Health care

Obamacare the path to single-payer? Or to insurance companies as utilities?

There’s a provision of the Patient Protection and Affordable Care Act (“Obamacare”) “called the medical loss ratio, that requires health insurance companies to spend 80% of the consumers’ premium dollars they collect—85% for large group insurers—on actual medical care rather than overhead, marketing expenses and profit.”

The Bomb Buried In Obamacare Explodes Today-Hallelujah!

Today, the Department of Health & Human Services issues the rules of what insurer expenditures will—and will not—qualify as a medical expense for purposes of meeting the requirement….

Can private health insurance companies manage to make a profit when they actually have to spend premium receipts taking care of their customers’ health needs as promised?

Not a chance-and they know it. Indeed, we are already seeing the parent companies who own these insurance operations fleeing into other types of investments. They know what we should all know – we are now on an inescapable path to a single-payer system for most Americans and thank goodness for it.

More likely, in my opinion, is that the private insurance companies will become like regulated utilities — the kind of universal health care they have in The Netherlands and Germany.   When I asked I the speaker at the meeting of Health Care for All – Washington about this, he pointed out that the cost of such systems is higher than the cost of true single-payer systems such as Canada’s and France’s. Unfortunately, due to historical and political constraints, it’s possible that the insurance-company-as-utility model of health care payment may be the best the US can get in the foreseeable future.  I support single-payer but am open to the option of insurance companies as well-regulated utilities.

Of course, another possibility is that the proverbial fox polices the hen house and the regulators end up serving the insurance industry.

[Note: see comments for informed feedback.]



4 Replies to “Obamacare the path to single-payer? Or to insurance companies as utilities?

  1. One thing all the nations that use private insurance companies have in common: ALL the insurers must be non-profit. Not only is that required, but also no for-profit company can manage to make a profit in such a highly regulated market. In general, the regulations for insurers require that they accept all applicants, charge the same premiums for everyone, and provide a fixed and comprehensive set of benefits to all enrollees. On top of that, a central bureaucracy keeps track of which insurers end up losers (more sick enrollees) and which end up winners (healthier enrollees) and compensate the losers at the end of the year. Insurers are left to compete for enrollees on the basis of their quality of service.

    Using multiple private, non-profit insurers, originally called sickness funds, to cover the entire population was the original universal coverage model started in Germany in 1870 under Otto von Bismarck. It’s inherently more expensive that a straight single payer model, but it does work.

Comments are closed.