Health Care

I missed this Washington Post article when it came out in early June, but came across it today via Google, trying to learn more about John Kerry's health care plan.

Ceci Connolly provides a useful summary and evaluation of Big John's Big Idea on health care:

… catastrophic claims account for less than half of 1 percent of all claims but generate 20 percent of the nation's health care costs, according to the latest federal data. To cover those costs, insurers … boost premiums, often forcing companies and individuals to dig deeper in their pockets or go without care.

For more than a decade, the health care debate in America has focused on the millions of people without insurance. Now, Sen. John Kerry, D-Mass, in an unconventional twist for a Democrat, is focusing on the 162 million Americans who are purchasing insurance and what can be done to ease the double-digit premium increases paid by employers and their workers.

At the center of Kerry's ideas is his proposal to have the federal government reimburse employers 75 percent of medical bills over $50,000 that a worker runs up in a year. The reimbursement would, in effect, make the government a secondary insurer and ease costs for employers, workers and private insurers.

In exchange for the benefit, Kerry would require employers to offer insurance to every worker and to provide health programs that detect and manage chronic illnesses such as high blood pressure early enough to prevent the diseases from worsening.

Kerry's catastrophic-illness relief plan is the only new health care proposal — and the most expensive — of this campaign season. It marks the first time in 12 years that a political leader has attempted to reorient the insurance market away from dodging the costliest patients and in the direction of implementing higher quality of care.

The concept of a national reinsurance pool has garnered support from a wide spectrum of players from labor unions and former Vermont governor Howard Dean on the left to former House speaker Newt Gingrich and former Bush economic adviser R. Glenn Hubbard on the right. …

"It clearly would allow us to be more price-competitive," said Bruce Bodaken, chairman of Blue Shield of California. Two independent analyses found that the policy could reduce annual premiums by 10 percent, or nearly $1,000 per person.

Connolly notes that the idea has precedent:

Today, the federal government serves as the ultimate reinsurer for natural disasters and terrorist attacks.

Here's my question: The same big-ticket catastrophic cases that drive up health insurance premiums also drive up auto insurance premiums — which have far more to do with the cost of health care than they do with the length of your commute. By making the federal government "the ultimate reinsurer" for catastrophic health care costs, wouldn't this plan also help to lower auto insurance rates?

I have two reasons to be hopeful that this is the case. First, it would be a good thing for the Kerry campaign — an informal focus group of everyone I've ever met shows that lower auto insurance rates enjoy widespread, bipartisan support. Second, I would really not mind paying less for auto insurance myself.

I'm hoping that some of the many, many people who know and understand more about insurance than I do will let me know in comments here if I'm reading this right.

(Oh, and Thank You to the WaPo for not only doing this kind of issue article, but for putting it on A1. More like this, please.)