Business Perspectives on Health Care Reform

| December 10, 2009 | Comments (0)

Health care reform is a complicated challenge and one without a simple solution.
Where do we start?  Let's look at the best practices and lessons learned from the Massachuestt's "experiment."  Three years ago, the state implemented health care reform with the goal of universal access and lower cost.

What were the results?

Massachuesetts ranks No. 1 in the country with 97 percent of it residents insured.  But Massachusetts' health care budget is also exploding and we have longer wait times to see a doctor.  The state has the highest number of physicians per capita in the country and the longest wait times – an average of 46.7 days.

Best Practice No.1: Individual mandate with the elimination of pre-existing condition limitations and guarantee issue underwriting.
Best Practice No. 2: Subsidies for those citizens who are in financial need.

Lesson No. 1: A government-run, public option isn't necessary.  Partnering with private health insurers makes more sense. The notion that government will create competition is flawed.  The government would threaten the long-term viability of private health insurance.  Why? You can't be a referee and a player at the same time and call the outcome objective when you play by different rules.
Lesson No. 2: It is socially responsible for an employer to offer health insurance. An employer mandate isn't necessary because most employers offer health insurance to attract and retain their employees – in most cases, those that don't offer it can't afford to do so without eliminating jobs.

Lost Savers
1.  Tort Reform - According to Investor's  Business Daly, medical liability adds $60 billion of cost to the system – and the CBO suggests that the defensive practice of medicine adds more that $700 billion of unnecessary care and does nothing to improve American's health. Why not consider tort reform so providors can practice medicine instead of protecting their liability?

2. Evaluate State Mandates – When you buy a health insurance plan, that plan includes a list of services that must be covered, called mandates.  In Massachusetts, we have 43 state-mandated benefits, including infertility coverage.  By some estimates, this benefit adds 7 percent to the cost of insurance.  Infertility treatment is valuable  – but mandating the benefit for everyone adds unncecessary cost.  Why not consider developing a standard set of medically necessary benefits for all states to follow and make other benefits available for purchase on an employer/individual basis?

3. Evaluate Minimum Creditable Coverage (MCC) – Massachusetts established a minimum level of benefits for a health plan to be compliant with the law.  This provision of the law is well-intentioned but again increases the cost of insurance. In Massachuestts, 187,000 people lacking prescription drug coverage now have to buy that coverage even if they don't want it or can't afford it.  Why not consider stronger consumer protection laws that mandate full disclosure?

4. Allow Interstate Competition and Tax Favorability for Individuals – competition drives down cost – government-run, public healht insurance will not create competition.  By some estimates, the country has 1,300 health insurance companies; why not let them compete across state lines?  Employers can buy health insurance on a tax-preferred basis.  Why not allow individuals to buy health insurance on a tax preferred basis?

5. Evaluate Provider Reimbursement – The federal government (Medicare) doesn't pay its fair share of health care because it doesn't reimburse providers adequately.  By most accounts, the federal government reimburses providers $0.75 for $1.00 of health care – while private health insurers reimburse providers $1.25 to make up the difference, and we all pay higher insurance rates as a result.  Providers contract with insurers on a discounted fee-for-service basis.  In most cases, those contract increase the level of reimbursement from year to year to account for inflation.  However, the inflation factor used in those coutracts accelerates two to three times faster than does the general rate of inflation (better known to all of us as health care trend).  Why not consider fixing the annual reate of increase to match overall inflation?

In the end, the direction of national health care reform is still a mystery, though one thing is clear:  This debate is far from over.  I hope all of us take the time to participate in the conversation.

Mark S. Gaunya
Principal, Borislow Insurance
President, MassAHU

Category: Featured, Position Statements

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