In my previous post I located 4 areas of consumer choice that were relevant to consumers and discussed how the public option has been an effort by Democrats to appeal to more conservative voters in offering a public insurance option as one of many choices rather than a single-payer system with which it is often compared. In my “anatomy of consumer choice” in healthcare, I realize that I left out one choice that is obvious: “choice of insuring entity”, which was a large oversight on my part
Thus consumer choice in healthcare can be subdivided into 5 categories:
- Choice of Insuring Entity
- Choice of Plans
- Choice of Healthcare provider
- Choice of Treatments
- Choice of Wellness/Preventative Health Programs
In practical terms, the choice of insuring entity will only have an effect on consumer healthcare experience if:
- Any insurer is allowed to reject your application due to medical conditions.
- Any insurer is allowed to terminate your coverage unilaterally due to medical conditions
- Different insurers offer different plans (this seems obvious but in all-payer systems not so obvious)
- Different insurers offer coverage for different treatments
- There are “in-network” and “out-of-network” providers or the insurer is integrated with a healthcare delivery system
- Insurers differ in terms of their treatment of delinquency of payment or other financial disputes
- Insurers differ in terms of access to subsidies for lower income subscribers.
- Will become insolvent or go out of business during the term of your contract
- Has symbolic meaning for you in terms of political orientation or status
The “public option” policy proposal actually hinges on a choice of “insuring entity” in that the public insurer is supposed to behave like a private insurer except be “public”. As the playing field is supposedly leveled between the public option and private insurers, this would mean that any rules that applied to private insurers would also apply to the public option.
Ron Wyden’s approach that overlaps to some degree with Republican (not necessarily serious) calls for market-based solutions to health reform puts an enormous emphasis on choice of insurer, not just the choice of public and private insurance but choice between private insurers and therefore competition between them.
If under the proposed healthcare reforms, all insurers will be mandated to adopt similar rules with regard to accepting subscribers, payment policy, and subsidy, the differences between private and public insurers will be diminished. Furthermore, we do not know yet about insurers being allowed to fail in the new regime as they will be both recipients of mandated payments and maybe will be able to compensate for adverse selection (a sicker population) by getting risk equalization payments from a pool. What will happen to the insurance policies of those who have paid into an insurer who goes bankrupt? The latter is not likely to happen in the first place, if the evolution of universal health care systems is any guide.
In my next post I will explore how choice looks in the successful universal health care systems in a number of countries. As we will see, you get more effective or substantive choice in most areas of healthcare in these systems that nevertheless have much more government involvement in structuring the healthcare system.
