Skin in the Game (Editorial)

by Arkansas Business Editors  on Monday, Jul. 7, 2014 12:00 am  

Everyone understands that last week’s special legislative session was, as it concerned health insurance benefits for public school employees, a short-term fix to a long-term problem that had been ignored until it simply couldn’t be ignored any longer.

Most telling: Bob Alexander, executive director of the Department of Finance & Administration’s Employee Benefits Division, was telling people that some of the school employees who have been enrolled in the state’s “gold” insurance plan will have to be educated as to what a deductible is.

That’s right, folks. The gold plan had no deductibles, a concept even harder for private sector employers and their employees to fathom than a defined-benefit pension. Gold plan enrollees were paying a higher premium than silver and bronze enrollees, but they were buying an all-you-can-eat buffet without even the moderating pain of needing to loosen one’s belt.

It’s become a cliché, but everyone needs to have skin in the game of health insurance. Since the advent of “managed care” three decades ago, the cost of health care has been a murky mystery to the consumer whose medical bills are works of fiction before insurance discounts and benefits have been applied — and shocking surprises afterward. Market forces can’t work efficiently when costs and benefits cannot be evaluated on the front end, and they don’t work at all — as the state’s gold plan proves — when the consumer has no incentive to even wonder about the bills he or she is racking up.

Someone benefits from that kind of system, of course, but it isn’t the consumer and it isn’t the taxpayer.

The special session bought a little time. Very little. A longer term answer will have to acknowledge that the things we want — including quality teachers compensated well enough to keep them in the classroom — aren’t free. They aren’t even cheap.



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