Affordable Care Act Scene 2 - Insurance Premiums

Parent Cafe
5321

<p>Michigan’s dominant health insurer, Blue Cross/Blue Shield of Michigan, announced it will not offer its current policyholders on the individual health insurance market the option of keeping their existing policies for another year, despite authorization from Michigan’s insurance commissioner to do so.</p>

<p>BCBS’s reasons are a bit obscure, though it did say it had spent 2 1/2 years preparing new products for the ACA rollout. BCBS also said about half of its current individual market customers will be eligible for subsidies and it didn’t want them to “leave that money on the table.” The circumstances also suggest, however, that BCBS may have been losing money on those individual policies; either that, or making so little that it’s not worth it to continue those policies at the expense of undercutting its new ACA-compliant products.</p>

<p>BCBS had about an 80% market share in the individual health insurance market in Michigan, holding about 175,000 of the state’s 225,000 individual policies.</p>

<p>[Blue</a> Cross, HAP won’t extend policies that don’t comply with ACA requirements | Detroit Free Press | freep.com](<a href=“http://www.freep.com/article/20131122/NEWS06/311220097/affordable-care-act-policy-extension-michigan-insurance-health]Blue”>http://www.freep.com/article/20131122/NEWS06/311220097/affordable-care-act-policy-extension-michigan-insurance-health)</p>

5322

<p>

</p>

<p>One reason it costs so much. Health care is also very labor-intensive, and labor costs are much higher here than in most of the rest of the world, for everyone from custodial workers on up through nurses and doctors. Not sure what the prevailing wage is for surgeons in India, but I should think a surgeon making $50k or $75K in India could live like a king; put that same surgeon in New York or LA and he’d demand 8 or 10 times the salary, if not more. </p>

<p>I would predict that, just as with other labor-intensive industries like software programming or customer service hotlines, we’ll see increasing outsourcing of medical services to low-labor-cost regions, especially for surgeries that have become more or less routine like hip replacements, prostate surgeries, and heart bypasses. A number of developing countries are investing in high-tech hospitals and highly trained personnel to cater to medical tourism; they may not be at the cutting edge of new medicine, but they are perfectly capable of learning to use the same technologies and techniques that have become standard here, and doing the exact same procedures as well or better than U.S. doctors and hospitals at a fraction of the cost. And that’s going to put a lot of economic pressure on high-end U.S. medical centers which rely on fat profits from those sorts of procedures to help fund some of the more innovative, cutting-edge things they’re doing. At the same time, U.S.-based insurers are balking at the high prices they’re being charged by high-end medical centers for what are now essentially routine procedures. The gravy train may be over.</p>

5323

<p>'The gravy train may be over."</p>

<p>The question is who gets hurt the most: the high-end hospitals and the highly paid doctors or the American people (at least those with insurance) who are the beneficiaries of the amazing medical technology and miraculous drugs for which the system has been responsible. Maybe the answer is “everybody”.</p>

<p>BTW, the best way to get the costs down would be through competition from overseas hospitals, if that was possible.</p>

5324

<p>The actual metrics (outcomes and especially outcomes per dollar spent) show that the US medical system is not close to the most effective in the world. It’s hard to really judge these statistics. A smaller, more homogenous population is going to be statistically better on a range of measures than a country with the demographics of the United States.</p>

<p>However, our health care system wastes and incredible amount of money – from throwing good money after bad in to prolong life for a few miserable days for 80 year olds to spending massive sums on prescription drugs of questionable value. Research to public policy has been commercialized to the point where it often becomes the marketing arm of the pharmaceutical and medical industry, creating new diseases to treat out of whole cloth.</p>

<p>Just look at the tsunami of type 2 diabetes and other metabolic syndrome diseases – largely preventable. Obviously our public policy nutrition guidelines and medical treatment is not resulting in good health outcomes. In a way, all the attention on insurance is just a distraction from the fundamental flaws in the health care system.</p>

5325

<p>

</p>

<p>I’m all for competition from overseas hospitals, and I think we will see more of that. But competition among U.S. hospitals would be healthy, too. </p>

<p>That’s something we haven’t had because pricing for hospital services is so non-transparent. (We’ve had competition based on reputation, but not competition based on price). The nominal price for hospital-based diagnostic, medical, and surgical procedures is just a pure fiction that has little to do with the cost of providing those services or with the prices competitors charge for the same or similar (often identical) services, and for most consumers the nominal price bears almost no relation to the real price because the real price is negotiated, in secret, between the hospital and a third-party insurer. Or imposed on a take-it-or-leave-it basis by Medicare. The only people who get slammed with the nominal price are the uninsured or underinsured.</p>

<p>One of the principal aims of the ACA is to create more price transparency throughout the system so as to foster competition. My impression is we’re starting to see some real competition, and some of the highest-priced providers are either balking at joining networks that are offering reimbursement rates lower than those to which they’ve been accustomed, or not even being invited to join such networks because their prices are so out of line. Normally we’d applaud those kinds of competitive pressures. But instead, you keep screaming that the sky is falling because the gravy train is ending for your favored high-cost providers. I’m not convinced that leaves us collectively worse off. If we can get more people more high quality health care at a lower cost, that’s a big win in my book. Even if it means a slower pace of innovation.</p>

