My name is Kat, and I love Insurance law.
I realize it’s unhip to buck the hue and cry trend over reform, but I keep thinking about reforming what we’ve already got, on a market level. The operative premises are:
1. The goal is not to get as many people insured as possible; it’s to get as many people care as possible. That lawmakers keep framing the debate as the former represents, I think, a major oversight.
2. Market evolution suggests that what exists is exactly what we want. “Reform” is to throw a stick in the spokes of a bicycle the entire market is riding in tandem. It’s dangerous and foolish, but #1 prevails so this thought experiment is about doing something.
3. This experiment is strictly about insurance, which is to say the articulation of finance and law. Obviously (!) the answer to health care reform is tort reform. But I will save torts for another day.
So. The thing that makes Insurance fascinating is that it’s a) private; and b) a sophisticated contract between sophisticated parties.
Insurance has nothing to do w/ outsourcing one’s well-being. W/ issues like public safety, we blithely outsource decisions regarding protection to Big Government, and we squirrel away military bases largely away from metropolitan areas, but we rely on that protection just the same.
Insurance is not outsourced; it is not unseen. We make an active choice to join a private network. We pay frequently, and big bucks for that safety net. It’s a contract and a long-term commitment. From the start we know that if we break that contract we’ll be faced with risk, uncertainty, and we’ll likely have to pay dearly for our own accumulated liability when looking to replace that K relationship.
The way the safety net works is that we all pay in and hope we never have to pull out. When we pull out it’s because we’ve had a problem, an illness, an accident. Everyone’s certainty and well-being is bolstered by this paid-in community.
Problems can arise, of course. If the community itself quakes, as in the aftermath from hurricane Katrina, then the entire safety net falters.
Many of these quakes are fascinating (see the operative payout system from the World Trade Center’s layered insurance K’s for a great example). But as with any market system, the key is to create a strong core. Insurance law is about creating incentives for insurance companies to cement solid financials. This way, when disaster strikes, companies can and will pay out, and they will do it properly.
Because we’re pursuing a single goal — getting as many people care as need it, and getting that care properly — we need to examine the problem. First, most uninsured Americans aren’t uninsured bc they can’t afford it; they’re uninsured bc they choose not to keep insurance.
Not keeping insurance is a perfectly valid choice. Perhaps not the most sophisticated choice, but it’s a valid choice nonetheless. Indeed, for those healthy or wealthy enough not to fear uncertainty, those thousands of dollars a year saved on unrealized insurance premiums can certainly fund any problems encountered later in life.
It’s for those endgame problems that insurance companies collect such high premiums. Yes, it sounds expensive to pay in now, but consider the cost of therapy later on.
When a patient undergoes chemotherapy, for example, one incidental cost covers daily vials to replenish or replicate lost immunity when white blood cells falter. Each vial costs over three thousand dollars. Add to this the other major non-incidental costs, and insurers’ high premiums come into stark perspective.
It makes sense that insurers would be so diligent about keeping pre-existing conditions out. But what if there were some provision to cover cancer patients, rather than simply dropping them at the first loopholed opportunity?
The way the system works now is that an insured keeps paying roughly similar premiums over the course of his insurance. Those premiums rise under certain conditions, but by and large insurance companies simply let patients pay a deductible up to the cost of a treatment. Insurance companies pay strict attention to which treatments patients pursue, and the companies govern when and how patients may try a given route.
What if insureds had an option to switch from, say, Aetna to a wholly-owned subsidiary, like Aetna Cancer, upon diagnosis? Patients would pay much higher premiums upon switching, but they would also gain a huge array of better options. Treatment centers closer to home, for example, or a more permissive range of experimental treatments.
Would companies go for this? Financially it likely makes sense. If I know Aetna allows me to switch and maintain this option if I get diagnosed, I may well choose this company over one I know will keep me on a strict plan if I get cancer. So the market would likely respond favorably by buying more regular Aetna, and possibly paying higher premiums all along, to preserve that right to Aetna C.
What about preexisting conditions? I can’t help but think I’d pay more for Aetna, to preserve switchability, if I know cancer runs in my family. The entire market response may well correspond to each respondent’s anticipated risk.
How would this change Aetna’s screening diagnostics for hopeful insureds? Aetna would have to consider the fact that each insured will have the option to pay more later in life and get a better range of choices. May Aetna change the point at which a condition becomes “preexisting”? Can a company do that, legally?
Do insurance companies ask for detailed family history now? Is it harder for adopted folks to get insurance? If someone has an insuppressible family history and is denied insurance because of it, does that constitute discrimination? If a healthy person w/ a family history of heart disease and a predilection for beef is denied, is that discrimination on a too-loose definition of “preexisting condition”?
The major benefit of letting people switch to better subsidiary coverage is that doctors would still get paid. This wouldn’t accomplish the same sort of wave to better care that we’d get w/ tort reform, but it would slightly loose our grip on doctors’ shorter hairs such that they wouldn’t be quite so unwilling to touch a patient — or, perhaps more insidious, to medicate a patient rather than treat.
More to come. This is interesting.