Blind Leading The Blind

The Baucus Plan of taxing insurers for expensive plans is yet another example of shot-gun approaches to reducing health care costs with no understanding of the economics or key drivers that are at the core of the crisis.

For years employers have been working with insurers to modify plan designs and change economic incentives for consumers(employees) to hopefully choose the right plans that will optimize both cost and quality. The reality is, however, that despite their best efforts, employers are still struggling with understanding a clear perspective of three fundamental factors that impact healthcare: cost, utilization and risk. As a result they often find that people with severe illness end up choosing health plans that cost more- a term called adverse selection.

Any time you try to change an economic incentive in health care you need to be able to determine at a very precise level the underlying drivers of health care and be able to measure the downstream impact of change. The Baucus plan is yet another example of balloon economics.Taxing expensive plans will only drive utilization and costs elsewhere if there is no accurate measurement of cause and effect. Many have tried such mechanisms with little success because they are blind approaches supported by very little data.

The system needs reform but its time to start involving folks that have been in the trenches that understand health care. The patient is in critical condition and lets stop allowing people in the waiting room to make suggestions unless they truly understand what is going on.

By Sreedhar Potarazu  |  September 23, 2009; 7:48 PM ET  | Category:  Health costs , Leadership Save & Share:                 
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