Official Brief Comparison of House/Senate HC plans

[Gone4Good]

Do you know what the percentage of rescinded policies is for states that underwriter coverage? Slim to none, and 98% of the time there is a good, valid reason for it. Many people have selective memory when filling out insurance applications, whether it be for health, life, disability, etc.

Please provide a reliable source to back up this claim.

Here's what insurance industry execs told Congress this summer . . .

Late in the hearing, Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them [insurance company CEOs] whether he would at least commit his company to immediately stop rescissions except where they could show "intentional fraud."


The answer from all three executives:


"No."

And rescissions aren't the only way to get at this. Martha summed it up nicely here:

They also can raise rates for everyone on a particular plan, driving out the healthy who can get underwritten so they buy a cheaper plan and leaving the unhealthy behind with a very expensive plan.

They can offer a new deal to those who can get underwritten, leaving behind the unhealthy and then raising their rates because of the bad group experience.

HIPAA doesn't bar rate increases. Some states do not bar raising rates because of claims by an insured.

But of course you know that because you were part of that thread and agreed at the time . . .

I very much agree that something needs to be done about the ability to rescind a policy. I don't care whether you are Republican, Democrat, for health reform or against it, it's pretty much universally agreed upon that hte practice of rescission needs to be eliminated, or at least limited to obviously intentional fraud (like a smoker claiming they are a non-smoker and then getting lung cancer). Unfortunately, arguing about the technicalities is what lawyers are for.

That's what I wrote above about the practice of "blocking" [in response to Martha's comment quoted above]. Scummy, but that's what they do and you have to play the game the way the rules are set as of now.

So again, I ask, what is the value premium on a policy where these things are prohibited versus where they are not? If we're going to compare costs across states, lets at least compare apples to apples.

 

[Gone4Good]

But it does next to nothing to make changes to the system that will stop double-digit inflation in health care. THAT, to me, is the 800-pound gorilla in the room; solve it and ALL the other problems become much more solvable. Ignore it and no matter what you do, in another couple of years you have another crisis. Health care reform is an intractable (if not impossible) problem to solve without getting costs under control.

We should address the health care inflation problem first, or at least concurrently. That is the problem which has made all the others so much worse.

I agree with all of this and am disappointed that the bill mostly deals with things that are politically "easy" to do - like extending coverage.

But a large part of the blame for that has to be borne by those who demagogued any attempts at controlling costs as instituting death panels and the like. If we actually had a grown up political process, and electorate, we could have had a better bill. But we don't. So it isn't.

 

[dgoldenz]

Please provide a reliable source to back up this claim.

Here's what insurance industry execs told Congress this summer . . .

I don't have a source, I just know that people applying for health insurance tend to suffer from bouts of selective memory when filling out applications. I am 100% in favor of changing the law to only allow rescission in the case of fraud, so I am not disagreeing with you on that.

The question is - who can afford the insurance when it costs $1,000 per month, or $2k per month, or $4k per month? At some point, you just take your chances. Like I said, if you can't write the check, you can't write the check. That has nothing to do with rescission.

 

[samclem]

The options to fix this are:

1) No subsidies
2) Subsides that phase out above the middle class
3) Single payer insurance

Of the three, the third option is actually the best but the one you probably like least.

Another option--straight (no tiered rate) income-based caps on medical expenditures. Subsidies after you've spent the determined percentage.

Rationale: If medical care is such a basic necessity (like food and shelter), then it is entirely reasonable that everyone be willing to pay a percentage of their income for their own care. There's no free lunch, and this is a got-to-have service. The present tax code implies that the gummint believes 7% is a starting point--I'd say 15% is probably a lot closer to the mark . No "standard deduction," no "personal exemption" etc: from the first dollar of income, people would be expected to have available 15% for their medical needs. "Medical needs" = the insurance premiums for the govt-sanctioned high-deductible private policy and any co-pays or cash payments made by the patient for medical services. When a taxpayer exceeds the 15%, then the government subsidies kick in for essential services. No tummy-tucks or IVF, but cancer treatment.

With this system, it might be feasible to not have a personal mandate. We'd still need community rating.

This is a great deal for the poor, it asks them only to contribute to their care the same % as everyone else. And, yes, I do think it would fair to deny any publicly-funded care (or to mandate privately-funded care) to those who won't participate.

