Blue Cross Raises Rates
for At-Risk Individual Plan Subscribers

Jack Truher, September 3, 2005
Here's a S.F. Chronicle  columnist on how Blue Cross will raise rates of those individually insured, i.e. for subscribers outside of group health insurance plans.  I don't know that this "actuarial practice" has been a Blue Cross policy, but apparently it is now.  We are familiar with the actuarial practices of automobile insurance where unlucky users get their rates hiked, along with the negligent and malicious, and with no rights of appeal.

Just this sort of actuarial medical insurance, whether distorted, perverse, or corrupt, is explained in a readable health insurance story, the "Moral-Hazard Myth" in August 29, 2005, The New Yorker.   American medical insurance practices are compared with other countries.   The moral-hazard made us eat our homework. That was sold by an academic economist in 1968.

Employer sponsored health plans assume to have the advantage of some local constituency which might expose the income-seeking corporate plutocrats who manage too much of American health insurance.  Stanford conditions staff by fear of an often mythical hierarchy of merit. Out of that climate, the notion of patient constituency has been negated. Disgraceful.  

Like most folks, I'm even more suspicious of a government managed, mandated health care system.  Service monopolies are scary.  But as we all learn, wholly privatized corporate for-profit health care can be scary as well. My family has been in the non-profit Palo Alto Medical Foundation, Sutter system for 50 years!  We have been competently treated by this well managed, large group practice.  I think that the non-profit orientation helps keep the game honest.

More on Long Term Care Health Insurance

I wrote to my Retirees of Stanford group list:

I've been puzzled for a long time on whether Long Term Care Insurance makes sense for elders?  Stanford continues to offer a LTC plan to everybody.  It's very expensive.  No way of knowing whether it makes sense for anybody.  Always too expensive for those without money, and unnecessary for those with lots of money.  Is there any income group for which Long Term Care Insurance makes sense?  I have never participated and don't intend to.  That doesn't mean that I know I'm right.

From a separate story, I learn that Consumer Reports has studied the issue:

""Consumer Reports reviewed 47 long term care policies offered by seven firms. After finding only three acceptable, it concluded that "for most people, long-term care insurance is too risky and too expensive."

"Too risky" means the probability that you will actually use the insurance is low.  Most people find some other way to check out.

A wise Stanford friend responded:

It is fairly clear to me that long term care insurance is a bad deal for everyone, regardless of income level. The general term of long term care obscures the issue.  It can run the field from remembering to take your pills to total paralysis and total dementia.  Cost would be reduced if various degrees of help were available.  Sweden had a system of districts nurses who covered an area and supervised the individual needs of people in their homes,    and even had them taken shopping.  I believe that a system of paying seniors to help seniors might be useful.  I am thinking of something more universal and organize than  than might be possible through a volunteer organization.  The problem of the aging population will not be one of money, and a reliance on immigrant labor.  Even poor people get old, and you will need more and more. Our present approach is a Ponzi scheme and is doomed to fail.   The solution lies in getting the correct ratio of the part of life in which you need care to that where you can give care and incentives to reach this optimum. Good health and late retirement and longer vacations would be useful,  but I am not sure this would enhance out over rated economic growth.
Since, at least in theory, we will always intervene to avoid people dying in the streets, we should face it and guarantee everyone a minimum care plan out of taxes, while permitting those who wish more can pay more privately.  We waste too much money avoiding  taxes.