leashyourkids wrote:
Yeah, they're basically TPA's or brokerages.
But even if they did retain the risk themselves, don't you agree they would add very little value? As we discussed, the consumer just gets a buffet of unlimited services, and the TPA's/insurers have no incentive to really monitor it. They also have no way of differentiating the premiums, so their underwriting is of little value. It'd be like everyone paying $1,000 a year for their home insurance, whether they were insured for $50,000 or $50 million. They really add nothing other than more cost in an already costly process.
Yes, TPA's are the proper way to describe the situation. I have thought a lot about what a well designed system would look like,
if we wanted to keep it private. Since every other major country has some form of public health insurance that may not be possible. I'd say the majority consider health care access to be a right, so as a public policy matter, the government has to provide health care for all.
The first problem our system has is the legacy of employer provided health care, which originated during WWII price controls. Employers offered it as a way to attract employees since they couldn't offer higher pay. Employer provided health insurance makes no sense. No other insurance is provided this way. When someone loses a job, they lose their income stream and health insurance at the same time.
By having employers subsidize the costs, the users are protected from the true cost of health care. It has led to the over use of services, the lack of price competition, and unhealthy lifestyles. The fat diabetic slob in your office pays the exact same rate as the salad eating marathon runner. Where else in life do you consume services where you don't know the cost and don't see the bill for 30 days? Heck even in a car repair shop, they give a cost estimate before they do the work.
If people acquired health insurance the way they bought auto insurance, you would be more careful with your health. You would have to pay first dollar expenses until you had a chronic or catastrophic situation. You would ask about the cost of services because it's coming directly out of your pocket and will effect next years premiums. After an auto accident, I think the natural reaction is, "crap my rates are going to go up.".
Now the question you might wonder, is what do we do with the sick/pre- existing conditions? The P&C markets already address this state by state. Some states have an insurer of last resort (residual market) that is state administered and funded by premiums and the industry. Other states have a take all comers model. There are market based solutions to this problem. For poor people that can't pay, then you either have a Medicaid set-up or provide them with a pot of money to acquire private insurance.