Ok, usually I will post an entire article and then put my comments in red alongside of the part of the column I wish to comment on.
Not so with today. Today, I am just going to post the column here and then explain my opposition to reinsurance and why I strongly believe it is the ultimate backdoor into single payor.
Here is the news piece in question.
http://khn.org/news/hhs-states-move-to-help-insurers-defray-costs-of-sickest-patients/
We are hearing from Washington that states are looking to the federal government for help in addressing their massive double digit ACA premium increases. At face value it is beyond laughable. Are people actually looking for solutions from the same people who purposely caused this problem to begin with? Here the federal government creates the plans that caused these problems and now the solution they have come up with is an extremely complicated method of mitigating risk called "reinsurance"?
Does anyone know what Reinsurance actually is? Reinsurance at face value is rather simple. Companies will take out a policy called a Reinsurance policy which is designed to help companies with risks that are too large or put the company in grave danger of folding should those claims ever get filed.
The company will apply for reinsurance like any other insurance product, the RE company will underwrite the risk and then issue a corresponding premium amount for them to accept the risk. It is how insurance is supposed to work and has worked for hundreds of years. The problem here is the logistics. How will the reinsurance product work? Will the feds reinsure at a dollar amount? Will they reinsure on a per policy level like other reinsurance carriers? How will the feds underwrite reinsurance policies? Will it be by state and will policies from the larger more populated states like NY and California pay more because of the elevated risk of exposure to a high dollar claim? These are all questions we must ask before we allow our government to start playing reinsurance company.
The federal government is not a reinsurance company and shouldn't even be a standard risk company. No one has explained how this will work. Ok, so the states are now able to go to the feds for a bailout should utilization start crushing plans. Reinsurance will only help adjudicate those high dollar claims. It will do nothing to help with premium amounts as they are advertising. Why is that, you ask? Well it is simple. This reinsurance policy will do nothing to address utilization. Yes, it may in the end through the feds eating the high dollar claims but it will do nothing to address the issues of utilization and the way it drives up premium costs. Those utilization costs will be there no matter who is adjudicating the claim which is why the reinsurance plan looks more like a scam. Where is the federal governments insurable interest here? I mean, why would the feds take on such enormous risk if there is no pay-off? Reinsurance carriers do it because the premiums are set after underwriting has determined the risk an acceptable one in which the risk exposure is minimized and the chance to profit is in their favor. The government's plan looks more like a kick in the teeth. No underwriting, no risk management....just pure risk. Taking on all that risk is what makes me think this is the next step towards single payor.
It makes sense that this is another and potentially the final step in the march to Single Payor. First the feds come up with the ACA to begin the federal compartmentalization of healthcare. It is now blowing up as they intended. Now the feds are coming up with this ridiculous reinsurance idea as a way to start actually paying claims. So now you have the federal government building and offering plans AND you will have the federal government paying claims, ironically the most expensive claims. The next logical step is for the feds to say that they are getting killed on reinsurance costs and the only way to control those costs is if they are the ones adjudicating those claims from the start as they can best negotiate fees and rates. Of course they will considering they built all of the fee and rate schedules. Now, at that point you have single payor. It probably won't be called that of course but the end result will be the same. Your healthcare will be offered, managed and adjudicated by the federal government. A rose by another name....
This is horrendously bad government policy and one I hope that never sees the light of day.
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