More on Julia Boonstra
Paul Krugman also comments on healthcare horror stories hooey:
by Robert Waldmann
More on Julia Boonstra
Glenn Kessler noted that the latest ad presenting an alleged Obamacare victim doesn’t add up right. Koch funded “Americans for Prosperity” broadcast an advertizement in Michigan in which Julia Boonstra complained that her old insurance was cancelled due to the ACA. Kessler notes that also as a result of the ACA her annual premium is $571 per month instead of $1100 a month.
Boonstra complained about out of pocket expenses.Kessler noted that “under Obamacare, there is an out-of-pocket maximum of $6,350 for an individual plan, after which the insurance plan pays 100 percent of covered benefits.” This means that the maximium cost of the old plan had $0.00 out of pocket would be $2 this year. Of course it didn’t so Boonstra will save money.
I have a question. Why was the old plan cancelled ? The ACA imposes minimum standards for what counts as insurance (although insurance plans people had when the bill was signed are grandfathered). This is clearly needed to make the mandate meaningful. But Boonstra’s old insurance sounds like excellent insurance. How could it not be ACA compliant. I can think of a few possibilities:
1. It is ACA compliant, but ooops the contract is renewable by mutual agreement. Boonstra has leukemia. Obvsiously her old insurance company (and her new one) will lose money insuring her. The old company might have cancelled the policy for that reason only. I assume that the cancellation notice mentioned the ACA. I also assume it was not a sworn affidavit.
2. Her old plan was not ACA compliant for some minor reason (minor in the expected number of dollars paid by the insurance company to care providers). I might even suspect that insurance companies deliberately wrote technically non ACA compliant plans so they would have to cancel them. Then they could offer essentially identical plans at almost the same cost to healthy policy holders. Again the cancellation would be caused by the Leukemia.
3. Her old plan is seriously non ACA compliant (in dollars). For example it might have a lifetime maximum payment to providers. The ACA might have saved Boonstra a lot more money than old out of pocket minus $2.
4. For completeness I have to admit that it is technically possible that the insurance company didn’t cancel the plan at all. It is conceivable that Boonstra cancelled to save the $530 a month and is now complaining. I am sure this isn’t what happened. In any case, I’d be interested in the explanation. I suspect it shows how dangerous it is to trust insurance companies and how vitally important are the ACA regulatory reforms.
lifted from Stochastic thoughts
As of the passage of ACA I believe 100% of all US health insurance policies were not ACA compliant. I suspect through 2011 and 2012 a high percentage of all health insurance policies in the US were not ACA compliant.
By 2013 some health insurance policies were ACA compliant.
Not until 1/1/2014 were most/all insurance policies close to or ACA compliant, including my own.
There is too much noise and too little information from both sides.
Plus once changed, the plans were no longer grandfathered.
Reading through the Kessler article I see no reference to Boonstra’s possible out of pocket costs for her old plan. It seems very unlikely that an individual plan prior to the ACA legislation would have no OOP costs at all. Even more likely would have been a cap on both annual and life time insurance claims so that any serious expense would have wiped her out financially before the new coverage and the ACA/OOP cap.
Is there no law prohibiting the publication of blatantly misleading and/or out right untrue advertising in political advertising? If the insurance company placed an ad about its plans that was so totally untrue it would probably run afoul of some legal requirement.
The “middle class” that don’t qualify for the tax credits will pay a lot more in premiums, and the huge deductables will hurt everyone.
Moreover, many doctors won’t deal with the massive increase in red tape.
Consumers, in general, will pay more for health care, while government pays less. That’s what the Affordable Care Act really means, i.e. less consumer spending for everything else and freeing-up government money from health care spending.
There are plenty of exchanges to see costs of premiums. Please provide some examples of middle class exorbitant increases in premiums.
Massive red tape was happening for this decade anyway, regardless of ACA which does add to the process. Also, red tape is also used by some private companies to reduce services for that very reason…it can be cheaper for a service provider to charge the client the lower amount of the insurance/per session but in cash and avoid the insurance altogether, as there is a significant time spent in billing and review notes to send the company to ‘justify’ treatment. Hence insurance is rejected without referring to ACA or even Medicare.
How do you separate out the role of medical inflation over the last decade at 7-9 per cent prior to ACA and subsequent measurements post ACA?
The greatest flaw of the ACA is it reliance on for profit insurance companies. It is not possible for a for profit insurance company to be anything but what history has shown them to be, the most expensive way to deliver health care to people.
Why do we continue to dance around this simple, easily supportable fact?
The reason that we have so much regulation of the insurance industry is because the for profit model is so poor at delivering what we need, widely available, low cost, high quality health care. The for profit insurance model makes the most money delivering just the opposite, health care to only the healthy in a high cost market.
DSimpson, I disagree.
The health insurance industry makes a relatively small profit margin, compared to other industries, and profit is the result of efficiencies in delivering health care, e.g. providing high quality at low cost.
