Wednesday, July 31, 2013

Health Insurance and Health Care Evolving Into a Sustainable System

Why – Because It Has To

No economic news is totally bad or totally good.  The decades long news that health care costs are rising astronomically is terrible news, but the good news is that the cost increases are forcing the industry to evolve into a better system.  Yes the evolution is taking too long and costing too much, because public policy is not leading, but it is happening.

In the Washington area this is the look of the future.

In 2012, MedStar Health, like many large employers, struggled to keep up with rapidly rising health-care costs. For three years, the company held down premiums for its 19,000 employees by absorbing the increases itself.

Most employers would have had no choice but to raise premiums — in this case, by about $550 for a family — and cope with frustrated employees. MedStar, one of the Washington area’s largest health systems, saw another option.

It would launch its own health insurance plan, offering it first to its employees. Patients would be limited to MedStar-affiliated providers, and as a result, pay lower premiums. In time, MedStar could compete with the Aetnas and Blue Crosses of the world, offering insurance to the public.

“By putting in the new health plan, we had the ability to give them an option that actually allowed savings,” said Eric Wagner, a MedStar vice president. “People who enrolled in MedStar Select got a lower premium than they had the year before.”

Why didn’t the old system work?  Basic economics.

“They make their money by not paying for health care to be delivered,” Wagner said of health insurers. “We make our money by delivering care. There’s always been a natural tension.”

Had the U. S. moved to this type of system years ago, with competition among competing health care system providing assurances of good, low cost care, much of the inflation in U. S. medical costs could have been avoided.  But this would have taken people to recognize that the health insurance model was broken.  That was apparently beyond the scope of people’s abilities.  In some cases it still is. 

Republicans think that competition in health insurance will solve the problem.  They are not deliberately trying to wreck the system, they are just ignorant. 

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