I thought that yesterday’s post would create much interest. Clearly the idea espoused is thought provoking. Here are snipets from some comments and my clever retorts!

The Republican argued that community rating was the obvious, least complex way to assure that persons with history of health problems had a viable place in the insurance market. Community rating can result in problems, however, particularly if the young healthy persons are not insured in the same system as those who have a history of illness (or if the young healthy people drop out). The writer explained that this happened in 1993 in the New York insurance market, where community rating was applied to the individual market (only), the few healthy individual insurance purchasers dropped out and it set off an insurance death spiral as plans became increasingly expensive for fewer and fewer sick people.

This comment makes a cogent argument for caution. The concept has great appeal, but the devil is in the details. The proposed idea will only work if the “pools” remain large enough.

While I favor free market solutions, this comment makes me consider that the insurance “needs” of young, healthy patients are different from our classic 55 yo female with diabetes, hypertension and 60 pack years of cigarettes. The problem with the free market solution comes when the young healthy person looks for plan. He/she will not buy as extensive coverage – and this will be a rational economic decision. However, the impact of that decision will disadvantage the older, sicker patient.

Kerry had the much better idea – let people buy in (at full “group rate” cost) to the same programs offered to federal (or better, state and federal) employees. Except the insurance industry would never go for such a deal, as the inferior insurance coverage that is foisted on individuals and small employers, which is incredibly profitable for the insurers, would no longer be viable.

But then, if national competition at least makes inferior insurance coverage more affordable, it’s a step in the right direction. Combine the two, and those who want (or need) decent comprehensive coverage can get it, those who want bare bones coverage can get it, and those insurance companies that want to price themselves in the middle will have to provide a set of benefits which justifies their price point.

Again, my comments above apply.

This proposal also doesn’t appear to address one of the biggest problems with non-group insurance now, the indiscriminate exclusion of care based on medical history. When I was applying for individual health insurance last year the biggest problem was not the cost, it was the exclusions. One company wanted to exclude all neurological problems that might occur in my 6 year old because she had fallen while running 4 years earlier and we had taken her to the ER. Everything was fine except a big knot on her forehead, but the exclusion would have gotten the insurance company out of all sorts of unrelated diagnoses like viral meningitis. I had had a pinched nerve in my low back successfully treated, but the insurance company wanted to exclude everything spine related including a traumatic cervical spinal injury. What good is catastrophic health insurance when the companies use every trick in the book to avoid actually insuring people?

This commenter makes a very interesting point. Insurance companies primary goal is to make money, not to improve health care. They respond to share holders.

If Congress were to pass a bill which takes all the problems into consideration, then the insurance market would likely become less profitable. Were that to happen, many insurers would look to other types of insurance to sell rather than health insurance.

In summary, I like the initial thrust of the the concept (see yesterday’s rant if you have not followed this discussion), but I worry (like my commenters) about the details. This concept should receive honest scrutiny as an option for making health insurance more affordable to more patients.

Related posts:

1. Krugman – we can afford universal coverage
2. Making health insurance competitive
3. Why not make health insurance competitive?
4. A few more thoughts
5. Free market theory does not apply to medicine

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