A Texas-Sized Health Care Failure

If Congress now creates new exchanges, as seems increasingly likely, it must prevent this phenomenon by setting two national rules: Insurers have to accept everyone and have to charge everyone the same rates regardless of health status

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This story was published in today's New York Times. The health care reform debate in Washington has struck a nerve with the American people, including many here in Hays County. Cappy McGarr had a close up view of the failure of Texas' own attempt at a health care exchange for small businesses in the mid to late 90s. Its demise, Mr. McGarr notes, was assisted greatly by – you guessed it – the health insurance industry.

Here's the link to the whole story: http://www.nytimes.com/2009/10/06/opinion/06mcgarr.html

By CAPPY McGARR
Op-Ed Contributor
Published: October 5, 2009
Dallas

The Senate Finance Committee has for the moment rejected the idea of creating a public health insurance plan. It’s difficult to see how Americans will be able to find good, affordable health insurance without one.

But if we are to go forward without a public option, it is more important than ever to make sure that we get another part of health reform right: the exchanges, where it is envisioned that small businesses and people without employer-sponsored insurance could shop for policies of their own.

Back in the 1990s, I was the founding chairman of Texas’ state-run purchasing alliance — an exchange, essentially — which ultimately failed. There are lessons to be learned from that experience, as well as the similar failures of other states to create useful exchanges.

[snip]

Private insurance companies, which could offer small-business policies both inside and outside the exchange, cherry-picked relentlessly, signing up all the small businesses with generally healthy employees and offloading the bad risks — companies with older or sicker employees — onto the exchange.

Cappy McGarr, the president of a private equity firm, was the chairman of the Texas Insurance Purchasing Alliance from 1993 to 1995.