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Letters to health-care Santa: Let Ron Wyden fix the exchanges!

1996-small_fuchs.jpgOver the course of this week, I'll be asking some health-care experts what they'd like Santa to add to the bill during conference committee, and publishing their responses on the blog. Our next payer is Victor Fuchs, the Henry J. Kaiser Jr. Professor of Economics and of Health Research and Policy, emeritus, at Stanford. Fuchs is a member of the Institute of Medicine and was president in 1995, and a distinguished fellow of the American Economic Association.

I would opt for passage of the Wyden-Collins Amendment, which provides vouchers as a new voluntary option for employers and employees to purchase health insurance through the health insurance exchanges. Inclusion of the Wyden-Collins Amendment in the final health bill would strengthen the reform effort in several ways:

1. The employer would save a 6 or 7 percent broker's fee plus internal administrative costs.

2. The employees would have a wider choice of plans and would be free to switch employment without having to change health insurance.

3. The insurance exchanges would work more effectively and efficiently because they would have many more participants.

The key to the success of this arrangement is a well-functioning risk-adjustment system to protect insurance companies against adverse selection. Given such a system, the voluntary option to allow employed persons to use the insurance exchanges is winner all around. (Except the brokers.)

Earlier in this series, Diane Archer called for Congress to create national exchanges rather than state exchanges, Alain Enthoven offered some ideas for how to fix the exchanges, David Cutler proposed a soda tax, Austin Frakt argued for competition in the Medicare Advantage program, Jacob Hacker broached letting the public sector help the private sector negotiate lower rates, George Halvorson tried to expand the exchanges to include providers of actual care rather than just insurance coverage, Henry Aaron wants the death panels back, and Jon Gruber wants the House's definition of decent insurance coverage to prevail.

By Ezra Klein  |  December 23, 2009; 11:31 AM ET
Categories:  Health Reform  
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Comments

Do the exchanges have a well functioning risk adjustment system to protect against adverse selection in the current bills or is that something else on Santa's list?

Posted by: windshouter | December 23, 2009 11:36 AM | Report abuse

Victor Fuchs has unsurprisingly zeroed in on the most important leverage point for improving health care reform.

Posted by: HalHorvath | December 23, 2009 12:35 PM | Report abuse

Ezra,

you had to know I would respond on this subject.

actually i don't know any broker that makes 6-7% anymore (more like 4-5% and dropping like a stone with reform)but my biggest question is how do we resolve the fact that what brokers do is EXPLAIN day in and day out how health benefit plans work to employees and employers? So does Ezra or Mr. Fuchs really think that being able to read it online is going to miraculously make it understandable to everyday people? I know CEO's that are absolute genuises' that don't get healthcare and how it works.

See the below for proof:

http://ifawebnews.com/2009/09/22/few-who-enroll-understand-their-health-benefits-survey-finds/


And I bet a good portion of those 20% are lying.

Ezra,

can you reasonably explain your health plan at WAPO? Do all your co-workers understand it? Do you know what it covers, what is excluded? How to ensure you pay the least out of pocket cost possible? Where you need to go for labwork, doctors? Is a colonoscopy considered preventative? What is in your prescription formulary? What step therapy is and when its required? What requires pre-certification and how to go about doing it?


I'm all for the exchange but not at the sacrifice of brokers who will be MORE needed in reform, not less. If people are given the option of one choice from their employers then that's it but when the choice opens (as it should) to 5 or 7 or 10 options how will someone know what option is the best for them for that year? ANd what about next year when their potential costs change (maternity, sickness etc) Now have that person be a blue collar worker who can't even grasp the idea of a deductible a copay variance and then you expect them to go online (assuming they can and have access) and get this info?

I'm all for decreasing broker compensation to a reasonable level to save costs but to go totally without representation is like going to your house closing without a lawyer, doing your businesses taxes on your own or building your home yourself. Sure you can save a couple bucks in the short run but in the end will it be worth it?

Posted by: visionbrkr | December 23, 2009 12:59 PM | Report abuse

Visionbrkr, you're right as usual. And in a post-reform world health insurance will be more complicated, not less.

Let's see, in the post-reform world there would be the following methods of obtaining health insurance: 1) the market outside the Exchange; 2) the market in the Exchange; 3) the FEHBP-like program; 4) the optional state compacts; 5) the health care cooperatives. And don't forget Medicare and Medicaid, for those populations. How's any consumer going to understand all this, without help from an expert?

Sure, the Exchange will have its Navigators, but unless they hire qualified people (read: brokers or experienced people in the industry), those Navigators are going to be worthless in helping people make intelligent health insurance choices.

The drafters of the bill assume that all Americans are literate, health literate, financially literate, and insurance literate. For the average American those are probably unwarranted assumptions.

Posted by: Policywonk14 | December 23, 2009 1:38 PM | Report abuse

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