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Insurance industry insider on Medicare vouchers

Medicare Voucher Costs

Letter, The New York Times, August 28, 2012

To the Editor:

Re “Truth and Lies About Medicare” (editorial, Aug. 19):

As a former chief executive and actuary of an insurance company that once sold both individual and group health insurance, I am particularly mystified by the effort to push Medicare participants into the individual health insurance market.

I thought that we wanted to reduce — or at least control — the cost of health insurance, but individual health insurance is by far the most expensive alternative.

Depending on the size of the vouchers, the government itself may save money, but the entire system will pay more. Someone has to pay for the costs of individual underwriting, marketing and so on, and those expenses will fall on the elderly themselves.

You are also correct in assuming that there is likely to be anti-selection, with the healthier people going to the insurance companies, leaving the sickest and most expensive people in the Medicare plan.

It is certainly true that health insurance needs reform and that President Obama is far from having all the answers, but the Romney-Ryan plan will increase the country’s health care bill with little or any of the increase going to more or better health care.

Stephen Brown
Brewster, Mass.

http://www.nytimes.com/2012/08/29/opinion/medicare-voucher-costs.html

Comment: 

By Don McCanne, MD

Today's message is important because it comes from an insider in the health insurance industry. Not only does he indicate that it is a terrible idea for Medicare beneficiaries to use vouchers to purchase private, individual plans, but, of even greater significance, is "that health insurance needs reform and that President Obama is far from having all the answers."

For private insurance reform, nobody has all the answers. The nature of the beast is that when you try to fix one defect, others open up. Instead of moving Medicare beneficiaries into private insurance plans, we need to move private insurance victims into Medicare.