US Healthcare Expensive and Inefficient

[califdreamer]

MKLD, some good food for thought there.

One concern I would have as a buyer of the upgraded policy would be my ability to maintain coverage somehow, somewhere if the private insurer goes out of business or limits coverage in other states. Transferability, I suppose, could be a feature of the policy.

Another real world concern would be the ability of those currently covered by their employer's policy to be able to jump to the new system without having to worry about pre-existing conditions.

 

[Martha]

Why an HSA? Those that are not able to buy on the individual insurance market are going to have chronic diseases or be poor. An HSA is not what they need. If you have a chronic disease, you will chew through deductibles and not be able to stash money for the future. If you are poor, you can't afford to fund an HSA. The Kaiser family foundation has published studies on how HSAs do not work for these two populations. They are great for the young and healthy though.

I don't know how to make the insurance model work unless we:

--require people to have insurance
--subsidize the poor and uninsurable or bar underwriting much as in Wyden's plan.

 

[mykidslovedogs]

The insurance even covers a stay at a health spa. That may change in the future. For employed people the cost is 13% of your gross salary.

So if you are a single 25 yr old, and you are employed, and you make $100,000/yr, your cost of insurance is $13,000?! Wow. How much of what's left of your income do you have to pay for other gov't sponsored programs? Just curious.

 

[mykidslovedogs]

Why an HSA? Those that are not able to buy on the individual insurance market are going to have chronic diseases or be poor. An HSA is not what they need. If you have a chronic disease, you will chew through deductibles and not be able to stash money for the future. If you are poor, you can't afford to fund an HSA. The Kaiser family foundation has published studies on how HSAs do not work for these two populations. They are great for the young and healthy though.

Martha, you couldn't be more incorrect. I have a chronically ill client who was paying literally thousands in out of pocket costs for prescription drug and office visit copays on a traditional plan. She switched to an employer-sponsored HSA, which provided 100% coverage for all costs after deductible and she ended up saving about $10,000/yr in out of pocket costs (in premiums plus copays and co-insurance expenses). In my plan design, employers would be able to subsidize the cost of the deductible for a lot less $$ than paying premiums for health insurance, so there would still be incentive for employers to provide benefits. Those who are on the basic plan could potentially have 100% coverage if their employers subsidized their entire deductible as a benefit each year. The HSA would provide tax incentives for people to save for future healthcare costs and incentives for people to use their deductible $$ wisely.


Plus, with EVERYONE being required to have insurance, that will drive premiums down tremendously, so it might not be that hard for lower income folks to save towards their HSA....especially if their employers kick in a little bit towards the deductibles.

The Kaiser Foundation is biased towards a nationalized system, because they think they are going to be the administrator if it all happens. I imagine that their stats are somewhat correct, but HSAs are only beginning to become more and more understood. I think when people really get the just of how they work, we are going to be seeing a lot more participation. Many of the people who have signed up for HSAs were previously uninsured.

 

[Mwsinron]

How would they plan on funding universal health care? Tax rate across the board increase? The working middle class will be the ones who take it on the chin. The rich wont give a **** and the poor well they already have nothing and were getting free health care anyways.

 

[mykidslovedogs]

MKLD, some good food for thought there.

One concern I would have as a buyer of the upgraded policy would be my ability to maintain coverage somehow, somewhere if the private insurer goes out of business or limits coverage in other states. Transferability, I suppose, could be a feature of the policy.

Another real world concern would be the ability of those currently covered by their employer's policy to be able to jump to the new system without having to worry about pre-existing conditions.

Calif - notice in my plan that the basic plan is standardized and guaranteed issue, so people wouldn't have to worry about portability if they moved. True, we could still be faced with portability issues on upgraded plans.

To address your second concern - notice that my plan prohibits employers from providing insurance to their employees, so there would be no need to worry about pre-existing conditions. Instead, employers would be allowed to have something like a flexible spending account or health reimbursement arrangement, whereby they would be allowed to subsidize up to 100% of the employee's deductible AND even premiums if they wanted to, a tax deductible basis. This gives employers plenty of incentive to still provide benefits, while it also still gives employees the discretion to shop around and use their deductible dollars wisely, because if they don't use the money, they will get to keep it, and allow it to grow, tax free, year after year.

