Health insurance reform certainly is a must. The reason why is the current system requires a much too heavy burden on the people, all the people who pay into the system, while only delivering services to half the population. We pay approximately $2.4 trillion a year in the United States for healthcare, about 16% of our GNP, however, we only cover about 60% of the population. The cost is way too high for something that only works about half the time.
That is the current situation and it will only get worse unless we reform the system of healthcare economics in this country. Clearly the greed factor of the free market is being mismanaged by designed. The truth is, we have half baked socialized healthcare which is proving to only make things worse, not better.
In the current system, we have Medicare, Medicaid and commercial insurance. Medicare and Medicaid are taxpayer supported health insurance plans and commercial insurance is employee supported healthcare. From my prospective, insurance is simply a tax by a different name. You have to have it whether you want it or not in most cases, so you pay for it every week out of you paycheck.
In the current system, though we clearly have more than enough money on the table to cover all the healthcare expenses in this country, however, we are not giving the money to the Doctors and the Hospitals. That is why the hospital and the doctors are quick to remind us all why the bills are so high, because you're paying for your own treatment, and the other five people sitting next to you.
That is because we are giving it to the middleman, the insurance companies, whose publicly stated purpose is to collect premiums and not pay claims as much as possible in an effort to make profit. And under the current system, the commercial insurance companies have the best opportunity not to pay.
If you are a newborn to 18 years old, and are unfortunate to have a terminal health problem, the insurance companies will advise you to get on Medicaid, thereby effectively avoiding paying a lifetime of medical claims. If you are middle aged, you work, pay your insurance premiums for 45 years and as you get closure to the age that you will need extensive healthcare, the insurance company only needs to keep holding you off until you reach 65, then Medicare takes over.
This is the current system and the only people who benefit are the insurance companies who take lots of everyone's money while leaving the most vulnerable segments of the population, the young and the elderly, to be covered by the taxpayers (aka the government).
The insurance companies are generally very successful at this because the business of insurance is regulated at the state level, not the national level. That means the insurance companies have a choice of 50 different states to which they can be licensed in, choosing only those states that best serve their profit motives and avoiding states that cut to heavy into their profit.
I do not see the current healthcare reform bill ever going forward in the Senate. Frankly, nobody wants a Medicare for everyone and it will only serve to create a larger bureaucratic nightmare than we already have. I do believe the insurance business, especially the health insurance business, needs to stay in the commercial sector. However, I also believe that the congress does need to introduce some type of national regulation of the business, just not another gigantic agency to do it.
Frankly, if those in control of Congress want a public option for health insurance, they could simply just have AIG (which is 80% owned by the taxpayers anyway) to sell health insurance to anyone who needs it. That is a practical option that could be done tomorrow since the government ultimately owns the largest insurance company in the world anyway. As the majority stockholder, the Whitehouse could just tell AIG to start rolling out affordable health insurance products starting in the next quarter. The Congress could even consider folding Medicare and Medicaid into AIG, since it is an insurance company, not a government agency, who better than AIG to do the job? AIG is arguably better suited for the job anyway plus, the taxpayers get the benefit of a profit driven company to handle its most expensive government costs. And if AIG starts costing the taxpayers' money, fire the board and hire someone else until they get it right.
However, the regulation of all insurance is really the core of the matter yet it is the least discussed issue in the entire debate. Actually, there was a lot of discussion on the matter earlier in the year on Capitol Hill however the regulation question seemingly was shelved by congress in order to debate the current topic of public health insurance.
As I stated earlier, nobody wants another mega government agency like the IRS or Medicare to regulate the insurance business. What was being proposed and to a certain extent supported by the insurance industry itself, was something along the lines of the FDIC model that is used to regulate the banking system.
This is a good idea in my opinion, though on the surface it would appear that the taxpayers are hiring the fox to guard the henhouse.
If congress chooses this option, here is how it would work.
Much like the Federal Reserve, the insurance companies would setup a system of regional boards in which each insurance companies that wants to business would have to become a member, just like your bank is a member of FDIC. The insurance companies would pay dues that finance the expenses of hiring staff and opening offices. As members, the insurance companies would have to elect a board who effectively write and vote on the regulations by which all the members must follow. This board would also be responsible for enforcing those regulations on each other and just like the Federal Reserve, has the force of law to seize and effectively take over any insurance company that is not following the rules. What is important to understand in this model is the fact that as profit driven entities, the insurance companies are not going to make any rules that would seemingly give one company and advantage over another (including AIG or a taxpayer owned company). That is to say, ultimately the consumer will benefit because in every discussion of a rule, the member insurance company is always going to vote for a rule that allows them to sell a product a dollar cheaper than the other guy. At the same time, it is also the goal of any commercial enterprise to introduce new innovative products in the market place while always trying to put the competition out of business.
I believe this would work on many levels, including tort reform. If we had such a model for insurance, and since the entire insurance industry is built on consumer confidence, the insurance companies themselves would come down on any single member company that appears to call into question the entire industry. If a bad company is not paying claims, the board would swoop in, take the company and some other member would certainly be ready to buy out the offender if for no other reason, to play hero and the most virtuous of man eating monsters the arena. This would undoubtedly defer hordes of lawsuits by consumers because for whatever the reason the insurance company in question is not paying claims, the entire industry will look at it as opportunity to put the competition out of business. Much like the FDIC comes in the middle of the night and takes a bank to insure that bank doors are open the next day for business, but under a different name and management and the assurance to the depositors, their money is safe because the entire industry is standing behind the depositors.
It is certainly not the perfect system of regulation however, capitalism as concept is inherently defective because it is so dependent on so many unknown factors. On the other hand, what better way to regulate something other than the threat of taking your business elsewhere if the consumer confidence is lost? It is that threat that keeps insurance companies in line and paying the doctors and hospitals to assure confidence in the company while watching the expenses and making a profit for the shareholders.