Saturday, March 1, 2014

Health Insurers Try to Cover Themselves

Great deeds are usually wrought with great risks.

Herodotus, C485 to C425

Insurers are rushing to gather health information from the new customers they won on public marketplaces in a high-stakes outreach effort crucial to their hopes of profiting from the health-care law.

Anna Wilde Mathews, “Health Plans Rush to Size Up Clients”, Wall Street Journal,  February 28, 2010

Every great utopian  deed, like universal coverage, has two sides.

The first side,  if you are government,   you  must ignore all  pre-existing conditions and people at risk,  and assume all risks in the name of compassion.

The second side,  if you are a health insurer, you must try  to minimize or neutralize those risks.   This will be difficult,  for you are an industry based on the concept of risk.

Side One

If you are on the governmental  side,  you can do your deed in two ways,

·         Cover all conditions,  be they pre-existing or non-existing,  no matter what the age or gender, because all conditions will exist sooner or later.

·         Offer universal comprehensive coverage covering all eventualities to make sure you have covered all the risks.

Side Two

If you are on the insurers’ side,  you have a problem.    You know that the government cannot offer or afford  universal coverage without you because its financial risk is astronomical and incalculable without your actuarial help.  

To survive, you must do 4  things, as surely as dawn follows night.

·         You must dramatically  raise your premiums to cover your losses.

·          You must raise your deductibles to astronomical levels, in effect, making your insurance catastrophic  rather than routine coverage.

·         You must strike a deal with government to bail you out if  the catastrophic losses you anticipate occur.

·         You must somehow render harmless conditions government has imposed upon you,  namely, that you must  cover all pre-existing conditions,  and you must offer comprehensive coverage without knowledge of your clients’ health status.

Cushioning Your Losses

But if you are on side two,  and you truly want to cushion your losses,  you must find ways to assess the condition of the population you are asked, nay, forced, to coverage. 

To do this, says the Wall Street Journal reporter,

“To fill in the blanks, insurers are calling, emailing and writing letters to new enrollees, urging them to divulge information about their conditions, prescriptions and even personal habits, often through online forms called health-risk assessments that have long been used in employer-sponsored wellness programs.”

This risk-minimization game reminds me of a nursery rhyme game.

Here is my version.

A-Risk-It for  All, A-Task-It for All

A Big Red Basket for All.

My uncle wrote a 2700 page letter for All.

On his way for universal coverage for All.

But alas, employers dropped their plans.

People saw their plans and doctors dropped.

But fear not, Uncle Sam will pick everything up,

And put the expense in somebody else’s pocket.

Tweet:   To cover all, government must end all risks for all conditions for all ages: to survive insurers must find what these conditions are to set their rates.

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