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Medical Journal Editorial Blasts Obamacare for Increasing Underinsurance

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During the protracted Congressional fight over the Affordable Care Act, its supporters kept stressing the importance of extending coverage to tens of millions of uninsured. But some observers, including your humble blogger, warned that having overpriced insurance that didn’t cover much was a headfake, not real progress.

Physicians for a National Health Program has gotten access to an editorial approved for publication next week in the Journal of General Internal Medicine titled Life or Debt (hat tip martha r). It which takes aim at the lousy job Obamacare does for the group it was billed as benefitting, the un- and underinsured, keying off an article in the same journal, “Prevalence and Predictors of Underinsurance Among Low-Income Adults,” whose lead author is Hema Magge.

If you’ve had a look at how the bronze plans work, you’ll find the conclusion of this article to be no surprise. Bronze plans for individuals are expected to cost between $4,500 and $5,800 a year in 2016. But if you make less than 4 times the Federal poverty line ($11,170 in 2012), you’ll pay less by virtue of receiving tax credits. Someone making up to 133% of the FPL will get credits so that his net payment will be only 2% of income, while those making 300% to 400% of FPL will pay 9.5% of FPL.

But the real problem is that this is only a portion of what lower-income people will pay. They’ll presumably only be able to afford the lowest tier plans, which are bronze plans. And bronze plans are terrible. They are designed so that the insurance covers only 60% of costs. The insured is expected to pick up 40%. And this is inadequate.

62% of bankruptcies in 2007 had medical bills as a contributing factor. Only 22% of those individuals were uninsured. And Obamacare-style coverage does nothing to lower this risk. The Massachusetts health care program, whose bronze plans are more generous, designed to cover 70% of medical expenses as opposed to Obamacare’s 60%, did not reduce medical bankruptcies. (By contrast, current employer-provided policies typically reimburse roughly 80%).

When authors Steffie Woolhandler and David U. Himmelstein take you through the numbers, you can see why:

125 In concrete terms, a 56-year-old making $45,900 (399 % of poverty, and hence eligible for premium subsidies) will pay an estimated $4,361 in premiums for individual Bronze coverage, and up to $4,167 in additional deductibles and copayments for covered services.13 At 401 % of poverty ($46,100) subsidies disappear; the mandatory premium would be $10,585, with out-of-pocket costs for covered services capped at $6,250. In effect, the federal government has lent its imprimatur to skimpy plans (long-promoted by private insurers) that offer scant protection from pauperization.

What is even more evil about this is that for most employers, coverage over time will migrate towards the inadequate Obamacare level. Sure, many will provide more as an inducement, but with this low a bar to beat, over time you can expect a decline in the average level of private coverage.

And don’t kid yourself that making individuals and families bear more of the costs is an effective way to rein in health-care spending:

International evidence indicates that cost-sharing is neither necessary nor particularly effective for cost control; the U.S. has high cost-sharing and the highest costs. Canada, which outlawed copayments and deductibles in 1981, has seen both faster health improvement and slower cost growth. Canadian provinces control costs by tax- based funding; global hospital budgeting; binding, negotiated physician fee schedules; and a simple unified single-payer structure that minimizes administrative burdens and costs. Scotland, which has eschewed market-based policies 161 and patient payments—even going so far as to abolish parking fees—has costs about half those in the U.S. Scots view patients as owners of their health care system, not its customers.

And in parallel, a stealth plan to weaken Medicare and force more low-income people into these lousy private plans is underway:

About 40 % of those gaining 102 coverage will get Medicaid. As Magge shows, many current Medicaid enrollees are woefully underinsured. Disturbingly, CMS looks set to allow state Medicaid programs to demand 105 copayments and deductibles, even from the poorest of the poor. Several states have already reduced benefits, cut provider payments, and narrowed provider networks. Hence, underinsurance among Medicaid recipients will probably increase. More ominously, the White House is 110 encouraging state officials to use federal Medicaid expansion funds to purchase private insurance, a shift likely to raise both taxpayers’ costs and poor patients’ copayments.

Catfood isn’t an adequate comparison for this scam. Cat insurance is a better deal because it is targeted to people with middle to high incomes who can shop for options and for the most part, won’t buy a bad policy out of desperation (there are lots of consumer sites comparing pet policies, so a minimal level of research will screen out overpriced products). Obamacare, by contrast, is all about enriching entrenched interests. And the worst is that it offers the poor and uninsured the promise of a better deal when it instead serves them up to the very same insurance industry that helped get us in this cost mess in the first place. While this is yet another face of the “Change you can believe in” con, it’s particularly despicable for treating the health of low income Americans as another looting opportunity.

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134 comments

  1. Hayek's Heelbiter

    Excuse me, but did I read somewhere that, as we approach 2029, the Affordable Care was actually subtitled “A Modest Proposal for the New Millenium”? Just curious.

  2. Jim Haygood

    ‘At 401% of poverty ($46,100 income) subsidies disappear; the mandatory premium would be $10,585.

    The notion that someone is going to spend a quarter of their gross income (probably a third of their take-home income) on health premiums is simply absurd.

    ‘Affordable Care Act’ is an Orwellian practical joke that brings tears of laughter at the health care plutocrats ball. Actually, this emerging train wreck is designed to crush the remnants of the U.S. middle class under its wheels.

    Looks pretty bullish for bankruptcy attorneys too! Let’s get this social mop-up going before the muppets catch on …

    1. Pelham

      Absolutely. This is why the ACA is actually, from a political standpoint especially, far worse than nothing.

      Everything stated here is factual but slightly complex. And that won’t be conveyed in the mainstream media. Instead, with the ACA, Americans and certainly their political class will say, “Been there, done that.” The press will describe it as universal coverage, and people by and large will accept that this is the best that can be done — even though individually most of us will be suffering, perhaps more than ever.

      But, atomized as we are, we’re unlikely to make the connection between individual impoverishment and bankruptcy at the hands of the medical establishment and the broader deception.

      So the ACA is one hell of a lot worse than nothing.

      1. financial matters

        In depth analysis such as this shows the folly of this portion of the FIRE sector. This is faux insurance. This country can afford medical care but it has to be done under universal coverage with coverage and renumeration of health services public knowledge. This insurance scam also needs to be taken off the back of employers.

        Medical care has never been an item that fits within a private sector free enterprise model. Its a social issue that needs to be free of the insurance industry.

        1. Heretic

          Just for the sake of discussion I would like to add this:
          Market forces are always at work; as long as human beings and institutions
          Interact the law supply and demand, personnal or institutional self-interest , and relative negotiation power (market based, social based, legal, or physical (I.e threat of violence) will be powerful factors in determine the transactions and relationships outcomes among the participants. In the scenario of important medical procedures or serious illness, negotiation power majorly favours the healthcare industry over the customers, due to knowledge asymmetry ( why are medicines and procedures so expensive, why does my chest hurt? ), consequence asymmetry ( loss of revenue for hospital vs loss of life for customer), time preference asymmetry (hospital revenues are measure monthly, but sick people want their problem solved ASAP), and the emotional vulnerability of the sick person; hence the healthcare can extract huge profits from their customers. Only a very strong buyer with control of money and regulations, can negotiate effectively with the medical /insurance industry… Hence the much lower cost medical systems of Europe, Canada, and Australia, which on aggregate deliver much better outcomes, than private healthcare industry in the US.

    2. Cynthia

      Americans without children or dependents who need to purchase their own health insurance should use every tax trick in the book to reduce their taxable income down to $45,900, in turn reducing it down to 399% of the federal poverty level. That way they can qualify for federally subsidized health insurance, which will save them roughly $6,000 a year in health insurance premiums. In order to do this without getting in trouble with the tax man, I recommend that they maximize their IRA contributions or charitable contributions or both, if need be.

      As any shadow banker or tax dodging corporate welfare cheat knows, the easiest way to get ahead in America is to become an expert at gaming the system, and ObamaCare is just another piece of legislation among many others that encourages this sly and sneaky sort of behavior.

      1. katiebird

        I think it could be difficult for working families. The subsidies (and other protections such as the % of income cap) is calculated on some other definition of income than agi … and I’m not sure what that even is.

      2. Jim Haygood

        Good suggestions. But like ACA, the tax code is another maze which baffles most folks:

        Nina Olson, the National Taxpayer Advocate, estimates that almost 60 percent of filers will pay someone to prepare their returns this year, while 30 percent will use specialized software to help out.

        Without this assistance most taxpayers would be lost considering the tax law comes in at nearly 4 million words, said Olson, who ranks complexity as the most serious problem facing taxpayers.

        http://www.slate.com/blogs/the_slatest/2013/01/09/tax_season_2013_most_americans_won_t_do_their_own_taxes_will_pay_professional.html

        By the time a tax preparer tells the victim, errr, taxpayer that they were just over a key ACA threshold last year, it’s too late to do anything about it.

        This nasty legislative complexity creates jobs for professionals — lawyers, accountants, tax preparers — who benefit from it.

