Stream: When Replacing ObamaCare, Remember Health Insurance Isn’t Health Care
Big Louie whispers to you, “Say, Mac. The fix is in. The Redskins are throwing it to the Browns. It’s all set. Guaranteed.”
“No, kiddin’, Louie?”
“I’m tellin’ ya. Now listen. I want you to bet me the Skins win.”
“Wha…? But you just told me—”
“You aren’t paying attention. What’s wrong with you, Mac? You want trouble? I said the Skins will lose and you will bet they’re going to win. Now gimme sixty bucks that says the Skins will win.”
“Hey! You don’t have to be so rough…”
“Say, these twenties are new! Considerate of you. Listen. Don’t be so glum. You’re contributing to a good cause: Me.”
Any of this remind you, Dear Reader, of the insurance business? It ought not to. Yet the word insurance has undergone and strange metamorphosis caused, as you won’t be surprised to learn, by Government.
Insurance used to be a bet you would make that you hoped you wouldn’t win. You went to an insurer and made a bet that something bad would happen, say, you got cancer or your house would burn down. The insurer figured out how much it would cost to pay you to fix the bad thing. He then said, “Okay, gimme Y dollars, and if the bad thing happens, I pay you X.” If you didn’t like Y or X, you negotiated with the insurer until a pair of numbers were mutually agreeable—or you agreed to part ways.
But suppose you told the insurer, “I have cancer. It will cost X to treat. I want to bet with you that I get cancer. What’s the minimum Y I should pay you?”
The insurer would either laugh you out of his office, as he commiserated with you about the sad state of your health, or he would pick a Y greater than X. Why? Because it was guaranteed that the insurer would pay out X. Why would he ever take an amount less than X? He would be certain to lose money!
Because Government, that’s why. Because your cancer is a “pre-existing condition” and it was seen as cruel and heartless for the insurer not to lose money on your behalf. But Government forced, by the point of a gun, the insurer to lose money. Government enjoyed playing Robin Hood. Hood as in criminal, crook, confidence trickster (did you not know that? Big Louie knew).
However, because the entities that comprise Government move in and out of insurers (and their banks), the Government also took pity. Government knew insurers had to make up their forced deficits. So it mandated that citizens who did not want to make a bet with any insurer had to give the insurer money for bad things that would almost never happen. Obamacare became Big Louie muscling twenty-somethings to insure themselves against Alzheimer’s.
Thanks to “Supreme” Court Justice Roberts, you being forced to fork over funds to a private entity was called a tax. (Same thing Big Louie calls it!) Thus, not only was the word insurance gutted of most of its actual meaning, so was tax. Orwell lives…
I bet you’ll click over and read the rest.
Categories: Culture, Statistics
Insurance for unexpected events like accidents that can require extensive efforts makes sense. Insurance that provides for routine visits to the doctor or ongoing medication does not. It’s like having auto insurance that pays for car washes and oil changes.Unfortunately, people really do expect someone else to pay for routine health care.
The real problem is that insurance causes medical expenses to rise. It did so for auto insurance. Try getting some body work done and, after getting a quote, mention you are paying for it yourself. The price will usually then plummet. Used to be the same with health insurance pre-ACA. The going price for routine things like doctor visits and blood work had a 300% markup because the insurance companies routinely paid only 1/3 the list price. Now, because one is required to have insurance, that markup has become the true expected price and it is much harder to bargain it down.
Most states already had aid for catastrophic surgery and emergency care before Obamacare came along and really upset the cart. Yes, some did receive health insurance through work as a perq. As more and more received it, the price climbed to meet the available money. The insurance was the price driver.
Routine health insurance was (and still is) a ripoff. The silver plan has a typical 80/20 copay arrangement with a minimum $20 copay. A doctor’s office visit lists around $125. Because of the insurance arrangement, the doctor actually gets around $35-45. Because of the $20 minimum copay, so the insurance company is on the hook for only $15-25 dollars (note how the 80/20 became 55/45). The average annual premium for a single person on a silver plan is $6000-7000. With four office visits per year, the insurance company pays $100 and pockets the rest — a $5900-6900 profit. Even if a person paid the full asking price, they would only pay $500/yr vs say $6000/yr for the visits.
