Can there be any value that comes from skyrocketing medical costs? Perhaps the medical cost trend will force an important debate about the role of health insurance.
Often, discussions about insurance lead to discussions about cost and affordability. Initially, health plans and insurers introduced the idea of managed care as a means to control medical costs and improve health. Now, the health care community recognizes the importance of performance and cost “transparency” as a prerequisite to engaging consumers and providers as part of the cost and quality debate.
We all recognize the value of transparency. But, because it’s a strategy that’s in its infancy, how do we know it will have enough “teeth” to help tame the medical cost beast that threatens to undermine our collective objective of access, affordability and quality?
Why not do more and take a page out of the auto and life insurance industries? Why not consider rewarding individuals who make healthy decisions and lead healthier lives?
Smoking, poor weight management and poor chronic disease management are three factors that drive up health care costs. Why shouldn’t these choices, and others, be factored into health insurance rates and benefits, in a similar way that motor vehicle driving histories are factored into auto insurance rates? For example, is it fair for a 45-year-old man with diabetes who actively manages his disease and lives a healthy lifestyle to pay the same health insurance premium as a 45-year-old man with diabetes who smokes, is overweight and is making no effort to improve his health?
Linking cost to lifestyle may help us with the goal of reducing health care costs. But even more importantly, it will make us healthier and offer a better model for those who stand to benefit even more — the generation of children that are taking our lead.
Let’s face it, we are bombarded with daily pressures and choices that make it very easy to choose less-than-healthy decisions. Certainly, exercise and diets have been around for years and they haven’t stopped or even slowed our slide. What other short term incentives can we create that will activate our population into a healthier direction?
So the question at hand for each of us is: Can — and should — health insurance be a positive agent for driving healthier living and producing better outcomes?
Eric H. Schultz is the president and CEO of Fallon Community Health Plan.
While we admire the intent, we are yet unconvinced that tiered pricing in group health plans will ever be widely accepted on a legal or social basis.
This topic is frequently covered in discussion on the short-term-medical-insurance.com blog at http://short-term-medical-insurance.blogspot.com/ including a post today specifically refering to Mr. Schultz’s post.
I agree with Eric’s comments … after all, health insurance costs are a reflection of health care costs, and taking more responsibility for one’s own health is the first step in reducing health care costs. On a national basis, I see this as an emerging message that we need to promote in reforming health care nationally and in all forms of insurance – federal employees, Medicare, Medicaid and state subsidized plans, employer based markets and individual purchasers.
However, when we start talking about the rating mechanism for health insurance, most other states operate on the basis of health underwriting, with consumer protections found through the creation of a high risk pool for those with high cost medical conditions. In MA we basically operate a high risk pool for everyone and we have been doing so since guarantee issue health insurance became law in the 90’s. Our state’s latest efforts at health care reform were aimed at making insurance affordable, but neglected to deal with the fact that the guarantee issue market has driven out competition and driven up costs in MA over the past several years, and the last reform builds on a flawed system. The healthy people who can’t afford or don’t see the value in purchasing health insurance will continue to opt out if we can’t deliver affordable options to them. And we can’t deliver affordable options without re-examining the impact of our guarantee issue market.
Why is no media reporting the fact that in Califoria and New York the states are investigating the insurance companies for ripping off doctors,patients and the government?The media is not reporting this and that is awful.The insurance companies are not paying medical bills.I am sick to think even the media is not honest.We have dishonest politicians,dishonest insurance companies and dishonest media.
Question: “So the question at hand for each of us is: Can — and should — health insurance be a positive agent for driving healthier living and producing better outcomes?”
Answer: No.
Insurance companies and their products do very little – if anything at all – that is of benefit to the American people and to our health care system.
In fact, many well-informed individuals would argue that these corporate profit-seeking entities and their bosses are the direct cause of many – if not most – of the negative and destructive influences on healthcare access, affordability and quality.
Health insurance as a commercial product is the infamous centerpiece of our perverse approach to healthcare in Massachusetts and the U.S..
Treating healthcare as a commodity, a thing to be bought and sold in the “marketplace”, instead of treating healthcare as a social good to be guaranteed for all (and paid for by all in equitable fashion) lays the foundation for most of the other ills that plague our non-system of care.
The world-renowned New England Journal of Medicine contains an excellent article making just this point:
“Market-Based Failure — A Second Opinion on U.S. Health Care Costs” by Robert Kuttner, Feb. 7, 2008
click here to read:
http://content.nejm.org/cgi/content/full/358/6/549?query=TOC
Eric H. Schultz writes: “Why not do more and take a page out of the auto and life insurance industries? Why not consider rewarding individuals who make healthy decisions and lead healthier lives?”
Are you saying the people who have Multiple Sclerosis, Lymphoma, Rheumatoid Arthritis, accidental injury, mental disorders or even Strep throat and the general spectum of diseases of the aging. etc., should be judged and punished for their misfortune?
Of course, they have no choice in their diseases. It seems quite oversymplistic to assert that most ill health is caused by not making “healthy decisions”. Some more circumspect souls might even see it as condescening.
In fact, blaming the victim is no way to fix the atrociously dysfunctional medical care non-system that exists in Massachusetts or this country. The MANDATE FAD that pervades current thinking is equally condescening and will prove to be as ineffective and detructive as Prohibition or McCarthyism.
Just as we pay for our police, fire departments, schools, national security and myriad public services, medical services should be provided and the expense broadly shared for the common good. There is no justification for profit in the health related misfortunes of others.
Medical CARE and health INSURANCE are not synonymous and they never will be. Yes, life is a crap-shoot, but we are not willing gamblers in this table’s stake.
So Beth, do you realize that a smoker pays the exact same premium as a non-smoker? That is not misfortune, that is a choice.
What about the individual who is repeatedly told by their physician that they need to improve their diet in order to lose weight. In this example, losing weight would lead to lower blood pressure, lower cholesterol, and the lessening of a diabetic condition. Wouldn’t that also be a choice?
Let’s use lipitor as an example. Non discounted lipitor costs about $110 per month. So if you have 1000 people in the commonwealth whose high cholesterol are diet driven and not hereditary, then someone, the state, the taxpayers, the insurance company, but not the individual, is paying $1,320,000 to cover that medication alone.
Now do you think that Mass only has 1000 people in that situation. The number is probably more like 600,000 given the obesity rates in the country. Now using that number, the premium surcharge to cover lipitor is $792 million every year in Mass. alone.
Never post before 2 cups of coffee. I forgot to adjust the population for age. There are more like 300,000 in that category, not 600,000. So the surchase is more like $400 million.
I just read in Forbe’s magazine that William McGuire CEO of United Health Group Inc. the largest health provider in the Country got a “compensation”package of $124.8 million dollars,I don’t know what compensation deserves that when the citizens of this country are going broke.This is why we must get rid of greedy insurance companies.I also read another article that stated “The notion that the private sector is always more efficient than the public sector is propagated by business interest.”The private insurance industry is causing our Country to go broke.
We were reading your blog and wanted to point out that in Minnesota atleast, premiums are different for smokers and non smokers. Smokers pay on average 16% more for their health insurance premiums.