        To avoid inadvertently stepping into serious dog poop with multi-thousand dollar consequences, one has to become (as you say) a resourceful, creative, and well-informed schemer. Indeed, it’s practically a moral duty, when an empty-robe corporate shoeshine boy like John Roberts says you can be forced to buy coverage for the privilege of existing.

        1. Cynthia

          I’m perhaps one of the very few who still uses paper, pen, and a small handheld calculator to do my taxes, Jim. Old habits are hard to die, I suppose. About the only major botch up I’ve done by doing my own taxes is failing to file my dividends earnings as “qualified,” instead of as “ordinary.” It took me nearly eight year to notice this tax change, so for almost ten years I was over paying somewhere between $1,000 and $1,500 a year in income taxes.

          But hey, the IRS didn’t make this tax change in dividend earnings obvious at all on the 1040 tax return. In fact, unlike the worksheet to calculate your child tax credit, the worksheet to calculate your dividend earnings isn’t even in the 1040 instruction booklet, nor is it available in my locate library, which is well stocked with all kinds of tax forms and worksheets! I had to download this worksheet off the internet. Even though it’s easy to download it today, just five years ago it wouldn’t have been so easy. Plus the place where you report dividends and the place where report your dividend after you calculate them on a hard-to-find worksheet are located in two entirely different sections on your 1040 tax return. That’s crazy!

          This is why for so many years I missed noticing this tax change. But the good folks at the IRS let me go back three years and recalculate my taxes using the dividend worksheet, and because all of my dividend earnings were 100% “qualified” and because my income is low enough that all of my dividends are tax free, the IRS wrote me a big fat check for $3,000.

          What first began to alert me to this change in taxes is when I heard that Apple issues rather generous dividends. It baffled me as to why a high growth company like Apple would even issue dividends. Traditionally, only low growth companies issue dividends. Once I figured that there is now a tax advantage to owning dividends, as long you don’t sell them, then I realized the huge mistake I was making in reporting my dividend earnings. Live and learn, I suppose, painful though it is.

      3. lambert strether

        “use every tax trick.” So I should pay rent to the accountants instead of the health insurance scams.

        True, accountants aren’t actually in the business of killing people by denying them needed care, so I suppose I prefer to pay the accountant. But still.

      4. jrs

        Good ideas, but the tax tricks available to the middle class are limited (you named them pretty much – itemizing, IRAs, sometimes education) and sometimes very tightly constrained and if you start taking too many expect the AMT. I think if you are in that position and tend to earn near the lihne (self-employed etc.) you are better off just keeping your income itself below the line. Of course none of this changes the fact that even if you qualify for a subsidy, the plan you are getting will probably still be one of the bronze garbage plans and not be there for you when you need it.

    3. Medically Bankrupt Deadbeat

      Obamacare is a second cousin to Obomber’s policy of Drone Justice.

      If you are “insured” or uninsured in the USA the most logical plan is to purchase a pre-paid airline ticket to a country like Panama, Colombia, Thailand, Chile— where high quality health care will cost you far less than the co-pay under Obamacare, or for that matter even Medicare.

      While you are there you just might want to investigate immigrating permanently.

      1. jrs

        Yea people actually voted for Obomber over Obamacare. To me it seems you don’t vote for a known drone bomber targeted assasination murderer no matter what, but hey …

        I think they voted because of pre-existing conditions which may be one of the few things that actually benefit from Obamacare (I assume, but maybe nothing is better under obamacare and everything is worse). It seems to becoming clear that: the poor are not benefitting, the average middle class person with employer provided is not benefitting.

  3. Norman

    There you have it folks. The real reason that the Robert[s] court gave the green light to O-care. Another realiaty-nail in the coffin-of the grand betrayal by the “O”.

    1. John

      There was NEVER any doubt the corporate whores of the Supreme Court would come down on the side of Obamacare since it delivers all Americans in chains to the blood-sucking private health insurance companies.

      I would have bet everything I own on the ruling.

      Too bad I don’t own much of anything.

  4. Cynthia

    Not a happy report, but not surprising either.

    It would seem that behind all the complicated facts and figures, the basic business model of for-profit Health Insurance – which is not the same thing as Health Care – is to collect as much as possible in premiums, while paying out as little as possible in benefits. And the even larger overarching problem is the continuing explosive increase in the cost of medical services, which by itself will effectively crash the economy in the not-to-distant future. The genius of insurance is that it can be a useful way to pool resources in order to hedge against the possibility of catastrophic loss, but it only really works when dealing with a low-probability event, i.e. your house burning down. We’re all going to need medical care at some point. The current system is pathologically predatory.

    1. Jim Haygood

      ‘The even larger overarching problem is the continuing explosive increase in the cost of medical services.

      Precisely. Roughly, the U.S. spends nearly twice as much as peer nations to obtain the same outcomes.

      Rather than reform any aspect whatsoever of this broken system, Congress entrenched its maze of cartels, price discrimination, employer-tied coverage, overtesting, costly malpractice insurance, and so forth.

      Like defense contracting, health care (excluding lowball Medicare and Medicaid payments) is largely a cost-plus system. Therefore it will keep on metastasizing as a percentage of GDP until real reform (rather than the egregious anti-reform of ACA) occurs.

      As the ACA train wreck unfolds, the only question is how those responsible (I’m lookin’ at you, Nancy Pelosi) will manage to deflect blame onto others. Who could have possibly foreseen that a 2,409-page bill drafted by industry lobbyists would make their clients rich?

      1. lambert strether

        “drafted by industry lobbyists.” ACA originated at the Heritage foundation. The goal was to head off single payer. The Heritage plan was first implemented by Mitt Romney. The Heritage plan was drafted by Liz Fowler, a WellPoint VP on secondment to Max Baucus’s office as chief of staff. (Fowler exited through the revolving door to lobby for Big Pharma; Baucus recently called ObamaCare’s implementation a “train wreck” and declined to run again.)

      2. Lune

        Roughly, the U.S. spends nearly twice as much as peer nations to obtain the same outcomes.

        And most of that comes from our higher overhead costs, *not* by overtreatment. Insurance companies, even under new obamacare regulations, are allowed to have 30% overhead. In addition, providers easily spend 20% of their income on the overhead needed to deal with insurance companies (e.g. billing, prior authorizations, fighting denials, etc.).

        The dirty secret of public health programs is that most of the savings they get is from reducing administrative costs by cutting out the middle man, not really from rationing care. Many European countries have higher per-capita annual hospital days, doctor visits, etc. than the U.S. Check out A study from the Commonwealth Fund.

        The next biggest chunk of savings is negotiating discounts on everything from pharmaceuticals to physician services.

        These 2 things alone, without even begining to change how health care is actually delivered (e.g. eliminating unnecessary care, improving preventive care, etc.) would get us 95% of the savings that other countries see.

        It’s telling that the average rate of growth of health care costs in the U.S. is pretty much the same as other countries. That means that aside from eliminating the 50% in overhead that we tolerate here in the U.S., public health systems aren’t really spending less, or somehow making more efficient use of medical advances than the U.S.

        (N.B. this isn’t to imply that we shouldn’t concern ourselves with improving the actual medical care provided. I’m just saying that eliminating the 50% overhead costs we bear for no good reason is a good and easy first step)

        1. Yalt

          I’m recalling an interview with Obama, before his election, in fact it must have been before the campaign altogether because he responded to questions thoughtfully and seemingly honestly. The discussion turned to single-payer–he understood the argument in favor of it because of administrative cost savings but said “what about all the lost jobs?”

          One man’s cost is another man’s revenue.

          Not just from the point of view of the shareholders and executives of the health insurers, but also from the peculiar macroeconomic perspective that requires waste so as to give everyone a useful “job”, it is precisely the inefficiency caused by the middlemen that is the most attractive, even essential, feature of the current system.

          1. Denise B

            Thoughtfully and honestly?

            In 2008 Obama was the last candidate to publish his so-called health care plan, and it was as phony as a $3 bill. He did away with pre-existing condition exclusions but did not include a mandate, because he was pandering to young people and the mandate didn’t go over well with them.

            It was a plan that he knew would not work and could never be implemented. It was a totally cynical, totally dishonest piece of work.

          2. Denise B

            No lost jobs with Medicare for All. Almost every insurance company in the country sells Medicare Advantage and/or Medigap plans. Everyone has to have one or else you’re on the hook for unlimited 20% copays. Plenty of business.

      3. efschumacher

        Jim Haygood: Precisely. Roughly, the U.S. spends nearly twice as much as peer nations to obtain the same outcomes.

        Precisely. Roughly, the U.S. spends nearly twice as much as peer nations to obtain significantly worse outcomes.

        Fixed that for you.

  5. petridish

    So, let’s be honest here. From a purely practical, economic standpoint, the person making $46,100 would be far better off boycotting the system. He/she/they should keep the $10,585 (ANNUALLY and just for the first year as premiums are certain to rise) in a coffee can. Use some of the money to pay the “fine” for being uninsured. Use the rest to pay cash for the routine services–medical and dental and chiropractic and ophthalmic–used during the year. This is, by the way, is what they would have to do ANYWAY since deductibles are out-of-pocket and will need to be met in addition to premium payments before the insurance company pays one penny.