 

[Martha]

I agree that if you have high drug costs, an HSA can be cheaper than a plan with copays. In fact, for the chronically ill some employers are dropping or reducing copays to get people to buy their drugs. In the long run, they figure it is cheaper. Saving for future health care costs is pretty much a non-issue for this group.

So if you want an HSA option for the chronically ill, that is fine with me. Minnesota's risk pool offers either a standard insurance plan at various deductible levels or an HSA plan. So Minnesota does this already, at a price equal to 125% of what a healthy person would pay on the individual market. How about poor people who can't afford the deductible or premiums because they are unemployed or underemployed?

Also, how would you force people to have insurance? Wyden does it simply by forcing everyone to pay through the tax systems.

 

[Martha]

How would they plan on funding universal health care? Tax rate across the board increase? The working middle class will be the ones who take it on the chin. The rich wont give a **** and the poor well they already have nothing and were getting free health care anyways.

Look at Wyden's plan. http://early-retirement.org/forums/index.php?topic=11033.0

It is a myth that the poor get free care anyway.

Also, people in the middle class can be impoverished by health care costs.

 

[mykidslovedogs]

I agree that if you have high drug costs, an HSA can be cheaper than a plan with copays. In fact, for the chronically ill some employers are dropping or reducing copays to get people to buy their drugs. In the long run, they figure it is cheaper. Saving for future health care costs is pretty much a non-issue for this group.

So if you want an HSA option for the chronically ill, that is fine with me. Minnesota's risk pool offers either a standard insurance plan at various deductible levels or an HSA plan. So Minnesota does this already, at a price equal to 125% of what a healthy person would pay on the individual market. How about poor people who can't afford the deductible or premiums because they are unemployed or underemployed?

Also, how would you force people to have insurance? Wyden does it simply by forcing everyone to pay through the tax systems.

The way I would force people to sign up would be for them to have to pay for it in the form of a tax penalty if they chose not to buy it. Therefore, there would be no incentive for them not to buy it, because they'd have to pay for it anyway in the form of a tax if they couldn't prove they bought it. (you would have to submit a certificate of creditable coverage to the IRS when you file to avoid the penalty.)

As far as poor people go (and this would only be people who couldn't qualify for Medicaid), all I can say is that, yes, in my system, there might still be a little inequality. My plan would allow them to get a catastrophic plan for practically free. Their only worry would be the deductible. At the very least, this will help reduce cost shifting, because instead of these people being uninsured, providers of healthcare will still be paid above the deductible amount. You have to figure that not all poor people are going to need to be heavy users of their deductibles. It will only be a very small amount of people left with financial issues. They would still have coverage above the deductible, and that will do wonders to hinder cost-shifting to other markets and bring down premiums for everyone.

 

[FIRE'd@51]

You get some good kids, 8th or 9th graders, some hand held calculators, population data and a copy of Deming's Red Bead Experiment.

Ask them to raise taxes and figure out how to reward people to be healthy.

Shot any adult who comes near them till they are finished.

Sort of reminds me of the 1st graders who they tested on the Florida "butterfly ballot" after the 2000 election. Seems the kiddies had no problem figuring out how to vote it properly and the way they intended.

 

[Martha]

As far as poor people go (and this would only be people who couldn't qualify for Medicaid), all I can say is that, yes, in my system, there might still be a little inequality. My plan would allow them to get a catastrophic plan for practically free. Their only worry would be the deductible. At the very least, this will help reduce cost shifting, because instead of these people being uninsured, providers of healthcare will still be paid above the deductible amount. You have to figure that not all poor people are going to need to be heavy users of their deductibles. It will only be a very small amount of people left with financial issues. They would still have coverage above the deductible, and that will do wonders to hinder cost-shifting to other markets and bring down premiums for everyone.

But you cost shifted to the providers. If a person can't afford the deductible, (1) they could go without care (2) they could get the care and owe money for it or (3) the provider could eat the cost. If they can't afford the premiums, not only would they not have insurance, but they would owe a tax penalty. Better to have a sliding fee system. Or properly fund medicaid and allow people to enroll on an income basis alone, with sliding fees up to a certain income and asset level. (I don't like that idea because the poor is always the first to lose out).

