These are answers to questions from our class discussion. I gleaned the answers from lunch and Menzel’s talk to the Pomona Student Union.
Jenya asked the question about how the Exchange works, but I only caught part of the answer. The part I heard was that the Obama plan will only allow people to use a Federal subsidy for health insurance if the insurance is purchased through the Exchange. If that’s right, then every insurance company would offer at least some policies through the Exchange: who wouldn’t want to sell to customers whose purchases are subsidized?
Here’s a brief description of how the Exchange is supposed to work from an expert.
One way to solve these problems is to have “insurance exchange” in which a variety of insurers would offer the same benefits at a fixed price and have to take all comers, while being paid more if they enrolled sicker patients (risk adjustment). This keeps prices down by reducing administrative costs.
Employer provided insurance, however, doesn’t have to meet the requirements of the Exchange policies, at least, as I understand it.
Update: Jenya reports that, “Menzel said that Obama never announced whether all private insurance companies would have to participate in the exchange or not. If they all do, they will all have to adhere to the minimum requirements. Basically, Obama has been very vague about it.”
Emilio’s question about what stops someone from buying insurance only after getting sick got a quick answer: nothing! Menzel said that Emilio was right to think this is a major problem with the Obama plan and that the best solution would be a mandate, requiring everyone to buy insurance.
Then again, a Democratic plan hot off the presses, from a real legislator no less, includes a mandate. Maybe health care has a pulse.
One of Menzel’s criticisms of the Obama plan is that it does nothing about ineffective care (p. 13). We had two questions about this.
The answer to the second question is easy. It is a criticism of both. It’s in the Obama section so there would be an even number of criticisms.
The answer to the first question was very interesting. We have good reason to suspect that a lot of the surgeries that Americans do are not necessary. There have been studies of some surgical procedures showing that they do no good; the response of the relevant professional organization was to show its members how to reclassify the surgeries so that insurance companies would continue to pay for them. That’s not good.
We also know that surgeons are paid much more in the US than they are in countries with superior health systems, such as Germany. You won’t be surprised to hear that there are more surgeons performing more surgeries per capita in the US than there are in Germany. And you won’t be surprised to hear that the US does worse in most measures of the effectiveness of its health system than Germany does.
Finally, we have a good theoretical reason to suspect that there must be unnecessary procedures in the US. Medicare pays doctors by the services they perform rather than something else, such as the number of patients they oversee, the hours they work, or the outcomes they achieve. Generally speaking, if you pay for services, you get services; when in doubt, even a reasonably conscientious physician will order the service.
Menzel is very fond of Germany. It has a private insurance system, so it’s closer to the US than a completely public system such as those in the UK or Canada. The insurance market is highly regulated and prices are negotiated for the entire system. It achieves greater coverage, better results, and costs less. According to Menzel.