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10 Steps to Reform Insurance While Covering Chronic Conditions

Joe Cantlupe, for HealthLeaders Media, February 3, 2010

The government should initiate "small scale reforms" to its healthcare insurance system to overcome potentially devastating obstacles in serving an aging and chronically ill baby-boomer population, says one of the leaders in the healthcare consumerism movement.

"We're going to have just a huge problem," says John C. Goodman, president and CEO of the National Center for Policy Analysis, referring to 78 million baby boomers retiring early or losing jobs and potentially facing burdensome health issues. Goodman, an economist specializing in healthcare issues, writes what he terms the only "right-of-center" health policy blog.

As Goodman sees it, revamped policies would include "portable insurance"—in which providers would allow customers to move from job to job and maintain health insurance—and special needs insurance "instead of requiring insurers to be all things to all people, they should allow plans to specialize in treating one or more of the chronic conditions." Goodman has been an opponent of existing healthcare reform proposals as falling short of meeting the nation's healthcare needs. The legislative proposals are currently stalled in Senate and House conference discussions.

The emerging baby boomer population represents a special need, he says, adding that more than 80% of them will retire before they become eligible for Medicare. "Employers should be encouraged to negotiate to cover retirees," Goodman says, adding "two of three don't have the promise of post-retirement care."

"Most proposals for dealing with the problems of pre-existing conditions would completely divorce health insurance premiums from expected healthcare costs," Goodman wrote Jan. 27 in "Ten Small-Scale Reforms for Pre-Existing (Chronic) Conditions" for Health Affairs.

"Yet a policy of trying to force health plans to take enrollees they do not want risks jeopardizing the quality of care they receive. Instead of suppressing the price system, I propose 10 ways of dealing with this problem that make greater use of it."

The 10 Goodman recommendations include:

Encourage portable insurance. Goodman contends the problem of pre-existing conditions occur because health insurance isn't portable, and employers aren't allowed to buy insurance they can own and take with them from job to job, or out of a job. Goodman says, "The NFL and mineworkers have such policies, where they can take it from job to job."

Allow special needs health savings accounts for the chronically ill. These plans would include "cash and counseling programs" in which homebound and disabled patients potentially take care of their own private plans. Pilot programs exist for such programs in which there has been nearly a unanimous satisfaction rate among participants. The programs could be models for future plans for chronically ill people, Goodman says.

Allow special needs health insurance. Insurers should be allowed to specialize in chronic conditions, instead of being "all things to all people," Goodman writes. Insurers should be allowed to charge market prices, while quality competition should be encouraged, he says.

Allow health status insurance. There should be two separate kind of insurance, with separate premiums, Goodman says. Standard insurance would cover the health needs of people during the insurance period, while status insurance would pay future premium increases people face if they have a change in health status and then try to switch to another health plan, Goodman adds.

Allow self-insurance for changes in health status. The tax law allows employers to pay for current-period medical expenses with untaxed dollars. But there lacks an opportunity for employers or employees to save for future changes in a health status, and people need to engage in contingency savings for future payments—such as a health savings account (HSA).

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