Friday, September 07, 2007

Customer turnover leaves health insurers little incentive to cover preventative care.
A recent study (not yet published) by researchers from Case Western Reserve and Carnegie Mellon University explains that the culprit in poor diabetes management—and the lack of preventive care in general—may be the very high rate at which Americans switch among insurance plans. It takes about a decade for insurers to recoup their investment in early diabetes treatment, and by then odds are that their customer has moved on to another health plan. Alas, a lot of this turnover may be built in to the way Americans get health insurance. And it's the doing not of individual patients so much as their employers, who are always on the lookout to switch plans for lower-cost coverage.
I used to be quite hopeful that eventually the market, maybe after some deregulation, would produce more long-term health care contracts between individuals and insurers. However, as medical technology continues to change, it's just not possible to specify which future technologies will be covered to what extent. What should be the copay on fancy, expensive nanobot appendix removal, if traditional surgery would work almost as well? Long-term contracts require trust. A third-party setting coverage standards might achieve that, but states already mandate a lot, and this hasn't solved the problem. (If you think states aren't being specific enough, then Massachusetts is the experiment to keep your eye on.) I wonder if there are other possible mechanisms.

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