Random musings of Scott McGregor

Recently I’ve been coaching several people recently on how to get a job in this down economy, and I would like to share them with you as well. The people I have been coaching with these techniques include new college grads and non- grads seeking entry level positions, as well as more experienced candidates ranging from early stage careers in technical roles and marketing to mid level and senior management level positions.

My background as an innovation and disruption expert
If you have followed my work, one of the things you know about what I do is that I look for (and coach others on finding) disruptive innovation product strategies that allow a start up to invent important new and fast growing markets that they become the leader of, or disrupt the balance in existing markets so that they become new leader and drive the incumbents out of the market.

Disruption strategy methods can be applied to every kind of business
While most of the companies that I have personally participated in have been applying these product strategy methods to the Internet, Software and Mobile Industries, I have taught these methods to people in all business sectors, consumer and enterprise, high tech and low tech, products and services, and they have found these methods equally valuable in all those settings.

Applying Disruption Strategy approaches to Job Searching
In fact, I think these methods can be applied to any business or market, and today I’m going to talk about a strategy that comes from applying them to an area that you may never have considered as being open to innovation or disruption. Today, I want to talk about what can happen if we turn those same disruption strategy methods to give an individual job seeker a disruptive advantage in the online job market.

Disruption enabled new job candidates beat experienced job candidates, by getting to jobs before they do.
What does a disruptive job search strategy mean? Think of it this way: If you are a job seeker, today there are many other people out their competing to get the jobs you want. If you have a great resume, cover letter, and interview skills, are the most qualified applicant and are always the first person to get a job offer for any job you apply to through a job site like Monster, Career Builder, or Craigslist, you are the current market leader that other job seekers are losing out too. It is these successful people that other less successful applicants need an new approach that will allow them to disrupt the playing field to their advantage — to find jobs the current leaders can’t — because those jobs aren’t yet advertised on Monster, CareerBuilder or Craigslist and to overcome the advantages they may have in qualifications and a great resume, by creating a new path to hiring managers that doesn’t depend on a better resume. Note that such a strategy is disruptive in another way as well — it creates a new way for recruiters to package candidates and get them in front of hiring managers before their competitors, and especially before Monster, CareerBuilder or Craigslist.

Finding the niche market that the current market leaders don’t serve well
To figure out how to disrupt the traditional online job search market we start by looking for the special situation where some customers are ill served by the existing products. That special situation that we’ll focus on is a job market in which there are lots of highly qualified candidates seeking every job that is advertised. And what makes the current system ill suited to hiring managers in such a hiring climate is the large number of resumes that need to be screened and interviews that need to be held to fill a position.

Our task: find alternative ways to reach overburdened hiring managers
In our disruptive approach we’ll look for an alternative way around that hiring manager problem that allows job seekers who use the disruptive approach to bypass the existing job site channels where they are at a disadvantage by using to alternative paths to hiring managers.

SOLUTION: Two alternative ways to reach hiring managers

A bad economy makes hiring managers hang back from announcing jobs
The current economy makes it necessary for job seekers to take a different strategy than what works when the economy is good, and the ways that might be the way most people have found a job in the past. The key thing to realize is that right now most employers have way too many resumes, and feel overwhelmed and don’t want to see more resumes. In fact they want to see fewer resumes, and zero is just about ideal! So many of these overburdened hiring managers don’t even want to post a formal job opening on their own website or on a paid job site or on Craigslist. They’d rather fill that job through an informal process that avoids having to read a ton of resumes.

Busy Hiring Managers May Wait to Post Jobs Until After They Know Who Will Fill Them
When that happens you obviously can’t find these jobs by looking for job postings. And you can’t assume that because a company doesn’t have a your job title posted that they don’t have that job — even if they have lots of other jobs posted. That’s because it isn’t the company that is overwhelmed, it is the hiring manager that the job would report to who is maybe hanging back from filling out a requisition for a job. In fact, at times like these, many hiring managers won’t even fill out a job requisition, that is “create a job”, until they know they have already identified the candidate they know will fill the job. That way, as soon as the job is posted and the resumes start coming in, the manager can hire the identified candidate and skip reading the rest of ton of resumes that inevitably flood in because they have now already filled the job that was just posted.

Entry level jobs yield the most overwhelming stacks of resumes to weed through
The more resumes the hiring manager might get, the more likely the job is actually to be filled like this. And the jobs where the most resumes are likely to come in for will be entry level jobs. So this is very relevant for you and Sean.

More qualified candidates who miss out feel frustrated
Naturally, this is very frustrating for job searchers who think they would have been better job candidates, if they had only known about the job. And some of them probably would have. But each of these job searchers has to make a choice: they can be among the many people who continue to post resumes and wait for companies to search for them, and apply to advertised job openings on website and job search sites — and complain when they miss out on these jobs that aren’t really posted until the person who will be hired is already identified. Or they can be one of the people who deliberately or accidentally stumble into these not yet created job opportunities.

The person who gets hired is the person who solves the current problem first — and the current problem is the huge stack of resumes to review!
If getting a job that’s perfect for you is more important to you, even though other more qualified people may have been ignored, then you there are steps you can go through to deliberately get a job this way. If getting a plum job based on “who you know, and who knows you” even if other more qualified candidates may exist makes you feel guilty, then you might want to stick with posting resumes and applying to blind ads. But keep in mind that doesn’t necessarily mean the best qualified person will get the job, someone else who uses the informal processes that i describe below, with lower qualifications than you, but a willingness to go through the who you know and who knows you network, might get it instead. Because in the end, the best candidate for the job in the hiring manager’s mind is the one that minimizes the manager’s effort in finding and guiding the new hire, and who makes the greatest contributions to solving the hiring managers problems. And right now, problem one is getting some work problem solved without having to read a lot of resumes.

Two ways to find the jobs that have not yet been posted, or even created
When hiring managers are hanging back like this, the way to get the job is to get to the person through an informal process. There are two ways to do that which I know can work.

Strategy 1) YOU find the hiring manager: job networking
The first approach to find jobs that don’t yet exist is often called “job networking”. The trick here is to have a bunch of informal meetings with people. The wrong way to go about informal job networking is to ask people “Do you have a job, or know someone who does?” That won’t find you hidden jobs. It will mostly get you a bunch of “nos“, and you’ll quickly exhaust all those sources of leads. But a slight twist will actually get you more “yeses” and more useful leads.

How to ask for a job networking meeting
Phrase your question this way instead. I’m interested in learning about jobs as a “(your target job title)”. I’d like to talk to someone who does that job now, has done that job in the past, has managed people doing that job, or who has worked with people doing that job. I’d like to speak to them and learn a little bit more about the field, the companies in that field and the typical problems they face in that job as part of my preparation for a job search in this area. Do you know anyone I might speak to about such things?”

