GOP wrong on health care

By Marshall Beard

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Recently, I heard the Republican governor of Florida, like several others, say that his state would be among those to reject national health insurance exchanges, with the belief that market forces are the best way to control costs. Meanwhile, recent Towers Watson surveys report that employers will see 7.4 percent health increases in 2012, reduced to 6.2 percent after plan changes.

The three biggest reasons cited by respondents for rising costs are new medical technology causing overuse of medical care, medical providers recommending too many services and providers' efforts to boost profits.

How tired are you of hearing how much many insurance companies and hospitals (and colleges) are doing to hold down costs, and are proud that their increases are only double or triple the rate of average inflation? As an employee benefits professional since 1974, I would observe that market forces have not worked very well in health care.

When I started, there were dozens of quality group health insurance companies. Today, there are fewer because of consolidation after a lot of carriers threw in the towel on the health business. This indicates that many fragmented pools, whether high risk or otherwise, do not create sufficient economy of scale.

Best efforts of employers to control their own pools are difficult at best. They rely on the skill of their insurance company's effort to negotiate prices with reluctant hospitals, doctors and vendors. Wellness programs sound good, but my experience is that many employees resist this intrusion into their personal lives and go through the motions while thinking lifestyle as a right of freedom, with little concern about the impact on medical costs - especially when the medical event finally occurs.

Disease management programs are often viewed as big brother, evidenced by past HMO (health maintenance organizations) resistance and recent misrepresentations by politicians such as Sarah Palin.

My experience with trying to create pools for one large or several smaller businesses is that participation only comes from those who can get the insurance less expensively.

It is worse when it comes to individual health insurance. This is called “adverse selection,” meaning that freedom in the marketplace drives good risk to low price, and bad risk to the lowest available price. The pool eventually self-destructs under its own weight if it is a subset of something much larger, with yet more choices.

Traditional barriers to entry for pool protection, like medical questions and pre-existing limits, are going by the wayside with the recent legislation and public sentiment.

As a lifelong Republican, I am observing that this party's belief in market forces will only perpetuate the access problem until they adopt some ideal of national pressure on health care providers' practices that also include more efficiency, quality and effective influences on patients' behaviors. Business would actually catch a break from “cost shifting” by providers who are underpaid by others.

While Medicare and Medicaid may be poster children for poorly administered programs, their large pools and effective contracting are powerful in market prices. Just ask your doctor. They are slowly, but surely, working toward paying for better quality and outcomes as the largest payer to both doctor and hospital practices.

We need our politicians to recognize this and talk about efficient solutions instead of just being against their adversary all the time with few credible alternatives.

Marshall Beard of Cedar Rapids is a former director in the corporate benefits departments at Rockwell Collins and Steelcase. Comments: marshallbeard@yahoo.com