    And they should prepare themselves for bankruptcy. After all, in the event that they suffer a $100,000 emergency medical expense, after they have shelled out $10,585 for premiums and, say, $5,000 for deductibles, they will still owe 40% of the remaining $95,000. $38,000 or $100,000, you still don’t have the money and will need to file BK so is there really a difference?

    This is, by the way, my plan.

    1. diptherio

      Good plan! The only suggestion I would make is to not pay the fine, as apparently the only thing the IRS can do is withhold a portion of your refund. Just make sure you owe them at the end of the year, not vice versa, and they have no way of collecting. I’m told it’s not a “hanging” offense.

      Or, better yet, let’s all just not file. I think we should all be able to agree that doing paperwork for a corrupt bureaucracy is a waste of our collective precious time.

      “No taxation without representation,” is what I always say…

    2. petridish

      PS. While nightmarish in the extreme, this article deals only with the COST of the “insurance.”

      I can assure you that there are many more devils in the “covered services” details of the policy.

      When taking such an economic hit buying the policy, people have a tendency to assume that whatever treatment they need for whatever “condition” the diagnosis declares will be “covered.”

      Caveat effin’ emptor.

    3. Lambert Strether

      Best not to have any assets, either because Medicaid. (Readers correct me, I’m actually not good with money, which is why I appreciate Yves’s clear explanations so much.)

      1. jrs

        I also wonder what counts as assets. Are retirement plans and so on counted? I think there are some things they can’t go after these for (haha, maybe that’s just divorce). It always struck me as a possible hidden benefit (of these bad overpriced 401ks). Taxes as a percentage of income I pay, it’s not that but expropriation (as in medical bankruptcy etc.) I fear.

        1. aletheia33

          it depends on the law in your state, but i believe you are allowed to keep any retirement savings in BK, as well as the home you own and live in (up to a certain value), car, and other necessities of living.

          it’s a pity far more people don’t consider the relief available through BK except as a last resort.

          search for a compassionate lawyer who does BK for poor folks because s/he actually cares (rare but they do exist), is meticulous, and will not take your case unless s/he is positive it can be won. BK is more difficult than it used to be (not by accident, but that’s another story), but the right lawyer can lead you through it. borrow from family or friends to pay the lawyer. that right lawyer will not overcharge what s/he knows people can manage.

          this will not fix the massive predation going on in our society, but until they take it away from us completely, it does give relief from crushing debt.

          1. Stan Musical

            Except student loan debt; there’s no good reason it’s the only debt not dischargable through BK.

            As to medical care, as soon as Obama allowed single-payer to be excluded and stuck with private insurers, the game was up.

            For medical insurance, the law should be that coverage cannot be refused for any reason.

            Now excuse me while I go laugh my head off.

    4. Medically Bankrupt Deadbeat

      Since when will any medical emergency that requires hospitalization in the US only cost $100,000? The bill for band aids alone will run $10,000.

      1. Medically Bankrupt Deadbeat

        Arthroscopic gall bladder surgery in Boquete, Panama. Five days in hospital. Total bill: $780.00

        1. Observer

          If you need gall bladder surgery you probably won’t have time to fly to Panama first. But your point is well taken.

      2. Lidia

        Broken wrist w/45 min outpatient surgery to install plate = about $22k and still counting WITH the hospital’s supposed 40% discount for the uninsured.

        $700 ($400 w/discount) for 5 min. of a PT’s time to tell DH to move his wrist up and down, from side to side, and twist right and left. Plus a can of Silly Putty (cost $1.00 but probably billed at $50.00 as an “occupational therapy device”).

        I get statements but NO breakdown of costs; this is apparently normal for the two facilities we went to. I keep having to make Special Requests for an accounting.

        Knowing we have no insurance, “providers” were still shocked when we cancelled our most recent follow-up appointment. (More X-rays, another doctor’s fee for a total of probably $1k—they charge an extra sum per X-ray for some intermediate unknown person to “interpret” them, as if the bone surgeon and his residents were incapable of reading them.)

        When I went to the ER to complain about how their bill was presented, they sensed I was not happy, and the billing staff went through a very obvious “scramble” as how to “handle” me. I was tagged as needing “handling”. It was pretty funny to watch them scuttling about in fear! I merely pointed out that even a cable bill lists what the charges are, and that I didn’t appreciate getting a statement in the mail that said nothing more than “Pay us $1400″. I made clear that they really could avoid the fear of confrontation if they were more transparent in billing.

        @Jim Haygood: “The notion that someone is going to spend a quarter of their gross income (probably a third of their take-home income) on health premiums is simply absurd.”

        What can’t be sustained. won’t be.

    5. PunchNRun

      The question I have to ask myself when contemplating this particular remedy is “How likely is it that with a pre-tax income aroung $40K I will be able to find $10 large surplus to stick in the virtual coffee can?” The waitress I know (who certainly makes less than 400% of poverty level) cannot afford even the poor health-care plan her employer does offer. So she will continue to work sick until she has to go to the emergency room.

      She most certainly can’t even afford BK costs to get the collection agency off her back that her last hospital visit got her (hospital verbally promised she could pay $20 / month and then turned around and sold the collection rights).

      I guess/////know I was foolish to think Krugman had a point with his “it’s better than what we have now.” It’s not. It’s the same. If you can’t afford health insurance you still won’t be able to afford it.

      1. Carla

        And just think of the consequences of all the wait-staff routinely having to work sick and serving you FOOD. This is not to hit on restaurant servers, but to ask: do the 1 percent ever think at all? Every minute of their lives, they depend upon the services of other people. If those people are increasingly unhealthy, how long do the 1 percent think they can avoid becoming physically ill? I know, they think they are immune and invincible and they’re WRONG.

        Re: the last sentence in Yves post in which she refers to looting low-income Americans — it’s what this country does best.

        1. Stan Musical

          @PunchNRun: the difference is that now you HAVE to buy medical insurance or you’ll be fined. So it’s worse than what we have now.

          @Carla: years spent in Japan revealed to me how the Japanese oligarchy has had much longer to create a well-oiled upward-transference-of-wealth machine, and they’ve succeeded wildly. Ours is less efficient because even the sheeple are a little unruly compared to the Japanese, the world’s most obedient citizens.

  6. diptherio

    Perhaps this is why Max Baucus just announced his retirement yesterday. He wants to be able to scurry away quietly when people figure out just how badly they’ve been screwed by him and his ilk. 2014 is not going to be kind year for the democrats, methinks.

    1. NotTimothyGeithner

      His polling dropped below 50%. An incumbent Senator this far out has never won below that mark, and he was behind to the two Republicans running for the opposing nomination. Maybe, Harry Reid pulled it off, but he was running against the Chicken-trade lady.

      1. diptherio

        Those poll numbers really show how pissed off people must be about his DC spinlessness. Max has been a shoe-in for my entire adult life. No one has ever been able to stage a reasonable assault on him that I can remember, and he always seems to win with pretty good margins.

        However, he’s also always been “the Democratic” senator, with Conrad Burns filling the role of the “the Republican” (We like to keep things balanced here in MT). Ever since Tester beat Burns, I think people have been feeling uneasy about having two Dems in Washington. It just don’t feel right, so it’s time for Baucus to go. Let’s just hope his Republican replacement (and it will be a Repub, mark my words) is less corrupt (and racist) than ol’ Conrad was.

        1. John

          Can’t you Montanians throw off the blinders that the Rs and Ds are a different party?

          Elect an independent please. Get started today educating the masses of the deception of the two party system.

    2. jrs

      Why do I feel happy thinking it won’t be a good year for Democrats, even though I know we’re not getting anything better.

    3. Carla

      Watch for the announcement of Max’s multi-million-dollar lobbying contract. Slink away? I think not.

      1. John

        You got that right. Max is thinking what’s in Montana anyway but Big Sky and SUCKERS. He’s on his way to his pay out.

  7. Paul Tioxon

    While the truth can be too much to bear, HCA passing during the internet and cable news era revealed on an hourly and daily basis what used to take almost a life time of research and writing. From an intellectual standpoint, HCA is a thin gruel. We immediately ask for more because with medical treatment, half measures can be a complete miss. And when the reading and thinking public were fully exposed to the health care system here and compared to places around the world, we can only get sick at how cruel and short of full medical treatment is being doled out by the private for profit health insurance industry and the attenuated government plans, Medicare, Medicaid and VA. The truth that HCA does little of what reform is supposed to do, meaning, change things for the better, in a meaningful quantity and not in name only is no surprise to me. But then, I know that even among what were supposed to gold plated union plans, for example the Teamster Health And Welfare Plan, there were 3 levels of plan coverage. I had one of the lowest levels, where you would not believe what was seriously being offered. It was next to almost, completely useless. I learned that over 30 years ago.

