Former Republican Senator Dave Durenberger was always the sensible Republican on health care. He now hangs out in a small institute called the National Institute of Health Policy at a small Minnesota college called the University of St. Thomas. Every so often he puts out great commentary emails. His most recent one contains a really a great description of what happened to health insurance in the late 1990s. You can sign up here. Well worth a read and I’ve reprinted the part about insurance below—Matthew Holt
I’ve watched the ups and downs of health insurance products and “markets” since involving myself as an employer in the 70s in a community-wide effort by large employers to provide employees with a choice of health insurance plans, including the nascent HMO. Our goal was reducing health care costs through informed employees and accountable health plans, creating, in effect, new forms of insurance and competitive markets for insurance and medical services at the community level by using available information and consumer choices to facilitate behavior change.
While experiments like this across the country have been tried with varying success, we are now on the verge of doing a “back to the future” adaptation of our lessons learned. The health reform law (ACA) provides for state-based health insurance regulation, health insurance exchanges and a new emphasis in assisting “smart buys” by employees. Recall what happened to the HMO: It became large national “managed care organizations” like UnitedHealth Care (UHC) who lost community support for their behavior change because savings never stayed with those who earned them.
The success of privatization of the HMO and for-profit medical practice corporations like the PHO movement led many of the 80-plus old-fashioned non-profit Blue Cross Blue Shield plans to go public and sell their community trust to Wall Street short-term profit-takers. Then along came Pat Rooney with his Golden Rule individual indemnity plan and the medical savings account. He sold the idea to Republicans who needed simple solutions that fit with a belief in consumer choice and insurance markets and tax-spending, and to the solo practice AMA community that hated the prospect of informed consumer medical care policies.
As simple solutions to complex problems caught on, Pat sold Golden Rule to United HealthCare for $800 million, UHC and managed care companies began raising their prices back up to double digit annual increases, fought off competitive bidding for private Medicare, feinted at informed consumers with Definity models, and persuaded the Republicans in 2003 to pay them $1.13 on the $1.00 of traditional Medicare to provide beneficiaries with “private insurance.” It’s all in the toilet now that the prospect of real insurance competition is here.