High Deductible Health Insurance -- Golden Rule

[ERD50]

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Originally Posted by Gotadimple My point is an underfunded federal option will not create competition, it will create a marginalized population receiving sub-standard service.

Maybe I'm just misunderstanding you - but this seems like double-speak to me?

What do you mean by an "underfunded" public option regarding "competition"? It seems to me that you are saying that ins cos are charging too much (I don't disagree), but then you say that the public option needs more money than that to be "competitive"? I don't get that.

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The reason for the public option is that in many states there is only one large insurer. At least that's the reason the need for a public option has been presented.

That's the whole reason for dropping the state regulations - let's get more insurers in a territory. I have plenty of car ins cos to choose from.

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To encourage competition the various state legislators and the insurance departments can make changes to encourage entry by other players. It just hasn't been worth it to a particular state to encourage the competition. -- Rita

I suppose they could, but it would probably be like herding cats. Wouldn't this be better done at the national level?

-ERD50

[Gotadimple]

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Originally Posted by ERD50 Maybe I'm just misunderstanding you - but this seems like double-speak to me? ERD: The House version of the health insurance bill will establish a fund of $2,000,000,000 (trillion) for a public health option. There will be no other funds, and as you've said it would be pay as you go. As I've said in other threads, $2Tr is not a lot of money to compete against United Health Care (who can go to the market to get more money, and can do things to sustain a profit by investing in other businesses to generate profits). My experience with a mid-size not-for-profit insurer is that to pay claims and provide services that cover 3,000,000 people takes in excess of $500,000,000 per year. If there are 45,000,000 uninsured people who enroll in the public option, then, it would take $7.5 trillion to pay claims and provides services. * 45,000,000 uninsured is 15 times more than 3,000,000 * $500,000,000 claims/customer service/advertising/marketing costs per year * 15 = $7.5 trillion * So $2,000,000,000 can only provide services to 4,000,000 people for a single year. Who covers the other 40,000,000 people? What do you mean by an "underfunded" public option regarding "competition"? It seems to me that you are saying that ins cos are charging too much (I don't disagree), but then you say that the public option needs more money than that to be "competitive"? I don't get that. See above for my reasoning on underfunded. That's the whole reason for dropping the state regulations - let's get more insurers in a territory. I have plenty of car ins cos to choose from. Talk to your regulator and legislators. Just like any other regulated industry (think electricity, auto insurance, cell phones), the state needs to make a business environment that encourages these business to want to do business in the state. I suppose they could, but it would probably be like herding cats. Wouldn't this be better done at the national level? Yes it would. I agree with you absolutely! -ERD50

-- Rita

[ERD50]

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Originally Posted by Gotadimple My experience with a mid-size not-for-profit insurer is that to pay claims and provide services that cover 3,000,000 people takes in excess of $500,000,000 per year. If there are 45,000,000 uninsured people who enroll in the public option, then, it would take $7.5 trillion to pay claims and provides services. * 45,000,000 uninsured is 15 times more than 3,000,000 * $500,000,000 claims/customer service/advertising/marketing costs per year * 15 = $7.5 trillion * So $2,000,000,000 can only provide services to 4,000,000 people for a single year. Who covers the other 40,000,000 people? -- Rita

Either the math is funny, or your insured group is far outside the average (or both)?

I've read (and provided links along the way, could dig them up if needed), that our HC costs are $2.2T (2.2x10^12), which divided by 300 million population ~ $7300 annual per person average.

Your sample 3M people insured at $500M claims/customer service/advertising/marketing costs per year is only $167 annual per person per year?

15*$500M = 7.5 B( 7.5 x 10^9, not T).

But rather than get lost in the numbers and decimal points, let's just level the playing field. Give a voucher for that $7300 and let them choose govt or private, each has to take any/all offers. Either the govt provides better services for the $7300, or they don't. Let the people choose.

Regardless of how badly private ins cos are or are not running things now, it would be crazy to think they would not want a piece of that $7300 * 300M people.

But if your $2,000,000,000 to cover 45M people is accurate, then yes, it is underfunded, that is only $44/person/year. So it isn't really a plan, is it? When do they come back and say they need more money?

BTW, the latest figures are 30M uninsured - this seemed to have changed after someone assured us that illegal immigrants would not be covered:

Obama changes talking points on uninsured | Politics | Reuters

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WASHINGTON (Reuters) - Tucked into President Barack Obama's speech to the U.S. Congress was a new talking point -- that his aim is to get health insurance for 30 million uninsured people, not 46 million. "There are now more than 30 million American citizens who cannot get coverage," Obama said on Wednesday. Back in August, he had said: "We've got 46-47 million people without health insurance in our country." Why the change? White House spokesman Robert Gibbs said Obama was making the point that under his plan, illegal immigrants would not get health insurance. "The proposal that the president outlined covers American citizens," Gibbs told reporters. "His plan would not cover illegal immigrants."

