March Of The Lemmings
TO THE EDITOR
In your article, “Government Hopeful On Health Costs,” (Feb.19) you quote Donald W. Moran, associate director of budget, Office of Management and Budget, as saying “the marketer . . . can build in prevention in the price of the policy.”
In giving Mr. Moran the benefit of the doubt as to why he made this comment regarding the price of health insurance, it is difficult not to agree with him. Indeed, the marketer can achieve the ultimate in prevention by pricing his policy so high as to make it unaffordable thereby rendering the distant benefits within the policy as useful as a glossary of computer terms to Cro-Magnon Man.
I trust, however, that Mr. Moran was referring more to price as it relates directly to the specific benefits engineered in the contract. Benefit design and pricing have proven in practice to deter over-utilization or misutilization of the policy while still providing a solid base of protection. Only when the insurance buying public is educated (part of the agent/broker/company function) to the fact that the price/cost relationship is a direct relationship, and not mutually exclusive parts of some insoluble puzzle, will the demand for change become strong enough to cause marketers of health insurance products and services to move to meet it.
In the meantime, those risk managers and benefits consultants whose interests are company-based or client-based as opposed to product-based are way ahead of the pack. Utilizing captives, self-funding, partial self-funding and other innovative and cost effective measures have brought back into focus the relationship between pricing and the ultimate cost of benefits.
This approach is much more sensible than the traditional one of indefinitely passing on rate increases to the end user. This self-defeating upward spiral of health premiums in lock-step with health care costs is forcing the buyer of our products to either do without coverage or look for Federal or state relief. Neither option bodes well for the insurance industry or the consumer.
It is long past due for the insurance community to wake up and take advantage of the opportunity at hand rather than continue to move like lemmings to the sea.
PAUL J. DISSER
Trust Benefits Management Corp.