IMO, what’s needed is a way to lower costs instead of covering existing prices. The only way to do that is to reduce insurance against the commonplace. Tax the hidden income of work-provided insurance might be one way. It would then soon disappear.
Trouble is, insurance is a major industry. For the last 5-6 years the health industry has gotten the taste of blood and now is unwilling to relinquish its grip. It may already be too late.
Damn the ACA and everything like it! The only sensible thing would be its repeal without replacement. Make insurance expensive. Enact health tort reform — yet another driver. Tax work-provided insurance. The lack of insurance by many will force health costs down.
Pre-existing coverage without increased cost has only been in effect for THREE years: (from HHS)
“These rules went into effect for plan years beginning on or after January 1, 2014.” referring to no increase in costs for pre-existing. Before that, it was allowable to charge more and insurers did, except through work.
Also, COBRA, expensive though it is, provided a way to keep continous coverage so the next employer would cover a medical condition. It works, but it costs and we can’t have that.
There is a problem with the “buy after you have the disease” idea—what happens if you were 10 years old when you contracted the illness? Say you become diabetic or have cancer. The diabetes is forever, the cancer can recur. You could NOT buy insurance before you contracted the disease. Your parents insurance covered that. Now that you’re 18, you cannot buy medical insurance because you have a pre-existing condition??
That being said, I agree that what we call insurance is NOT insurance. It’s medical cost reimbursement. And it increases costs. Insulin has gone up to $250 or more a bottle. You can buy an older version at Walmart for $26 a bottle and people without insurance do. Same for many drugs. The prices are based on what the insurance negotiates with pharmacies as reimbursement. The prices are outrageous. The pharmacist always stares at my insulin refill for 3 months—it’s over $1000. I have to pay up front and then be reimbursed. I used to buy insulin without involving insurance, but can’t afford to now. I have found ways around the system for other items. Any time insurance is involved in pharmacy costs, the costs go WAY up.
I agree with DAV that tort reform is necessary. People sue, enriching the weasal lawyers, for EVERYTHING including listed side effects, etc, and things that are in no way shown to even be remotely connected to the drugs and exact huge cost increases for everyone else. I am all for catastrophic coverage only—actual insurance, in other words, and letting the market cover the rest. It is rediculous when people have iPhones and buy lottery tickets but demand everyone pay for their medical care. It breeds irresponsibility.
Pre-existing coverage is the most expensive part of ACA. It effectively means that insurance companies are forced to take losing bets. Pre-existing clauses were usually waved for group insurance because the cost was presumably spread throughout the group. If it weren’t in place, the employer insurance premiums would be lower. The cost was still though determined by taking pre-existing conditions into consideration. One employer may have paid more than another for the “same” insurance if, for example, the employees were mostly 70-somethings vs 20-somethings.
The purchase mandate was needed to cover the increased outlay caused by the pre-existing coverage requirement. It is still being contemplated in the ACA replacement. It really should be dropped but it’s one hot potato that’s likely to be held onto.
Even without COBRA, most states required a 30-90 day grace period for group coverage and often with the option of retaining coverage through self-payment. Quite often, this would be the first time the true cost of the insurance was realized by the insured. When I left my last job I was offered $3600/yr (still a bargain considering today’s premiums). COBRA increased the grace period (perhaps unreasonably so) to 18-26 months and 36 months for spouses.
What the ACA does, admittedly and openly, is to use the “young” to subsidize the “old and/or sick.” A young person today, hovering around the age of 30, and wanting to start or having started a family, with a moderate income (that is, above the poverty line but by no means rolling in wealth) is on the hook for a huge premium (approaching $1000/month in some cases) with outrageous deductibles (did anyone say $9000? Ah, well, not so bad, but in the small print indicates that this is per member of the family). In theory, the health insurance taxes and related care, can swallow well over 50% of a household’s income (this isn’t even getting into what the the regular tax rates are). Even if this young person did not have college debt (and college debt of spouse or partner), these kinds of “taxes” are unsustainable. Rent (forget about buying a place) is going to go up, there is inflation in the supermarket that all can see except the economists, pay may go up a little with a little bit of good fortune, but not at a rate to match the galloping premiums. If any system of taxation is designed to make the public poorer and sicker than they were without it, it is the ACA. Drugs are another matter, and there should a greater effort for affordable drugs to be on the marketplace, especially those to treat chronic conditions.