    The fact that HCA passed at all, and is universal health care is a miracle. Because if you have not grown up in the America of the top 20%, the people who are the cadre of managers, professionals, and business owners needed to run the who operation of our capitalist economy and the public civil service workers, such as teachers, police, judges, federal bureaucrats needed to run the extensive pubic sector, you got nearly useless bronze plans for just about everything connected to health care, and almost everything else in life. Bronze neighborhoods loaded with crime, bronze jobs loaded with hazards and harassment, and on and on. And that is if you got anything at all other than steak knives.

    Right now, Medicare, Medicaid and the VA provide access to doctors and hospitals, even with co-pays and deductibles, it covers almost half the population. Most people will not be able to afford the bronze plans. Half the country makes less than $50k and have more than themselves to support. The tidal wave of entry into Medicaid will be staggering. Most of the time, when sick, it is a small matter, not an exotic operation needed or rare medicines that cost a fortune. Simple, cheap high blood pressure medicines are keeping many men and women alive past their 50s and into their 70s. But only if they know they need them. While it would be ideal to have an ideal situation, the HCA is meaningful reform, it is meaningful on a scale which will now include 30 millions of people with absolutely nothing and will give them the additional message, that yes, your country can still do something for you that can change your life.

    I know it is not popular on this site to encourage hope unless it is on terms that I and most Americans could never have hoped to afford in our lifetime. And that much is true: HCA should have at least included the public option. But as Medicare stands, there is still a 20% gap. That gap can only be closed with the payment of an extra $200/mo or so in extra premiums. It comes with no dental or eye coverage. And, here is no dental insurance at all in existence that is not totally inadequate for paying even 5% of a dental bill. Eye exams and prescriptions provide only a voucher for $150 or so towards the bill, which is always 2 or 3 times more. Unless Medicare and all of the other government health insurance programs are upgraded to 100% payment of services, including dental, eye glass, and other rehab medical devices, if something really bad takes a hold of you, financially, you will live for paying doctors or go broke. But,we already know that.

    I have studied the health care system in America since the 1970′s when the big reform passed by Congress then, in a panic, that health care would exceed 10% of the GNP, was the Health System Agency bill.

    http://en.wikipedia.org/wiki/National_Health_Planning_and_Resources_Development_Act

    What is different this time around, is that a law actually passed, that will change the lives of millions for the better. The fact that it is loaded with similar drek that many of us had been forced to use, until we could afford better plans, is not a bug or a feature, it is all that organized political opposition will allow. And that is the way life is. Most of us get little that benefit us in any political show down, the ruling class aren’t ruling for no reason. The fact that Obama, Pelosi and Reid overcame anything at all is a miracle and should be hailed as a victory. The fact that many dear colleagues and posters here refuse to acknowledge the good in HCA, as things seemed to be judge here morally, because it is not sufficient to solve the entire problem of human suffering in one legislative package is your problem. The real medical needs of millions will begin to be addressed by real doctors, and not policy wonks complaints, for the first time on a national basis. And, it will be a long term fight to keep it secure from the same kind of attacks that are launched on social security, and every other item that takes as much as a penny and spends it on anything other than a profit making enterprise.

    1. financial matters

      Fair claims. I was also surprised that it passed and withstood a Supreme Court challenge. It has to be compared to what we had before and what we were capable of getting against powerful vested interests. And fear of the unknown. Even though many medical providers don’t like the insurance industry they wonder what it would be like without it.. With todays bank friendly social austerity oriented govt it could be problematic. But I think a public debate could deal with reimbursement issues in a reasonable matter as some care is very simple and some is very complicated.

      The most positive thing that I see now are good discussions such as the above which show the direction that future improvements can take.

      1. TK421

        ” I was also surprised that it passed and withstood a Supreme Court challenge.”

        You’re surprised a business-friendly law passed Congress and was upheld by one of the most business-friendly Supreme Courts in American history? Why?

        1. financial matters

          As what seems to be part of the FIRE sector motto they like to be on the sidelines as if they don’t exist and add rentier costs to the real economy. They want to be seen as a necessary part of the productive economy.

          This act got everyone interested in health care coverage and I don’t think I’ve ever seen such good news analysis of the private health insurance’s shortcomings..

    2. diptherio

      ACA (or HCA, or whatever we’re calling it nowadays) is not universal health care, it is a universal mandate to buy health insurance. Kinda big difference there, dontchathink? Universal health care was not even discussed, thanks to our trust Democratic leadership. The Affordable Care Act seeks to provide universal coverage to health insurers, not universal care to citizens.

      Over 60% of americans wanted single payer and this is all that could be done? Well, as others have pointed out, nothing would have been better (and I’m poor as shit, btw…the ACA does not make me feel like my government cares about me).

    3. petridish

      You are seriously deluded, Paul. I’ve no way of knowing whether it is self-delusion or not, but deluded it is.

      NO law is far more preferable to BAD law and this law is a VERY, VERY BAD LAW.

      Your impassioned defense of getting ANY law passed is as pathetic as it is incomprehensible.

      1. ian

        I take your point. I’m not sure how to say this without appearing offensively selfish but I care first and foremost about my familys health care, then that of my friends, then that of the general public. The question I have is how much worse the health care of my family has to get to achieve universal coverage. I’m willing to pay a bit more and wait a bit longer, but there is a limit.

        1. Yalt

          Unless you’re very well off, it’s likely that there’s no tradeoff at all, that your family’s health care would actually improve under universal…well, I was going to quote your “universal coverage” but that’s exactly what we don’t need so let’s start over…if care were provided to everyone. Compare the results, and costs, in countries that provide universal care to what we achieve here.

    4. Lambert Strether

      As far as “thin gruel,” ObamaCare is, for some, very much not an “intellectual” exercise but a real threat to their well-being (such as it is).

      To me, it looks like I’m being forced to buy junk insurance or get in trouble with the IRS, and the junk insurance isn’t going to get me care if I need it; since the business model of the health insurance industry is to profit by denying care, that’s an entirely rational concern.

      I’d rather pay nothing and not get care than pay a quarter of my income and not get care.

      1. jerry denim

        I strongly second that notion. I’m pretty lucky at the moment I have pretty affordable, (apparently) decent insurance through my employer, but I will expatriate my ass right out of this corrupt predator nation the minute the government tells me I must surrender a fourth of my income for totally crap medical insurance just so I can get gouged even more viciously for having bought said ‘insurance’.

        Would our hypothetical 46K a year American not be better served by stuffing his $10,000 a year insurance premium into a mattress and then negotiating a 75% or more cash price discount for medical services if and when the need arises?

        There was a great story in the LA Times last May about a woman who sued her insurance provider after finding out she was being price-gouged BECAUSE she had insurance. Despite a $700 a month insurance premium Jo Ann Synder was asked to pay $2,336 out of pocket ($6,707 total charge) for a procedure the Times reported would have been billed to the patient for $1054 without insurance. (no negotiation) The LA Times also reported the same hospital, when asked, quoted a straight cash price for the same procedure at $250! Jo Ann Synder did everything right, including coming out of retirement so she could afford her $700 a month insurance premium and for her diligence she was rewarded by cut-throat price gouging of over 1070%!

        With insurance like that who needs insurance? Answer: Nobody – hence the government mandate. Sure can’t have citizen’s self-interest interfering with the “free-market” can we?

        F*&k the HCA!

          1. Jimi

            I had two MRIs on my head. One W/contrast. Was billed $3,240.I am on Medicare and they paid $840. Dr. made me pay – get this, TWO BUCKS!. Case closed.

    5. Lune

      Paul-

      With all due respect, I strongly disagree with your assertion, and I’ve studied healthcare policy quite extensively as well. Howard Dean was absolutely correct when he called on Democrats to scuttle this bill even if it meant we had to wait another 10-20 years for another try at reform.

      This bill gave away the one thing that every insurance company was salivating over, the individual mandate, for nothing in return. That is worse than doing nothing because we no longer have a carrot that we can use to extract meaningful changes in the insurance industry. FWIW, from a policy standpoint, the individual mandate is the right thing to do (the insurance death spiral is a well-documented phenomonen). But from a political perspective, you only give that up in exchange for concessions. And Obama didn’t get any. Now there is no reason whatsoever for insurance companies to support any type of further reform.

      I also have to disagree with liberal Obama supporters (not saying you’re one of them) who think it’s best to get at least “half a loaf” because we can always improve the program later. There’s no guarantee that programs improve with time. They can equally be weakened. Witness the current debate over social security “reform”. If Obama has given away every point of leverage he had to extract concessions, why does anyone think insurance companies will voluntarily give away their newfound advantages? And more importantly, what force of government will be capable of withstanding the lobbying force of a >$1 trillion industry now looking at an additional several hundred billion in revenue?

      Finally, it was no miracle that this health bill passed. Obama wasn’t some skilled negotiator. Essentially, he guaranteed that there would be no price controls on pharmaceuticals, no real regulation of insurance, make the government force people to buy your product, and provide hundreds of billions of dollars in subsidies for your industry. Such a corporate giveaway is not really that hard to pass. If anything, the difficulties he had in passing such a pro-corporate plan shows how poor a negotiator Obama was, not how brilliant)…

      1. traveler

        No accident Obama gave away every point of leverage. He’s a lawyer. He knows what he’s doing. There’s a definite pattern to his so-called negotiations.

