A plan with lower premiums and a high deductible makes a lot of sense for healthy individuals. A Medicare-style plan makes more sense for those with chronic health problems. These alternatives, however, should be offered as options, not mandated.
Even though catastrophic illness plans save most people money and would reduce the overall cost of health care if they were widely adopted, some people will not want to buy into a plan that requires them to pay for health care directly. After all, paying for health care is not nearly as much fun as going shopping. On the other hand, more people might take advantage of this option if it were readily available. It is a choice that should be offered by both employers and the government.
Employers who provide health insurance as a fringe benefit could reduce their costs by negotiating to include catastrophic illness plans as an option offered employees. If a reasonable share of the savings from reduced premiums were passed on to employees to offset their increased out-of-pocket expenditures for health care, most workers would eventually realize that they are better off financially with that type of plan. Even employees whose medical expenses exceeded the deductible amount would see only a small increase in actual cost. The overall cost of health care would be reduced for both workers and employers.
The decreased income to insurance companies would be largely offset by the savings they would realize from having a greatly reduced role in the health care system. They would no longer need to provide oversight or approval for routine medical transactions. Profits might decline somewhat, but insurance companies would remain profitable.
If such a plan were offered by the government it could help moderate-income individuals and families by basing premiums on ability-to-pay. With or without a progressive premium schedule, a government-run plan offers the additional benefit of maximizing over-all savings by eliminating profits.
The primary goals of whatever reforms are implemented should be to reduce the overall cost of health care and to offer consumers a range of meaningful choices. Consumers should have the choice of acquiring a policy through a private company or buying in to Medicare. Consumers should have a choice between full coverage and a policy that covers only catastrophic costs. All of these options need to be available if we hope to reduce the cost of health care significantly.
If Congress manages to supplement the existing Medicaid and Medicare programs with a buy-in to Medicare they will deserve a higher approval rating and a brief respite from being labeled a “do-nothing” Congress. If they add the option of a catastrophic illness plan they will have done everything we can reasonably expect from the government with regard to reducing the cost of health care.
Article comments
1 - P.Marlowe
good article... Long article... really, really long, but good!
Marlowe
2 - DHL
The catastrophic illness plans are interesting, but may not contribute much to solving the problem of providing coverage to those currently uninsured. The product idea is not new, insurance companies do offer "high-deductibles" to cater to individuals who have affordability problems. If it is not mandatory, not all car owners may buy liability insurance. Our "health care" crisis is not just a health insurance crisis. In reality, health insurance companies are becoming the popular whipping boys. They are blamed for inefficiency, and bureaucracy, and being profit-minded (Blue Cross/Blue Shield are not-for-profit) at the expense of patients' well-being. We are not sure if we can safely remove the roles of insurance companies from our system without creating another form of crisis. Substituting the insurance companies with a government body may not be a better solution, as seen in the public transportation system or our public education system.
The aging population, the availability of more expensive advanced technology that treats diseases that were terminal previously, and even economic growth all contributed to our rising health care expenses as a nation. In the book entitled "The Fattening of America," by Eric A Finkelstein and Laurie Zuckerman, it was reported that over two-thirds of Americans are overweight or obese. Over the past three decades, the number of obese Americans has more than doubled, across the socioeconomic spectrum, and for all racial and ethnic groups, most dramatically, for America's children. According to Eric, America's growing waistline is a by-product of our economic and technological success. It has been estimated that the annual cost of overweight and obesity in the U.S. is $122.9 billion, a sum that is comparable to the economic costs of cigarette smoking.
All health care crisis has to be tackled on all fronts, and as you pointed out, reform could involve a grassroot movement. You suggested that we should band together to limit the role of insurers with or without help from the government. On the positive note, grassroot organizations have already started to direct the effort in discouraging smoking, addressing obesity, and adopting a healthy lifestyle. These are sure steps in bringing health care burden under better control in the long run.
3 - Rod Reasen II
It is interesting that most claims for reform are directed at insurance companies not the system as a whole. I find it mind bogling to believe that Americans are as foolish as many may make them out to be. The health care system is made up of three primary components: You and Me; doctors and facilities and payers.
The main problem with our current system and the direction that we should focus is TRANSPARENCY.
