Bizarro World
At least 40 Republican Senators and possibly the critical 50 have decided to stand up to the lobbyists, the interest groups and big business. They are willing to vote for the Cruz amended BCRA which would not just repeal Obamacare, but also destroy US individual market health insurance. If they do so, they stand up to many of the most powerful lobbies including the AMA and the AARP (but not the NRA or AIPAC). Most importantly, they reject the very firm claims and fierce arguments of the relevant health insurance industry lobby AHIP
AHIP (and BCBS) wrote an extraodinarily passionate and detailed letter to the Senate which included “this provision will lead to far fewer, if any, coverage options for consumers who purchase their plan in the individual market. As a result, millions of more individuals will become uninsured.” Notice the future indicative (which I will never ever use). The claim is definite and made with absolute confidence. They express 100% confidence that enacting the reform (with the Cruz amendment) will cause a disaster.
The amazing thing is that AHIP is demanding that its members be regulated. They are asserting that they will damage the country if allowed ““As healthy people move to the less-regulated plans, those with significant medical needs will have no choice but to stay in the comprehensive plans, and premiums will skyrocket for people with preexisting conditions”. This correctly asserts that AHIP members will cherry pick if they are allowed to. AHIP correctly assumes that AHIP members will destroy the health insurance system for short term gain if allowed. It’s like a serial killer cherry picker writing “stop me before I medically underwrite again”.
It is bizarre for an industry to demand regulation to protect consumers from them. The suspicion must be that the concern for the general public is an excuse for support for regulation which helps incumbents or limits competition. The second Bizarre thing is that I personally don’t doubt the sincerity of the lobbyists advocating regulation in the public interest of the members of the lobby. For one thing, their claims are obviously correct and at least an overwhelming majority of independent experts agree. In fact, I haven’t read a defence of the Cruz amendment by ultra hack Avik Roy (I think there is one by uber hack Stephen Moore). I don’t think that an honest case can be made that an industry lobby isn’t sincerely acting (this time) in what it’s officers consider to be the public interest.
But strangeness beyond strangeness, it seems possible that 50 GOP Senators will ignore all serious independent analysis and all of the relevant interest groups. I don’t recall the last time so many Republicans seriously considered standing up to big business. I don’t think it is really surprising that Republicans finally say no to an interest group when that interest group says the public must be protected from the socially damaging profit seeking which shareholders will fore on them.
Everything is updide down in Bizarro World.
According to this
https://thinkprogress.org/third-republican-senator-lashes-out-at-mcconnell-f3ea8b5efce8?ref=yfp
Ron. Johnson (R-WI) has now stated he will vote against a motion to proceed to a vote. That makes it 3 R’s who will vote against a motion to proceed (Rand Paul and Susan Collins being the other two).
After Johnson made that public declaration on local TV in Wisconsin then at 10:22 pm McConnell announced he is putting off the vote again until McCain is back from eye – surgery in Arizona.
Apparently McConnell assumes he can shift Johnson back or get Paul or Collins to sign on before McCain get’s back to DC.
Also purely speculatively, if none of the GOP senators are swayed by the industry’s declaration that the new bill will decimate coverage by their invoking high premiums, then i would have to conclude that the Senators know that the industry’s declaration is just a form of public propaganda for public consumption so that they aren’t “blamed” if the bill passes. They’ll simply say “we told the Senate we opposed the bill. What more could we do?”
I can’t recall if there was every a time in the history of private enterprise when a for-profit industry ever opposed a law that allowed them to make a greater profit. So they only oppose it in the public’s eye… and the Senators know the industrtry doesn’t actually oppose it and so the GOP will still get oodle’s’s and gobs of funding from the health care insurance providers.
Ron Johnson (R-Wi) isn’t up for re-election in 2018 mid-terms but his last election in 2016 he won with only 50.2% of the vote. So he has to walk a thin line to keep his seat in the 2020 election.. in other words he’s among the most vulnerable tea party conservatives in the 2020 election.
This makes him, imo, McConnell’s perfect pick for a 3rd GOP senator to oppose the new health care bill. . which is my own conjecture that the GOP can’t afford to let this bill pass before the 2018 mid-terms… so it can only pass in 2019 or 2020 before the campaign season get’s fully underway … but that will depend on the 2018 mid-terms .. a gage of public voting sentiment on how to legislate if they maintain the Senate majority after 2018.
