<p>In 2010, the U.S. spent $2.6 trillion on health care, an average of $8,402 per person. </p>
<p>In 2010, health care was about 18% of GDP. Health care costs have been rising faster than the economy, way faster, for decades. For some reason, in the last four years, since the passage of Obamacare, health care cost growth has slowed markedly. Some people attribute this slowdown to Obamacare, but a lot of people say it’s mostly the bad economy.</p>
<p>Regarding kids turning 26, I think that Cardinal Fang’s quote from the regs (“for rating purposes …”) is dealing with how insurance companies determine age rates. If your child turns 26, they will not be eligible to be under your plan (that month) and that is an event that allows them to buy insurance beyond open enrollment.</p>
<p>A question came up about projecting future health insurance costs… So I started thinking…
If costs were linear and compounded… Dont roll eyes yet it is not that complicated :)…and old people pay 3 times the rate of young people…for 44 years…</p>
<p>In my head I get an increase of health insurance costs of 2.3 percent a year ( I could be off by a tenth or two) because of aging over 44 years. </p>
<p>Then you have to add in healthcare cost increases. If we use a 5 percent number, a person will experience increases of 7.3 percent a year. (This is for states that use aging as a criteria). </p>
<p>This kind of sucks because most people are not seeing income increases compounding at a 7.3 percent rate.</p>
<p>There are other variables but I think these estimates are in the ballpark.</p>
<p>CF, what do you think?</p>
<p>Washmother, thanks…</p>
<p>I’m not a fan of insurance companies, and I wish we had universal coverage instead, but insurance companies have legitimate expenses. That is, if insurance companies have to pay out 85% of your premiums for health care, that doesn’t mean that the other 15% is profit. I’m pretty sure that the actuaries who figure out rates and the insurance agents who are answering your phone calls aren’t working for free. And claims processing isn’t done by the brownies and the fairies.</p>
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<p>The 15% isn’t their profit margin, Iglooo. 85% of health insurance companies’ revenue from health insurance premiums needs to go directly to provision of medical services, i.e., to doctors, hospitals, nursing care, etc. All of the insurance companies’ administrative overhead–claims processing, marketing, payroll and benefits for their own employees, office expenses, etc.-- needs to come out of the remaining 15%. Any profit margin will be a much smaller percentage of that 15%. The theory is that too large a fraction of our health care dollar has been going to administrative costs at insurance companies rather than to actual medical care.</p>
<p>[edit: cross-posted with Cardinal Fang]</p>
<p>Now I think washmother is right about when coverage ceases for 26-year-olds; alas, it’s the month they turn 26. This is a quote from a Blue Cross Blue Shield fact sheet:
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<p><a href=“http://www.bcbsil.com/affordable_care_act/pdf/age26.pdf[/url]”>http://www.bcbsil.com/affordable_care_act/pdf/age26.pdf</a></p>
<p>A lot is going to depend on what is included in the 85 percent number. Edit… Ok. i see the prior posts.</p>
<p>I can see why insurance rates have been rising at 10 percent a year. Healthcare costs rose more than 5 percent a year, old people can be charged 5 times more than young people, etc.</p>
<p>Yes… Healthcare is dominating the economy ( more than $2.6 trillion spent in healthcare now). Other industries are going to suffer along with healthcare consumers if healthcare cost increases rise at a faster rate than the economy grows. There is just so much money around even if the pot is growing slowly. </p>
<p>The population is aging which is like stepping on the gas pedal as far as healthcare costs are concerned. </p>
<p>If nothing changes, we could just allocate more and more of the economy to healthcare. Demographics. We do things that are age appropriate. When we are 5 we are buy chalk and balls. When we are young teenagers we are buying video games. When we are older teenagers we buy rubbers. Eventually we buy homes and fund our retirement accounts. Old people buy healthcare and we are getting older.</p>
<p>Cost containment would be nice though.</p>
<p>dstark, The meat of your analysis is this:</p>
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<p>Yeah. Health care costs have been going up faster than inflation, way, way, faster, for a long time. American health care costs are like twice as high per person as everybody else’s costs, but all the other countries are seeing the same kind of cost growth: exponential. Not exponential in the uninformed innumerate journalist sense of “really going up fast”, but actual exponential growth in the mathematical sense. </p>
<p>This is bad. Exponential cost growth can’t continue indefinitely. We have to rein in the growth.</p>
<p>In the last few years, the cost growth has slowed dramatically. It would be nice if that were due to some clever solution we’d come up with, but it’s probably just the economy, and that means when the economy takes off, so will health care costs. :(</p>
<p>Thats Stein’s Law- if something cant continue forever, it wont.</p>
<p>Which probably just means linear growth. But that isnt so great an outcome when there is no GDP growth and little person income growth. </p>
<p>Can anyone think of other fields where technology increases cost? Education. Mining- but that seems to be a special case.</p>
<p>“In the last few years, the cost growth has slowed dramatically. It would be nice if that were due to some clever solution we’d come up with, but it’s probably just the economy, and that means when the economy takes off, so will health care costs.”</p>
