Speaking of ACA

[scrabbler1]

This is not a valid statement. The young can get sick too, are more likely to have auto, motorcycle and sporting accidents than the old. So a semi serious accident could cost $500k to treat. So they are not over paying at all, just paying their fair share. To allow them not to do so is defeating the insurance model and putting a heavier burden on the Tax Payers to fund the differences.

Copyright1997reloaded is correct.

https://www.ahip.org/wp-content/uploads/2016/03/Age-Rating-Bands-Brief_2014.pdf

As the linked article points out, age ratio caps of 5:1 were present in most states because that struck the best balance between recognizing that older people tend to use health care more than younger ones do, while keeping health insurance reasonably affordable for everyone and in a fair manner.

Compressing the cap from 5:1 to 3:1 put upward pressure on rates for younger people while subsidizing the older ones.

Younger people are more prone to getting into car and motorcycle accidents than older ones, and that is properly reflected in the higher rates they already pay than the older people pay. So, let's leave that out of the discussion relating to health insurance, please.

 

[NW-Bound]

I like the concept and generally agree with the thinking of Robert Reich.

I don't think the U.S. workforce could fill all those openings in its current configuration. In my former company, one of the top 2 or 3 risks as discussed by the management team was the oldun's making a mass exodus and being unable to effectively fill those positions for many years. I was part of those discussions. I whistled and stared at the ceiling....

7 years after me quitting work for real, they recently reached out to ask if I would come back.

I was already working part-time, with no benefits, no 401k matching, no vacation, and could be told to not come in any time. In other words, I was a heck of a bargain for them, let alone being able to do what they have not found another to do after all that time, despite the higher pay. I could have done OMY if they treated me a bit better.

Too bad. Too late. Heh heh heh...

 

[MichaelB]

Prior to the ACA there were no caps on age ratio (in most states), insurance companies did as they were allowed. They implemented age ratio for about 10% of the insurance market (individuals) The other 90% did not allow that.

 

[neihn]

Not to mention that I know people who rail against "socialized medicine" and "single payer" who either love Medicare (if they are 65+), or are looking forward to getting on Medicare (if not yet 65). There's some serious cognitive dissonance there.

Yes, I met and talked to many people like you described above.

 

[cyber888]

The data is inaccurate. The data source is Kaiser - which is not a third-party but a very bias source. There are millions of young people who are not included in the data, because they get sick and do not get medical care since they cannot afford it. Young people are more accident prone, so older people are subsidize young people who rack up huge healthcare cost due to accidents. ACA should be expanded.

I, and others, have already posted that ACA plans have a limit on age-based premium differences. The law limits the spread from a 21 year old to 64+ to 3:1.

Yes, the young *can* get sick, and *are* more likely to have an accident. That is irrelevant in terms of the overall numbers when you take the population as a whole.

I stand by my statement: The young/healthy subsidize the old/sick in terms of ACA plan costs.

OK, here's more: https://www.healthsystemtracker.org/chart-collection/health-expenditures-vary-across-population/#item-people-age-55-and-over-account-for-over-half-of-total-health-spending_2016

And here is the underlying table of cost by age:
X.1 Share of Population Share of Spending
65 and over 16 36
55 to 64 13 20
45 to 54 13 13
35 to 44 12 10
19 to 34 22 11
Under 19 24 10

So 56% (over half) of ALL health care costs are due to people aged 55+.

Note that this table is just showing share of cost. Here is a table (as of 2017) of the USA population by age:
Location United States
Children 0-18 0.24
Adults 19-25 0.09
Adults 26-34 0.12
Adults 35-54 0.26
Adults 55-64 0.13
65+ 0.16
Total 1

So, 55+ adults make up 29% of the population, but use 56% of all healthcare costs. That would be a 1.93 ratio (HC%/Pop%). Adults 19-34 make up 21% of the population, but use 11% of the healthcare costs. That would be a 0.52 ratio. The comparison of the two is 1.93/0.52 = 3.71.

So, adults 55+ should be paying 3.71X the rate of age 19-34 adults.


I know this is an emotional subject for us here on FIRE as we are in general older. But the data is the data. (Even within the 65+ population, health care spending is concentrated. About 10% of those in that age bracket make up 50% of age 65+ health care costs.)

 

[flintnational]

^^The data is from the Kaiser Family Foundation, a non profit not associated with the insurance arm. They are widely considered to be a reliable source. Health costs increase with age. Whether we do anything with that information or wish to alter plans accordingly is up for discussion.

 

[ShokWaveRider]

^^The data is from the Kaiser Family Foundation, a non profit not associated with the insurance arm. They are widely considered to be a reliable source. Health costs increase with age. Whether we do anything with that information or wish to alter plans accordingly is up for discussion.

