Legislatively, we are at an impasse on this topic, while many voters are agitating for a solution. The Tea Party no doubt, while basically non-vocal at this stage, want a return to what we had before Heritage Foundation/Romney/ObamaCare while Progressives want a Single Payer Plan. Neither is likely to see this Congress pass anything that will make them happy. Which means they will be unhappy.
It would have been nice to see Congress really working on a solution that would solve the real source of unhappiness with HF/R/ObamaCare: the high cost of health insurance and high deductibles. Unfortunately, high deductibles are the only way insurance companies can control the cost and if you reduce the deductibles, you will increase the cost, and vice versa.
A Michael Strain, who I believe is an economist on faculty somewhere, wrote a column for Bloomberg News on a possible path to bridging this impasse and bringing some real relief to the mass of voters on this issue.
HIs idea is the following: Republicans need to acknowledge that universal coverage is the right goal, but it has to be affordable to both households and the government. This means there has to be a carrot to get young people to buy insurance and there must be coverage for those with pre-existing conditions. There must also be subsidies to make insurance affordable.
Democrats will need to acknowledge that catastrophic health insurance is health insurance and that to reduce this economic conundrum between premiums and deductibles, you need to bring some choice into the equation. His idea is that preventive care and other forms of routine care, be the responsibility of the policyholders to pay. This is essentially what is already happening with the high deductibles. The trick is to figure out a way to get make the total package affordable to the working poor and those with pre-existing conditions who end up in a high risk pool.
I would add to this, that long term care for elderly and long-term disabled, be separated from Medicaid so that there is a clear picture of what is basically a very different problem from what the cost of providing Health Care to the working poor.
The author's basic premise is that people need insurance for protection against Catastrophic health developments, but insurance cannot pay for all routine care, for those with money, and be affordable when some people will abuse that coverage. That is where the Progressives must compromise in return for the acknowledgement that Universal Coverage will be obtained in the form of affordable catastrophic health insurance.
The trick of course will be what is the dollar value of catastrophic coverage for each income level. A working middle class family will struggle with a value of $5,000 while an upper middle class person might be comfortable with a $25,000 value. As a retired person, pre-Medicare, I don't think I would be comfortable with anything much greater than the $7,000 my current health insurance has as a max-out-of-pocket. And that insurance is costing me almost $500 a month for myself.
Anyway, I ran this by RedStateVT and he saw merit in it. I see merit in it. Will politician's? The author is not betting on it anytime soon.
Showing posts with label Health insurance. Show all posts
Showing posts with label Health insurance. Show all posts
Sunday, August 27, 2017
Sunday, July 30, 2017
Why a Market Based Health Care System Will Not Work
If RedStateVT reads this he might have a different angle, but today's musing comes from the NYT Business pages where I found a really good summary of why Health Care Policy is complicated and why a public option is necessary for a well functioning individual market for health insurance.
I am backing off a Universal Single Payer Plan for the moment, not because I don't believe that to be a worthy objective, but because I think we need an intermediate step from HeritageFoundation/Romney/ObamaCare, which is for better or worse our starting point. You have to recognize that most Americans are insured through their employers with insurance policies issued by shareholder owned companies. These companies employ a lot of people.
But what is the key complaint about ObamaCare? It is the high deductibles and high policy premiums. One path to controlling that would be to get the high cost patients into a public option, but would that cause Medicare costs and premiums to rise significantly? That would be a major problem for many elderly.
So the short answer is I don't know for sure but what I do know is the Ronald Reagan era government with a GOP majority in Congress passed a law mandating that hospitals care for anyone who shows up at their doors. This is also what the Hippocratic Oath calls for and so we have a 2000+ year old societal agreement that Dr's care for anyone who needs help. Now the only real question/issue is how do we as a society pay for it.
The GOP likes to believe that market based systems will control this expense, so at it's core, there is a segment of the GOP that acknowledges that Health Care is right and we do not want people dying in the streets because of a lack of access to health care.
The article today lays out why Externalities, a lack of knowledge by consumers, the necessity for health insurance to protect against catastrophic loss, the fact that the presence of insurance leads to overconsumption of medical care, and the risk of adverse selection in a pure market based system make reform a very complicated proposition and one that needs a lot of thought. Something in short supply in Congress and the White House these days.