You mentioned waiting lists. I know a young woman who has no money and is not eligible for medicaid (not disabled, no children). She has no dental insurance. Heck, I don't either. She is on a waiting list to get a bunch on necessary dental work done. In a year or so maybe she will get to the top of the list. Or never.

 

[mykidslovedogs]

But you cost shifted to the providers. If a person can't afford the deductible, (1) they could go without care (2) they could get the care and owe money for it or (3) the provider could eat the cost. Better to have a sliding fee system. Or properly fund medicaid and allow people to enroll on an income basis alone, with sliding fees up to a certain income and asset level.

Actually, my plan DID call for a sliding fee on the premiums for the catastrophic plan. Go back and take another look.

Right now, we have a large number of uninsured people. When they have a huge medical expense, providers eat the cost and shift the balances to the private sector in the form of higher premiums. If everyone had at least catastrophic coverage, providers would not have to eat the costs above the deductible amount. This will help to reduce cost shifting, because providers won't have to inflate prices so much to people who are paying for better coverage by choice. Coverage will be much more affordable for the great majority of the population. Employers will likely gladly pick up deductibles in the form of a company benefit if they don't have to pay for premiums anymore.

Yes, there may still be a few people who unfortunately will choose to forego treatment for deductible items. On the other hand, in a nationalized system, eventually, everyone will have to forego treatment until they get to the top of the waiting list. Isn't it better to have only a small number of people having to forego treatment or get the care and owe money unwillingly than eventually having EVERYONE be forced to wait on waiting lists for services?

 

[FIRE'd@51]

With regard to Senator Wyden's plan, I have heard very little discussion of it. I read the Loewen study of it, and IMO it's the best thought out and most complete plan that has been presented. I have to take his numbers at face value and don't know if they are correct. But he seems to arrive at 99% coverage at a reasonable cost and with essentially no change in the healthcare delivery system, only how the insurance works. I am astonished that the Democratic Presidential candidates haven't rallied around it. I guess their egos force them to each have their own plan. Edwards said in the debate that he is in favor of forcing businesses to provide insurance or pay into a pool. I think this is completely out of step with current thinking which is that we should be cutting the tie between jobs and insurance, and tying insurance to the individual, which will allow one to maintain his insurance forever so long as he files a tax return.

Martha, do you have any idea why Wyden's plan has gotten so little press or open Democratic support?

 

[tomz]

I guess I stirred things up a bit.

MKLD - here is the link to the complete 40-page study I referenced in the original post.

Commonwealth Study

If you look through it, infant mortality and longevity are only 2 of the metrics they use. They also look at: Quality of Care, Access, Efficiency, Equity, and Healthy Lives (where the infant mortality stats are included). There are detailed tables that indicate all the different criteria that were used. Under Quality of Care, for example, they looked at things like: Prevention (where the US does very well), Chronic Care (where we don't do as well), Safe Care (wrong meds, e.g.), Coordinated Care, and Patient Centeredness. The MSNBC article does not do the study justice. In short, they looked at things that have nothing to do with socioeconomic conditions.

Also, we spend almost double per capita than the next country. 51% of our spending is by or for the government (Medicaid, Medicare, SCHIP, VA, taxes used for government employees insurance, etc.) and that doesn't include the lost revenue from the tax deductions. Theoretically, if we rationalized our current system, we could provide the same level of spending as the next closest country without having to raise taxes.

I worked in healthcare for 15 years. We don't have a healthcare system. We have an expensive and inefficient hodgepodge that does some things right, but a lot of things wrong.

 

[mykidslovedogs]

With regard to Senator Wyden's plan, I have heard very little discussion of it. I read the Loewen study of it, and IMO it's the best thought out and most complete plan that has been presented. I have to take his numbers at face value and don't know if they are correct. But he seems to arrive at 99% coverage at a reasonable cost and with essentially no change in the healthcare delivery system, only how the insurance works. I am astonished that the Democratic Presidential candidates haven't rallied around it. I guess their egos force them to each have their own plan. Edwards said in the debate that he is in favor of forcing businesses to provide insurance or pay into a pool. I think this is completely out of step with current thinking which is that we should be cutting the tie between jobs and insurance, and tying insurance to the individual, which will allow one to maintain his insurance forever so long as he files a tax return.

