Tuesday, September 22, 2009

The Quandary

I originally developed the model of the Medical Savings and Loan as an internal reform for insurance companies. My belief is that reform would best be done by an internal change within health insurance companies rather than the creation of an artificial exchange.

If people had equity in their health accounts, owned their claims experience and owned their medical records; we would solve every single one of the major complaints about the status quo.

Restructuring insurance companies along the lines of the medical savings and loan would create a paradigm where we could separate out those people able to self finance care from the small number of people who legitimately need outside assistance. This would help streamline charitable efforts in health care.

Simply reforming the mathematical model of health care (making it focus on the lifecycle of the individual instead of the make up of the group) suddenly solves the problems of health care.

The reform I wish to see could happen if one removes the tax advantages given to pooled insurance and if a few pioneering companies made the decision to switch from insurance to the medical savings and loan.

If I am correct, switching plans would decrease health costs and increase employee satisfaction; thus, giving the companies making the switch a sweet competitive advantage. A sweet competitive advantage would cause competitors to rush to follow the trend or lose employees and market share to the cutting edge competition.

The reform could take place internally within a health plan. However, the reform would have one major effect. The Medical Savings and Loan shifts year to year fluctuations in health care spending onto the policy holders. The current paradigm calls this natural fluctuation "risk." Insurance companies make outrageous profits by selling this risk.

Switching from the pooled insurance model to a medical savings and loan would eliminate the lucrative trade in risk. Insurance companies would see a sizeable drop in their profits. All of the profits made by "assuming the risks" of the group would be internalized in the structure of the Medical Savings and Loan.

Switching from pooled insurance to the Medical Savings and Loan model would transfer billions of dollars from rich insiders that benefit from the pooled insurance model.

Much of the outrageous profit from the status quo goes directly into campaign donations … primarily to members of the Democratic Party.

I am left in a wilderness here.

The reform could be done internally at insurance companies. The improved model would end up giving substantially better care, but would decrease profits.

There is zero chance that the Democratic Congress, which is owned lock-stock-and-barrel by big insurance, would approve a law encouraging a system where individuals owned their health care resources. Big insurance would dislike anything that decreased their substantial power base.

The program could be forced by a collective of small businesses looking for a way to give their employees health care resources, or by a few big businesses tired of the abuse of big insurance.

Since the easiest way to create the medical savings and loan would be to reform an existing insurance company, I've been left in a quandary about whether I should present it as model in opposition to existing health care companies or to present it as a way to improve the companies from the inside out?

I do not hold the view that insurance people are evil. I believe that they are driven by a desire to do what is right. However, I also understand the impediment that profit motive can work to our detriment and realize that the power brokers who have their lives invested in the pool model will not take lightly to the idea that health belongs to people and that people should own their health care resources.

No comments: