VCU news

By Tom Gresham

The new federal health care reform legislation is imperfect but it solves a critical problem that demanded to be addressed – the lack of insurance for millions of Americans, according to Etti Baranoff, Ph.D., associate professor of insurance and finance at VCU.

“Some kind of help needed to be given to the system,” Baranoff said. “The economic condition of the whole system was in a kind of jeopardy. In a choose-your-own-adventure kind of scenario, this is an adventure that is solving the problem right now.”

Health care is a social product, Baranoff said, comparable to clean water and air. It is something that people deserve by the simple virtue of being people, she said. Between 32 million and 46 million Americans do not have health insurance, Baranoff said, and most of them struggle to receive proper health care because of it.

“This can be your brother, your sister, these are people that you know,” Baranoff said. “These are working people.”

The new health care reform legislation will keep the health insurance industry as a central player while bringing the entire population into the system. The federal government’s role grows dramatically — “It’s a solution that brings the federal government much more into the life of employers and consumers and providers — everybody basically,” Baranoff said — but the alternative was to leave the ranks of the uninsured scraping by.

In the current health care system in the United States, Baranoff said the insurance industry acts as the financial intermediary between patients and providers, “basically making decisions on health care allocations based on the money they receive.” Baranoff said the health insurance industry likely will continue to thrive under the new system, but it will not have the same level of influence on how care is provided. That, she argued, is not a bad thing.  

“It’s a social product,” Baranoff said. “Why would there be one industry that is deciding who is getting it and who is not getting it? We needed an overseer who is out of the capital markets.”

It is important for Americans to know that they will still have options for health insurance and that they should continue to weigh costs and benefits when choosing an insurance package, Baranoff said.

Insurance is a critical propeller of the economy, Baranoff said, and the perpetual uncertainty of health insurance has proved to be a drag on business and workers. Small businesses, she said, struggled to compete for the best employees, who tend to gravitate toward large organizations that can afford to offer generous health care benefits.

“Health care became a reason to go someplace to work,” Baranoff said. “It needs to be out of the picture.”

Baranoff said the many potential drawbacks to the reform bill are legitimate concerns. Will the reform bill increase the costs of health care? Will the involvement of the federal government in managed care create problems? Will there be a shortage of doctors, especially in certain fields? Will access to top care providers decline? Will the cost of insurance increase markedly for those with the top tier packages? It’s too early to divine the answers, Baranoff said.

“The devil is in the final little regulations,” Baranoff said. “There’s so much to work out.”

About Etti Baranoff
Etti Baranoff, Ph.D., a former state insurance regulator in Texas, is a five-time winner of the prestigious Shin Research Excellence Award from the International Insurance Society. Baranoff has studied and taught risk management, employee benefits and all lines of insurance, including both consumer and industry issues. A new textbook, “Risk Management for the Enterprise and Individuals,” which was written with co-authors Patrick Brockett and Yehuda Kahane, will include applications to the current financial crisis. She is also the author of the 2004 textbook, “Risk Management and Insurance.”