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Old 11-24-2011, 11:09 AM   #21
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I guess the following will certainly make those opposed to the new law mad but it is a question I have had. I live in a state that requires you to carry car insurance. I know the states have the right to require you to purchase a product and that the federal governments right to require you to purchase this product is in question but that is not what my comment is about. Once this law went into effect my insurance rates went down as I was no longer paying as high a un-insured motorist premium. why would we not see the same thing with health care as most would now be covered with insurance than are not now?
If all car insurance was guaranteed-issue regardless of your driving record, prices would rise for everyone. Your car insurance policy is still underwritten and someone with a DUI is still paying 5x the price for half the coverage. When underwriting is eliminated, those with good driving records would be forced to pay more to cover those with bad driving records. Same thing applies with health insurance - those that are healthy and can qualify for lower-priced insurance on the individual market will no longer have that advantage. Older, unhealthy people will come out ahead while young healthy people will be screwed. Most people under 30 that don't want to get pregnant (to "use" their health insurance) won't buy health insurance for $100/month, let alone $300-400/month. This will contribute to an insurance premium death spiral.
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Old 11-24-2011, 11:14 AM   #22
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If all car insurance was guaranteed-issue regardless of your driving record, prices would rise for everyone. Your car insurance policy is still underwritten and someone with a DUI is still paying 5x the price for half the coverage. When underwriting is eliminated, those with good driving records would be forced to pay more to cover those with bad driving records. Same thing applies with health insurance - those that are healthy and can qualify for lower-priced insurance on the individual market will no longer have that advantage.
Does anyone ever expect that there would be "no underwriting" car insurance? I surely don't.

There are ways to deal with the idea that some lifestyles are "less healthy" than others. For example, if the taxes on alcohol, tobacco, Big Macs and the like were used to fund the health insurance subsidies, then the users of those products are indeed (indirectly) paying a "surcharge" for their lifestyle choices. If the public health costs of alcohol abuse is (for example) 52 cents per drink, then add a 52 cent health care tax per drink and heavier drinkers are no longer being subsidized overall. You could do the same with a pack of cigarettes. (Am I saying this is the system I want to see? Not necessarily, but I am saying there are easy ways around the "subsidizing bad lifestyle choices" argument in the form of targeted taxes on certain products that increase health care costs.)

Also, any analysis of the "public cost" of unhealthy lifestyles should include some offset for the fact that these folks will be receiving Medicare and Social Security for several years less on average. So if someone can charge a "bad health risk" more because of health care costs to the public, why don't they get a "discount" on Social Security (lower tax rates or higher payouts) since they'll probably collect, say, 5-7 years less than a "healthy" individual and won't cost these entitlement programs as much as a "healthy" person?
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Old 11-24-2011, 11:17 AM   #23
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Does anyone ever expect that there would be "no underwriting" car insurance? I surely don't.

There are ways to deal with the idea that some lifestyles are "less healthy" than others. For example, if the taxes on alcohol, tobacco, Big Macs and the like were used to fund the health insurance subsidies, then the users of those products are indeed (indirectly) paying a "surcharge" for their lifestyle choices. If the public health costs of alcohol abuse is (for example) 52 cents per drink, then add a 52 cent health care tax per drink and heavier drinkers are no longer being subsidized overall. You could do the same with a pack of cigarettes.

Also, any analysis of the "public cost" of unhealthy lifestyles should include some offset for the fact that these folks will be receiving Medicare and Social Security for several years less on average. So if someone can charge a "bad health risk" more because of health care costs to the public, why don't they get a "discount" on Social Security since they'll probably collect, say, 5-7 years less than a "healthy" individual and won't cost these entitlement programs as much as a "healthy" person?
Do we expect car insurance to be guaranteed-issue? No, but I am just making the point as to how it would change prices in the market if that's how it worked.
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Old 11-24-2011, 11:25 AM   #24
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Do we expect car insurance to be guaranteed-issue? No, but I am just making the point as to how it would change prices in the market if that's how it worked.
Maybe so. But something involving public funds can more easily find other ways to surcharge these bad choices than only through underwriting and direct premiums.

I guess what I'm saying is that as long as these "subsidies" for unhealthy choices come from pools of public money, it's not that hard to work around it through levying taxes on the use and consumption of these "unhealthy" products at the point of sale. Private insurers can't levy taxes this way, so their only way to "price risk" is through underwriting. To the extent public subsidies are involved, these subsidies could be paid out with money raised through taxes on booze, cigarettes, fast food or whatever else. Again, this isn't something I'm specifically advocating but "no underwriting" with public subsidies doesn't have to mean people making less healthy choices won't pay one way or another.
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Old 11-24-2011, 11:26 AM   #25
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Under the new law they are allowed to charge more as you age so that younger people pay less than older people? This is not full medical underwriting but it does balance the premiums some.