-ERD50

[Martha]

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Originally Posted by ERD50 Turns out I was not cynical enough A First! Wolf Blitzer asks David Axelrod Some Tough Questions | Chicago Daily Observer Hot Air » Blog Archive » Video: Axelrod not comprehending what “competition” means IOW - that is NOT what we want to do. Period. They don't want to help people, they want control (or make 50% of the people dependent on them, which brings control). No cynicism, just appears to be the facts. -ERD50

There are good reasons not to allow interstate competition unless some drastic changes are made. The problem is that states regulate insurance companies. If you can buy out of state your home state's regulations don't protect you. The worry is that the worst companies win or companies mislead consumers into buying a product that can barely be called insurance and states effectively lose any ability to regulate. All it would take is one state with no regulation. Insurance companies migrate there and sell all their policies from that state. Some states already do next to no regulation of insurance companies. Now I can see this becoming less of a concern if the federal government steps in to fill the regulatory gap.



It is somewhat like state usury laws. They became close to meaningless when a credit card company based in South Dakota was allowed to market cards to people in any state. South Dakota had no or very high interest rate limits and other states' usury limits became meaningless.

[ziggy29]

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Originally Posted by Martha There are good reasons not to allow interstate competition unless some drastic changes are made. The problem is that states regulate insurance companies. If you can buy out of state your home state's regulations don't protect you..... Now I can see this becoming less of a concern if the federal government steps in to fill the regulatory gap.

Well, yeah -- I think that would have to be part of the mix. But that would also be a part of the regulation of interstate commerce, so I see no legal or constitutional issues standing in the way.

[Martha]

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Originally Posted by ziggy29 Well, yeah -- I think that would have to be part of the mix. But that would also be a part of the regulation of interstate commerce, so I see no legal or constitutional issues standing in the way.

I don't see legal issues either. The problems with prior attempts to allow insurance companies to sell anywhere was that there wasn't replacement federal regs and thus most all state governors and attorneys general opposed the attempt. The issue under reform is how much preemption of state law is going to occur. The only reason that an insurance company isn't selling in a particular state now is that they don't want to get licensed there and play by state rules. If there is preemption then the whole issue is moot.



ERD:--When thinking about competition you could say the individual insurance market is highly competitive--they compete for the youngest and healthiest and you can get a pretty cheap policy if you meet those requirements. How do you foster competition for customers no one wants? Currently, the mostly unregulated individual market say phooey, we will underwrite and you won't be our customer unless you are healthy. Making a state business friendly doesn't mean anything to me in this context.

[ERD50]

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Originally Posted by Martha There are good reasons not to allow interstate competition unless some drastic changes are made. .... Now I can see this becoming less of a concern if the federal government steps in to fill the regulatory gap.

Unless I'm missing something, this strikes me as a very 'strained' response. I don't see why this is characterized as a "drastic change". It seems much less "drastic" than going 100% single payer. We have many, many federally regulated areas now, and some of them seem to work reasonably well. I'd prefer car safety tests (for one example) to be federally regulated than state regulated by 50 different agencies.

Insurance is a fairly complex beast, so yes, I think that the feds would need to step up to the plate with some regulation. I would like to see 98% of that regulation be in the form of 'transparency' (standardized terms, some standardized plans, plus options). It should be made fairly easy for people to know what they are and are not getting for their dollar. Help them make an informed decision.

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It is somewhat like state usury laws. They became close to meaningless when a credit card company based in South Dakota was allowed to market cards to people in any state. South Dakota had no or very high interest rate limits and other states' usury limits became meaningless.

That one falls on deaf ears for me. I don't think we should have usury laws any more than we should have laws that say you can't pay more than $X for a piece of artwork, even if it was done by Picasso. The terms should be standardized so the buyer knows what they are purchasing (the time value of money in this case), then it is a contract between two entities.

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Originally Posted by Martha ERD:--When thinking about competition you could say the individual insurance market is highly competitive--they compete for the youngest and healthiest and you can get a pretty cheap policy if you meet those requirements.

That's not competition, that is target marketing. No comparison. Look at Axelrod's statements - one or two players in many states. A duopoly is not competition.

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How do you foster competition for customers no one wants? Currently, the mostly unregulated individual market say phooey, we will underwrite and you won't be our customer unless you are healthy.

This is separate from the first simple step of going national with Health Insurance. Those customers are not being pursued by companies under state regulation either. But separate from that, we've discussed this solution before - you eliminate underwriting. And you can do that by giving everyone a voucher, and let them choose public or private plans, whichever is giving them the most bang for the buck.

