If you've read any of my previous posts, you'll know that I am not a firm believer that any of the proposed solutions to the current healthcare crisis will work. Universal healthcare is a lofty goal but if there is any hope that it will work, it has to involve every American as an invested individual, equally and fairly. In a conversation I was having with a few colleagues, an idea came to me that seems so simple it just has to work.
Let us assume that some form of universal healthcare will be enacted. We must also assume that in order for the insurance companies to survive, only the largest and most efficient, able to take advantage of economies of scale, will be likely to surivive. Participation in any form of universal healthcare will be mandatory, whether it is sponsored or offered by an employer or the government. You will have little or no choice. When there are only a few suppliers or producers, you have an oligopoly. An oligopoly is defined as "A market dominated by a small number of participants who are able to collectively exert control over supply and market prices". Does insurance fit his definition? Yes it will.
If we do have a situation where a few large suppliers or producers dominate a market, we as consumers, need regualtion and protection from them just like we do in the utilities markets. You may not be aware of their presence, but the public utilities commissions of your individual states make sure that the suppliers of your water, electric, natural gas, railways and telephone services are treating you, the public, fairly. They are also responsible for the oversight of those industries, review requests for rate increases and monitor the industry's return on equity and investment to their respective shareholders. Can this model be applied to health insurance? Absolutely.
Anthem BC/BS was a mutual insurance company until it changed it's status and was later acquired by Wellpoint, Inc. A mutual company is defined as " A company whose profits are distributed in proportion to the amount of business each participant does with the company". Sounds like a perfect structure for universal healthcare.
Since there will likely be mandaory participation, all payments to the insurance companies will come from the governement in the form of direct or indirect payments. If each household is given a "share" in their insurance provider for each covered life, that household has a direct invested interest in seeing that their insurance company is as successful and profitable as possible. They would be encouraged to utilize their healthcare resources only when necessary. Decreased utilization by the individual covered lives means lower insurance company expenses , greater profits and additional distributions (dividends) per covered lives. Since every person covered receives a share when they sign up for insurance, you receive a direct financial dividend when your insurance provider earns a profit. The most efficient insurance companies that are also providing the best healthcare benefit will naturaaaly attract more participants, increasing their efficiencies through economies of scale. In an effort to increase "shareholder" satisfaction, these companies, like their untility company counterparts, will seek to be more efficient, maximize value, return on investment and equity and take the greatest advantage of financial leverage.
Rather refreshing for an insurance company to be operating on your behalf, as a shareholder, instead of only a hostage or paying customer. It makes much more sense to combine the benefits of a regulated industry where each covered life is treated like a shareholder with a voice, in conjunction with what will be mandatory participation. Under this scenario, you are as important to the insurer as a consumer as you are as a shareholder. The shareholder's voice of displeasure can effect who runs the insurance company depending on how they vote at the annual shareholdeer's meeting.
You also have a voice on how well you feel your insurance provider cares for you as a consumer. If they do a good job, you'll tell others, attracting more members/shareholders. If you don't like how you are being treated, you'll change insurance carriers and tell all your friends and co-workers.
I don't have a lot of confidence in the government to fix the problems with healthcare and I have less confidence that the insurance industry will do anything in the indvidual's best interest unless they are made to do so. But, if I am in a position to benefit directly from their quality and efficient care to patients (me and mine), I would feel much better about universal healthcare, government regulation and the insurance companies continuing as ongoing concerns.
Doc B
My opinion is free.
Advice is worth exacly what you pay for it.
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2 comments:
Will this lower the cost of insurance premiums for us poor schmucks who have to private pay? If so, bring it on! My insurance co. just notified me that my premiums are going up $76/mo. over the prior year to almost $700 by the time I add in my separate dental coverage and no competition for individuals unless I chose a plan with even higher deductibles and no Rx plan. You need to be well to do or very poor to be sick in this country.
I feel your pain. Being self-employed I pay the employer AND employee portion of my health insurance premium to the tune of $14,000 per year. And it is due to increase by at least 10% for 2009! My family has NEVER used this amount of benefit in any calendar year ever.
I certainly don't mind paying my proportionate share of healthcare related costs, but I want my money to be spent efficiently and cost effectively. I don't want to pay huge salaries and bonuses to CEO's who do nothing to sell a product that we have to have. How hard a sell is that?
Ultimately, all us schmucks will be paying for our healthcare either direcetly out of pocket or by taxation, and some more or less than others. But WE will pay.
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