Link to "Why Health Care Policy Is So Hard"
This is really worth reading. I hope Congresspeople do because they have to come up with something better.
I am backing off a Universal Single Payer Plan for the moment, not because I don't believe that to be a worthy objective, but because I think we need an intermediate step from HeritageFoundation/Romney/ObamaCare, which is for better or worse our starting point. You have to recognize that most Americans are insured through their employers with insurance policies issued by shareholder owned companies. These companies employ a lot of people.
But what is the key complaint about ObamaCare? It is the high deductibles and high policy premiums. One path to controlling that would be to get the high cost patients into a public option, but would that cause Medicare costs and premiums to rise significantly? That would be a major problem for many elderly.
So the short answer is I don't know for sure but what I do know is the Ronald Reagan era government with a GOP majority in Congress passed a law mandating that hospitals care for anyone who shows up at their doors. This is also what the Hippocratic Oath calls for and so we have a 2000+ year old societal agreement that Dr's care for anyone who needs help. Now the only real question/issue is how do we as a society pay for it.
The GOP likes to believe that market based systems will control this expense, so at it's core, there is a segment of the GOP that acknowledges that Health Care is right and we do not want people dying in the streets because of a lack of access to health care.
The article today lays out why Externalities, a lack of knowledge by consumers, the necessity for health insurance to protect against catastrophic loss, the fact that the presence of insurance leads to overconsumption of medical care, and the risk of adverse selection in a pure market based system make reform a very complicated proposition and one that needs a lot of thought. Something in short supply in Congress and the White House these days.
Link to "Why Health Care Policy Is So Hard"
This is really worth reading. I hope Congresspeople do because they have to come up with something better.
Tuesday, March 21, 2017
The Federalist Posts An Idea for Health Insurance
And it is worth exploring.
The basic idea is that the government would provide an umbrella catastrophic health insurance plan for everybody. In this vision, it would include payments for pregnancy care. So, in essence it would kick in at a deductible or max-out-of-pocket of $5,000 (this is unstated in the description) or cover certain specific types of situations.
Then people would buy private insurance or self-insure everything below that max-out-of-pocket amount.
It isn't Medicare for all, but the author believes it is cheaper than American Health Care Act which is cheaper (because it covers fewer people) than Obamacare, and in the process it would provide Catastrophic Insurance for everyone.
That is an idea worth exploring from a die hard Conservative.
Link to Federalist column
Meanwhile, NYS GOP Congresspeople ignore my letter to them and instead of focusing on making health insurance affordable for their constituents, they cut a deal with GOP House Leadership to forbid NYS from forcing counties to share in the cost of Medicaid, while leaving NYC with that obligation. I don't know how other states share Medicaid costs, but if NYS is singular in this approach, this change may not be all bad, but it does mean income tax rates in NYC state will not be going down. And the pressures from Dementia Care will be a more forthright issue in this state. I would not want to be on the NYS Death Panel deciding when to evict Grandma out into the snow in Utica when she blows through her maximum expenditure provided by the Federal Government.
I know of this division and what it means to county finances because of my mother. Delaware Country didn't want to pay for her dementia long term care. So they sued my Father to spend down more than required by the law of the land and our lawyer won the case forcing them to do so.
The basic idea is that the government would provide an umbrella catastrophic health insurance plan for everybody. In this vision, it would include payments for pregnancy care. So, in essence it would kick in at a deductible or max-out-of-pocket of $5,000 (this is unstated in the description) or cover certain specific types of situations.
Then people would buy private insurance or self-insure everything below that max-out-of-pocket amount.
It isn't Medicare for all, but the author believes it is cheaper than American Health Care Act which is cheaper (because it covers fewer people) than Obamacare, and in the process it would provide Catastrophic Insurance for everyone.
That is an idea worth exploring from a die hard Conservative.
Link to Federalist column
Meanwhile, NYS GOP Congresspeople ignore my letter to them and instead of focusing on making health insurance affordable for their constituents, they cut a deal with GOP House Leadership to forbid NYS from forcing counties to share in the cost of Medicaid, while leaving NYC with that obligation. I don't know how other states share Medicaid costs, but if NYS is singular in this approach, this change may not be all bad, but it does mean income tax rates in NYC state will not be going down. And the pressures from Dementia Care will be a more forthright issue in this state. I would not want to be on the NYS Death Panel deciding when to evict Grandma out into the snow in Utica when she blows through her maximum expenditure provided by the Federal Government.
