Health insurers offer to not charge the sick more

[DGuller]

Insurers offer to stop charging sick people more
By RICARDO ALONSO-ZALDIVAR, Associated Press Writer Ricardo Alonso-zaldivar, Associated Press Writer 20 mins ago
WASHINGTON – The health insurance industry offered Tuesday for the first time to curb its controversial practice of charging higher premiums to people with a history of medical problems.

The offer from America's Health Insurance Plans and the Blue Cross and Blue Shield Association is a potentially significant shift in the debate over reforming the nation's health care system to rein in costs and cover an estimated 48 million uninsured people. It was contained in a letter to key senators.

In the letter, the two insurance industry groups said their members are willing to "phase out the practice of varying premiums based on health status in the individual market" if all Americans are required to get coverage.

"The offer here is to transition away from risk rating, which is one of the things that makes life hell for real people," said health economist Len Nichols of the New America Foundation public policy center. "They have never in their history offered to give up risk rating."

Insurers are trying to head off the creation of a government insurance plan that would compete with them, something that liberals and many Democrats are pressing for. To try to win political support, the industry has already made a number of concessions. Last year, for example, insurers offered to end the practice of denying coverage to sick people. They also said they would support a national goal of restraining cost increases.

The latest offer goes beyond that.

Insurance companies now charge very high premiums to people who are trying to purchase coverage as individuals and have a history of medical problems, such as diabetes or skin cancer. Even if such a person is offered coverage, that individual is often unable to afford the high premiums. About 7 percent of Americans buy their coverage as individuals, while more than 60 percent have job-based insurance.

"This changes everything," said Karen Ignagni, president of America's Health Insurance Plans, the leading trade group. "When you have everyone in the system, and you can bring (financial) assistance to working families, then you can move away health status rating."

The companies left themselves several outs, however. The letter said they would still charge different premiums based on such factors as age, place of residence, family size and benefits package.

And importantly, the industry did not extend to small businesses their offer to stop charging the sick higher premiums. Small employers who offer coverage can see their premiums zoom up from one year to the next, even if just one worker or family member gets seriously ill.

Ignagni said the industry is working on separate proposals for that problem.

"We are in the process of talking with small business folks across the country," she said. "We are well on the way to proposing a series of strategies that could be implemented for them."

This is one of those articles that make me bang my head against the wall.  It seems like every time journalists try to write about insurance matters, they just can't grasp the main point.  They make it sound like the evil health insurers are feeling threatened, and are offering to behave nice to avoid being hammered by the Democrats. 

It does not occur to the writer of this article that this offer is a sort of a win-win proposition, as the necessity to screen for health history declines greately in system where everyone is mandated to have health insurance.  There is a quote on this right there in the article.  This is also not earth-shattering, the industry has been saying for a while that they won't need to screen the patients in systems with strong mandates.

[The Brain]

So it's like every single thing that journalists write about?

[DGuller]

So it's like every single thing that journalists write about?

It does make you wonder how much your perceptions are based on utter stupidity of journalists when it coems to topics you don't know much about.

[The Brain]

So it's like every single thing that journalists write about?

It does make you wonder how much your perceptions are based on utter stupidity of journalists when it coems to topics you don't know much about.

Especially since most people have little understanding of their own fields.

[Malthus]

I take it that if everyone *must* get health insurance, the whole game of necessity changes, whether the insurers are nice or not.

[DGuller]

I take it that if everyone *must* get health insurance, the whole game of necessity changes, whether the insurers are nice or not.

Yes, exactly.  Health insurers are not being nice, they just understand how adverse selection works.  Without mandates, abandoning health screening would make the insurer insolvent almost overnight.

[Malthus]

I take it that if everyone *must* get health insurance, the whole game of necessity changes, whether the insurers are nice or not.

Yes, exactly.  Health insurers are not being nice, they just understand how adverse selection works.  Without mandates, abandoning health screening would make the insurer insolvent almost overnight.

And I suppose health insurers *could* attempt to require huge payments from the sick where insurance was mandatory, but they might find that stance a trifle unpopular. 

[DontSayBanana]

I think that was the point, Malthus. With mandated healthcare, there's sufficient volume to to minimize the effects of an individual's treatment to the healthcare provider.

[Malthus]

I think that was the point, Malthus. With mandated healthcare, there's sufficient volume to to minimize the effects of an individual's treatment to the healthcare provider.

I know.

Point is also that if insurance is "mandatory", everyone had better be able to afford it ... 

[DontSayBanana]

I'm not sure what they're trying to accomplish. Car insurance is mandatory, and many people still have to resort to government workarounds. If the government places the requirement, then ultimately the onus is on the government to provide the healthcare or mandate affordability programs for healthcare.

[DGuller]

I'm not sure what they're trying to accomplish.

They're trying to make the highly dysfunctional market for individual insurance functional.

[Admiral Yi]

I'm not sure what they're trying to accomplish.

They're saying if you give us the power to tax healthy people we're willing to subsidize sick people.

[DGuller]

They're saying if you give us the power to tax healthy people we're willing to subsidize sick people.

Yes, that is one of the effects of their proposals.  Healthy people will pay more than their actuarially fair share.  However, that would happen under any system that is designed to not penalize those who drew the short stick when it came to health, in one way or another.

There is a positive effect to the healthy people out of this proposal, however.  Healthy people without insurance would actually be able to buy it.  In most circumstances, the market for individual insurance fails so substantially right now that healthy people are effectively priced out of it.

[Martinus]

Congrats, Yanks, on reaching the civilized world standards concerning health insurance, finally. A rich Western developed country, where people may die of curable diseases because they can't afford health insurance would be a disgrace.

[DGuller]

Congrats, Yanks, on reaching the civilized world standards concerning health insurance, finally. A rich Western developed country, where people may die of curable diseases because they can't afford health insurance would be a disgrace.

I think you badly underestimate our resilience when it comes to sticking with grossly inefficient healthcare policies.