If you guarantee customers, we'll ease higher charges to the sick

On March 24, an article appeared in the Washingtonpost.com "Insurers Offer to Soften a Key Rate-Setting Policy" by Robert Pear. You can go to the original at washingtonpost.com. If nothing else, insurers are starting to come clean: It's about the money.

The old managed health care model emphasized the power of groups in health care as they exchanged discounts for larger membership guarantees. Just like any other group rate, participants benefited in terms of cheaper costs for larger numbers. This is why the go it alone attitude sold to Americans has been a loser from the outset, a loser for consumers. Still, wrapping it in the American flag as empowerment, individuality, and consumer choice, this trend is not dead yet. But as more and more people are faced with living the "dream" of independence as employers cede to greed, and insurers who offer these group rates to unions, and most notably to those in governmental civil service jobs while making up their cheaper rates by exploiting those "outside" the group, perhaps we'll all start understanding that insurance rates that charge more to certain people seem great while you're healthy but eventually, you too become an expense and then, you're out of luck. Even insurance rates for the healthy have skyrocketed leaving individuals opting out of health insurance. And this is as it should be.

MA made a mistake in fining people for opting out. It is the boldest revelation that there is no free market in the health services industry available to consumers.

So the washingtonpost reports: "The health insurance industry said Tuesday that it was willing to end the practice of charging higher premiums to sick people if Congress adopted a comprehensive plan requiring all Americans to carry insurance."

It is wise to support this step but as we've heard from the TARP, the devil is in the details. Still, no raining on this parade today.

So is the insurance industry becoming kinder? Of course not. They are actually returning to the original model of managed care: Large numbers of participants in exchange for a slightly cheaper rate. This is the right idea because the trend of excluding the sick or potentially sick from insurance coverage is making health insurance as a PRODUCT that is sold to cover the RISK of paying for needed medical care when you are sick...obsolete.

What else is required? Part of this change has got to focus on cost controls including utilization rates that exclude defensive medicine costs from consumer responsibility. Physicians seek to reduce their malpractice insurance rates by practicing defensive medicine, sending patients for every test known. This practice works for them because it costs them nothing and actually saves them money. However, with the variety of tests available, consumers find themselves involved in months worth of testing for any problem with months worth of bills as physicians use the tests to obviate the need for them to stand behind their own expertise. Right now there is banter about consumers taking charge of their health care but the reality is that consumers often cannot opt out of defensive medicine even when they know that's what's going on.

A combination of threats (we can't be sure, we can't offer an opinion) to concrete consequences (we will report this is against medical advice which might jeopardize your insurance coverage) is what consumers hear. Further, physicians run these tests as a threshold requirement for even getting to see them. Until we really empower consumers and allow them to opt out of a catscan for a belly ache without being exposed to such harrassment, we cannot change the defensive medicine costs. The use of a release by a physician should be available for consumers who want to opt out of certain tests. This removes liability. For the more complicated cases where a physician believes a test is absolutely necessary in order to make a diagnosis, THIS is where peer review and insurance company oversight comes in.

So for now, insurance companies are on the right track. As a product, every time their coverage of the RISK of the EXPENSE OF ILLNESS is reduced, they become less valuable as a product for consumers. If you're not sick you don't need insurance.