Focus on discovering needs, not a job
You don’t want to tell people that the purpose of the meeting is to find out if they have a job or can get you a job — that puts them on the spot if they don’t have one; or even if they do have one, because they don’t know you yet and aren’t prepared to deal with a job discussion until they’ve first screened you. Instead, you tell people that the purpose of the meeting is for you to collect more information about what it is like to work in that field, and what people hiring people in that field currently need. This last word, Need, turns out to be the trick that can make job networking work magic for you. The trick is to focus on understanding individual hiring manager’s needs and offering to help with them.

You aren’t imposing by asking for a meeting — you are offering the person a chance to show off their expertise
Everyone loves to tell people about how they got the job they have, how they succeeded and what they do — it makes them feel important. So when you ask to meet with someone to learn about their experiences in the business, you aren’t wasting their time! People like to have meetings with other people who are interested in hearing all about their successes (and about all the secret booby traps they’ve avoided, or discovered).

Give people the permission to complain about their problems
Everyone also has needs — some of which aren’t being well met at any given time. People like to tell other people who are willing to listen all about these needs too — in hopes that other person will know of a solution they had not heard of. A lot of people are reluctant to talk about their problems because they don’t want to come across as complainers. But when you ask, well that’s a different story! Also, when you speak to someone working in that field, tell them up front that you are happy to share any useful information you might learn from your meetings, or to provide them similar leads if some day they are looking for a new opportunity.

Shifting gears: become a solutions provider
So you want to find out the needs of people who hire for the job you want. You want to find out about those needs from potential hiring managers, or from the other people who work for them. Contrary to what you said when you first started asking for these meetings to prepare your job search, once you have this knowledge, you don’t go into job search mode — you go into solutions provider mode!

That’s what turns out to be the trick to getting these jobs that don’t exist yet. People are reluctant to give you their valuable time if they think you are going to ask them for a job they haven’t created. But they are eager to give you their time if they think you might tell them about solutions to the problems they have.

Don’t ask for a job, let them propose a job in order to capture your solutions skills.
The strange thing is, that in telling them some of the solutions to their problems you are also indirectly telling them that you know how to solve those problems. When they know that you know how to solve these problems, you personally also become a solution for them. Not only would hiring you mean their current problems could be resolved and they could focus on something else, but you could solve similar problems for them in the as well in the future. Once they have that realization, that’s when THEY are suddenly going to think about creating that job just for you, and the ability to skip having to interview other people will be a big plus!

Company problems vs. Hiring Manager Problems and Generic Problems vs. Peculiar problems
Note that you can’t shortcut the previous steps by looking at the job description, or what the job title is. Those are generic problems. They are usually problems that hiring companies have. But companies don’t actually hire — it is the hiring managers inside the companies who actually make the decisions.

The hiring manager that is going to make the decision does have those generic problems, and they might be the first ones they think of when writing a job posting. But they aren’t what the hiring manager is thinking about when they are making a hiring decision. All the candidates whose resumes passed the first screening, and solve those generic problems. What makes the hiring manager choose a specific person out of the set of multiple qualified candidates is their ability to solve the manager’s immediate short term problems that are peculiar to this manager at this moment.

Imagine the job you are seeking is “web designer”. When the hiring manager is describing the job, they may be thinking about someone who already knows JavaScript and has created interactive webpages before — so they can start right to work. So that’s the generic problem or skills the manager puts on their job description.

But what the hiring manager is thinking about when making a hiring decision are the peculiar problems that they have right now. Maybe they lost their previous web designer because the job required the web designer to work without some off shore graphics developers in Malaysia who sometimes don’t seem to follow directions in english that well. The previous web designer found that frustrating and quit. So, the peculiar problem isn’t just getting interactive web pages working, but getting them working with beautiful graphics that having been coming from this offshore group.

There might be many alternative solutions to the peculiar problem.

A web designer who is also a talented graphic designer might do both web design and graphic design well and thereby make the offshore group unnecessary.

Alternatively, A web designer who speaks Malaysian, might communicate more effectively so this problem doesn’t reoccur.

The manager may not be attached to which way the peculiar solution solves the problem, but they sure want to be certain that the peculiar problem will be solved.

Be the solution to the peculiar problem
And if one candidate seems to appreciate that peculiar problem and shows the manager they have a solution, that candidate immediately become the least risky selection for the manager to make. And given that the manager doesn’t want to spend more time reading resumes and interviewing people, the first known solution to the peculiar problem is likely to result in a quick end of the job search and a quick job offer. There is no need to keep searching for candidates with alternative solutions — it is time to implement the first one and get back to productivity now.

Show off your ability to solve their problem
Because the hiring manager hasn’t gone through the formal steps to get a new job requisition filled out, they might not know if they will be able to get the budget for such a new job, or get it approved, if it requires higher level approval. But they probably have the authority to invite you in for a day to see if you can help with a peculiar problem they have. Ask them if they would like you to do that. If they seem concerned about the cost, tell them you appreciate that they took so much time with you, and the opportunity to get to know more about their company, their department and what it is like to work for them. Tell them, that you won’t charge them for the 1 day of work, but that what you ask in exchange is that if at the end of the day they like what you did that they agree to write you a short testimonial and introduce you to other people in the industry who might hire someone like you. It is a rare hiring manager who will say no to that offer. And think about this: when it comes time to make a hiring decision, would you want to do that based on a resume or interview or would you rather make a decision base on observing the person at work for a day? Seeing is Believing!

Ask for a Testimonial and a referral: If this manager can’t hire you now, get them to help you find the manager who will!
At the end of the day, if you’ve made some progress on the hiring manager’s peculiar problem, ask for that testimonial and referral. Tell them that while you understand they don’t have approval to hire a person for this job on a full time basis, that you like them, and that if they want your continued help on an knocking off the peculiar problems that have been troubling them, you are willing to do that on a consulting and part time basis while you look for the full time job. Tell them, that if an opening should be approved while you are searching you would love to consider it, because now you have had the experience of working with them for a day. Now you aren’t a job seeker — you are the problem solver that they are wanting.

Need more help on getting meetings with potential managers using this approach?
Get more information on how to create these problem solver images in the minds of managers, click on the following link to get a copy of Anthony Parinello’s excellent book “Selling To VITO (Very Important Top Officers).”

More jobs are being filled through networking that through job sites.
My friends in the recruiting industry are telling me that 60-80% of all jobs are being filled this way right now — and it is the way I have filled most of my jobs over my career. Often I just have a name of someone I got from a friend of a friend. The purpose of the meeting is very informal, just to find out more about their job, their company in general, and their views about what is happening in the industry.

