One of the biggest selling points for Obamacare is that it requires insurers to offer policies to people with so-called pre-existing conditions, as in known, fairly to extremely costly-to-treat ailments, like diabetes, HIV, and autoimmune diseases.
Not surprisingly, two things have started happening. One is that the early evidence suggests that people with pre-existing conditions are signing up for the new plans in disproportionate numbers. For instance, the individuals determined to be eligible to enroll in federal exchanges through the end of November had a much lower proportion of people eligible for subsidies than anticipated. Those who had health issues would naturally be highly motivated to obtain coverage. Insurers and the Administration no doubt hope this will balance out and more of the “young invincibles” will sign up as the deadline approaches.
Second is that the insurers, par for the course, are finding clever ways to make the actual coverage offered to people with pre-existing conditions so minimal as to come as close as they can to covering them, apparently with the hope that they will go elsewhere. As the Washington Post reported earlier this week:
Some plans sold on the online insurance exchanges, for instance, don’t cover key medications for HIV, or they require patients to pay as much as 50 percent of the cost per prescription in co-insurance — sometimes more than $1,000 a month….
“The easiest way [for insurers] to identify a core group of people that is going to cost you a lot of money is to look at the medicines they need and the easiest way to make your plan less appealing is to put limitations on these products,” [Marc] Boutin [executive vice president of the National Health Council] said.
The ugly reality is that, logically speaking, a known condition isn’t a matter of insurance but subsidy or socialization of costs. Readers in comments have raised this issue by saying these conditions aren’t “insurable risks”. Let’s unpack that.
In lay terms, insurance is a product that gives you a financial payment that helps offset the damage you suffer if something bad happens in the future. You might have a flood in your house. You might lose your job. You might get cancer. See these dictionary definitions:
1. a practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.
2. a thing providing protection against a possible eventuality.
Now what is the uncertainty if you have, say, HIV? You have a baseline of costs that is already baked in: a certain level of payment for meds you are on that will presumably continue, and a certain number of doctor visits and tests over the course of a year. The uncertainty for you is if something bad happens on top of that, say an opportunistic infection, or a medical problem independent of your HIV, like breaking an ankle.
In other words, the cost of medical coverage for that person is the cost of baseline coverage for that condition, and the uncertainty is around adverse developments. The latter component falls properly in the insurance realm. The former component is more akin to a simple cost division: if I am pretty sure this person with HIV in Topeka will incur a baseline of costs of $4000 in a year, I’d want to make sure I am fully compensated for whatever portion of that cost I bear.
So if we as a society want to make people like this more productive, does this really fall in the insurance paradigm? This really is about socializing costs and hence the single payer model of a single risk pool is the only logical way to go (aside from the benefit that it also cuts out unnecessary layers of bureaucracy and profit margins). New York City, for instance, has programs that pay for meds for people with HIV. I know at least two people who’d be dead by now without this assistance, and both have been able to hold jobs as a result.
But within the insurance paradigm, the insurer will simply see this as a question of who eats the risk, and the policy-holder can be expected to be asked to bear a great deal of the cost of any known problem. As Don McCanne writes on the PHNP blog:
It is no surprise that private insurers would use every devious trick to try to limit their payments for expensive drugs, including requiring the patient to pay more through higher cost sharing, or by omitting expensive drugs from their formulary altogether. From the insurers’ perspective, that’s just good business….
When the insurance lobbyists are saying that they are trying to “give consumers better value for their health-care dollars,” they really mean keeping insurance premiums low enough to compete in the marketplace. They do that by paying as little as possible for health care, shifting ever more of the costs to patients. The sky is the limit on innovations when they are driven by greed.
We have the wrong people in charge – the insurers. We need our own public financing system that is designed to help patients get care by removing financial barriers. That’s what an improved Medicare that covered everyone would do for us.
Enough of this, “Boy, do we have a plan for you, and it’s cheap, but if you have anything wrong, study this plan carefully since you’ll find that it won’t cover what you need (and then go away kid, you bother me).”
Mind you, that does not mean people with existing conditions won’t benefit from getting access to Obamacare plans. They will get some subsidization from the healthier members in each pool, as well, as we discussed, underwriting of incremental risk. And when they visit hospitals in network, they’ll also gain from negotiated discounts. But this approach of using insurance in lieu of subsidies or socialization of costly conditions is just as misguided as using housing finance as a way to subsidize housing for the low income. It’s indirect, inefficient, and the complexity lends itself to fraud and abuse. But that paradigm worked well for the financiers, so it’s no surprise that the insurers are using a similar playbook.
Nice to see the “Obamacare is the new subprime” meme taking shape. Just substitute the insurers for JPM and BAC and watch the fraud and subsequent economic destruction.
I’ve been jumping up and down for years trying to explain to people that pre-existing conditions are not insurable, that insuring for probabilities approaching 1.0 is nonsense. What we are actually doing is burying a welfare component into an insurance policy. The problem with doing that (and we’re seeing it here) is that insurers are very good at insuring, but absolutely terrible at welfare.
Now I’ve seen this “drug arbitrage” thing pointed out in some earlier articles that start coming out as the plans being offered became clearer, and it is clearly a mainline strategy that makes for a race to the bottom on pre-existing conditions. It’s also (from the other side’s point of view) anti-selection, and if you ever want to see an insurer RUN, anti-selection to them is like garlic to a vampire. It’s the quickest way to kill them, and they know it.
But there’s another thing going on with these plans, and it’s called Zero Actuarial Value (ZAV) plans. I’m referring to selling extreme deductible and coinsurance plans to people who cannot afford to pay these barriers to entry into medical care. These are technically illegal, in that you can’t have contract where one side offers nothing to the other, but the insurers will get away with it because in EXTREME cases, something eventually will come out the other end. But for all practical purposes, they are not insurance in any usable form to an ordinary poor family. But people will buy them because they feel forced to buy something, even if they don’t understand that what they’ve bought will be turned down at the entrance to the Emergency Room.
What’s in it for insurers on these is two things. First, some cash with little obligation to ever pay out. But second and far more important is that these funds will be pooled with the rest of their receipts in a single pool, and this money will be used to subsidize plans that actually do pay off to the planholders. In other words, the hapless poor who can’t afford the $5-10,000 (and more) price of entry (deductible, although I prefer the term “barriers to service”) will actually be paying to subsidize the soccer mom and her family, who can afford better plans, and can climb that deductible/coinsurance mountain. The poor take the shaft for their “betters” again.
Insurance is just a really dumb way for a society to pay for health care, pre-existing conditions or not.
There is no answer to this besides single-payer universal health care and requiring all health care providers to be not-for-profit. You want to invent a lifesaving technology? Have at it and make a profit and go in peace. You want to be a hospital or physicians’ group? Non-profit.
Non-profit? Most HI companies around here are “non-profit”. Because of that, they are also exempt from federal anti-trust law.
They are also very good at giving huge salaries and bonii to their execs, before the non-profit profits are put into “savings”. The last CEO of excellus left with over 5 million.
Non-profit? For who?
The problem with “single payer” universal health care is that the individual patient has no incentive to control costs- since the “public” is picking up the tab.
Which would be why Canada’s costs are so much higher than ours. Oh, wait…. You really ought to get that knee seen to.
Many people with pre-existing conditions were insured at the time they were healthy, but lost insurance (sometimes with their job) as a result of that condition (after it occurred).
That is if you even want to talk about a health insurance, which is kind of dumb, since you are trying to insure against a virtual certainty, where the only question is how much will the damage be. It’s doable, but many people will yell murder, when the lifetime limit is exceeded, savings exhausted, and they are sick and unable to earn any money. Too late at that point to go live in Europe, Japan, or even Great Britain or Canada.
You are so right on. As an HIV+ person for the last 20 years I am a walking testament to all you have just said. I have had to spend down an entire life’s savings, incurred a job loss because of inability to work, and end up with less than the $2000 of assets to qualify for help from my state for drug subsidies. Proverbialy, I am the loser living in his parent’s basement, literally!
“The key point to remember in all discussions of ObamaCare is that neither it, nor indeed the entire private health insurance “industry,” should exist. They are rent-seeking parasites, economic tapeworms. One does not improve a tapeworm; one removes it.” Lambert Strether
I have a recently created ‘Quotes and Extracts’ text file that is ever growing. I see I have another one to add.
Insurers are indeed parasites, who have no incentive to lower costs across the board.
Think about what would happen to insurer profits if costs were somehow reduced by 50% – Unless profit margins were increased, insurer profits would drop 50%. Insurers have every incentive to maintain (and increase) mandated expenses across the board. Obamacare is clearly going to increase both costs and presumably income (by taxing the healthy young) . To me this is a disgusting con of citizens..
Some insurers reduce society’s costs and risks overall because they induce people to do things, such as purchasing smoke detectors, and offer lower premiums to those who do.
