Smart Health Care Cost sharing
Ezra Klein writes about smart cost sharing.
He wants a committee to decide reimbursement rates.
This made me think about an idea I got from Mark Thoma
Mark Thoma linked to the even more verbose version of this at my other blog. He has an interesting comment thread.
…preventative care … ought to be encouraged, and one way to help with this is … to forge an unbreakable lifetime relationship between the insurance company and the consumer so that expected lifetime costs are important to the insurance carrier.
I strongly suspect (with no evidence) that Thoma’s thoughts were influenced by
an empirical result that very small financial incentives to doctors based on their patients’ blood glucose caused big changes in those outcomes (pdf warning).
which will save huge amounts of money for medicare but small amounts of money for the HMO’s that introduced the incentives.
I think the best we can do is to charge medical costs not just to the current insurance plan but also, in part, to the one that covered the patients in the past (to give the an incentive to keep their clients healthy).
If insurance companies saw obese people with horrible eating habits who watch TV all day as a profit opportunity, the USA would be a healthier place.
Just think, sleazy insurance agent hangs around bars and then calls his boss to say “Right in front of my eyes, I have a guy who must way 300. He’s on his 4th whiskey, has emptied 2 bowls of bear nuts in the past five minutes and he’s chain smoking camels, we got to move fast before our competitors sign him”.
[line above updated for punctuation and to add details plus a homonym to celebrate the fact that Matthew Yglesias linked to this post (the homonym was honestly accidental. In fact, there were not one but to honest homonyms — I typed “too add details” two before correcting it, witch just goes to show how thrilled eye am.]
To try to explain better
My plan is the Edwards plan plus insurance companies pay for care of former clients based on alpha(cost of the treatment)*(years with that company)/(age at time of care) where alpha is well below one and for the care of current clients minus the part paid by former insurers. They get paid a constant which depends only on the region where they are located times the same alpha factors.
Thus they have an incentive to keep their clients healthy (which they can pass on to doctors).
Plus they get paid based on progress on preventive measures (patients who quit smoking, got blood pressure from x down to y, lost weight from obese to not obese etch)funded with a tax on insurance companies per patient so on average they get zero.
This means they would be more willing to sign fat lazy smokers as there is lots of room for improvement compared to things as they are.