  8. MattB

    Tax credits aren’t acctually a subsidy. For someone at the top end of those qualifying for a subsidy under Obamacare they can help, for someone making low wages, who gets a refund every year, having a tax credit (for a larger refund?) isn’t going to come up with the money for the current month’s premium

    1. Lambert Strether

      C’mon, let’s be creative. Take a piece of paper, write “I’m gonna get a tax credit of $____ next year maybe,” put it in the coffee can on the kitchen table where you keep the cash, and pay the bill!

      * * *

      Actually, I’m envisaging some kind of payday lender-type aftermarket, where people who are desperate for health care immediately borrow against their anticipated tax refund.

      Kaching!

    2. Lidia

      I lost out on a bunch of energy-efficiency subsidies because they were structured as tax credits and my income wasn’t high enough to obtain those credits.

      Only the rich should be encouraged to lower their energy use through means other than higher utility bills and the exhaustion of their pocketbook, is the take-home message.

  9. Joey Anchovey

    The problem and main reason for the utltimate failure of Obamacare is that it does nothing about COST. Without cost reduction, and correlative tort reform, all Obamacare does is shift the costs around to different populations whether its the middle class workers or their companies or the govt (who pay for the poor). The costs remain out of control and gettin higher every year so all Obama has done is re-arrange the deck chairs on the Titanic and got the media to sell it all as a luxury cruise to the Caribbean. This ship is sinking and its only a matter of time. Mark my words – when Obamacare sinks the economy, Obama will be the Italian Costa Concordia captain Francesco Schettino and blame everyone but himself.

    1. Lambert Strether

      Single payer Medicare for all would save at least $400 billion, enough to cover all the uninsured. Can you show that the conservative nostrum, tort reform, will do the same?

    2. run75441

      Joey:

      For all of its short comings, the PPACA designed by Congress and signed by Barack Obama has enough loaded into it to begin to cut the cost of healthcare which has begun to occur as we find fault with it. The rising cost of healthcare results from the cost model or fee for services rather than the quality of treatment and the outcome of it. Such occurrences as readmission to hospitals due to problematic outcomes will be borne by the hospitals themselves.

      As far as tort reform, most states have caps on noneconomic costs which leaves economic costs to be quibbled over. Two facts you may be interested in:

      - “Over 64 percent of payments in 2005 involved death, or major or significant injuries.
      - Payments for ‘insignificant injury’ were less than one-third of 1 percent of payments in 2005.”

      Attorneys will not touch cases for insignificant injury or for pain and suffering. Payments for malpractice suits have been decreasing when inflation is also taken into consideration. http://www.citizen.org/documents/NPDB%20Report_Final.pdf

  10. Eureka Springs

    “Catfood isn’t an adequate comparison for this scam.”

    In this dark comedy I’ve begun calling the whole thing “Hannibal O’Lectorcrat care” and with each new bit of information I ask myself just how many wood-chippers must a patient/citizen go through before they enter the doctors office and then how many must they go through before health is restored and the bills are paid. I’ve lost count.

    We Americans are indentured servants on crystal neo-meth.

  11. Heretic

    It is no wonder that the American Rightwing populists are so rabidly angry with Obama… This medical plan is nothing less than the government sanctioned rape of the American middleclass.

    1. Jagger

      I am an American Leftwing populist and I am rabidly angry with Obama… And it isn’t just the healthcare insurance giveaway that makes me rabidly agry about Obama.

    2. McMike

      Oh yeah, the rights HATES it when big companies rape the middle class. They bitch about that all the time. They even want to create labor unions and consumer protection agencies to stop it.

      1. Lambert Strether

        Some conservatives opposed ObamaCare because it forces entry into a market. I think they’re right on the merits. What product am I going to be forced to buy next, to “manage risk”?

        1. McMike

          But many of those conservsatives seem only to resent being told what to do by the government. The fact that is done at the behest, benefit, and direction of their beloved corporations seems to be lost on them.

          Somehow though, they manage to consider it “socialism,” which makes it hard to grant them any points for merit, being overshadowed by incoherence.

          1. Wells Fargo Must Die

            Conservatives are not opposed to being forced to buy insurance because they already have it. What they are opposed to is forcing low-income people to buy insurance because they know those people will be subsidized and it will ultimately cost them more in taxes.

            They would have no problem whatsoever in people having to buy insurance if they knew they’d have to pay the full cost. That’s why they prefer to let people go without insurance even though it runs up the cost of insurance. For the most part, they are not paying those costs.

          2. jerry denim

            There in lies the central flaw (well, one of at least) of the Republican/Libertarian free-market fantasy. No meddling government, no taxes and everyone is free to do as they choose- EXCEPT they forget that in a lawless frontier the strongest, most cunning and corrupt will find ways to monopolize, corner, corrupt, and coerce the supposedly “free” market. These same players will also subvert democracy so all of the magical benefits conferred by their dream system of governance/commerce don’t work out.

            For conservative/libertarian types to recognize the link between the industrial sickcare complex and the HCA they would have to recognize reality and surrender their worldview. That’s not about to happen. There’s still too much money to be made lobbying for lower taxes and less regulation.

          3. McMike

            Interesting. My understanding of the reason the plan is a corporate boondoggle is that it forces healthy people into the plan and also widens the pool. The only people getting subsidized are health company execs.

            From a societal-wide perpective, my understanding of the argument is we are already subsidizng the poor/uninsured via bad medical debts, emergency room visits, workplace absenteeism, etc. So the new plan simply rationalizes those costs into an underwritten insurance system.

        2. McMike

          Would they oppose it if it was national health insurance (i.e. medicare for all) wherein the government mandates particpation, but the cost is paid via taxes isntead of premiums and based on income instead of underwriting?

          Obamacare really isn’t that different than medicare, except we have private companies as the middle men.

          We are already forced to buy all sorts risk management via our taxes, with the government as the purchasing agent – national defense, the domestic securty state, fire and police protection, prisons, food inspection, the EPA… except in these cases, the government is the middle man.

          Once the government decides everyone should participate in something, then the only question is who you write the check to.

          One alternative would be to scap the current insurance/care system and create a two-track system. One track is purely private insurance and private care providers – and you make your own deal. The other track is a voluntary opt-in national health care system (british style) paid for by voluntary taxes and progressive income based pricing.

          Under this system, you are free to opt in or out, to go without insurance, or to pay for premium services that you want. But, if you get in a car wreck, you better have your national health care card, or they will leave your a** in the street waiting for a private ambulance.

  12. McMike

    Bankruptcies (restated):

    Just under half (48%) of all 2007 bankruptcies were medical-cost related involving people who HAD health insurance. And another 14% of all bankruptices involved medical costs of uninsured people.

    The fact that half of all bankruptcies result from medical costs is a tragedy, particularly in a nation that spends so much on insurance.

    I suspect that the fact that more bankruptices involved insured versus uninsured people is because people with insurance are more likely to have enough assets and debt to be worth bankrupting.

    1. Yves Smith Post author

      No, per the editorial, which had citations, it was 62% of 2007 bankruptcies.

      1. McMike

        62% of all BR’s are medical.

        78% of those 62% are insured.

        so, 48% of all BR’s are BOTH medical and insured.

        (0.62 times 0.78) or am I missing someting?

        1. McMike

          In other words, 48% of all bankruptices happened because their health insurance was indadequate to cover costs.

          14% occurred was because there was no insurance at all to cover health costs.

          And the remaining 38% of bankruptcies were unrelated to medical costs.

    2. Yalt

      It would be nice to think that the uninsured received the care and simply weren’t worth bankrupting…but isn’t it possible that, without insurance, they received no care at all? That they are deceased, rather than bankrupt?

      1. financial matters

        There are EMTALA regulations that hospitals have to comply with or lose their ability to charge Medicare..

        http://www.cms.gov/Regulations-and-Guidance/Legislation/EMTALA/index.html?redirect=/emtala/

        In 1986, Congress enacted the Emergency Medical Treatment & Labor Act (EMTALA) to ensure public access to emergency services regardless of ability to pay. Section 1867 of the Social Security Act imposes specific obligations on Medicare-participating hospitals that offer emergency services to provide a medical screening examination (MSE) when a request is made for examination or treatment for an emergency medical condition (EMC), including active labor, regardless of an individual’s ability to pay. Hospitals are then required to provide stabilizing treatment for patients with EMCs. If a hospital is unable to stabilize a patient within its capability, or if the patient requests, an appropriate transfer should be implemented.

    1. jerry denim

      you are far too generous. I’d say his betrayal was pretty much complete when he finished nominating his Cabinet. Find me one progressive voice.

