Your assumption that the government would be able to calculate how low reimbursements can go before they are too low is clearly mistaken. That's why the Sustainable Reimbursement formula Congress passed into law in 1998, which should have lowered reimbursements to physicians from Medicare by about 3% to 4% every year, has been overridden by Congress in every year but one since then and will be overridden again this year. Congress didn't know what the correct formula was for deciding how much doctors should be paid back in 1998, and after thinking about it for 11 more years, Congress clearly still doesn't know.
Toomuchtime, it can be done, with fairly good accuracy...and we can learn from mistakes and get better at it. This is what insurance companies do, in order to negotiate their own prices with different hospitals and doctors.... Insurance companies do NOT PAY the ASKING price, just as medicare does not.
In a way this is all just typical "retail"....the vendor lists a higher price so they can really sell a hell of a lot of it when they "say" it is discounted or marked down....
(When i worked for Dillard's, if our competition advertised a sale price on an item 2 times, the 3rd time of their markdown price or sale price happened we had a policy that we had to permanently reprice our same product at their sale price, as its newly established regular price....)
But these hospitals and doctors and labs etc, keep the higher price as their established retail price and never reestablish it at the discounted price they actually sell it for to the majority of their customers...I believe the reason they do not, is because there is some sort of Tax Write off in it for them?
Back to your point, i think our gvt has done a pretty good job with medicare caps and pricing, and although there have been some problems, nothing that could not be addressed. And yes, Insurance companies go through the same type situations when they try to negotiate their prices with hospitals....and they work deals with these hospitals that they can only be charged a certain amount for each procedure JUST LIKE medicare does.
Individual policies are not 2 to 3 times more expensive than group policies. The companies, on average pay about 70% of the cost of a group policy so it seems individual policies are 2 to 3 times more expensive, but if the company had to give you a voucher for the same amount it pays for the company plan you would be able to find an individual policy for about the same price as the company's plan. So if the average family policy cost about $13,000, the company would pay $9,100 and the worker would pay $3,900. What I am suggesting is that the company be required to offer the worker a choice of paying $3,900 for the company plan or receiving a voucher for $9,100 to buy an individual policy, so he/she would still only pay the difference between the full cost of the policy, still approximately $13,000, and the $9,100 voucher you would receive.
I begged to differ with you on this because i have just gone through the experience of trying to find individual insurance. I have personally priced individual health care policies here for matthew and I, and it was $25,000 a year for the two of us....Matthew could be retired with me right now if it wasn't for what health care would cost us yearly so he is working only for the health care coverage. On his company's group plan for the 2 of us, it is about $10,000 a year....so if they paid 60-70% of that, the voucher would be $6-7k towards a $25,000 dollar a year policy...NOT MUCH HELP, when we would have to come up with the other $18,000 - $19,000....Group insurance is much much cheaper than individual insurance...there is a huge bulk discount in the price of the policies negotiated.
The only reason group policies are cheaper than individual policies is that the administrative cost of servicing a group policy, including sales commissions, is less that the administrative costs of servicing many individual policies, but administrative cost is one area where efficiencies can almost always be achieved if necessary, so if employers were required to offer vouchers instead of forcing employees into the company plan, more efficient insurance companies would find ways to cut their costs, perhaps by eliminating sales commissions and selling directly to the consumer or by reducing reimbursements to some providers, and offer individual health insurance policies for less than the company plan would cost or with greater benefits than the company plan offered.
There's a little more to it than just paperwork in the negotiation process...these insurance companies are basically guaranteeing these hospitals and doctors that are "IN NETWORK" a certain amount of customers, their GROUP.
Otherwise, I agree with you and you've got some pretty good cost savings ideas of your own that should be passed along to these guys... 
There is huge savings that can be had in this area of streamlining paperwork. and most of it is on the Hospital's billing side imo.
In order to keep too many workers from defecting from the company plan, the insurance company that had that contract would have to find ways to lower its costs or offer more benefits, and this competition between the insurer that had the company plan contract and the hundreds of insurers who were trying to lure workers away from the company plan would not only put downward pressure on administrative costs but it would also put downward pressure on providers, and this downward pressure would continue until reimbursements got so low that quality could not longer be maintained if they went any lower.
Over all, the concept and idea of what you described about with vouchers and company group plans is really good, and I like it. But it will only work if individual policies were more reasonable that what they are now...and maybe they would be, if these other insurance companies know that they have a GOOD SHOT at getting a whole bunch more customers!
But this still doesn;t help as much as we all would like with our health care insurance prices...because they just really reflect what the doctors and hospitals and labs are charging.... if we wanted to really affect the price of the actual health care, it would be us, as customers, influencing the price of health care one on one with the hospitals and doctors that we buy it from....the middle man, would be no where to be found.
A federal law that defined national health insurance policies would be a matter of inter state commerce, which clearly falls under the jurisdiction of the federal government, not the states, which are prohibited by the Constitution from passing laws that limit or inhibit commerce between states. The only reason the states have the authority to regulate insurance companies to the extent they do now is the anti trust exemption Congress passed years ago and that the Dems are determined to overturn now.
So if the anti trust exemption is removed, then this could happen constitutionally? then GREAT, this should be done.... however, as said, if we really look at the big picture, insurance companies are only one part of the problem with higher health care costs.
I think you're confused about the insurance premiums. If you're paying $10,000 for the company plan and the company is paying 60% of the cost of the policy then the company is paying $15,000. $15,000 is 60% of $25,000, which is what you say an individual policy would cost you. If the company had to offer you a voucher equal to what it pays towards your insurance, the voucher would be for $15,000, the company's current contribution for your health insurance, and you would still have to pay $10,000 for health insurance, but you would be able to choose the policy and insurance company you wanted not just the one your husband's employer wanted you to have.
Now if everyone had the option of choosing the voucher and every health insurer in the country could sell you a policy, you would have $15,000 of the company's money to spend and some of these companies that you currently can't choose are probably more efficient than the ones that are now available to you, so after applying the $15,000 voucher you might only have to pay an additional $9,000 or $8,000 or perhaps some more efficient insurance company would offer you additional benefits you would like to but don't want to pay extra for. Highly competitive markets not only drive prices down, but they also cause companies to find more creative ways of attracting customers.
You are mistaken about how Medicare reimbursement rates are set. Medicare does not negotiate with providers the way private insurers do. Medicare rates are set by law, either by new acts of Congress or by formulas that were established by past legislation. That's why it takes an act of Congress to change the rates. Obviously, when Congress established the Sustainable Growth Rate formula in 1998, it did not even consult with providers, let alone negotiate with them. If it had, it would not have been necessary to pass legislation every year but one since to prevent the formula from taking effect. There are no tools to determine before hand how low rates can go before quality of care is effected. If there were, Medicare would use them to set its rates and establish its formulas and Congress would not have to pass special legislation each year to try to correct its past mistakes.
It is a myth that health insurers offer some sort of volume discount to groups. There are only two factors that determine premiums, claims experience and administrative costs. If the underwriting is the same for groups and individuals, the claims experience should be the same, so the only difference in the insurance company's costs are the administrative costs, which are higher for individual policies than they are per capita for group policies. Most of the administrative costs are involved in underwriting and sales, but if the proposed reforms go through, insurers will have to accept everyone, so very little underwriting will be necessary, and if the individual policies are sold directly by the company, either through the Exchange or on the internet or even by phone, the sales costs will be very low and very close to the per capita administrative costs for group plans.
Doctors who accept HMO's do not get paid one rate for patients that have group policies and another rate for patients that have individual policies. Their agreements with the insurance company cover all patients with the same kind of coverage, group or individual.