The idea that insurers contribute nothing is grossly misleading. The fact is that the insurers always enter the pricing negotiations from the standpoint of wanting the LOWER the prices being charged, and they are the only ones at the table who take that possession, and always have been the only ones. No doubt single payer is a better idea, but even then, there has to be someone whose job it is to get the medical suppliers to keep their prices down, and until single payer comes along with its plan for doing that, the insurers are the only ones with the power and interests to take on that critical role. Too many people are either forgetting this, or aren’t aware that it is even taking place, but ask anyone who bills for a hospital, and they’ll be quick to tell you they are ALWAYS fighting with the insurers, trying to stop the insurers from forcing prices down too much.
A task ideally performed by government, since the government (even before getting to the idea that public policy should be determined by the public) has maximum purchasing power.
Hence, yes, the insurance companies are tapeworms. There’s no reason for them to be in the equation.
Not one mention of the medical suppliers in your reply.
That’s a rather telling blind spot.
The ugly truth pretty much no one is willing to talk about is that providers (hospitals, pharma and device manufacturers) are the ones driving the ever rising costs of health care, MUCH MORE than insurers do.
Just take a look at what Mass General and Brigham and Women Hospital System did to Tufts insurance Co 3 years ago in the Boston market.
But hey! Who’s going to skewer publicly such a prestigious hospital? Insurance companies are such an easier target to attack.
“A task ideally performed by government, since the government (even before getting to the idea that public policy should be determined by the public) has maximum purchasing power.”
Playing devil’s advocate, what does the government’s record look like when it comes to negotiating lower prices? Looking at sectors besides healthcare, there are continual stories of waste and overruns and $5000 bolts. Even within Medicare and Medicaid, the SGR has been a continual struggle to implement and eventually, as in this week, the government yields to special interests. Affluent doctors are guaranteed incomes while those struggling to survive lose unemployment benefits. Nobody in DC will fight for benefits for Joe6Pack who, at most, sends in $20 to his favorite local politician every four years.
The issue is that the purchaser of insurance and the issuer of the insurance have goals that are fundamentally at odds with each other. In other forms of insurance, the interests are aligned. The purchaser of life insurance (usually) wants to collect on his policy even less than the insurer wants to pay out, and the purchaser of auto insurance attempts to avoid collecting on his collision policy. OTOH, the health insurer would also like to avoid paying claims, i.e profits in the insurance industry are based on not providing service, while the customer in this case seeks to maximize the number of claims paid….. yet another feature of health insurance that differentiates it from other products. It is this conflict of interest that must be addressed, either in the public or private market.
Switzerland has a multi-payor private insurance system, reputed to be similar to the ACA, but insurers are regulated much like utilities and subsidies are provided for those who can’t afford the premiums. The coverage is substantially better than most ACA policies, and it manages to realize substantial cost savings over US expenditures…… though is #2 behind US in per capita spending. If I were appointed queen of healthcare (and could be confirmed, which is quite a stretch), I’d choose a model that has demonstrated greater savings and outcomes, e.g. France. Irregardless, even the single payor countries have been looking for ways to reduce healthcare expenditures. A public and/or single payor system could reduce total costs by perhaps 20% by eliminating profits, while a minimum of 50% is possible and necessary for sustainability sans an MMT based fiscal policy….. a policy that needs those inspired by a vision of what could be vs. what’s politically possible. As for me, I’m not gifted with such inspiration, or even hope (re: MMT) in this era of record profits for corporations and mass unemployment and food insecurity the rival of third world nations.
Providing healthcare “welfare” for all citizens will be a major step, one I do dare to hope to see accomplished in my lifetime (mid-50’s). The majority of Americans get their insurance through their employer, which already shifts a disproportionate share of the risk onto those now uninsured. Single payer would need to include those in employer-based plans to level overall actuarial risks which would meet considerable resistance from those in said plans, IMO. I’m dumbfounded by the prevalence of the “I got mine, screw you” mentality…… with the screwees sitting around drinking beer, watching tv and making babies” (hey, use birth control, and it sounds tempting…. kinda like hanging out with Craazyman?). The biggest threat however is the meme used by the right that healthcare for all is too complex for the government to handle, with polls (majority want Republicans to take control, Democrats popularity has fallen precipitously, and it is only Democrats…. and one Socialist…. who will EVER advocate single-payer) reflecting that the Obamacare rollout is currently being successfully used as their #1 argument.
Naturally there would be resistance unless they are duly compensated, since the benefits were bargained for in lieu of higher wages.
But, actually, this is already happening to some extent.
Please check out this excerpt from a Reuters piece:
*********************[Sorry, not able to blockquote]****************************
Here’s the link:
Just more of the Dem “nudge theory” at work.
Or maybe a more apt description would be “Boiling Frogs.”
After the conversion of employer-sponsored plans into “private exchanges,” the next step will be dumping these same individuals into the Public Exchanges (if they are still up and running).
(My money says the Marketplace won’t exist–in current form–in several years.)
To pay for it, put a more substantial tax on “the wealthy,” AND change the raise Medicare taxes–but make the tax progressive.
The ACA was a hairbrained idea in the first place.
Who are the clowns who thought this policy up, for crying out loud? (Aside from Liz and Company, that is).
LucyLulu – BRAVO. Excellent points!
The rhetorical tape-worm device is unfair, even if true. You are assuming that because the government has one ability that non-governments have that they are therefore preferable. Maybe we could at least subtract off their ability to create websites from the purchasing power value they create. I think insurance overhead is north of 20% (doctors plus insurers(, but margin (for insurers) is around 3%, but I did not look it up. Yet medicare reimbursement paperwork takes twice the time of regular.
In any rate, the government has an awesome tool to lower prescription drug costs. The FDA. I am not sure why they get such a free pass. I think they are second most captured part of the government.
And the hospitals. oh. my. god. don’t get me going.
“Grossly misleading”, Benedict? I beg to differ. This is the only country on the planet where for-profit healthcare – health “insurance” in particular – is even legal. Only in America is this even an issue! And like Mr. Strether points out, it is the GOVERNMENT who has maximum purchasing power. When there is only one nonprofit entity doing the purchasing of pharmaceuticals, etc., that entity has way more bargaining clout than these multiple purchasers in this overly complex, cumbersome system of ours. Let’s not forget, their only motive is to enrich themselves; our healthcare is just a means to that end. Why else does there exist all these junk policies that don’t cover anything?! The same goes for the privately owned, for-profit hospitals. And people are dying because of it, while many more are left destitute. This is INTOLERABLE and it HAS TO STOP. I disagree with Goodwin’s premise that the tapeworm metaphor is “unfair”. The hell it is.
The tapeworm metaphor is completely fair. There’s no reason for the entire line of business to exist. That’s what the example of Canada shows.
The metaphor is also fair in that once a nutrition-sucking parasite is removed from the patient, the patient’s bodily health will improve in all aspects, and so with our bodily politic when the health insurance parasite is extracted.
The discussion of hospital costs is a diversion, since single payer and controlling costs are not mutually exclusive. No sane doctor would recommend that a (vitality-sucking) intestinal parasite like a tapeworm should be left to do its thing, even though a (vitality-sucking) heart condition had been addressed.
Further, single payer is — let me just emphasize this — single payer. A democratically controlled entity with maximum purchasing power: What better way to control costs? As the example of Canada, once again, shows.
Canada, the UK, Germany, France, Japan, China, Cuba, Mexico, the Netherlands… the list goes on! This is an unnecessary, artificial issue, naked capitalism at its very worst, and with tragic consequences.
Yea I think single payer would need to have teeth around pharma and hospital charges especially. Otherwise I think it would be another round of getting fooled again, although at least would mean care for awhile even if it bankrupted the government paying for those overcharges.
For now we still have to deal with this round of getting fooled again and the ACA.
“The idea that insurers contribute nothing is grossly misleading. The fact is that the insurers always enter the pricing negotiations from the standpoint of wanting the LOWER the prices being charged”
Highly doubtful any of it results in premiums being lower. I guess if deductible is high (so insurance never really pays, except in catastrophic cases) customer benefits from paying less in deductibles, arrangement similar to small business paying monthly to mafia boss for “protection” which is just newer incarnation of a peasant giving part of a harvest to a feudal lord to protect him from invasion of another feudal lord.
Yes, the insurance companies may drive down the payments they make to providers, but there is no guarantee that they will pass that saving on to you. What they charge you for premiums is based on what you’re willing to pay, and what they pay for services is based on what providers are willing to accept. The two concepts don’t necessarily intersect. Public systems do have that intersection, since any savings from negotiating better discounts essentially ends up in the public treasury. But private insurance exists to maximize the difference between those two numbers, i.e. their profit.
I agree with your comment except when you say “What they [the insurance companies] charge you for premiums is based on what you’re willing to pay..”.
Not really. You as an insured have no choice. There’s really no competition. The HI companies have divided up the market into areas (states) where they limit competition and keep prices high.
[…] What they [the tapeworms] charge you for premiums is based on what
you’re willing to paythe US government can extract from you by force.”
We really need to rid ourselves of these parasites. Only in America is this even an issue. This is the ONLY country on the planet where it is even legal to make a profit off of healthcare; health insurance in particular. On that basis, I stand by my premise that they contribute nothing.
