THE SOLUTIONS, PART 5, THE INSURERS

The insurance problem could, in part, be moderated by introducing health cooperatives, as previously discussed. However, this poses its own set of problems that I’ll attempt to address later. As a free market capitalist, I’m generally opposed to regulations that don’t have the specific purpose of protecting the market system and preventing abuse and fraud. However, money lost to insurance company profit reduces the amount of care per dollar that can be provided. On the other hand, profit can drive innovation and efficiency, and reducing choices (such as with a single payer) stifles innovation and may discourage the best talent from entering the field. So finding the sweet spot where “greed is good” can be problematic. Just as we have laws that limit monopolies to prevent corruption of the capitalist system (sadly ignored, of late), I submit, not without some trepidation, that it might be reasonable to impose liberal (no pun intended) limits on profits. The monopoly analogy is not a precise one and distorting the marketplace by capping profits, I’ll concede, is usually contrary to good policy, so I’m open to opposing viewpoints. On the free market side of the equation, some have suggested increasing competition within the insurance marketplace by allowing consumers to choose out-of-state insurers, as opposed to having the government as a competitor (with its potential unfair advantages that could shrink the buyer marketplace). I would favor an approach that increases competition. Free competition may make setting arbitrary profit limits moot, and market forces are usually smarter than the government, when the system isn’t gamed. As with anything, the “devil’s in the details.”

In addition, injecting a little sanity into the reimbursement policies of both private and government insurers is long overdue. My blood boils when I read pieces like this describing how cheap alternative techologies are denied in favor of vastly more expensive choices.

A policy of transparency on the part of the hospitals has also shown promise in cost reduction. The ACC News Digest summarized a CBS news story on 9/12/09 that reported: The University of Michigan began a “policy of transparency and apology…in 2002, and it’s proven to be a shrewd business practice for the 40-member hospital system. Since then, claims against the system have dropped from 262 in 2001 to 83 in 2007. Fewer claims have allowed the system to drop its malpractice insurance reserves from $73 million to $13 million.” Moreover, “the hospital’s new openness has another positive effect — with doctors less likely to be sued, they’re reporting negative outcomes six times more often.”

A sidebar on preventive care: Why not mandate more of it? While preventive care is important and disease prevention laudable, we have to be careful about the type of screening we ask for. Studies have shown that screening may be effective in disease prevention when done properly but does not reduce the cost of health care, as detailed concisely here.

On the other hand, lifestyle modification is cost-effective. Unfortunately, getting people to stop smoking, eat healthy and exercise regularly over the long haul is like pushing a boulder up Mount Whitney. Taxing unhealthy foods, like we do cigarettes, has been proposed as a solution (another intrusion of Big Government). I like the idea of the insurance companies charging a premium for every ten pounds above ideal weight, as this blogger proposed here on his September 14th post. It allows the market to influence behavior, rather than B.G.

What’s your poison?

 

NEXT: We the Patients

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