A Rethuglican Health Insurance Reform Proposal
I have watched all of the town hall meetings on health care/insurance reforms available on C-SPAN. One of the issue that comes up, especially during Republican town hall meetings, is a proposal to allow sale of health insurance products across state lines. Proponents, like Michelle Bachman of MN, believe that such interstate sales, allowing the current stable of some 1800 health plans to sell their product nationwide, will significantly increase competition and thus lower costs according to free market principles. When I have heard this issue arise during town halls, it is soundly applauded by the conservative crowds. Why not? It's so simple! This is an idea any idiot can understand.
And therein lies the problem.
This concept relies on some very significant, yet highly dubious assumptions. Paramount among these is the assumption that a substantial proportion of those 1800 insurance issuers will incur the considerable expense required to contract with physicians, hospitals and ancillary facilities nationwide. Will this will occur to any meaningful extent? Or will those who purchase coverage out-of-state find few if any practitioners to treat them? Proponents of this idea seem to disregard the unique function of health insurance as an intermediary, where contracts with providers are no less important than their contracts with subscribers.
I am comfortably retired, but if I were still in practice I would accept patients with Medicare, Tricare and four or five different private plans. However, each plan has its own requirements for submitting bills, coding nuances, and other varying restrictions such as the intrusive pre-approval processes unique among the private insurers. As more plans are added, more support personnel become necessary and administrative costs begin to skyrocket. Knowing this, I would not allow my practice to participate in any plan that did not have substantial market penetration in my local area.
Of course, if insurers are willing to just pay the usual and customary fees, as dictated by physicians, hospitals, and ancillary service providers, rather than a negotiated rate schedule, that would work for the subscribers and provides, but it would be prohibitively expensive for the insurer. Such a system would most certainly be counter productive to the issue of cost containment. More likely, patients will be forced to act as intermediaries between the doctor and the insurer. Doctors will bill usual and customary fees that patients will be obligated to pay. Patients will make claims to their out of state insurance company, and they will receive a check for the insurance allowable minus deductible and co-insurance. I was recently hospitalized for pneumonia. My hospital bill at the usual and customary fees for services came out to $67,000. The negotiated rates brought the bill down to just over $6800. My cost was $500 - a $100 per day co-pay for the first 5 days in hospital. Under this proposal, I could be on the hook for more than $60,000!
If this proposal were to pass, conscientious physicians would advise their patients to stay with their current plans or risk losing their current health care arrangements. Wise patients will understand that and eschew cheap insurance from remote companies operating in an unregulated environment beyond state control.
Under this proposal, the state insurance regulators will be handcuffed and there will be no regulatory framework to protect consumers. Without regulation there will be abuse (see AIG), and once the abuses become rampant, as surely they will, a massive new federal regulatory regimen will have to be enacted. By then it will be too late to undo the damage. This isn't just a bad idea, it's a profoundly stupid one, an idea only an idiot could love!
And therein lies the problem.
This concept relies on some very significant, yet highly dubious assumptions. Paramount among these is the assumption that a substantial proportion of those 1800 insurance issuers will incur the considerable expense required to contract with physicians, hospitals and ancillary facilities nationwide. Will this will occur to any meaningful extent? Or will those who purchase coverage out-of-state find few if any practitioners to treat them? Proponents of this idea seem to disregard the unique function of health insurance as an intermediary, where contracts with providers are no less important than their contracts with subscribers.
I am comfortably retired, but if I were still in practice I would accept patients with Medicare, Tricare and four or five different private plans. However, each plan has its own requirements for submitting bills, coding nuances, and other varying restrictions such as the intrusive pre-approval processes unique among the private insurers. As more plans are added, more support personnel become necessary and administrative costs begin to skyrocket. Knowing this, I would not allow my practice to participate in any plan that did not have substantial market penetration in my local area.
Of course, if insurers are willing to just pay the usual and customary fees, as dictated by physicians, hospitals, and ancillary service providers, rather than a negotiated rate schedule, that would work for the subscribers and provides, but it would be prohibitively expensive for the insurer. Such a system would most certainly be counter productive to the issue of cost containment. More likely, patients will be forced to act as intermediaries between the doctor and the insurer. Doctors will bill usual and customary fees that patients will be obligated to pay. Patients will make claims to their out of state insurance company, and they will receive a check for the insurance allowable minus deductible and co-insurance. I was recently hospitalized for pneumonia. My hospital bill at the usual and customary fees for services came out to $67,000. The negotiated rates brought the bill down to just over $6800. My cost was $500 - a $100 per day co-pay for the first 5 days in hospital. Under this proposal, I could be on the hook for more than $60,000!
If this proposal were to pass, conscientious physicians would advise their patients to stay with their current plans or risk losing their current health care arrangements. Wise patients will understand that and eschew cheap insurance from remote companies operating in an unregulated environment beyond state control.
Under this proposal, the state insurance regulators will be handcuffed and there will be no regulatory framework to protect consumers. Without regulation there will be abuse (see AIG), and once the abuses become rampant, as surely they will, a massive new federal regulatory regimen will have to be enacted. By then it will be too late to undo the damage. This isn't just a bad idea, it's a profoundly stupid one, an idea only an idiot could love!
