The Universal Healthcare Paradox

Make no mistake, universal healthcare reform, in the guise of a public option, whether Single Payer or Medicare for All, is coming, ignore it at your peril agents and brokers. The only question remains, what role will private insurance play in this revolution? Should we simply mimic what other nations do? Regardless of how politicians and reformers romanticize healthcare systems in other countries, certain undeniable truths (and problems) emerge as you put these publicly financed systems under the microscope.

Two-Tiered Healthcare Systems

This is a term commonly used to describe systems that employ a publicly funded universal healthcare plan but allow a role for private insurance (supplementary coverage) Why do we see elements of private insurance in almost all publicly financed systems? The driving force behind the demand for private sector coverage is two-fold and consistently found in all of the countries I researched (exception being Canada, but more on them later)

Examples:

·       Great Britain – Two tiered, but with the public option paying a greater share of costs than most, resulting in cost overruns and severe access to care problems.

·       France – So called “top up” which fills the gaps above the 70% to 80% paid by the public option. Note: this is the most expensive public option taking over 10% of Frances GDP

·       Australia – Pure two-tiered with the government actually subsidizing the private plans (they also subsidize prescription drugs) One of the better financial performers.

·       Sweden – Public/private cooperative. Excellent fiscal performance

·       Germany – Not strictly two tiered as you must choose between the public option and the private one, not a combined supplemental option.

·       Mexico – Public option is called Social Security. The country guarantees healthcare for all citizens, but there is a thriving second tier of private health care for those willing to pay.

What is the Role for Private Insurance?

Regardless of the heated political rhetoric, private health insurance is never going away. Every country listed above, along with most nations who employ a primary publicly funded system, have two major problems directly attributable to government sponsored healthcare. These two problems are alleviated to some degree, by employing elements of the private insurance. Shared problems in government sponsored healthcare:

·       Availability of Providers

·       Timely Access to Care

Solutions for the above are usually market driven and, except for Canada, generally supported by the politicians and government officials (cynics would say the US is in effect, the second option for Canada). How will this private insurance solution work? I believe that the day after a universal government sponsored health plan goes into effect, private insurance will begin to finance “front of the line” programs using specialty networks, aka Direct Primary Care, Concierge or simply doctors who, in exchange for a monthly guarantee of capitation, will provide quicker access to care. The result? More time and service and entre to privately funded advanced diagnostic equipment (MRI/CAT/PET Scans).

What if The New Law Prohibits Private Insurance or Private Networks?

In the (highly) unlikely event that Bernie, Liz or Kamala get their way and private health insurance is outlawed, entrepreneurs will spring into action and take a non-insured approach to providing access to healthcare services. How would this look? Check out the current unregulated model used by faith-based groups that co-op member contributions to cover members health needs. The last resort would be to simply take it offshore to Mexico, or accessible centers of excellence outside of the US.

In any case, there is simply no reasonably argument against the role of private insurance acting as a supplement to any government scheme or reform plan. What makes Medicare so popular and successful is not the government component, but private “medsupp” plans that almost everyone purchases.

The Future is Bright

One could argue, and I have done so in this very forum, that this new role for private insurance and broker/agents is far better than the traditional one. How? With all the catastrophic risk being borne by the government (taxpayers) insurance companies are free to develop creative designs with acceptable and controllable and profitable (underlying) risk. There will certainly be many more carriers interested in the market, creating much more competition and an even a greater role for the professional consultant.

Metaphorically speaking, the health insurance glass is half-full my friends, fear not and refrain from getting your real estate license, I for one cannot wait to see where it all leads.

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