In asking about their job, I often ask them about what their current problems are. Then I usually say something like this, “I have some ideas about how to solve some of the problems you mentioned, that I would be happy to share with you”. I also ask, “are these kinds of problems widespread in your industry?” and “Do you know other colleagues who might have these problems, because I have skills at solving these problems and might be able to help that colleague.”

Usually, if they really don’t have the budget or can’t hire me now, they will introduce me to other people who have similar problems. They’ll win brownie points with that other person, and may be able to hire me later and would like me to feel they are a great manager. Or if they can swing the budget, they’ll say “Well, I didn’t have an opening when we started the talk, but if you can solve that problem, I might be able to get approval to hire you.”

Ultimately I’ll find myself in front of some colleague who will say to me: “Really? you can solve this particular (and peculiar) problem for me? Can I hire you temporarily as a part time consultant to solve this problem?”

And I say sure. Then I solve their problem, and they get to know me and I get to know about other problems that I can help with. If I like working with them, I’ll tell them about the other things I can help with when i am done with my current project, and if they also like me this has always led to a full time job. If we don’t like each other we found out quickly and cheaply for both of us.

Strategy 2) The hiring manager finds YOU!
That brings me to the second way to get a hiring manager who is hanging back to find YOU! If they are busy, shorthanded and overwhelmed (and avoiding the idea of thinking about being even more overwhelmed by more resumes!) they aren’t going to be searching craigslist or monster to find you. Maybe they should be. But they aren’t going to be.

The manager who isn’t seeking people to do jobs, is searching for HOW TO solve their peculiar and general problems
What the hiring manager is thinking about is how to solve that problem without hiring someone, since going through all the steps to get approved for hiring someone and then doing all the resume reading and interviewing is such a hassle. . And to find solutions, they are likely to likely to do an Internet Search for published advice on how to solve their problem. That’s the hook in this startegy. Since they aren’t looking for your resume, but are looking for a solution, you post a solution for them to find. Then you let them realize that hiring you to solve their problem is even less work than learning HOW TO solve the problem is even less effort on their part than spending their own time (as a busy distracted newbie manager) trying to apply that new knowledge expertly.

Make search engines like Google help managers seeking solutions find yours!
This is where you can make the power of the internet search engines work for you, so that the hiring manager finds YOU and not competing candidates for the job. Since these are hiring mangers who aren’t looking for job candidates, they won’t be searching Craigslist, Monster or Careerbuilder. And they won’t find the people who could compete with you for a job and who might even look more qualified based on the resume on those sites.

Instead, you’ll post your solutions are going to be on the non job sites that Google will find. Places like public blogs (syndicated with RSS), or Audio podcasts on iTunes, or videos on YouTube. Those solutions will also contain a pointer to your web page. And that web page won’t just be a resume, it will be a portfolio site showcasing other How To solutions you have authored, as well as your past successes and testimonials from people you have benefited.

When they find your solution, they have also found you!
Now, when these managers are looking for solutions to their problems, they will also find you in the course of searching for those solutions.

How do you get started, and become findable?

Create How To Tips
The trick is to just start creating content about various generic and peculiar problems that you have solved before and give some simple HOW TO tips on solving them. The form of this content (text, audio, or video) isn’t as important as that your HOW TO solutions are published on the web and found by search engines. You can write these tips in text such as a blog, or facebook page, or email newsletter that you syndicate through RSS. Or you can just talk your way through them in audio in a podcast. Or you create a short animation and save it as a You Tube video. Any way you do that you, you’ll wind up listed in an internet search engine. Now when the hiring manager goes looking to find a SOLUTION to one of their problems, they are likely to find YOUR How To tips.. And through your how to tips, they will discover YOU! And now, while they might not have searched for your resume, they know you are a potential source of solutions for the job they haven’t yet created! (and they still don’t know about, or have the time or interest to discover other candidates resumes on Craigslist, Monster or Career Builder.

Short is can be sweet!
These content pieces don’t have to be long — in fact short and sweet (2-3 paragraphs or 10 steps in text, or 2 minutes of Audio or Video are often preferable. Let people experience several descriptions of simple but common problems, so they see the breadth of what you know. If their problem is deeper, let them ask for consulting help.

If this still sounds complicated and daunting, do not despair. Click on the following link to get David Wood’s book “Get Paid for Who You Are” which does an excellent job of taking you step by step through how to do just this kind of way in a quick and easy way. If you want even more help, David’s Get Paid University site provides a wealth of support.

Sidebar: Why are we getting spammed when we post our resumes on job sites and what to do about it.

Why we post on job sites like Monster, CareerBuilder and Craigslist
We post our resumes on a public job site in order to let all potential employers know that we are looking for a job. This way, we don’t have to know which employers we want to work for; we let them find us. It is very low effort on our part.

When posting on job sites actually generates useful calls from employers
Posting our resume in a general job site mostly only works when there are too few active job seekers for the number of job openings employers want to fill. When that happens, employers must go looking for additional potential employees, and that’s when they are willing to spend time searching for people like us, and when it is cost effective to pay the fees that paid sites like Monster and CareerBuilder charge.

Why employers are responding to our resumes on Monster, CareerBuilder and Craigslist right now.
When there are a great many job candidates applying for each only job opening, like in today’s economy, it isn’t sensible for a company to do such paid searches. Since right now employer sare already getting more resumes than they want to review for each opening — and that’s just counting the resumes that are coming in unsolicited via their company’s own job pages on its own web site. With so many resumes, employers don’t want to spend the time to do an external search for additional potential employees, and they certainly don’t want to pay for information that they can are already getting for free when people apply through their own company website.

Even if cost were not the issue, it is less work to just review and select from the resumes you are already getting through your own web site.

This is why you and I will probably not get very many useful contacts from employers simply by putting our resumes on these sites. Instead, we will have to identify potential employers and apply on their sites.

So, who does want to purchase our information from job sites?
But if employers don’t find it cost effective to pay for contact info from extra potential employees, then who DOES find it cost effective to pay for your contact information — people with jobs that NO ONE wants to apply to, and people who are selling a service– such as a college. These are people who can’t get your information more cheaply another way, and are willing to pay for your information (either in actual dollars on a paid job site, or in time and effort on a free site like Facebook or Craigslist).

Why we are getting spammed when we publish our phone and emails on Job sites
The people who most are most willing to buy your information are people who want to sell you something that you aren’t searching for. That could someone who wants to sell you a college degree, or someone who wants to sell you on a job that NO ONE is applying for. Or it could have nothing to do with jobs at all.

How to avoid getting spammed
To avoid getting spammed like this, the best way is to do our own research to identify prospective employers we want to work for, and apply on their own web sites, rather than wait for them to come to us. Better yet, use networking to find a path directly to the hiring managers (even the ones who don’t at present have a job req) and let them know about your problem solving skills! Since companies don’t want to share your information with competitors, targeted contacts like this usually won’t result in your information being shared with anyone else.

