Open thread October 25, 2016 Dan Crawford | October 25, 2016 5:25 pm Tags: open thread Comments (46) | Digg Facebook Twitter |
I have some thoughts about Obamacare and the recent news of premium increases.
First, the premium increases will mainly affect those on the exchanges without subsidies, it’s estimated that that population is about 1.5 million. With a US population of 320 million, this represents .05%. Those on the exchanges paying market rate are folks who are unable to purchase insurance elsewhere, so rates going up must be put into perspective. These are people who were unable to buy any health insurance before Obamacare.
I also want to look at Obamacare at the macro level. When it was passed, the bill was estimated at one trillion for ten years, or about $100 billion per year. It was all paid for, with tax increases on high income earners, and certain fees, like on medical equipment, tanning salons, etc.
Two things have happened that has bended that cost curve. First, after the first Supreme Court ruling on Obamacare, states were allowed to opt out of the Medicaid expansion. And some red states have done so, leaving an estimated 5 million uninsured. I estimate that at $3600 per year for Medicaid premiums average, that means a cost savings of $18 billion per year.
The second factor is the number joining the exchanges. The estimate was for 20 million by 2016, but it’s now at 10 million. In terms of costs, that means two things. One, ten million at an average annual subsidy of $2500 means a cost savings of $25 billion. Second, ten million folks are paying a penalty for not having health insurance. I’m estimating an average penalty of $500, so a total revenue of $5 billion.
Adding up these three figures, I come up with a total annual savings of $48 billion, or about half the estimated cost. So, that means that we are covering 20 million new people for $50 billion.
Obamacare does need to be fixed. Health insurers made some rate decisions without a good knowledge of the client base. Some states have very little competition.
It’s time for progressives to come in with answers, whether it’s a public option, or something else. Health insurance continues to be state driven. Vermont’s experiment with looking at single payer might be instructive. Other states can look at incentives to broaden the exchanges.
The big insurance companies want to merge. They are using Obamacare as a weapon in their fight to do so. We should push back on this extortion.
“These are people who were unable to buy any health insurance before Obamacare.”
And those people whose policies were cancelled because of Obamacare.
– Were changed in which case they were ineligible under the PPACA. If Healthcare Insurance Companies did not change the policy, the people could keep their old policy.
– Some policies like the McDonald’s ones did not meet the minimum standard for healthcare insurance under the PPACA, These policies were given up to 5 years to be corrected under waivers.
– The reduction in Medicare Outlays came from subsidies to Insurance Companies for Advantage Policies which in many cases mimicked what was offered by Medicare.
– Much of the PPACA increases are the result of increased healthcare cost for which the PPACA reflects. Competition will not fix this. Co-ops might have helped if funded properly except the funding was torpedoed by the Repubs.
“It was all paid for, with tax increases on high income earners, and certain fees, like on medical equipment, tanning salons, etc.”
And by a $500m reduction in Medicare outlays over 10 years.
A little less than 3% of those with private insurance had their policies cancelled.
And the vast majority of those policies were sheer and utter garbage.
You are way out of your comfort zone on the ACA. And channeling GOP talking points shows an incredible ignorance.
It had no effect whatsoever on people with Medicare, just hospitals and insurance companies.
Has the comments box at the end of Kimel’s post been closed? It no longer opens, which is not too great a loss, but strange to leave such a brisk conversation unfinished.
I would like to point out in response to EMichael’s closing remark, teaching below the college level is probably the most difficult job there is. So the old saw, cliche that is, “Those that can, do. Those that can’t, teach.” is more accurately, Those that can do, often cannot teach what they can do. And the best of those that teach can almost always do what they teach. But most accurately of all is that, those that can’t do and those that can’t teach can always consult. Pull up an arm chair.
Pardon me — my statement WAS inaccurate. I should have said, “And by an $800m reduction in planned Medicare outlays over 10 years.”
For the sake of disclosure, I have been working on the ACA FFM project for three-and-a-half years.
And I have been writing about it with Maggie Mahar since 2008. Read the Manager’s bill, deciphered it, and posted on many of the aspects of the PPACA.