Now that the focus has shifted from the distracting issue of the web site, which likely was an insurance company-driven problem itself, we are beginning to see how the insurance companies are starting to game Obamacare to avoid compliance with the law. Because the Blue Cross/Blue Shield folks wrote the law, helpful investigative reporting would identify whether the offending companies are Blue Cross/Blue Shield companies or AHIP member companies. I am beginning to suspect there is a story about how AHIP and its member companies set out to undermine Obamacare through sabotage and gaming the system. The sooner the diversion from attacks on the government can focus on the guilty actors, the sooner the political pressure for change can develop.
Bernie Sanders and Jim McDermott have introduced a bill that repeals the individual mandate and replaces it with a Medicaid-for-All plan that is administered through the states and can be supplemented by the states. No doubt their web sites have a link to the 189-page legislation.
From what I’ve seen in a few examples of HIV drug costs, BCBS actually was the low cost drug provider (for now) while other companies were offering very small discounts. After HIV patients move to BCBS (or the low cost provider), the provider will no doubt change their policies in a year to match their stingier competitors’ policies.
P.S. I thought Wellpoint’s former exec was a key author although I’m sure all the insurers had major inputs…
Wellpoint IS Blue Cross/Blue Sheild, it’s the parent company.
Bernie Sanders is my hero. He is one of the greatest senators this country has had, now or ever. Sometimes I worry the poor guy might suffer a heart attack from all the stress of constantly fighting the evildoers. We sure can’t afford to lose him!
Flop Sweat Alert:
Pretty soon you won’t have to sign up or pay your premium to be eligible for ACA. Just show up at the hospital of YOUR CHOOSING and tell them your covered. Paperwork optional. Is there a higher alert stage then Defcon 5 because this may be it.
The new strategy is to make everyone else with ordinary insurance green with envy. Does it get any better than retroactive insurance? (True) Ok, maybe paying your premiums when you feel like it (partial payments accepted) may be even better. (True)
Rumor has it that free limo rides to the doctor will be offered to the young invincibles. Obama may set aside time in his busy schedule to appear at hospital bedsides next year to tell ACA patients to “hang in there.”
I’m holding out for a free tire rotation.
Not funny. Not appreciated.
Yes, that’s how single payer would work:
Well played, sir!
That is because we are trying to cram a health care system into an insurance industry.
If you view the purpose of of ACA as providing health care, then these is no need to have these conversations about who is worthy. However, if you view the purpose as having a for-profit insurance industry, then indeed the primary conversation will be about who is worthy.
Of course, having HIV is just an extreme example of the preexisting dilemma. So is being a smoker. So is being overweight; having cancer in your family tree; riding a motorcycle; taking a little something extra to sleep, or get over the blues, or get a boner; drinking a bit too much…. or having the wrong genetic marker in your DNA. You can see where this goes.
As they perfect risk-rating on intake and claim denial on the back end, the insurance industry in America is on the cusp of becoming not-insurance, and more of a reverse annuity. With no promise of payout. With fee extraction of course. More like feeding a slot machine.
In the case of ACA as it is written, this step is unavoidable. When you expand the pool, there must be a one-time reset. People who were outside are coming inside. Some come with existing costs, some come with no existing cost. Some come as ticking cost time bombs, due to explode any day. It’s open enrollment; amnesty day – caddy day at the country club pool. There is no choice but to price it in as best you can, and take the plunge.
Once the pool has been expanded, then we are back to an insurance system. The guy with HIV will use either more or less care than expected. One fatty will get fit. One twenty-something will develop lymphoma.
This one-time reset is providing the useful service of raising the issue though: do we have a heath care system or an insurance industry?
Smoking is the only “pre-existing” condition it’s still OK to hammer. Grossly overweight–nope. HIV–nope. Diabetes–nope. ANY kind of cancer–nope. Smoker–hammer away.
I posted this response to Lucy hours ago; it is not here; yet when I re-post I get cut off with the message that it has already been posted. Huh? Anyway I’ll try this again.
Yeah, I already said that. Probably at least fifty times. So where’s my post?
I give up.
‘This really is about socializing costs and hence the single payer model of a single risk pool is the only logical way to go.’
Whoa, wait, that conclusion doesn’t follow at all. Case in point, which Lambert has discussed extensively: Medicaid. Aside from its merits and demerits, Medicaid provides care to the indigent, without mandating a single payer system for all. Some countries sidestep the issue of cash payments to care providers by directly running public health clinics and charity hospitals.
How is single payer (i.e., monopsony) working out in K-12 public education? Poor quality and runaway costs are the norm in the NYC suburbs, where five-figure property tax bills (about two-thirds of which is for schools) are the norm on modest homes.
Competition would drastically bring down the costs imposed by our Stalinist, single-payer public ed system, which will remorselessly sell your home out from under you if you don’t pay their inflated bills (nice guys, huh?). Extending this oppressive tax enslavement to health care is the worst thing I can imagine. And it starts next month under Obamacare, with a $95 refusenik tax which soon will escalate to hundreds, then thousands.
yes, let’s get some private equity running and turning around our schools! that will work great…errr, except for those pinko b@stards in Sweden already tried that…
kind of like in the other socialist utopia, the Netherlands, with their privately run post office. Now that’s competition driving great results, right?
“I watched the postwoman sorting mail in her kitchen, dividing it up into piles on the steel counter on either side of the sink, carefully dried after the evening’s washing-up. It seemed to be mainly Ikea catalogues, the cover showing an exquisitely lit arrangement of blond, cheerful furniture. The Ikea ideal did not include any obvious area for the sorting of mail. As the greasy slap of the catalogues’ plastic covers hitting the counter became monotonous, my eye kept being drawn to a row of Smurfs balanced on the copper pipe above the sink. They were covered in a thick layer of black dust. The postwoman knows things are not going well. In an anguished email she sent me after my visit, she wrote: ‘Many tears are dropping.’”
COMPETITION!!!! Give me a break. As if ANY private business actually WANTS to compete. The only competition that motivates private business, including and especially in publicly necessary functions, is who can get the monopoly first.
Refer to the medical insurance industry, for instance. (Or the parking meters in Chicago, for that matter.)
Indeed. The story of privatization is one of companies buying captive markets, protected from competition, and guaranteed profits.
“trying to cram a health care system into an insurance industry” Oil and water. Good points. It is even more absurd than all the other industry subsidies our government hands out to the corporatocracy. Because the two elements are diametrically opposed. Obamacare will not be reconciled into either insurance or healthcare. It will just become a chronic condition.
Your statement Competition would drastically bring down the costs is one I hear regularly repeated. Can you give a SINGLE example of a monopoly or oligopoly (either government owned/run or privately owned) in which
1) Competition was introduced (the monopoly broken)
2) Cost to consumers was reduced
3) Service level remained or improved.
I can’t think of one (the closest is Airlines, but don’t meet #3). And don’t pick a “cream skimming example”.
Surely you jest…..
Well, the CAB oligopoly was broken in the late 1970’s. Competition did increase (at least on some routes), prices dropped (again on some, but not all routes. Of course the “price” for competition was that air travel transitioned from a pleasure to root-canal level treat.
I’ve asked the Randians for a SINGLE example of where “competition” has brought down costs that isn’t an example of “cream skimming”. There isn’t one.
Remember when there was only one phone company? Many thought it would be the end of the world once ATT lost it’s monopoly.
Now you can call all over the country, and even the world, for a fraction of a fraction one paid before telephone competition. This never would have happened if it weren’t for healthy competition.
Competition makes us improve ourselves and our products.
Are all of you who hate competition the same parents who are insisting that your child still win an award even if she/he loses the game? Or demand that the winning team stop scoring points at a certain mark so as not to “hurt the feelings” of the kids on an inferior baseball/football/-or-whatever team? Do you really want to raise your child to be a crybaby or, instead, would you rather they pick him or herself up, and figure out a way to be better? Healthy competition is good.
And, by the way, isn’t a single payer system a government run monopoly, void of competition? Making it impossible for some other entity to trump the government with a better idea, a cheaper idea, a quicker, more effective, life-saving idea?
In the 20th century, what great inventions, ideas, art, did the USSR contribute to the world from it’s government monopoly of everything?
Okay, Sputnik…but then they were in competition with the U.S.
Competition is good. Like the ability to purchase insurance across state lines with unlimited and competitive options. Why do progressives hate this idea of insurance sold across state lines so much? Are they afraid it will work?
No one else in the world has a market based HC or educational system other than places like the Congo. But even if such a thing had merit, and it could in my view, the fact is that private industry in those fields are run by people who are out for income by any means necessary including fraud particularly in the HC area. these people have shown themselves to be dominated by the same criminal mentality that dominates Wall Street.
If we all lived in a moral society where the oligarchs and commoners were all honest then something like what you describe would be possible–sort of like 18th century Scotland which, sort of, fit the bill
Competition will bring down costs in most industries, but the healthcare insurance industry is unique in this regard. Competition among insurers drives UP costs in healthcare.
