T Nation

Cheaper Health Insurance


#1

This is the first time I've seen an idea of how to make health insurance more affordable to a lot more people that seems to have merit. What do you guys think?

Cheaper Health Insurance
A little competition can go a long way.

Monday, July 25, 2005 12:01 a.m. EDT

Republicans haven't been getting much credit on the health policy front, despite their misguided 2003 drug entitlement masquerading as Medicare "reform." That could change soon. Last week the House Energy and Commerce Committee approved a bill that could dramatically reduce the ranks of the uninsured and spur general economic growth--all without costing a dime to the Treasury.

The idea behind the legislation, sponsored by GOP Representative John Shadegg of Arizona, is disarmingly simple: Allow Americans to buy health insurance from vendors in any one of the 50 states.

Right now Americans who aren't lucky enough to get insurance from large employers or poor enough to qualify for Medicaid find themselves at the mercy of the legislators and insurance commissioners of the state in which they happen to live. This can be OK in states that exercise this regulatory function judiciously. But in others, the young and working poor find themselves effectively priced out of the market by special-interest regulations dressed up as consumer protections.

New York requires every insurance policy sold there to cover podiatry. Acupuncture coverage is mandated in 11 states, massage therapy in four, osteopathy in 24, and chiropractors in 47. There are an estimated 1,800 or so such insurance "mandates" across the country, and the costs add up. "It is always the providers asking for the mandate; it is never the consumer," says health policy guru John Goodman, who has testified before legislatures considering such rules.

What's more, states like New Jersey and New York add two more ultra-expensive requirements: "Guaranteed issue" allows people to wait till they are sick and then buy insurance; "community rating" prevents insurers from charging different prices to people of different ages and health status. These may sound like compassionate ideas, until you realize they make insurance so expensive that millions of people are exposed to financial ruin because they aren't allowed to buy basic policies focused on catastrophic costs.

How expensive? A 2004 study by eHealthInsurance.com found that a typical insurance policy ($2,000 deductible, 20% co-insurance) for a family of four could be had for as little in as $172 per month in a reasonably regulated locality like Kansas City, Missouri. But in New York that family's only option--managed care--would run $840 per month, and in New Jersey family policies run a whopping $1,200-plus. We bet Democratic Representative Frank Pallone's constituents in New Jersey would be interested in his view that insurance in his state is only "slightly" more expensive than elsewhere.

As for the arguments against the bill, let's dismiss the phony federalism objection first. The Founders wrote a Commerce Clause into the Constitution precisely so Congress could act against internal restraints on trade of the sort represented by today's 50-state health-insurance market. The system has never made much sense; it is even more of an anachronism in the age of Amazon and eBay.
Critics also allege that freeing up interstate commerce will result in a "race to the bottom" in which fly-by-night insurers operating in poorly regulated states would be able to take advantage of consumers. But we've yet to hear which poorly regulated states they're talking about. The best analogy for what to expect here is probably our experience with interstate banking, which has indeed resulted in operators moving to friendly climes like Delaware and South Dakota but which has also proven nothing but a boon to consumers. A national market has allowed the growth of big, financially stable institutions that have earned consumer trust.

Nor, contrary to the self-interested arguments being put forth by the BlueCross BlueShield Association--which has effectively monopolized many highly regulated markets and fears the competition--would free commerce jeopardize the "risk pool" (i.e. the overall pool of money that makes insurance possible by allowing the healthy to subsidize the sick). In high-cost, guaranteed-issue states the young and healthy don't participate in the individual insurance market anyway; a larger national market can only improve matters.

As a major side benefit, interstate commerce in health insurance would remove a huge barrier to the efficient allocation of human resources in our economy. Right now untold numbers of Americans fear moving, switching jobs or starting their own businesses for fear of losing their health insurance. That would change if they were able to shop nationwide for policies that would follow them wherever they go.

But the most important issue here is justice. It is simply immoral that millions should be exposed to the possibility of financial ruin because of the all-or-nothing choice offered by the insurance regulations of states like New York and New Jersey. Amazingly, we hear the entire GOP delegations from both states are leaning against the bill, which may come before the full House in September. Their names belong on a dishonor roll should they end up letting the special-interest lobbies mentioned above determine their vote. We hope President Bush--who supports the Shadegg bill--is prepared to twist arms as he did on the Medicare vote. It's no exaggeration to say this could turn out to be the most humane and consequential domestic achievement of the Bush years.


