Clarifying Non-Group Healthcare Insurance Market Reform

In a Maine Voices op-ed published last Saturday I outlined my “let the federal government fund it, and the free market run it” non-group healthcare insurance market reform framework, building upon the initial outline posted here in mid-April. But after reflecting on the op-ed myself, as well as digesting third-party feedback, some clarification is in order.

To review – as of year-end 2015, according to Kaiser, 268 million Americans were insured by “group” insurance (employer/Medicaid/Medicare/other), 22 million by private non-group insurance, and 29 million uninsured.

When I refer to the “Non-Group Healthcare Insurance Market” (NGHIM) I mean the 22 million privately insured and the 29 million uninsured in totality (51 million). I structure my commentary this way because the ACA treated the market as such in its attempt to reduce the uninsured rate. But to the detriment of clarity, in the Maine Voices op-ed I used the NGHIM label interchangeably between labeling the entire market and in reference to those privately insured.

Second point of clarification is my use of the phrase “free market”. In the context of non-group healthcare insurance reform I treat state governments as “free market” operators, as they are incentivized by balanced budget requirements to operate within a “return on investment” framework.

My lack of clarity is really not helpful because the issue is quite simple:

  1. From a regulatory standpoint the federal government should remove itself entirely from the non-group healthcare insurance market –> i.e. do not force a one-size-fits-all structure on to private healthcare insurance providers
  2. The private healthcare insurance providers should then step in and compete to cover the 51 million private insured/uninsured –> appropriately structured (i.e. like a utilities, perhaps), competition would be fierce
  3. Only then – once federal government regulations are removed, and the private healthcare insurance providers can price policies according to a free market “return on investment” framework – can *we* determine what level of federal government funding is required to insure all 51 million non-group individuals, and where state-level implementation is appropriate

Private market implementation is more effective than state-level implementation; and state-level implementation is more effective than federal government implementation. The break point between private market and state-level implementation is when the quality of private market implementation no longer justifies the cost – perhaps when insuring those with preexisting conditions. But I am not an expert here; I am merely outlining a mathematics-driven framework under which healthcare experts can operate.

* * * * * * * * * * * *

In this morning’s NYT, Michael Sparer, professor of health policy at the Mailman School of Public Health at Columbia University, outlined a framework for reforming the ACA that is very much along the lines of what I am pushing. He says the following:

“Another myth is that states need more freedom to develop innovative Medicaid policies. But states already have flexibility to shape their programs, and the Trump administration could give them even more without changing the law. Indeed, nearly every state is experimenting with novel approaches to the delivery of care, benefits packages and provider payments. This means New York can pay immigrant-aid organizations to provide health screenings, while Indiana experiments with high-deductible plans and health savings accounts.

“The notion that Medicaid is a ‘big government’ program is yet another myth. More than 60 percent of Medicaid beneficiaries are enrolled in private managed-care plans now. Medicaid is actually a successful public-private partnership.”

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