| Governor Patrick seems to be making political points with the recent game of chicken he has been playing with the mostly non-profit insurance industry in Massachusetts. Yesterday he said that he doesn't understand why when costs are only going up by "5%" through providers the insurance companies need "30%" increases.
The first thing to look at is the Massachusetts health insurance law. People with pre-existing conditions can get coverage under this law. As we saw earlier this week in the Boston Globe, people are gaming this system to buy short term "insurance" to cover them only when they are sick. It is cheaper to pay the fine during the other times. This drives up the costs to insurers.
The second thing is that to truly control costs we need to move away from the Ted Kennedy HMO model. Before Ted Kennedy and the congress invented the HMO model people paid for their routine care out of their pockets and had insurance for catastrophic events. When the consumer pays for things out of their own money they can shop to find the best value. The best value is not always the lowest price, for example consumers aren't going to be beating down the door of Dr. Nick from the "Simpsons". Consumers of the services would however choose the option that was best for them.
The Ted Kennedy HMO model is a second payer action which removes the consumer from his or her part in the value of the transaction. Much like the payment of income taxes has become a second payer action. The average taxpayer really doesn't know how much they pay in either income or other taxes each year. Employers pay the income tax through witholding every week, and merchants collect other taxes for the government. The taxes are buried. The same is true of the current health care system. Costs are buried so that the consumer doesn't know the true cost of their care.
So while Deval Patrick may get good headlines out of "fighting against the insurance companies". Remember he supported doubling down on a failing system, by making it illegal to not buy the insurance companies products.
The only way to fix the current health insurance mess it to go to a model whereby people buy catastrophic insurance and pay for routine medical visits out of their own pockets. |