Good luck job seekers!

This post may be freely reproduced in whole or in part for non-commerical purposes when printed with attribution or a link to the www.smcgregor.com/blog website under a creative commons license. For commercial use, please contact the author for permission.

Where is the political party of the Small Businessman and Entrepreneur?

Tying health care coverage to employment is a disaster for entrepreneurs, the self-employed and small businesses. But these are the people who drive the engines of innovation. Today, inability to get affordable and comprehensive individual health policies is a huge disincentive to people contemplating building a new business. Without this disincentive a whole generation of new American entrepreneurs and self-employed workers might arise to improve our economy, create new greener power sources and transportation, reduce C02 and other national and world problems — entrepreneurs and self-employed professionals no long fettered by their inability to acquire affordable, comprehensive individual insurance for their families.

Where is the political party of the Small Businessman and Entrepreneur that is taking the lead and fighting for portable and universal affordable health insurance on their behalf? Entrepreneurs and the self employed take big financial risks but provide most of the employment and economic growth this country enjoys. Yet they also disproportionately face health insurance risks which hamper their efforts to do so. It seems to me that such a political party would not only the party of compassion, but also the party of American individualism and the party economic growth.

Who are the members of this party?

We will recognize them not by their words but by their actions.

I’m sure that millions of Americans like Terri and I would like to find that party and help it succeed in the upcoming mid term elections. But we won’t recognize its members by their partisan posturing or post election promises. We will know who really represents our interests only by what these representatives are able to accomplish on our behalf before the next election, regardless of whether there is an (R) or a (D) designation next to their name.

They get it done

When we see the actual senators and congressional representatives who are able to reach across the aisle to make the compromises necessary to make coverage for all americans an immediate reality, we’ll know that those are the incumbents we will want to re-elect to fix the unforeseen short comings that turn up in the first few years after the establishment of any major program.

They don’t participate in stalemate

And we’ll be able to distinguish them from peers who pontificate and create stalemate and perpetuate both our health care woes and economic woes. We’ll know that those are the incumbents that we want to send packing.

We don’t need immediate perfection. We just need a start!

I don’t know what are the best provisions to put in a bill that ensures that all americans have health insurance all the time. I doubt anyone ever does.

We are not omniscient, we are humans and we make mistakes. We elect human like ourselves as representatives and senators, not omniscient petty gods.

We rarely get these things right the first time, and we know from experience that our representatives don’t either. Luckily, congress doesn’t just vote in such massive programs and then disappear forever. We’ll have years to come to refine and perfect our uniquely American health care program.

But this refinement and perfection can’t start until we have passed at least some plan. In this case, the striving for unobtainable perfection is the enemy of the imperfect, yet achievable good.

For those without, any solution is better than the persistence of no solution

ANY solution that enables ALL Americans, to receive adequate health care throughout their entire lifetimes, regardless of age, marital or employment status, current employer or pre-existing conditions, or any other condition beyond legal residency is preferable to a status quo that effectively denies any of our citizens access to the quality health care available to some of their fellow Americans.

Has Congress No Shame?

That any elected representative should, through their inaction, allow the evils of the status quo to persist and create havoc in the life of any one American is unfortunate. That it should affect hundreds of Americans is unreasonable; thousands of Americans, disgraceful; millions of Americans, intolerable; tens of millions of American is outrageous. That tens of Senators, and hundreds of Members of the House have allowed this problem to persist unaddressed for multiple terms of their incumbency is a scandal.

The second paragraph of the Declaration of Independence, establishing this country, reads:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness.”

Our Senators and Congressional Representatives have been entrusted with maintaining these rights, and the health of this great country that we have inherited from our fore-bearers. Each generation has improved the general welfare of all Americans, and the amount of suffering and uncertainty faced in life that existed in the time of our founding fathers has been steadily decreasing. Yet, like all human endeavors, our nation has not achieve perfection in this regard and there is still room for improvement. While today Americans over the age of 65 need not worry about whether they will be able to get the health care they need, hundreds of millions of other Americans may face that uncertainty at some point in their lifetime. No member of congress truly serves his or her state’s or district’s entire populace as long as there remain citizens within that state or district facing this uncertainty.

The Health of the Nation is Intertwined with the Health of All Americans

Congress has been entrusted with the health of this nation and to ensure these labors continue, ever increasing our enjoyment of the life, liberty and the pursuit of happiness, the very rights which this country was formed to guarantee.

But the health of the nation cannot be increased when the future health of hundreds of millions of americans remains uncertain, and subject to the vagaries of economic turmoil, disease and accident.

Good Health is a Necessary Precondition

To enjoy the right of Life, we must have the health that comes from quality care in order to live it fully. To enjoy our Liberty, we must be free from the need to indenture ourselves to a lifetime of service to a large corporation in order to ensure our families can get the care they need to remain healthy — and we must also be free from the uncertainty that we may lose access to that care at any moment, through no fault of our own, but solely due to the economy, actions of our employer, or giant for profit insurance companies. We cannot pursue happiness as our founders intended, when we are constantly in flight to avoid the uncertainties of changing and evaporating health care coverage.

If All Men Are Created Equal Then Why isn’t All Health Insurance Equal?

The very first of the basic truths upon which a legitimate government must operate, according to the Declaration of Independence was that “all men are created equal”.

Indeed, each of our births is a genetic lottery and any of us, and any of our children, could be born with a congenital condition which could have lifelong affects on their health. Should we not have equal access to the health care needed to enjoy the inalienable rights to life and liberty that are birthrights?

And each day we each equally face the random risks of unforeseen disasters caused by forces of nature like Hurricane Katrina, from disease such a bird flu, from physical accidents in our homes, offices and automobiles, and from random acts of mayhem by criminals, terrorists and madmen. The aftermath of these events can have both short term and chronic health altering effects. Should we not all have equal access to the health care needed to treat us for the health consequences of these events?

Where is the equality and justice in an insurance and health care system where access can be terminated summarily through the death, divorce or loss of employment of a spouse, by the whims of large employers or for profit insurers or unavoidable pre-existing conditions, where a person’s health care coverage can vary dramatically from employer to employer, from insurer to insurer, and person to person.

Half a Loaf is Better Than None

Somehow, every other industrialized country has figured out at least some basic health care solution that covers all of their citizens. None of these other plans is perfect yet, and their countries governments continue to fine tune them as well. But they all ensure that every one of their citizens have access to the health care they need. And in that regard, every one of these other countries plans is preferable to the American status quo for each American who is without health insurance or at risk of losing such coverage summarily.

