By Henry J. Waters III
Columbia (Mo.) Daily Tribune, Jan. 29, 2014
Much is being made by opponents of the Affordable Care Act of adverse selection, the tendency of younger, healthier Americans to avoid buying health insurance, thereby skewing the economics of the plan, which depends on premium income from people needing relatively little care to offset the cost of care for older, sicker patients.
This is a valid point, one of several that demonstrate why Obamacare as currently constituted is not the final answer to health care reform.
As any student of insurance of any kind would know, premium revenue and provider cost must on balance produce a profit. Private insurance companies stay in business by managing these two factors, limiting exposure from policyholders likely to cost too much and limiting costs by negotiating low prices from providers.
This formula works well for companies serving manageable groups of potential patients, such as employer groups, and avoiding coverage for people of predictably high risk, like smokers or those with dangerous illnesses.
Years ago under this system, older people more likely to get sick and poor people who could not pay premium costs were being left behind. Government had to step in with Medicare and Medicaid, programs popular with everyone because they dealt with the parts of the health care system the private sector could not manage, but as time passed it has became clear this selective system will not provide adequate health care for everyone at the lowest price.
The Affordable Care Act is a step forward but can’t succeed fully until all citizens are in the same risk pool with basic care covered in a national insurance system, usually called single-payer.
Single-payer insurance would essentially be an amalgamation and expansion of Medicaid and Medicare to cover people of all ages and means with premiums paid through the tax system. We, the government, would negotiate costs with doctors, hospitals and drug companies and provide guaranteed, efficiently administered payment. Individuals could buy additional coverage out of pocket, but all would be covered with the basic plan.
As we know from experience everywhere in the developed world, this is the only way to provide universal health care at the best price. Everyone would have good basic care, and those who choose could have additional private fee-for-service plans. Health outcomes would be better, and costs would be lower.
Sooner or later, we will end our senseless bickering and get on with it. Sooner is better.
Henry J. Waters III is an editor at the Columbia Daily Tribune.