Full perspective needed for essential health care innovations and reform
Thursday, July 24th, 2008
By Staff
David Smith
In the editorial, “N.C. Pilot Health Project should go ahead,” (AC-T, July 6), you argue that the state needs to be innovative and allow for pools for purchasing health insurance to be formed in Asheville or other parts of the state. While admirable in concept, the real answer is not so simple.
In 1993, the General Assembly, under the leadership of Martin Nesbitt and Dennis Wicker, pushed forward the formation of small business purchasing alliances (or “pools”) to allow for this kind of market reform. These pools were very similar to those being run in other states and were seen as a new means of saving administrative costs and giving small businesses real buying power in the market.
Pools’ track record
This innovation a mere decade later is not a bright and shining example of success but another tombstone in the graveyard of disappointments. Some of these pools collapsed to competition when the healthier groups could find better rates in the open market. A few fell into the phenomenon called adverse selection — the healthy choose to not buy through the pool (usually because they can buy it cheaper outside the pool) when the people who need the coverage the most buy at any cost. Others discovered the myth that a large buying group does not always guarantee better rates. Finally, the rest lost their market power when the political winds shifted and bureaucratic inertia failed. Each and every reason why the pools did not succeed are all realities of the market. (more…)
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