 

[ziggy29]

The options to fix this are:

1) No subsidies
2) Subsides that phase out above the middle class
3) Single payer insurance

Of the three, the third option is actually the best but the one you probably like least.

Methinks you are making assumptions about my ideology that probably not entirely correct. I have some reservations about single payer (especially when looking at what Medicare is facing) but I would reserve judgment until I saw the details.

I'm not too ideological about health care reform. The devil is in the details, and my thought processes tend to look for unintended consequences.

 

[Gone4Good]

I don't have a source, I just know that people applying for health insurance tend to suffer from bouts of selective memory when filling out applications.

This is harder than you think. We're in the process of doing it now, and trying to do it honestly. When asked the question "please list all of the medical conditions you've been treated for over the past five years" it is surprisingly hard to remember and be 100% certain you've listed everything. Do you even know what's in the medical file of every doctor you've visited in the last five years? If he writes down "high blood pressure" but doesn't think it serious enough to mention to you you're screwed. In our personal situation we have an instance where a strange symptom was treated but never diagnosed as something specific, what do we put down for that?

Combine those challenges with the fact that the application is written by lawyers for a company that actually wants you to make mistakes and you don't have a chance.

Now add in all of the other ways the insurance company can drop you or raise your rates over time once you get sick and it makes "low cost" individual health insurance basically worthless in my view.

So you can get a basically worthless policy from a "low cost, low regulation" state or a high cost policy that does what it says it will do but may be unaffordable. Those are your choices now. Seems like reform is a far better option.

 

[Gone4Good]

Methinks you are making assumptions about my ideology that probably not entirely correct.

I did use the word "probably".

 

[Gone4Good]

Another option--straight (no tiered rate) income-based caps on medical expenditures. Subsidies after you've spent the determined percentage.

I like this approach and have argued for something similar in the past.

But you still have to pay for it, and it was the funding mechanism that we were talking about. To avoid the impact on marginal rates you're still left with the three options I identified, no?

Plus, if you determine out of pocket expenses as a percentage of income you are still creating an incentive to reduce income (which was the basic problem Ziggy had with the way the subsidies are structured under the existing bill).

This is a hard nut to crack. All things considered I think they did a good job within the confines of what is politically possible.

 

[Texas Proud]

Here is what I see.... we wanted them to 'fix' the cost of health care.... but I see three big categories....


1> Fix the cost of health care

2> Fix access to insurance (insurance reform)

3> Provide coverage to the uninsured (universal coverage)


The problem is most of the people I know want them fixed in that order... and a number do not want #3... because THAT is what is costing so much money....

But they are trying to get #3 first with a few items thrown in for #2 to make it worthwhile for a good number of people... with very very little (or no) items for #1....

The problem is if you do NOT fix #1 (as others have said), it really does not much matter if we have #2 or #3... and if you do NOT fix #1, then #3 WILL bankrupt the country (well, not really since by then we will really start to ration and not have a good system)....

 

[ziggy29]

The problem is if you do NOT fix #1 (as others have said), it really does not much matter if we have #2 or #3... and if you do NOT fix #1, then #3 WILL bankrupt the country (well, not really since by then we will really start to ration and not have a good system)....

Agreed! I would be MUCH more open to considering #3 (universal single-payer) if we first got #1 (cost and inflation pressures) under control.

 

[Martha]

How do you control cost? The best bet is to try to emulate low cost areas that have good outcomes and probably weaning away from pay per service. There are a number of people who are working on this issue, it isn't like it isn't being talked about. This is a good article that discusses efforts to get a handle on the cost issue: Health Affairs Blog A good place to read about the cost issues is National* Institute of* Health Policy.

 

[samclem]

Considering the legislation at hand--I do hope that it can be unwound in an elegant way if required. As our discussions here illustrate, the proposed package addresses a lot of symptoms without getting at the underlying causes. Whatever fragile political consensus used to exist is evidently fast on the wane. The astounding shakeup in the Massachusetts senatorial special election race has got to waking a lot of people up right now. If a race in very-liberal MA is within single-digits, it's time for everyone (on both sides of the aisle) to acknowledge that there has been a major sea change among the electorate.
Given that, I hope that whatever package might get passed in the coming weeks is something that can be undone at minimal cost and disruption to the health care of Americans when the time comes. Good plans of any type usually feature "what if" branches and sequels that allow for flexibility in the event of unanticipated changes in the situation. That would be good here, too. If, instead, the plan deliberately incorporates lots of devices to shackle the American people to this construct even if the political consensus changes, it will validate the growing cynicism of the voters.