I know of this division and what it means to county finances because of my mother. Delaware Country didn't want to pay for her dementia long term care. So they sued my Father to spend down more than required by the law of the land and our lawyer won the case forcing them to do so.
Sunday, March 19, 2017
Sunday Musing's
Steven King, the say anything Congressman from Iowa, wants Caucasians to have more babies. He also wants to abolish the EPA. Meanwhile, in China, which has seen widespread pollution increase over the last 30 years, there has been a sharp drop in the fertility of Chinese men. So, while it is a coincidence, it is at least likely there is a link as heating food in plastic containers in a microwave has been shown to leach a substance from the plastic to the food and that substance reduces sperm count in men. So if a lot of conservatives agree with Steve King on the need to improve fertility, then they should support the mission of the EPA. But they don't. Is that Hypocrisy or Ignorance? I suspect it is a bit of both.
Meanwhile, there were two good op-ed's on potential reforms to the health insurance design of the U.S.A. Unfortunately, one written by a Scandinavian and one written by a GOP pundit, both highlight the need for a different path from both ObamaCare and TrumpCare, one built around a form of a single payer plan. Links are below.
Link to Ross Douthat on Singaporian Health Insurance
Link to The effective Finnish approach to Health Insurance
Meanwhile, someone finally unveiled some key statistics about where U.S. health care $ go.
As I wrote previously, 50% of Medicaid $ cover the care for elderly dementia patients.
Now I see that 84% of medical spending is for the 50% of the population with at least one chronic condition such as Rheumatoid Arthritis, Diabetes, and who knows what else. 50% of medical spending is for 16% who have 3 or more chronic conditions. 50% of the highest cost 10% receiving Medical Care this year will be in the same category next year. It the GOP wants to really deal with the problem, they would sanction euthanasia for these people. But they are against euthanasia and prefer to simply force these people to spend money they don't have on care they cannot afford. Which is simply a different form of death panel. Maybe the painkilling epidemic is a GOP design on a form of death panel to deal with these type of costs. But that would require thought, knowledge and a level of thinking never seen in politicians.
Link to worthwhile WAPO column
Meanwhile, there were two good op-ed's on potential reforms to the health insurance design of the U.S.A. Unfortunately, one written by a Scandinavian and one written by a GOP pundit, both highlight the need for a different path from both ObamaCare and TrumpCare, one built around a form of a single payer plan. Links are below.
Link to Ross Douthat on Singaporian Health Insurance
Link to The effective Finnish approach to Health Insurance
Meanwhile, someone finally unveiled some key statistics about where U.S. health care $ go.
As I wrote previously, 50% of Medicaid $ cover the care for elderly dementia patients.
Now I see that 84% of medical spending is for the 50% of the population with at least one chronic condition such as Rheumatoid Arthritis, Diabetes, and who knows what else. 50% of medical spending is for 16% who have 3 or more chronic conditions. 50% of the highest cost 10% receiving Medical Care this year will be in the same category next year. It the GOP wants to really deal with the problem, they would sanction euthanasia for these people. But they are against euthanasia and prefer to simply force these people to spend money they don't have on care they cannot afford. Which is simply a different form of death panel. Maybe the painkilling epidemic is a GOP design on a form of death panel to deal with these type of costs. But that would require thought, knowledge and a level of thinking never seen in politicians.
Link to worthwhile WAPO column
Thursday, March 16, 2017
Why Insurance Competition Will Not Lower the Price of Health Insurance
Real Conservatives, as opposed to "Trumpian's" believe in every part of their rational self that the consumer cost of Health Insurance will go down if you simply free up the market from government regulation of the product. They absolutely believe that if went down this path, health insurance would be affordable for every working person.
But insurance provided by the private sector insurance market only works if the insurance companies make a profit after they cover their costs. Life Insurance is the easiest for the industry to make a profit because the statistics, required overhead and investment returns work in a synergy that produces a product that can be constructed in a variety of ways to satisfy consumer demand and be affordable. It is a very useful product but one that many lower wage people do not buy because they don't have the money for it. And non-working people do not have any either. But both of those classes of people need and demand medical care from hospitals if their is no other place for them to go.