With all the smoke and mirrors from my view it seems to me that there are some things that private enterprise does better than government and there are things that the government does better than private enterprise. I also once had a HSA account for health care back in 08 and when the market crashed it took with it my health care money that I was using to pay the premiums that was coming from the market gains. I don’t think it would be wise to get burned again (shame on me) so it looks more like Hillary Care plan of one size fits all-single payer government totally run and totally subsidized plan will most likely become everybody’s plan eventually even if Trump wins…
“Manager’s Bill”? I’m afraid I don’t know that one.
i know nothing about this, but i will throw in that it has seemed to me that doctors are charging way more than they did just a few years ago. it also seems to me that the prices are fraudulent… being charged for unnecessary services.. or for something like “first appointment 300 dollar surcharge”
if this is true it would somewhat excuse the insurance companies charging more.
medicare has reduced… refused to pay… about half of the charges which suggests to me that they feel the charges are excessive… but they seem to accept the charges for unnecessary or bogus services (doctor looks in your hospital door on his way to the bathroom and charges medicare for an evaluation).
i had a minor injury that the doctors tried to get me to go into surgery to “fix.” i refused. and the injury healed itself without complication.
leaves me feeling something not quite honest is going on.
Maggie and I talked about healthcare fraud and the differences between Medicare and Commercial insurance. Commercial Healthcare insurance puts more money into investigating fraud where Medicare does not make as great an effort. It is costly to investigate and adds to the cost of commercial insurance, Maggie seemed to feel it had a large impact on Commercial Healthcare premiums. Ezra Klein wrote about this also. Congress blocks many things Medicare could do with Hospital services, pharma, and procedures. Univ. of Michigan now has a surcharge to be added to the part of the cost you pay which of course is picked up by supplemental insurance to Part B and A. Why???? They are building a mega-center 15 miles north of Ann Arbor in Brighton. Again Why? and why so big?
Insurance Companies are controlled by the PPACA 20% for administrative for individuals and 15% for Group policies. The balance is the Healthcare Industry. If you are after Commercial Insurance, you are beating the wrong dog.
Bloomberg features story about Google abandoning their much-ballyhooed “disruption” of the cable/ISP industry here: https://www.bloomberg.com/news/articles/2016-10-25/alphabet-access-unit-to-cut-about-9-of-google-fiber-staff
“Ultimately, most of the reasons Google got into this in the first place have either been achieved or been demonstrated to be unrealistic.” uh huh.
Meanwhile AT&T’s acquisition of Time Warner is certain to provide the economies of scale they need to manage dropping cable and internet fees to their lowest point in history. That’s why they spent the $83B right?
Another story by Wolf Richter here: http://wolfstreet.com/2016/10/26/layoffs-at-alphabet-access-to-hit-9-google-fiber-to-pause-plans-ceo-leaves-as-alphabet-cracks-down-on-costs/
I really used that old quote to take a shot at consultants. My wife was a teacher for 20 years. I am well aware how difficult it is to be a teacher. And it is much harder these days than it was 20 years ago.
Perhaps I should have ended the comment with: “And those that can’t consult use Six Sigma.”
And now you have proven to be as clueless(at least) as Mike Huckabee.
How’s that, E.M.?
Yeah Jim, a health insurance scheme so poorly designed it’s going to destroy it’s poorly designed reinsurance scheme. And if you think the only people on the exchanges who don’t receive subsidies were previously uninsurable, you’re wrong. For those of us who are healthy, have to buy insurance on the open market and don’t receive subsidies, the PPACA has been a disaster.
Why, because your plan now must meet certain standards?
Buying health insurance as either an individual or family policy has always been an absurd expense. It has always been far more realistic, financially, to get some form of group sponsored health insurance. That was one of the more significant reasons for the need for something to change in regards to personal health care coverage. Health insurance grew into an important part of one’s worker’s compensation pkg.
The legislative negotiations that took place prior to passage of the current health care insurance legislation is where responsibility lies for a less than really good system of health care coverage. The result is a confusing hodge podge of legislation. Early efforts at Medicare for all, a single payer approach, would have helped resolved Medicares funding issues by bringing in younger, healthier participants and keeping over all premium costs down. That was scuttled by both the insurance and pharmaceutical industries and their legislative sycophants. If Congress represented voters rather than campaign donators we might have gotten a quality health care bill passed.
i think younger healthier workers are paying their Medicare “tax.” I think that’s a good thing. But it suggests, to me, that “bringing in younger healthier workers would not “help resolve Medicare’s funding issues.”
on the other hand, raising the Medicare tax enough to pay for the health care of younger workers as well as older workers, might be a good way to lower overall medical care funding issues.