I would like “insurance” to cover the awful things. The car accidents and the dread diseases. I would like to be able to go to the doctor for a normal consultation and pay the rate (ideally posted on the front door) at the time of service from my own wallet. When you go to a restaurant you have an idea what the bill is going to be. When you go the doctor, you are stepping into the twilight zone, and the bills can be coming for years after treatment.
For those interested, John Graham and Devon Herrick have a good deal of information and analysis at the health blog of the National Center for Policy Analysis. Worth culling through or searching their older posts also, to get a more complete picture of what they’re talking about.
Watching the WH press briefing. Rhe message on this is WH favors reducing premiums and increasing choices. The purchase mandate is out. Pre-existing conditions are still in. How this will be paid for is unclear and not mentioned.
On the plus side, the current bill is 123 pages vs. thousands; is in an open daylight process; and is not being shoved down our throats in the middle of the night like ACA was.
The preexisting condition problem is to a fair extent caused by the arrangement that we get health insurance through our employers. Back in the day when many people had a job for life with a single employer this was not a problem. But now that people switch jobs even late into their careers, people with preexisting conditions become undesirable risks.
I’ve thought the solution to this problem is to be found in professional sports contracts. When team A decides they need to unload a player, part of the deal with team B is that the old team will pick up some portion of the remaining contract.
So while the new insurer is not happy about taking on a known bad risk, the current insurer is of course delighted. The solution is that as part of the deal, the current insurer owes the new one an appropriate cash flow.
Without a requirement to cover pre-existing conditions, people will stick with their current employer and insurer rather than be exposed to major uninsured medical expenses. So the requirement is effectively a gift to current employer and insurer and a burden to the new ones.
Chiefio had a post on this yesterday which I (as a Brit) thought interesting:
While I agree with most of what you have to say, there are two conditions for which we need government protection, (or stronger contract law).
Scenario 1. I bet that I will not get cancer. (I do not have cancer, nor do I have a family history)
The insurance company says pay me X for the premium and we will pay you Y if you get cancer. Great!
Bad news, I get cancer. The insurance company says we will pay you Y for one year, and then we are dropping you as a customer. And I say, I thought the deal was Y each year so long as I kept paying X. And they say, read the fine print.
Scenario 2. I bet that I not only will I not get cancer, I also want treatment for injuries, and treatment for heart disease.
I get cancer.
My insurance provider is told, you can’t drop your customers just because you have cancer. However, I learn that company B is providing a better deal for the treatment of heart disease and other ailments. Once I have cancer, I am pretty much locked into one provider.
LOL! You finally figured it out, Briggs! You’re the first conservative (that I know of) who has finally figured it out – health insurance is NOT health care. Health care is something we all need at one point or another. We never know what it may be. Could be cancer. Could be heart disease. Could be arthritis. Could be a car accident, or an allergy, or a dude on PCP jumping off a building in an attempt to fly and landing on you. Ya’ just never know. Health insurance is a bunch of people pooling their money together to pay for the services they will all eventually need, but for what, and how much it will cost, we can never be certain. That’s what health insurance is for. Once you understand that, then you see why what we have here in the US, our health insurance/health care sectors, the way they are structured, it makes no sense, which is probably why we’re the only developed nation on the planet with such a “system,” an antonym in this case if ever there was one.
JMJ, get out of your bubble. Conservatives have been railing about this for as long as I can remember.
Oh, by the way, we have this ‘system’ because people who think government is the solution, whereas it is actually the problem, have been forcing government into it incrementally over a century, since many Americans didn’t want the government’s nose in it in the first place.
cdquarles, you are a useful idiot for people who profiteer from the misery of others.
Well at least HE’S useful.