Monday, December 13, 2010

What Should Health Insurance Be

Ezra Klein provides a good definition (though I actually doubt that he agrees with this definition):
"... that helps protect you from a health-care crisis is,.."

I think if Health Care Reform mandated such a product, essentially catastrophic coverage, then there would be much less apprehension and uproar about the mandate. Here is my lament from almost a year ago about then proposed high minimum benefits and the problem a mandate creates:

"Thought 1: I have probably said this previously but I think the biggest peril in health reform lies in the convergence of two areas- the minimum benefit and an individual mandate. If the minimum benefit is generous (i.e. covers all the first dollar stuff like physician visits and eyeglasses) than it will be fairly expensive. This will be problematic as even with subsidies (currently proposed for folks with an income up to 3X-4X the poverty level) a lot of the middle class that do not get their insurance from an employer will find themselves still unable to afford healthcare (maybe less so than before) and will now face the prospect of a penalty for not having complied with the mandate. Sounds fantastic.

"Thought 2 (closely related to thought 1 for those keeping score): The emphasis on coverage thus far has been on the first dollar variety (e.g. low deductible, low copayment, low coinsurance). This emphasis is misplaced. Going to the doctor for your annual physical, semi-annual dental checkup, and some antibiotics are the typical interactions for most people with the medical system. This can be done and should be done out of pocket. These are predictable events not suited for insurance and add to the overall cost growth of health insurance in creating administrative waste. What is important though is that you are covered when something unfortunate does happen, such as getting hit by a bus, a sudden stroke, etc. This is what insurance is typically for, low frequency events with high payouts. It is this type of event, a catastrophic event that causes medical bankruptcies for the uninsured. It would thus seem logical that a mandate would involve such a plan-catastrophic coverage-as opposed to something that makes sure you can get a pair of designer glasses and prescription sun glasses without having to reach into your wallet."

The mandate was necessary to make these high minimum benefit plans remotely affordable. I have never been confident that the mandate would actually make the plans affordable (the high minimum benefits make that goal unattainable), but it was the only hope. The legal current legal challenges pose a direct threat to the foundation of health care reform.

Part of the current dilemma could have been mitigated if congress had approached health insurance in a more traditional sense (catastrophic coverage). Mandating a product that costs a family a couple hundred dollars a month without a subsidy is an easier pill to swallow than one that costs north of a thousand a month to purchase without a subsidy. There would still be some opportunistic state AGs willing to file suits but their suits would find fewer sympathizers (on and off the bench). Instead, health care reform has written such coverage out of law. There is in fact something called catastrophic coverage envisioned in the new health care law but it has so many minimum benefits that it would be more accurately characterized as a PPO with a higher deductible.

1 comment:

Online Health Insurance said...

Health insurance is very important. It might seem like an unnecessary expense at the start, but you'll be thankful that you have one in case you meet with a sickness or an accident. The internet offers thousands and thousands of online health insurance options. You just need to have patience when looking for the health insurance plan that is just right for your needs and for your budget.