IF congress can find a way to control costs… as I think Medicare does to some extent but could do a lot better.
and here is the perennial “blog problem”: I wrote my comment to suggest that the cost increases in health insurance might be more to do with price gouging by the providers than with bad faith from the insurance companies (which i do not rule out). But you seem to think I was beating the wrong dog… that is, blaming the insurance companies.
What can I do when you think I was saying the opposite of what I thought I was saying?
I believe I used the word “if” to began the last sentence and I meant it to all on here. The Commercial Healthcare Industry is the driver of cost as you have stated and I reinforced. You just repeated your position and I agree with it.
We all pay the Medicare tax and those receiving the Medicare coverage pay a Medicare premium. My point is that if all people, young and old, were in one coverage system and paying just a premium for the coverage the cost of that coverage might be lower. There would be no profit percentage. There would be less administrative cost. If the Congress began representing voters rather than contributors they might growth the balls, literary not actual, to allow Medicare to better negotiate on drugs and health care devices.
Another advantage to the people is that their coverage would be nation wide rather than having to worry about needing health care while traveling.
Unrelated comment (as this is an open thread). I suggest that when a thread is closed to additional comments some notification of that be apparent on that thread. When the Comment button is made inoperative simply place a closed sign on it or just an X over it.
seems we agree. but see reply to jack below.
seems we agree.
but not clear to me you understand or agree that current “young and healthy” paying Medicare tax is the smartest way to keep their premiums low when they get old and unhealthy and have no income.
i think i favor a “medicare for all” idea, but people need to understand it means (or should mean) a higher medicare tax for them (and not just the rich), but lower “insurance” (private) costs and one hopes very much lower medical costs.
i apparently agree with Run above that the providers are the drivers of cost, though i am not at all sure the insurance companies are not complicit (the higher the costs the more people “need” insurance, and the more insurance companies make even if “only 3%” of it is “profit.”)
there is no question that mandatory car insurance drives up the cost of fender repair and consequently drives up the cost of car insurance.
as far as i can see gummint is the only entity with enough bargaining power and potential oversight to control costs in a pay or die marketplace. that is, if the government is not owned by the insurance companies and their accomplices.
just heard another story about how the banks steal someone’s farm. nothing new there. you’d think there would be a law…
and no, that’s not really a change of subject.
run-I’ve never wanted to comment on my personal situation because…who really cares. But since you think you know everything let me explain to you why it was a disaster, My pre-PPACA policy had everything but maternity coverage. But we had to switch due to PPACA mandates. That switch increased my premium by $200 per month. In our state the insurance companies did away with the PPO plans, they’re all HMO now. Maybe you heard about this. I lost my personal physician of 20 years, my kids lost their pediatrician of 20 years, (my oldest is 24, my youngest is 14), my wife lost her OB/GYN of 20 years. In 2016 my premium increased $300 per month to total nearly $1000 per month. Our “narrow network” sucks. I haven’t seen the 2017 renewal terms but the rumor is it will increase 25%-35%. That is an amount that is almost equal to my mortgage payment. At this point my wife and I are seriously considering paying the penalty instead of throwing away over $10,000 per year on insurance we can’t use. BTW, we’ve never been sick, not even a broken bone. Once my son had an ear infection after swimming.
I understand that the PPACA has helped many people get insurance. That’s great. Too bad my family has to suffer so others can have low-cost or no-cost health insurance. But I do love the PPACA chickenhawks (people on Medicare or VA) telling me how great the PPACA is. Thanks.
What mandate forced you to change. If the insurance company changed the policy, that would have caused you to change policies. You are speaking in generalities.
Maternity. My wife is 43, I’m 53. We don’t need maternity coverage. The insurance company (UHC) in question changed the policy to make it PPACA compliant. But there is good news! My wife handed me our 2017 renewal when I got home from work. 51.9% increase! Of course cheerleaders were telling everybody that regulators would never approve such increases. Essentially everything the promoters said was untrue. Keep your doctor? Bend the cost curve? Keep your plan?
Did I mention my deductible went from $6000 to $6500 for 2017? Is that specific enough for you. Want to see the renewal letter? The genius plan to provide everyone insurance is going to force me to drop my coverage. My annual premium will now exceed $17,000 per year. For crappy insurance!
You are an insurance guy, why did you increase the price?
@ Little John:
What do you think your situation would be on the commercial market without the ACA?
