Gop Medical Plan Makes Sense

Americans buy automobile insurance to protect them against a major financial loss in the event of a serious accident.

They do not use insurance to pay for oil changes or to patch up a tire. That’s not what insurance is for, and they would consider an expensive policy covering every filter change to be absurd.

Yet, the managed-care product that millions of Americans call “health insurance” is no less strange.

A business dictionary defines “insurance” as a “system whereby individuals and companies concerned about potential hazards pay premiums to an insurance company, which reimburses … them in the event of a loss.”

An annual checkup is hardly a “hazard.” That checkup or regular mammograms or allergy shots all are predictable and ordinary expenses - not risks to be insured against.

People also do not need insurance coverage for most unexpected medical problems, such as ear infections. That would be like a homeowner buying a policy to cover broken windows.

To return to the automobile analogy, imagine that you are enrolled in a CMO a car management organization. Your car needs a new muffler. Ordinarily, you would choose which shop to patronize by applying your own criteria - price, location, efficiency, friendliness, skill. However, your CMO has contracted with Acme Mufflers to do all the muffler work for its members. You must go to Acme if you want the insurance company to reimburse the cost.

Pretty ridiculous.

Many people are under the false impression that when their health maintenance organization (HMO) picks up the bill for a routine blood test, they are getting something free of charge.

In reality, however, consumers are paying dearly for the HMO “service” of micro-managing their day-to-day health care. They bear this expense in the form of higher insurance premiums. If their employers provide coverage, the steeper cost is passed through in the form of smaller paychecks.

HMOs typically pocket about 20 cents of every premium dollar for salaries, stockholder dividends and other costs of administration and ownership.

This is clearly a lucrative business. Last year, executives at eight large HMOs paid themselves a bundle, with the poorest making $3 million; one boss took home nearly $16 million. This isn’t the kind of money you make selling real insurance.

These chieftains assert that they have succeeded in slowing the rapid growth in medical costs. They are partly correct.

Under old-fashioned comprehensive health coverage, the patient could go to any doctor for any service, and the insurance company usually would pay the bill. Patients obviously lacked incentives to compare doctors’ fees or to avoid unnecessary tests. The expenses were added to the premium, which was tax-deductible.

Insurance companies stepped in and cleaned up because leaders in Washington long have lacked the imagination and courage to do something about rising costs.

However, the Republican House leadership recently has come up with a proposal that would help control costs while releasing those who hate HMOs from the absurdities of managed care. It is called the “medical savings account.”

A medical savings account returns the decisions on low-level medical care to the patient.

It works as follows: Instead of buying comprehensive coverage at great cost, the company (or individual) purchases a cheaper catastrophic plan which includes a high deductible.

Catastrophic coverage is activated only when the patient needs heart surgery, a kidney transplant or some other expensive treatment. (That is real insurance, similar to a homeowner’s policy that covers a major loss such as a house fire.)

The money saved goes into a tax-exempt account that the worker can tap for routine expenses. Workers keep what they do not spend.

The beauty of this arrangement is that consumers may visit the doctor of their choice. However, because the money comes out of their personal accounts, they will have good reason to ask about fees and question bills.

Having said all this, this writer still prefers to contain costs and preserve freedom of choice through a European-style national health insurance plan.

However, Democratic leaders have demonstrated time and again that they will do nothing to displease the insurance industry.

Only the Republicans have shown the fortitude to propose an idea that cuts out HMOs. The medical savings account is a lot better than what we have.

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