A good explanation of how competition works in health insurance (and delivery of care):
Conversely, lack of competition, or consolidation, of providers drives up costs in healthcare. It provides large hospitals and healthcare networks with greater bargaining power relative to the insurers, as pressure from those insured increases to have them included in provider networks.
Free market theories fail for a number of reasons, not all addressed in the article provided (e.g. unlike low cost decisions, e.g. flu-shot, patient either physically unable to participate in the high-cost decisions, or “good” decision-making impaired by emotional bias, e.g. rehab choices after disabling stroke or choice of treatment for late-stage cancer), when it comes to health care. 5% will incur 50% of all costs. Some models of care, e.g. Newark, have successfully reduced the costs of this 5% (e.g. those referred to as “frequent flyers” in ER’s) by pre-emptively addressing underlying factors causing frequent utilization of high cost care.
Competition will minimize costs, since collusion between the insurance companies will never happen, just like the airlines. Oh, wait….
Good post–and of course leads to the conclusion that single payer is the only rational option. I’ll add my anecdote to the mix.
Recently moved to Mass. and got health insurance for family of 4 with low deductible–$1,299/mo. I have to reapply by March 31, 2014 (not sure why), so started an application trying to see if I qualify for a subsidy (a worse plan now costs at least $1,550). Halfway through the application, it indicated I was in prison. I called the woman at HealthConnector and she said that error comes up with lots of people, but don’t give up. Parenthetically, made me wonder how all of that NSA data they are collecting on us all is going to shakedown in the future.
Yesterday, got back at it and I am still in prison, but was able to override it by stating I was not. Got stuck, hit the back button, got out of that message and continued. The application asks a dizzying array of questions, many aimed at predicting how much money we will be making. Since I have children ages 23/21 who are still tax dependents, it makes the process even more complex. Well, after giving them all of our most personal of data, the message at the end said they would get back to me and let me know if I qualified. Still have not been even able to determine if my current plan is part of the subsidized market.
Now this is in Mass. where they have apparently been doing this exchange for many years. I have 93 plans to choose from, with costs ranging from $1100 to over $2,500, and even within the bronze/silver/gold categories, the plan costs in each category vary by more than $500/mo. or more. And who knows what you get on the backside should you ever have the audacity to get sick.
I am a retired-lawyer, yet I find this process incomprehensible. It is a scam being perpetrated on people who believe if you have insurance, you have healthcare. Of course, no one knows until they get sick what costs they will get stuck with. And if you get sick out of network, you are doomed.
So, the anecdotes the Obama admin. will broadcast are of peopl. who were able to buy a cheap policy and love it. Just don’t ever go back and ask them what they think after they get sick. Undoubtedly, 2014 will be chalked full of articles about how so and so thought she had good insurance until she got sick and then found out how lousy it was.
We could not have designed a more idiotic health care system had we set our mind to it.
The part about being in prison sounds interesting. Seems you chosen insurer should give a discount for that – being under prison care?
Does sorta make me worry about that “three strikes and you’re out” law. What if on your first misdemeanor the judge finds a couple pre-existing prison terms and gives you “life”? (haha – that’s a joke – the judge gave you life, not your doctor!) That’s scary. Would your public defender have the chops to argue with the NSA data?
Then again, maybe you should ask the help desk where you can get your “3 squares a day”. They are cutting back on food stamps.
Prison is our fall back plan. Before living on the streets a group of us ole geezers are going to rob a bank and live out our time in custody.
You are better off connecting the dots and realizing that Obamacare has nothing to do with health care; it’s about totalitarian control following the Nazi template and a “thinning of the herd”, especially all those non-productive tax and debt slaves known as the elderly. Within 2 decades, the entitlement problem of SS, Medicare and Medicaid will be miraculously solved. No one will be given non-cost effective procedures and meds after age 65; even if one lives to 65 which is doubtful thanks to Fukushima.
http://www.dol.gov/dol/topic/health-plans/portab. Dept of Labor HIPPA law governing pre existing conditions. If your policy was cancelled, you have exactly 62 days to sign up and actually HAVE coverage under OBAMACARE, or all your health problems/medications are pre existing. More Obama smoke & mirrors with ACA, Read it at Dept of Labor.
The link provided does not work but the passage reflects pre-ACA law. The DOL website has not been updated to reflect the changes from ACA that will come in 2014, including insurers being unable to (overtly) exclude pre-existing conditions.
“[T]hat error comes up with lots of people.” Testing — in this case, on live subjects such a yourself — can show the presence of bugs, but never their absence.
One can only wonder how many errors (or, possibly, “errors”) there are that never come up.
You do know there is a Scott W in Federal prison:
Scott W. Rothstein (born June 10, 1962) is a disbarred lawyer and the former managing shareholder, chairman, and chief executive officer of the now-defunct Rothstein Rosenfeldt Adler law firm. He was accused of funding his philanthropy, political contributions, law firm salaries, and an extravagant lifestyle with a massive 1.2 billion dollar Ponzi scheme considered to be the 4th largest financial fraud since the first documented flimflam in 1719 involving Scotsman John Law.
He was sentenced in 2010 to 50 years. It is a pretty infamous case.
To me, insuring a mortal being that will eventually have increasing heath related issues and die is a flawed concept. If folks want to play that game, fine, but leave me out. Blowing precious resources on insurance versus care is the crux of the problem. Perhaps with zirp and fiat, the resources aren’t that precious— but if that’s the case, stop taxing me, fund the military death machine, fund the social programs, fund health care with no stops, all with fiat and empty promises , contracts and obligations that are hole cloth. Got an eye on a chair when the music stops?
What about people planning on having children in the near term? I don’t know how you’d identify them until they actually have the kids, but while it’s not “preexisting” it is a planned elective that is usually covered in some way. I’d guess that they are signing up in disproportionate numbers as well right now, since their health care expenses are both predictable and far outweigh their insurance premium outlay.
Great post Yves.
Insurance conceptually is quite simple. If you charge some customers more than the value of their coverage, they quite predictably never sign up in the first place. Imagine somebody driving a 10 year old Ford Focus being charged comprehensive rates of a brand new Jaguar. They would just drop comprehensive coverage. In a market-based system, non-consumption is the biggest competitor to insurance products.
The Democratic blatherers are of course tied up in knots because they want to claim that PPACA solves non-consumption affordably, yet they don’t want to raise taxes on the wealthy or cut payments to the healthcare industry to pay for it.
“If you charge some customers more than the value of their coverage, they quite predictably never sign up in the first place.”
Insurance requires that customers be charged, on a net basis, more than the value of their coverage, lest they end up bankrupt. The net difference is what customers are willing to pay for risk coverage, the security that comes with coverage of the perceived high-cost, low probability event. For example, people often forget that a portion of SS goes towards coverage of payments in the event of disability, not only retirement pensions. Whether ultimately used or not, the availability of future coverage if needed has an inherent value that can be priced.
When people buy term life insurance, usually they receive no value at all for their premiums, yet it’s a popular product. I used to joke that insurance is the only business that makes money by doing nothing…….. what a racket.
Of course the premium cost includes keeping the insurer in business. That accounting profit is necessary for any producer to keep producing their product over time, which is what consumers who want to acquire the product want. Note, that is true of any organization, whether for-profit or not-for-profit or the government itself.
What is different is when that premium cost includes not just the cost of keeping the insurer in business for the consumer’s own needs, but on top of that, also includes part of the cost of other consumers’ premiums. In expensive areas like healthcare (a huge portion of the economy, unlike much smaller products such as term life insurance or comprehensive auto coverage or long term disability), these subsidy costs of paying for other people’s premiums quickly eat up the surplus value that would otherwise exist.
Thus, non-consumption happens at the margins.
The Social Security Administration’s Disability Insurance Trust Fund (DI) is a great example. Even though SSA is the most efficient large insurance company on the planet, not all of the taxes paid into DI are sent to recipients; some money goes for administration. And some administrative costs are borne by other entities (for example, DI doesn’t pay the wages of the Treasury Secretary even though that position acts as the Managing Trustee). Furthermore, there has to be an adequate match over time between the taxes collected and the benefits paid. If FICA withholding was made voluntary, for example, then the fund would be depleted quite quickly.
Your example is somewhat inaccurate when it comes to healthcare, mainly because everyone values their life pretty equally (i.e. everyone perceives themselves to need the protection afforded a Jaguar).
This is the reason why insurance can work for autos but not for healthcare: it is entirely possible to go your entire driving life and not be in an accident. Also, depending on what car you buy, it’s possible to reasonably predict what your maximum liability under comprehensive insurance would be, and therefore purchase accordingly. Note that even in car insurance, the expenses that are essentially equal for everyone (or at least equally unpredictable), namely the damages you might cause to someone else’s vehicle, are insurable at about the same rate regardless of what car you drive (though it may be underwritten by your risk of getting into an accident).
Healthcare is different: every single person is going to die, and every person values their life quite highly. Therefore, while some patients may die early in their life and others later on, every person will die, and usually after a fairly high amount of medical expenses (barring perhaps DOAs from bad traumas). If insurance is about covering the uncertain but catastrophic events, what event is *less* uncertain than death?
