As Republicans are preparing for the Press Event with Obama on Thursday, I’d like to see a specific point be made with regard to costs. Something like this:
“Mr. President, our plan removes the barriers to Interstate Insurance sales, so individuals and families can purchase insurance with specific benefits across state lines. We’re sure you are aware with insurance every new benefit mandated with the force the Federal government, will increase costs for every US citizen’s own policy.
“As such, we’d like to go over this list of Benefits / Services currently mandates by the states:*
“Mr. President, you’ll note that there are very few benefits that even 25 of our states require, but there are more than 130 potential mandates. And if all the state plans are forced to cover the same fifty Federal mandates, people won’t actually have any real choice. Republicans believe there have to be both low cost, bare bone plans and plans that cover specific types of patients.
“Why do mandates happen Mr. President? Largely because special interest groups (good people in a state all suffering from the same condition and their doctors and drug makers) lobby their state government to have their problem covered by everyone, so their own costs are lower.
“Who can argue with: If special education for autism is covered, why not home healthcare? If an Osteopath is covered, why not a Psychiatric nurse. If HIV drugs are covered, why not morbid obesity, why not sickle cell, why not an athletic trainer, why not massage. Mr. President, special interests have succeeded in getting ALL of these covered in different states. Do you really believe the federal government can be trusted to say NO?
“Mandates pit patients and their doctors against other patients and doctors. Who’s health is most important?
“Under our approach, each state can impose mandates to serve a specific group, but that is up to them. And under our plan, citizens in those states will be free to shop elsewhere, so mandates do not turn all plans into Cadillac plans. And if someone’s own condition is not covered in their state, they can go get insurance that covers them.
“Mr. President, if CBO agrees that our plan without mandates will keep costs lower, even fora majority of those who are sick, are you willing to leave mandates to the states?”
I want this issue raised, because the common refrain from Obama is without mandates, there will be a, “race to the bottom.”
He means healthy (young) people will go buy polices from Alabama where there very few mandates, so their premiums are low. And as insurance companies start to lose this business from their own state, there will be pressure on other states to lower their mandates or lots of insurance companies will move to Alabama.
This is not true.
The true positive effect: People with a specific condition will go shopping for plans that cover it, this will lead to pools of people with the same condition grouping into the same policies. So we’ll have very specific alcoholism insurance plans and morbid obesity plans that spread the cost of that specific kind of care over that group of people. This does wonders to properly place prices on lifestyles and still provide affordable plans.
In most cases this means many plans will look like “Basic Coverage + 1.” As in basic coverage + maternity. So child bearing age policy holders spread the risk of maternity costs amongst themselves. Yes, some conditions are very expensive to treat, and grouping those patients will lead to very expensive policies. But it is better to see where the prices come out, actually look at the number of suffers, understand the costs and types of treatment, see what the policies actually cost and then where aid makes sense, subsidize those policies when it is warranted.
This also leads to better comparative treatment and better competition amongst doctors. Which Osteopath is not going to accept the insurance that covers many of his potential customers? It is also much easier to show patients with a “Basic + Osteopath” plan the prices local Osteopaths charge, because they don’t have to pour through an online database with all the diseases and doctors – they just see their local Osteopaths aggregated by their insurance policy. This “price transparency” would do much to encourage people to purchase high deductible, tax-free HSA accounts that grow balances overtime. This is truly the smartest kind of policy. It dramatically drives down premiums. When people can easily price shop, and keep the money, we’ll see savings.
Smart states will require Insurance companies to offer multiple forms of Basic Coverage Plus. If CA, NY, TX, and FL require insurance companies to offer 130 different policies of Basic Coverage + (name a mandate), we’ll have true price discovery for each condition / treatment within months. So discussion of subsidies can begin honestly.
A year later, we’ll begin to see people moving towards HSA style versions of those polices because it is the best chance they have saving money for themselves.
The alternative to Basic Coverage Plus, is federal mandates picking favorites and driving us towards Cadillac plans for all.
America needs to see Obama be shown this logic. They need to know the answer to President Obama’s “race to the bottom.” It is wrong.