I find it quite interesting that Johnson switched his position on voting to proceed with the vote again at the last minute. First he opposed proceeding with the original Senate version, then he said he would vote to proceed on the current version, and then he said today (July 15) he wouldn’t vote to proceed with the health care vote.
His decision makes 3 GOP senators who will not vote to proceed to bring the health care vote to the floor. 48 Dems + 3 R’s = 51 opposed to bringing the vote to the floor McCain’s absence is superfluous.
Firms will offer plans their customers want to buy and “Cruz” plans would have plenty of customers. Some would get burned with too little protection, but many would not. And the reasons this should be prohibited are what, exactly? If the country for some reason absolutely needs to consider health insurance as a public utility instead of a business of private contracts, then do that directly. If private contract between A and B is equitable in the judgement of A and B, why interfere with it?
Eric:
Because party C ends up paying for it in the end. Being a common carrier the same as a public utility brings with it a whole host of regulations.
Eric,
You have to stop with this mindless, unproven GOP drivel you are spouting on at least two blogs.
You want to claim ” Some would get burned with too little protection, but many would not. And the reasons this should be prohibited are what, exactly?”
then back it up with proof your claims are correct, in the same manner that people who know your thoughts are insanely wrong(y’know like, insurance advocacy groups, economists, etc.”) have shown.
Getting old, pal.
I think the ACA set back the concept of single payer a generation. It is one of my big complaints about Obama–he went with a GOP plan which addressed some, but by no means all, of the problems with the payment for medical services in 2008. The biggest problem is how to turn the curve of ever increasing costs of providing health care to the citizens of this country. the ACA made some inroads by regulating insurance companies and trying to get more people to get health care when it was less expensive to treat their conditions and certainly less expensive than getting health care only through emergency rooms. That is an entirely different issue than premium relief which can only occur with the largest possible pool and which has young healthy people paying a disproportionately higher premium than older sicker people—exactly what has happened for many years in employer groups. If the Senate bill passes–and I would never count on Johnson to stay committed to any position he is dumb as a rock and does what he is told (and will not be vulnerable until 2022)– the fallout by 2020 may finally cause enough political chaos that we will start on the road to single payer and leave health insurers to the market of selling supplemental policies which I assume are profitable but not on the scale of insuring employee groups. I think the insurance industry always plays a long game and they recognize that Cruz’s amendment could well be the death knell for their industry.
“‘The whole scheme is enlisting young adults to overpay, so other people can have subsidies,’ Dean Clancy, vice president of public policy for FreedomWorks, told my Wonkblog colleague Sarah Kliff. ‘That unfairness reminded us of the military draft.’”
That is a BS argument fostered by those who wish to have no insurance, a plan so small it is utterly worthless when needed, or sign up when they need it. Who pays then? The premium cost for the elderly is paid how??? “by taxes on rich people and by cuts to Medicare spending, not by the premiums paid by young people,” Ezra Klein. Why should you, others, and myself subsidize them? Ok if you want to do that. Just sign a document excuses us from caring for you when the inevitable happens and we will push you out of the teepee into the cold so as not to be a burden.
What many of those complaining about is going back to a period when a “bizarre health-care system existed that worked best for those who needed insurance the least. The sick and elderly are charged sky-high premiums or denied insurance coverage altogether. The upside of that practice as awful as it is, is that premiums are lower for young, healthy people. Obamacare ended that practice; as a result, some young, healthy people will end up paying higher premiums.”
150 million people have ESI. Another 100 million people are on Medicaid or Medicare. Those with income between 100 and 400% FPL are subsidized or are limited in the percent of income they have to pay in the Individuals Market. The complainers are mostly >400% FPL and in the Individuals market. For a single person making < $48,000 annually they are subsidized by either a subsidy or a % of salary limitation. If they are < $30,000, you are receiving a subsidy for out of pocket payments (which Trump has threatened and which will also cause premiums to rise). "'Single payer isn’t a panacea,' said Uwe Reinhardt, a health economist at Princeton University. 'The magic they have is setting rates. But neither Medicare nor Canada has done anything innovative on the delivery side. Taiwan is trying a little bit but not a whole lot. By and large they just pay bills.' The limitations of single-payer systems became clear during the health-care debate, when the Congressional Budget Office projected that premiums for a public option would be higher than premiums for private insurance -- unless a public option could avail itself of Medicare’s pricing power." Former head of Medicare Don Berwick in 2008 said 1/3 of all of Medicare funds is wasted. This is because it accepts everything the FDA throws at it regardless of the benefit received by the patient. Furthermore, Medicare has not changed the fee for service provision of healthcare by the healthcare industry. They provide more services and products for a profit and Medicare negotiates a lower rate regardless of the outcome benefit. Atul Gawande, "The most expensive places for Medicare are not the most expensive places for private insurers. In fact, there was essentially zero correlation between where a city ranks in Medicare spending and where it ranks in private-insurance spending—even when you only consider people undergoing the exact same procedure.” Why is that ??? Single payor (as I call it) is little more than a book keeping methodology. Medicare achieves negotiated pricing; but, it is still a service for fees market wasting $millions and doing little for controlling fraud.
