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Life Health > Health Insurance > Health Insurance

On the Third Hand: Insuring insurability

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To me, it seems as if one of the problems with efforts to talk calmly about health reform is that what people call “health insurance” is really a collage made up of at least six drastically different types of insurance coverage.

Of course, there are a few readers here, and more elsewhere, who think that the government, or a government equivalent, should oversee all health finance, because, from their perspective, setting up any kind of fair, rational health care market is impossible.

Those folks would argue that, in practice, sick people have little ability to understand what surgeons want to do, let alone bargain with surgeons, and that the idea of dumping sick people on the sidewalk simply because they cannot afford to pay for care is absurd, monstrous, and cruel to any healthy people who happen to have to use that sidewalk. 

We have a lot more readers who think that just about any government interference in the peacetime health finance system leads to such horrible bureaucracy, market distortions and general idiocy that the interference ends up making just about everyone — even sick, low-income people — worse off than they probably would be if the government would just leave everyone alone.

In practice, it seems as if most health insurance agents and most trade groups have accepted the idea that Medicare, Medicaid and related government health programs are here to stay. The question is how much the government should do, for whom, for how long, and with what other person’s money.

The “health insurance” that we talk about really includes:

  1. Cheap preventive care that has very obvious value and, in some cases, helps keep other people from getting sick. Or, at least, reduces the likelihood that other people will have to choose between paying for expensive long-term care programs, setting up Soylent Green processing centers, or dealing with horrifying sidewalks. This category includes childhood inoculations, flu shots, giving pregnant women good prenatal care, and giving adults blood pressure checks advice to eat right, exercise more and stop smoking.
  2. More expensive preventive care, and care for routine aches and pains. Sore throat care and sore elbow care.
  3. Chronic medical care for conditions such as arthritis, diabetes and Parkinson’s disease, which, in some cases, may be preventable, but, in many cases, will seem a lot more preventable to the people who are free from the conditions than to the people who do have the conditions.
  4. Care for big acute health problems, such as broken elbows, that may lead to $50,000 hospital bills, but not the kind of bills that has anyone talking seriously about rationing care. I just don’t see much pressure to ration access to broken elbow care.
  5. Catastrophic medical care, for heart attacks, cancer and organl transplants. 
  6. Protection against loss of insurability, or having a child who is uninsurable from birth.

The Patient Protection and Affordable Care Act (PPACA) now requires health insurers to provide first-dollar coverage for a number of services in the first category. I think that change is here to stay. People are complaining about the decision to put birth control pills in the “must cover” category, but no one is sending me press releases complaining about the requirement that plans cover blood pressure screenings.

PPACA will probably increase what typical, well-insured consumers pay out of pocket for routine sick care and for preventive services not in the official PPACA preventive services care package, by encouraging employers that now offer rich benefits to water down their benefits.

PPACA could have either good or bad effects on the cost of chronic care, ordinary big acute care and catastrophic care, depending on whether providers take care coordination seriously or just use it as a tool to stick it to the insurers.

Where PPACA could shine — even if it doesn’t work all that well in other ways — is in insuring insurability.

The fatal, absurd flaw in current commercial health insurance products is that they’re designed to lapse when the worker paying for the coverage really needs the coverage.

Example: I belong to a group health plan. There’s no possible way I could afford to buy my own individual health insurance plan right now. I do have disability insurance, but, even if I became sick enough to have a hard time paying to continue my health insurance, I might still have a hard time qualifying for disability benefits.

In that respect, PPACA World looks like heaven. Coverage might keep getting more expensive, and it might not work all that well, but at least I could still have coverage (such as it becomes) when I someday get sick.

Of course, COBRA, the Health Insurance Portability and Accountability Act (HIPAA) and state non-cancelability and portability mandates provide a little bit of insurability protection, but clearly not enough, and not in the kind of straightforward form that would give healthy coverage buyers or new group plan enrollees a realistic idea of what the rules will be.

In PPACA World II — the world after PPACA World I, when health policymakers look to see which PPACA World I ideas worked and which didn’t — will there be some way for the policymakers to save the concept of insuring health insurance insurability?

It hit me when I was thinking about this that early National Underwriter readers found a great answer to a very similar problem about a century ago.

They invented whole life insurance.

Whole life insurance is based on the idea that people ought to be able to buy and keep life insurance for just about their whole lives, even when they’re extremely old, and even when they get sick and turn out to need life insurance. Because, seriously, you don’t need life insurance all that much when you’re healthy; you really need it when you’re old and sick.

On the one hand, what’s funny about whole life insurance is that, of course, it makes no sense to young people who feel as if they’re going to live forever and just kind of vanish at the age of 50. Why, a young parent asks, would people need any life insurance once their children are through college?

Many consumer group reps are young people, and, historically, they really hated whole life with a passion. I’ve accumulated a small library of books by consumer advocates about how horrible whole life is.

On the other hand, whole life is all about insuring insurability. Now the consumer advocates want us (understandably) to insure health insurance insurability.

On the third hand, when the PPACA World II talks start, maybe one item on the agenda ought to be to bringing a bunch of experts on whole life out of consumer advocacy exile to ask them, respectfully, with an open mind, how you go about insuring insurability.

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