    2. Cynthia

      Yes, and that’s why hospitals stand to gain more from ObamaCare than doctors will. Hospitals and hospital-affiliated clinics are reimbursed for services at a much, much higher rate than freestanding clinics. Also, hospitals, unlike freestanding clinics, get to tack on a “facility fee” to every bill. This explains why hospitals have an overly fat and bloated management structure and support bureaucratic boondoggles like the “Center of Nursing Excellence,” which provides nothing but cushy armchair jobs for master’s and doctorate prepared nurses, who wouldn’t know how to care for or treat a patient if their life depended on it! Tell me, how in the world can hospitals justify paying these armchair nurses such enormous salaries when none of them ever have to put their license on the line to do what they do, nor do any of them ever have to experience the enormous stress and strain of having to deal with life and death situations. They don’t even provide a billable service to patients. And they certainly don’t play any meaningful role in improving patient care or reducing hospital stay.

    3. Lambert Strether

      The so-called public option was never “popular” except among career “progressives” who were running a bait and switch operation to head off single payer for Obama, and ginned up a some polls. As a policy proposal it was vacuous and ever-shifting and finally dwindled away to nothing. Medicare for All also polls very well, and — gasp! — it’s an actual, concrete, real life public policy that people can make a reasoned judgment on, based on experience.

      Please, can we put an axe to the brain of the Public Option Zombie Sparkle Pony? Now?

      1. and 1

        You got a big mouth, but that’s all I see, Pokey.

        Jane Hamsher and FDL did more than anyone to kill that monstrosity, Obamacare. Every day they hammered any and all who proposed what eventually passed, they were relentless and witty.

        You whinging little ninnies at whatever corrente it was did what?

        Nothing, and you’re still crying about it.

        You, guy, are an embarassment.

    4. Carla

      “Obama’s first great betrayal of his supporters was when he met secretly with insurance and hospital lobbyists to kill the very popular public option”

      I have no idea if it was the first, but the REAL betrayal on healthcare was when Obama, after saying “Everyone will have a seat at table” said in an aside not broadcast by the MSM, “…except single payer.” Any prospect of a fair and equitable health care system for the people of this rich country was lost at that moment.

      And Lambert is 100% correct about the sparkle pony of the putrid public option.

  13. Wells Fargo Must Die

    Does the Bronze level qualify for subsidies? I read that it didn’t but maybe that has changed.

    In any case, the out-of-pocket is capped at $3,000 from what I have seen so I don’t think the downside is quite as bad as it is made out to be although most people that will be subsidized will not be able to pay that.

    I looked up the plan that would would qualify for and it costs $247/mo right now in the state of Texas. But the govt is going to pay $4,000 per year for it in in subsidies and I have to pay $100/mo. What an amazing deal for the insurance companies.

    It’s going to be a pretty good deal for me but the costs go up incredibly fast with your income. If you make over $30,000, it is a lot to pay for junk insurance.

      1. Wells Fargo Must Die

        Right you are. I realized after posting that the out of pocket is in addition to the deductible. That’s going to be excessive.

        But even worse is the quick ramp-up of premiums. If you make $21,000, your insurance is a little over $100 which will not be very affordable for most. But if your income increases to just $27,000, the amount you owe for the premium goes up to $179!! Almost double with just a $6,000 increase at a low-wage level.

        A full HSA contribution reduces your costs but only the upper middle class can afford those.

        1. Observer

          Now add that to your monthly student loan payment of similar or greater amount, and cover with the net from your part time minimum-wage McJobs (you’re gonna need more than one). And remember to save by paying yourself first.

          1. Wells Fargo Must Die

            What a revolting development. As part of the permanently unemployed, I thought I was going to benefit from ObamaCare due to the subsidies and my low taxable income. But the out of pocket will higher than what I have now and the cost will be roughly the same. And that’s with an additional 5K subsidy to the insurance company.

            And when I go to the hospital, they are still going to tell me that most of the charges are ineligible for payment.

            What a disaster.

  14. MLS

    Health care is unfortunately not immune to the laws of economics, and all of the cost-shifting, monopoly-enforcing rules (etc.) instituted by our federal government over the last 60 or so years has warped the system beyond repair. That ACA continues down this death spiral and enriches a few crony business and friends of government at the same time is hardly surprising.

    Sadly, my expectation is that it will get worse from here. The cynic in me thinks that the “train wreck” of our current set of laws is a feature, not a bug, so that single payer is hailed as the only remaining alternative.

    1. Cynthia

      Market competition is part of the problem. The healthcare “market” has a much too inelastic demand and high cost of entry to ever be as efficient as it would need to be. Next time you’re really sick and go to the hospital and listen to what the doctor recommends, see if you want to spend the time and money shopping around the nearest 500 miles for a cheaper surgeon, scan, or test. It just isn’t feasible.

      Hospitals shouldn’t be run like hotels, either. But because ObamaCare bases a significant portion of hospital reimbursement on patient satisfaction scores, and because patients tend to base their satisfaction score on how well the hospital mimics a high-end luxury hotel, despite this having little, if anything, to do with the quality of their medical or nursing care, hospitals will be run like hotels. This means that a costly hotel service charge will be added an already costly hospital bill. It is things like this that make me very, very skeptical as to how ObamaCare is gonna cut healthcare costs. My skepticism tells me, ObamaCare, if anything, is gonna cause healthcare costs to soar even higher.

      1. MLS

        I see it differently, and I challenge the notion that we have market competition. Between third party payers, cost shifting, and the lack of a published price list by hospitals/clinics, there’s no effective price discovery mechanism for consumers. A counterexample of this is LASIK, which historically hasn’t been covered by most insurance policies since it’s an elective procedure. Consumers can see how much it costs and judge for themselves whether it’s worth it. Doctor’s offices all over offer the treatment. The result is that costs have come way down (90% since 2000) and results/quality of care has gone up, and it’s happened in a regulatory environment that has kept the procedure safe. This example probably isn’t applicable to all areas of health care, but it’s a model we can definitely use elsewhere.

        In my opinion, insurance is overused by consumers. Having a third party payer foot the bill means I’m less sensitive to what something actually costs before I agree to any treatment. Doctors overprescribe non-generic medications because they know the insurance company pays instead of the patient. Restricting insurance companies from competing across state lines (the antitrust exemption) makes no sense. Why can’t I go online and comparison shop at a number of different carriers to tailor a policy that fits my needs like with house and car insurance? Make them earn my business. The fact that we get insurance from our employer is a throwback to the workaround to wage controls 70 years ago. It makes no sense today, but it keeps people locked in jobs for fear of losing their insurance. There’s no reason to pay for routine medical care such as a script for the flu with insurance – we know these costs are coming for all of us at some point, and with the barriers above removed, prices would come down enough so that most people can pay out of pocket. There are clinics that have opted to extricate themselves from the Medicare and private insurance systems and accept only cash – their costs are 40-80% lower than typical prices.

        For the situation you describe – being sick or in an accident with no alternative to compare prices, we should have a catastrophic policy to cover these costs. That’s what insurance is supposed to be designed for. The costs of this policy are much lower since it covers less frequent events and we aren’t constantly tapping the policy for payments. Yet we would still be protected against the things that could really hurt us financially. Plus, with the other things I mention corrected for, overall system prices would be lower so a CT scan doesn’t cost $25,000. We don’t use our home insurance to pay for a new roof when it’s needed from wear and tear, we don’t use car insurance to put new tires on, and we don’t have food insurance to buy groceries, because we know these costs are coming. We use insurance to cover the cost when a tree falls on the house or when our car is totalled in an accident because these are large costs that are much less predicatable. Health insurance should be used the same way. Not coincidentally, having insurance used less means significantly lower administrative costs as office employees don’t have to find reimbursement codes for every procedure and deal with the red tape and beauracracy of insurance companies and the gov’t. Lower cost of care (routine and emergency) will result.

        I get that there are people that can’t afford any policy and I think mechanisms like tax credits or vouchers to purchase a private policy are an effective way to address that issue so people get coverage.

        I agree with you that ObamaCare will drive prices higher, but I see it happening for different reasons. Forcing more and more people that don’t make well-informed decisions about cost and care into a system with limited resources will lead to shortages, rationing, and higher pricing. Forcing down the reimbursement rate at Medicare/aid will result in more cost-shifting to private carriers. Fewer doctors will accept Medicare/aid patients as a result since the doctors don’t cover the cost of accepting them (we are already seeing this) and we’ll see higher private policy costs. Forcing carriers to cover more and more things that some consumers may not care about will continue to drive up costs. Continuing to enforce the silly rules I listed above do nothing but raise cost, and all of them (and others) will be magnified under the ACA.

        What we have today isn’t insurance at all, it’s simply a third party to pay the bills on our behalf. That’s why the industry is so huge. Change the rules I mentioned above (and others I didn’t mention), use it less, and the insurance industry will shrink on its own. Unfortunately the interests are too entrenched and the dollars too big that I doubt we’ll ever see any meaningful change.

