Health Insurance Reform

1. Tort Reform. This is an obvious omission from the current bill. Threat of lawsuits (often frivolous) costs doctors too much money in malpractice insurance and also results in too many extra and costly tests being performed.
2. Three Simple Rules insurance companies must follow:
a. An insured person cannot be dropped from their insurance, or have their premium go up as a result of illness.
b. A mechanism must be put in place to insure people with pre-existing conditions.*
c. Insurance must be transportable for an individual, not tied to a place of employment.
3. End state mandates of what must be covered in an insurance policy so that individuals can choose from a menu of items they want to have covered, rather than forcing insurance companies and individuals purchasing insurance to provide and have coverage they don’t need or want. (This dovetails nicely to point 4 below.)
4. Allow sales of insurance across state lines. This will increase competition and increase the number of insured people in the risk pool, both of which should have the effect of lowering the cost of insurance.
5. End the practice of “grouping” the insured. Currently, insurance companies sell insurance to groups (like the individuals working for a company, or in a union, etc.) as though the risk posed to the insurance company from that group is limited to the number of people in a particular group. For example, I worked for a company employing 45 people. The cost of insurance to the company was based on the risk our little “group” posed. The same insurance for a larger company where the risk was spread across more people would have been less expensive because of the larger risk pool. The insurance would not have been available to the self-employed because there was no “group” across which to spread the risk.
The problem is that this is an artificial construct. An insurance company ultimately spreads the risk across everyone they insure, not merely the members of a particular defined group. I understand the business model, because it’s clear that if each “group” is managed for maximum profitability to the insurance company, even when a few “groups” end up upside down because of illnesses or injuries, the other profitable groups more than compensate.
This artificial construct of relating to the insured as members of “groups” rather than as all belonging to the overarching “group” of ALL of the people the company insures (which is the reality) is a cause of insurance being more expensive overall, and mostly unaffordable to individuals who are self-employed.
Ending this practice of “grouping” will make insurance more transportable, because the cost of insurance for an individual in a company will no longer be tied to that company “group”. It will also make the playing field level for the self-employed and for people who want an insurance option that their company is not willing to pay for (as part of the employee’s compensation package).

Summary: These five simple things will drive down the cost of insurance and of medical care. If insurance is more affordable, far more people will purchase it. If providing medical care is less expensive due to tort reform allowing for less money spent on malpractice insurance and unnecessary testing, a lot of waste and unnecessary cost will come out of the system. This is true “health insurance reform” that will make a difference to people.

*Perhaps a non-profit entity can be created that is funded by an X% contribution from all insurance companies (possibly also getting funding from other sources as well) making it a “re-insurer”. This would allow an insurance company to sell the person with a pre-existing condition a normal policy for all care not specifically related to the pre-existing condition, plus provide insurance for the pre-existing condition via the non-profit re-insurer. This would allow the insurance companies to insure people with pre-existing conditions knowing there was a fixed cost in doing so. The person with the pre-existing condition might be required to pay into the non-profit, but the cost would be limited.