5326

<p>This article looks like something you would read in The Onion, except it’s on CNN:
[CNN:</a> No Obamacare subsidy for some low-income Americans - CNN.com](<a href=“http://www.cnn.com/2013/11/22/politics/obamacare-subsidies/index.html?hpt=hp_t1]CNN:”>http://www.cnn.com/2013/11/22/politics/obamacare-subsidies/index.html?hpt=hp_t1)</p>

<p>CNN is complaining that some lower income young people are being unfairly deprived of their Obamacare “subsidies” because - boo hoo – the insurance premiums in their state exchanges are set too low.</p>

<p>For example:

</p>

<p>Because, you know, it would be so much better if BCBS or whatever companies sell insurance in Illinois would charge everyone a lot more for premiums. How dare they offer a Silver plan to a young person for less than $2000 annually! They should charge more money so that the young person can get the “subsidy” that it is his rightful entitlement! (You know, that big fat Obamacare check that’s going to arrive in everyone’s mailbox every month, or maybe float down their chimneys). </p>

<p>This, according to CNN, is dreadful – You see, Obama “promised that the threshold for government assistance would be higher.” </p>

<p>You see, it’s a mistake in the law: “But if the baseline plan is cheap enough, the formula is thrown off and the subsidy is zero.”</p>

<p>And, as CNN explains further, “But no matter where a person lives, premiums increase based on a customer’s age, meaning this problem will disproportionately affect younger customers”</p>

<p>You see, we 60 year old get plenty of subsidy, since our rates our triple what the youngsters pay. </p>

<p>–
OK, anyone here have a kid in a STEM major? Because I guess it takes an advanced mathematics degree these days to figure out that person who has to pay $165 a month for a subsidy is not getting cheated because some older person with the same income and a $400 premium gets $235/month in subsidy money.</p>

<p>And maybe someone can explain to CNN that the government subsidy is something that goes to the insurance company to pay the balance owed on the premium, beyond the part that the person’s income supports. </p>

<p>Note: The Kaiser Foundation calculator tells us that a person earning $27,400 a year has an income of 238% of the poverty line, is required to pay no more than 7.65% of their income for health insurance, which comes to $2,095 per year. A $165/month premium comes to $1980 a year, which I guess means maybe CNN thinks that the governments should send the kid a monthly check for $115 as a compensation for the bad luck to live in a state that doesn’t charge more for insurance than the law expects him to pay. </p>

<p>You can see from reading the article that administration officials tried to explain this to whoever wrote this article, but I guess that’s hard when someone has their thumbs in their ears and is shouting “I can’t hear you.”</p>

<hr>

<p>I’d point out that despite CNN’s histrionics, the hypothetical Chicago 27 year old does get a benefit – s/he qualifies for a cost-sharing Silver policy, with an actuarial value of 73% (rather than 70%) – that’s the one with the lower deductible, max-out-of-pocket of $5200, and lower copays.</p>

5327

<p>^ calmom,
I sometimes think innumeracy must be part of the job description for “broadcast journalism” jobs–in scare-quotes because I think “broadcast journalism” is itself an oxymoron. Or maybe just moronic.</p>

5328

<p>“My impression is we’re starting to see some real competition”</p>

<p>This is the last thing which will result from ACA. In fact, there will be less competition. For instance, I have two insurance companies to choose from, whereas prior to ACA I had at least 5 insurance companies to select from. </p>

<p>The hospital in my town is trying to purchase the largest outpatient clinic. They claim they’re doing this because of ACA. Because of the low reimbursements, they are looking to cut costs; one way is to acquire other medical care providers. </p>

<p>Where is the competition? The networks are narrowing, offering less choices for consumers, and most of us are stuck with one insurance plan with slightly different copays and deductibles from one or two companies. </p>

<p>No, if costs go down (which I highly doubt) it will be by coercion, not from competition.</p>

5329

<p>Well, we’re starting to see some real competition here in Minnesota, and it’s driving rates down. And high-cost providers and monopolists are being exposed as outliers. That’s never happened before.</p>

5330

<p>I can’t speak about Minnesota, but in California there is far less competition. You have this cookie-cutter insurance plan which is essentially sold for almost the same price by very few insurance companies. </p>

<p>Any time govt (Medicaid, Medicare and by limiting your choices) sets prices, the quality diminishes and the supply of the product almost always decreases.</p>

5331

<p>While statistically the end outcomes of US healthcare are not superior overall (I could cite this but the links I believe are considered political) but without question more costly, the advantage of a privatized or “tiered” healthcare versus a “single tier” system become obvious on the upper end.</p>