The unfortunate truth about insurance is there are systemic issues that effect the relationship between affordability and profitability. Car insurance illustrates this. Inflation drives the cost of car insurance. RSL has unfortunately over the last 10 years had 3 incidents with her car. She damaged the under section when she hit some black ice in Vermont and went into the ditch. Repair bill as I recall was $3,000. She damaged the bumper when she misjudged an icy pile of snow pulling out of street parking. Repair bill $1,500 as I recall. And last year, she lightly rear ended a van coming off the Saw Mill Parkway onto the Cross County. The van had little damage because it was moving forward. Our car had $6,000 of damage to the hood, grill and bumper. As a result of this her car insurance now costs $1,900 a year. I have no accidents, but my car insurance costs $1,100 a year. A few years ago we were both paying about $800 a year.
I know that if we had lower cost cars we would pay less in car insurance. And if we lived somewhere else we might have lower cost car insurance. But the fact remains that the damage in the 1st incident cost $3000 less to fix than the last incident because of inflation in the car repair business. Inflation can not be competed away and it drives up the cost of insurance because investment returns cover inflation everywhere in the process except in the actuarial necessity that premiums from the consumer cover the 95% to 100% of the expected losses. Shareholders would actually prefer that be 100% or 102%, and anything below 100% has to be covered by investment returns.
How is health insurance going to be affordable when almost any little illness causes $200 to $300 in Dr' bills plus another $100 in lab fees? Easy repairs to limbs cost $5,000 to $10,000 and sometimes more. Cancer, if treatment is successful, runs $50,000 to $100,000. And then there are the chronic illnesses like Diabetes, Lubus, MS, etc that cost at a minimum a few thousand $ a year.
We live in a society that had decided patients and Dr's get to decide on treatment. Even the current Head of HHS believes that. What that means is sick people get treated and the health insurance has to pay for it. And as I will lay out below, that is why competition will not lower the price of Health Insurance and if people cannot afford Health Insurance, they will end up in hospitals for treatment as uninsured people, and then we all pay for that somehow because hospitals need to be breakeven at worst.
My only insight into how the law of large numbers works on this dynamic is the state of the individual market in NYS before ObamaCare. No exclusion for pre-exsisting conditions and zero deductibles with the usual co-pays generated a $1,500 a month cost per person, which allowed the insurance company a profit. $3,000 a month for a couple equals $36,000 a year.
Now under ObamaCare, that cost is now roughly $5,800 a year with a $7,000 deductible/max-out-of-pocket per person with an insurance company profit. I expect to pay about $1,000 of that deductible so my total cost for one is $6,800 a year or $13,600 for a couple.
NYS has a fairly vibrant market for health insurance but that is the base line cost. How is competition going to reduce that when the insurance companies that are here are already working with the Dr's, Lab's, and hospitals to reduce the cost of visits for those with insurance. I know from speaking with Dr's that they are being squeezed and working to make up income on volume. The only way insurance competition can reduce costs is by reducing coverage or making some users pay more for what they want in their policies. And inflation in medical services can only be covered by increases in premiums. That is the way the private sector insurance market works.
And if the insurance companies want to manage that inflation they have to limit what they cover and that in particular puts a focus on new treatments that are very expensive, so the insurance companies essentially create death panels to limit their exposure to new treatments.
There is delicate balance that any insurer must manage when it comes to new treatments. But the reality is cancer is far more treatable today than it was 20 years ago. Who knows what improvements will come with other illnesses? Someone has to pay for new treatments or they will not develop to the point where they are useful to more people and covered.
That of course leads us to the issue of how can we as a society cover new treatments but keep the overall cost of health care within some budget. Conservatives like to focus on the growth in Medicaid rolls and tend to focus on the needs/cost of the poor. But the fact is that much of the growth in Medicaid costs comes from long term care for elderly dementia patients who spend down their resources and then go on Medicaid. I hate to be harsh, but as long as our society does not view euthanasia for dementia patients as acceptable, this will be an expense for Medicaid. So, either we pay this cost or we have to have a process for killing dementia patients. And dementia patients end up in hospitals costing money to be fixed up and sent back to the Long Term Care facility. There is circle of expense here that looks to me like a legal Ponzi Scheme for the Medical Treatment Business.
