The Elusive “Level Playing Field”

This from my friend DL.

In my view the other essential to a level playing field is contracting. So long as the Feds have the coercive power to impose contracts on providers, there can be no  level playing field.  One way around that would be to guarantee that any contract “negotiated” by the public plan is available to all insurers who participate in that market. In addition to making the private plans competitive it would prevent (politically) the public plan from underpaying since providers would not be able to cost shift to anyone.

Thanks DL

Perhaps the publication of any negotiated health provider or health insurer contract – i.e. total transparency – would have a similar effect.

SMF

Re-insurance: Ups and Downs of the Attachment Point

From my friend, CK:

In reinsurance, the attachment point is the dollar level above which the reinsurer takes over. For instance, if a policy has reinsurance at a $500,000 attachment point, when/if the policyholder’s claims get to $500,000 in a year (usually calendar year) they are not paid by the underlying insurer but are paid for by the reinsurer.

Limiting the insurers risk like this lowers the premiums they need to charge to the insured. Buy they still need to pay for the reinsurance policy. Usually a per policy per month premium. This is added to the cost of the insurance.

Reinsurance is typically sold to self-insured employers who need to protect themselves from catastrophic risk. All a numbers game. Sometimes reinsurers also reinsure themselves.   They take the risk from $500,000 – $1,000,000 and over $1M another reinsurer takes over. There’s a charge for this of course.

There are those in the industry who feel that the government only needs to reinsure the private sector insurers at a low enough attachment point and this will in itself solve much of the un and under insured problem. In theory, private insurers would then price their products lower thus providing additional access by virtue of lowered premiums.

I haven’t seen this served up or studied for impact, but it is a thought and seems simpler than some of the other reforms that are more comprehensive. But I wonder if the insurance companies would only pocket more profits. Thus the need for a public option, I think — the competitive model.

My thanks to CK

Let’s get this right

There are definitely weaknesses in the newest reform bill to pass the House of Representatives.  Many would prefer to see stronger regulations on insurers.  Among them is Dr Marcia Angell. 

http://www.huffingtonpost.com/marcia-angell-md/is-the-house-health-care_b_350190.html 

I don’t have anything against the tightest regulations possible, but I don’t really believe they’d be effective.

I, like Dr. Angell, am happy to see some kind of reform, but wish it were different.  Dr. Angell couches many of her concerns in terms of Medicare.  I’d couch many of mine in terms of market incentives. 

I suspect she wishes for tighter regulations placed directly on insurers.  I’d wish for a stronger, more independent public option that provided low administrative costs and competition that insurers couldn’t escape.

 

My point of view is that if regulations can be placed on insurers during one administration, they can be removed during another. 

So I’d prefer a system set up to work regardless of which party controls either Congress or the White House.  (Which brings us back to re-insurance as a means of assuring that the public option remains independent and sustainable.)

 

So I think I understand Dr. Angell’s point of view, but if I do, then we differ.

 

Sel