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Tom Potter, Grand Forks, Published July 07 2012

Health care exchange best option

There is a reason why an annual car insurance premium is about the size of a single monthly car payment, while a monthly health insurance premium is often as large as a monthly mortgage payment on a house. The reason is that every driver in North Dakota is required to purchase an automobile liability policy for the vehicle the driver is licensed to operate.

Because all drivers are required to purchase an auto insurance policy, and very few drivers are actually involved in auto accidents that cause damage to the person or property of others, a small premium from each driver provides a big pool of money, which in most years is enough to pay the large claims of a few unlucky people who are involved in an accident.

That is the insurance principle: The individual costs of casualty losses are much smaller when those costs are spread among a fairly large pool of insured drivers.

If we are going to do anything about the runaway inflation in health care insurance premiums, we will have to make the health care insurance market function more like the auto insurance market. By spreading the total cost of illness and injury across the entire population of the state, the cost to any one individual becomes affordable.

But health care costs are a lot more complicated than the costs of repairing the damage from a car crash. We can’t just wave our arms and tell the health insurance market to behave. We will need to create the new market structures that produce economically desirable outcomes in the market for health insurance.

The cornerstone of an efficient market for health insurance is a big package of standard procedures for enrolling members, collecting their premium payments, authorizing treatments, approving claims and making payments to doctors and hospitals. To make matters even more interesting, all of these procedures must be performed in a way that keeps patients healthy, allows doctors to practice medicine the way they are trained to practice, and avoids unpleasant surprises in the system.

It’s a tall order, but, thankfully, we have the expertise in North Dakota to create an insurance exchange that will almost certainly be able to meet all of the required standards. That is why I was so glad to read in the paper that Blue Cross Blue Shield of North Dakota has not given up. (“Blues execs explore health exchange,” Tuesday, July 3). I agree with CEO Paul von Ebers that we still have “a fighting chance” to begin work on a health insurance system in North Dakota that our grandchildren will be proud of.

Even though we are in the early stages of a long and bitter election campaign, I hope that our state legislators can put the interests of North Dakota’s residents ahead of the needs of us politicians. The state’s largest health insurance company can see the issues clearly enough. Should we expect anything less of our elected representatives?

Potter taught finance at the University of North Dakota for 20 years. He and his wife, Louise “Weezie” Potter, live in Grand Forks. He is Dem-NPL candidate for insurance commissioner.