Democrats & Liberals Archives

National Insurance Exchange is the Key

We have had a blistering August with hard-right crazies raging against what they consider a government takeover of their Medicare and their healthcare. All this rage because of their fear of the so-called “public option.” Liberals reacted with dread to the possible loss of what they considered the most important part of the healthcare plan.

It's not. I was one of those who insisted that without a "public option" there would not be any reform. But after much reading and ruminating about it, I have come to the conclusion that we are focusing on the wrong part of the system. By merely forming a "public option" we do not introduce competition. With the power they have, the insurance industry could make this public entity weak, either during legislation or after implementation.

No, we need to legislate better regulation, the kind of regulation that would cause individual insurance companies to compete strongly among themselves. For that we need a robust National Health Exchange System.

In current legislation there is a requirement for health insurance exchanges where consumers may go to find about and apply for different health plans. This is an excellent place to set standards, enforce regulations and work for overall cost reductions.

A robust Health Insurance Exchange System could be the answer we seek for solving our major problems:

  1. People's Unhealthy Lifestyles - Eating junk food and doing little exercise are responsible for the vast majority of heart attacks, cancers and other chronic diseases. An Exchange Systemcould disseminate information through articles, discussions, broadcasts, websites, support groups and through individual consultations

  2. Inefficient Health Providers - We are cursed with a system based on fee-for-service, excessive testing and excessive specialization. We pay for procedures, not for healthy outcomes. An Exchange System could produce comparisons based on evaluation studies and apply incentives to encourage payment for healthy outcomes.

  3. Overlording Insurance Companies - They run roughshod over patients, contradicting health providers and denying patient services. They are infamous for refusing coverage for preexisting conditions, dropping coverage after a patient gets sick, and for long term caps on coverage. They act as health-system dictators. An Exchange System can correct these conditions, offer consumers choices and assure competition among insurers and providers.

A National Health Exchange System with teeth is the key to keeping people informed, making health providers more efficient and supplying much needed competition within the healthcare field. A powerful Exchange System will over time bring healthcare costs down substantially. At the same time it will expand the quality of care and bring it to all Americans.

We don't need the "public option" to bring about competition. A "public option" would need to compete against a whole industry to which federal anti-trust laws cannot be applied (See McCarran-Ferguson Act.) A strong Exchange System could be designed to produce competition among the insurance companies themselves. Steven Pearlstein of the Washington Post agrees that we should drop the "public option." He has a list of 9 healthcare requirements:

-- Universal coverage. Finally, a requirement that every American purchase a minimum, a basic health insurance plan.

-- Insurance exchanges. Each state or region will set up government-supervised insurance exchanges through which private insurers can offer policies to the uninsured, the self-employed and small businesses. Coverage standards will be set nationally, and participating companies must agree to take all customers, regardless of pre-existing conditions, at rates that vary only slightly by age.

-- Options. Among the options would be lower-cost, high-deductible plans long pushed by Republicans. Another: nonprofit insurance "cooperatives" set up by participating hospitals and physicians groups offering an alternative to traditional fee-for-service medicine.

-- Low-income subsidies. Households with incomes up to 300 percent of the poverty line would be able to buy the average-priced basic plan through the exchanges for no more than 15 percent of pre-tax income, with the balance paid for by the government.

-- Employer mandate. All businesses would be required to pay for at least half of the cost of a basic insurance policy for all workers and their immediate family, or pay the government a progressive tax on payrolls over $250,000, exempting the smallest businesses. While distasteful to Republicans, the mandate would level the competitive playing field among firms that now offer health insurance and those that don't, while generating revenue to pay for premium subsidies.

-- Tax on extravagant health plans. A tax of 25 percent would be imposed on health plans with an actuarial value of $10,000 for individuals and $20,000 for families, indexed to inflation. While distasteful to unions, the measure is designed to raise revenue for subsidies, make patients more cost-conscious and help force down insurance premiums.