We had Keiser when we lived in SoCAL. We loved it, excellent care, reasonable cost. We only dream of having such good and comprehensive health care now we are in Florida.

 

[NW-Bound]

^^The data is from the Kaiser Family Foundation, a non profit not associated with the insurance arm. They are widely considered to be a reliable source. Health costs increase with age. Whether we do anything with that information or wish to alter plans accordingly is up for discussion.

As stated twice earlier, the Medicare cost is $12,353 per person in 2018.

The premium collected is only 15% of that. I don't see how there's any money left to subsidize anything, no matter whether the young people cost more or less.

 

[ziggy29]

We had Keiser when we lived in SoCAL. We loved it, excellent care, reasonable cost. We only dream of having such good and comprehensive health care now we are in Florida.

We had Kaiser when I lived in San Jose, until we moved in 2003. You love it or you hate it. We mostly loved it. There were frustrations -- weeks to get routine appointments, being able to use only Kaiser facilities, and so on.

I don't know if it's changed a lot since 2003, but what I remember is how low stress it was dealing with the insurance bureaucracy. If you went to a Kaiser facility, you knew it was going to be "in network". If a Kaiser doctor said something was medically necessary, it was covered. In 2000, my wife had orthognathic surgery (jaws broken, reset and wired shut) to correct a problem with the bite. At the time It was probably a $10,000 procedure or so A lot of insurance plans would not cover that or put you through a lot of appeals and such. The Kaiser doctor looked at the X-rays and such and agreed that this was likely to cause TMJ and all kinds of other health problems in the future, so he ordered it up and it was done. All we paid (sign of the times) was a $10 copay.

I don't know if Kaiser still works like that today.

 

[ziggy29]

As stated twice earlier, the Medicare cost is $12,353 per person in 2018.

The premium collected is only 15% of that. I don't see how there's any money left to subsidize anything.

I think more to the point, what if opting into Medicare was a *choice* in the Exchange? It surely would not cost $12,353 for a 55-year-old on average, for example, let alone a FIREd person who is 45 or 50. If the cost to provide Medicare-level coverage was competitive with (say) silver or gold level plans with insurance, it could be an option. As far as cost to the taxpayer goes it would be a wash because they would get the same subsidy with a different plan anyway. There is enough data out there to get a pretty good, even if not exact, idea of what Medicare-level coverage would cost by age.

I don't know if the math works, but if it did, putting Medicare's coverage on the Exchange to be sold at cost (less subsidy) seems like it would be a revenue-neutral thing. Except that insurers, and the politicians they buy, may not like it.

 

[flintnational]

As stated twice earlier, the Medicare cost is $12,353 per person in 2018.

The premium collected is only 15% of that. I don't see how there's any money left to subsidize anything.

You are correct. I am not brave enough to fully wade into this discussion. I was just correcting someone (sort of like a referee) that indicated the old are subsidizing the young and that the Kasier Foundation is biased . He/she was mistaken on both points. Darn, now I have made someone mad and fully waded into a controversial topic. What was I thinking.

ETA: I know how to fix health care, when to take SS and when the stock market will decline. But, I am not telling.

 

[NW-Bound]

On something a bit more interesting, I ran across this article, which is an interview with a German director in the Germany Ministry of Health. It tells a bit about how Germany controls healthcare cost.

For example, a new treatment or drug will be reimbursed only at the same rate as an existing treatment or drug, if the newer ones are not better. Who decides this? A national institute with a federal joint committee that represents doctors, nurses, other health professionals, the health insurance funds, and hospital owners. If a new drug or treatment is not effective, it is not covered.

I often read that new drugs introduced in the US are often not better, but just different and more expensive. The above system will not pay more for it. It all makes sense.

The article also describes something that Germany adopted from the US, because they saw the value in it. You will have to read the article to find it.

See: https://www.mckinsey.com/industries...lth-care-costs-an-interview-with-franz-knieps.


PS. The German authority interviewed in the article humbly said

"At present, it’s not clear whether we have produced real cost reductions or whether we have simply slowed the rise in spending.

I am convinced that the cost of health care is not going to go down, but there is much we can do to dramatically reduce the amount of money wasted."

 

[NW-Bound]

You are correct. I am not brave enough to fully wade into this discussion. I was just correcting someone (sort of like a referee) that indicated the old are subsidizing the young and that the Kasier Foundation is biased . He/she was mistaken on both points. Darn, now I have made someone mad and fully waded into a controversial topic. What was I thinking.

