Monday, November 8, 2010

Medical Insurance Reform Idea

I've blogged about the US medical insurance problem before, but as most pundits could attest to, it's much easier to point out flaws in a system than to propose solutions (and, as an aside, only mildly harder to use the flaws and public frustration with the system to advance an unrelated agenda which does nothing to address them and might even make them worse, as the Obama administration has so aptly and repeatedly demonstrated). Part of the reason you don't see people like me proposing 2000+ page legislative "fix all" monstrosities to "reform" broken systems is that reasonable people realize that you don't reform/fix problems with massive legislative fecal-dumps: at best they fix some problems at the expense of more spending and red-tape; at worst they make most problems worse and add more spending and red-tape. The path to actual good reform is to address the actual real problems, one at a time, in a manner which most people can agree makes the situation better on the whole. To that end, I have a small idea which I would love to see in a future legislative reform package (hopefully limited to just this idea).

Currently, when you have medical insurance, there are two contracts in place. One is between the insurer and the provider, which stipulates the terms under which they will be paid for procedures on/for people with the insurance, how claims are resolved, what rates will be paid, what procedures will be covered, etc. The second if between the insurer and the patient, covering how much will be paid, what steps must be followed, what doctors can be seen under what conditions, etc. This is problematic in practice, because medical providers often have "trouble" resolving billing with insurance companies, and pass that burden to the patient, often at great expense of time and hassle. In actuality, these problems can happen on both sides, and they can sometimes be semi-intentional: the medical provider has no particular incentive to submit claims correctly (since the patient is ultimately liable for the costs), and the insurer has no incentive to pay claims unless everything is in order to their satisfaction. Often, the patient is stuck in the middle, resolving any problems which may arise in the process.

I would propose that there be a federal law, which establishes that if an insurance company has a contractual relationship with a medical provider, and the provider admits a patient for treatment under an insurance plan provided by that company, that the patient be only legally liable for the payments as dictated by the policy. This is no functional change from the current situation, except that in the case of claim submission problems, the patient would explicitly not be liable: it would be up to the provider to resolve the problem with the insurance company they have contracted with. The law could also allow for insurance plans where the patient paid the co-payments and deductibles directly to the insurance company upon receiving treatment, and thereby avoid all legal liability to the medical provider.

The benefits would be obvious. The providers would be incentivized to streamline the claim submission process and avoid errors. The insurance companies would be incentivized to pay legitimate claims promptly, to keep providers happy and avoid legal action from businesses with the knowledge and experience to pursue such if necessary. Patients would no longer be caught in the middle, being used as leverage to the detriment of the health care experience. Everybody wins.

Now would be where I would typically insert my snarky comment about it being too good of an idea to ever be actually adopted, but I'll leave that out this time. Seriously, though, for my actual readers: am I missing anything, or would this be a good change?

1 comment:

  1. I agree completely with this. I have observed this problem, but no one reports on it.

    On a semi-related note, I don't like the whole idea of a "healthcare system". Some people have more medical needs than they can afford to pay for, and that's a serious problem. But it doesn't mean the "system" is broken any more than it does when people can't afford other basic needs.

    What you're reporting on here affects people who can afford to pay for the medical needs, which is most people. To get people to open their wallets to help the needy, though, they appear to need to sell it as a systemic overhaul.