I could go on; but, I have said enough. This is what you want . . .
Terry,
Congress makes legislation, not Presidents. Want to blame someone for their not being a public option(which would lead to single payer) in the ACA?, blame the Senators who filibustered the House bill that contained the public option.
On the other hand, I also think the ACA did not set back single payer at all. When or if the GOP kills the ACA, then we will see a rallying cry for Dems in the next couple of elections. Not just to restore the ACA, but to move even further down the road.
Take a look at Social Security when it first passed, or Medicare. You have to start somewhere.
I do have one question for RW. It regards:
“I haven’t read a defence of the Cruz amendment by ultra hack Avik Roy (I think there is one by uber hack Stephen Moore).”
Which is worse, ultra or uber?
Dear EMichael “uber” uber alles.
Dear Eric
If you wish to discuss economics and policy, you have to decide if your approach is deontological or consequentialist. Most economist accept the Pareto principle that if a policy makes everyone better off it is good even if it involves restricting rational contracting between individuals.
Generically, assuming 100% rationality and perfect competition, free contracting leads to a result Pareto inferior that that obtained including some restrictions.
This is a decades old result in General Equilibrium theory which demonstrates the irrelevance of the earlier result that, with all those assumptions plus the assumption that there is an asset which pays 1 unit of numeraire good for each distinguishable state of the universe, then free market outcomes are Pareto efficient.
Obviously it would be insane idiocy to assume complete markets when discussing how to protect health insurance from the adverse selection death spiral.
Now you may say that, even if everyone regrets the consequences, we must allow free contracting,because it is a basic human right. But then you don’t ask “why” as you are declaring an absolute principle. If you ask why, I can only direct you to the past 50 years of economic theory. A hint. The result I mention above is due to Geanakoplos and Polimarchakis. The reason you are confused is explained in the life work of Nobel memorial prize winners Joeseph Stiglitz and, especially, Oliver Hart. The seed of the literature (like that of many perhaps most economic theory literatures) was planted by Kenneth Arrow.
There is no debate in the profession on these points. Rather the case against regulation appeals to political science not economic theory — the argument is that, even though it is generically possible (that is possible for an open and dense set of economies) for a restriction on free rational transactions to cause a Pareto improvement, it is impossible to hope that Congress & bureaucrats will act in the public interest. If they are not to be trusted a simple third best rule like laissez faire may be rationally advocated even by people who are familiar with economic theory.
RW.
I agree. Doubt anyone can outuber moore.
EMichael do not challenge them. I doubt that Moore can be out ubered, but I don’t want to watch 1000 republihacks give it the old college try.
Longtooth. I to noted the novelty of the AHIP position. However, it is not true that disastrous deregulation which would cause huge human suffering would also cause higher industry profits. It is entirely possible that the Cruz amendment will hurt everyone in the long run — including health insurance company shareholders.
There is a collective action problem. Cherry picking doesn’t help the industry over all. Each firm wants its competitors to refrain from scouting out low cost policy holders. It is often true that competition hurts both competitors. Normally, this also helps consumers (they are competing in price). However, in a market with asymmetric information, competition can hurt everyone. Again, this isn’t a new argument in economic theory. The idea that adverse selection can lead to a free market outcome Pareto inferior to that with regulation has been standard in the literature for decades. Pareto inferior means worse for CEOs of insurance companies too.
Consider an example — the ban on TV advertizing of cigarettes. The aim was to reduce smoking. It isn’t proven that it worked (it wasn’t a well controlled trial) but the evidence (very weakly) suggests it did — smoking declined dramatically. It also caused a huge increase in tobacco company profits. The money they had spent stealing customers from each other went straight to the bottom lines. This was bad for TV companies so it wasn’t a Pareto improvement. But the point is regulation of an industry aiming to help customers can also cause higher profits. Only if you assume that the world is a fixed sum game can you find this paradoxical.
