Choice and competition in the insurance marketplace is not an effective alternative to single payer

August 21, 2020

Topics: Quote of the Day

By Brian J. Miller Robert E. Moffit
Health Affairs Blog, August 20, 2020

The renewed national health care debate represents a conflict of visions of how to create better value: government central planning versus patient-centered, consumer-driven competition.

Market-driven approaches based upon defined-contribution financing (premium support), the states as insurance laboratories, and addressing the employer-sponsored insurance (ESI) tax exclusion would all serve to increase competition and engender insurance affordability and portability.

Previous legislative attempts at solving cost and access challenges in health policy have viewed health insurance and care delivery markets through a national lens, focusing on standardizing benefits and care delivery. As any patient or clinician will volunteer, health care markets are intensely local, and policy solutions must navigate the complex interplay of local, state, and federal stakeholders.

Recent progressive health policy efforts remain firmly anchored in a political philosophy that champions national regulation and central control, sitting in direct conflict with consumers who strive for mass-customized health care. Currently, consumers and clinicians are persistently frustrated, as both strive for choice, flexibility, and modernity in an otherwise dysfunctional system. In selecting health benefits, consumers face an impossible task: to predict their trajectory as patients, a challenge when the healthy office worker one day can become a terminal cancer patient the next. In this setting, a single benefits package is at its core unfair—a person’s needs change over time, and they should be able to change and customize their coverage as they progress through different stages of life.

Part I:
https://www.healthaffairs.org…

Part II:
https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

Universal publicly-administered and publicly-financed health care programs work well for everyone. In contrast, the most expensive health care system of all – ours – uses a fragmented system of administering and financing that includes choice and competition of private insurers, and that has been a disaster, leaving tens of millions with inadequate coverage or no coverage at all.

It is difficult to understand the obsession with injecting consumer-driven choice and competition into the mix when the private plans and the burden they place on the health care delivery system have defeated the goals of universality, equity, efficiency, affordability, accessibility, and social solidarity. Yet here we have another article advocating for this market-driven approach.

Although this two-part article repeats many of the usual conservative talking points, the excerpt above reveals a fundamental flaw in their premises that alone shoots down their model of reform. They seem to understand that it is not the choices in health care itself that makes the market work but rather it is the choices in private insurance products that they seem to believe makes the health care market effective. They claim that a single benefits package that applies to everyone is unfair because “a person’s needs change over time, and they should be able to change and customize their coverage” to fit their needs. So they provide the example of “the healthy office worker one day can become a terminal cancer patient the next,” though they concede that consumers face an impossible task in predicting their trajectory as patients. Even if you knew you had a specific cancer, you could not purchase coverage for that cancer alone because the insurers must pool risk, and if such a product even existed, it would have to be sold to people without that cancer. Otherwise that insurance product would have to include the full costs of the care for that malignancy plus the administrative costs and profits of the insurer. Retail plus maybe twenty percent is not a bargain that would find a niche in the marketplace. Selecting in the market only the insurance you need is impossible.

We really don’t need these analyses anyway. Not only do we have the most expensive system of all nations, though we leave tens of millions out in the cold, private insurance is the most expensive component of health care financing when adjusted for the health of those covered. Of course, that’s how insurance markets work, selectively sell to the healthy while shoving the sick into government programs or simply into the street. That is why all that money we are already spending on health care plus insurance administrative costs is still leaving so many facing financial hardship or, even worse, leaving them with physical suffering or death due to lack of health care.

Throw out the private insurers, recover the wasted funds, establish a single universal risk pool, and then take care of all of us through our own public, single payer model of Medicare for All. Simple.

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