As I drive America's greatest highway for my project on US89, the people I meet in places like rural Montana (above) tell me that access to health insurance is a constant worry.
More than two years ago, I tossed my solution for national health insurance to a friend who is/was highly placed in Utah Governor Jon Hunstman's administration. In case you haven't noticed, I'm kind of busy here. In between the Highway 89 project, I am starting a campaign to bronze Ansel Adams' tripod holes at the Snake River overlook. And I am putting together the charter membership of PhETI, Photographers for the Ethical Treatment of Images. I don't really have time for people to drop the ball, like my friend did with my most excellent plan. It includes near-universal access to coverage, makes small businesses more competitive, and retains a market-based system of personal choice for health care.
Newsflash: we already have a national health care insurance program. In fact, we have at least four of them in the public sector. But you and I can't participate in them, and that's what I am proposing to change.
The federal government insures its employees in all fifty states. It also runs a separate program for serving military and their families. A third program serves veterans and their families. Every state government offers its employees insurance. Between these four programs, with their large pools of participants, we have a pretty good idea of what decent medical insurance costs when the buyer has bargaining power.
Here's the key idea: once I am insured under an employer-based program, I have the right to extend my coverage for 18 months after I leave my job, at my own expense, at no more than 102.5% of what my previous coverage cost per month. It's the law, it's called COBRA, and it applies to (almost) all employer-based medical insurance plans. The 2.5% overhead seems a reasonable fee for the separate billing program to deal with individual beneficiaries, and I imagine that the insurance lobbying talent negotiated that number pretty hard.
So why can't my business buy into the federal or state insurance pool at a 2.5% premium over the government rate? Or 5%. Pick some reasonable administrative cost, and let the private sector benefit from the government's purchasing power. My employees get the same benefits negotiated for the rest of the program, and I as employer can take it or leave it at a guaranteed price. It's a simple idea, really.
No one is forced to buy any program, my idea simply offers access and more choices. It also sets a ceiling on the price: what you as a taxpayer are already paying for your government employees is what everyone pays. It creates an environment for real competition among insurance providers. Everyone knows what the government programs will cost, so insurance companies have to compete on price and service. Don't like the state employee offerings? Buy the federal program or a private policy. Organize your trade society to form a private insurance cooperative. But at least we have eliminated the concept of uninsurability by guaranteeing employer-purchased access to the public employee programs.
Who loses:
Insurance companies have been playing the high premium game with small businesses are going to have a transparent marketplace in which they must compete. Not going to cry about that. Calculating risk over only the pool of a small business's employees is simply a profiteering scheme to rake over profits in an unequal market. Any small business employee could go get a government job tomorrow and be insurance-eligible. It makes no sense to treat these people differently because they work for a small company.
Public governments: if the lore is true that that many government jobs pay less than the private sector, but employees take them because the jobs come with great benefits, the governments may lose good employees to the private sector. I used that argument myself with prospective employees when I was the hiring official in state university system, but they people I wanted to hire didn't come for the benefits. People choose to apply for public sector positions for lots of reasons, so I doubt this is a serious issue.
Large sector private industry uses benefits packages as a competitive hiring advantage over small companies. Since small businesses create the bulk of new jobs and wealth, I'm not too worried about large companies losing their edge over small businesses in the hiring game.
Who benefits:
Incorporated into the cost of hospitalization is the overhead of the uninsured. If someone shows up at a hospital with a gunshot wound or heart attack, that person will be treated, and if the patient is uninsured, and the insured all share the cost as part of the hospital overhead. We who are insured all benefit when more people are insured.
Small businesses: I believe that the unavailability of medical insurance for small companies is a serious brake on entrepreneurship in this country. People with good ideas are willing to sacrifice and risk their assets, but not their families' health. Guaranteeing access to decent medical coverage will unleash an army of entrepreneurs who will create new jobs.
Large businesses: I can see a new market for reselling insurance. Costco, Fedex, Walmart, UPS all have employees in national markets. If they can sell access to their employee insurance pools for less than the public sector and make profit, hallelujah!
My idea is a game-changer. Go forth and discuss. Let me know how it turns out. If you want to make a donation to the "Bronze Ansel's Tripod Holes" fund, I'll be back shortly with details on that program. I don't have time to solve everything all at once.
Comments (8)
The real question is how much would that federal health plan cost in the open market. Keep in mind that COBRA doesn't apply to employees working at companies with less than 20 workers. Most states have some form of "mini-COBRA" which in essence works the same way except that they can charge 10-15% over the regular rate.
Another item worth mentioning...most employees are shocked at what COBRA costs - they never knew how much their former employer was paying for their coverage.
