Large companies weigh cost of dropping employee health benefits

[Texas Proud]

Jimoh...

Some good ideas in your post... and I will give examples..

Go to any doctor or even their front desk people and ASK... how much does this cost I have not had a single person be albe to tell me...

(as an aside, I can ask this in my dentist's office and they will tell me what any and everything costs... they also will say 'this is not covered by your insurance, do you want to pay for it yourself... it is $25)...


One of the other problems is the cost of some of the medicine that is out there... why can we not have some negotiation with the companies... why does it cost us 25X here and only X in Canada or England....

My mother is trying to get approved for some bone medication... the one recommended by the doc cost over $10K per year for two years... she was denied by her insurance company... no reason given...

 

[ziggy29]

It would probably help deal with "use control", an important component of cost control.

It's both. In FD's example, I don't care whether the full price of an MRI is $2500 or $699 if I pay a $50 co-pay either way. If the $2500 place has more impressive facilities, a more convenient location or appointment times, has prettier nurses or whatever else, I may choose it since I'm only out $50 either way.

But subject this to coinsurance and deductibles, and suddenly I pay a LOT more for it at the $2500 place, and I go elsewhere. I pay less, insurance pays less and (in theory) premium increases are held down.

And in some cases ("use control" as you say), I might not go in at all for elective visits or really minor stuff if I had to pay more than a $20 co-pay office visit for it.

Health care isn't an area where "free market economics" are a cure-all (pun intended), but I do believe that they should be used where they make sense -- and IMO, here they do. But again, this requires both transparency in fee structure AND a switch from low fixed co-pays to deductibles and co-insurance.

 

[IndependentlyPoor]

It's both. In FD's example, I don't care whether the full price of an MRI is $2500 or $699 if I pay a $50 co-pay either way. If the $2500 place has more impressive facilities, a more convenient location or appointment times, has prettier nurses or whatever else, I may choose it since I'm only out $50 either way.

But subject this to coinsurance and deductibles, and suddenly I pay a LOT more for it at the $2500 place, and I go elsewhere. I pay less, insurance pays less and (in theory) premium increases are held down.

And in some cases ("use control" as you say), I might not go in at all for elective visits or really minor stuff if I had to pay more than a $20 co-pay office visit for it.

Health care isn't an area where "free market economics" are a cure-all (pun intended), but I do believe that they should be used where they make sense -- and IMO, here they do. But again, this requires both transparency in fee structure AND a switch from low fixed co-pays to deductibles and co-insurance.

Allow me to add that To make an informed decision, you also need information about the quality of care, and the medical profession has made this impossible to get.
Also, if you are a patient in the hospital, you don't have any choice of MRI providers.

 

[ziggy29]

Allow me to add that To make an informed decision, you also need information about the quality of care, and the medical profession has made this impossible to get.

Agreed, but that's an issue regardless of whether you keep the "low co-pay" status quo or move to deductibles and co-insurance. Still it is an important part of becoming an informed consumer of health services.

 

[IndependentlyPoor]

Agreed, but that's an issue regardless of whether you keep the "low co-pay" status quo or move to deductibles and co-insurance.

True

 

[Independent]

Allow me to add that To make an informed decision, you also need information about the quality of care, and the medical profession has made this impossible to get.
Also, if you are a patient in the hospital, you don't have any choice of MRI providers.

Yes. I'm in favor of jIMOh's suggestions - medical providers should provide price lists, and they shouldn't give discounts to anyone (including Medicare).

Those are helpful steps, but they don't deal with people who can't afford care or insurance. And, they aren't enough to give us an efficient market. One of the requirements of an efficient market is that buyers are the sole judges of the value of what they are buying. In health care, most of us don't know what medication or procedure we need, and we can't judge the relative quality of various providers.

I don't know if I really need an MRI or if an ordinary X-ray is nearly as good. And if Dr. A charges 50% more than Dr. B for reading either, should I go with the cheaper Dr. B, or is this a case where the higher price signals better quality?

 

[FinanceDude]

Also, if you are a patient in the hospital, you don't have any choice of MRI providers.

True, but most MRIs done are outpatient in nature, or at least that's what my neighbor whose an MRI tech tells me............

 

[FinanceDude]

relative quality of various providers.

I don't know if I really need an MRI or if an ordinary X-ray is nearly as good. And if Dr. A charges 50% more than Dr. B for reading either, should I go with the cheaper Dr. B, or is this a case where the higher price signals better quality?

I heard this one somewhere.......... Guy goes to a doctor and says he's not feeling well. Doc does a bunch of tests and says he's fine, just some indigestion. Guy gets a bill and freaks. The tests were only $300 but the doctor charged $2500. Guy asks the doctor why the high fee. The doctor says: Anybody can give you a test, I'm the one who tells you WHAT THEY MEAN!!

 

[Gone4Good]

No first-dollar coverage except for preventive care (and perhaps those below the poverty level).

Stronger penalties for being uninsured so there can be no financial advantage for not buying at least the cheapest available (highest deductible) coverage.

Breaking the link between employment and health insurance so people can buy the coverage most suited for them. (If anything I think Obamacare *strengthens* the link by writing employer responsibilities/penalties into law.)

I agree with all of this stuff.

But none of this takes a radically different approach from the law that was recently passed. You'd think with all of the hollering, including from members on this board, about how truly awful this legislation was that someone would have a pretty significantly different idea about how to do this. But instead, everyone now apparently agrees that a very significant government [-]takeover[/-] involvement is needed (in the way of mandating individual coverage, mandating minimum benefits, mandating that insurers provide coverage, regulating prices, etc.).

