Concepts from yesterday's message
The claim is often made by HSA supporters that the premiums of the HDHPs are much lower because of the high deductible. But, in fact, they are usually much lower only because the plans are priced in the individual market which excludes from coverage individuals with preexisting disorders. When the plans include guaranteed issue (everyone is allowed in the plan) and community rating (the premiums reflect the average costs of all individuals in the plan) then the premiums reported above are typical ($11,772 per year for a family in California).
Either we support the insurance principle of spreading risk by including everyone, or we don’t. But let’s end the lie that we can lower premiums for everyone by a modest increase in the deductible, when in reality we are lowering premiums by leaving out those who have the greatest need to be included.
Alan Sager, Ph.D., Professor of Health Services, Boston University School of Public Health, responds:
Agreed!
But one thing: insurance is about sharing risks among similar people. That’s experience rating and why actuaries exist. Leaky boats pay higher premiums. That’s the essence of insurance.
It’s also why insurance does not work in health care. We use the word, but we mean social insurance, community rating. Community rating is not real insurance. To claim otherwise, I think, inadvertently plays into the hands of the privatizers because the game is then played on their (insurance) court.
I think it’s helpful to be clear on this because it shows that only government action can win durably affordable coverage for all. That’s because community rating never survives in any market.
Alan Sager, Ph.D.
Professor of Health Services
Director, M.P.H. Program in Health Services
Director, Health Reform Program
Boston University School of Public Health
www.healthreformprogram.org
Comment: Professor Sager is absolutely right. Many current proposals for reform of the insurance market are specifically directed against community rating. To keep premiums low and therefore competitive, private insurers and the policymakers who support them will inevitably tailor insurance pools to exclude high cost beneficiaries with greater health care needs.
We do need to conduct the debate in our court of social insurance (government) with everyone included, and not in the court of the private insurers (market) who would leave out those who have the greatest needs.
Don McCanne