That’s why health “insurance” isn’t really insurance: at a macro-level it’s a pre-paid plan for your total lifetime care that is payable in yearly installments. You *will* at some point use your insurance. There is pretty much no way around it. This is very different than car insurance, or fire insurance, or even unemployment, disability, etc. It’s the same reason why whole life insurance plans are primarily tax-advantaged investment vehicles, as opposed to term life insurance (in which you may not die before the policy expires and therefore can be considered insurance against an unforseen *early* death, not death in general).
The only way that health insurance companies make money (aside from skimming a percentage of the pool each year) is by denying you the care they know you will need, either by overtly denying it through contract fine-print shenanigans, or dropping you when the risk of you dying soon gets high enough (e.g. you get diagnosed with blockages in your coronary arteries) that they’d rather take the money you’ve paid so far and run, rather than stick around and wait for the coming deluge of expenses.
“Your example is somewhat inaccurate when it comes to healthcare, mainly because everyone values their life pretty equally (i.e. everyone perceives themselves to need the protection afforded a Jaguar).”
It’s not about valuing life (although it is not accurate to state that everyone has pretty much the same values). Rather, it’s about the cost of life, and that varies greatly from situation to situation. Insurance is about pooling people of similar situations. That’s why many people with old cars don’t carry comprehensive at all, and if you increased the premiums, even fewer people would carry it.
“That’s why health “insurance” isn’t really insurance: at a macro-level it’s a pre-paid plan for your total lifetime care that is payable in yearly installments. You *will* at some point use your insurance.”
I understand what you are saying, but you are mistaken.
This misconception is one of the reasons that people get tied up in knots talking about this. Health insurance has no meaning beyond the particular details of the plan, and health insurance in the US is not a lifetime commitment. It’s a 12 month commitment until someone is discarded to the Medicaid rolls or reaches Medicare age. A huge portion of the cost of healthcare, and thus, insurance premiums, are predictable (such as chronic conditions) and matters of taste (such as neonatal intensive care for severely premature births or extended hospital life support for someone in a coma).
This is why getting healthcare proxy/power of attorney is so important for loved ones – there is no one ‘correct’ way to handle expensive medical care. It’s a matter of taste. And it’s why 12-month insurance contracts don’t work with pre-existing condition exemptions: those without pre-existing conditions will be heavily incentivized to continue their non-consumption for another 12 month period.
“They will get some subsidization from the healthier members in each pool…”
I doubt it. Most of the young, healthy people I personally know are flat broke. Getting them to sign up for anything beyond free Medicaid (and I have helpfully pointed out to them that the bronze plans via Obamacare are less than worthless) will be quite a miracle.
On the other hand, whenever I meet an older person and he/she brings up some of their bizarre medical issues (for some reason that is a favorite topic of older people. Hell if I know why), I am quite vigorous about defending Obamacare and encourage said person to sign up for it ASAP. It’s my way of helping people make the choices that are right for them.
“for some reason that is a favorite topic of older people”
Its new to them and like the weather its just small talk with a sprinkling of I’m old and therefore wise with years of experience and how foolish young people are. They remember the Great Frost of 1683. I was not well for about 2 years ( I got better) when I six and seven, but trust me, they don’t want to discuss these issues. It makes them sad*. Seniors also like the competitive aspect of their illness.
“They used a needle this big on my knee.”
“Oh thats nothing. They had a needle in my goiter. Impressed?”
“Not, really. They put those in my spine when I was six years old.”
*I’m squeamish so I move any conversation to my old issues as swiftly as possible to not hear about unpleasantness.
Apparently more than a few of my contemporaries are being treated lately for macular degeneration. (Wet or dry, I can’t remember.)
Treatment involves getting a shot, in your eye, MONTHLY. Medicare covers it.
Seriously, here is where I draw the line–I don’t care WHO’S paying.
But I appreciate the 411. I’ve taken to eating truckloads of carrots and tomatoes.
Fun fact: To get the most nutritional value out of carrots, you must cook them: boiling is the recommended method. However, you should NOT cut the carrots up before boiling them, but rather boil them whole and cut them afterwards.
Also, “baby carrots” are actually just the cores of deformed carrots and as such contain almost zero nutritional value.
Also, purple carrots are considerably more nutrient rich than orange. In general, the darker the color, the better for you.
I obtained all of the above information from the wonderful book Eating on the Wild Side by Jo Robinson
Today I find myself in a “jerkin’ yer chain” kinda mood.
Are the cores of “deformed” carrots less nutritional than the cores of “undeformed” carrots?
Are the cores of carrots less nutritional that the whole carrot? Compare and contrast the nutritional value of undeformed and deformed carrots, and undeformed carrot cores and deformed carrot cores for extra credit.
Jeez, the alliterative possibilities here seem to be endless.
And then there’s the “colored” carrot core controversy that has yet to be conquered. (Whew, this is getting addictive.)
It’s just that I’ve bought a great looking pot roast for this weekend and carrots were part of the plan. Carrots have been on my mind, or perhaps I should say I have carrots on the cranium?
Ouch. Quit while you’re ahead.
Ha! The reason baby carrots are nutritionally vapid is because most of the nutrients in a carrot are contained in the outer layers (don’t peel ’em!). Carrot purveyors apparently think odd-shaped tubers would shock our delicate consumer sensibilities, so they shave off all the nutritious parts and sell us the left-overs as baby-carrots. But the marketing is a LIE! Those aren’t babies, they’re mutilated adults!
Actually, you are better off skipping the carrots all together and increasing greens and maybe spices.
Beta carotene in adequate quantities is in most greens.
But greens are a much better source of lutein and zeaxanthin.
Carrots are not very nutrient dense in other vitamins, minerals and important phytonutrients.
Preparation matters. For instance, cruciferous veggies need to be sliced up and allowed to sit 10 minutes before cooking to develop their cancer fighting compound. But they also have a compound that suppresses the thyroid and this compound is easily destroyed by light cooking or steaming. (good)
This place has the right prep method for everything.
Hint: check out kale, red cabbage and sweet potatoes. You may live forever! (Pete Peterson willing, of course)
Consuming “healthcare” is like a job for many older Americans–it’s what they DO.
So many doctors and pharmacies and so little time. Sense of urgency is baked in the cake. The peddlers take full advantage.
And the more “healthcare” one consumes, particularly as one gets older, the more one needs.
Sheesh, there’s a whole industry devoted to “innovations” for just ORGANIZING all the pills they take. You talk about your job, they talk about theirs.
Obamacare is based on flawed logic. The young and healthy must be making so much money that they won’t mind carrying the burden for the sick and elderly who now live to 90 instead of 70.
The fatal flaw is that the young and healthy cannot find jobs that would allow them to even entertain this noble gesture. And if they cannot carry the burden for the others, the entire plan collapses.
Jobs will make Obama look brilliant. Lack of them makes him look like a fool with absolutely no sense of priorities.
Well considering all those over 65 are already covered by medicare, worrying about 70 olds and 90 year olds and their insurance only becomes and issue with the privitization of medicare.
Excellent post. Many countries have mandatory health insurance programs in place. It could work in the USA too, but typical of all American corporate implementations it is plagued with exorbitantly high rent seeking costs. To make matters worse, the American government puts no mechanism in place to tackle corporate fraud and abuse. People are left to fend for themselves against Harvard educated piranhas.
Here in Belgium we have 5-insurance non-profit companies which every Belgian are required to subscribe to one of them. In addition, the government has a heavy hand in controlling costs in the front-end. The government has a tight grip on pharma drug prices. They do so through plain-old price negotiating, and get this, by extracting fees from the pharma companies to operate in theater. The government also heavily subsidizes hospitals and world-class staff to operate them. Not to be left out Belgian students have nearly free tuition throughout their coursework. When they graduate, doctors act as doctors as opposed to in the American system where doctors work feverishly to raise their fees to offset their tuition payments and to live the life of a 1%er. On the other hand, Belgian general practitioners, for instance, definitely live a middle-class lifestyle because their patient fees are capped.
I paid about $40 for a CT recently. Half of it will be paid by insurance. Yes, my net out-of-pocket bill was $20. My visit to see a neurosurgeon was only $25 net, while insurance paid the other half ($25). The same thing for meds. I paid $10 for a prescription of pain pills. Insurance will pay back $5.
The American health care system needs fundamental rethinking to make it affordable and to become more the norm with the rest of the world. Single Payer would definitely wring out high costs and curb corporate insatiable omnivorous behavior.
In the U.S. The medical industry has incredible political power in Washington and is allied closely to other industries to keep any kind of reform from coming to public consciousness. Sadly nearly all the mainstream media keeps the people in ignorance. Even on the left few people know about how insurance works on the Continent–they think it’s all single-payer! Most Americans believe Europe has systems with long lines and primitive technology etc.
Great comment. Regulated Monopoly/Oligopoly seems to have proven itself as a relatively effective private/public model…at least when it is actually regulated. It could probably be argued that health insurance is a case of “natural monopoly,” where barriers to entry and low profit margins make competitive markets impossible and where the natural tendency will be towards consolidation and monopoly, with or without regulation.