 

[Martha]

I agree that people are frustrated with the health care bill process. Most of the time people dont pay much attention to legislation being made and this one put it all out there for people to see. My frustrations as a liberal are very different from the frustrations of a conservative. The frustrations do not mean that the public has suddenly turned conservative. (Though mid term elections always seem to lose seas for the incumbent party) It is hard to see how starting over is going to help at all. I also agree with Yrs to go, politically has been next to impossible to address many of the cost issues--too many scare tactics and not enough careful thought. It has been very disappointing to watch. Just getting provisions in the bill allowing Medicare to experiment with reimbursement mechanisms has been extremely difficult.

If a pollster asked if I liked the senate bill I would say no. But I also would say we need to pass a bill. My feeling is we need to pass it and work on it after it is in effect. It just is the first step of many. But I sure would like to see some changes made in the bill before it passes.

 

[ziggy29]

If a pollster asked if I liked the senate bill I would say no. But I also would say we need to pass a bill. My feeling is we need to pass it and work on it after it is in effect. It just is the first step of many. But I sure would like to see some changes made in the bill before it passes.

The big problem is that cost containment is Issue #1, but that requires buy in from a lot of representatives and senators who are in the pocket of special interests (of all sides of the dabate). Doesn't matter whether it's Big Pharma, the insurers, unions, trial lawyers, seniors or any other powerful lobby -- the bottom line is that cost containment requires leaving NO sacred cows and no stones unturned. But as soon as you threaten one of these fiefdoms, it's time to scream bloody murder and watch nothing get done in the sausage-making process.

The net result is a half-baked reform package that avoids seriously infringing on any of these overly-powerful lobbying groups, thus getting the support needed on Capitol Hill to pass something.

 

[samclem]

The net result is a half-baked reform package that avoids seriously infringing on any of these overly-powerful lobbying groups, thus getting the support needed on Capitol Hill to pass something.

And so this time the proponents made an effort to buy off everyone up front. The AMA got a special deal to exempt doctors from cuts for a couple of years and (more importantly perhaps) were assured that the new arrangement would preserve the AMA's very lucrative federally-enforced monopoly on their "medical coding" business. The insurers were bought off with promises of govt-enforced individual mandates and a continuation of the practice of restricting interstate sales of insurance (thus reducing competion and preserving the protected territories of inefficient, high-cost insurers). The proponents of the new health care promised the drug companies that reimportation of drugs would continue to be banned and that they'd get other concessions/protections on prices. All of this was worked out in private away from the inconvenient glare of public scrutiny.

And then a great thing happened: the lawmakers broke their word and some of the sweatheart deals were abrogated. A cry went up among the other plotters and the whole stinking, corpulent compact of special favors and secret deals collapsed in front of everyone. Hooray! There truly is no honor among thieves.

 

[FIRE'd@51]

Here are are a couple of questions I have about this bill?

How does it really improve portability?

If those who are satisfied with their current policies can keep them, how will the new policies without underwriting be priced, especially since they will disproportionally attract those who can't pass underwriting? IMO, this bill perpetuates adverse selection by not expanding the risk pools dramatically.

If the Congress really cared about meaningful healthcare reform, they would open up the Federal employees' health plan to everyone (other than Medicare patients). That plan includes immense risk pools with premiums negotiated by the largest single employer in the country. It's not a public option, nor is it single payer. It's a bunch of private insurance companies bidding for business. Doesn't it make you suspicious that this hasn't been seriously proposed?

 

[ziggy29]

If the Congress really cared about meaningful healthcare reform, they would open up the Federal employees' health plan to everyone (other than Medicare patients). That plan includes immense risk pools with premiums negotiated by the largest single employer in the country. It's not a public option, nor is it single payer. It's a bunch of private insurance companies bidding for business. Doesn't it make you suspicious that this hasn't been seriously proposed?