<p>In a nationalized program such as that in Canada, the baseline healthcare available is at a minimum, comparable in terms of statistical outcome to that of the US. But in order to keep that baseline affordable and accessible, the country has avoided allowing a second, private tier of “super” healthcare delivery. So what that means is that many affluent Canadians, whether correct in perception or not, will come to the high-end “super centers” of US medicine seeking treatment not readily available in Canada, as cited by GP.</p>

<p>So, just like in education where you have a handful of truly exceptional schools sought the world over, so too does the US have a concentration of truly exceptional medical centers. This kind of exceptionalism doesn’t typically exist elsewhere because it is fostered in a free market system and does not, cannot thrive in a nationalized system with a single payer.</p>

<p>But just like in education, that doesn’t mean that medical services in the mid to low range of the pack are better or even equal to the standards in some other countries. Or that the exceptional medical services are uniformly accessible to everyone (eg Medicare, or now, as GoldenPooch regularly points out, his anthem plan in the case of cedars.)</p>

<p>So there are tradeoffs between accessibility and nurturing conditions that give rise to exceptional treatments. While it is proving extraordinarily difficult to achieve, I believe the intent if ACA was to foster accessibility while still also fostering a system that can be exceptional. </p>

<p>I think this is very difficult to accomplish.</p>

5332

<p>There was an article in yesterday’s NYT Health section about spending more and getting less for health care and a new book - 'The American Health Care Paradox - just published by the Director of Yale’s Global Health Leadership Institute. I don’t want to link to it because it may be construed as political, but anyone who is interested should go to the Times site and read the article.</p>

5333

<p>Calmom</p>

<p>I didn’t read that cnn article the same way you did. They made it clear several times why there would be no subsidies. The point was that a promise of a subsidy had been made to these young low-income people to lure them in, but the promise didn’t materialize which could act as a deterrent to enrollment. That is the “problem” being referred to that affects the low-income young but not the old (who do get a subsidy).</p>

5334

<p>I think it’s difficult to have a (non-anecdotal) stand on quality, delivery and price without examining more deeply. This isn’t like saying, so what if my tv was made in Korea, it works fine and the price was right. Healthcare is more complex. </p>

<p>When the media gets involved, they look for what grabs our attention- not always to accurately inform. Sad stories or tales of frustration, an example of someone who isn’t satisfied, a line on an invoice, the time it takes to have a new med or procedure approved. These are articles or a few minutes in a broadcast, not masters theses. Just be aware how much is our personal reactions and how that doesn’t always represent all the issues that apply.</p>

5335

<p>I spoke to a relative yesterday who is certain her mom would have died two years ago had she not maintained a MediCare supplement from a previous employer. She was hospitalized for months with a mystery auto-immune illness. This is when the whole thing gets very complicated because although there may be a pile of paperwork somewhere that shows we’re spending less and insuring more people; who cares if they’re just getting the basics? The basics are easy and no-one is really denied basic health care now. It’s when you need someone like Dr. House that you’re in trouble. It’s a safe bet he won’t be on the ACA plans. </p>

<p>Also, I have often heard that US life expectancy statistics are not fairly compared to other countries since we unfortunately have a whole lot of people shooting themselves to death in our streets. Statistics are usually designed to mislead.</p>

5336

<p>“Also, I have often heard that US life expectancy statistics are not fairly compared to other countries since we unfortunately have a whole lot of people shooting themselves to death in our streets.” </p>

<p>This is a big positive for the United States. :)</p>

5337

<p>Lol! It’s not a health care issue.</p>

5338

<p>"I can’t speak about Minnesota, but in California there is far less competition. "</p>

<p>I am not sure this has to do with ACA since legal impacts should be uniform across the states. From what people have linked about the process, California went out trying to pick and choose who can offer insurance and tried to control the number but in some areas those numbers stayed and in some most companies just dropped out.</p>

<p>You could move to Arizona and find that some counties have 50+ insurers.</p>

5339

<p>Boiling it down, was the point of Obamacare a promise that people would get subsidies? Or that more people would be able to get healthcare at affordable prices?</p>

<p>No, people shooting each other isn’t a healthcare issue if they’re just picked up off the streets and taken to the morgue. How many pass through hospitals first? How many rack up what costs? </p>

<p>Btw, you can look at hospital budget reports and commentary to learn more about what charity costs and how hospitals view this responsibility. I only looked at one, a major, recognizable name. </p>

<p>Also, if you dig into the role statistics plays in med care decisions, it’s true that sometimes it’s hard to justify more than the basics. You may want Dr House, but when that’s “want,” not medically necessary, what should happen? A friend had an issue that could have been detected by a sophisticated test. BUT, though it detects, it only predicts a crisis in something like 4% of cases. And is expensive. What do you want to do- run it on all 50 year old men, at high cost, for that 4%?</p>

5340

<p>No, I want it to be personal. I don’t want to run any test on everyone. The one-size-fits-all-best-for-everyone part of this deal is my biggest issue. We don’t all need the same thing. Health care decisions are individual.</p>