You and I don't actually know where most of the cost comes from in a bill. I submit that if we were fully aware of all charges from all parties we might have a basis for discussing change. Until we have this, we are simply submitting ourselves to idle chatter.
Rod Reasen II
President TriplePoint Consulting
4 - bliffle
The insurance companies have created a marvelous illusion: that somehow Health Care depends on Health Insurance. They've employed this illusion to place themselves at the center of the entire "Health Industry" and thus reinforce their monopolistic grip on that entire segment of society. They've created the notion that you can't have Health Care without Health Insurance.
Now, we have presidential candidates who are seriously advancing proposals to enslave US citizens to Insurance companies though 'mandates', which put one in mind of Indentured Servitude, which is the (only slightly) less ugly sister of slavery.
Hasn't it occured to people yet that the jury-rigged facade of capitalistic health care has completely collapsed?
Nothing could be further from the truth.
5 - Rod Reasen
Again, blaming the insurance industry for rising costs is simply misplaced energy. They do play a part: Manage Risk. If you want to solve the problem of rising costs you must see where the costs are located.
I have spent the last 12 years representing employer groups. We have helped them maintain modest levels of costs (around 1-4% annually) by knowing what causes the increases. It is not the insurance company.
The insurance industry adjudicates claims and manages risk. They do not hoard your dollar. I am sure many will contest this but prove it.
If we want lower costs than we need to be wiser consumers, frugal in our spending on health care and be forward looking about our health. The old saying "garbage in, garbage out" really does apply to your health.
6 - bliffle
Bah! All insurance companies are arrogant monopolists (OK, let's call them oligopolists - the effect is the same).
They are enabled in their monopolistic endeavors by the 1945 McCarran Ferguson act which prohibits Federal regulation of ALL insurance companies, thus leaving only the weak state regulators to fight their predations.
It is this which enables their 40% profit margins.
We need to revoke the McCarran-Ferguson act and enforce Federal anti-monopoly laws.
7 - Ruvy
You and I don't actually know where most of the cost comes from in a bill. I submit that if we were fully aware of all charges from all parties we might have a basis for discussing change. Until we have this, we are simply submitting ourselves to idle chatter.
I wish to respectfully disagree with you on some of this, Mr. Reasen.
My son was born a preemie about 19 years ago and he needed to stay in the hospital for over three months. At the time, my wife's health insurance required a $400 co-pay. When we saw the hospital bill, a voluminous document that weighed several kilos and came to over $180,000, we were extremely grateful for the coverage my wife had. We got a similar bill from the physicians attending our preemie for $85,000. It too, weighed several kilos. We had to pay a nominal sum, if any at all, an amount of money I honestly do not remember.
But the point is that every little jot and tittle of "treatment" my baby got was accounted for from the bilyrubin lights to the diapers and tissues, and was was noted and charged for. Need I say that we were overcharged? We probably weren't terribly overcharged - the insurance company would have refused to pay - but we were overcharged.
The hospital was a private hospital and needed to show a profit, so that was part of the charge. But there was transparency. No attorney could have argued that these huge bills were not clear.
I suggest to you that the problem is not necessarily the insurance company - though insurance companies do have a nasty habit of setting themselves up as care brokers and cherry picking the population in the process.
I would look in the hospital supply room instead. When I was a kid, hospitals used to sterilize equipment and reuse it. Today everything is use once and throw. The oil companies make a fortune on the plastics used for much of the use and throw equipment. And it costs a fortune. That is just one place to look to trim costs in the health system.
8 - Doug Hunter
"Republicans never miss an opportunity to push the message that government is incompetent and incapable of providing services as efficiently as private enterprise. If they truly believe that, they have nothing to fear from offering people a choice between private insurance and a government-run program."
I agree that we need universal healthcare, but this little jab is totally nonsensical. It's an apples to oranges comparison. Government programs are subsidized with hundreds of billions of dollars every year. Medicare takes premiums from every worker young and old, then only covers old ones and still operates at a loss. The government can 'lose' tens or hundreds of billions on a program every year and still maintain it by diverting taxes or simply printing more money. The largest mega corporations can only lose money for a year or two in much smaller amounts without going bankrupt.
Private industry DOES run more efficiently and effectively because of limited resources, that is also it's weakness. The government runs sloppy and inefficient but is in no danger of running out of money as long as they own the printing presses.