That the GOP positioning on health care reform is dishonest may be expected. It's politics after all. What's more infuriating is that a number of Democrats will join Republicans to likely defeat any real and substantive changes to our completely screwed up heath care system.
Sadly, it seems more and more likely that, at the end of this big debate on health care reform, Americans will have a system that looks an awful lot like the current system; still managed by big, private insurance companies that have made oh so sincere public pledges to cut costs and insure more people. And Congress will, no doubt, pat themselves on the back for all the heavy lifting they've done to reform the system. No debate on single payer. No public plan. Essentially, business as usual with some tough love (more love, less tough) for the private insurers.
What gets lost in the whole debate in Congress are the private stories of the American health care system.
How about this? A quarter of American households are struggling to pay their health insurance premiums. Or this; 40% of Americans expect to delay health care treatments this summer. Or this; nearly 20% of American households reported postponing or delaying health care over the past year. (Note: an interesting statistic from the survey indicates the group least likely to be delaying heath care treatments are those born prior to 1946. In other words, Medicare patients. In other words, the recipients of a single payer approach to health care.)
It may be popular for health care opponents in Congress to express their faux concern over health care rationing that would come with government involvement, but one need only look at the current system to see that rationing is already occurring.
And when members of Congress come on TV and refer to the American health care system as the greatest in the world and warn of the dangers of allowing the government to step in and act as an arbiter in health care decisions, think about Robin Beaton.
The real tragedy is that Ms. Beaton's story isn't unique. The real tragedy is that Congress will likely pass a health care reform package that is more about appeasing private insurance companies, fighting dumb old political battles than it is about Robin Beaton. Or you. Or me.
Oh, one more fact that may interest you; from an actuarial standpoint, if you are a healthy person, you are financially better off if you do NOT purchase health care insurance (except maybe coverage for catostrophic conditions - which is relatively cheap). If you pay out of pocket for check ups and other minor services you are way ahead of the game. Again, because as I mentioned above, you will not be subsidizing the most unhealthy 3% to 5% of the population.
ReplyDeleteTrue that providers may charge you more, as an individual, than what they would be paid by an insurance comapny, but you're still ahead and this only speaks to the greed of providers.
The greed of providers and their suppliers is somehow rarely mentioned in these debates. It's always the insurance companies that are the bad guys.
Remeber, 85% to 95% of what we pay in premiums is going to the providers - not to the insurance companies.
Insurance companies would love to lower costs. That's how they compete, gain and maintain market share. Why don't they? See my first post.
You've covered alot of ground here. I agree with your comment that the "healthy" insured pay for the "unhealthy" insured. We also pay for the scores of people that are uninsured, some number of which either can't afford or are denied insurance.
ReplyDeleteRegarding your suggestion that the young and healthy should consider not buying medical insurance: I would argue that's a pretty significant gamble. I can assure you from first hand experience that the pre-existing condition trap is big, expensive and sometimes deadly.
The current system is unsustainable. And I think there's a strong case that private insurance only exists as a business entity because the federal government has gone out of its way to protect it via tax credits to employers. If Americans had to deal with private medical insurers on an individual basis, they would have been replaced a very long time ago.
I agree that the current system is unsustainable in an economy where job security, and thus health insurance security, is both tenous and declining.
ReplyDeleteFor that reason, and that reason only, I, as an economist that works in tandem with actuarials in the private health insurance market, favor universal coverage.
However, I assure you that there would be no cost savings to the covered. The cost of coverage is not an artifact of the private insurance sector. Rather it arises from characteristics of the providers themselves (e.g. physician as God and unquestionable authority**), medical advancements where marginal costs exceed marginal benefits, from unhealthy lifestyles and from the covered purchasing insurance for the purpose of gaining access to goods and services they would not otherwise be able to afford.
"... private insurance only exists as a business entity because the federal government has gone out of its way to protect it via tax credits to employers"
That's a good thing, though, isn't it. It incentivizes provision of insurance.
"If Americans had to deal with private medical insurers on an individual basis, they would have been replaced a very long time ago."
Maybe. But what you would have is actuarially fair pricing. Most of us would be paying a premium that is a fraction of what we now pay and we'd be happy. The sickest 3% to 5% would be priced out of the market. Again, think auto insurance. That works well and no one is recommending governemnt provision for that.
**practice variation is a huge source of risk and cost. Allow me to illustrate with a real life example that I see as typical (my morning brain has not yet been sufficiently caffinated to express in more general and abstract concepts).
A woman contracted a lung infection while in Arizona (commonly known as "valley fever"). She had a presistent and severe case and had developed bleeding lesions on her lung. Her PCP had prescribed antibiotics. This was a waste as the infection is caused by a fungus. When the antibiotics failed to achieve results she was sent to a pulmonologist who wanted to immediately schedule a lobectomy (the removal of a section of the lung - and an expensive highly invasive surgical procedure requiring sigificant folow up costs). Wisely, the woman (and her insurance company) sought a second opinion and saw an infectious disease specialists who determined (correctly) that the condition would best be treated with the powerful anti-fungal, Diflucan. The script for diflucan was ordered and cost approximately $600 a month for the next three months even though the same drug in the same strength through vetinary suppliers is approximately $45 a month (the woman got better, thank goodness). Each - the PCP, the pulmonologist and the disease expert - had ordered expensive imaging of the woman's lungs even though they were made aware that images had been previously taken.
Where is the insurance company's culpability in all of this costly mess? Medicare wouldn't have done any different. Hopefully you gleened some higher truth from the example.
