Public Option

[ChecksTheMath]

If the Public Option becomes a reality and the Industry has a new competitor to deal with i.e. The Federal Health Insurance Company Inc (FCI). then I am assuming that FCI will not have to worry about the following:

1. Commissions and Brokerage Fees
2. State Premium Tax
3. Profit
4. Having to file and deal with 50 separate Insurance Departments
5. Compliance with all the Regulations, Guidelines
6. Compliance with SOX
7. IRS & State Audits
8. Hiring Actuaries

These constitute a large chunk of change that they would not have to factor into their pricing.

So my question is. How will the Health Insurance Industry be able to compete unless the following happens:

1. NAIC finally gets its act together and centralizes (4) and (5)
2. Elimination of State Premium Taxes
3. Reduction in Commission rates
4. Smaller profits
5. Drastic reductions in administration and other costs

Even then the Industry would be dealing with a very large (Monopolistic?) competitor who will be big enough to make all sorts of deals with Providers, Drug Companies etc.

Is this the death knell of the Health Insurance Industry?

Would like to know your thoughts.

[Sub_Zero]

Originally Posted by ChecksTheMath

If the Public Option becomes a reality and the Industry has a new competitor to deal with i.e. The Federal Health Insurance Company Inc (FCI). then I am assuming that FCI will not have to worry about the following:

1. Commissions and Brokerage Fees
2. State Premium Tax
3. Profit
4. Having to file and deal with 50 separate Insurance Departments
5. Compliance with all the Regulations, Guidelines
6. Compliance with SOX
7. IRS & State Audits
8. Hiring Actuaries
9. Solvency

ifyp

[Dr T Non-Fan]

Originally Posted by ChecksTheMath

If the Public Option becomes a reality and the Industry has a new competitor to deal with i.e. The Federal Health Insurance Company Inc (FCI). then I am assuming that FCI will not have to worry about the following:
...
Is this the death knell of the Health Insurance Industry?

Would like to know your thoughts.

Yes, it would be.
Public Option is more complicated than simply reducing the Medicare Age Eligibility to 0.
If the latter happens, then there will be a large Med-Supplemental/-Advantage market. Insurers can still provide supplemental or replacement-for-fee insurance.

[Drewby]

I concur that the "public option" will eventually lead to the death of the health insurance industry. The public plan will NOT be able to compete fairly in the marketplace.

[FormLetter]

If the public option was not given any of the artificial advantages listed above, then it would be exactly the same as a private plan, subject to all the same forces. In that case, it would be the same as another private plan entering the market.

So that leaves the public option as either being just another private plan, which is the exact thing that is supposed to be "kept honest", or it is given artificial advantages.

[Drewby]

My post came from the position that the "public option" CAN NOT/WILL NOT be "just another private plan", which I truly believe to be its ultimate character. It will have too many advantages, some of them inherent (lack of taxes for one).

[EasternSierra]

The idea of a public option is to compete with insurers is a bad idea, unless you're trying to put health insurers out of business (which is maybe perhaps the goal.)

One of the major problems with healthcare in this country is the underlying cost. Medical inflation drives people's premiums up and then less people can afford health insurance. The idea behind the public option is that it will create more competition to help lower the cost of care. This is baloney. Normallly, having more competition in a free market lowers the price. However, the opposite is true with health insurers, when there are lots of competing health insurers in a market, none of them can get very good discounts with providers so they all end up negotiating higher rates and hence have to set higher premiums. If you want to reduce costs then you want monopolistic pressure. (Of course, providers don't like this.)

[2pac Fan]

My knowledge is little on this and it was nice to see that yahoo ran a story today on how little profits health insurance companies make compared to other industries. Also how the profits for health insurance companies are around 2% where pharm companies profits can be around 10%. Hopefully more articles can shift the focus around.

Any chance the public option could lower salaries of doctors, and hospital employees by paying less aka medicare reimbursements?

[2pac Fan]

Also why is no one pushing a system similar to work comp more. Where everyone has to get coverage, and public options cover the people that can't get coverage subsidized by the rest?

Don't some states have public option already? New York or Mass? Maybe I am just missing a lot, I would like to reiterate I don't have much knowledge on the subject.

[2pac Fan]

Originally Posted by EasternSierra

The idea of a public option is to compete with insurers is a bad idea, unless you're trying to put health insurers out of business (which is maybe perhaps the goal.)

One of the major problems with healthcare in this country is the underlying cost. Medical inflation drives people's premiums up and then less people can afford health insurance. The idea behind the public option is that it will create more competition to help lower the cost of care. This is baloney. Normallly, having more competition in a free market lowers the price. However, the opposite is true with health insurers, when there are lots of competing health insurers in a market, none of them can get very good discounts with providers so they all end up negotiating higher rates and hence have to set higher premiums. If you want to reduce costs then you want monopolistic pressure. (Of course, providers don't like this.)

Would the government option just be a way to push down lower reimbursements to pharm, and healthcare staff. As a private insurer you compete, as the government you can mandate that they accept the patients?