-- Malpractice reform. A federal cap on punitive damage awards in cases where physicians adhere to evidence-based medicine. It's useful in lowering malpractice premiums and reducing defensive medicine and crucial in winning political support from doctors and Republicans.

-- Cost containment. Every two years, a panel of independent health experts would propose a package of structural reforms and reimbursement rates to keep spending growth of Medicare and Medicaid in line with growth in national income. The entire package would be subject to an up-or-down vote by both houses of Congress and veto by the president.

-- Rationing. The bill will provide funding for stepped-up research into the relative effectiveness of different treatments, along with the promise that the results would not be used as the basis for denying coverage.

Instead of the "public option" Pearlstein has Insurance Exchanges. Later he refers to cost containment. But we need more. We must have an Exchange System that works on every angle that may improve the healthcare cost/benefit for each American

A powerful National Insurance Exchange System can do more than any "public option" to improve health and decrease healthcare costs. Let's drop the "public option" that so many people dread and work to make the National Insurance Exchange System as strong as possible. Perhaps it will quiet the crazies a little.

Posted by Paul Siegel at August 30, 2009 2:17 PM
Comment #287131

— Malpractice reform. A federal cap on punitive damage awards in cases where physicians adhere to evidence-based medicine. It’s useful in lowering malpractice premiums and reducing defensive medicine and crucial in winning political support from doctors and Republicans.

Couldn’t agree more. This is great! I can get behind this.

If the rich have enough money to pay more taxes in the vision of our current Congress and President, then we should prevent attorneys and citizens from making crazy amounts of money off of malpractice cases.

I still don’t understand how we can increase the denominator (total insured) without increasing the numerator (total health care professionals, esppecially general practitioners). Will the incentive be there for new people to join the ranks of professional medicine? Or will the incentive be there for medical professionals to go where the money is? Perhaps somewhere else in the world and medical vacations will pick up.

Posted by: Edge at August 30, 2009 4:21 PM
Comment #287164

How do insurance companies deny service? I’ve gotten EOBs where they have said they won’t cover certain procedures under the policy, but they have never denied me the service. On the occasion where this has happened to me my doctor either adjusted the code, gave me the recommended alternative, or gave me a deal on the procedure since I was paying out of pocket.

I do have an uncle who is in very bad health with cancer. He was told his insurance wouldn’t pay for an experimental procedure, and he comtemplated going over to Europe to have it done (ultimately he decided against that). If experimental procedures/drugs are the issue isn’t that more a problem with the regulatory approval process?

Posted by: George at August 31, 2009 11:00 AM
Comment #287166


Move toward a non-profit formation of incorporated hospitals and clinics, and I will get on board with capping malpractice suits. However, as long as for profit health care delivery corporations can make a profit through malpractice, I won’t back malpractice caps.

Malpractice suits without caps is a real deterrent to corporations motivating doctors to work 12 hour shifts in surgery and pushing through patients as breakneck pace that cuts short vital communication between patient health care provider. I don’t want that deterrent removed UNTIL the profit motive to bad practices has been removed.

Posted by: David R. Remer at August 31, 2009 11:16 AM
Comment #287170

Edge, a friend some years ago, had a stroke, leaving without communication skills and a host of consequential medical issues as a result. The insurance co, paid for his immediate stroke treatments. Then, seeing that his treatment plan called for years of rehabilitation to learn to speak again and control parts of his body, they promptly cancelled his policy as too expensive and exceeding their caps on catastrophic long term care.

His only recourse was Medicare. I lost touch with him, and don’t know what his progress has been. But, millions of Americans over the years have experienced the same situation, if they paid into Medicare/Medicaid. And then there are those who didn’t pay into the Medicare/Medicaid system.

You are right to raise the question about regulatory approval process and liability of practitioners in employing experimental procedures. Which is why the Indian tourist medical industry is booming. Those who think we are going to forever be able to import doctors and nurses are blind to the realities taking shape.