The problem is overregulation has made health care a luxury good.
Partially correct in that Insurance Companies were not the devil on profits. Even so, there were some who were less than the 80 and 85% MLR now mandated on all individual and group policies. I would also say your later comment on efficiency and quality is not necessarily true either. The last comment is not true as the rising cost of healthcare is being driven by the selling of services, procedures, etc. which were not necessarily efficient, in many cases were redundant, and over priced as determined by hospitals.,
Instead of increasingly more excessive regulations in the health care industry, we need to free-up the health care industry and allow it to provide higher quality and more quantity at lower costs. Then, we can afford a stronger safety net and higher standards.
Dan, here’s a study:
Obamacare Sticker Shock Found in Deductibles, Not Premiums
February 3, 2014
“The report found that the average cost of premiums sold on the Obamacare exchanges is about $5,844 annually —or 4 percent less than the average cost of $6,119 for an employer-provided plan with comparable benefits.
…the average individual deductible for Obamacare’s bronze plan was $5,081 a year—42 percent higher than the average deductible of $3,589 for an individually purchased plan.
However, a number of top hospitals and doctors are not accepting insurance provided by the exchanges because of low rates and more bureaucratic red tape.”
Can you supply a citation please? Please begin to nest your comments, you know, put them together. This is a lot of rambling on your part.
“The average cost for a bronze plan was about $4,885 or 20 percent less than an employer-based plan. The study did not factor in the subsidies offered by employers, or the tax credits offered on the Obamacare exchanges.
…the average individual deductible for Obamacare’s bronze plan was $5,081 a year—42 percent higher than the average deductible of $3,589 for an individually purchased plan.”
My comment: Americans will have to buy health care or pay a fine/tax. So, that’s less spending on everything else.
Also, I may add, much of the “middle class” will see a substantial decline in quality, e.g. doctors, hospitals, specialists, etc., because of a smaller selection on the exchanges.
And, I wonder if low income Americans will, or can, actually pay the premiums and deductables.
Jack-You mean like,”If you like your plan you can keep it”?
No, you can keep your plan id it is unchanged by the healthcare insurance companies. Guess what, they changed the plans and then they were no longer grandfathered.
The key is “…of covered benefits.” Is it possible that something, say a drug, was covered under her old plan that isn’t covered under her ACA compliant plan? If that were true it would seem that her new plan has a higher out-of-pocket expense than her previous plan.
I’d also refer Krugman to a July 2005 CBO study “Effects of the Federal Estate Tax on Farms and Small Business”. That study refutes Krugman’s thoughts on the estate tax.
PT, please give us a link to your “study”.
Batmensch, all you have to do is copy the title (above) and put it in Google:
Yes, Batmensch, finding the report is trivial. Finding anything in it that refutes Krugan, not so much.
Healthcare works best when the amount delivered is minimized. Exactly the opposite of most consumer goods industries. Of course healthcare is prone to market failures.
There are many factors driving-up the cost of health care, including a doctor shortage:
Doctor shortage, increased demand could crash health care system
October 2, 2013
“There is already a national shortage of doctors, according to the Association of American Medical Colleges. We’re down about 20,000 now, and the number is expected to get worse as nearly half the nation’s physicians are over age 50 — meaning many are at or near retirement age. And it’s not just doctors who are in short supply; we also need more nurses, according to the American Medical Association.
“We’ve got an aging population that needs more care and a growing population.”
When the mandatory insurance rules of Obamacare kick in next year, and a couple dozen states expand who is eligible for Medicaid, you can bet more people are going to want to use their health benefits.
Dr. Ryan A. Stanton: “I think of (Obamacare) as giving everyone an ATM card in a town where there are no ATM machines,”
When the Massachusetts law kicked in, wait times to get an appointment at primary care physicians’ offices increased significantly, and they’ve remained high ever since, according to an annual survey from the Massachusetts Medical Society. And Massachusetts has the second highest physician-to-population ratio of any state.”
I heard, because of the hassles of being a MD, many would be MDs go into biochemistry or microbiology instead, or become specialists, rather than primary doctors, which pay a lot more, to compensate for the aggravation. You have to be very dedicated wanting to be a MD nowadays.
I can tell you, as a faculty in a biochemistry department with a degree in microbiology, that you have to be very dedicated wanting to be a biochemist or a microbiologist, nowadays.
I can also tell you as a medical school professor that medical school applications are up again this year, as are the number of medical schools.
I would like to see evidence that insurance companies were actually not running big margins.
Because we had this same argument in 2008 and certain pseudo-anonymous commenters then were citing AVERAGE profit margins sector wide while not correcting that for the fact that right on half of private insurance is “non-profit”. Which of course doesn’t mean Blue Shield etc execs and administrators living a life of poverty. IIRC this had commenters throwing around AVERAGE profits of 5-6% to conceal that companies like Aetna were actually taking down double that.