ETA: I know how to fix health care, when to take SS and when the stock market will decline. But, I am not telling.

Well, there are opinions. And then there are facts and numbers. I like to look at numbers, particularly.

If people do not like numbers, they can still question the source of the numbers. Opinions are, well, just opinions and that's all we can say about that.

 

[GenXguy]

Most legal experts seem to think the ACA will stand, although it may have to go to SCOTUS first.

Medicare isn't free! In fact, it is very costly as mentioned a few times earlier. I know senior couples that are spending over $10K per year on premiums for Medicare A, B, D, and supplemental to provide adequate coverage despite having paid into it all of their careers.

 

[flintnational]

NWB, here you go. And, its a German study to boot!

"Big Pharma Fail: No Evidence Of Added Benefit In Most New Drugs, Study Finds"

"According to the study performed at the German Institute for Quality and Efficiency in Health Care, more than half of the new drugs entering the German healthcare system show absolutely no added benefit."

 

[NW-Bound]

^^^^ Hey, that's the same German health institute in the interview that I linked.


Why is the reported fact not surprising to me? Doctors in the US have said the same thing, years ago. In fact, doctors in Sloan Kettering Cancer Center refused to prescribe some cancer drugs that they said did nothing for their patients, as reported years ago.

Yet, I know that my own mother likes brand-name and new drugs. I guess she just wants "to be sure" she gets "the best money can buy".

Her motto is "between prescription drugs and over-the-counter, I will get prescription drugs, and no generic". Her rationale seems to be that "you get what [-]you pay for[/-] the price is", and that if something is bought over-the-counter at Walmart how good can it be.

If patients want to pay more, we will have to let them spend their own money.


PS. Recently, my mother bumped her head and had a big contusion. After her doctor sent her to have X-ray and everything was OK, he told her to take some Tylenol or aspirin. She would not take any, because they would be "no good", and held a grudge against her doctor for not prescribing some "nerve medicine" that she would need. It's not that she had some drugs in mind, but she believed there had to be something better than Tylenol or aspirin for her conditions.

 

[ziggy29]

Yet, I know that my own mother likes brand-name and new drugs. I guess she just wants "to be sure" she gets "the best money can buy".

Her motto is "between prescription drugs and over-the-counter, I will get prescription drugs, and no generic". Her rationale seems to be that "you get what [-]you pay for[/-] the price is", and that if something is bought over-the-counter at Walmart how good can it be.

I wonder how much of this is driven by all the pharmaceutical ads on TV.

 

[copyright1997reloaded]

I think more to the point, what if opting into Medicare was a *choice* in the Exchange? It surely would not cost $12,353 for a 55-year-old on average, for example, let alone a FIREd person who is 45 or 50. If the cost to provide Medicare-level coverage was competitive with (say) silver or gold level plans with insurance, it could be an option. As far as cost to the taxpayer goes it would be a wash because they would get the same subsidy with a different plan anyway. There is enough data out there to get a pretty good, even if not exact, idea of what Medicare-level coverage would cost by age.

I don't know if the math works, but if it did, putting Medicare's coverage on the Exchange to be sold at cost (less subsidy) seems like it would be a revenue-neutral thing. Except that insurers, and the politicians they buy, may not like it.

I also do not know the math on this. But as I mentioned in this post: http://www.early-retirement.org/forums/f38/speaking-of-aca-98666-7.html#post2266294 with any optional (i.e. opt-in) plan there is the issue of adverse selection. You bring up an interesting point, that these may already be people on ACA plans, which might reduce the amount of adverse selection. But (guessing here), if the Medicare like plan was priced in a cost-neutral manner (neither subsidizing or penalizing based on age/health factors), given that the ACA plan does subsidize older ages that without considering the insurance overhead that the medicare plan should cost more than an equivalent ACA plan. You also make a good point that costs could be theoretically lower w/o the insurance company middle-man (this assumes that the Medicare overhead/admin costs are lower than those + profit provided by an insurance company).

 

[USGrant1962]

To add to the conversation, in many respects the basic ~$12,000 Medicare is worse than ACA-compliant plans. It doesn't have the ridiculously high deductibles of ACA, but generally has both a 20% cost share and no OOP maximum!

So as I understand it, to get a plan comparable to ACA or most employer-provided plans you need to add the cost of Advantage of supplemental policies.
IOW, ~$12,000 per person is an under-estimate of the real cost of Medicare-covered health care.

Clearly, the cost of adding 55-64 year-olds to the pool will be less on average than the current Medicare demographic, but would still not seem to be an attractive buy-in value. And certainly not compared to subsidized ACA.

