I’ll admit to being somewhat ambivalent about the recent action by the Tennessee state senate to eliminate the state’s assumption of risk in Gov. Phil Bredesen’s CoverTennessee plan. The Plan, designed to help provide health insurance to lower-income ciitizens (among other goals) relies in part on the assumption of risk by the State for losses above a set limit.
While I strongly believe in the centrality of universal coverage to any meaningful health care reform, I’m also leery of taxpayers’ subsidization of big business. Unfortunately, it may be difficult to get health plans to step up to the CoverTennessee plate without some way of protecting them against “excessive” losses.
While the Feds constructed a rather intricate risk-share program for Part D, my reading of that effort is that it is too complex, and potentially too generous, by far. Instead, perhaps the State should set up a reinsurance pool, funded in part by the commercial health plans participating in the CoverTennessee Plan and in part by the State (i.e. taxpayers). This pool might have two components; one to cover losses of any plans that go bankrupt, and another providing, on a quota-share basis, a mechanism to mitigate losses for specific health plans.
May
18
Does assumption of risk in this context amount to reinsurance, and if so, what are the problems with it if appropriately priced?
A universal health plan would seem to me to require two kinds of new protections. First, the individual subcriber’s financial exposure needs to be limited by applying an affordability index to set maximum financial outpays per year. And some reinsurance for catastrophic losses seems to be in order — without it the number of insurance players goes way down to a small number of big players.
All people regardless of how much they make need insurance. Some plans even if they would insure you are to high a monthly rate.