I probably won't have time for a while, but I've been thinking of starting a thread on "Baby Steps for HC Reform". Nationalize ins first, maybe step two is that once you are in a group plan, you cannot be dropped even if you quit or change jobs (you need to keep paying the same group rates), drop the tax benefits for employers to level the field, and a few more steps I haven't thought out yet. But I think a public option that was true pay-as-you-go could fit in that if it looked like it was needed to keep the ins cos in-line, but I suspect that real competition will do that.


-ERD50

[Martha]

I have no idea why you think my post on interstate sales of insurance was strained. As I said,"National" first is a terrible idea unless it includes federal regulation. You are taking away a state's right to license, have oversight and have certain minimum requirements, without replacement regulation it will make things worse, as I described above. I am ok if you regulate federally but then things are no longer simple. Do we regulate to the lowest common denominator or highest? These are not easy questions because states do things differently, especially with coverage mandates like mental health treatment. Transparency is part of the mix but I dont care about transparency much if the cost isn't affordable. If we have an unstable individual market as I discussed in other posts we have a big risk of having an unaffordable individual market. We also can end up with plans that are far from adequate but that is all you can afford. Transparent is only relevant if you can afford to shop for what you need.

Well, I am sitting in a seminar right now so I should go back to paying attention.

I know vouchers appeal to you and they may be fine to me as well, but no proposals have vouchers so it is fun to talk about but not practical. I think it would be worthy of a letter to your representatives and senators however.

[ERD50]

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Originally Posted by Martha I have no idea why you think my post on interstate sales of insurance was strained.

Because it seemed very odd to me to even suggest that going from State level to National level would involve elimination of regulation. It struck me as rather 'dismissive' of the whole idea, by throwing in a scenario that I would never even imagine. But I don't want to get hug up on that, so anyway - sure diff states have diff regs now, but I don't see that as insurmountable. You can't have reform w/o some change, right?

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I know vouchers appeal to you and they may be fine to me as well, but no proposals have vouchers so it is fun to talk about but not practical. I think it would be worthy of a letter to your representatives and senators however.

Whether we actually get vouchers or not, I still think they are useful for the discussion/education. It's one way of stressing/illustrating "pay-as-you-go" and real competition.

With a voucher, *everyone* could shop for what they need (they get the voucher if they can't afford it). Transparency is an integral means to control costs, not some sideline "feature". I keep hearing from some that the public option would be so much more affordable w/o the private overhead/profit, etc, but why is there so much fear of allowing the private sector to compete on a level playing field? And if the public option is funded from the general fund/debt, how do we ever know how they are doing? Just like Cash for Clunkers, they will tell us how "successful" the program is, with "success" being defined as "giving stuff away to some people".

Yes, I write my reps. They are puppets. I might get a nice form letter back telling me just how wonderful the proposals they support are and how "successful" Cash for Clunkers was, etc, etc, and how much they appreciate hearing from their constituents (but we are gonna do what we are gonna do, sucka!). While I don't approve of the more raucous style used by some at the Town Hall meetings (and probably blown out of proportion by the media - a noisy TH meeting makes more news than a civil one), I can understand the frustration that many of us just are not being heard.

-ERD50

[Martha]

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Originally Posted by ERD50 Because it seemed very odd to me to even suggest that going from State level to National level would involve elimination of regulation. It struck me as rather 'dismissive' of the whole idea, by throwing in a scenario that I would never even imagine. But I don't want to get hug up on that, so anyway - sure diff states have diff regs now, but I don't see that as insurmountable. You can't have reform w/o some change, right?

OK, what you might not know was that several years ago there was a proposal to allow interstate sales of insurance to small
businesses and there would not have been any federal regulation. State governors and attorney generals were very upset about this.

[ERD50]

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Originally Posted by Martha OK, what you might not know was that several years ago there was a proposal to allow interstate sales of insurance to small businesses and there would not have been any federal regulation. State governors and attorney generals were very upset about this.

Nope, not aware of that. It obviously didn't get very far, even though it covered only one segment of the population. I just can't imagine a proposal for unregulated national insurance for all having a snowballs chance, especially in the current political climate.

-ERD50

[ziggy29]

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Originally Posted by Martha OK, what you might not know was that several years ago there was a proposal to allow interstate sales of insurance to small businesses and there would not have been any federal regulation. State governors and attorney generals were very upset about this.

If state governments had their way, you wouldn't be able to buy stuff from out-of-state vendors either, I suspect.

The state is only concerned about getting its cut of taxes and fees. It's all about the Benjamins, and state and local governments never saw a revenue source they didn't want to tap...

[Martha]

Ziggy, I am not that cynical. I think that a number of states' attorneys general are very concerned about consumer protection and they were the most vocal opponents of the proposal to open up the borders to out of state health insurance companies. (see, eg Powered by Google Docs) They tend to get especially ticked off when someone asserts federal preemption when there are weak or no federal regulations in place. Some might remember when the OCC asserted that it, not the states, had authority over all matters pertaining to national banks, and states could not enforce their consumer protection laws against the banks even though there were no similar federal laws. This is hot button stuff to states who really push consumer protection issues and can't be minimized when we talk about insurance reform.