No Excuse For Delay

If Congress can figure out how to cover every American over the age of 65 and every Veteran with adequate health coverage, congress ought to minimally find a way to cover the 100s of millions of other American Citizens who will lose their coverage at sometime in their lives. And while that plan most assuredly won’t be perfect as passed, it will most assuredly better for uninsured Americans than they alternatives they have today.
Then they can begin work on improving it. In the meantime, millions of Americans will enjoy both less stress and greater health.

Fast Action is Possible: Rescuing the Nation’s Financial Health

When the worldwide banking system was on the edge of an overnight collapse and the financial health of millions of Americans was at stake, Congress was able to act instantly and then make adjustments as needed in subsequent legislation. When millions of American’s non-financial health and lives are threatened daily by lack of health insurance, obstructionist incumbent politicians cannot be tolerated. With midterm elections only a few months away, vigilance can guide us in selecting the most effective members to return to congress for another term.

Healthy Small Businesses Mean a Healthy Nation (and Healthy Campaign Coffers)

It is worth noting that entrepreneurs and self employed business owners — and their employees, not only constitute a large voting block that can be mobilized as a stick against incumbents who ignore this issue, it is also worth noting that they also possess a large carrot. Many of the wealthiest american, such as Bill Gates, have made their wealth by founding new companies that subsequently grew large and grew quickly. Recently, the supreme court struck down campaign financing laws that affected businesses. So looking after the interests of today’s new entrepreneurs might not only be good for re-igniting a growth economy, it might just also lead to the growth of wealth that these donors could contribute to future campaigns.

Will individuals in Congress step up to their responsibly to protect the health of the country? Will we see any health care legislation before the next elections? Or will minority parties attempt to stonewall in order to deny the majority a legislative victory?

Time will tell, and we are watching…

Background

The article Feb 5th 2010 Lemondrop article by Allie Townsend entitled ‘Will Marry for Health Insurance’ — One Woman’s Desperate Quest‘, tells the unfortunate story of Terri Carlson. Ms. Carlson suffers from a genetic disease that greatly impairs her immune system requiring life long care. Until recently, Ms. Carlson, who had been a stay at home mother of 4, had health insurance through her husband. Then the couple divorced. Ms. Carlson was able to maintain her ex-husband’s health insurance under COBRA regulations but these regulations stipulate that this capability will terminate in early 2011. For a variety of reasons including her pre-existing autoimmune condition, Ms. Carlson has a limited ability to work outside her home, and been unable to get insurance through her employer. Determined not to be without health care coverage when COBRA runs out, Ms. Carlson recently launched a campaign to find a new husband — who has health insurance — before her COBRA coverage runs out.

Problems with Marrying for Health Insurance

While this action has done a great job of dramatizing the desperation of many Americans without health insurance or who are in jeopardy of losing health insurance soon, and has yielded Ms. Carlson over 1000 proposals so far, there is a big problem with this strategy for getting health insurance here in the USA.

Let’s say Ms. Carlson meets someone who is single, and has health care through his job. It is still quite possible that she will lose that coverage again very soon. For instance, consider these possibilities:

• Involuntary Unemployment. Three months later, the economy tanks again and his employer lets him go. Now he’s on Cobra until it runs out. If he becomes disabled while he is between jobs, he may find it hard to get another job in his field. He may find it had to get coverage, except at HIPAA rates due to his pre-existing condition.
• Small Business insurance turmoil. Or maybe he owns a small business and has a policy for his family, and the families of his two employees. When his health insurance contact comes up for renewal, he finds that his former insurance company doesn’t want to offer him a new policy, because their claims costs have increased since he married her. So he starts shopping for a new policy with a different insurer, but for that size company they want to know about the expense levels for the previous year, they either choose not to offer him a corporate policy, or their rates are so high that none of his employees will be able to afford them.
• Divorce. Coverage would end if the marriage ends divorce. The probability of divorce is even higher the second time around. COBRA Coverage may be available, but for only a limited time.
• Death. Her husband could be struck and killed by a car while he is cross an intersection in the cross walk. COBRA Coverage may be available, but for only a limited time.

All these scenarios could leave her in the same no health care situation she is in today, looking for a new way to get affordable health insurance before her current policy or COBRA ends.

Reccomendation: Find insurance not dependent on employment, or marital status

My recommendation is that Ms. Carlson amend her search and look only for men who can guarantee her PERMANENT health insurance — health insurance that she can keep even if he loses his job, can’t get his policy renewed, divorces her, or is killed.

Reside anywhere in the industrialized world (except the US!)

Her choices are not limited solely to choosing among Canadians and Americans who live in Massachusetts. All she needs to do is to marry someone who lives in ANY other industrial nation, or is willing and able to immigrate to any such country. Once she becomes naturalized in that country (or a legal resident of Massachusetts) she will have coverage that can’t be taken away from her regardless of what happens to her spouse.

That means she really can marry for love, she just needs to insist that after they marry they both are agreed that they will resided in a civilized part of the world where every resident is guaranteed health insurance, regardless of their marital status or current employment status. For someone who loves really her, that shouldn’t be too big a request to make.

States that ensure health insurance available to all

Perhaps by that time, there will be other progressive states like Massachusetts that rise to the challenge of providing health insurance for all their residents regardless of marital and current employment status. There is a growing movement to do so in California now.

Someday, USA?

Perhaps someday the conservative minority in the senate will decide that maintaining the health insurance status quo that keeps Terri and millions of other uninsured people in this mess is no longer preferable to even the weakest passable plan that ensures coverage for All Americans. And then at least some plan will pass that will ensure no American will ever again suddenly discover that their health insurance can disappear, or that the coverage they have will turn out to refuse to pay for the care they need.

Will All Americans Be Able to Access the “World’s Best Health Care“?

When that day comes maybe the supposed “World’s Best Health Care” the US has will be available to ALL American citizens, not merely some currently employed people, their spouses and minor children, and the wealthy foreigner’s of the world. Then Americans like Terri can enjoy the health security that citizens of the world’s other industrialized nations take for granted. Then Terri can live anywhere in the US — without her marital status affecting her health insurance coverage.

The American Plan – a new health insurance alternative

Abstract

This article describes a seven-point plan for a private health care insurance option that meets the goals that the proposed public health insurance option was designed to address, but which are not met by today’s existing private employer paid system. This article further challenges private insurers (and their supporters) to step away from mere criticism of a public option by stepping up to the plate and with a specific and credible alternative that meets the goals that the public option was designed to address: continuity, universality, comprehensiveness, affordability, and equity.

Proposed rules for such private universal care policies rules are described later in this article.

What American’s don’t like about today’s health insurance alternatives

Americans don’t want a health care insurance program like in Canada or Britain. We like to do things our own way.

Americans like private sector competition and believe that capitalism can be a force yielding lower costs, greater choice and higher value – at least when as the private sector investor’s goals are aligned with those of the consumers. Yet, we have seen also seen all to clearly how millions of ordinary Americans have suffered great economic setbacks when our nation’s laws or watchdogs have not ensured that they are so aligned.