A regulated electricity monopoly served my state very well for many years. We had the fourth cheapest electricity in the nation and great service. The stability that the model provided was good for both stockholders (many of whom were current or former employees) and for employees. Then, in 1998 we got the bright idea of de-regulating and it’s been downhill ever since. Regulated monopoly is one of the few mainstream economic models I don’t really have a problem with. It would ideally be a worker-owned, or at least non-profit, monopoly, but even regulated capitalist monopoly seemed to work out alright.
Out of curiosity, what is the total percentage of income taken in tax for Belgians?
Are your young people starting families in independent households? How many exist on the public benefit programs alone?
What is your unemployment rate among youth?
Where are your demographic shifts occuring? In age, culture, ethnicity?
One interesting thing coming out of this thread that seems new to me is much greater clarity between insurance and health care. I think people realize the distinction every time they get a bill from their insurer or health care provider that asks for $X in addition to what ever co-pay or deductible their insurance contract indicated that they should pay. But, the distinction hasn’t really been articulated so clearly in a discussion such as this, at least it hasn’t penetrated my thick head before. It reminds me of another distinction that is emerging in education, Obama’s other great neoliberal boondoggle. This is the distinction between “standards/testing” (which is a profit center for Democratic operative initiatives around the country, billionaire “philanthropists” and the hedgies — and apparently Jim Haygood too) and education (which is not a profit center … but what children actually need).
whenever I meet an older person and he/she brings up some of their bizarre medical issues (for some reason that is a favorite topic of older people. Hell if I know why)
Wow, so im not the only one who feels awkward when an elderly relative starts talking to me for no reason about his/her 6-7 medications?
This was supposed to be a reply to a comment by Jgordon
Single payer. Medicaid for all. Our healthcare is a national disgrace and embarrassment.
NO NO NO. Not Medicaid for all. Very bad idea. MediCARE for all!!!
Medicaid has more generous benefits. It will vary by state, but for example in my state, $3 co-pays for everything. I was never unable to get necessary care for my clients (except dental…. the lone adult provider in county blacklisted anybody who was a no-show or late), but it sometimes required persistence and being resourceful. My childhood interest in detective activities came in handy. .
The problem with Medicaid is lack of providers who accept it, due to low reimbursement rates. If everybody had Medicaid, providers would be forced to accept Medicaid, or leave their professions. The vast majority would choose to accept Medicaid, though industry lobbies would probably get reimbursement rates increased. These increases could be offset by provision of some of the services now provided by physicians and other high cost providers being provided instead by lower cost ancillary providers without loss of quality, and perhaps improved due to time and focus factors.
Have a bit of a different view of the Medicaid Program. It has been eviscerated in some states.
For one thing, Medicaid benefits vary state to state. There are general guidelines, but states have a great deal of discretion in administering this program. (or did) Many states have privatized their Medicaid program. Most have gone to MCO’s or ACO’s. Pretty sure that very few have fee-for-service programs.
In some states, the program has been “waived,” and the states do not receive federal monies. As a result, the benefits are barely “skimpy.”
Few primary doctors, much less specialists, participate in Medicaid in our university town. Heck, it is increasingly difficult to get some physicians to accept much of any insurance, anymore. We’ve found that our insurance, which is administered by one of the largest US insurance companies, is not accepted by the only orthopedic group in town–they object to the low reimbursement rates!
It would be a bad idea for anyone age 55 and up, due to the MERP (Medicaid Estate Recovery Program).
Unless they get a perverse satisfaction out of seeing a lien slapped on their estate for services rendered. And like the benefits, the strict enforcement of this program varies from state-to-state. Ironically (or perhaps not) the more so-called “liberal states” have traditionally had the most aggressive “recovery programs.”
(The MERP is MUCH BROADER today. It extends to ALL collection for payment on all categories of Medicaid services. IOW, is NOT restricted to institutional long-term care.)
IMHO, we need a universal health care system that is the same, no matter where one resides.
(BTW, don’t mean to be contentious, LucyLuLu. But I have seen what one Democratic (DLC) Governor did to Medicaid in the name of balancing the budget. It wasn’t pretty!)
I agree with all your points, I think. “Medicaid for all” of course would involve eliminating all the bad features, right? The disadvantage with Medicare is that it doesn’t cover long-term care at all, and only 80% of many expenses. I’m not exactly sure how Medicare treats acute hospitalizations but I believe there are big holes there, too. A hybrid of some sort is what’s needed.
Where I live, private practitioners who will take Medicaid are difficult to find, and specialists too, but with diligence, can be found. Most people end up at hospital setting clinics though, with residents in training. Sometimes it works out well, sometimes not so much. None of my Medicaid clients (ALL) were ever pursued for recovery but I know it happens elsewhere. I also know that some states, like Florida, that privatized Medicaid had terrible problems with fraud. IIRC, top level execs went to jail in Florida (figures considering Scott is governor).
I did NOT know that states could opt out completely from Medicaid. Or are you referring to the Medicaid expansion portion when you mention not receiving federal funds? In any case, your post wasn’t the least contentious. Different opinions are always welcome, IMO, especially when clearly backed with reasons. :=D
Everybody’s been talking about “pre-existing” conditions for awhile. The difficulty getting “health” insurance for people with “pre-existing conditions” was one of the main drivers of this so-called “healthcare reform.”
Rarely mentioned, however, is that the idea of “pre-exisitng conditions” is a construct of the “healthcare” insurance industry itself. It’s been used for decades to identify people the industry DOES NOT WANT as customers. The “pre” in “pre-existing” refers to BEFORE THE CURRENT INSURANCE POLICY WAS IN PLACE.
Insurance companies are empowered to draw a line in time, specific to each individual, and ration “healthcare” payments based on that arbitrarily drawn line, not to mention using the line to justify exorbitant monthly premiums. Frequently changing policies translates into frequently changing, arbitrarily drawn lines.
As more for-profit “healthcare” has been peddled, and the definition of “pre-existing condition” has been expanded, the proportion of the population in this category has exploded. Actually USING your medical insurance to get treatment was like branding yourself a member of the “pre-existing condition” herd.
In countries with universal, cradle-to-grave national healthcare systems ( that would be all economically developed countries EXCEPT the US) there is no such thing as a “pre-existing condition” because there is no “pre.” There are only sick people who need healthcare and healthy ones who don’t.
For all the talk, I don’t think most Americans realize that “pre-existing conditions” are uniquely American phenomena for which insurance company business practices are responsible.
The concept of a “pre-existing condition” makes a kind of mathematical sense when the “pre-existing condition” has a direct connection to the current claim. The part that I thought was insane was the situation where the insurance company denied a claim for diabetes because the patient had been treated for a broken big toe when he/she was six years old.
Can someone comment on whether this is an accurate description of what has been going on?
The prefix “pre” literally means “before.” It is a reference to time (or space, but always indicating before.)
The term “pre-existing condition” cannot be understood or explained without considering an insurance policy, with specific start and end dates. Also a time reference.
Substitute the word “before” for “pre.” The question then becomes, “Before what?” Once again, the insurance policy must be included in the explanation.
Denying diabetes coverage due to a childhood fractured toe would not necessarily surprise me but would not hold up to scrutiny and would be a decision that could be appealed, and reversed.
It isn’t only pre-existing conditions that were used to deny policies. Insurers have full access to your claim history when you apply for a policy. HIPPA includes an exemption for insurers, including prospective ones. Insurers don’t like insuring people who incurred losses for other carriers, for obvious reasons. Moral of the story: Buy health insurance but whatever you do, try to avoid using what you paid for.
To whom, exactly, would you be appealing?
In the above example, the fractured toe is not a “pre-existing condition”per se. It is more like a “previous condition” which must be disclosed on the insurance policy application. If it is not noted, the application can be considered fraudulent and the policy voided due to the omission.
Insurance companies employ armies of “investigators” to discover such omissions and void policies especially when presented with substantial claims. Of course refunds of paid premiums on these “fraudulently” obtained policies are not part of the deal.
Use of this information is completely at the insurance company’s discretion and you may never even know that they have it. The company can continue to collect premiums and keep the policy “in force” as long as no large claims are made, allowing you to THINK you are “covered.” Substantial claims can be denied and policies cancelled using this “fraud” as the reason.
THIS. I was about to make the same point. Pre-natal* to death bead healthcare eliminates both pre-existing conditions and the self-selection that leads insurers to not cover them. And self-selection doesn’t occur only at the insured/uninsured level. If any of the major insurers provide plans under ACA that DON’T play games in an attempt to dissuade people with expensive pre-existing conditions, they will get a disproportionate share of people with expensive long term medical problems.
*because good medical care starts before the cradle.
