Cost Factors
Posted By Mark on January 6, 2010
Lets review again what the Health Reform is all about. The mantra is cost, accessibility and portability. In my view, cost is the major issue. If the cost for health insurance was lowered, accessibility would be increased and portability not such an issue.
Let’s delve deeper into the cost issue. My recommendations to lower cost for health insurance are:
- Tort reform – Limiting frivolous lawsuits will lower costs all around. No need for a test case as this has already been proven in Mississippi.
- Third party purchase of Group Policies - Insurance companies and businesses must be divorced. That is businesses must no longer be able to purchase insurance for their employees as a benefit and subsidize the premiums or at least empoyees must pay premiums out of their bank accounts while “insurance benefit” from employer becomes allowance or reimbursement. This allows employees to have medical insurance without any idea of the cost of the total monthly premium or what benefits the policy provides. Employees are often very suprised to find out how expensive their benefits are when they are terminated and receive information on COBRA.
- Mandates – These are benefits which insurance companies are required to provide in all of their policies. For example in Colorado, health insurance companies are required to provide coverage for alchoholism, substance abuse, smoking cessation, mammogram, complications of pregnancy and birth control. This is not a complete list (click here to see a complete list for all states as well as financial impact), only a sample of benefits companies must provide whether or not they are wanted or would ever be used. These benefits drive up premiums. This is a bit trickier to handle, but can still be done. My first choice would be to eliminate them, allow consumers to educate themselves on what is available and choose. Or at least make it more like Medicare supplements, which come in standard forms (A through L). Each of these forms has a specific list of benefits and are the same no matter which company you chose. Therefore when chosing a plan you are chosing based on things like service, complaint history etc. As well you would have clear choices on which benefits you are choosing at which price.
I believe these proposals would “bend the cost curve” downward.
Next up: Pre-existing conditions
Wow! This makes too much sense. These are solutions that cost nothing, but unfortunately do not increase the power of those in Washington DC. If they truly want reform and insurance for everyone, this would be a very good start. We do need some help for those that have been insured for years and are being priced out of the market. State guarantee funds are available for those coming off group insurance, but usually not for self employed or those paying for their own coverage. We need to talk to our senators and congressmen to fix this.
[...] already has 51 state mandates! As I discussed in my post on cost factors in health insurance these mandates increase premiums and here we go again. I can hear the [...]