 

[Montecfo]

Not the least of which is that pre-ACA, insurers were charging women higher rates than men.

Due to claims stats, yes.

 

[Montecfo]

We are in our early 60s and have a non-subsidized ACA policy. The premium is 17k and the deductible is $6,700 per person. We have found that the negotiated discount for prescriptions is higher than the GoodRX rate. We are still using our long term PCP even though he is out of network. He gives us a 70% discount for being "uninsured" which is higher than the 60% discount we received from BCBS when he was in- network. My point is that we have not found the negotiated discounts to be very valuable.

Stated differently, the "list prices" for services are not real.

I think a different type of reform is needed. ACA mandated coverages but did not provide meaningful cost reforms such as published prices for services, published stats on outcomes, interstate competition and tort reforms.

You will never have cost effectivity when neither the patient nor the doctor or provider knows the cost of the services at the time they are provided, and when there is so little chance of shopping for better value.

 

[NW-Bound]

Not the least of which is that pre-ACA, insurers were charging women higher rates than men.

Due to claims stats, yes.

I do not think the insurance industry did anything wrong to levy higher premium to women, when they saw that women had higher claims than men. It's simply because women's reproductive system is more complicated, and has more things to go wrong.

Now, if society decides that women need protection because both sexes are needed for the survival of the species, then laws can and did get passed for men to subsidize women. It's all OK. I will not blame insurers for doing what their risk assessment told them how to price the premium.

And talking about survival of the species, in one RV trek while camping outside of the Grand Canyon, I met with a young German couple. They had a young baby of a few months with them. They explained that the government had been encouraging people to have children because the birthrate was so low. For having that baby, they were awarded some time off with pay, which they used for this travel.

Many European countries have policies like the above to halt the decrease in birthrate. These policies have to be decided at the nationwide level, and we cannot blame individual businesses for not doing "the right thing", whatever that thing is.

 

[MichaelB]

True. Maybe opting into Medicare through the Exchange could have been the “public option”, at whatever the cost is for delivering Medicare to someone of that age minus whatever subsidy they qualify for. The insurers want no part of this, of course.

As mentioned earlier, Medicare cost is $12,353 per person in 2018, and the premium paid by retirees only covers 15% of that.

ACA premium is less than the above even when unsubsidized, but then ACA people are younger than 65.

Opting in to Medicare at a younger age is an interesting alternative. Medicare has some attributes that make it appealing

- it has a community rating option, so no age discrimination or distortion

- the approach is to provide uniform basic coverage, and allow users to opt and pay for private additional coverage

- additional private coverage is heavily regulated, yet still attractive for users and insurers

It is not easy to compare estimated costs. Medicare does not cover pharmaceuticals (need separate Plan D) while the AC policy does.

Medicare average cost, as already reported, is around $12.8K yearly. This includes a nationwide provider network and covers 80% of health care costs. That is equivalent to a "Gold" tier ACA plan. For someone age 60, a gold plan with a broad nation-wide network will cost considerably more than $1K per month - at least 50% more. The uncertain variable is the cost of pharmaceutical coverage.


A Medicare opt-in plus MediGap F plus Plan D would be equivalent to an ACA Platinum level. Looking at a local zip code, such an ACA policy for a 62 year old with a large national network would cost $2440 per month and still have $1000 deductible and $3500 TOOP.

My guess is the Medicare option would be less costly for a 60 year old and probably similar in cost for a 50 year old. If this were to be considered, though, I would expect the basic framework or program design to be "fully costed" Medicare. If subsidies are needed, they should be considered, but any program should begin with the full and real cost upfront for everyone to see.

 

[NW-Bound]

...
Medicare average cost, as already reported, is around $12.8K yearly. This includes a nationwide provider network and covers 80% of health care costs...

I tried to find more detailed numbers, but have not found them. The numbers I cited earlier were $740 billion to cover 59.9 million people in 2018. I assume that was the benefits that Uncle Sam paid, but then we had to add other out-of-pocket costs. Perhaps that was the additional 20% above. That brings the total cost to $15.4K per retiree.

Now, Germany healthcare is 11% of their GDP, compared to 18% for the US.

If we manage to bring it down to the European level, we are still talking $9.5K per retiree. That's how expensive healthcare is.

 

[NW-Bound]

Something else I just thought about, regarding drug cost in the US vs. drug cost in foreign countries.

We talked earlier about how Germany would not pay more for new drugs that had no better efficacy than old drugs.

Could that be a reason why they are paying less than we do? Because they are no fools?

If so, we are not subsidizing anybody. We are simply gouged.

To check this out, I would need some very specific numbers. Alas, I am no medical researcher or expert to get into this stuff.