Americans who have employer paid group health insurance plans value them and the choices the have to select among them, and competitive forces in this arena have resulted an ever growing choice of plans to help provide better health care coverage while simultaneously striving to slow the ever increasing cost of that care. Today we have HMOs, PPOs, HSAs, POS and many other plans.

Unfortunately, for those of us who do not have such plans and whose only alternatives today are individual and family coverage, the profit motives of private insurers and our individual needs are not as well aligned. In particular, insurers offering group plans compete to attract a company’s business by covering all members of the group equally. However, in the case of family plans, the insurer can pick and choose who to cover, when to cover them, and what not to cover.

The result is that millions of us, including many self-employed Americans, are without coverage, or have inadequate coverage. And those luck Americans who do have employer paid health care are constant at risk of losing it should their employment situation change.

That’s why congress is debating health care insurance reform right now.

Requirements of a credible plan

We all want to know that we will have coverage when we need it (universality), that we will able to maintain that coverage regardless of whether we change employers, become self employed or unemployed (continuity). We also want to know that our policy will be cover all our family member’s needs regardless of which chronic conditions any of them may have or may develop at some time (comprehensive) and that we will be able to afford it regardless of whether we are young and healthy, or older and infirm (affordability). Lastly, we want to know that equal coverage is be available to all (equity).

Of these 5 goals, continuity is the goal that is hardest to reconcile with private employer paid plans, because it is increasingly becoming a very rare situation for anyone to have lifelong employment with one employer that is continuously doing so well that they are not tinkering with which insurance plans they are offering (which employers often change when costs are growing rapidly, or the economy or their industry is not doing well).

Problems for people who can’t get employer paid health insurance

Families and Individuals applying for insurance on a personal basis, including the self-employed, often find that their options for insurance coverage are significantly worse than options available through employer paid plans:

• Insurers require Medical testing and patient medical records before coverage is underwritten – something that isn’t done with most employer based plans.

• Coverage can be denied outright to such individuals and family members.

• Premiums may be exorbitant compared to the cost of similar coverage through an employer-based plan.

• Coverage offered may be extremely limited in scope, and specific conditions (including most or all pre-existing conditions) may be excluded, even if they would not typically be so limited in an employer paid program.

• Coverage may be arbitrarily denied after expenses have already been incurred, and policy limitations are often so complicated that consumers have no idea whether their health care needs will be covered when they purchase a policy.
Problems for Americans who have employer paid health insurance

Even for Americans who are employed there are several problems with employer paid plans:

• Employers may find insurance policies so expensive that they do not offer insurance – this is especially true of new companies (who represent our economic growth opportunities of the future) and service industries such as restaurants and retail establishments who often provide employment to the unskilled, young people getting their first jobs, and others with incomes who might not be able to afford most personal policies.

• Employers may reduce coverage their plans offer as a money saving strategy – especially when the economy is in reverse. This can lead individuals to discover that a family member’s needs are no longer covered. And getting alternative coverage may be difficult or impossible to get for some pre-existing conditions afflicting family members.

• Employees may lose their jobs, and ultimately their employer paid insurance especially when the economy is troubled. Even if they are able to hold onto their insurance through COBRA, may find that without a job they can no longer afford it, or that if they are unemployed for a long time they may find out that even COBRA coverage has been exhausted. If an employee is no longer able to perform their previous job due to an accident or health problem, and yet they also do not qualify for Medicare, individual coverage may be impossible to acquire.

Assessing our fears and becoming proactive

Americans want a plan that gives us all the advantages of employer paid plans with multiple insurance companies competing for business, but which provides equal coverage for all Americans, and is not affected by the vagaries of their individual employment situation, or of the economy in general or prior conditions.

Some Americans are afraid that a public health care insurance option would result in a reduction in quality and flexibility of their current employer paid insurance programs.

Some seniors, disabled individuals and other Americans covered by Medicare are afraid that a new health care insurance option would result in a reduction in their benefits.

The congress is now debating how ways to provide health insurance that covers all Americans: regardless of whether they are currently unemployed, self-employed, or employed without employer paid coverage, which does not have the limitations of today’s individual and family plans.

The inadequacy of the current Individual and Family care coverage has led many in congress to support “a public option” and this is causing considerable concern among those who fear such a system will destroy the private option, or undermine the existing Medicare system.

The Proposed Private Alternative

Without commenting on whether these fears are well-founded or ill-founded, nor whether this public debate is being conducted in a way that will generate light or merely heat, I would like to address the concern in a constructive manner by offering a proposal which private insurance companies could endorse which would address the goals of the public option, but through a competitive private market system.

I call this proposed system, The American Plan.

The plan is simple, and it does not require congress to legislate it – it merely requires several large insurers to come together and petition existing state government insurance commissioners to grant them the ability to offer the following coverage to all residents of those states.

The policy is a group policy, voluntarily offered by private insurance companies, where the covered group is the currently uninsured or underinsured residents of each state, or those who find this plan more attractive than the plan their employer offers.

To ensure equity, universality, and continuity, the American Plan group policy should have the following characteristics:

1. For the first 5 years, the policy shall be underwritten based upon the demographics of all residents of the state in which the policy is offered and their immediate family members. Thereafter policies may be underwritten based upon the demographics of plan participants over the previous 5 years. (Equity)

2. The policy shall be offered to every state resident (and their immediate family members) on an equal basis. This means the price of the policy, and the conditions, care and treatments covered shall be the same for all covered persons, regardless of age, gender, or prior health conditions. (Universality)

3. The company shall offer at least one policy that provides coverage equal to the coverage provided by Medicare at that time. This is called the “reference policy”. The company may also offer one or more policies with less coverage for a lower premium, as well as policies with greater coverage at higher price points. (Comprehensiveness)

4. The insurer agrees to offer the reference policy on a most favored customer basis, that is, the expected underwriting profit margin on this policy may not be greater than any other policy written for any other group of the same or smaller size. (Affordability)

5. The policy shall include equivalent coverage for the resident and covered family members when traveling or while attending a school, college, or university anywhere within the US. (Comprehensiveness)

6. The company may not cancel the policy for any reason other than failure to pay the premium or fraud. If a policy is cancelled for failure to pay the premium on time, the policy shall be reinstated, effective immediately upon receipt of the full policy payment. (Continuity)

7. The company agrees to accept premium payments on behalf of an individual or family by either a state organization (if the state desires to subsidize health insurance premiums for some residence) or by any small business that wishes to provide paid insurance to their employees. (Affordability and Equity).

Time for action

Recently, opponents to the public option have been very vocal in their opposition, but their focus has largely been on opposing the proposed public option, but without offering a universal coverage alternative by the private sector. It is time to stop talking and start doing something constructive.