Another point is at least after 2014 those that are un-insured now will be paying something which will offset some costs as we are paying for their care now.

I certainly see your point since that is what happens today in the individual market as those that were in good health lose it which we all will. they can no longer move groups and thus see their rate spiral out of control.

I will share my opinion as I respect your also. I think the new law is somewhat better than what we have now for the following reason. I think that we only have two choices, the new law, or go back to the old system. The actions of the parties say they will not offer improvements as they have not yet in meaningful way. If they were serious the repeal bill would have detailed the replacement options and would have quite possibly garnered enough votes to pass.
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Old 11-24-2011, 11:28 AM   #26
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It appears to me that large groups have less underwriting than small groups yet also have lower premiums. Changes in premiums are far more exposed to factors such as cross subsidies and tax treatment. Death spiral? Hardly.
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Old 11-24-2011, 11:31 AM   #27
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I will share my opinion as I respect your also. I think the new law is somewhat better than what we have now for the following reason. I think that we only have two choices, the new law, or go back to the old system. The actions of the parties say they will not offer improvements as they have not yet in meaningful way. If they were serious the repeal bill would have detailed the replacement options and would have quite possibly garnered enough votes to pass.
There are aspects of this law I very strongly dislike. I don't like how the subsidy phases out to feel like an additional 15% tax on middle class incomes, and I don't like the stupid requirement of "going naked" for 6 months before you can buy into the federal high risk pool. And I don't like that the 800-pound gorilla in the health insurance problem -- runaway inflation -- was basically ignored. But I don't know that keeping the status quo is a better option.

I would like to see them going to work to fix some of what I think are oversights and deficiencies, but I don't want to see an outright repeal unless it comes with something better at the same time -- not later, but at the time of repeal.
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Old 11-24-2011, 11:34 AM   #28
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It appears to me that large groups have less underwriting than small groups yet also have lower premiums. Changes in premiums are far more exposed to factors such as cross subsidies and tax treatment. Death spiral? Hardly.
Economies of scale are certainly a factor, but additionally many large employer-sponsored groups (including my employer's plan) are self-funded where the employer actually pays out the claims, so the only "profit" for the insurance company is in their administration of the plan, reducing overhead.
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Old 11-24-2011, 11:46 AM   #29
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There are aspects of this law I very strongly dislike. I don't like how the subsidy phases out to feel like an additional 15% tax on middle class incomes, and I don't like the stupid requirement of "going naked" for 6 months before you can buy into the federal high risk pool. And I don't like that the 800-pound gorilla in the health insurance problem -- runaway inflation -- was basically ignored. But I don't know that keeping the status quo is a better option.

I would like to see them going to work to fix some of what I think are oversights and deficiencies, but I don't want to see an outright repeal unless it comes with something better at the same time -- not later, but at the time of repeal.

I agree with your comments. Thanks to all for sharing. If our politicians would only do the same!
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Old 11-24-2011, 07:05 PM   #30
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From what I have read, and the last decision by the appeals court, it looks like this might get through.... IOW, most of the people who I have seen on TV say the 4 liberal judges will vote to keep it and there are two or three conservative judges that might vote to keep it since it would follow some of their previous decisions on other cases... IOW, it might not be 5-4...
That's what some Court watchers expect, that upholding the individual mandate, as conservative Appeals Court judge Laurence Silverman did recently, would be consistent with their previous rulings.

But of course, that's no guarantee.

Then there is the issue of severability. Court could rule the individual mandate is unconstitutional but uphold the rest of the provisions, such as no pre-existing conditions, no price discrimination based on age, etc., which is what one federal court ruled.