        1. Lune

          MLS-

          You make several points I disagree with:

          1) Comparing an elective procedure like LASIK to necessary healthcare does not prove your market theory. The reason why LASIK prices went down / quality went up is because there is elasticity in demand. That is, if prices go up, people can simply elect to continue wearing contacts / glasses. So there’s natural market correction. Lifesaving medical procedures are essentially demand inelastic: people are more than willing to bankrupt themselves, sell all their assets, their family’s assets (through extended family and through multiple generations from grandparents’ retirement funds to grandchildren’s college funds), etc. if it meant their loved one could potentially be saved.

          If you subject brain tumor surgery to the same market forces as LASIK, then you should expect that brain surgeons will likely successfully get their patients to sell their house, empty their retirement accounts, and potentially mortgage the future of their entire family for generations in exchange for a shot at helping their family member live longer. While quality *may* go up because consumers could theoretically shop around, I highly doubt they would be able to get a better deal on price than Medicare currently does with its monopsony powers.

          2) The reason why you can’t buy insurance across state lines is because this preserves the ability of state insurance regulators to regulate the products offered to their residents. Without this restriction, you’d see a race to the bottom in terms of insurance regulation similar to what we saw in credit cards when the Supreme Court ruled that credit cards could be issued under the usury laws of their headquarter state rather than the state in which their consumer resided. If this restriction is lifted, there will be some enterprising state which will figure out it can get an extra 1,000 corporate jobs by stripping out every regulation on the books. If it screws the other 300 million Americans, who cares?

          Besides, it’s not because of those regulations that most states don’t have competitive insurance markets. CA is the 10th largest economy in the world after all; more than enough to support a vigorous market. The reason you have less choice is because insurance companies merge until they’re big enough to have pricing power against corporate buyers and health services providers. If you remove these restrictions, all that will mean is that in a few years, insurance companies will merge even more and instead of having 2-3 dominant players in each state, you’ll have 2-3 dominant players for the entire nation. Either way, you as a consumer won’t have any more choice than you do now.

          3) Your ideas about catastrophic plans are admirable but you need to define what represents an economic catastrophe for the average American family. It is certainly not $5000. Especially these days, many Americans are one paycheck away from being on the streets. According to this article only half of Americans could come up with $2000 for an unexpected expense. A doctor’s visit, an MRI, and a nongeneric prescription is enough to blow through that. And yet I don’t think that’s what you were defining as “catastrophic care”.

          For these reasons and many more, it truly is a case that healthcare is different, and private solutions inevitably turn into market failures. The only successful plans in the world are either public plans, or private plans in which insurance companies are so heavily regulated they function more like regulated utility companies.

  15. Hugh

    “Obamacare, by contrast, is all about enriching entrenched interests.”

    Obamacare is about looting, mandating the purchase of the crappiest product at the highest price possible.

  16. Francois T

    After reading this article, let’s run the check list “Legacy of a President.”

    Civil rights Destruction galore baby!
    Income disparity Record highs and counting
    Justice Only for the well connected and the rich
    Economy Your mileage shall vary CONSIDERABLY
    Politics Only for those with lobbying power/influence (Example: the FAA fix.)

    Health care FYIGM…bitch!

  17. Francois T

    Prof Uwe Reinhart once said that one of the only event that would propel a universal health care system in the US is a 1918-style pandemic. It would expose each and every shortcomings of the system so bad that no political force could oppose the change.

    Is that what it is going to take?

    1. jerry denim

      That or ten to fifteen more years of business as usual. The wheels are going to come off of this wagon soon. There’s life in the predator state sick-care industrial looting model yet. Once the majority of the gainfully employed managerial class can no longer afford decent health care change will be imminent. There are still plenty among us that can carry on believing everything is fine and Obama has solved all of our healthcare problems- for now anyway.

    2. McMike

      Not sure I buy that.

      An epidemic would result in marital-law style quarantines, mandated emergency vaccine fast tracks, and heavy triage for spaces in hospital beds.

      But how would that expose the flaws in the private system? None of that exposes the nonsense on denied coverage, ridiculous copays, opaque pricing, high cost for poor otucomes, etc.

      The government would step in and fight it like a war. it would be simply viewed as a “who could anticipate that”/aberation/9-11 sort of one-off.

      No, the health care system will get reformed when it collapses under its own weight. When enough people opt-out and boycott, when the system starts screwing the upper-middle class, when enough employers say they want to get out of the insurance business, and when enough people literally stop being able to afford premiums and copays that they start to “strike” or go bankrupt in even greater droves.

      I mean, lok at the banking industry; what sort of disaster will it take to get reforms there?

  18. Don Levit

    If a family qualifies for subsidies, they can get significant help, up to 80% of their premium paid by the government.
    Unbfortunaely, this incredible deal has a few caveats:
    1. If, say, the father is offered health insurance at his employer, which satisfies the ACA essential health benefits component, and the premium is less than 9.5% of his household income, the insurance is affordable, and subsidies are not available, regardless if dependent coverage plus employee only coverage consumes 20% of household income.
    2. Dependents are defined as children. Spouses are specificaly excluded from the classification of dependents.
    3. The good news is that the spouse could qualify for insurance on the Exchange, if not offered a qualified plan from his or her employer, if employed. I anticipate a lot of “spousal only” policies being sold onb the Exhanges.
    Don Levit

    1. McMike

      You can see the attraction of Medicare.

      - What’s your income?
      - What’s your age?

      Ok, you’re in.

  19. Ed S.

    Final step – get Congress to make medical debts non-dischargable in bankruptcy (just like student loans)……………

  20. Joanne

    As the parent of college graduates approaching the cut-off age for staying on our insurance, I am beside myself in contemplating their prospects. Despite having been employed full time since graduation, at 25 they are in entry-level positions. Entry-level means that salaries don’t begin to cover independent living expenses. Entry level can also last througout one’s twenties. Next year the group insurance offered by their employers, well-established corporations, will take another 25% of their meager paychecks for coverage that I assume will be far less than they have been used to, meaning more out-of-pocket medical expanses.

    Has anyone ever taken into account the physical toll on our population induced by the stress of worrying about healthcare for oneself and family?

  21. Ed S.

    Here’s a horrifying thought experiment regarding the impact of ACA and insurance premiums to overall US GDP

    Prior state (really simple – binary): 99% probability of no medical expenses; 1% probability of medical expenses that result in bankruptcy. Horrible to be in the 1%, but for the other 99%, life goes on.

    New state (again really simple – still binary): 99% probability of no medical expenses but insurance consumes 10% of gross income (which for most family units will be probably 50-75% of spendable income); 1% probability of medical expenses that result in bankruptcy.

    End result is the same – if you get seriously ill, you face bankruptcy. But in the new state the ACA transfers a large proportion of spendable income (gross less taxes less housing/food/transportation) to purchase “insurance” every year.

    The more you think about ACA, the worse it is. Pair trade (not investment advice): long Wellpoint, short Disney?

  22. Valissa

    Doctors Denounce Cancer Drug Prices of $100,000 a Year http://www.nytimes.com/2013/04/26/business/cancer-physicians-attack-high-drug-costs.html?pagewanted=all&_r=0
    The doctors and researchers, who specialize in the potentially deadly blood cancer known as chronic myeloid leukemia, contend in a commentary published online by a medical journal Thursday that the prices of drugs used to treat that disease are astronomical, unsustainable and perhaps even immoral.

    They suggested that charging high prices for a medicine needed to keep someone alive is profiteering, akin to jacking up the prices of essential goods after a natural disaster.

  23. P. M.

    I do have to raise one important point here. All plans on the exchanges/marketplaces must cover what are called “Essential Health Benefits” (EHB). Some examples are: mental health care and pediatric dental care.

    Many (most) health plans do not cover these EHBs. Thus, even a Bronze plan with crappy cost-sharing for the patient still covers things they may have previously had to pay in full for out of pocket despite being insured by another plan or Medicaid.

    (One caveat of course is that if a person was previously uninsured, they were probably getting a discounted ‘full cost’ charge from their provider, so it is possible that their 40% cost-sharing for an EHB under the Bronze plan is the less, the same as, or more than they would have paid before out of pocket. Would have to run numbers to be sure once the HIX plan prices come out).

    1. Yves Smith Post author

      1. In New York State, mental health and chiropractic are required to be covered

      2. With 40% effective copays, you are going to see a lot of people forego these services

    2. run75441

      P.M.:

      One of the benefits to healthcare insurance is the negotiation of rates. While this does not pay your deductible, it does minimize the impact of the bill. You are correct in stating that Preventative Healthcare for patients must be covered and is outside of the deductible. There is a raft of preventative care for women occurring with the PPACA which was not covered previously or was subject to deductibles. The addition of preventative care crosses all state borders and is not just isolated to one or two states anymore.

  24. bluntobj

    “International evidence indicates that cost-sharing is neither necessary nor particularly effective for cost control; the U.S. has high cost-sharing and the highest costs.”

    What would happen if the cost of care was 100% the responsibility of the patient? I.E. Cash based medical care?

    The price for medical care would be less. 40% or more less, according to my doctor, who now offers a 40% discount for cash. Amusingly, the price I pay now is the same as I paid before Obamacare when the cash discount was 10%.

