Monday, July 28, 2008

The Foraker-Rasmuson Health Insurance Plan

The July 27, 2008 issue of the Fairbanks Daily New-Miner carries an article based on an earlier one in the Anchorage Daily News describing what it calls a “bold insurance plan” being put forth by the Foraker Group and the Rasmuson Foundation aimed at lowering the number of uninsured persons in Alaska. The idea is to make it easier for the 6,000 employees of nonprofit organizations to buy health insurance for employees, thereby getting the employees off the rolls of the uninsured.

While laudable in its intent to help some Alaskans with their health care expenses, the Foraker-Rasmuson plan, like many other proposals, focuses on the wrong problem. The real problem is affordable health care, not the affordable health insurance the plan proposes. If health insurance actually paid for the full cost of health care, then having affordable health insurance would be a great idea. Unfortunately, that is not the case. Most commercial health insurance pays only a part of the bill, and the proportion it pays declines with greater need for health care. It is generally true that the more affordable a health insurance policy is, the lesser portion of the health care cost it pays. The majority of Alaskans need comparatively little health care each year, so whether or not they have health insurance, their health care costs are limited, perhaps only to what they pay in health insurance premiums if insured. If they have no health insurance, their cost is even less. Insured or not, these are the lucky Alaskans.

But woe is the Alaskan, insured or not, who needs a lot of health care. At no fault of his own perhaps, he has a serious car accident that puts him in the hospital, she has a complicated birth, or he contracts cancer or Alzheimer’s that requires extensive or long-term care. By the time this person pays for any premiums, deductibles, co-pays and all other out-of-pocket expenses associated with his or her health problem the person may face a bleak financial future that might well include bankruptcy.

The Foraker-Rasmuson plan fits right in with the current trend of shifting risk from employers and insurance companies over to individuals by means of high-deductible insurance policies and health savings accounts. While lowering the cost of health insurance, the plan places more of the cost of health care onto the individual, often at a time when the health problem also curtails family income because of inability to work.

One fault that I see with the plan is that it can lull people into thinking that, by having high-deductible insurance and health savings accounts, they are protected from high health care costs. They think they are safe right up to the time when a health crisis occurs, and then they find out just how bad it can get. The statistics are compatible with that pertaining to playing Russian Roulette with a 10-chamber revolver. If the person is commercially insured, only one chamber of the gun contains a bullet, but if he is not insured, two chambers contain bullets. Obviously it is somewhat safer to have insurance, but complete safety is an illusion. Real safety comes only with having a system of universal health care, in which case there are no bullets in the gun.

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