He does not care. He wants it back to where he was and screw the other people.
“He does not care. He wants it back to where he was and screw the other people.” Run
That’s a bit harsh as a critique of someone’s concern over their own set of problems brought on by an overly complicated approach to health care insurance legislation. Everyone is being screwed over in some way while some portion of the population gets some mediocre health insurance. Can’t help feel that the healthcare industry, including insurance and all sectors of providers, are the only beneficiaries of these policies.
It’s a fact of life in America. If we keep sending assholes to Congress we will continue to take it up the ass financially. America has traded a preference for a myopic social agenda for financial suicide.
It is not the Commercial Healthcare Insurance which are the drivers of cost. It is the Healthcare Industry which the Healthcare Insurance companies reflection. This is not a new problem. It has been around for decades. Pre-PPACSA the increases were higher. You are also mistaking the PPACA as the driver of these costs. The rates are less steep as a result of the PPACA.
It could have been better; but;
– We had Repubs refusing to work with Dems on Healthcare. I believe not one Repub voted for Healthcare improvements.
– We had the same attitude John espouses, “I got mine, sorry about you, and not my problem. There is the backdoor to the hospital which is going away also.
– We had states refusing the initiative leaving 5.2 million people without healthcare insurance. All because they were Repubs opposed The Black Man in The Big White House. They were willing to sacrifice constituents to keep him from serving a 2nd term.
It could have been better; but, we had a lot of lies about Healthcare, the free market controlling cost, and the cause of much of the cost in healthcare got away as a result.
On balance, the ACA is a marked improvement over what came before, when tens of millions were denied health insurance. But it is a Rube Goldberg mechanism, conceived by the Heritage Foundation to keep insurance companies in business. The rest of the industrialized world manages to keep their citizens insured through some form of single payer.
Most countries have a two tier system of private and public healthcare. Most countries also control the commercial healthcare industry costs. Healthcare Insurance is not the cost driver.
I have to tell you that I do not believe one single word that Little John has said.
Not one word.
Zip code. Income. Ages.
Let me take a look.
Till then? Not one word.
i’m not so sure. it i remember he is paying 10k per year.
if he and his wife are in their late forties or older their chances of having a 20,000 dollar medical bill in the next 20 years may not be small.
note: i don’t know anything about this. did not even look back at the comment. because i wished to make a point about the cost of medical care and the unwisdom of paying for it a month or a year at a time according to “current” risk.
by spreading the cost of lifetime risk over a lifetime income (and paying as a percent of current income) the cost becomes manageable (per month). though still too high i think because of pay or die pricing and no oversight on costs and honesty of provider.
this looks to me like a need for government regulated healthcare, though i’m not adverse to government run healthcare: in some ways i don’t like the idea of “socialized medicine” but recent experience with predatory medicine is changing my mind.
and part of my “point” is to try to elicit the real “facts” from those who know. but i should say i don’t have much interest in fairy tale facts like “competition in the free market…”
i used to think, might still think, that a managed competition in medical care like having the government set out a set of specifications and have the insurance companies bid for contracts to carry out the day to day
with government overseeing that specifications are met, and over-overseeing to look for cost savings beyond what “competition” can deliver
this kind of combination of government – private contract/bidding is the way the highways are built in this country and seems to work fairly well… as long as the government is honest. which may be easier to achieve than letting “competition” keep the insurance company / providers honest without government oversight.
back aways (here on AB) William Ryan suggested that the fact that SSA reports no inflation even as the cost of insurance is rising astronomically suggests dishonesty
he was answered that retirees don’t pay “market” insurance rates but are on Medicare
true. but SSA is required to use the CPI to measure inflation and, as far as i know, CPI does not distinguish between those on Medicare and those buying private insurance.
so his question lingers, though the “dishonesty” may not be exactly what Ryan thinks it is.
an “accurate” cost of living index for Social Security has been debated since the 1990’s, but the direction has always ended up effectively concluding that CPI is too generous and demanding that SS cost of living raises be adjusted downward… this is not merely dishonest, it is criminally dishonest.
they call it a “technical” adjsutment, and all the pundits slobber overthemselves touting it as “reasonable.” it’s not reasonable. it’s an effort to see that Social Security recipients live at the poverty line… as it was in 1936.