[ERD50]

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Originally Posted by Martha I think that a number of states' attorneys general are very concerned about consumer protection and they were the most vocal opponents of the proposal to open up the borders to out of state health insurance companies. (see, eg Powered by Google Docs) ...

Martha, that letter illustrates why I described any notion that regulation of the insurance industry would be eliminated as 'strained'.

"Regulation" is one of the favorite words of the current current administration. And that bill you refer to was written by the minority party. Snowball's chance doesn't even come close to describing the odds of something like that even getting any consideration today, let alone signed into law.

Another thing I just cannot fathom is why some people link "public option" with "cost containment". Here's some reality regarding "public options" - tuition at our state college went up 14% this year. What was inflation? Why isn't Congress targeting these obscene increases? It seems that increases are only "bad" when they are from the private sector? Why isn't Michael Moore doing a creative "expose" on rising costs and poor performance of our public school system? Why aren't our public schools containing costs if the govt is so good at eliminating overhead, has no need for profits, etc? In my view, a "public option" mostly trades one problem for another, w/o fixing any root causes.

-ERD50

[Martha]

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Originally Posted by ERD50 Martha, that letter illustrates why I described any notion that regulation of the insurance industry would be eliminated as 'strained'.

You are working to hard to minimize a valid point I made. When you said "national first" without saying what you would do to regulate the national sale of insurance, red flags go up for me.

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Another thing I just cannot fathom is why some people link "public option" with "cost containment". Here's some reality regarding "public options" - tuition at our state college went up 14% this year. What was inflation? Why isn't Congress targeting these obscene increases? It seems that increases are only "bad" when they are from the private sector? Why isn't Michael Moore doing a creative "expose" on rising costs and poor performance of our public school system? Why aren't our public schools containing costs if the govt is so good at eliminating overhead, has no need for profits, etc? In my view, a "public option" mostly trades one problem for another, w/o fixing any root causes.

As you know, the idea is to run it like a non-profit and have it pay for itself through premiums. The track record on administration costs for the government in healthcare is pretty good; Medicare administration costs are a smaller share of expenditures than administration costs of private insurers. For example, the CBO found that administrative costs under the public Medicare plan are less than 2 percent of expenditures, compared with approximately 11 percent of spending by private plans under Medicare Advantage. And this does not include the profit that Medicare Advantage providers take.

I don't know how much the public option will help--I am going to talk to an economist I know about the issue. I am still worried about the public option ending up like the private insurance market--unstable and expensive, even if underwriting is eliminated. I am worried that people can't afford the public option--their premiums will have to be subsidized. Also, I have a hard time seeing it work unless it has the same kind of tax benefits that employer insurance has or if you remove the tax benefits from employer insurance. Otherwise the playing field isn't level. But I sure do like the idea of reducing administrative costs and that is money that doesn't go to care.

But I do think that everyone agrees that the public option is just a small piece and isn't even close to enough alone. Is there going to be price regulation? What will it be? You favor vouchers which is price regulation of a sort. There are all sorts of other things we have to look at to keep costs down. I have mentioned just a few things to look at in other posts.

[Ed_The_Gypsy]

Now matter how it turns out, I have absolute confidence...that my government will screw it up.

[ERD50]

So many points, so little time to post

I'll tackle this one, maybe get to the others later...

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Originally Posted by Martha You are working to hard to minimize a valid point I made. When you said "national first" without saying what you would do to regulate the national sale of insurance, red flags go up for me.

My failure to explicitly mention it shouldn't raise a red flag. I honestly feel that it just isn't realistic to think that any nationalized insurance plan would go anywhere if it did not include some regulation at the national level. Heck, it does not seem to be going anywhere anyhow. So I didn't bother to mention it. My posts get long enough as is

So I agree with you - a totally non-regulated national ins plan could be bad. But it isn't a valid argument against nationalized ins, it's only an argument against unregulated nationalized ins.

-ERD50

[Martha]

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Originally Posted by ERD50 So I agree with you - a totally non-regulated national ins plan could be bad. But it isn't a valid argument against nationalized ins, it's only an argument against unregulated nationalized ins. -ERD50

Of course.

[growing_older]

I thnk the insurance industry has amply proven that they cannot be unregulated. Their longstanding record of obscure rules and preauthorization requirements in order to disallow claims will only get much worse if insufficiently regulated. Their growing practice of rescinding coverage retroactively to people who actually make legitimate claims - based on trivial discrepancies that are impossible for consumers to avoid - will absolutely continue to make the very idea of insurance unworkable - unless checked by strong regulation.