The above proposal is being offered with the hopes that those who favor private sector provided insurance will take a constructive approach by encouraging major insurers to commit to offering “the American Plan” now, demonstrating their ability to provide a credible alternative that provides universal coverage at affordable rates.

If competition in the private sector really can deliver on the promises of lower costs, greater choice and higher value, then because of the way the reference plan is defined, seniors and others on Medicare should have nothing to fear.

Nor should those who fear government’s ability to manage anything as efficiently as the private sector have anything to fear – for the private sector is left free to deliver as efficiently and affordably as it is able – the government in this model merely sets the minimum set of 7 requirements, and provides oversight to see that goals such as equity and continuity are met, and assists the needy with subsidized premiums.

A hidden benefit of Continuity: better preventative care and lower overall cost

One of the hidden benefits of a plan that has continuity is that it can improve both quality of life AND reduce health care costs. Because health insurance is not portable from employer to employer, an insurance company can’t be sure that those it insures today will continue to be policyholders in the future.

This can cause insurance companies to make decisions that save money in the short run but increases costs in the long run – because the insurance company knows it will have lower costs immediately, while the longer term cost might well fall on a competitor. For example, an expensive vaccine might be very effective at preventing a form of viral infection that often triggers cancer. By not paying for the vaccine expenses in the current year might be saved, but higher costs for later treatment if the vaccine is not given might not be experienced by the insurer, because the policy holder may have changed to a new employer and a competitor’s plan before that cancer is likely to be discovered.

The result, less preventative care, greater long term cost and poorer long-term health.

Or viewed the other way, if the insurance company spends the money today to pay for inoculations, it might be competitors who see the savings when the frequency of occurrence of those preventable cancers goes down.

The value of individual customer loyalty

With employer paid plans, insurance companies can’t build customer loyalty with their individual policy holders, because the policies are sold to employers and the policy holders switch employers. But when the insured can, and do maintain the same coverage every time they switch jobs or leave the workforce, the preventative care costs the insurer incurs today may be offset by even greater savings in the long term. And when individuals can make their own long term decisions, companies have an incentive to treat them well and build long term policy holder loyalty. Even procedures that are not merely preventative but restorative might become more cost effective. For instance, laser eye surgery might be costly in the short run, but save considerable money in the long run by eliminating the need for annual or biannual lenses and frames.

Thus creating the opportunity for individual policy holder loyalty better aligns the interests of the individuals and the insurance companies, encouraging insurers to offer better care coverage at lower costs as well.

Tax Savings

Lastly, if private sector competition does reduce costs and increase value, the reference plans these private companies offer provides the states and Federal governments with proof of concept approaches for providing Medicare equivalent coverage at lower cost – and that could contribute to better coverage for Medicare recipients at overall lower costs to taxpayers.

It is the best outcome possible, a Win-Win-Win: a win for the consumer, a win for the insurance companies and their shareholders, and a win for taxpayers. And that’s what we Americans like!

The American Plan – a new health insurance alternative

Summary

This article describes a seven-point plan for a private health care insurance option that meets the goals that the proposed public health insurance option was designed to address, but which are not met by today’s existing private employer paid system. This article further challenges private insurers (and their supporters) to step away from mere criticism of a public option by stepping up to the plate and with a specific and credible alternative that meets the goals that the public option was designed to address: continuity, universality, comprehensiveness, affordability, and equity.

Proposed rules for such private universal care policies are described later in this article.

What American’s don’t like about today’s health insurance alternatives

Americans don’t want a health care insurance program like in Canada or Britain. We like to do things our own way.

Americans like private sector competition and believe that capitalism can be a force yielding lower costs, greater choice and higher value – at least when as the private sector investor’s goals are aligned with those of the consumers. Yet, we have seen also seen all to clearly how millions of ordinary Americans have suffered great economic setbacks when our nation’s laws or watchdogs have not ensured that they are so aligned.

Americans who have employer paid group health insurance plans value them and the choices the have to select among them, and competitive forces in this arena have resulted an ever growing choice of plans to help provide better health care coverage while simultaneously striving to slow the ever increasing cost of that care. Today we have HMOs, PPOs, HSAs, POS and many other plans.

Unfortunately, for those of us who do not have such plans and whose only alternatives today are individual and family coverage, the profit motives of private insurers and our individual needs are not as well aligned. In particular, insurers offering group plans compete to attract a company’s business by covering all members of the group equally. However, in the case of family plans, the insurer can pick and choose who to cover, when to cover them, and what not to cover.

The result is that millions of us, including many self-employed Americans, are without coverage, or have inadequate coverage. And those luck Americans who do have employer paid health care are constant at risk of losing it should their employment situation change.

That’s why congress is debating health care insurance reform right now.

Requirements of a credible plan

We all want to know that we will have coverage when we need it (universality), that we will able to maintain that coverage regardless of whether we change employers, become self employed or unemployed (continuity). We also want to know that our policy will be cover all our family member’s needs regardless of which chronic conditions any of them may have or may develop at some time (comprehensive) and that we will be able to afford it regardless of whether we are young and healthy, or older and infirm (affordability). Lastly, we want to know that equal coverage is be available to all (equity).

Of these 5 goals, continuity is the goal that is hardest to reconcile with private employer paid plans, because it is increasingly becoming a very rare situation for anyone to have lifelong employment with one employer that is continuously doing so well that they are not tinkering with which insurance plans they are offering (which employers often change when costs are growing rapidly, or the economy or their industry is not doing well).

Problems for people who can’t get employer paid health insurance

Families and Individuals applying for insurance on a personal basis, including the self-employed, often find that their options for insurance coverage are significantly worse than options available through employer paid plans:

• Insurers require Medical testing and patient medical records before coverage is underwritten – something that isn’t done with most employer based plans.

• Coverage can be denied outright to such individuals and family members.

• Premiums may be exorbitant compared to the cost of similar coverage through an employer-based plan.

• Coverage offered may be extremely limited in scope, and specific conditions (including most or all pre-existing conditions) may be excluded, even if they would not typically be so limited in an employer paid program.

• Coverage may be arbitrarily denied after expenses have already been incurred, and policy limitations are often so complicated that consumers have no idea whether their health care needs will be covered when they purchase a policy.
Problems for Americans who have employer paid health insurance

Even for Americans who are employed there are several problems with employer paid plans:

• Employers may find insurance policies so expensive that they do not offer insurance – this is especially true of new companies (who represent our economic growth opportunities of the future) and service industries such as restaurants and retail establishments who often provide employment to the unskilled, young people getting their first jobs, and others with incomes who might not be able to afford most personal policies.