Martha, do you have any idea why Wyden's plan has gotten so little press or open Democratic support?

Fire'd - Did you see how rich the benefits were on Wyden's plan? (very low deductible and low low copays - no much incentive there to prevent overutilization). I have a feeling he is greatly underestimating the cost on that. That's just IMO. At least he's trying to do something, but I really do think he is greatly underestimating the cost.

Getting rid of brokers and adminstrators, IMO, is not going to cut back costs that much to keep the family rates as low as he hopes it will. Our commissions are minimal in comparison to the overall costs to administer private health insurance. The biggest admin costs I think are in billing and claims, and you aren't going to get rid of those costs by eliminating brokers. In fact, you might make claims admin worse by providing such a rich plan (giving incentive for people to overutilize) and eliminating brokers who typically pick up a lot of claims admin work for free as part of the cost of doing business and keeping clients happy.

Wyden's plan shifts admin/enrollment costs to the gov't, which I can't imagine will be more efficient than it is in the private sector. Is the gov't going to step in and help out with difficult claim issues, too?

 

[tomz]

Martha, do you have any idea why Wyden's plan has gotten so little press or open Democratic support?

Part of the reason Wyden's plan is not getting much press is because it does nothing to control costs. It takes the current insurance system and jiggers it a bit so more people have coverage. There are multiple problems with healthcare in the US such as fee for service arrangements that increase cost, lack of healthcare information systems, and 45 million without insurance. If you want to see what the market has done for healthcare in this country, read Money Driven Medicine by Maggie Mahar. She makes a very good case that market forces don't work very well.

Also, I don't think anyone here is advocating what the UK has - i.e., socialized medicine. What I am looking for is national healthcare that includes cost controls and access for everyone. You can do this without having the doctors work for the government. France and Germany seem to be doing a pretty good job of it.

 

[tomz]

Fire'd - Did you see how rich the benefits were on Wyden's plan? (very low deductible and low low copays - no much incentive there to prevent overutilization). I have a feeling he is greatly underestimating the cost on that. That's just IMO. At least he's trying to do something, but I really do think he is greatly underestimating the cost.

We agree on something else.

 

[mykidslovedogs]

Also, we spend almost double per capita than the next country. 51% of our spending is by or for the government (Medicaid, Medicare, SCHIP, VA, taxes used for government employees insurance, etc.) and that doesn't include the lost revenue from the tax deductions. Theoretically, if we rationalized our current system, we could provide the same level of spending as the next closest country without having to raise taxes.

Tom - Thanks for the link. I'll read through it. I have already read through some of the commonwealth posts that Martha gave earlier, and I watched a video too. They make some good points, but I still don't share their ideology, and there is definately room for improvement. I don't think our system is perfect. I think we spend twice as much as other countries because we can afford to, and we choose to.

I really don't understand how the gov't can price control without eventually affecting quality. It might work for a few years, but 20 years down the road...?

 

[Martha]

Re: US Health care Expensive and Inefficient

Part of the reason Wyden's plan is not getting much press is because it does nothing to control costs. It takes the current insurance system and jiggers it a bit so more people have coverage. There are multiple problems with healthcare in the US such as fee for service arrangements that increase cost, lack of healthcare information systems, and 45 million without insurance. If you want to see what the market has done for healthcare in this country, read Money Driven Medicine by Maggie Mahar. She makes a very good case that market forces don't work very well.

Also, I don't think anyone here is advocating what the UK has - i.e., socialized medicine. What I am looking for is national healthcare that includes cost controls and access for everyone. You can do this without having the doctors work for the government. France and Germany seem to be doing a pretty good job of it.

