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Actuarial Health Care Reform Puzzle

Posted 11-29-2009 at 06:19 PM by maggid
Updated 11-29-2009 at 06:23 PM by maggid

From a European perspective it's hard to understand why the US Health Care Reform creates such a fuzz.

Behind Health Care Reform
At first sight one might think American values were somehow at stake, as UCLA's Dr. Marc Nuwer, a leading expert on national health care reform, stated back in 2008:
  • "To heal our ailing health care system, we need to stop thinking like Americans."
  • "Americans prize individual choice and resist limiting care"
As one-sixth of Americans are uninsured and especially elderly people are in need of good (insured) health care, one would expect this group to support this new health reform. Think again, the majority of elderly people voted against a guarantee of health insurance for all Americans:

Not a surprise for actuaries of course, because we were already aware of the interesting age-distribution of the uninsured.

Recently, Tyler Cowen, a economics professor at George Mason University additionally stated : Further health care reform doesnít now seem to promise much to old people, except spending cuts on them. Given their limited time horizons, old people donít so much value systemwide improvements, which invariably take some while to pay off.

For those of you who are interested in the background and consequences of pay offs regarding limited time horizons, (generation) discount rates and 'Gamma Discounting', the article Caring about the Distant Future: Why It Matters and What It Means from professor Tyler Cowen is a joy to read.

Certainly a 'must read' for actuaries.

Future Health Care Reform
Anyhow, the House of Representatives passed the sweeping health care bill recently.

Puzzle is that this bill has nowhere to go in the Senate, as the stumbling block is that government will have to compete with the private insurers.

The solution to this problem is as simple as can be:
Implement the headlines of the Dutch Health Care Model

Key elements of the new (2006) Dutch Health Insurance Act are:
  • All adults are obliged to buy health insurance and can choose any insurer
  • Children (under 18 years) are insured for free
  • Low income groups receive financial compensation by tax reduction
  • All insurers must offer a (governm. def.) policy to anyone who applies
  • Basic benefit package is almost comprehensive
  • Insurers get compensation for taking on higher risk patients from the risk equalization fund
  • Insurers can offer complementary health insurance packages under free market conditions
  • Consumers have the right to change insurer at the end of every calendar year if not satisfied or if they change employer
  • Insurers have the role of prudent purchasers of health care
    (value for money)
  • Providers are encouraged by insurers to deliver high quality care at low costs

In a 2009 Irish (Dublin) Health Actuary Seminar called 'More for less', the Dutch health actuary Enne Osinga explains more of the consequences of this new (2006) Dutch Health Care Model in a presentation called: The Dutch Experience .

I trust the US succeeds in making this important turn around!

- Tyler Cowen: Caring about the Distant Future: Why It Matters..
- Economics
- Yahoo
- Health Coverage & Uninsured (2009, 2007)
- RIVM Article:Regulated competition behind the dykes?
- Enne Osinga: The Dutch Experience

More info at Actuary-Info
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