I mean if profits were really just 5% you wouldn’t think MLRs of 80/85 imdividual/group would have had AHIP squealing as it/they have .
As so often at AB the first request comes down to “More data. In sufficient context”.
Bruce, why aren’t you complaining about the huge profit margins in high-tech fields or some low-tech fields, like railroads?
Also, I may add, many of the old U.S. industries that were offshored, e.g. to China, have low or declining prices, while new U.S. industries have higher prices, rising prices, or market power.
Ah…PT misdirection to Bruce. With the time you put in and perhaps skill, what a post could be written if you wanted.!
non sequitur remarks PT. Not germane to the topic.
Look (checking what I said above), healthcare insurance is a factor; but, it is not the prime driver of cost in healthcare. For that, you have to look to the healthcare industry itself. Maggie Mahar and myself have written on this topic numerous times before.
When McKinsey’s researchers analyzed health care spending in different countries they adjusted for the fact that more prosperous countries will invariably spend more on medical care. But even after taking higher per-capita income in the U.S. into account, they found “additional” (or excess) spending in the U.S. concentrated in five areas: hospital inpatient care; outpatient care, drugs, administration, and insurance (in that order), with inpatient care and outpatient care accounting for 80 percent of additional spending. (Keep in mind that the pricey drugs administered in a hospital or outpatient setting, along with any devices used during inpatient or outpatient surgery, show up on hospital bills, so drugs and devices should remain high on the list of factors responsible for climbing medical costs).
Taking a close look at the major components of our health care system, MGI analysts found the main sources of higher spending: “Input costs—including doctors’ and nurses’ salaries, drugs, devices, and other supplies, the profits of participants in the system–explain the highest proportion of additional spending –or $281 billion.” (Note, these are 2005 numbers.) “Inefficiencies and complexities in the system’s operational processes” add another $147 billion. Finally, administration, regulation and intermediation cost another $98 billion of excess spending.”
The report goes on to note that our fee-for-service payments to physicians encourage them to do more and see more patients. U.S. doctors see, on average, 1.6 times more patients than physicians in other countries. They also are paid more: in other developed countries specialists earn an average of 4 times GDP per capita, while generalists earn 3.2 times GDP; in the U.S. these numbers rise to 6.6 and 4.2 respectively. (Of course most U.S. doctors also pay for their own medical education. As I have suggested in the past, we would be better off subsidizing the education, as other countries do, rather than paying some specialists exorbitant salaries for 35 or 40 years.)
In addition, McKinsey observes, in our for-profit system, “physicians frequently co-own facilities, such as ambulatory surgical centers, diagnostic imaging centers and diagnostic testing and procedure laboratories, and receive a share of their profits. The profit sharing counts for another . . . $8 billion of higher spending.”
In our hospitals, the cost per day is 2.6 times higher than the OECD average, largely because we emphasize “acute care,” and “complex surgeries.” Many U.S. patients receive far more aggressive, intensive care than their counterparts abroad: One in five is likely to die in an intensive care unit (even though 90 percent say they would prefer to die at home.) Yet, McKinsey confirms what we know: on average, the quality of care is no better, and we don’t live as long as the citizens of many other nations. http://www.healthbeatblog.com/2010/09/no-obesity-is-not-driving-health-care-inflation-part-1/#sthash.SItpc0P4.dpuf
Healthcare Insurance reflects what the healthcare industry does plus an adder which is higher than what Medicare would cost. While there are government regulation; by far, few if any of those regulations impact what is charged for healthcare in the US.
The US Constitution is a regulation. Actually, a ton of regulations.
February 24, 2014 3:58 pm
I’d also refer Krugman to a July 2005 CBO study “Effects of the Federal Estate Tax on Farms and Small Business”. That study refutes Krugman’s thoughts on the estate tax.”
Um, no. No it doesn’t. Not in the slightest. Then again, anything that is published by Douglas Holtz Eakin should be ignored, as he has not been right about anything in my memory. In fact, he is the only challenger to Larry Kudlow in that regard. there is only one reason either of them has a job, and it is not competence.
“It severely overestimates the incidence of the estate tax on small businesses: Holtz-Eakin asserts that eliminating the estate tax would raise the wealth reported on estates by over $1.6 trillion. He describes this as an “increase in small business capital,” despite the fact that only 1.3 percent of the .24 percent of all estates who pay estate taxes are small businesses. In 2009, according to the Center on Budget and Policy priorities, only 80 (yes, eight-zero) businesses or farms nationwide will owe any estate tax at all. The average rate the heirs to these estates will pay will be 14% of their multi-million dollar inheritances. ”
PK, on the other hand stated a fact(with a link and everything!) to back up his statement that
“The estate tax is quite literally a millionaire’s tax — a tax that affects only a tiny minority of the population, and is mostly paid by a handful of very wealthy heirs. ”
I don’t know about you, but I’m thinking 80 businesses and farms subject to the state tax a year is a pretty tiny minority.