By Ronald E. Bachman
Many Americans are angry because Congress has failed them. Republicans are unable to agree on a rational health reform plan and Democrats struck out with the Affordable Care Act, ObamaCare.
Why is it so difficult to offer a solution to the current dysfunctional healthcare system and give Americans the health insurance they want to access the healthcare they need? Why is there no personalized health insurance to change the debate on healthcare reform, show how to achieve lower costs, and outline the way to care for the sickest among us?
Consider this: Insurance is based on a concept of risk pooling. This means a large group with similar risks shares potential costs. In healthcare, this would mean individuals being grouped by their health status, such as:
- Catastrophic – g., cancer, rare diseases, head trauma, burns
- Chronic and persistent illnesses – e.g., asthma, diabetes, heart disease, mental health
- At-Risk Acute Conditions – e.g., smoking, high blood pressure, overweight
- Well – e.g., no claims, low risk, good nutrition, active lifestyle
Sixty-three percent (63%) of the population are generally “well” and create just 12% of health insurance claims. These people should have lower premiums, benefiting from their healthy lifestyle and wellbeing, along with others in similar condition.
Twenty percent (20%) of the population are “at risk” of needing medical care and generate about 25% of claims. This group needs programs such as smoking cessation, diet support, nutrition education, pre-natal care and family planning. This group can reduce premiums by prevention and early intervention.
Sixteen percent (16%) of the population are “chronic impaired risks.” They generate about 41% of healthcare costs. Those with chronic and persistent illnesses or diseases need significant medical care. This group benefits the most from medical maintenance and stabilization. Those with asthma, diabetes, heart disease and mental health issues can reduce premiums by following treatment plans and complying with doctor’s orders.
Just 1% of the population are “catastrophic impaired risks” who need all possible help and support. This group generates about 15% of healthcare claims. If these individuals were segmented into a separate insurance pool, all other groups would benefit with lower health insurance premiums. This group would receive proper care and treatment, assisted by state and federal premium subsidies, and be offered information and support for effective treatments.
Consumers have a right to be grouped with others who have similar health risks, good or bad. Only then will they be able to get relevant and timely information, an appropriate level of coverage, proper medical care and an affordable insurance premium.
Neither politicians nor insurance industry leaders are discussing a risk segmentation approach. Why? Because it upsets the status quo.
Some argue it’s not politically correct and could stigmatize the high-risk population. Others say it is too much like the system we had before ObamaCare. But it is not. Politicians seem to prefer a centralized, one-size-fits-all approach. That is how we got ObamaCare’s “Single Risk” pool, with everyone lumped together.
But a single risk pool system results in everyone’s premium being based on everyone else’s health risk. There is no differentiation based on health maintenance, lifestyle, treatment compliance, or (sometimes) even age and gender. There is no financial benefit or incentive to being healthy, getting healthy or staying healthy.
It’s time for Americans to insist on a coverage approach that acknowledges an individual’s unique needs: personalized health insurance. Personalized health insurance is consumer-driven and patient-centric. This approach gets you the insurance you want, when you want it, at an affordable price. It’s different from what has gone before because it lowers premiums for all who want coverage while focusing financial help and medical support on the sickest among us.
For full details on Personalized Health Insurance go to www.personalizedhealthinsurance.net
Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Georgia Public Policy Foundation. Established in 1991, the Foundation is a trusted, independent resource for voters and elected officials. The Foundation provides actionable solutions to real-life problems by bringing people together. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (October 23, 2020). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.