Even this would result in adverse selection unless it eliminated the concept of individual health insurance with individual underwriting. Because unless that happened, healthy people who needed health insurance could get a better rate with an individual policy and only those who are unhealthy, uninsurable and with significant pre-existing conditions would sign on to the federal group plan.

So another question becomes -- is it possible to have a "group" based policy with no underwriting which does not trigger adverse selection if individual health insurance is available?

 

[samclem]

So another question becomes -- is it possible to have a "group" based policy with no underwriting which does not trigger adverse selection if individual health insurance is available?

What would be the impact of a "within kind" tax scheme were individually-procured, underwritten, non-group health insurance was taxed to provide matching funds (at an annually-modified rate) for those purchasing the group policies? No new income taxes, but those getting the cheaper prices of individually underwritten insurance pay the tax to offset the higher costs (caused by adverse selection) in the (mandatory-issue, set-price) group plan.

We'd still need to fund health care for the truly poor.

 

[FIRE'd@51]

Even this would result in adverse selection unless it eliminated the concept of individual health insurance with individual underwriting. Because unless that happened, healthy people who needed health insurance could get a better rate with an individual policy and only those who are unhealthy, uninsurable and with significant pre-existing conditions would sign on to the federal group plan.

I'm not sure that this is correct. The Federal plan is pretty attractively priced for the coverage provided. As I understand it, all types of plans are offered - HMO's, PPO's, HSA's, etc. And, typically group plans are cheaper than individual plans offering the same coverage.

Now, if you are saying that 20 million sick people would join the plan, and that they would have a big effect on the risk pool, driving up the cost for all, you may well be right. Perhaps this is why it hasn't been offered. Congress knows what's good for itself and other Federal employees. This is why I asked if it made one suspicious that it hasn't been seriously proposed.

 

[ziggy29]

Now, if you are saying that 20 million sick people would join the plan, and that they would have a big effect on the risk pool, driving up the cost for all, you may well be right. Perhaps this is why it hasn't been offered. Congress knows what's good for itself and other Federal employees. This is why I asked if it made one suspicious that it hasn't been seriously proposed.

That's sort of my point. Let's say someone has Megacorp health insurance and FIREs at 50, and they know they need to find another source of health insurance. Let's say they know that a 50-year-old individual can get group coverage under the federal plan with no underwriting for (say) $600 a month. (The actual numbers are fairly unimportant for the purposes of this example.)

As a prelude to retirement, they begin the process of looking into an individual health plan. But maybe they are a significantly overweight smoker with high blood pressure, high cholesterol and high blood glucose levels.

Such a person -- if they can find it -- might have to pay $1000 a month or more for individually underwritten health insurance, but only $600 on the federal employee plan (even if they paid up to 102% of the full cost like people do with COBRA, make it $612).

Let's also say that another 50-year-old colleague of theirs retires at the same time and they are in great health -- ideal BMI, non-smoking, all blood panels look normal and there's no history of pre-existing conditions. They might get in for, say, $400 a month.

Suffice it to say that the former would sign up for the group plan and the latter for the individual coverage. That in turn would result in many more high-risk people in the federal group without the "critical mass" of healthier, lower-risk folks who could make the overall group costs manageable. This would drive up the cost of the federal plans (and drive up taxpayer costs if we had to eat the higher costs for federal employee coverage).

So in reality, even if there is a "universal mandate" for coverage I don't know how you can have a no-strings-attached, no-underwriting group plan exist side-by-side with individual plans, as the group plans would be the "dumping ground" for all the high risks. I don't know how we could implement this feasibly unless the concept of individually underwritten health insurance was abolished and *everyone* had to have group coverage.

 

[FIRE'd@51]

So in reality, even if there is a "universal mandate" for coverage I don't know how you can have a no-strings-attached, no-underwriting group plan exist side-by-side with individual plans, as the group plans would be the "dumping ground" for all the high risks. I don't know how we could implement this feasibly unless the concept of individually underwritten health insurance was abolished and *everyone* had to have group coverage.

I agree. For it to work without adverse selection, you really need one risk pool (or maybe large regional pools), with all insurance, whether it be group or individual drawing from the same risk pool. IMO, this is a failure with the current proposed reform. When the President said you could keep what you have if you like it, he introduced adverse selection into the equation.