Why would an Indian doctor choose to emigrate to the U.S. to be a doctor when they can live as high a quality of life in India as a doctor and remain close to family and friends and culture they are familiar and knowledgeable of? The legal environments there are more favorable too, allowing doctors to take risky measures without legal consequence when all less-risky measures have failed. Of course there are many unanswered questions surrounding their review process.

But, we in America should be looking to establish peer review courts, staffed by a judge and panel of retired medical professionals, to pre-screen potential malpractice suits and eliminate those without merit or, bases so weak and indefensible, as to do more harm to the health care system patients than good, if upheld.

Posted by: David R. Remer at August 31, 2009 11:33 AM
Comment #287192

Please read the article on our screwed up health care system in this month’s Atlantic Monthly - online at I will try to briefly summarize the important points as I see them, but I fear I won’t do as good a job as just reading the article directly. It is quite long and involved, because, let’s face it, this issue is complicated, but it deserves a good, hard, long look by thoughtful people.

The author’s elderly father died from an infection he got while in the hospital for pneumonia. His grief led him on a path to try to understand what is wrong with the system, and I think he is onto something basic and very big.

The current debate about including or not including the public option isn’t addressing the deeper problems. A much more basic problem is that the consumer of health care services isn’t at the center of the system. We (the consumers) don’t know, and in many cases, don’t care, what the prices of various procedures are because we, who are lucky enough to have insurance, pay a fraction of the price. Why don’t we see significant reductions in prices based on technology improvements, like in every other industry? The improvements in technology in the medical field are incredible, but prices never seem to go down. The author gives an example where he notes that his MRI costs $1200 for a 20 minute procedure, when in fact it is a “20 year old technology, requiring a little electricity and a little labor from a single technician and a radiologist. Why was the price so high? Most MRIs in this country are reimbursed by insurance or Medicare, and operate in the limited-competition, nontransparent world of insurance pricing…” He goes on to show an example of how a medical procedure that isn’t covered by insurance, Lasik eye surgery, has come down drastically in price in the past ten years or so. His point is that the prices in a competitive environment will tend toward the marginal cost of the procedure, which is relatively low. But our current system of insurance pricing never allows market forces to work, and expanding coverage to all citizens, as we must do, will bankrupt us with this kind of pricing system.

The answer is to use insurance for what it is normally intended for - true catastrophic situations. Routine care should be paid out of pocket by the citizens -govt subsidies could be provided to those who can’t afford basic care. Once people are paying for their actual health care procedures out of their own pockets, the provider, who will now depend on the consumers for their revenues (and not medicare or private insurance), will have to be responsive to the consumer and prices will come down.

Our perverse system has had the effect of raising prices across the board so that one needs insurance just to be able to get basic care. This is a tragedy, and doesn’t need to happen.

We probably can’t move away from the current insurance system immediately - the author suggests that it may take a generation, but we need to start now to reset the system on a course that is sustainable over the long run.

Posted by: Greg Bradley at August 31, 2009 1:38 PM
Comment #287648
We (the consumers) don’t know, and in many cases, don’t care, what the prices of various procedures are

Not true at all. Everyone that I know of gets an explanation of benefits when payment is made to the provider. This almost always (I haven’t seen one that doesn’t) shows the actual charge, what was written off as part of the agreement between the provider and the insurance company, what was actually paid to the provider and what the patient owes. They are there for everyone, with the exception perhaps of medicaid (I don’t know if it does or not). This also is true for Medicare, I know because I went over my parents’ with a fine tooth comb.

The idea that patients can “shop” for health services sounds fine on paper, but not practicable in the real world. Where I live there are few doctors, so few choices. And the fees are decided at some corporate headquarters elsewhere in the state, not locally.

Posted by: womanmarine at September 7, 2009 12:28 PM
Comment #288321

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Jenifer Levis

Posted by: Jenifer Levis at September 19, 2009 7:09 AM
Comment #301567

In current legislation there is a requirement for health insurance exchanges where consumers may go to find about and apply for different health plans. This is an excellent place to set standards, enforce regulations and work for overall cost reductions.

Posted by: rose at June 3, 2010 6:20 AM
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