...If enacted, exchanges and co-ops offering a small public option will only raise hopes for reform that will never come, and are therefore a cop-out for those shaping this year’s reform attempt. Here are just some of the many reasons that health insurance exchanges are bound to fail:
- H. R. 3200 restricts access to coverage through the Exchange to individuals who are not enrolled in qualified or grandfathered employer or individual coverage, Medicare, or Medicaid (with some exceptions).
- The public option will not be implemented until 2013, or perhaps only until private plans have been shown not to save money ( the so-called “trigger”).
- Because of its relatively small market share, the public option will not have enough market clout to counteract the practices of private insurers, and will become the only option for sicker people with higher-cost care.
- There are almost no restraints on insurance premiums in any of the proposals; an amendment by the House E & C Committee limits premium increases to no more than 150 percent of the annual percentage increase in medical inflation, and provides exemptions if this would “limit a health plan’s financial viability.”
- In order to avoid competition, the insurance industry has successfully lobbied to prevent premiums for a public option to be much lower than those of private plans.
- There are no good examples yet of successful exchanges. California has 15 years’ experience with an exchange, and it has been a failure. A July 2009 Issue Brief by the California HealthCare Foundation details its problems and demise. It was initially intended to “provide an easy to navigate single point of entry where people could go to choose among several health plans, reduce the cost of coverage (using three primary mechanisms: reduce administrative costs by achieving economies of scale, command lower prices, and foster market competition), and enhance portability of coverage.” None of those objectives were achieved.
Instead, the California Exchange achieved few administrative efficiencies, lacked pricing power, and was burdened by adverse selection of sicker enrollees. Private insurers gamed the system and loaded up the Exchange with people with more expensive illnesses. Despite large start-up funding, the experiment was unsustainable, and was shut down in 2006.
If we would only pay attention to history, we would know that co-ops will fare no better than exchanges. Many co-ops were started during the 1930s in the years of the Great Depression, only to fail in most instances despite initial government subsidies. Most of these co-ops never reached sufficient size to either become financially viable or to counteract market problems. Only a few have succeeded over the years. An excellent example is Group Health Cooperative in Washington State, which today has some 600,000 members in an effective integrated health care system. But despite its reliance on salaried physicians in a large well-managed group practice, it still has to compete against its competitors and has almost as much trouble containing costs. Group Health today has only a 9 percent market share in Washington State. It has increased its premiums by an average of 12.3 percent a year since 2000 (four times the rate of inflation), and is raising its premiums in 2009 by 13 percent (compared with 17 percent by Regence BlueShield).
http://pnhp.org/blog/2009/08/17/exchanges-co-ops-and-cop-outs-on-health-ca
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
