Obama HC part 2, in response to a comment

Mark Horning posts on similar topics on his blog.  While the general direction is good, I want to correct a few misconceptions that people who have not worked in the insurance industry may not understand. 

1.  Most large employers are self-insuring.  Insurance companies just do the paperwork, and processing, all risk is born by the company itself.  I personally know that Walmart, for instance, is managed by Blue Cross of Arkansas (come 2010), for ALL it's employees.  BCBSAR processes the claims, and at the end of the month/week, Walmart cuts a check for the actual amount of claims paid out plus a Per Member Per Month fee of somewhere between $15 and $50.

2.  The state lines bit is also mostly bogus for large employers.  Mostly, a single insurance company handles all their insurance across state lines.  Maybe some multi-state, but small employers have this problem, but the large ones don't at all.  I believe BCBSIL handles all of McDonalds corporation.

3.  Purchasing insurance across state lines is problematic due to the varying patchwork of regulations from state to state.  It would effectively be a pre-empting of states rights to make insurance regulations, as high regulation states would lose lots of insurance business.   Is it good for the feds to violate state rights in this place?  I'd like it for sure, but I don't know how to justify it constitutionally.

4.  Tort reform is a minor issue.  Sure, $1/4M annual policy does add up, but...the big issues are incentives and regulation based.

1. Incentive for individual to spend less is missing.  Solution: HSA/MSA/Singapore style thing
2. Medical competition heavily restricted.  Solution: Trust-busting AMA, allowing independent Nurses/Bachelors of Medicine, Independent demi-physicians, independent surgeons, etc.
3. Drugs regulation is a mess.  Solution: Abolish FDA, or at least dramatically curtail their mission.  # dead to artificially slow deadlines is HUGE compared to number hurt from under-regulation, and FDA n-tuples the cost of drug development, which is where the real innovations tend to come from.

 5.  As before, somehow Singapore's Tax-based HSAs + Catastrophic insurance allow 5% GDP spending AND lower med-expenditure growth than anywhere else.  If we're not looking in that direction, we're silly (or captive to political interests).