despite the fact that those recipients paid for their own Social Security as well as contributed to the rising standard of living during their working lives, and can continue to pay for a level of Social Security benefitst that reflects not only the cost of inflation, but the rising standard of living, by raising the amount they contribute to SS (this is called “savings” everywhere but in public discussioins about SS where it is called “the payroll tax) about one dollar per week each year… while average wages are rising more than ten dollars per week each year (according to SSA projections… which are what we have to deal with here unless we want to open ourselves to every hip pocket guess by every right wing crank with an axe to grind. and if the projections turn out to be wrong, we can adjust what we do as conditions warrant… that is, without destroying SS today because all the paid “non partisan experts” are shouting “the sky is falling, er, the sky is going to fall in forty years or over the infinite horizon whatever comes first)
and there is no reason health care can’t be paid for the same way SS is: by lifetime contributions based on income by the people who will get the benefits later, when they will need the money most and mostly won’t have incomes.
JackD- I have no idea what the cost would be like without the PPACA. I assume it would be less expensive or at least have a more robust network of care providers.
Jack-Yeah, no big deal. I agree with you on the cause of the trouble.
run- I wish I could have some influence on health insurance pricing as an “insurance guy”, but alas, no. But, I do understand health insurance pricing and this probably isn’t the forum for that discussion although I can say it’s about claims vs. premiums. I am surprised you don’t know how the general pricing assumptions work. In terms of wanting to go back to the previous system, nah. I think it’s a good thing to have done away with the underwriting aspect of the previous system. It’s just that the PPACA design doesn’t work well for people like me. In addition I learned along time ago not to be upset at what other people have. If you resentful of others you’re going to have a rough life. If someone tells me they enjoy a subsidy I am happy for them and realize how lucky I have it compared to most people.
The sad part is that more healthy people are going to leave and this is going to have a negative effect on future pricing. I am not calling it a death spiral but it sure looks like it’s heading that way. Maybe for people who have to buy their own coverage and don’t enjoy a subsidy, the premiums or a portion of the premiums could be a tax credit? I don’t know the exact fix but it’s a thought.
EMichael- Male 53, female 43, female 16, male 14. (My oldest is on her own.) Zip Code 75160. AGI $151,000. Maybe your wisdom and endless knowledge can find me a better deal. Good luck.
i suffered a mental typo in my earlier comment here. if you are paying 10k per year for health insurance you would have to “expect” to have 20k worth of medical bills in the next two years, not twenty as i said.
trouble is you can’t go by your own health to figure your odds, at least the insurance company would have to go by the expected costs over the whole population. my guess is that people your age may actually have a fairly high risk of medical bills that high, and quite possibly in the hundred thousand plus range over ten or twenty years. but i don’t claim to know, even approximately. i wonder if you have that information?
on the other hand, i have been told that health risks are “mostly” a matter of life style (drink, smoke, drugs) and where you live… (beaumont texas anyone?) so you may be paying for people who have higher risks than you do.
on the other hand, horror stories about insurance companies cutting people off just when they start to need the “insurance” they have been paying for are probably not entirely leftist propaganda. do you know anything about this?
thing is I don’t know anything, but listenting to the argument going on here, i don’t get the feeling that anyone is thinking about the nuts and bolts, but just doing a lot of arm waving.
unlike Run, i do not trust the insurance companies, whether they are the “cost driver” or not.
but neither do i trust the providers… at least recently they seem to all have discovered the “profit maximizatioin” business model.
and while i dont trust the government we have today, i think we have a better chance of keeping the government honest than “competition” among doctors/ insurance companies in America have demonstrated over the last decades. and i never thought government mandated private insurance had a chance of being any more honest than government mandated car insurance.
Dale-I totally agree with you. I’ve been in the insurance industry 25 years(life insurance) and I wouldn’t trust these companies as far as I could throw them.
From my understanding it’s the healthy people NOT signing up while the unhealthy people ARE signing up. Regardless of run’s incoherent babbling I never had a pre-PPACA renewal increase of over 50%. I’ve also never thought that, “I have mine;screw you.” That’s run putting words in my mouth.
You come out here and offer up anecdotal personal accounts. Brooking and the CBO say you are the one wrong here. Brookings is incoherent? Yea right. You are not telling everything. Your understanding is once again is anecdotal Mr. Insurance Man. Even if healthy people signed up, it would do nothing to stop the healthcare industry from increasing cost. “You never” has nothing to do with it.
Cry your tears elsewhere.