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Monday, February 28, 2011

Problem solving healthcare

Techniques in problem solving appear to be a lot more advanced than knowledge of them, which is unfortunate given the growing list of problems that are critical in our everyday lives. I was lucky enough as a kid to have courses on problem solving and also to have a lot of personal reading on the subject. As an adult I am at times mystified when solutions that seem simple to me not only are not known, but people still don't do them even when given solutions that are easy, and easy to explain.

Like consider healthcare insurance which is big in the news a lot lately as well it should be. Healthcare costs are a growing cost of government, and they are spiraling out of control, where one major issue is insuring everyone.

Insurance companies don't want to insure sick people, or people they deem very likely to get sick.

People need insurance though and politicians try to force insurance companies to "insure" people when it really just becomes paying their medical bills as it's no longer insurance when you know the person is already sick, or very likely to get sick. Kind of like asking auto insurance companies to give car insurance to people after the car has been in a wreck.

Oddly enough, politicians seem intent on framing the problem as evil insurance companies, when the proper framing of the problem appears to be, who pays for people who are ill or likely to become ill.

Seem like a small shift? Not really.

I worked for a while at a corporation that had a health insurance company that third party administered its health insurance. So the health insurance company issued us their insurance card, but our company actually paid the insurance costs.

What makes that story even more remarkable to me was that I was working at an insurance company. Naively you might wonder why they didn't just do the insurance themselves, which I wondered. Turns out it was better business to let another insurance company do the administration, while they paid the actual money out.

So if the problem is who pays for people for whom "insurance" is the wrong word, simple answer I'd think is the government, but they still have the same insurance as everyone else, in that they get the same card, but are third party administered.

See? All that from properly framing the problem, but it gets better.

If health insurance companies only directly insure healthy people but everyone has the same insurance while the government just pays for some who are third party administered, then they have a business incentive to keep people healthy!!!

Wow. We just went from evil insurance companies that won't "insure" sick people to benefit partners who work to keep people healthy.

Can that system be gamed?

How? If health insurance companies can only directly bill healthy people what possible incentive might they have to, say, diminish their profit area by saying someone is not healthy if they are? And why would they claim someone ill is healthy? Then they're back to the issue they have today!

I've given more on the pluses and minuses with a full plan that I tweeted a while back and then expanded on one of my other blogs.

I tweeted it July 26th and put it on my blog September 9th, in 2009.

I've watched the healthcare debate with a lot of interest since then, and what is clear to me is that demonizing insurance companies is about asking them to not do the business of insurance, but instead engage in social welfare, without calling it such, when they can be valuable forces for good, by having a simple system that allows them to work hard to increase the number, yup, of healthy people who would be happily paying customers.

Oh, so what happens when a healthy person gets sick? Their insurance company pays to the limits of the policy. Beyond those limits that person gets paid for by the government, but they keep their insurance company which begins third party administration.

So is there some reason it would be really hard for third party administration on the national level? I'll admit, I do not know. Looking for web information on it, here's something I found on the Wikipedia, which I think can give an idea: en.wikipedia.org/wiki/Third-party_administrator

Oh, and what about government entities that already take care of people like Medicare and Medicaid?

Under this idea they'd no longer be necessary.

The government would pay for people who were third party administered and would collect their insurance premiums (yes, you'd still pay premiums if you could afford them), so the cost of administration would be shifted off of the government and onto the insurance companies, leaving the government to handle the social welfare role.

Leaving the business of insurance, to the insurance companies.


James Harris
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