Pool the Risk!

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CHIP is one of those programs that was a good thing to pass at the time, since we weren’t able to get a more comprehensive universal health care program passed at the state level. But the fact that we even need that program – because we don’t have universal insurance – proves we’re monsters. Obviously children should have health insurance, because obviously everyone should have health insurance. Unfortunately a program for children was all that could get through at the time.

But the instant you get an opportunity to fold all the people who are in the CHIP risk pool in with another risk pool like Medicaid or the State Worker Insurance Fund (SWIF), you do it! Tom Corbett wants to keep all these different little risk pools separate, but that’s stupid, and HHS thinks so too.

Why is it stupid? One reason is that Medicaid is actually just as good on access to care as private health insurance, and much much cheaper. There’s no evidence that physicians give less care to Medicaid patients than others.

And the other reason it’s stupid is that Medicaid needs to be more like Amazon. Suppliers who sell to Amazon don’t really like selling to Amazon, because Amazon pays them crap prices. But they do it anyway because if their stuff isn’t on Amazon, they’re not going to do very high volume business, and their competitors are going to get all those sales.

Likewise, doctors don’t like treating Medicaid or Medicare patients, because the reimbursements are lower compared to private insurance. But the public insurers are a huge slice of the market, and providers would be missing out on a whole lot of business if they said no. Some still don’t take Medicaid, but the bigger those public insurance risk pools get, the harder it’s going to be for doctors to say no to Medicaid.

That is why we should not only combine Medicare and Medicaid at the federal level, but combine Medicaid with the various public insurance programs at the state level. That state insurance pool needs to be as big as possible, so we can have more bargaining leverage to demand deeper discounts from health care providers.

If you look at the municipal pension issue, and to a lesser extent state pensions, risk pooling is also an excellent idea. The more we can combine all these thousands of tiny different plans into one plan, the more we’ll save on management fees. Pool all that risk, and invest all the pension money in a low-fee diversified index fund, rather than risking municipal worker pensions on whatever crazy investments the thousands of backwater volunteer municipal finance officials are making.

Don’t let anybody fool you about this. If there’s ever an opportunity to combine some social insurance programs, more pooled risk is always going to be a great idea.

This entry was posted in Miscellany.