Or they could strike the whole thing down, which means rising premiums, more people losing coverage and the politicians unable/unwilling to make major reforms on something which will eat up more and more of the GDP.
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Old 11-24-2011, 11:30 PM   #31
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The timing of the expected decision is certainly convenient in one sense. The decision is due in June. If the law stands intact, it seems that those with pre-existing conditions looking to ER could decide to do so on or after July 1 and get coverage under COBRA for 18 months. This would provide guaranteed issue coverage until 1/1/2014 at which time pre-existing exclusions are no longer permitted. Think we'll see the labor force participation rate take a spike downwards if the law and particularly the mandate is upheld?
The supreme ct could uphold or strike down some or all of the obamacare provisions - sure. But that is not the only way obamacare could be impacted in the next 2 years. The 2012 elections could result in a land slide victory for the republicans who get a sufficient majority to overhaul or kill obamacare, right? And that could theoretically happen into 2013.
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Old 11-25-2011, 06:18 PM   #32
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The supreme ct could uphold or strike down some or all of the obamacare provisions - sure. But that is not the only way obamacare could be impacted in the next 2 years. The 2012 elections could result in a land slide victory for the republicans who get a sufficient majority to overhaul or kill obamacare, right? And that could theoretically happen into 2013.
Your situation could happen so I wonder if the "good stuff" like keeping children on your policy was front loaded on purpose, to try to boost public support for the entire plan. Out of curiosity, since my individual plan was bought prior to the Health Care Act, I checked qoutes on my exact plan that is offered now. It is 25% higher than what I am paying. Now it isnt as bad as it sounds because my premium is about $72, and its now about $90. You take the difference in monthly premium and times it by 12 and the difference basically is the cost of the "free" annual physical that is now mandated. It appears the insurance company just passed that cost on in the form of a premium increase. In my case anyways, it appears a wash.
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Old 11-25-2011, 09:06 PM   #33
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It appears to me that large groups have less underwriting than small groups yet also have lower premiums. Changes in premiums are far more exposed to factors such as cross subsidies and tax treatment. Death spiral? Hardly.
I am not talking about large groups versus small groups. I'm talking about group health insurance prices versus individual health insurance prices. Most of my clients cannot afford more than ~$100-200/month per person insured, so raising the price for them to obtain coverage to $250-600/month per person insured is not going to help anything. Younger, healthier people will mostly take their chances opting out of the system until they need it. As there are less young and healthy people in the pool, rates will have to increase to account for the older, sicker population of the pool. This will further drive more young/healthy out of the pool, and the process repeats itself until only the unhealthiest with urgent, immediate, expensive needs are left. That is an insurance death spiral.

On a side note, if nothing changes, the small group market will likely be obliterated when 2014 comes around. There would be no incentive for small business owners to offer health insurance as an employee benefit when it is easily obtainable on the open market at the same prices. There will probably be a lot more HRA plans where the employer just gives the employee a fixed amount each month to use towards whatever coverage they want.
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Old 11-25-2011, 09:56 PM   #34
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I am not talking about large groups versus small groups. I'm talking about group health insurance prices versus individual health insurance prices. Most of my clients cannot afford more than ~$100-200/month per person insured, so raising the price for them to obtain coverage to $250-600/month per person insured is not going to help anything. Younger, healthier people will mostly take their chances opting out of the system until they need it. As there are less young and healthy people in the pool, rates will have to increase to account for the older, sicker population of the pool. This will further drive more young/healthy out of the pool, and the process repeats itself until only the unhealthiest with urgent, immediate, expensive needs are left. That is an insurance death spiral.
I understood what you meant, but you missed my point. To focus only on the rates of a select few that are young and healthy, whine that those rates will increase and call it a death spiral is an exaggeration.

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On a side note, if nothing changes, the small group market will likely be obliterated when 2014 comes around. There would be no incentive for small business owners to offer health insurance as an employee benefit when it is easily obtainable on the open market at the same prices. There will probably be a lot more HRA plans where the employer just gives the employee a fixed amount each month to use towards whatever coverage they want.
If the small group market is "obliterated" the US would be better off. Pricing in that segment is an abuse and forcing health insurance through employment makes companies uncompetitive.
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Old 11-25-2011, 10:16 PM   #35
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I understood what you meant, but you missed my point. To focus only on the rates of a select few that are young and healthy, whine that those rates will increase and call it a death spiral is an exaggeration.

If the small group market is "obliterated" the US would be better off. Pricing in that segment is an abuse and forcing health insurance through employment makes companies uncompetitive.
The two go hand-in-hand. If the small group market disappears, young healthy people will be even more likely not to make the choice of buying health insurance because for most of them, it hasn't even entered their mind until the employer offers it to them (note - I personally don't think health insurance should be tied to employment).

Whether young and healthy or older and healthy, the higher rates go, the less likely that any healthy people will be to buy health insurance, and we end up right back in the death spiral. I think you may be highly underestimating the actual cost of insurance in 2014 on the individual market.
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Old 11-26-2011, 09:54 AM   #36
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The two go hand-in-hand. If the small group market disappears, young healthy people will be even more likely not to make the choice of buying health insurance because for most of them, it hasn't even entered their mind until the employer offers it to them (note - I personally don't think health insurance should be tied to employment).