The Cruz amendment would quite probably destroy the individual health insurance market. This would be bad for individuals who want health insurance and for insurance companies. Similarly picking 0.01% of policy holders at random and shooting them would be a bad proposal. AHIP would oppose it. It would reduce the profits of AHIP member companies. There is no paradox. Of course my proposal would cause fewer deaths than Cruz’s, but they are qualitatively similar.
Robert,
It is very, very difficult for me to believe (conceive?) the primary beneficiaries by which I mean the health insurance providers (besides the top 5% or 1%) of the GOP/Cruz plan will not profit more than they were able under the ACA.
They are not altruistic enterprises, nor are those that own them (other than reducing income taxes by “charity giving”).
Arrow pointed out the asymmetries of information in health care which removed it from the standard competitive market paradigm …. and promptly thereafter goods producers learned that this asymmetry applied equally to many types of consumer goods… so along came the “extra warranty option” for consumer goods to milk that information asymmetry.
Caveat Emptor is still the name of the game.
Robert,
The issue with the health care insurance providers writing a letter saying their “effectively” opposed to the Cruz condition is that their opposition (and the AMA’s) hasn’t changed any GOP’s Senator’s minds.
So either the GOP isn’t beholden to the capital owners (& that would b a first!) or the physician’s union, OR they have other benefactors. But I can’t figure out who the other benefactors could be.
The only logical and economically rational basis for the Senators to not take the health care providers “opposition letter” into consideration, and thus more Senators being against the Cruz part of the plan, is that the “opposition letter” is just a positioning ploy to keep the general public from blaming the insurance companies… i.e. loss of public good will. Another way of saying this is that “talk is dirt cheap”.
I’m not sure how one could reasonably expect that insurers would do anything but offer lower premiums to the reasonably large pool of young and healthy people who are available to the individual market with the absence of premiums supports and expanded medicare.
The only way you get to lower premiums for the extremely sick is by including them in the same pool, but market forces and competition require that they have a lower priced product available for those who doubt whether they need insurance and would balk at any price that includes them in a pool with the extremely sick.
I am around forty and full time employed, as is my partner, and we’re starting to wonder whether health insurance is worth it. When you get a bill from the doctor’s office that is 400 dollars for two visits of your child to a pediatrician for pneumonia (one initial visit to get prescriptions, a second follow up to ensure that the situation has been resolved), plus another 120 on top of that for prescriptions, you start to wonder what you and your employer are paying for every month. My bill says these visits were reduced 15 dollars each by my insurer’s expert negotiation skills.
If I were uninsured, I could call up the hospital system that the doctors are part of and get 20% reduction off the top, and not have the extra pulled out of my paycheck every month.
Yes, there’s a fear of the catastrophic, but there’s also a substantial level of indignation here because my insurer is paying NOTHING in a standard year, and contributing no effort to reducing the bill by negotiation.
“Paying nothing in a standard year”.
Geez, now I am defending insurance companies. Umm, you the only person in your insurance pool?
But I get your indignation. I have had auto insurance for almost 50 years now, and that damn insurer has paid nothing in five decades.
Of course I’m not.
However, United Healthcare did manage to make 1.9 billion in profits in 2016, and paid their top five executive 55.4 million. They also dropped out of nearly all healthcare exchanges in 2017.
144 billion in premiums, 117 billion in medical cost payments.
If everyone covered by UHC paid our bills individually, we might well still come out ahead.
80% -85% without diving deeper into it
If Revenue is $144 billion and profits $1.9 billion. UH profits are <2%. Forbes said healthcare insurance ranks 30-something in profitability. Pharma profits = 20-something percent. Hospital Supplies re 15-something percent, healthcare insurance industry profitability was ~3%.
I acknowledge it does still cost something to do paperwork…but I already am doing paperwork plus tax forms specific to HSA.
Well, if you have UHC, then I can call your numbers posted above pure bs. And you can prove me wrong, by accessing the EOBs for the visits you detailed and proving me wrong. Which you cannot as they are not accurate.
Healthcare is expensive, that is out biggest problem. Lying about things like this helps no one.
BTW,
The online access to your EOBS takes about 15 seconds. myuhc.com. Strange how my UHC plan seems a little different than yours. Seriously doubt any plans are that different. Here is one claim from that site
At a Glance
Amount Billed $168.00
Plan Discounts
$103.00
Your Plan Paid
$52.00
Your Responsibility
$13.00
▲
Coinsurance
$13.00
piechart
Your Responsibility
$13.00
You May Owe
$13.00
I have a so called high-deductable plan (HDHP required for eligibility for HSA, this is how many companies are providing insurance these days, and the catastrophic level is also generally self-funded by the company. For many companies at this point, this is the cheapest way to pay for insurance. I’ve seen similar plans at companies I have worked for or audited since 2000, but the government-rules version of the HSA came after that, in 2000 the companies were self-managing the employee’s “HSA”, these days they are often managed by companies like UHC (“Optum Bank” = UHC)).