So,without euthanasia and death panels, private sector companies cannot control their costs and that is why competition will not make health insurance affordable for all levels of income.
Any Health Insurance Plan that wants to provide health insurance for everyone has to be Universal and if it is not, you either pass the cost of the uninsured receiving care onto the insured market or you have to deny such people any treatment that they cannot afford to pay for and you will have the poor dying in the streets as they did 200 years ago.
So, what do I support. Leave those with employer paid health insurance in the private insurance market. Leave Medicaid expanded for people who make 138% of the poverty level. And let anyone over the age of 26 who is in the individual market have access to a Medicare policy. If you are under 65, pay a premium equal to the full cost of the Medicaid policy for a basic level policy and if you want something better pay the full cost of the Medicare policy.
Thank you for reading this if you get this far.
But insurance provided by the private sector insurance market only works if the insurance companies make a profit after they cover their costs. Life Insurance is the easiest for the industry to make a profit because the statistics, required overhead and investment returns work in a synergy that produces a product that can be constructed in a variety of ways to satisfy consumer demand and be affordable. It is a very useful product but one that many lower wage people do not buy because they don't have the money for it. And non-working people do not have any either. But both of those classes of people need and demand medical care from hospitals if their is no other place for them to go.
The unfortunate truth about insurance is there are systemic issues that effect the relationship between affordability and profitability. Car insurance illustrates this. Inflation drives the cost of car insurance. RSL has unfortunately over the last 10 years had 3 incidents with her car. She damaged the under section when she hit some black ice in Vermont and went into the ditch. Repair bill as I recall was $3,000. She damaged the bumper when she misjudged an icy pile of snow pulling out of street parking. Repair bill $1,500 as I recall. And last year, she lightly rear ended a van coming off the Saw Mill Parkway onto the Cross County. The van had little damage because it was moving forward. Our car had $6,000 of damage to the hood, grill and bumper. As a result of this her car insurance now costs $1,900 a year. I have no accidents, but my car insurance costs $1,100 a year. A few years ago we were both paying about $800 a year.
I know that if we had lower cost cars we would pay less in car insurance. And if we lived somewhere else we might have lower cost car insurance. But the fact remains that the damage in the 1st incident cost $3000 less to fix than the last incident because of inflation in the car repair business. Inflation can not be competed away and it drives up the cost of insurance because investment returns cover inflation everywhere in the process except in the actuarial necessity that premiums from the consumer cover the 95% to 100% of the expected losses. Shareholders would actually prefer that be 100% or 102%, and anything below 100% has to be covered by investment returns.
How is health insurance going to be affordable when almost any little illness causes $200 to $300 in Dr' bills plus another $100 in lab fees? Easy repairs to limbs cost $5,000 to $10,000 and sometimes more. Cancer, if treatment is successful, runs $50,000 to $100,000. And then there are the chronic illnesses like Diabetes, Lubus, MS, etc that cost at a minimum a few thousand $ a year.
We live in a society that had decided patients and Dr's get to decide on treatment. Even the current Head of HHS believes that. What that means is sick people get treated and the health insurance has to pay for it. And as I will lay out below, that is why competition will not lower the price of Health Insurance and if people cannot afford Health Insurance, they will end up in hospitals for treatment as uninsured people, and then we all pay for that somehow because hospitals need to be breakeven at worst.
My only insight into how the law of large numbers works on this dynamic is the state of the individual market in NYS before ObamaCare. No exclusion for pre-exsisting conditions and zero deductibles with the usual co-pays generated a $1,500 a month cost per person, which allowed the insurance company a profit. $3,000 a month for a couple equals $36,000 a year.
Now under ObamaCare, that cost is now roughly $5,800 a year with a $7,000 deductible/max-out-of-pocket per person with an insurance company profit. I expect to pay about $1,000 of that deductible so my total cost for one is $6,800 a year or $13,600 for a couple.
NYS has a fairly vibrant market for health insurance but that is the base line cost. How is competition going to reduce that when the insurance companies that are here are already working with the Dr's, Lab's, and hospitals to reduce the cost of visits for those with insurance. I know from speaking with Dr's that they are being squeezed and working to make up income on volume. The only way insurance competition can reduce costs is by reducing coverage or making some users pay more for what they want in their policies. And inflation in medical services can only be covered by increases in premiums. That is the way the private sector insurance market works.
