The Sacramento Bee on pooling risk
Editorial: Coverage for all
The Sacramento Bee
March 25, 2007
The state regulator of HMOs has fined one of the largest, Blue Cross, $1 million for canceling health policies of enrollees who, among other things, got pregnant. Cancellations like these weren’t isolated, according to the California Department of Managed Health Care. Rather, they were systematic, right down to a computer program that scours the system for enrollees seeking certain kinds of care.
Blue Cross denies wrongdoing. That’s fine. There is a larger lesson here: This health insurance market, the one for individuals or families who don’t automatically get covered through their jobs, is sick. Insurers try to avoid covering people who need care. And many Californians avoid getting insurance until it is in their financial interest to do so. It’s a game, and the game must end somehow. That can only happen by blowing up the individual health insurance market that exists today and replacing it with something that makes more sense. And that can only happen with the California Legislature and Gov. Arnold Schwarzenegger.
There are two basic choices here when it comes to health insurance. One is to get rid of private health insurance altogether and replace it with a program in which the government directly pays doctors and hospitals to provide care. That’s known as single-payer. It is championed by some Democrats, but opposed by the governor. Single-
payer isn’t a likely short-term compromise, but the more we look at this mess, single-payer seems to be an increasingly likely long-term solution because of the many ills of the private insurance market.
The second choice is to fix the insurance market. How? Bottom line: It means that health insurers such as Blue Cross have to cover all who apply, even those who are eight months pregnant. On the flipside, everyone — or just about everyone — has to have insurance. It can be through his or her company. It can be through a government-
sponsored program. What is important is to throw everyone into the pool. Insurance, when it works, is all about spreading risks.
Either the governor and the Legislature somehow create this pool, or they don’t. All of the solutions by necessity would impose various mandates — either on employers, on individual Californians or in some combination. And any solution will require money. Why? If the state were to require everyone to have coverage and require insurance companies to cover anyone who signs up, that would include many low-
income Californians who don’t have insurance today. Those Californians can’t be expected to pay full freight. And they can’t be left out of the equation, only to wander later into emergency rooms and expect care.
In any sane health care system, getting pregnant should never be a cause to lose health care.
http://www.sacbee.com/110/story/143154.html
Comment:
By Don McCanne, MD
The Bee’s editorial board understands: “What is important is to throw everyone into the pool.”
Segregated pools of healthy individuals won’t do it. Yet that is the specialty of the private insurance industry - pooling risks of the healthy workforce and their healthy families.
If we are to effectively spread the risk, we would have to transfer funds from the segregated pools insuring the healthy, to pools that include those with high-cost needs. But that creates an actuarial nightmare that invites the inequities of gaming the system. It would be much easier and much more efficient to establish one single universal risk pool. It would also finally make the financing of health care equitable since contributions would be based on ability to pay.
Once we remove the requirement for the private plans to pool risk, what is left for them to do for us? Think hard. We’re sure paying them a lot for whatever it is they do.
Maybe it is time for us to tell those in the health insurance industry to go get a real job.