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While reading 'The Wrecking Crew' by Frank Thomas, I came across the following passage.

"Rule two.  Congress can regulate all it wants but without enforcement it is meaningless.  Immediately upon taking office, (Anne) Gorsuch did away with the EPA's Office of Enforcement.  She then came up with a series of schemes that seemed designed to make the agency's work impossible: turning over enforcement power to the states; making toxic waste reports that had been mandatory into a handful of questionnaires that would go to only a hanful of polluters. ... But for the true believing wingers it was never enough.  In a memo leaked in 1983, a particularly zealous member of Gorsuch's inner circle assailed a slightly less zealous colleague for being too strict on pollution enforcement and thus "systematically alienating the primary constituents of this Administration, the business community." "  ('The Wrecking Crew', by Thomas Frank, Metropolitan Books, copyright 2008, pg 159)

It set me thinking about the primary constituents of the insurance companies and the motives of big business as it pertains to health care and whether or not it may be possible to entirely redirect the business motives of an industry into something more humane.

Currently, we are laboring under a system where the profit motives of insurance companies are entirely tied to providing as few services as humanly possible.  With their feet held to the fire by shareholders and driven not only by the monumental profits that they have already racked up, but by the staggering amounts that it may be possible to reap by those whose growing bank accounts seem only to fuel their greed, it is no wonder that insurance companies act as they do.  It makes good business sense to do so.

Every dollar that goes to customer care is one less dollar in their pocket.  It is a zero sum game of chilling properties where total benefits for the customer can mean the death of the business, but total profits for the business means the death of the customer.  It is a business model that exists as a permanent floating non-sequitur, but one where customers are currently powerless and all the rules are made in the corporate office, a situation entirely devoid of humanity.

Let's imagine, however, that it may be possible to change, at will, how the entire health insurance system works.  What if we could change the game entirely at a single stroke?

Let us say that instead of an insurance company banking their profits directly from the customer, the monies derived from premium payments go, instead, into a holding company that is a mandated part of the insurance business structure.  This holding company, a kind of health care escrow account, holds all payments by consumers.

The insurance company does not take its profits directly from this pool, but recieves a percentage of the monies that are paid out of it to the health care system when services are provided to their customers.  Every time a medical bill is paid from the fund for health care for a patient covered by the insurance company, the company is paid out of the fund according to a percentage of the billing.  This would put the focus for profits not on the lack of services provided, but on the number of services provided for the customer.  The greater the number of customers, the greater the payment to the insurance company.

Additionally, since it is difficult to count on a constant rate of pay from the possibility that people may or may not need services, a certain amount of the total fund will be invested by the holding company in solid stocks with a good, consistent return rate.  The profits from these investments would be split between the insurance business and the holding company at a rate of 80/20 in order to ensure a consistent flow of profits to the insurer for the continuation and expansion of business.

How interesting would it be to see insurance companies that, rather than purge their rolls of customers, actually go out hunting for more people to sign up?  How different would it be to see the profit motive placed within the proper context- that of gaining profits from the services provided to the customer?

While I'm certain that this plan would have its own holes and areas of abuse, it may be something to think about.  Maybe we can make this thing work after all.

Originally posted to jlang57 on Fri Feb 26, 2010 at 10:31 PM PST.

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Comment Preferences

  •  Tip Jar (4+ / 0-)
    Recommended by:
    debedb, HoundDog, boophus, tardis10

    "If we would guide by the light of reason, we must let our minds be bold." -Brandeis

    by jlang57 on Fri Feb 26, 2010 at 10:31:05 PM PST

  •  If I could really (1+ / 0-)
    Recommended by:
    boophus

    "change the game entirely at a single stroke?", there would be no health insurance companies at all. None,zero,zip,nada.
    Health Insurance does not equal Health Care. Never will. Never.

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Fri Feb 26, 2010 at 10:55:37 PM PST

    •  No insurance companies (1+ / 0-)
      Recommended by:
      tardis10

      Amen to that.

      "If we would guide by the light of reason, we must let our minds be bold." -Brandeis

      by jlang57 on Sat Feb 27, 2010 at 12:13:25 AM PST

      [ Parent ]

      •  You can avoid insurance companies (0+ / 0-)

        Just pay out of pocket.  If the greedy insurance company is the problem, then you should be able to make out quite well without paying them.  Just pay your doctor directly.

        •  If you have income (0+ / 0-)

          and can spare the money and can find a doctor who will accept new patients and cash for service.
          The insurance companies own health care...they're just letting us borrow it for awhile.

          •  So the issues are (0+ / 0-)
            1. You don't have the money
            1. You don't think a doctor will take it (?)

            But this is the fault of the insurance company?

            The problem is that we want to pay the insurance companies some managable amount, say a couple hundreds of dollars a month and then have them pay whatever the doctor wants to charge for whatever care we seek. After all medical decisions should be between us and our doctor.

            Medical decisions can only be completely between us and our doctor if we are paying the bill directly.

  •  So when the fund goes broke? (0+ / 0-)

    If the insurance companies make money by spending as fast as possible, what assures that there is money in the pool to pay?

    Profit is not the only incentive to avoid making payments.  They also have to try to keep premiums down or no one will pay them.  At the very minimum, the premiums must equal the amount of payments.  (This is a simplification, in a good market, temporary investment of the premiums can allow payment of higher claims than premiums).

    Insurance company profit is not the major source of increasing costs.  There are major non-profit insurance companies and they have pretty much the same characteristics.  The average 5% profit is comparatively small.

    The source of the problem is the rising cost of care itself.  With care going up at about 10% a year, it is going to be unaffordable no matter who pays the bill. We need to reform actual health care.

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