Mark P. Scherzer Health Insurance Law Blog on Lawyers.com

Presentation by Mark Scherzer

Mark Scherzer addressed a large crowd of state policy-makers, healthcare advocates and insurance industry representatives at the NYSHealth Foundation Conference, “Reforming New York’s Individual Health Insurance Market,” in midtown Manhattan on November 17, 2008.  Mark was a member of a panel of experts commenting on proposals to reduce premiums and restore a viable, affordable “direct pay” market in New York State.

The crisis caused by high premiums and shrinking enrollment, Mark noted, has its roots in the state’s failure over the last 8 years to increase funding for the reinsurance pool which is designed to keep premiums low in the individual health insurance market.  The increases are necessary to match medical inflation as well as to mitigate the effects of New York’s very progressive rules prohibiting discrimination against purchasers of insurance based on their age, sex or health.  These rules have allowed many people with high healthcare needs to have access to policies they could not purchase in other states.

Mark noted the parallels of the individual health insurance market crisis with the current banking system meltdown.  As a matter of public policy, and for very good reasons, New York mandated that healthcare insurers offer medical coverage to people in “subprime” health, without discrimination, just as the federal government has encouraged the banking industry to offer mortgages to people with subprime credit.  In both cases, however, policy-makers erroneously assumed that the marketplace could be relied upon to distribute the increased risks that had been introduced.  Subsequent events have demonstrated that private companies did not develop adequate mechanisms to spread the risk.  Policymakers must recognize that the risk is not one that private industry can bear alone, and that the increased costs of this additional risk ought to be taken on by society, as a whole.

The challenge, said Mark, is to ensure that the solution be crafted to benefit Main Street as well as the healthcare insurance industry.  A solution that permits insurers to offer coverage to healthy people at cheap prices is not good enough.  The test of success will be whether the very sick, elderly, and disabled can get and keep affordable medical coverage that meets their needs.  Some of the measures currently proposed, such as a merger of the individual health insurance market with the market for small employer groups, may offer enough temporary rate relief to keep the individual market afloat, but could endanger small business coverage in the long run.  The only sustainable system of comprehensive healthcare coverage is one which, through truly broad-based financing, effectively spreads the cost of medical care for elderly, disabled and seriously ill persons across all state residents according to their ability to pay.

A video of the NYSHealth Foundation conference will be available at http://www.nyshealthfoundation.org/section/november_conference