<p>This could be a problem. </p>
<p>The NY Times has been running a series of articles about the cost of healthcare. I think those articles are quite good. Time Mag had a great article. </p>
<p>We read a lot about the cutting of networks. Maybe, if the high cost medical centers are thrown out of networks, they will have to lower their prices. Maybe not the tippy top centers, but other medical centers.</p>
<p>We are covered by DH’s employer. This year just like all the previous years our costs will increase. The difference this year is the cost is going up more than normal and the company is stating it is because they have to comply with Obama care regulations on coverage. I believe them. While I don’t want to pay the extra money we can afford it. What is concerning to me is that the lower paid workers costs are going just as much as ours. It seems a number of them have not been signing up because of the cost but now because of Obama Care they most likely are going to have to. Regardless of whatever subsidies they get it just doesn’t seem right to force someone to pay for something they don’t want.</p>
<p>I do like Stein’s law. Stein’s law is true.</p>
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<p>The cost growth is not because technology is increasing the costs of the treatments we do. And to first approximation, it’s not because of population aging, either: we’re not getting older that fast… The cost growth is because every year smart people invent more treatments that work.</p>
<p>And that inevitably means we have to make hard choices between treatments, and we have to not do treatments that we know would produce health improvements. It’s no good saying the doctor and the patient decide between them whether to do a procedure; neither the doctor nor the patient has any incentive to forgo a treatment that works.</p>
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<p>As long as they are not the ones paying. In eye care for example, we make the decision all the time if we want to pay out of pocket for the anti-glare coating. </p>
<p>The lack of price sensitivity is what causes price inflation. Since ACA went away from price sensitivity I expect things to get worse cost-wise. </p>
<p>It would be nice if there were multiple successors to Obamacare before we reach the ‘final destination’; implemented various ways in various states. That way state populations could implement what seems best to them without a lot of bickering. It would also allow the rest of us to see which approaches work best.</p>
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<p>I wouldn’t say the ACA went away from price sensitivity. Insurers competing on the exchange is all about price sensitivity. Cutting Cedars Sinai out of a network-- price sensitivity, because they’re ridiculously expensive.</p>
<p>ACOs (accountable care organizations) bundling payments? Price sensitivity. Fining hospitals for too many readmissions? Price sensitivity, because putting someone back in the hospital costs a fortune.</p>
<p>It doesn’t have to be the patient who makes all the cost decisions to save money. In a lot of cases, patients are ill-equipped to make cost decisions.</p>
<p>Two questions:</p>
<p>On pg. 13418 of the link calmom posted with the regs/comments/responses (<a href=“http://www.gpo.gov/fdsys/pkg/FR-2013-02-27/pdf/2013-04335.pdf[/url]”>http://www.gpo.gov/fdsys/pkg/FR-2013-02-27/pdf/2013-04335.pdf</a>), I found one of the “qualifying events” to trigger enrollment outside of the open enrollment period to be “an individual becoming newly eligible or newly ineligible for advance payments of the preium tax credit or experiencing a change in eligibility for cost-sharing reductions.” </p>
<p>How often can an individual change their plan with the above criteria? </p>
<p>The other questions I have are about adult children under age 26. Does the household size increase, and so adding the adult child lowers the threshold for receiving subsidies (or amount of subsidies)? But the adult child’s income isn’t included in household income if they don’t live with the parents. And, if they do, does the adult child’s income have to be included in the household total?</p>
<p>Thanks for posting the regs/comments/responses. Very interesting reading, indeed!</p>
<p>I brought up how age can affect insurance premiums so people could quantify some of their insurance rate increases. </p>
<p>If rates are going to triple over time as you age, your rates may go up something like 2.3 percent a year even if healthcare increases are zero. </p>
<p>If rates due to age are going to increase 5 times over a person’s life, rates may increase 4 percent a year even with no healthcare cost increases. </p>
<p>If young people are paying more now because rates can only go up 3 times instead of 5, young people can make up some of the increases in the back end. Going forward annual increases in the cost of insurance because of age is going to drop dramatically over time.
The numbers are going to be hidden a little bit because of other healthcare cost increases.</p>
<p>This doesn’t help young people today, except most young people buying health insurance on their own will receive subsidies. This helps young people. There is also catastrohic insurance for those under 30. Many young people are actually going to come out ahead with ACA compared to pre ACA because their subsidized insurance costs are low and as they age their rates are partially capped lower.</p>
<p>It will be revised so many times before they age that projections seem largely irrelevant.</p>
<p>That is an issue.</p>
<p>The subsidies exist today. Most young people are going to buy subsidized insurance.</p>