 

[samclem]

We've discussed the sly bits of budgetary subterfuge that help the Senate bill look more budget neutral, and there's been some question about the real cost after everything is in place. I looks like about $100 billion in additional federal red ink every year. Here's the source of that helpful factoid, a column in the Arizona Republic. The assumptions look fair to me.

With different provisions taking effect at different times, the only way to judge its fiscal impact is as fully implemented. In 2019, CBO estimates that the health care subsidies in the bill will cost nearly $200 billion a year.



Supposedly that's offset, but the offsets are hoaxes.


There's $35 billion in taxes on high-value insurance policies that probably won't exist. There's $46 billion in cuts to non-physician Medicare providers Congress won't follow through on. And there's $35 billion in cuts to physicians Congress knows it will restore.


So the bill, as a practical matter, will easily add more than $100 billion a year to the federal deficit.

Now that $100B is just increased federal expenditures, it doesn't count increased state outlays (more people on Mecicaid) or the higher costs to individuals and corporations (due to that old supply/demand thing--virtually the same number of doctors and many more people chasing their services). I don't know what those extra costs might be.

 

[FinanceDude]

We've discussed the sly bits of budgetary subterfuge that help the Senate bill look more budget neutral, and there's been some question about the real cost after everything is in place. I looks like about $100 billion in additional federal red ink every year. Here's the source of that helpful factoid, a column in the Arizona Republic. The assumptions look fair to me.



Now that $100B is just increased federal expenditures, it doesn't count increased state outlays (more people on Mecicaid) or the higher costs to individuals and corporations (due to that old supply/demand thing--virtually the same number of doctors and many more people chasing their services). I don't know what those extra costs might be.

I think the costs will BALLOON severely in the future. I can't think of ONE govt program that didn't end up costing a lot more than they thought.

I can't find any of my friends to take a bet I am offering, I want to bet them $100 that the budget deficit will increase under the HC bill, and noone will take me up on it........

 

[lets-retire]

Fired@51 -- What you are missing, and will make your point moot, is the only factors to be used in determining policy prices are age (with limits), region, and family size. With that written into the law, my family of four with serious health issues will pay the same for an individual policy, as your very healthy family of four with a government policy, assuming every one in the families are the same age and we live in the same region. We will see the cost of big group policies go up if these bills pass.

As I understand the bills, all policies currently in effect that do not meet the standards can remain in effect as long as they do not enroll new customers. That is fine but that means as people, die, retire, have their needs change, the number in the pool is diminished. It might take several years but those policies that do not meet the new standards will eventually cancel all policies due to the pool becoming too small. Since there is a limit on the amount of profit a company can keep, I think you will find few policies that will go above the minimum standards for the three levels of policies, as detailed in the bills. There is greater risk for the companies without any more real return. It would be like putting your money in a savings account or investing in stocks, both with a max possible return of 1.25%. You'd be a fool to invest in the stocks, where you could lose money, when you can get the same return safely in the savings account. If the companies can only keep say 10% of the medical loss for their profit, then they can only keep 10% no matter how the policy is structured. The current policies that have low co-pay and deductibles will bring in no more than 10% profit. The policies detailed in the bills will bring in no more than a 10% profit. The difference is the policy requirements in the bills transfer more of the cost of insurance to the policy holders, while many current low deductible/co-pay policies keep the risk with the insurers. So if the insurers keep current policies in effect they are increasing their risk without increasing the potential for profits.

 

[FIRE'd@51]

If the companies can only keep say 10% of the medical loss for their profit, then they can only keep 10% no matter how the policy is structured. The current policies that have low co-pay and deductibles will bring in no more than 10% profit.

Not quite sure if I follow you. It seems to me that an insurance company will payout more medical losses (in $) for a low-deductible policy than a high one? So even if the 10% number is the same for both, it will lead to more $ in revenues (and hence earnings) for the low-deductible policy, since the 10% is applied to a larger $-volume of medical losses.

For example, if I find a riskless arbitrage opportunity in the market, I am better off to leverage my investment as much as I can since it will increase my $-return, even though the percentage return on the underlying notional amount is still the same.