The Public Option for Health Care

A conversation I took part in the other day reinforced my conviction that we need a "public option" in whatever health care reform comes out of Washington, even though the conversation was about Workers Compensation insurance.

The conversation was with an acquaintance of mine who had formerly been a high level manager at a major Workers Comp insurer. We were discussing why some Workers Comp audits at this insurer had been billed out so late--more than a year after being completed. His comments were revelatory.

The short version of his comments is that this major insurer was absolutely riven with "confusion and delay" as Sir Topham Hatt would put it (my grandson is the world's greatest fan of Thomas the Tank Engine, so I have learned about Sir Hatt's railway.) All audits were processed out of a particular unit of this insurer, in reaction to the demands of the legendary tyrant then in charge of the insurer to improve their effficiencies.

The resuls were not what the legendary tyrant would have wished, I suspect. The processing of audits at this unit was, according to my source, the ultimate Chinese fire drill (which would be appropriate, I guess, given the attachment of the company's legendary tyrant for all things oriental.)

What does this have to do with health care reform? Only that today, the headlines are that major health insurers are insisting that they cannot compete with a "public option" health insurance source--a government sponsored plan. And these major insurers further insist that to introduce such a public option will mean that they inevitably must wither and die.

And in the face of such dire threats, I think back on this major Workers Comp insurer that couldn't shoot straight when it came to processing audits (and I'm sure the situation is likely worse there now, given recent events.) And I have to wonder how much of the cost of health insurance reflects similar "confusion and delay" scenarios. My deep suspicion is that there is a fair chunk of premium that goes to cover the various CFDs at health insurers, on top of the fair chunk that has to be allocated for profits.

I know that a government plan isn't likely to be much more efficient than these insurance company operations--but I suspect it wouldn't be much worse, either. And the competition could be healthy for everyone in the system. Might even clean up a few of those CFDs.