Why this Mandated health insurance exchange is a problem

The design of the health insurance bill before Congress is based on a similar insurance health insurance exchange for Federal Employees. It's not a bad design for a limited group of people, especially if you have hard-core negotiators and a pool with a lot of healthy people. The scheme basically pits private health insurers against each other in a pool, and the Federal workforce can choose their insurance based on cost, services, and reputation.

But in order for the pool to really work, you need to have strict penalties on insurers for price collusion and for breaches in service. The cost of price-fixing and of not paying for healthcare as promised should be exclusion from the pool for many years (at least) and legal charges. If there is a strong authority keeping these insurance companies honest, then the free market will work as it should and reduce the price of health insurance while providing better services. In a situation like this, where laws are enforced and insurers are kept honest, pure numbers are the most important factor: the more healthy people you have buying into the pool, the lower costs will be for everyone. Healthy young people don't need expensive healthcare, and their premiums are basically "free money" to the insurance company; this "free money" subsidizes the cost of health care for the older and the sicker and helps keep their costs low as well. The companies can even make a decent profit.


The problem with the current Senate health insurance bill does not come from numbers, which will mostly work out to reduce costs for older sicker people by having every young healthy person buy into the exchange. (I say mostly, because there will be people who are so sick that they will skew the numbers: these folks will be put into the high risk pool, a small taxpayer subsidized pool.) The problem is NOT in trusting the numbers to work out: it IS in trusting Congress, who is whored out to the insurance industry, to adequately police this system.

The health insurance industry CANNOT be trusted to do the right thing. No industry can, but the health insurance industry has proved time and time again how extremely morally bankrupt they are. They have also proved their great ability to control their whores in Congress during this long, drawn out "national debate" on health insurance. The health insurance industry has already demonstrated that it won't cooperate unless a new law actually makes them far richer than they are now. They have watered down EVERY limit on themselves, while supporting a strict mandate on US citizens to buy their inferior product, even if it raises taxes to subsidize health insurance and even if it bankrupts people. They have demanded loopholes and have gotten them.

Despite the numbers, the health insurance industry DOESN'T want to take sick people with pre-existing conditions. They supposedly traded away the ability to do so for the opportunity to have all of America financially tied to them from cradle to grave: not a bad deal for them. But they couldn't even control their unmitigated greed for even more. As it stands now, even though the bill says in general that insurers will have to take people with pre-existing conditions, they can still charge more under certain circumstances. There is also no guarantee that insurers won't drop as many sick people as they possible can into the taxpayer-subsidized pool for the uninsurable, which still remains part of the bill. And there is also no guarantee that the insurance industry won't go back to Congress, and get back their ability to reject every pre-existing condition they want to reject through their whores in Congress and the WH. Whatever the health insurance industry is agreeing to today can change, especially as they can pay more and more whores. The only thing that will always "stick" and never change is the mandates on us. We don't have the money to pay for the blow job. It's as simple as that.

The health insurance industry also DOESN'T want price controls of any kind OR any kind of oversight OR any kind of competition. You need one of these three to keep this industry honest.

You either have to

(1) limit the increase in premiums by a fixed percentage, which the government has the right to do because it is mandating a customer base, thereby interfering with the free market; OR

(2)have intense oversight, which will require a new bureaucracy of accountants, statisticians and the like, and a special IG for the health insurance industry, in order to prevent price collusion and mistreatment of consumers; OR

(3) provide a public option which will force a competitive situation against a government program.

Without any of these options. the insurance industry gets the benefits of a free market without actually having to struggle in the free market. They are playing in a rigged game where they own the casino: they are being fed customers who can be fined or possible jailed for not buying their product, but they don't have to give much in return. (And yes, jail is possibility. Not paying IRS fines can also land you in jail.)

Unlike in a TRULY free market, this government spawned corporate monster has no competition outside its own group of companies in the exchange, many of whom may end up being unable to compete due to size, leaving the mammoth Wellpoint, Cigna and Aetna to join forces, buy out the small local companies, and participate in informal price-fixing. What this means is that the internal competition that Congress and the WH are counting on to keep prices low is not strong enough to do so. There is no incentive for these companies to BE competitive, even with each other.

They also have no incentive to be ethical: there are no punishments for an industry that has so many whores in Congress. And with this new bill, they will have tons of taxpayer money to buy more of them.

But the insurance industry is already proving that it is completely ungrateful for its government sugar daddy. Wellpoint is suing the state of Maine because it's not making enough profit.

http://seminal.firedoglake.com/diary/8735

Just wait until they sue the US government to increase premiums way beyond the public's ability to pay. Which side will Congress be on in that battle?

This plan is flawed not because of the numbers, but because of the sheer greed and immorality of the health insurance industry. As it stands now, the private sector is not the solution to healthcare for ALL.

Insurance companies are currently free to not participate in FEHBP...and they'd be free to not participate in this new plan, too.

The difference is that if the new system covers EVERYBODY, it's the only game in town. Insurers could either participate, close shop, or solely offer supplemental insurance to those who could afford it.

The "monopoly" in this case would encourage compliance.


I do agree, however, with your concerns on policing the system. Rules are only valuable if they're enforced.

And one strictly in the hands of a compromised Congress.

I just think that a lack of options will force the insurance industry to comply, to a degree.

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new business for the insurance companies. That is all. No other benefits to anyone, anywhere.

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:kick: