They say those who forget the past are doomed to repeat it. I think that’s a short-sighted viewpoint — it implies we’ve never done anything worth doing again. While it’s certainly true we should learn from our mistakes, isn’t it equally important to remember what we’ve done well in the past, and if it makes sense, consider bringing it back?
Bon Jovi appears to understand this concept. According to Billboard, this 1980s hair band boasted the top-grossing concert tour of 2008. As someone who saw Van Halen (with David Lee Roth) twice last year, I’m not at all surprised by these results. Musicians know how to get a lot of mileage out of their past successes.
So what about those of us in the health insurance industry — can we learn anything from these oldies-but-goodies making millions by recycling old material? Are there any forgotten strategies ready to make a comeback? Actually, one old idea already might be on tour.
In a December 1958 article in the American Journal of Public Health, author Charles A. Siegfried, second vice president of the Metropolitan Life Insurance Co., discusses the merits of major medical insurance, a fairly new concept at the time. Unlike the managed care plans we’re all familiar with, these policies offered no co-pays for expenses like doctor visits and prescription drugs. Instead, they provided catastrophic protection for a broad range of medical services after the member paid an initial deductible and co-insurance amount.
As Siegfried explains, these plans did not attempt to eliminate all out-of-pocket costs. Insurance companies recognized that providing reimbursement for more common, lower-cost procedures would dilute the effectiveness of the coverage and “would add substantially to the cost of the plan without adding commensurately to its value as insurance.” Instead, the purpose of the coverage was to keep “the financial problems of illness and accident for large numbers of families within limits they can manage — problems which in the absence of such insurance would cause the severest kind of distress.”
I don’t know about you, but the major medical plans of yesteryear sound a lot like the “new” high-deductible health plans touted as the savior of the private market health care financing system.
Of course, our attempt at consumer-directed health care is nothing more than a watered-down version of the plans Siegfried describes. These major medical policies put no limitations on the selection of a physician or hospital and did “not in any way seek to modify the patterns of medical practice or the fees charged.” In other words, there were no network restrictions and no negotiated rates — nothing to tempt consumers to change their behavior.
And therein lies the difference. The CDHPs of today rob consumers of many of their free-market decisions. By confining them to a network, we limit their freedom to choose. By contracting with providers, we hinder their ability to negotiate. And by defining what services will be covered, we discourage them from agreeing to experimental procedures and impede the evolution of medical care.
Last but not least, at a time when the cries for universal, mandatory and even single-payer health care are louder than ever, it’s important to note that these words of wisdom from 50 years ago warned against the idea of a “compulsory or governmental plan.” Instead, as Siegfried explains, major medical coverage “is based on a different concept, one which attempts to make as unnecessary as practicable the role of government in so personal a matter as medical care.”
As health insurance premiums continue to rise, we’re all scrambling for new ideas — something that will set us apart, give us an edge, and help us save the industry. But in our quest for solutions let’s not forget to look to the past — we might just find that the wheel has been invented for us already.
Eric Johnson can be reached at 817-366-7536 or eric.johnson@agentallies.com.