“…insurers, par for the course, are finding clever ways to make the actual coverage offered to people with pre-existing conditions so minimal as to come as close as they can to [NOT] covering them,…”
There, fixed it for ya. ;)
Most countries with universal health care built on their country’s existing plans. Medicare-For-All was the logical next step for the US. But the health care cartel like the Wall Street cartel was too big to fail. US health costs are 50% inflated over the rest of the world due to profit over people. This includes the fee-for-service Doctor who still needs to buy equipment and supplies. The ACA is an interim step in the process of providing health care to every citizen. Blue states who set up exchanges with providers encouraged to offer better cheaper plans have enrolled 2/3rd of people. Red states who obstructed and refused medicaid expansion only 1/3. Some states like Vermont went to single payer. Other states already have health care reform in process. CA has approved single payer twice that was rejected by the Governor. Medicare has cost controls which is why many Doctors refuse to accept it. There is a committee funded by ACA to look for improvements to Medicare to allow it to expand. First we need to wring out much of the cost of health care and convince the US that ignoring the sick is not good public policy.
The ACA has made single-payer or some other sane alternative less no more likely.
The whole “debate” a few years back was a fraud. The mainstream media is the main institution at fault along with the left that believed the discourse of “it’s just a start.” Now the industry will still have control of nearly a fifth our GDP with overflowing coffers to bribe and threaten public officials to make sure their criminal enterprises continue unabated.
i think you’re all missing an important point here. the cost isn’t going to be squarely on the patient–it’s going to fall back on the manufacturer (pharma company). copays will most likely be allowed in the exchanges (the reports of ‘mixed guidance’ on the copay issue don’t make logical sense), and for serious chronic diseases–particularly specialty disease states like RA, MS, and yes HIV as well–manufacturers will pay a huge portion of the OOP costs. one RA manufacturer’s yearly benefit for their copay program (not even their patient assistance program that provides free drug!) is nearly $10k per year. this basically transfers the cost burden from the insurance company straight to pharma for many high-cost categories (and i’m sure they still make plenty of money on the drug regardless). copay programs also ‘count’ toward the insane deductibles we’re seeing in health exchange plans, so it’s really not this doomsday scenario for the patient that everyone claims.
and for those who say usage of copay programs in the exchanges is tenuous, let’s be clear–insurers and manufacturers do NOT have a way to distinguish right now at the pharmacy switch who is receiving a federal subsidy vs. not (those who receive a federal subsidy are the ones who would be potentially excluded from using copay programs). in other words, if i’m insured by an exchange plan and get a federal subsidy, and i go to the pharmacy to pick up my medication and end up using a copay card–there is NO way for them to determine if i get a federal subsidy, and thus no way to ‘ban’ me from using the copay card. the insurers and pharmacies simply haven’t created the ‘linking’ technology necessary to make this work. this is a current unresolved issue as well for the uninsured, who are technically not allowed to use copay cards because they are not commercially insured, but who do anyway because there is no means of enforcement.
Obviously, health care should not be run by insurance but by some social contributive scheme. In part, because everyone needs health care – even being born requires med. care!
So while actuaries and the like can figure out the ‘risks’ overall of broken legs, AIDS, penumonia and what have you, i.e. the probability of having to pay out X, this is a stupid way to handle health or ‘sick care‘ – it is NOT a question of risk.
The US system (and the Swiss btw not to mention others) is beyond bizarre, because while private cos. run the show, the Gvmt. offers subsidies. In the US case, a person is not only of such an age, location, sex, etc. (actuarial categs.) but is poor or rich, that is, has the right to some subsidy or not.
So in effect, these systems are private-public partnerships and should be regulated as such. Switz. at least does this in a transparent way (and all the nos. are available)..but in the US?
Admittedly, I’m not clear how the US system is supposed to work in terms of financial flows, which is rather dismaying, as it should be transparent for Jane6 who has the internets.
Resistance to single payer schemes is strong in some places. In Switz. for ex, the Latin Cantons finally got together to propose a single payer system. This kinda happened by an accident of circumstance.
All the ‘ministers’ of health in these cantons are today Socialists, with two exceptions. One right-wing populist, People’s Party, but happens to be – comprehensibly – the President of the Defense of the Health Insured Association, which defends patients (or ‘consumers’ or ‘payers’) interests against all and sundry, which is part of the reason he was elected. The other is from the center-right but has a medical background of some kind.
‘Parliament’ voted NAY real fast, this week. Maybe it will go to initiative, who knows.
In Switz. the obstacles seem to be: a) an attachment to personal responsibility (each person must pay what they cost, which is a fantasy of course) and a fear of Federal Gvmt. take-over and meddling, b) the fact that the system works so there is no popular impulse to change it.
The Swiss have voted against changes of one kind or another many times. Basically, against Gvmt. control, plus against Insurance control. Apparently they approve of the present balance.
I hope such posts about the country that is the a little comparable to the US on health care (or what it hopes to achieve) are of some interest.
To add, ‘single payer’ comes in different shapes and forms, it is not a model to be embraced without much thought as it implies a lot of major changes.
Yes, your posts ARE interesting. Especially on the reasons for the opposition to single-payer in Switzerland, which seems to closely resemble what is heard in the US….. though control by private interests isn’t seen as threatening but desirable………
Free markets bring competition, better quality, push down costs….. being guided by the omniscient and omnipotent invisible hand…… and all that. /s
Theory trumps empirical data in hallowed beliefs about economics and the role of government.
We’re told–implicitly, but told nonetheless–that our personal well-being is completely independent of everyone else’s well-being, and not only that, but that well-being is, in some sense, a fixed commodity: more well-being for one person necessarily entails less for someone else. This latter proposition, that well-being is ultimately a zero-sum game, is the result of our subconscious equating of well-being with financial wealth. If someone is receiving money, somebody else must be giving it away. The former proposition, that we are entirely disconnected individuals, has been quite consciously stated by politicians, pundits, and economists alike; perhaps most memorably by Maggie Thatcher: “There is no such thing as society.”
It is, of course, absurd to make such a statement. My own well-being is obviously effected by that of those around me, and in a positively correlated way, no less. Would you rather live surrounded by financially secure, happy, healthy people, or by destitute, anxious, sick people? Obviously, personal well-being is, in large part, socially determined. My well-being and the well-being of others in my community is intimately linked, and in improving their situation, I also improve my own.
However, the currently popular world-view holds that if some person, rich or poor, is getting healthcare, that person is the only one benefiting from it. It might be allowed that the person’s friends and family also benefit, but it is generally not considered that everyone else in that person’s community is also benefiting from having a healthier neighbor than they otherwise would have had.
So when a poor person goes for care, and when money goes into the doctor’s hands to reimburse her or him for providing that care, the question is always, “who pays?” We think well-being is a zero-sum game and so we assume that if the poor person has been made better off through receiving that care, then someone else must have been made worse off by having to pay for that care. And if that payer is not an individual person, then the bill is assumed to be footed by everyone (“tax-payer dollars”).
But this way of thinking ignores that fact that, regardless of who pays the bill to the doctor–whether the individual him/herself or the government–everyone in the society benefits from having healthier individuals composing that society. This is a long way of saying that healthcare is a social good. The fact that we keep talking about it as though the healthcare of the poor is somehow divorced (or even opposed) to the well-being of the middle-class and wealthy just shows how confused and deluded we have become as a society.
“We’re all in this together” isn’t just a feel-good slogan, it’s a fact of life.
We’re all in this together, absolutely!
“I get to say where we go.
I will also tell you what you can and cannot do, even down to what you eat, what vices you are allowed to have, (None, naturally), and how you exercise. I’ll determine your allowable medical care based on your value as a consumer and taxpayer, and I will move you to Hospice care whenever that number turns negative.
I will determine the resources you are allowed to use, I will watch you all the time, and I can and will indefinitely detain you if you become too much of a nuisance.
You will even freely elect this system, because you think the people in charge, (me, and people like me) know much better than you how to allocate resources and consumers. You think, of course, that you are or will be a person like me, able to command your fellow consumers on threat of fines, sanctions, and imprisonment, but you will never be like me, and I will laugh all the way to the bank as I deposit my gold and Bitcoins in my secret offshore accounts. The elite pay me, you see, to ensure that they stay on top of the heap, and I make sure they do.
We are in this together, and the sooner you realize your role is to be a good consumer, newspeak distributor, and tax cow, the happier you will be!”
Pretty sure that’s a quote from a Blue Cross-Blue Shield representative…your point is? Do you support a Medicare-for-all type model, or perhaps a regulated monopoly model? Or do you prefer to the system we have now? Your comment confuses me.
I think that final, brief paragraph says it all.
Second thought… I see “diptherio’s” point!
If there is anything we can say about Obamacare it is that it completely exemplifies the death of the liberal class that Chris Hedges wrote passionately about. My reaction to the roll out of this monstrous scam is nausea and I mean physical nausea and even despair at the stunning perversity of “progressives” or as Alex Cockburn used to say “pwogwesives.”
Any idiot, including this idiot would have known that the more complex and confusing legislation is the more trucks can be driven through the loopholes inserted by lawyers who the find work at law firms handling the affairs of the various industries that are stakeholders in the legislation. This is standard Washington operating procedure as I knew very well as I saw Democratic operatives earn riches by spending a few years on the Hill then a few years in the private sector collecting bribes then a few years on the Hill or the WH and then back to collect their loot–the worst of it is they remained self-righteous in their narrative.