#2

Wow, not one bite yet. I thought this would be a hot topic. I can only guess there are other "hot" political threads going at this moment that is taking up everyone's attention.

Personally, I still had to post this because the solution is so alarmingly simple if it works. I hope the bill passes...


#3

I'm all for competition. I would like to be able to buy decent health insurance for my family. But decent health insurance here in the Lone Star State would cost me over 1000/month.

I can save that much in a savings account, and have a shitload of money to pay my medical bills in cash - which is basically what we do. I can't fathom paying 1000/month or more, for nothing but the right to recieve medical treatment.

I think health insurance is the biggest racket going - except for whole life insurance.


#4

Exactly. It is like playing the lottery. Unless you die and/or get catastrophically ill you are better off without insurance and paying out of your pocket.

Of course if you do die or get ill without insurance you and your family are screwed.

The best bet is likely some inexpensive insurance with a super high deductible, just in case of disaster.

Just imagine if people shopped for their own medical care and doctors published their rates.

Prices would come way down, insurance companies wouldn't be putting up huge new buildings every year.

America spends a ton of money on medical care. Too much of it goes to health insurance and malpractice insurance and too little goes to providing the actual services.

The solution is not socialized medicine. It is freemarket.


#5

The only trouble with that is you can end up paying a lot more than the "negotiated fees" the insurance companies pay for the same services. If you're paying cash you should always try to negotiate for yourself. I used to do that (I had a "catastrophic coverage" plan only as a student) and it works quite often.

One thing I hate is employers who only offer one plan or two that are basically the same. I'd like something with a $20,000 deductible and the tiny cost that would be appropriate for that. To be fair, the employer should pay all of it since they're paying half of everyone else's expensive plans. Instead, my only option is a no-deductible PPO plan. If I had saved my insurance costs for the last ten years, minus the tiny medical expenses my wife and I have had, that would pay a $20,000 deductible and buy us a new car. I wouldn't have thought twice about risking $20,000 on that outcome.


#6

Ugly topic because there is no simple answer. In the state of Washington, we have an every-category of provider law, which means I can get paid by insurance for performing acupuncture. Sounds like a great deal, right? Once again providers are scamming the system, right?

Not really. Insurance pays about half of what would normally be charged. So if a provider takes insurance or is a preferred provider, they have to see many more patients to make up for that lost income. In Seattle there is about 500+ (last time I checked) acupunctursts and most that are established have very busy cash-only practices. By and large, taking insurance is the way to go if you enjoy headaches.

Which side a person picks in the debate usually depends on which group of statics that agree with. I would love to see a comparison of how much more money it costs to cover acupuncture versus covering surgery. Obviously not every patient with lower back pain can be "cured" with acupuncture, but many do see relief. For example, the average cost of spinal fusion surgery was about $14K.

http://msnbc.msn.com/id/7951097/

Ten acupuncture treaments would run about 1K at the most. If surgery was the last resort for injuries (instead of acupuncture), then the system would save money...in theory.

Obviously there is something wrong with the system. As postulated earlier in JAMA, medicine in this country is major cause of death.

http://www.chekinstitute.com/articles.cfm?select=7

But we could go round and round on this topic and in the process would miss the primary factor that is causing medical insurance to be so high in this country: people's lifestyle and health choices. Should hard-working people that exercise and show restraint in dietary matters be forced to pay higher insurance rates because somebody else smoked for 50+ years and is undergoing inpatient treatment for lung cancer and emphysema? Should they be penalized by helping pay for somebody else's gastric bypass?

Obviously the answer is no. But until we figure out how to ethically and morally reduce the amount of money spent on unnecessary treatments or treatments caused by a person's intentional neglect of their own health, cost will continue to rise and secondary and teriary causes will be debated instead.


#7

I looked up that chek article you listed-somebody should really teach him how to add-maybe even send his butt to high school so he can finally get that diploma-
those numbers equal 225,000 and not 250,000 as he puts those big letters. funny enough, in the very next line, he states the correct number, so why the need for the b.s?
Paul chek is on quack watch for a reason!


#8

I used the Chek link because it was one of the top replies when I searched google for the article.

Okay, actually I used his link because I secretly wish that I could do all those swiss ball exercises.


#9

I'm not convinced on this one. We all have weaknesses. What's yours? And where do we draw the line?

That said, it's worth noting that the majority of health expenditure is on people who are in the last three months of their life. Now if a way could be found to sort that out ...


#10

If I had the answer to that, I would be in politics making millions.