Dr Greenberg does, however, make one somewhat valid point (making him 1 for 5, not exactly Hall of Fame material): if all plans were individually owned, there’d be increased competition, and more efficient benefit usage. For more on this, see the posts on “Catastrophic vs Insular.”
Of course, he then goes on to break his one-point winning streak with this gem: “Individuals might belong to a health care plan for many years or decades.” Why? Oh, because plans would have an incentive to “invest in a person’s health.”
He’s kidding, right?
Carriers are impersonal, corporate entities which are designed to generate a profit for their shareholders. They do this by offering reasonable plans, at reasonable prices, for a reasonable time. Eventually, though, rates begin to climb (regardless of whether employer-based or individually owned), and adverse selection takes over. There’s also attrition due to age, family status, heck, where one lives. I would have expected to see this silliness from Paul Krugman, maybe, but a supposedly serious economist?!
Perhaps the most egregiously stupid idea put forth by Dr Greenberg is his Earned Income Credit Model of health care: in order to levelise the playing field for those with severe or chronic conditions, or advanced age, or maybe being pregnant, Dr G proposes a “risk-adjustment payment based on age, gender, disability, or prior hospitalizations.” In other words, government subsidized health insurance. Didn’t we already reject this idea?
So, his solution is to remove one 3rd party (the employer) and replace it with…wait for it…another 3rd party (the government). But it was the government’s tax policy that created the “problem” in the first place. So we’re back to square one, right?
Not exactly; now we’re actually behind the curve. That is, we’ve substituted one somewhat-inefficient 3rd party payor with a substantially-inefficient one. By putting the government in the position of subsidizing health plans, one guarantees that the cost of those plans will increase substantially (cf: college tuition).
Thanks to Dr Ford for bringing this interesting – if flawed – article to our attention.
In a free market system (which health care is) very few people stay with the same carrier for any length of time. An exception of course is an employee covered by the same employer plan (although not necessarily the same carrier) for many years.
ReplyDeleteEmployers, small ones (fewer than 100 covered lives) in particular, rarely stay with the same carrier for more than 3 years. Some move every year.
This is not because of loyalty or a lack thereof. Carriers do monitor client accounts and blocks of business. If a client or block is losing money 2 years running the carrier finds ways to move that account off their books . . . usually with a significant renewal rate action.
Same is true for individual coverage. The exception here is, carriers do not single out one individual for renewal action reflecting either good or bad claim experience. But carriers do cycle through their book and every 3 - 5 years attempt to purge the book of the "bad" risks.
I have to agree with your assessment in that, there is nothing to indicate a carrier and an individual client would live happily ever after in a committed relationship.
.
ReplyDeleteI think that's why this article set me off. It's as if he's thinking: "Well, I'm an economist, and I've studied the economic factors in an economical way, and ah-ha!, I've found the economic answer."
But in the real world, folks rarely act in a way that reflects anything like the behaviors he's anticipating.
And you're right, of course, about retention: I have a handful of clients who've stayed with a given carrier for more than a few years, and most of those have upgraded to other plans the carrier offers, so that's a new book (of business), too, belying his whole thesis.
Argh!
Thanx for your insights!