I assure you, my plan has paid ZERO YTD for my family, and will have paid zero by the end of the year.
The alternative would be blue-cross blue shield with 100% higher deductibles, but I would pay co-insurance, which would look like your schedule. The way my system works, UHC pays not a cent on my behalf until I get over 10k or something (and if it goes over another threshold, my company pays it).
For UHC, there is no way to lose.
If your deductible is 10,000 for a family; there is not much higher to go. You can not have a 100% higher deductible. The max out of pocket for a family is ~$12,000.
ACA HSA Accounts
J.Goodwin, I am not trying to be a hard ass with you. What you are stating does not make sense to me and I have been studying the ACA since before it became a law. I like to think I get it right; but, I could be wrong on some things. If you want to piss off your company, apply on the healthcare exchange and see if you can get the same or better coverage than the employer offers. He will have to help fund it then.
An example of my version of such a recent statement:
(Type, Provider Billed, Plan Discount, Allowed, Health Plan Paid, Total you Owe)
A, $245.00, -$28.18, $216.82, …, $216.82
B, $45.00, -$10.15, $34.85, …, $34.85
B, $20.00, -$20, …, …, $0.00
C, $15.00, -$14.31, $0.69, …, $0.69
A, $165.00, -$20.45, $144.55, …, $144.55
So, billed to insurance company $490, negotiated downward by 93.09, I pay $396.91.
This excludes medications and associated prescription devices.
If I had no insurance, it would have been … $392, and I would have paid no premiums. I assure you, my personal and company provided premiums are non-trivial.
I won’t show mine, but for +$150k plus another $2k-$3k or so for other miscellaneous lab costs over multiple successive years my out of pocket was ~$2.5k in any year. (plus Medicare premium and a small premium from Kaiser. I’d be bankrupt and homeless by now if not for the ACA.. Before the ACA kicked in my annual (personal, not including wife) was in excess of $15k for lower total costs (~$110k +/-)..
If you’re lucky this won’t happen to you… take your chances though and you might end up homeless with zero assets.
It isn’t 10k (anger talking), it’s 3800 for 1+1 (my partner is on a separate single). Getting to 3800 out of pocket would be really hard, even with quarterly doctor visits for each of us and unscheduled visits for whatever thing is going around this month.
I know what we provision on average for medical and dental, and I have no way to understand how the population in my group could possibly be even consuming 80% of premiums on medical care.
The guy in the next cube has had an ongoing legal dispute over neurological coverage for a family member. Insurance is a nightmare. It’s very clear to me (I’ve worked at multiple medical device manufacturers in business group level finance roles) that all the medical inflation in the US is not going to testing, it’s not going to capital investments, it’s not going into the pockets of doctors. Increasingly drug coverage is provided separately from most people’s health insurance (often CVS/Caremark), and a lot of catastrophic requirements are covered by other sources of insurance (vehicle insurance etc.).
Those insurance premiums are going somewhere, and they’re not going to care.
J,
You can post all you want, but I will not believe there is such a small amount of difference between list and negotiated price by any health insurance plan.
That simply cannot be true.
I have no problem in believing that the insurance company has paid nothing if you had not reached your deductible limit yet. As Run pointed out, there is a lot of holes in your story.
Saw the same thing as Naked Capitalism throughout the passing and first several years of the ACA. Reasonable discussion does not include fairy tale anecdotes to make a point.
I’d never seen anything like it before, it’s why I’m so angry about it. I’ve pretty much decided to switch to the BCBS option when open enrollment comes around, even without a detailed analysis. Anything has to be better than this.
JG:
Two costs to be aware of deductibles and out of pocket. The maximum out of pocket + deductible in 2017 is $7,150 for an individual. The BCBS may be less or at least I hope so. Go to Personnel and ask some questions:
– What is the deductible maximum.
– What is the maximum out-of-pocket.
– What is the copay for an office visit and ER.
– PPO?
Then you can make some decisions.
I would learn to read an EOB if I were you.
The odds of two marketplace plans(at this point) being drastically different in terms of costs is fairly slim.