I am willing to accept Wyden's plan as a compromise position. I prefer a Medicare for all type plan. I am researching more the cost issues that Senator Durenberger is looking at. It is very hard to develop a mechanism to reward quality rather than quantity, but certainly the insurance model hasn't been successful in that regard. It compensates for quantity. We have to look both at how we pay for health care as well as how we deliver health care.

 

[Martha]

Specifically on the high cost of health care in the US, I suggest reading Dartmouth Medicine: The State of the Nations Health

http://dartmed.dartmouth.edu/

Investigating staggering differences in how much Medicare spends on patients in various parts of the country, the Dartmouth team has discovered that in Manhattan and Miami, chronically ill Medicare patients receive far more aggressive care than very similar patients in places like Salt Lake City, Utah, and Rochester, Minn. Their research reveals that Medicare beneficiaries in high-cost states are likely to spend twice as many days in the hospital as patients in low-cost states and are far more likely to die in an intensive care unit. The
odds are higher that patients in high-spending regions will see 10 or more specialists during their final six months of life. These facts alone aren't terribly surprising. But here's the stunner: Chronically ill patients who receive the most intensive, aggressive, and expensive treatments fare no better than those who receive more conservative care. In fact, their outcomes are often worse.

In high-cost regions, "patients with the same disease have higher mortality rates, very likely because of medical errors associated with increased use of acute-care hospitals," Wennberg and colleagues noted in a 2006 study of patients suffering from chronic diseases like cancer or congestive heart failure. As Fisher puts it, "Hospitals can be dangerous places—especially if you don't need to be there."

 

[FIRE'd@51]

Wyden's plan eliminates Medicaid, but retains Medicare and the Military in their present form. I know the total healthcare costs in this country are about $2 trillion, which works out to $6700 per person per year.

Tomz, do you know how much of the $2 trillion is Medicare and Military? IIRC, Wyden's plan starts off with premiums of about $350 per month for an individual, and $750 per month per family. As far as the "generosity" of his plan goes, that could be changed. I think the fact that he covers nearly everyone, does it through the tax system which forces compliance, and eliminates the tie between jobs and insurance, without forcing everyone into managed care are all good things. Congress can change the benefits if they are too "generous". It just seems to me, that Wyden has put something out there that is not drastically different (in terms of how we receive our health care) than the present system. By getting everyone into the system, he eliminates a lot of the cost-shifting that is present in our current system.

Why not take his proposal and work from it?

 

[Mwsinron]

Under his plan it would cost my wife and I more than getting our own insurance. I know damn well we wont be paying 750 a month for us. It should have some kind of adjustment built in for people who are healthy verse the more unhealthy.

 

[Martha]

Re: US Health care Expensive and Inefficient

Keep in mind that employers pay quite a bit of money for insurance and employee premiums are generally far less than employer cost. If employers are required to pay the money they used to pay insurance companies to their employees, the cost differential may be less or even non-existent.


(fixed typo)

 

[FIRE'd@51]

Under his plan it would cost my wife and I more than getting our own insurance. I know damn well we wont be paying 750 a month for us. It should have some kind of adjustment built in for people who are healthy verse the more unhealthy.

I guess you should love our current system, because it does exactly that. Wyden's plan is community rated. Everyone pays the same premium, old and young, healthy and unhealthy. At some time in your life you might look at $750 per month as realtively cheap for the coverage his plan provides. If you want to lower the premiums, just raise the deductible.

And as Martha points out, employers will be paying part of those premiums indirectly.

 

[tomz]

Tomz, do you know how much of the $2 trillion is Medicare and Military?

As of 2003:
Medicare 17%
Medicaid and SHIP 16%
VA, Public Hospitals, School Programs 12%
Insurance for Gov't Employees 6%

Source - Centers for Medicare and Medicaid Services

Expenditures per Capita in US in 2004 = $6102

Here is some good commentary on the Wyden plan:
Wyden Plan

When I retire at the end of the year, my budget for health insurance for DW and me is $1200 per month. This is through a mediocre plan offered by megacorp, but it is guaranteed issue. We are going to look for cheaper private plans once we sell our house and move to a different state. We have some minor things (who doesn't when you hit 55?) which we hope won't keep us from getting private policies, but at least we will have coverage (if we can afford it) until Medicare.