Healthcare Reform Thread II

[Kidlicious]

Yes it's true that insurance companies are making a profit. (the goal of every profit company) But while overall Anthem Blue Cross of California made a profit they lost money on its individual market. Can you legislate that a company operate at a lose. I have worked at a major insurance company and personally witnessed how books can be cooked but if you make business not profitable, they'll just take their ball and go home. (see florida coastal home insurance availability) When everyone loses.

So increase competition by allowing sales across state lines. Get more power to inspect their books to debunk their tales of woe. But DON"T legislate price control. You'll just end up with expensive government pools that don't service anyone well.

The problem is that none of that is going to work to reduce prices. Allowing sales across state lines doesn't mean that corporations are going to compete across state lines. And even if they do it's not going to reduce premiums. Corporations like premiums to be high and therefore so do some republicans. I'm talking about the type of republicans who don't really care about consumers at all, but just give them lip service. Those republicans only care about profits, and that's why they support allowing corporations to compete across state lines. Because that won't, in reality, reduce premiums.

[Kidlicious]

Fixing prices one way or the other is the only real way to control costs. There simply is no such thing as low cost free market system.

[Guynemer]

My honest opinion, as a physician:

We're boned. We're boned if we do nothing, we're boned if we do this, we're boned if we do that. There's just too much money at stake. I've resigned myself to being boned.

[rah]

Think of the savings in overhead if companies didn't have to set up different companies for each state the compete in. The waste is unbelievable. Go to the home office of any large company and see the redundancies that it causes. I've seen it. The state by state regulations causes an even bigger problem. You roll out a product nationwide but you have to do the legal legwork in every market, modify the product for every market, administer their program differently in every market etc etc etc. The waste is unbelievable.

And to your comment about price controls, check out the costs for homeowners insurance in Florida or car insurance in New Jersey. When insurance companies are mandated to operate on little profit, they cease writing policies. And to expect otherwise is insanity.

[Guynemer]

Of course, the counter-argument to "selling insurance across state lines" is that companies will then just incorporate in whatever state has the most lax regulations.

And, believe me, that is far from the only place where insurance companies waste money on overhead.

[rah]

Guy, agreed. I worked at one and couldn't stand it. While it's been true at every company I worked at, the insurance companies were the worst. And yeah they would incorporate where it's best, just like every other business, but you could legislate country wide regulations. Then you might have some true competition. And yes, I know there is no easy fix, but it is a for profit business, so unless the government want to socialize it and make it non-profit (heaven forbid) you have to allow them to make a profit if you expect them to want to play.

[DinoDoc]

Of course, the counter-argument to "selling insurance across state lines" is that companies will then just incorporate in whatever state has the most lax regulations.

Even if that does happen, such an occurance would seem better than the system that is in place now which is essentially handing buisinessmen a captive market to do with as they please. Forcing companies to compete for insurance policyholders as they do for car, home, etc. policies, would seem the best way to inflict punishment on them.

[Kuciwalker]

The "selling insurance across state lines" makes no sense to me. It's not like insurance is a good produced locally and shipped to where it's needed. There's no "free trade" aspect of this. Allowing insurers to "sell across state lines" is just a fake free-trade veneer over "forbidding the states to regulate insurers". That would, of course, promote a little bit of efficiency at a huge cost to potential regulatory innovation.

A much better scheme for reducing the inefficiency of dealing with 50 sets of regulations would be to just promote regulatory harmonization between states with similar regulations.

[rah]

If all insurance companies operated in every state, I would have a tendency to agree with you, but the don't. And that helps limit the competition.
And while I think having nationwide regulations instead of state regulations would save money and reduce redundancies, I can see why forbidding states to regulate their own states might be seen as undesirable but I think states are paying extra for that privilege.

[DinoDoc]

Given the environment we find ourselves in, I question the regulatory innovation value provided. I also fail to see why it is fine from a regulatory PoV for a person in California to buy car insurance from a company in Deleware if it turns out to be cheaper for him to do so but it poses an onerous burden on States and regulatory systems for the same person to buy a cheaper health policy from the same company.

[rah]

And think how much money the states could save by not having to support that regulatory agency in each state. But again, where do we stop if we start taking away state rights in terms of regulations.

[Ramo]

The reason why many jurisdictions have health insurance regulation is to ensure that some of the financial burden carried by the sick is shifted to the healthy. Unless you have strong federal regulations (which certainly don't exist in the Senate bill, and can't be implemented in reconciliation), allowing policies to be sold across state lines would make people in crappy risk pools pay a lot more for insurance.

[Kuciwalker]

Given the environment we find ourselves in, I question the regulatory innovation value provided. I also fail to see why it is fine from a regulatory PoV for a person in California to buy car insurance from a company in Deleware if it turns out to be cheaper for him to do so but it poses an onerous burden on States and regulatory systems for the same person to buy a cheaper health policy from the same company.

I'm totally open to the idea that car insurance shouldn't be sold across state lines, either.

[Kidlicious]

Think of the savings in overhead if companies didn't have to set up different companies for each state the compete in. The waste is unbelievable. Go to the home office of any large company and see the redundancies that it causes. I've seen it. The state by state regulations causes an even bigger problem. You roll out a product nationwide but you have to do the legal legwork in every market, modify the product for every market, administer their program differently in every market etc etc etc. The waste is unbelievable.

Good point. That would make it all the more efficient to only have only one insurance company, especially in this day.

And to your comment about price controls, check out the costs for homeowners insurance in Florida or car insurance in New Jersey. When insurance companies are mandated to operate on little profit, they cease writing policies. And to expect otherwise is insanity.

You are asking us to assume that huge profits are necessary for us to get anything close to the quality of care that we recieve. That's not true. Cutting in to profits, as high as they are, will only decrease quality of care an insignificant amount. I don't think anyone is suggesting that for profit agencies run without any profit at all.

[Kidlicious]

Rah,

I think that brings up a good point. With insurance bigger is clearly better. Recently I heard it said on the news that the credit card industry isn't competitive enough because there are only 10 providers that control 90% of the industry. I think that's wrong not because the industry is competitive, but because more providers isn't going to lower rates. But how many insurance companies would we need to make the insurance industry competitive, 10? 20? If we do have that many administrative costs are going to increase far beyond any saving that would be gained through reduction in profits.