    Cost sharing does not work properly in the US because the consumer, who must pay 20, 30 or 40% has no leverage in negotiation. The insurance company, or Medicare/Medicaid, negotiates prices and rates, and will pay, even if the payment is slow. The higher insurance rates go, the higher medical costs will go, much like the price of a home during the bubble era. The more cash available to lend, the disconnect of the risk of loss, all result in the skyrocketing price for real estate.

    Insurance premiums are no different. Expect the price of medical treatment to go through the roof with the forced influx of premium dollars from hapless young people, and a mandate that a high percentage of premiums be spent on care.

    Without insurance, medicare, medicaid, or any other risk disconnecting mechanism, what happens to the price of medical care? It crashes, much like housing, until it reaches an equilibrium much lower. Since we are talking fantasy, it will also be accompanied by a reform of legal issues, relaxing of the grip of the AMA, lower costs to go to medical school, more alternative providers, and a much simplified system of oversight and regulation focusing on strict liability and payment for lifelong care rather than lump sum settlements.

    That’s naturally all unicorns and rainbows…

    1. Sarah

      See answers above. The idea that individuals will ever be able to negotiate a price they can afford for anything other than cosmetic surgery for the elite is pure libertarian fantasy. Anybody who has ever been seriously ill or who has cared for anyone who is knows this in their bones. Illness and old age- along with caring for infants – are the things that best expose the idiocy of the whole idea that ‘markets’ are something of essential importance to people. When you can’t care for yourself you need someone – or preferably someONES – who cares about you who can. The only real insurance is being surrounded by people who are in some way attached to you- or at least kindly disposed towards you. In our current system this must also be someone well-educated, sophisticated and assertive enough to deal with multiple layers of insurance, medical and government bureaucracy on your behalf. As the daughter of two elderly people with Ph.D.’s (one in economics) believe me there will come a day when no matter how smart and savvy you are you will NOT be able to negotiate- or even think about your care yourself. Think about whether you really want to live in a society where market forces determine what happens to you before you reach that point.

  25. Medically Bankrupt Deadbeat

    Actually there is no need to fantasize about whether a private medical care system might be less expensive than a monopoly fascist one controlled by insurance conglomerates and their paid servants in Congress. According to the World Health Organization, the health care system of Colombia ranks #7 in the world. The US? #37. And their health care is entirely privatized.

    Who knows, maybe the price structure is an artifact of the days when Pablo Escobar and his competitors ruled and engaged in charity for the lower classes to gain their support? (LOL) Seriously, if you want to make the libertarian case you should investigate the Colombian system and see if it actually is a model for third world countries like the USA.

  26. cripes

    Libertarian Paradise in Colombia’s health care system?
    Not so much.
    Colombia’s politicians like to brag that 97% “enrollment” in health insurance is universal healthcare, even though the poor continue to die in inferior care, or without care.
    Sound familiar?
    The list of egregious abuses is so long, and almost entirely due to the “private” nature of care(strike) insurance, that I can’t catalogue it here.
    Thankfully, others have.

    A cheerful sample quote:
    “Ruthless industry tactics have resulted in the use of high-priced proprietary drugs rather than generic products, says Francisco Rossi, director of IFARMA, a pharmaceutical research centre in Bogotá. It has caused government drug expenditures to quadruple since 2005, he adds. “The impact of the price explosion has created a massive crisis in our health system. It’s a major reason the government declared a health care emergency two years ago.”

    Among the patient groups who are most affected are those with HIV, up to half of whom are systematically denied antiretrovirals, says John Harold Estada-Montaya, a drug researcher at the National University in Bogotá.”

    Entire article here:
    http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3314050/

  27. Javagold

    the Red Flag should have been when JOHN ROBERTS , gave Obamacare the thumbs up…..and the left cheered ….LOL !!!

  28. Susan the other

    THERE ARE THE FOLLOWING PLANS: \
    The Copper Plan – basically a burial plan.
    The Bronze Plan – very primitive medical attention.
    The Iron Plan – somewhat better but no one can define it.
    The Steel Plan – probably worse; but with more optimism.
    The Silicon Plan – probably analogous to grey goo.
    The Fuckyou Plan – letting all the “health” insurance companies go fuck off.
    The Lets All Die Plan – merely a decentralized social relief plan for the dying which is a reiteration of the Copper Plan.

    1. Susan the other

      There is also the Beowolf Plan wherein if the patient is diagnosed with a terminal and untreatable illness, that patient’s only recourse is to slaughter, with any blunt instrument, the entire medical industry.

      1. Susan the other

        This was a strangely edited version of my comment which was there is the copper plan whch is a basic burial plan; the bronze plan which is totally primitive; followed by the iron plan which is rediculous; followed by the steel plan which is the definition of hubris, followed by the silicon plan which can save your live for another 6 miserable months. There is also the Beowulf plan.

  29. run75441

    Hi Yves:

    I think you mean Medicaid here:

    “And in parallel, a stealth plan to weaken MEDICARE and force more low-income people into these lousy private plans is underway:

    About 40 % of those gaining 102 coverage will get Medicaid. As Magge shows, many current Medicaid enrollees are woefully underinsured. Disturbingly, CMS looks set to allow state Medicaid programs to demand 105 copayments and deductibles, even from the poorest of the poor. Several states have already reduced benefits, cut provider payments, and narrowed provider networks. Hence, underinsurance among Medicaid recipients will probably increase. More ominously, the White House is 110 encouraging state officials to use federal Medicaid expansion funds to purchase private insurance, a shift likely to raise both taxpayers’ costs and poor patients’ copayments.”

    I would say there is nothing stealth about the reductions in Medicaid especially in light of the 2008 collapse and the take over of many state legislatures and governorships by Republicans due to gerrymandering of districts. They are very open about cutting benefits to those living in poverty with their call to them; “Getta Job.”

  30. hondje

    This will be unseen, but re: tax credits, a LOT of poor people got suckered into student loans for fake schools a la University of Phoenix, so all their credits go to service defaulted loans.

  31. run75441

    The most an individual can pay is $5500 and $12,000 for a couple . . . outside of the subsidies. Compare this to going bankrupt previously.

  32. Mark Atlas

    “…some observers, including your humble blogger, warned that having overpriced insurance that didn’t cover much was a headfake, not real progress.”

    “They’ll presumably only be able to afford the lowest tier plans, which are bronze plans.”

    “..Obamacare-style coverage does nothing to lower this risk”

    “..over time you can expect a decline in the average level of private coverage.”

    “..don’t kid yourself that making individuals and families bear more of the costs is an effective way to rein in health-care spending”

    “Catfood isn’t an adequate comparison for this scam.”

    “While this is yet another face of the “Change you can believe in” con, it’s particularly despicable for treating the health of low income Americans as another looting opportunity.”

    Pardon me, Yves, but have you read the CBO’s November 2009 report on the original Senate bill that is known today as “Obamacare?”

    The report mentions that under the Affordable Care Act, the quality of insurance will expand dramatically, covering a wider array of benefits than under the prior situation. Insurers cannot impose lifetime caps on hospital stays, deny coverage due to preexisting conditions, or refuse arbitrarily to cover preventive care.

    As a result, insurance premiums for those buying under the individual market are slated to go up by 10-12 percent. But because the enhanced quality of coverage necessarily means higher premiums, this is to be expected.

    In fact, the poor and uninsured are getting sort of a deal:

    “…because of the greater actuarial value and broader scope of benefits that would be covered by new nongroup policies sold under the legislation, the average premium per person for those policies would be an estimated 27 percent to 30 percent higher than the average premium for nongroup policies under current law (with other factors held constant).”

    As for your diatribe about the uninsured getting scammed off of bronze plans…

    “…federal premium subsidies would be tied to a “reference premium equal to the premium of the second lowest cost “silver” plan, which would have an actuarial value of 70 percent, and plans would also be available with actuarial values of 80 percent (“gold” plan) and 90 percent (“platinum” plan).”

    footnote 12 of the report:

    “Enrollees with income below 200 percent of the FPL (Federal Poverty Line) would receive subsidies for cost sharing to increase the overall actuarial value of their coverage to either 80 percent or 90 percent. However,the plan in which they enrolled would have a premium that reflects an actuarial value of 70 percent…”

    Finally, there’s this fun fact:

    “the amount that subsidized enrollees would pay for nongroup coverage would be roughly 56 percent to 59 percent lower, on average, than the nongroup premiums charged under current law.” (Elmendorf, 2009)

    I understand your aversion with private insurance. I agree wholeheartedly with you that the private system of profit behind care has distorted and sabotaged care. But the bill that passed in 2010 is a significant achievement for the White House and for the country, absent Republican opposition. It will make insurance more affordable. I for one would think a single-payer system would do a much more effective job, for reasons you would probably get as much as I (I happen to be Canadian).

    Obama isn’t the messiah. He most certainly could’ve done more. But this bill is not a scam. It most certainly will save lives. It already has.

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