Posted by Jon Moss | October 30, 2008 11:54 AM
Posted on October 30, 2008 11:54
Along those lines, give all congressmen and senators $5000 more per year in salary, and remove their health insurance benefits. Let them obtain them in the free market. My understanding is that they get health insurance benefits even after they leave office as well.
As soon as a congressman's spouse or child is denied coverage secondary to 'pre-existing' conditions or has a costly, chronic disease, new laws will be passed eliminating the ability of insurance companies to deny coverage. Guaranteed. Our representatives see / feel no pain with the current system.
By the way, I am a surgeon, and see first hand the inequalities in the system currently.
Posted by anonymous | October 31, 2008 10:41 AM
Posted on October 31, 2008 10:41
This is the best idea ever. In fact it is what I personally have been pushing myself but my idea was not fleshed out as well. I only knew that government should join the insurance game as a competitor but I didn't figure out the mechanism to do so. I am totally passing this on to all my friends and family.
Posted by Bryan Sheasby | October 31, 2008 10:46 AM
Posted on October 31, 2008 10:46
I really like this plan. It is very similar to ideas I have been playing around with. The essence of the problem lies with the fact that the greedy insurance industry serves as nothing but a middle man which promises to help spread the suffering of medical bills thin over a large group of people. The problem is that all their greed for massive profits has created such an expensive overhead it makes insurance unfordable. The only reason they get away is because there is no real competition to drive prices down.
If the government would compete in the free market it could allow real competition to happen again and lower prices. The government would essentially just need to allow people to invest in a government run insurance fund which operates on a non-profit principal, thus allowing them to offer insurance cheaper than the for profit businesses. With the government offering a non greed driven alternative business would be forced to change their practices to retain their customers from moving to the government plan.
The only difference between our plans seems to be you wish to use the already existent governmental insurance infrastructure to compete, while mine advocates a more of "start from scratch" approach.
The idea of insurance where people reach a mutual agreement to share one another's burdens to prevent the possibility of a single individual having to go bankrupt from a medical bill from an accident.
Posted by Chris Anderson | October 31, 2008 11:52 AM
Posted on October 31, 2008 11:52
I have never understood the rationale behind group rates other than $$$.
I am no more likely to become ill as an individual than I am working for a company.
The uninsured constitute one of the single largest "groups" in the country.
I like this plan but the insurance companies will really scream.
Posted by Ed robinson | October 31, 2008 12:21 PM
Posted on October 31, 2008 12:21
One reason that group rates can be less than individual rates is that group rates suffer less from the impact of adverse selection. Most employees, unless insured through other means (such as a spouse), elect coverage. Some companies even require that an employee who elects to decline coverage under the company group plan have alternate coverage. The tendency for employees to elect coverage is even higher as the employer subsidy increases - and if the subsidy is 100% (i.e., the insurance is free to the employee), participation may approach 100%. Thus, the pool of people insured under the group plan includes the young and healthy as well as the older and less healthy -- and the "per insured" premium reflects this. Also, people who are able to work are likely to be healthier, on the average, than the "average" person - for example, the pool of "average people" includes those who are so unhealthy they can't work and/or who have problems such as substance abuse. People who seek private insurance coverage are likely to be less healthy - not only do they include the people who can't work due to poor health, they tend to be older and less healthy because young healthy people, for a variety of reasons (some rational, some not), are less likely to seek insurance.
Note that small group plans sometimes suffer large premium increases when even a single insured individual has extraordinarily high expenses (such as being in ICU for months and having extensive expensive medical procedures).
Posted by Will | October 31, 2008 1:32 PM
Posted on October 31, 2008 13:32
Why do we need insurance companies at all? Why not have ALL employers/employees pay into an national, gov run health pool. Make everyone pay a $10-$20 co pay and go to any doctor you need. The gov foots the bill out of the health fund. If people had access to preventative care, we would catch problems earlier and people will be healthier overall. We don't need competition between insurers. we don't need insurers at all!
Posted by Di | October 31, 2008 3:56 PM
Posted on October 31, 2008 15:56
Here's the problem I have with mandating that everyone can buy coverage without mandating that everyone HAS coverage. It screws up the risk pool. Most people buy insurance to guard against the catastrophic loss. If you get cancer, or develop a heart condition you know it will bankrupt you so you buy insurance now to cover what might happen later.
Now assume that you can buy that insurance any time, even with a pre-existing condition. Why not wait until you have a problem to get the insurance? People who are currently healthy and at low risk would opt out until they perceive their risk rising to the point where having (not just being able to get) the insurance is profitable. All of these low risk people are the reason that insurance is viable.
It works on the state government level because they insure the entire state government. It works for the military and veterans because they automatically cover them all. It will only work on a national scale when they put everyone in the same risk pool and declare that you have health insurance by virtue of being a citizen.
Posted by Matt | November 1, 2008 10:38 AM
Posted on November 1, 2008 10:38