Employer based health insurance. American Academy of Actuaries

by delmeyer on 02/06/2020 7:37 PM

An address by George Ross Fisher, MD, to the Actuarial Society of New York, was featured in one of our annual medical conferences. His opening statement was that employers should move out of the health insurance business completely, as gracefully and as quickly as they can. His reasoning was medical, or at least based on medical predictions. For far too long, the nation has regarded the financing of medical care as in insurance problem, with insurance solutions, quite ignoring the fact that the purpose of the whole exercise is to help sick people to get well. But if we don’t have any illnesses, we won’t need any insurance, and that revolution may be closer than you would guess.

For far too long, the nation has defined the adequacy of health financing by counting the number of people who lack medical insurance. Better than anyone else, actuaries know the problems caused by over insurance, some as troublesome as underinsurance. Without asking you, I know you agree that universal health insurance surely promises more than it can deliver.

The Uninsured:
Let’s be brief: Of the 40 million uninsured, at least a third of them are caught by a sampling snapshot during periods of unemployment between jobs. The more permanently uninsured are mostly poor, mostly young.

Young people are seldom very sick; if anyone can do without insurance, they can. As they grow older they have more sickness, but also more income. Fifteen percent of the poorest 20 percent of the population eventually rises into a higher quintile of income. In the meantime,  many can fall back on their parents in an emergency. In most instances, coverage of offspring is required to age 26. At this time the majority have already embarked on their life work.

Disability provisions of Social Security are available to those who are disabled from employment and indeed, probably to many who are not. Thirty percent of people receiving Social Security checks are under the age of 65 and are mostly, therefore, eligible for Medicare.

Medicaid is available to the poorest segment of the population. Nowadays, a person usually joins Medicaid after sickness brings him to a hospital, where the hospital social worker then effectively activates the latent coverage.  Although health financing of the 40 million can’t be called a seamless system, but surely its imperfections don’t warrant the title of crises.

Disappearing Disease.
The bad news grows out of the good news that more and more diseases are being conquered and many of the old diseases are disappearing. This leads to the startling prediction, central to health care financing, that the population up to age 65 could be largely free of major diseases within one generation. Health costs and health insurance are going to be pushed into Medicare. [The late] Sen. Ted Kenney will then have his single-payer dream come true, and my [actuarial] profession will do it for him. The focus of the employer-based insurance industry goes in the opposite direction; the need for that product is going to disappear.

Dr. Fisher, also an actuary, which he considers the brains of the insurance industry, must concentrate on the costs of being born and the costs of dying. Of the two, obstetrics has always been an uninsurable risk swept under the actuarial rug with such tricks as mandating premium payments to those unable to have children.

The cost of basic health care is reduced when it is
separated from employment.

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