Health Insurance

[paintitredinHC]

Originally Posted by PeterG

Key in Mass is that almost everyone has insurance, so the sick do not push up the rates as much as they would if they were the only individuals buying.

I'm inclined to agree with Pete here.

As a right leaning professional in the industry - The individual mandate is the linchpin to the entire concept of RomneyCare/ObamaCare. RomneyCare did a better job than ObamaCare in enforcing the individual mandate which is why it has been more successful in MA.

I'll try to elaborate... 50% of Healthcare costs are driven by just 5% of the population. In short, there are healthy people and very sick people. The very sick people are often older, uneducated and indigent. The healthy people are forced to subsidize the sick. The question is, how do we do that?

Option 1: ObamaCare
Make everyone pay in and charge a fine if they do not comply - everyone has skin in the game. The premiums charged for the healthy people pay for those that actually use healthcare services. The problem is that the fine for the individual mandate under ObamaCare was too low and young/health/hard right leaning individuals refused to participate. As a result, insurance companies lost a lot of money because they had a lot of sick people using services and no way to pay for it. Insurance companies won't get burned again so premiums are growing. From an insurance companies perspective, they don't like uncertainty, and the only way to mitigate that risk is by charging more.

Option 2: Single Payer System (Universal Healthcare)
Make everyone pay in via higher taxes. Same idea as above - healthy pay for sick/poor etc... The problem here is the disconnect in the public conscience between money coming out of their pockets via taxes and what that affords. Without skin in the game, there is little incentive to shop for cheaper services, drive competition and pursue healthier behaviors. The end result higher costs overall. I should note that there would be some cost savings via simplified back office/billing.

Option 3: Pre-ObamaCare Insurance market:
Sick/Poor patients go without insurance or join Medicaid. They are still going to show up at the ER. The hospital will treat these patients (legally required), but are not going to just chalk that up as bad debt and walk away. They will charge higher costs for commercially insured patients who can pay, thereby offsetting the losses via cross subsidization. Think $10 Advil on your medical bill.

Option 4: Complete Fee For Service
If you can afford it, you can have it. Competition abound and prices drop! Survival of the fittest. But could you live with yourself?

This is complicated and there are no easy answers.