Reform opponents have vested interest in status quo

The message of a recent story (“New group wants input on health exchange,” March 16, 2012, PBN.com) should not surprise us. When nearly 20 percent of the state’s economy is involved, as it is with health care, all that money is flowing through the hands of lots of folks who surely don’t want the course of that flow altered, and probably don’t really want to see it reduced much either.
First, full disclosure. Our company is not a health care provider, but our customers are. We have observed that despite businesses paying ever-higher health insurance premiums, however, our customers, especially the hospitals and primary care practitioners, are not prospering.
Our health-insurance system often operates like a mysterious black box. It demands ever more money from us and our employees, but what some of those providing the actual care get out is increasingly inadequate. What gives?
Just think of those now forming this new interest group, the Coalition for Affordable Health Care Choices, as the people who have been operating the black box. Think of the health-insurance exchange as an alternative to the black box.
I have spent most of two decades talking to small-business people about health care costs. What they want is what we all should want, a system that provides the highest-quality care our economy can reasonably support. It should be one in which businesses here are not burdened by health care costs much higher than their global competitors, and one in which small businesses as well as large make a predictable and affordable contribution to the costs of their employees’ health care needs.
We should examine the motives of this new coalition in the debate on that basis as well. How would each of them be impacted financially by a successful health-insurance exchange, one that was a sufficiently vibrant force to stimulate needed change in payment methods. In other words, an exchange that actually contained costs.
I don’t think one would be too cynical to conclude that by this standard the members of this new coalition should be quite suspect. It isn’t that anyone should discourage their participation in the debate. Indeed, most of them are already very engaged with the broader groups working on the exchange and related reform issues – so why the need to ostracize themselves and fragment the effort? Let’s take a look. Rather than to “call out” each of the new group’s members for their potential conflict with the concept of a successful streamlining exchange effort, let’s examine how such an exchange might operate.
At its core, an insurance exchange should be considered an exercise in group purchasing. As such, group purchasing of health insurance has been around for decades all over the country and has never been effective in controlling rates. Why not? Because these cooperative groups are fairly easily defeated by insurers and brokers who fragment the group by “cherry picking” the most favorable member risks – enticing them with temporarily better rates than the group offers, thus subjecting the remaining group to adverse selection of the sickest and oldest in the residual population.
Eventually, the group efforts generally wither and die and rates resume their inexorable upward spiral. In other industries such as medical equipment and supplies, in which group-purchasing enterprises have had dramatic success, membership in the purchasing cooperative involves draconian compliance requirements. Indeed, mandatory participation is clearly related to success in driving down prices. So we shouldn’t be surprised that the first “principle” of the new group would be that business outside the exchange must be preserved, as therein lie the seeds of the exchange’s ultimate defeat.
I would hasten to point out though, that the true motives of such a splinter group, and of the individual member organizations, might be clearly in conflict with the stated mission of the health-insurance exchange effort. •


Ted Almon is president and CEO of Warwick-based Claflin Co.

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