Whether young and healthy or older and healthy, the higher rates go, the less likely that any healthy people will be to buy health insurance, and we end up right back in the death spiral. I think you may be highly underestimating the actual cost of insurance in 2014 on the individual market.
IMHO, I have to agree with you. Although I have dutifully either paid for or recieved health insurance my entire adult years, at 47 years old now, and from here on out, I am in the individual market ( I could have stayed on my employers health plan, but prefer to pay under a $1000 a year, than over $6000 a year in premiums). But, if rates spiral out of control when the full plan is implemented and the penalty for not having it is considerably cheaper, I will be very tempted to go without and pay the fine. I say this purely from a statiscal odds stand point that what about, a quarter or so of the population consume most of the healthcare costs. Knowing where I am healthwise and my family health, the odds are very stacked in my favor that Ill be past 65 before I need much medical assistance. Im sure healthy 25 year olds would be more inclined than I am to gamble, too. Barring a car wreck or falling off a roof, I truly believe I will spend more on my teeth than any health issues, before 65. I would have preferred "A National Dental Care Act" more than the Health Care Act, but I admit for the time being that I am fortunate that health costs and premiums are minimal expenses to me now. If I had unfortunate health issues, I know my opinion would be very different, or I would still be working staying teethered to the company paid health plan.
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Old 11-26-2011, 12:22 PM   #37
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I am not talking about large groups versus small groups. I'm talking about group health insurance prices versus individual health insurance prices. Most of my clients cannot afford more than ~$100-200/month per person insured, so raising the price for them to obtain coverage to $250-600/month per person insured is not going to help anything. Younger, healthier people will mostly take their chances opting out of the system until they need it. As there are less young and healthy people in the pool, rates will have to increase to account for the older, sicker population of the pool. This will further drive more young/healthy out of the pool, and the process repeats itself until only the unhealthiest with urgent, immediate, expensive needs are left. That is an insurance death spiral.
I don't know anyone who is advocating a system that produces massive adverse selection as you are describing here. Yes, if done wrong -- if there is no universal mandate and there are insufficient penalties for going uninsured -- this could happen.

Pretty much everyone who supports a system with no underwriting recognizes that it can not happen without a "universal mandate" -- and the penalty for noncompliance needs to be stuff, at least as expensive as a high deductible health insurance policy would cost. And as I've said before, with public subsidies (or a public option) there are ways to recoup the costs of "unhealthy lifestyle choices" at the cash register.
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Old 11-26-2011, 02:14 PM   #38
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I don't know anyone who is advocating a system that produces massive adverse selection as you are describing here. Yes, if done wrong -- if there is no universal mandate and there are insufficient penalties for going uninsured -- this could happen.

Pretty much everyone who supports a system with no underwriting recognizes that it can not happen without a "universal mandate" -- and the penalty for noncompliance needs to be stuff, at least as expensive as a high deductible health insurance policy would cost. And as I've said before, with public subsidies (or a public option) there are ways to recoup the costs of "unhealthy lifestyle choices" at the cash register.
The penalties in the healthcare bill are not even close to the cost of health insurance, making it an easy choice for people who wouldn't otherwise buy anyway. The way the bill is written, anyone buying a policy outside the exchange will have to pay the penalty in addition to the cost of health insurance simply because their policy doesn't meet the government's definition of the health insurance that people should have. Therefore, with the cost of health insurance inside the exchange being so expensive, many people will opt out and the adverse selection will begin. That is my opinion and while you don't have to agree with me, I challenge you to try selling health insurance for more than $100/month to young healthy people and see how far you get.
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Old 11-26-2011, 02:25 PM   #39
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The penalties in the healthcare bill are not even close to the cost of health insurance, making it an easy choice for people who wouldn't otherwise buy anyway. The way the bill is written, anyone buying a policy outside the exchange will have to pay the penalty in addition to the cost of health insurance simply because their policy doesn't meet the government's definition of the health insurance that people should have. Therefore, with the cost of health insurance inside the exchange being so expensive, many people will opt out and the adverse selection will begin. That is my opinion and while you don't have to agree with me, I challenge you to try selling health insurance for more than $100/month to young healthy people and see how far you get.
Concerning the governments definition of health insurance, I know many people have expressed concern over the future of HSA's. There has been a furious movement to this type of coverage by companies for their employees. Will this unfolding process help protect HSA's after 2014 you think, since so many people will be involved in them by then?
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Old 11-26-2011, 03:03 PM   #40
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The penalties in the healthcare bill are not even close to the cost of health insurance, making it an easy choice for people who wouldn't otherwise buy anyway.
I agree that's a problem with the law as passed just as it was (and is) a problem in the Massachusetts law. But that's not something that can't be "fixed" -- it's just something where the political will wasn't there to adequately *enforce* a universal mandate.
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