ACA is a huge flop.
It’s the half-baked, bastard solution to a very real problem that goes unresolved.
All the ACA represents is the fact that all the political capital for healthcare reform has been wasted. US will have to wait for a real manifestation of crisis before healthcare reform is back on the political agenda. In the meantime, 17% of GDP will go to healthcare versus <9% in every other industrialized country in the world.
Very little capital that was truly invested in better health care was wasted. The capital that Democrats and career “progressives” invested had nothing to do with health care, and everything to do with bailing out the insurance companies and walking around money. Jobs for the boys! And hopefully, they will lose a ton of that capital.
What sounds so ominous about the “real manifestation of crisis” Cynthia sees in the future (that it seemingly will take to trigger reform) is the fact that we are already in a crisis. Between the number of people dying each year from preventable causes combined with lack of access to care (close to fifty thousand annually, last I heard,) and the hundreds of thousands who die from medical error and hospital-borne infections, and the additional multitudes bankrupted and left homeless by hospital & doctor bills, I have to wonder: how much worse does it have to get? And what happens if our population is stricken by a mass epidemic, or pandemic, of a particularly virulent, deadly strain of the flu, or ebola, or some other form of 21st Century plague? We are hardly equipped. And that scares me.
These aren’t really “tricks”, Yves. They are what is necessary to keep the premiums from being even higher than they are.
The insurance companies are far less concerned with minimizing premium costs and far MORE concerned with maximizing PROFITS.
In the case of the exchanges, the profits can only be maximized to a certain point. However, all the evidence available suggests they will be minimizing the losses on these policies.
I agree on the insurance companies goals, and I agree that the ACA should not be allowing insurance companies to be rent seekers. But they are not at the center of the problem. They have just agreed to be the lightning rods. There is no way you can be an insurance company in any market without following the rule of law first and the rule of microeconomics second. And working the middle ground as best you can. Because it is the most profitable company that gets to set the prices, and if you are the slowest runner, the bear eats you,
I need to clarify, my “bingo” was in response to Waking Up. What Mr. Goodwin describes is exactly the reason we need to be rid of the health insurance industry. The issues, limits or challenges faced by the insurers is not our problem, whereas surviving illness or injury is. There is a systemic conflict of interests here that is proving fatal to too many of us. They need to go bye-bye, which would have happened a few years ago if not for Obama’s devotion to bipartisanship. How quickly “Yes we can” morphed into “No we can’t”!
Nice article. Well thought out and researched.
Single payer makes the most sense… not just as a way of socializing the costs of the sick, reducing cost of administrations, but also economically.
With out current model of mostly employer provided insurance, the cost of healthcare is part of the cost of every good or service purchased. In essence, like a sales tax, it’s a regressive tax… on labor! What could be more job killing? Plus, goods and services produced via single payer should be cheaper and more competitive since they wouldn’t contain the hidden cost of healthcare.
Just as a brief note – our current employer-provided insurance came out of WWII regulations that prevented unions from bargaining for higher wages. Rather than fight these regulations, the unions cooperated on wages and switched to bargaining for fringe benefits.
If you are going to use an insurance model for health care expenses, it might make more sense to base it on a term life insurance model. The major financial issue with the ACA exchange is its attempt to get the young and healthy to pay for the costs of the older and sicker cohorts via premiums rather than having those premiums actually financing their own expected lifetime health care expenses- in other words, it isn’t insurance at all for such a young person- it is basically a tax, and a voluntary one at that.
If the model you propose were adopted, what would happen to the premiums paid by the young and healthy awaiting use when the person gets older and and needs to use them. It sounds a lot like our current Medicare program, but with lifetime benefits, and premiums designated as belonging to individuals. What happens to coverage if premiums are exhausted by unusually ill health? Can funds be spent by the government to lower taxes on the rich? What type of “savings vehicle” will be used that won’t result in claims of “empty lockboxes”, or will private companies have the chance to do the looting next time…. [must spend equal time knocking private corporations, ya know ;) ]?
“(aside from the benefit that it also cuts out unnecessary layers of bureaucracy and profit margins)”
Single payer will be additive to employment.
Also, if costs for existing conditions are to be socialized, control will be exercised over behaviors to minimize costs. This is simply what will occur. That control will be exercised by government bureaucracies. They will use templates, and personalized service and needs will not be considered in the primacy of fairness. If you think what the NSA and intelligence services have done in this regard is over the top, I invite you to speculate on what a personal healthcare bureaucracy will come up with.
Tl;DR version: “You are gonna get what you want, but are you gonna want what you get?”
“But I didn’t mean this!”
Is that how is actually works anywhere that actually has a decent healthcare system? Anymore than it already happens here without a decent healthcare system. I mean yes the empire does some to be uniquely corrupt, but still.
If only the USA didn’t exist all alone in the universe! If only there were other “countries” existing at the same time in the same world, so we wouldn’t have to try to imagine what happens when you have single payer!
Sarcasm aside, we do have other countries with single payer, and what you say “simply will occur” doesn’t occur.
“This really is about socializing costs and hence the single payer model of a single risk pool is the only logical way to go (aside from the benefit that it also cuts out unnecessary layers of bureaucracy and profit margins).”
How about eliminating numerous monopoly powers that medical/pharmaceutical/medical insurance industries enjoy? Maybe that would make catastrophic medical insurance costs really affordable (and most people would not need any other one; how’s annual physical coverage or contraceptive coverage is an insurance rather then rent payment to a middleman?) and treatment for most pre-existing conditions wouldn’t require insurance, since it will become affordable. And for rare cases of really expensive treatments for people having pre-existing condition socialization would be much cheaper than with current system? I am not saying that single payer wouldn’t work, I am saying it’s not true that there are no alternatives.
well the main reason medicare exists at all, is that the insurance industry has 0 interest in dealing with a lot of insureds who will constantly make claims. technically, all insurance is a private version of what some might call socialism, because no matter what the claim is, you may have only paid a part of the bill, and it maybe a very small part, the companies make that up by having more paying customers than claims. otherwise they go broke. Long term ACA will only be short term fix, with a public option coming into replace it when it becomes obvious that insurance companies can’t handle it (and when the last private employer stops offering it as a benefit. which probably wont be long as the number of employers who do, keeps shrinking every year). and to make a profit insurance companies are always on the look out for ways to cut costs. and that means avoiding any insureds that will make claims. which is why they invented the pre existing claims denial, and added canceling policies on those who made to many claims, for usually flimsy reasons. short version, business is in business to make a profit, nothing else. unless a miracle occurs, health care wont be a viable business for insurance much longer.
dw wrote: “Long term ACA will only be short term fix, with a public option coming into replace it when it becomes obvious that insurance companies can’t handle it ”
Agreed. When the ACA has been in place long enough to collect data and our healthcare expenses are 18% GDP, on their way to 20%, and other OECD countries are spending 10%, and Vermont and a couple other states have implemented single payer, slashing costs while developing reputations for their higher standards of living, some changes in attitude will take place.
Patience is what’s prescribed.
The “Vermont Waiver” is something that the bigbiz Republican/Catfood Democrat coalition will work very hard to repeal.
Excellent point, Bob! For who, indeed. Just the same old government-sanctioned extortion, thinly disguised. Not on MY nickel they don’t.
I thought you already had my name and online address.
I hope my post hasn’t been trashed, because I forgot to copy it.
Oh well! I’m still trying to figure out how to use this blog. Must have tried at LEAST fifty times to post a response to Katniss Everdeen’s brief comment about smoking and “pre-existing conditions”. My response kept vanishing when I posted it – like, “Poof!” – sometimes followed by a brief message from the blog’s managing staff (?) telling me I “said that already”… but still, no post! Meanwhile certain other posts of mine appear here immediately; others don’t fare so well. They either go “Poof!” and vanish forever, or they take a few minutes – or awhile – to appear, or they suddenly pop up multiple times… (embarrassing!!!) If someone could please enlighten me to what the problem is, I’d sure appreciate it. Just knowing how & why this occurs, and knowing what to expect, would clear this up. A little consistency goes a long way for us less-than-tech-savvy bloggers.
Below is a video of the rescue, treatment, rehabilitation, and recovery of a dog rescued from a trash heap in Los Angeles.
If this video link does not work, the link to the HuffPo piece also contains a workable link.
[Note: This video may not be suitable for young children to view, due to the emaciated and deteriorating condition of the rescued puppy. The story does have a wonderful ending, however.]
Story featured in HuffPo. Here’s the link below.
I agree with the writer that this video is “a moving video of the extraordinary recovery — and resilience — of an abandoned dog who was left to die in a trash heap–reminding us this week of the healing power of love, friendship and second chances.”
Sorry, posted the dog rescue video in the wrong post!
Death is a pre-existing condition (you are born with that disease and you are destined to succumb from the disease so it is probability 1), yet insurance companies insure against that risk. Simply put, there needs to be a government reinsurance scheme which will reinsure pre-existing conditions. Once a health insurance company denies a pre-existing condition coverage, the government covers the cost and asks the insurer to reimburse 80% of the paid premiums to the insured.