And yet Avedis you,as an economist, are able to overlook the stupendous administrative costs associated with the current system, checking for current coverage, monitoring co-pays, second guessing physicians. Why they even have to pay people to tell their clients their insurance coverage has been exhausted and they are therefore doomed. Shall we also mention the expansive salaries and bonuses paid to insurance company executives for not delivering health care. You cite an instance where the insurance company's self-interest in seeking a lower cost solution worked out. I bet the ratio of good outcomes to bad is nothing for them to boast about. Keep on gleening. Who knows you might find some higher truths yourself.
ReplyDelete"....stupendous administrative costs associated with the current system, checking for current coverage, monitoring co-pays, second guessing physicians. Why they even have to pay people to tell their clients their insurance coverage has been exhausted and they are therefore doomed."
ReplyDeleteUh...Medicare and the VA system both do this as well. Incidently, Medicare, in many instances, foists the responsibility off to private sector sector companies and these costs are not included in the quoted stat.s concerning Medicare's admin costs.
stupendous? Big word that. Let's see, if 85% to 95% of premium revenues are going pay the doctor's bills (which they are) then "stupendous" must be, at absolute maximum, between 5% and 15% of premium revenues (of course it really isn't this high for those things you mentioned because other things get paid out of what's left after medical bills; like disease management, case management....etc). But I'll play in your court for a bit. Let's split the difference and say 10% goes to all of those things you mentioned and let's further say that doctors never order procedures that are unnecessary (doctors and hospitals as profit seeking ventures? Never! Couldn't happen!) or do anything else to inflate costs thereby rendering all of those expenditures obsolete.
So we save 10% on a $700 a month premium. That's $70. Now, with the Peter G premium set at $630 a month I guess everyone is running out and buying affordable insurance and the problem is solved.
Bravo!
In all seriousness, admin costs have remained fairly stable for many years in the sector. Actually, in many instances they have decreased in relative terms.
ReplyDeleteWhat has increased at an alarming rate is the cost health care service. I cannot stress enough that the increasing $s paid in premiums are going to doctors and hospitals; not to the insurance companies coffers.
Why? Because doctors and patients who are insured are divorces from the cost/price at the point of sale. Other than nominal copays/deductibles there is no cost to the patient. The physician has incentive to charge as much as possible (that's why some admin cost has to go to keeping an eye on these guys). Developers of goods - like pharmaceuticals - interact with the doctors and, through marketing, with the patients. The insurance company acts as the financier of the whole ponzi scheme.
Medical technology keeps advancing. More people can be treated for more illnesses. This costs more money. The ponzi scheme keeps paying the bills.
Some of the advancements pass the cost benefit analysis; many do not.
The driver of premium costs is medical technology and healthcare provision; especially new and improved techniques.
The problem is, money does not grow on trees. It is limited. Someone has to say "enough is enough". Someone has to make some hard cold choiced about what services (benefits) will provided, under what circumstances and to whom.
This will entail situations like, "I'm sorry you have terminal cancer, but you don't get to stay in the hospital for three weeks trying to get a miracle cure from the off label use of some new expensive chemo drug. You may go to hospice and receive palliative care until you pass away. " or "we will not ensure you because you are obese and you smoke" come back when you have lost 150 pounds and quit smoking and we will offer you a reasonable premium". Or to the developers, "We will not include your new pharmaceutical until the price equals the benefit. We have a drug that produces a 60% improvement at $40 a month. Why would we pay $400 a month for your claimed additional 10% improvement at 1000% more cost?"
This type of hard approach would save at least 50%. It is the kind of decision making that exists in many of the socialized programs in other countries. And I would wager that with those savings many more unisured children and parents would have access to the type of coverage they need.
But is it what Obama is talking about? Do Americans really want this? Or do they think they can have it all for nothing?
Look, I have no doubt that health care service costs have increased. But to argue that private insurers are somehow these great and benevolent stewards for the insured is just disingenuous.
ReplyDeletePrivate insurers, like all public companies, have obligations to their shareholders to make a profit. And that they have. Profits at 10 of the country�s largest publicly traded health insurance companies rose 428 percent from 2000 to 2007.
It's reasonable to argue free market economics when one is talking about iPods and shredded wheat. It's a whole other thing when one is talking about whether they can or can't get the chemotherapy they need to combat their cancer.
Jay, one of the largest private insurers in Blue Cross Blue Shield; which is not for profit (thus having no share holders) and BCBS's experience is not so very different from the for profit companies'.
ReplyDeleteAnd, you are ignoring my main point (which I may have, admittedly obscured); which is that health care insurance costs are rising - and will continue to rise -because medical technology continues to increase' not because of profits or admin costs.
You can (maically?) strip admin and profut down to 0 and enjoy a one timer savings, but, after that, up go costs again.
How much of GDP do you want to ultimately spend on health care? 20%? 30? 50% all of it? How much of your personal income are you will ing to spend?
As longing as you are willing to spend - whether it be in terms of out of pocket, premium to a private insurer, or via taxes to the public plan developers of medical technology will supplier more and more of the latest and greatest wiz bang gizmos, drugs and techniques at an ever increasing price to benefit ratio.
That is the side of the market you don't want to face.
"It's a whole other thing when one is talking about whether they can or can't get the chemotherapy they need to combat their cancer."
And this is the choice you don't want to face. Yes you can pay for someone's chemo that has a less than 1% chance in prolonging life. Fine. If you feel the moral compunction to do so then you must also take responsibility for the flip side of that moral coin.
Paying for that kind of treatment makes premiums increase. And when they do increase there is probably some mother somewhere that can't afford the prenatal care she and her unborn child need to begin a healthy normal life.
http://cssrc.us/publications.aspx?id=4481
ReplyDeleteshould have included the link.....yeah yeah, I know...it's the Republicans....I didn't vote for the bastards, but I do agree with the stat.s in the link (which I snipped from above) and I have read and verified some of the exact same reports that they are quoting.
cheers and good evening