• Employers may reduce coverage their plans offer as a money saving strategy – especially when the economy is in reverse. This can lead individuals to discover that a family member’s needs are no longer covered. And getting alternative coverage may be difficult or impossible to get for some pre-existing conditions afflicting family members.

• Employees may lose their jobs, and ultimately their employer paid insurance especially when the economy is troubled. Even if they are able to hold onto their insurance through COBRA, may find that without a job they can no longer afford it, or that if they are unemployed for a long time they may find out that even COBRA coverage has been exhausted. If an employee is no longer able to perform their previous job due to an accident or health problem, and yet they also do not qualify for Medicare, individual coverage may be impossible to acquire.

Assessing our fears and becoming proactive

Americans want a plan that gives us all the advantages of employer paid plans with multiple insurance companies competing for business, but which provides equal coverage for all Americans, and is not affected by the vagaries of their individual employment situation, or of the economy in general or prior conditions.

Some Americans are afraid that a public health care insurance option would result in a reduction in quality and flexibility of their current employer paid insurance programs.

Some seniors, disabled individuals and other Americans covered by Medicare are afraid that a new health care insurance option would result in a reduction in their benefits.

The congress is now debating how ways to provide health insurance that covers all Americans: regardless of whether they are currently unemployed, self-employed, or employed without employer paid coverage, which does not have the limitations of today’s individual and family plans.

The inadequacy of the current Individual and Family care coverage has led many in congress to support “a public option” and this is causing considerable concern among those who fear such a system will destroy the private option, or undermine the existing Medicare system.

The Proposed Private Alternative

Without commenting on whether these fears are well-founded or ill-founded, nor whether this public debate is being conducted in a way that will generate light or merely heat, I would like to address the concern in a constructive manner by offering a proposal which private insurance companies could endorse which would address the goals of the public option, but through a competitive private market system.

I call this proposed system, The American Plan.

The plan is simple, and it does not require congress to legislate it – it merely requires several large insurers to come together and petition existing state government insurance commissioners to grant them the ability to offer the following coverage to all residents of those states.

The policy is a group policy, voluntarily offered by private insurance companies, where the covered group is the currently uninsured or underinsured residents of each state, or those who find this plan more attractive than the plan their employer offers.

To ensure equity, universality, and continuity, the American Plan group policy should have the following characteristics:

1. For the first 5 years, the policy shall be underwritten based upon the demographics of all residents of the state in which the policy is offered and their immediate family members. Thereafter policies may be underwritten based upon the demographics of plan participants over the previous 5 years. (Equity)

2. The policy shall be offered to every state resident (and their immediate family members) on an equal basis. This means the price of the policy, and the conditions, care and treatments covered shall be the same for all covered persons, regardless of age, gender, or prior health conditions. (Universality)

3. The company shall offer at least one policy that provides coverage equal to the coverage provided by Medicare at that time. This is called the “reference policy”. The company may also offer one or more policies with less coverage for a lower premium, as well as policies with greater coverage at higher price points. (Comprehensiveness)

4. The insurer agrees to offer the reference policy on a most favored customer basis, that is, the expected underwriting profit margin on this policy may not be greater than any other policy written for any other group of the same or smaller size. (Affordability)

5. The policy shall include equivalent coverage for the resident and covered family members when traveling or while attending a school, college, or university anywhere within the US. (Comprehensiveness)

6. The company may not cancel the policy for any reason other than failure to pay the premium or fraud. If a policy is cancelled for failure to pay the premium on time, the policy shall be reinstated, effective immediately upon receipt of the full policy payment. (Continuity)

7. The company agrees to accept premium payments on behalf of an individual or family by either a state organization (if the state desires to subsidize health insurance premiums for some residence) or by any small business that wishes to provide paid insurance to their employees. (Affordability and Equity).

Time for action

Recently, opponents to the public option have been very vocal in their opposition, but their focus has largely been on opposing the proposed public option, but without offering a universal coverage alternative by the private sector. It is time to stop talking and start doing something constructive.

The above proposal is being offered with the hopes that those who favor private sector provided insurance will take a constructive approach by encouraging major insurers to commit to offering “the American Plan” now, demonstrating their ability to provide a credible alternative that provides universal coverage at affordable rates.

If competition in the private sector really can deliver on the promises of lower costs, greater choice and higher value, then because of the way the reference plan is defined, seniors and others on Medicare should have nothing to fear.

Nor should those who fear government’s ability to manage anything as efficiently as the private sector have anything to fear – for the private sector is left free to deliver as efficiently and affordably as it is able – the government in this model merely sets the minimum set of 7 requirements, and provides oversight to see that goals such as equity and continuity are met, and assists the needy with subsidized premiums.

A hidden benefit of Continuity: better preventative care and lower overall cost

One of the hidden benefits of a plan that has continuity is that it can improve both quality of life AND reduce health care costs. Because health insurance is not portable from employer to employer, an insurance company can’t be sure that those it insures today will continue to be policyholders in the future.

This can cause insurance companies to make decisions that save money in the short run but increases costs in the long run – because the insurance company knows it will have lower costs immediately, while the longer term cost might well fall on a competitor. For example, an expensive vaccine might be very effective at preventing a form of viral infection that often triggers cancer. By not paying for the vaccine expenses in the current year might be saved, but higher costs for later treatment if the vaccine is not given might not be experienced by the insurer, because the policy holder may have changed to a new employer and a competitor’s plan before that cancer is likely to be discovered.

The result, less preventative care, greater long term cost and poorer long-term health.

Or viewed the other way, if the insurance company spends the money today to pay for inoculations, it might be competitors who see the savings when the frequency of occurrence of those preventable cancers goes down.

The value of individual customer loyalty

With employer paid plans, insurance companies can’t build customer loyalty with their individual policy holders, because the policies are sold to employers and the policy holders switch employers. But when the insured can, and do maintain the same coverage every time they switch jobs or leave the workforce, the preventative care costs the insurer incurs today may be offset by even greater savings in the long term. And when individuals can make their own long term decisions, companies have an incentive to treat them well and build long term policy holder loyalty. Even procedures that are not merely preventative but restorative might become more cost effective. For instance, laser eye surgery might be costly in the short run, but save considerable money in the long run by eliminating the need for annual or biannual lenses and frames.

Thus creating the opportunity for individual policy holder loyalty better aligns the interests of the individuals and the insurance companies, encouraging insurers to offer better care coverage at lower costs as well.

Tax Savings

Lastly, if private sector competition does reduce costs and increase value, the reference plans these private companies offer provides the states and Federal governments with proof of concept approaches for providing Medicare equivalent coverage at lower cost – and that could contribute to better coverage for Medicare recipients at overall lower costs to taxpayers.

It is the best outcome possible, a Win-Win-Win: a win for the consumer, a win for the insurance companies and their shareholders, and a win for taxpayers. And that’s what we Americans like!