And if the insurance companies want to manage that inflation they have to limit what they cover and that in particular puts a focus on new treatments that are very expensive, so the insurance companies essentially create death panels to limit their exposure to new treatments.
There is delicate balance that any insurer must manage when it comes to new treatments. But the reality is cancer is far more treatable today than it was 20 years ago. Who knows what improvements will come with other illnesses? Someone has to pay for new treatments or they will not develop to the point where they are useful to more people and covered.
That of course leads us to the issue of how can we as a society cover new treatments but keep the overall cost of health care within some budget. Conservatives like to focus on the growth in Medicaid rolls and tend to focus on the needs/cost of the poor. But the fact is that much of the growth in Medicaid costs comes from long term care for elderly dementia patients who spend down their resources and then go on Medicaid. I hate to be harsh, but as long as our society does not view euthanasia for dementia patients as acceptable, this will be an expense for Medicaid. So, either we pay this cost or we have to have a process for killing dementia patients. And dementia patients end up in hospitals costing money to be fixed up and sent back to the Long Term Care facility. There is circle of expense here that looks to me like a legal Ponzi Scheme for the Medical Treatment Business.
So,without euthanasia and death panels, private sector companies cannot control their costs and that is why competition will not make health insurance affordable for all levels of income.
Any Health Insurance Plan that wants to provide health insurance for everyone has to be Universal and if it is not, you either pass the cost of the uninsured receiving care onto the insured market or you have to deny such people any treatment that they cannot afford to pay for and you will have the poor dying in the streets as they did 200 years ago.
So, what do I support. Leave those with employer paid health insurance in the private insurance market. Leave Medicaid expanded for people who make 138% of the poverty level. And let anyone over the age of 26 who is in the individual market have access to a Medicare policy. If you are under 65, pay a premium equal to the full cost of the Medicaid policy for a basic level policy and if you want something better pay the full cost of the Medicare policy.
Thank you for reading this if you get this far.
Wednesday, January 6, 2016
Wow!!! Thomas Friedman Creates a Radical Program From the Left and Right
I understand each part, but wonder what political candidate, today or in the future, could pull together the voting public segments to run on it, and then get the Congress to pass it.
Link to Friedman Column
And the following column on how even with health insurance, people can have problems paying for their health care. My initial reaction was sympathy for them as I know a $6,000 individual max-out-pocket or $10,000 family max-out-of-pocket is unaffordable for someone making $40,000 a year unless they cut back on something else in their budget. But then I thought about the fact that they would have probably been dead 60 years ago with the same chronic illness. Surely, having access to some health insurance that is means tested is better than having no health insurance. That is what ObamaCare has given us and that is what Heritage Foundation/RomneyCare/ObamaCare was designed to do.
And what can society afford to pay for this care, collectively we are paying 20% of GDP for health care, and someone in this economy is earning that 20% of GDP. While I would like a single payer plan, the transition to it is going to be disruptive to a certain % of people and that will create a different type of financial chaos within certain families. And how do we make a single payer plan affordable? It cannot be free and therefore, how does it help the people in this article?
Better minds than I, who understand health care, should be writing about all this.
Anyway, this column is worth pursuing.
Link to article
Link to Friedman Column
And the following column on how even with health insurance, people can have problems paying for their health care. My initial reaction was sympathy for them as I know a $6,000 individual max-out-pocket or $10,000 family max-out-of-pocket is unaffordable for someone making $40,000 a year unless they cut back on something else in their budget. But then I thought about the fact that they would have probably been dead 60 years ago with the same chronic illness. Surely, having access to some health insurance that is means tested is better than having no health insurance. That is what ObamaCare has given us and that is what Heritage Foundation/RomneyCare/ObamaCare was designed to do.
And what can society afford to pay for this care, collectively we are paying 20% of GDP for health care, and someone in this economy is earning that 20% of GDP. While I would like a single payer plan, the transition to it is going to be disruptive to a certain % of people and that will create a different type of financial chaos within certain families. And how do we make a single payer plan affordable? It cannot be free and therefore, how does it help the people in this article?
Better minds than I, who understand health care, should be writing about all this.
Anyway, this column is worth pursuing.
Link to article
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