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What do you want to Pay for your health care?

Editor’s note: An interesting post from John Goodman.

His analysis may be particularly true if you end up with the virtual elimination of private insurance. Today, providers pass off incremental costs to private insurance to subsidize the reimbursement from Medicare and Medicaid. They can then afford to provide equivalent care.

If there is no private plan then the public plan will have no choice but to provide less for less reimbursement.

This leads to an additional point — why private plans will cease to exist (if they don’t exist, I guess you can’t keep what you have). As more and more people move to a public plan, the ability to shift the cost to the private plans will diminish as they will become more and more expensive to a point where plan sponsors will stop offering them or pass so much of the cost to participants that those participants will choose the public plan (they won’t want to keep what they have).

—-

USA Today devoted a lengthy article this week to whether health insurance premiums should vary by age (to reflect, say, that 60-year-olds cost five times as much to insure as 20-year-olds). This is also the week’s question at the National Journal health blog:

But why be so narrow? Let’s ask a much broader question: Suppose you could pay any premium you like for health insurance. What premium would you select?

  • Would you choose to pay the fair market price (reflecting the expected addition to total cost of adding you to an insurance pool), guaranteeing that insurers would vigorously compete for your business?
  • Or, would you choose a much lower premium, guaranteeing that no insurer would want you?
  • Or, would you choose a really, really low premium, guaranteeing that insurers really, really would not want you?

In thinking about this problem, it may be helpful to think about other products and services — since IQs tend to fall about 15 points whenever people start thinking about health care.

If you could pay any price you like for dinner at a restaurant, what price would you select?
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September 2, 2009 - Posted by | Federal Government, healthcare | , ,

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