Diary

Why does catastrophic insurance get such a bad rap?

I remember some twenty years ago Dan Rostenkowski, at the peak of his power,  being booed and chased by medicare recipients for supporting legislation which provided an extraordinary safety net to the elderly, including unlimited care, a drug benefit, and other protections. As best I can remember, they opposed it because the affluent elderly would have had to pay an increased premium to partially cover the new benefits.

The legislation was repealed. I hate to support a liberal initiative, but it is too bad the bill was repealed.

It has always seemed to me that the one area where the federal government ought to step in is that of catastrophic coverage. No private insurer can take on an unlimited liability in case of a new pandemic or natural disaster. or even the few unfortunate individuals with horrible chronic ailments. A government backed “umbrella” policy may not be pure capitalism, but seems in the spirit of of conservative thought.

Ironically, the current proposed legislation seems to address catastrophes with one hand while the other hand takes it away with IMAB and QALY (aka death panel). Lifetime caps and  canceled policies will be a thing of the past. So too with restrictions based on health or pre-existing conditions. Sure you can get coverage but the catch is that Peter Singer will decide who gets to use that coverage.

Nice trade, America. You get a fanatical death cultist instead of insurance companies who just want to make a buck.

Whether your insurance is provided by private insurance companies with government regulation, or a public option, what counts is the contract. Should insurance cover pedicures and massages? Most people would say no. Should it cover unlimited all out treatment of cancer? You betcha!

A few clear-cut standardized contracts with carefully crafted language (in English) would be a good idea. Additional features can be optional.

Private insurance can handle the pricing of those contracts. It should be made easy to form a nonprofit or mutual insurance company. Interstate competition should be allowed. The one thing that will give potential investors or customers pause is the hard-to-price catastrophe insurance. Let the government be the re-insurer of last resort.

Having a backstop on losses will permit Insurance companies to offer no-cancellation insurance. Life insurers do that today.  The idea is that once you are insured as a member of a particular risk pool, you have a perpetual right to remain insured as a member of that pool. If you wish to change policies, the new company must continue that coverage if they want your business. The government can offer some protection against bankrupt companies or other financial tricks.

Since the umbrella coverage risk is spread over all citizens, it is reasonable that tf be financed by taxation. Perhaps, a new payroll tax would make sense.

Having addressed cancellation, limits and pre-existing conditions, there is still the question of arbitrary rejection of claims.

The first step is to demand a list of non-covered procedures or treatments, written in plain English. Anything not explicitly excluded should be covered. Frivolous rejections should be severely penalized.

The details of deductibles and copays and premiums should be left to the free market.

I bet a few clever recent ivy league lawyers could write a bill of ten pages or less covering these provisions.

A separate bill providing some sort of subsidy to those who can’t afford the market rate can provide as much welfare as the voters want. Preferably it should be in the form of a tax credit or deduction.

That’s another ten pages or so.

The defense rests.