I have written substantially regarding the true kinds of reform that is needed in our health care industry as well as the forces at work in Washington that are bringing about the current kind of reform bills. Below is a link to a very informative video regarding the health insurance industry's recent ad campaign against the Baucus Bill. I think you will find it fascinating.

Michael F. Cannon on the insurance industry study on the Baucus Bill on FOX

When we finally begin to see through the press releases and media coverage for what this really is, and not the victory that it purports to be, we will be that much closer to being able to advance true reform.

Imagine what the health care industry would look like if the reforms I have proposed so far were all enacted. Although not yet complete, here is a snapshot of what it is shaping up to be:

Because of the birth of a free market system based on options, variety of products, and competition, all Americans would have access to affordable, private health insurance that is tailored to their needs and is not tied to an employer or government program. The uninsured are able to safely choose and assume the risk of going without insurance and have the risk minimized by equal tax treatment and a percentage cap on the amount charged. If worse came to worst, the family supports the needs of the individual and receives the tax credit from the government to pitch in. The poor and elderly who qualify for Medicare or Medicaid after the reforms are enacted, are given vouchers to private insurance and are empowered to pick a qualified option that is best suited for their needs. Employers are still able to attract and retain top talent through health care as a form of compensation by providing competitive vouchers to private health plans – insurance, co-ops and health shares. This new and vibrant market, invigorated by new players, customers and forces, innovates product solutions for the poor, the rich, the healthy and infirm.

Part of this new structure and environment facilitating this competition is the health care exchange proposed by the president with four adjustments:

1. No Government health plan

2. The exchange includes national health care plans – not just state plans. Opening up the market to our-of-state plans opens the doors to so many more options that are essential to creating choice in health care. The CATO institute reports that “One study estimated that that adjustment alone could cover 17 million uninsured Americans without costing taxpayers a dime (Footnote 1).” The barrier on out-of-state written plans needs to be lifted. It is the equivalent of an iron curtain on health care on a state-by-state basis. This iron curtain protects the insurance companies – not the consumer.

3. Include non-insurance options such as co-ops and health shares

4. Not limit who can participate. Currently, both the house and senate bills on health care limit the participants within the exchange to those who are not eligible for employer or government health care. Accordingly, the exchange in these plans is of benefit to only those without insurance. In effect, the exchange in the current bills does nothing to create a marketplace for health care. These limitations further entrench the employer sponsored health plan and the government’s health care programs. People need to have options and freedom to choose among them.

With these adjustments, the health care exchange proposed by the President and Congress is perfect.

An open and free health care exchange would create the marketplace where individuals could find a health care option that fits their health status, income, and health care goals. Without the kinds of reforms I have discussed in the preceding articles, the health care exchange would be like an out-dated mini-mall on the outskirts of town that no one voluntarily stops by to shop in. Yah, there might be something there but it sure doesn't look promising. In the kind of marketplace I described above, there would be a myriad of options, products and companies to choose from – similar to your favorite shopping mall – where there is something for everyone – all within the reach of the consumer through the exchange.

A free market health care exchange is the perfect vehicle to facilitate the kind of marketplace that will be created as a result of true reform in the health care industry.

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Footnotes

1. http://healthcare.cato.org/free-market-approach-health-care-reform

I got the following directly from http://www.barackobama.com/. It explains better than anything the health insurance exchange:

“The Obama-Biden plan will create a National Health Insurance Exchange to help individuals purchase new affordable health care options if they are uninsured or want new health insurance. Through the Exchange, any American will have the opportunity to enroll in the new public plan or an approved private plan, and income-based sliding scale tax credits will be provided for people and families who need it. Insurers would have to issue every applicant a policy and charge fair and stable premiums that will not depend upon health status. The Exchange will require that all the plans offered are at least as generous as the new public plan and meet the same standards for quality and efficiency.

Insurers would be required to justify an above-average premium increase to the Exchange. The Exchange would evaluate plans and make the differences among the plans, including cost of services, transparent. The Exchange will have the following features:

Comprehensive benefits. The benefit package will be similar to that offered through the Federal Employees Health Benefits Program (FEHBP), the program through which Members of Congress get their own health care. Plans will include coverage of all essential medical services, including preventive, maternity and mental health care.

Affordable premiums, co-pays and deductibles. Participants will be charged fair premiums and minimal co-pays for deductibles for preventive services.

Simplified paperwork. The plan will simplify paperwork for providers and will increase savings to the system overall.

Easy enrollment. All Exchange health insurance plans will be simple to enroll in and provide ready access to coverage.

Portability and choice. Participants will be able to move from job to job without changing or jeopardizing their health care coverage.

Quality and efficiency. Participating hospitals and providers that participate in the new public plan will be required to collect and report data to ensure that standards for health care quality, health information technology and administration are being met.”

I love this concept except for two very important points:

For the health care exchange to truly increase competition, it needs to extend beyond state boundaries. To have two to four companies competing against each other isn’t competition. In most states that is what it will be (Aetna, Blue Cross, CIGNA and some other provider). Health Insurance reform must change the way insurance is written in the states and begin to allow plans to extend beyond single states. If you want to see competition, try 10-20 plans that offer comprehensive in-state and out-of-state benefits competing for your business – that is when you will really see the benefits of this kind of exchange.

The public option will drastically reduce the private insurance industry. The Free Market is the best road for reform and the Public Option will forever close it. You cannot just rebuild an entire industry once it has been destroyed. Rather than destroy it we must seek to make it better.

The health care exchange with the public option is just a mechanism to get people onto the public option quicker than they otherwise would be and therefore would lead to a decline in the free market even faster. The attached video shows the intent of the exchange and public option.



The exchange could be a wonderful tool if used to truly increase free market forces and did so with the modifications listed above. Otherwise, it is a wolf in sheep’s clothing as shown in the video. Free market reform must include the Health Insurance Exchange as tailored above. A modified exchange is an excellent idea that we must push forward. If not modified, it will become a political tool and the consumer will lose.