Community Rating for Health Insurance: the Way to Get to Better Health, Better Care, and Ultimately Lower Cost for Our Citizens

When I was studying for my master’s degree in medical care organization in the mid 1980s, one of the first things I was educated on was the different ways a group’s insurance rate could be calculated.

The notion of insurance is that everyone pays upfront for the protection, even though only some will need it during a given policy year. There are very few people that could afford to rebuild their house if it burned down. For this reason, we have homeowner’s insurance. The companies that sell the insurance have actuaries who calculate the probability of a house burning down and they set the rate for the entire community. No one would sell a policy to someone after the fire had already begun to burn. Happily, most people won’t lose their home to fire and they don’t resent buying insurance.

With health care it is different. Everyone will eventually get sick and consume health care. Some people believe that they could save enough money before they get sick to be able to pay out of their own funds when they eventually do need health care. Of course with the average cost of one hospital stay being in the vicinity of $10,000, very few Americans could actually pay from their own funds….and that would only be for the bill from the hospital for one stay.

So, most people want health insurance so that they are protected from financial ruin when they get sick. In America, all citizens over age 65 get Medicare. It is our elders, of course, who are at the highest risk of needing health care. In our public discourse about health care, I don’t hear many people saying that we should get rid of Medicare. We don’t have a choice to opt-out of Medicare. From our first paycheck as a young person, Medicare taxes are taken out. Most of us realize that this is worthwhile protection for us when we get older. This sure seems like “a mandate” from the government to me, “an individual”. People over 65 pay some out of pocket, but the majority of their health care bills are paid by the program. The costs are spread over the entire community of working Americans. This is a form of “community rating” and it has worked quite well since 1964.

But what about people under age 65, who find themselves with a disease? Before the Affordable Care Act (derogatorily called “Obamacare” by people who don’t like the act), if you had a “pre-existing condition”, in other words, you had a chronic disease before you applied for insurance, the insurance company could refuse to cover you or to use “experience rating”.  In experience rating, you could be charged a very high premium because you were already sick. Is this fair? What if you had just lost your job and while you were looking for a new one, you learned that you had breast cancer? What if you were a small business owner with 25 employees and your premiums were experience rated and two of your employees developed cancer?  Most Americans believe that this is not fair.

The Affordable Care Act eliminates this unfairness. It says that insurance companies can’t discriminate in setting higher rates because someone already has a disease. But, in order for this to work, the insurance company needs the healthy people to pay the same rate as the sick people, just like fire insurance companies need the payments of the people whose homes won’t burn down in a given year to pay to rebuild the ones that will. There must be an individual mandate for all Americans to have health insurance just like there is a mandate for us all to pay so that Medicare will cover us when we reach 65. I was a citizen of Massachusetts when Governor Romney introduced their law and I was proud of him for doing that. In Massachusetts now, almost everyone has health insurance and they don’t have to worry about not being able to get care or go bankrupt when they are sick. Hopefully, the Supreme Court will understand this logic, so average Americans in the other 49 states won’t have to worry.  


What do you think about ensuring that all Americans have health insurance?

Doctor’s Day

Today, National Doctors' Day is recognized across the United States. March 30th is a day to celebrate the contribution of physicians. The first Doctor's Day observance was March 30th, 1933 in Winder, Georgia.  Eudora Brown Almond, wife of Dr. Charles B. Almond, decided to set aside a day to honor physicians.  On March 30, 1958, a resolution recognizing Doctors' Day was adopted by the United States House of Representatives and in 1990, legislation was introduced in the House and Senate to establish a national Doctor's Day. Following overwhelming approval by the United States Senate and the House of Representatives, on October 30, 1990, President George Bush signed the bill designating March 30th as "National Doctor's Day."

We have a wonderful medical staff who do marvelous things. Every year we get laudatory comments about how much they mean to individual patients.  We can never lose sight of the wonderful contributions of our hard-working physicians and their dedication to those they serve. I am glad that at least one day a year we reach out and thank physicians for all of the things they do 365 days a year.