Government-funded stop-loss?
Southwest Nebraska News
4/14/2004
Nelson Unveils Proposal to Expand Insurance Coverage, Lower Health Care Premiums
With health care costs spiraling and the number of uninsured expanding, Nebraska’s Senator Ben Nelson today unveiled a plan to reduce health care premiums so that more Americans can purchase and retain health insurance.
The Nelson plan would:
Create a federal “backstop” to provide coverage for catastrophic claims, with the insurer paying noncatastrophic claims up to a certain cost. This is known as “stop-loss coverage” and provides a dollar limit to the insurer’s exposure to either an individual claim or aggregate multiple claims.
Require the insurer to reduce premiums if they want to participate in the program.
Create a certification process by which insurance companies could be reimbursed for these catastrophic costs. The proposal allows for flexibility as insurees would continue to work through their insurance companies, but also requires accountability from the insurance companies.
The benefit of only having to pay premiums for noncatastrophic coverage is that it is predictable-the insurer knows in advance what the maximum claim amount per person will be.
http://www.swnebr.net/newspaper/cgi-bin/articles/articlearchiver.pl?155723
John Kerry for President
John Kerry’s Plan to Make Health Care Affordable to Every American
(1) Creating a new approach to control spiraling health care costs - and passing the savings on to workers
John Kerry believes that health care is becoming too expensive. He has a proposal for a new ‘premium rebate’ pool that will make health care more affordable for all employers and employees by helping out with certain high cost health cases. Under this proposal the pool would reimburse employee health plans for 75 percent of the catastrophic costs they incur above $50,000 as long as they guarantee such savings are used to reduce the cost of workers’ premiums. Helping out with catastrophic costs would strengthen the employer-based market by making health care more affordable for purchasers.
http://www.johnkerry.com/pdf/kerry_health_plan.pdf
Comment: There is bipartisan support for providing government subsidies for stop-loss coverage of catastrophic medical events. The intent is to keep health insurance premiums affordable, thereby protecting our current system heavily dependent on private employer-sponsored and individual health insurance plans. Since almost everyone is concerned about affordability of health care, this seems like a very reasonable approach. But there are serious problems with it.
This solution addresses only insurance premium prices. It does absolutely nothing to control the actual health care costs, which would continue to escalate well beyond the rate of inflation. In fact, by turning attention to premium prices, there is significant risk that true cost escalation will continue to be ignored. We’ll all be paying much more, but the catastrophic subsidies will make these increases less visible.
This program also will compound the problems of the administrative waste which currently plagues our system. We would have a new layer of complex accounting which would be required to establish eligibility for the catastrophic funding. Each insurer currently establishes their own reimbursement rules based on provider lists, allowed services, fee schedules, tiering of coverage and other specifications. A national stop-loss program would have a different set of criteria for establishing when the catastrophic deductible kicks in. Obviously this will add further to the costs and wastes of our current administrative nightmare.
And surely the national catastrophic insurance would have its own version of allowed charges. The disallowed charges would not be paid by patients, norby the health plans, but the losses would be absorbed by the health care providers. We do need cost containment in health care, but through sound policies. This guillotine approach could threaten the solvency of the providers.
We also need to ask who this is really protecting. It’s not protecting the patient-consumer because we’ll have to bear the additional costs in the form of higher taxes. The insurance industry has been trying to escape exposureto risk as they sell us more and more administrative services. This proposal dramatically reduces their exposure by essentially eliminating the costs of catastrophic care. Routine costs are much more predictable and easily factored into the premiums. Why should we be supporting policies that protect this industry that has been a source of much of the waste and inefficiency in our current system of funding health care, while allowing them to abandon much of their traditional role of risk pooling? Instead of adopting policies that support this industry, we need policies that eliminate it.
This deceptively attractive proposal will increase administrative waste, fail to control cost escalation, and protect the insurance industry, at a greater financial cost to all of us. Let’s reject this highly flawed concept and, instead, base reform on truly sound health policy.