Question

1, Why is insurance so complicated in the U.S.? What are your recommendations to improve health care insurance?

2. Describe how an insurance policy creates incentives for some medical services and disincentives for others.

3. Discuss the means that HMOs and MCOs use to contain costs.

4. How will the new insurance exchanges being dictated by health care reform affect the consumer's ability to purchase affordable insurance?

Answer 1

1.

1. Medical care is expensive, and they make higher profits if they deny as much care as possible to their customers while still charging them high premiums.
2. If they deny too much care, and too many of their customers get sicker and/or die, people will stop buying their policies. Because all of the companies behave in similar ways, they all worry (correctly) that the public will eventually force the government to change the rules in ways that will allow them less ability to profit.

So the insurance companies have to walk a tightrope, denying as many claims as they think they can get away with but not so many that they look like villains. They actually make the process complicated on purpose, because a certain number of people will just opt to forego health care for non-life-threatening problems rather than go through the excruciating process of filing an insurance claim. Sometimes health care providers and/or their customers will just give up and eat the cost, because they are tired of fighting with the insurance company. So making the claims process complicated saves them money, and thus increases their profit.

2 Creating complicated policies that cover certain things but not others gives them an ability to deny care whenever they think they can get away with it. They make complicated deals with various networks of healthcare providers, which limits their customers to only using these particular providers. This allows the insurance companies to gouge these providers and treat them poorly, because they can threaten to yank away a lot of their business if they complain.

3.HMOs were set up to approach health from a wellness perspective rather than a disease perspective. HMOs believed you could save money and lives by getting regular checkups and treating illnesses in their earliest stages, where the costs were lower and the prognoses better.

4.Prior to the passage of the Affordable Care Act, the individual insurance market was a notoriously difficult place for consumers without employer-based health benefits to purchase insurance. It also was challenging for insurers to sell insurance without incurring large losses. As a result, insurers went to great lengths to exclude people with even mild health problems. In 2010, the Commonwealth Fund Biennial Health Insurance Survey found that more than one-third of people who tried to purchase health insurance in the individual market in the previous three years—an estimated 9 million people—had been turned down, charged a higher price, or had a condition excluded from their health plan.

By January 2016, near the end of the ACA’s fourth open-enrollment period, things had changed. The size of the individual market has nearly doubled since 2010.2As a result of changes that have made purchasing and affording coverage easier—and with consumer protections such as bans against insurers charging people more or denying coverage because of preexisting conditions—nearly 9 million people have signed up for a plan through HealthCare.gov, the federal marketplace website.3 This does not include enrollment in 11 states plus the District of Columbia that operate their own marketplaces. An additional 7 million are estimated to have purchased coverage in the individual market outside the marketplaces, where insurers must comply with the same regulations as the ACA.4 Further, more than 16 million people have enrolled in Medicaid and the Children’s Health Insurance Program.5 All told, more than 30 million people are currently insured as a result of the ACA’s insurance subsidies, expanded Medicaid eligibility, state and federal outreach efforts, and market regulations.