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After Repeal: A Common Sense Alternative to HCR

By: mschmitt (Diary)  |  March 25th, 2010 at 10:41 PM  | 

RESIZE: AAA

Note: I began this post as a response to CSUFBomb, who is insured through his former employer, has a serious condition, and is worried about losing his benefits once his COBRA runs out. I thought I’d share it as a diary.

…

As we embark on the road to repeal, much discussion has been raised over what the Republican replacement should look like, how we should educate the public on how pre-existing conditions should be handled, etc.

I think I’ve come up with a solution that is pro-market, will actually reduce costs, and — most importantly — will not usurp any individual rights of the people or make the public, insurers, or doctors beholden to the invincible pen of a faceless Washington bureaucrat. Of course, this idea is not totally original (and hopefully, as I claim, mostly common sense); but I think and hope that it condenses the main conservative requirements for health care reform in as few words as are required.

My health insurance reform has four fundamental planks:

1. You (the individual) are free to negotiate any contract you like with any health insurer; in state or out of state, with any coverages you and your insurer agree to.

2. The government will enforce the agreement — as it should in any case that a dispute between two civilian parties arises.

3. The insurance takes effect at the time of the injury/illness and has permanent effect. That is, if you are insured against an illness, and you get that illness, your insurer will cover any and all current and future effects stemming from that illness (within reason, as determined by the courts).

4. Loser pays (tort reform).

That’s it. Even with all the legalese, this reform could be made to fit on a 3×5 index card, and — I believe — solve all of the bemoaned inadequacies of the current health insurance system.

Point 1 implies, first of all, that a private insurer will not be required to cover any individual condition. If they choose not to cover it, the government will not force them to. If you choose not to purchase coverage for it, the government will not force you to pay for it. The first point also allows for individuals to associate themselves for group coverage in any way they see fit.

If, for whatever reason, you don’t like the terms negotiated by an insurer, you are free to take your business elsewhere, anywhere. Any insurer who is too limiting in the list of coverages they provide will find themselves quickly losing market share, so this is a free market solution to providing the types of medical coverage people actually need and want.

However, no private party should ever be forced by a government agency to enter into a contract with another private party, particularly at a guaranteed financial loss.

Point 2 and 3 together speak to portability: if you change companies or decide to fire your insurance company, any future insurers will not need to cover your pre-existing conditions, because your previous insurer already is.

Consider this: imagine you are in an accident which damages your vehicle and your back. Assume it takes 1 week to fix the car and 10 years to fix your back. If you decide to change auto insurance a day later, you do not expect your next auto insurer to fix your broken car — it was damaged while the previous policy was in effect. Why should you be shackled to purchasing coverage from the same health insurer for the next ten years to get your back fixed? Of course you shouldn’t — you already paid for that coverage, that injury already occurred, and at this point, there is no more insurance of any kind — simply the assurance that you will receive what you already paid for and collected on.

I would go so far as to say that you should be able to drop your “injured my back in a car accident” coverage the next day as well (if you actually wanted to); it wouldn’t change the fact that you were insured at the time the injury/illness occurred.

The benefit of Point 3, what (perhaps) makes my reform unique from other ideas out there, is that it enables companies to continue to provide health insurance as a benefit, should they see fit to, because if you decide to leave the company at a later date, you are not limited by any medical conditions you may have developed.

Anyway, please let me know what you think. The argument for coverage of pre-existing conditions is a compelling one, and I think this could provide a totally conservative and easily understood alternative.

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COMMENTS

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  • mikerazar

    We have to indicate how we can keep the popular features of the by passing a short, to the point, substitute.

    I recently posted some thoughts on that which dovetail nicely with your ideas.

    http://www.redstate.com/mikerazar/2010/03/21/why-does-catastrophic-insurance-get-such-a-bad-rap/

    • mschmitt

      Most people could make out much better with catastrophic-only coverage and a health savings account — and in any kind of sane reform, those types of solutions shouldn’t be banned (so of course they are in ObamaCare, at least as far as I know).

      However, where we disagree is that I don’t think that the government should in any way be responsible for providing that “coverage”. If people don’t want to buy insurance, and end up with an expensive ailment, then let the government provide a safety net as an entitlement/welfare — but that should not be conflated with insurance.

      Furthermore, to my way of thinking, the way that safety net would work best is simply to facilitate loans to health care providers which would allow people to make payments over time at lower interest rates, not simply to absolve them of their decision to not purchase coverage on the taxpayer dime.

  • rascott

    I see with this is that medical issues are not that causal. If someone has colon cancer and has coverage, yes, they would get the initial treatment, and the doctors could say yes we got it all and you will recover. Of course studies would show, that these people would be at a much higher rate of a cancer recurrence. Actuaries from insurnace companies are sure to include that when you go get your “new” policy a few years down the road. But who picks up the tab if cancer returns in your pancreas?

    Was that pre-exisiting? Should insurance company 1 cover that? This is very simple example. In realitly there are correllations with a disparate amount of other diseases which you become more vunerable too. This is the inherent flaw with your plan.

    • mschmitt

      If you, an individual, are at a higher statistical risk of requiring medical care, then an insurance company should have every right to consider that risk when determining whether they want to insure you.

      I make that calculation every time one of my relatives asks to borrow my car. The fact that they may need the car does not entitle the government to force me to loan it to them.

      If it is really a matter of ambiguity as to whether a second cancer is relapse or unrelated, then let the courts decide — otherwise it should not be difficult for a medical professional to distinguish complications from really bad luck.

      And, by the way, your premise — that the insurance companies would automatically put the screws to anyone who ever had illness in the past — is not compatible with the free market. The market is self-correcting, and there would be no shortage of new insurers standing by to provide services for people who happened to be undergoing covered treatments for an illness.

      The sad truth is, some people do become ill through no fault of their own and with no means to provide for their own health care. This is where a government safety net can be applied — though (as I said before, the safety net should provide a way for them to obtain the care, not the care itself for free).

      Our individual desire to help people in need should be expressed in the form of charity, and does not entitle us to enforce our will (at the point of a gun) upon another individual, in order to force them to somehow alleviate our guilt.