So if everyone mostly agrees, why do I keep seeing threads about how awful the legislation is? And if everyone doesn't agree, why can't anyone explain to me how chronically sick people get health care under an alternative system?

 

[Gone4Good]

Four simple rules to fix the healthcare system.

1. Prohibit exclusions for preexisting conditions.
2. Mandate universal minimum coverage (with subsidies for the truly poor).
3. Insurers may offer any policy features they wish above a required minimum set, and may set any price they wish for this optional coverage, but the prices charged must be the same for everybody.
4. Policies may be canceled only for non-payment or other breach of contract, not because the client was seriously injured or contracted an expensive disease.
​

In what way is this different from the law that was passed?

 

[IndependentlyPoor]

In what way is this different from the law that was passed?

Um... It's about 1,000 pages shorter?

 

[dgoldenz]

I agree with all of this stuff.

But none of this takes a radically different approach from the law that was recently passed. You'd think with all of the hollering, including from members on this board, about how truly awful this legislation was that someone would have a pretty significantly different idea about how to do this. But instead, everyone now apparently agrees that a very significant government [-]takeover[/-] involvement is needed (in the way of mandating individual coverage, mandating minimum benefits, mandating that insurers provide coverage, regulating prices, etc.).

So if everyone mostly agrees, why do I keep seeing threads about how awful the legislation is? And if everyone doesn't agree, why can't anyone explain to me how chronically sick people get health care under an alternative system?

Because it is being done in a manner setting up the insurance companies to fail:

80% minimum loss ratio (85% for groups).
No waiting periods for pre-existing conditions.
No penalty for jumping from a cheap plan to the most expensive plan when you need a $3k/month prescription.
No open enrollment limits to stop said plan-jumping.
Mandated maternity and mental health benefits (I'm a guy...why do I need maternity?)
Mandated minimum benefit requirements that will become a haven for special-interest groups that want to be included.
More taxes on businesses.
More administration necessary, especially for small businesses.
Massive subsidies that will be unsustainable within a few short years.
No tort reform.

Do I need to go on?

 

[FinanceDude]

I agree with all of this stuff.

But none of this takes a radically different approach from the law that was recently passed. You'd think with all of the hollering, including from members on this board, about how truly awful this legislation was that someone would have a pretty significantly different idea about how to do this. But instead, everyone now apparently agrees that a very significant government [-]takeover[/-] involvement is needed (in the way of mandating individual coverage, mandating minimum benefits, mandating that insurers provide coverage, regulating prices, etc.).

So if everyone mostly agrees, why do I keep seeing threads about how awful the legislation is? And if everyone doesn't agree, why can't anyone explain to me how chronically sick people get health care under an alternative system?

it could have been fixed in pieces instead of creating yet another huge bureaucracy with no cost controls longterm. Fining healthy folks that don't want health insurance is not going to work. Taxing the folks that create jobs in this country is not going to work, etc....... So when the amount of increased taxes needed to support another 30 million folks doesn't end up being anywhere near the govt needs, a lot of those folks no doubt in the non-taxpaying section of the populace, how are you going to fund it?

Ideologically, it makes for a nice story. Fiscally, there's no way to fund it. That's the real issue. Explain to me where we are going to get all the doctors and other medical personnel to handle another 30 million patients? Our medical industry already is overtaxed and now we want to hire 12,000 IRS agents just to hunt down 20 somethings that won't pay the fine for not buying health insurance? how's that going to work?

 

[Gone4Good]

it could have been fixed in pieces instead of creating yet another huge bureaucracy with no cost controls longterm.

My question is how?

 

[Gone4Good]

Because it is being done in a manner setting up the insurance companies to fail:

1) 80% minimum loss ratio (85% for groups).
2) No waiting periods for pre-existing conditions.
3) No penalty for jumping from a cheap plan to the most expensive plan when you need a $3k/month prescription.
4) No open enrollment limits to stop said plan-jumping.
5) Mandated maternity and mental health benefits (I'm a guy...why do I need maternity?)
6) Mandated minimum benefit requirements that will become a haven for special-interest groups that want to be included.
7) More taxes on businesses.
8) More administration necessary, especially for small businesses.
9) Massive subsidies that will be unsustainable within a few short years.
10) No tort reform.

Do I need to go on?

Most of this list can be summarized as "adverse selection problem" and it is remedied by several of the things you also list. So 2, 3, & 4 are addressed by things like 5 & 6.

You never responded to my question on subsidies earlier in the thread, but 7 covers 9.

There is a logic to why things were done the way they were done.

You and I disagree on whether waiting periods for pre-existing conditions are sufficient to fix the adverse selection problem. I think they are woefully inadequate. What you will likely see is young healthy people opting for the least expensive coverage they can find.. Whereas older, sick people will opt for more comprehensive insurance making those policies prohibitively expensive. To fix that problem, the legislation mandates fairly high minimum coverage levels, which obviates the need for the waiting periods and other things you recommend.

 

[dgoldenz]

Most of this list can be summarized as "adverse selection problem" and it is remedied by several of the things you also list. So 2, 3, & 4 are addressed by things like 5 & 6.

You never responded to my question on subsidies earlier in the thread, but 7 covers 9.

There is a logic to why things were done the way they were done.

You and I disagree on whether waiting periods for pre-existing conditions are sufficient to fix the adverse selection problem. I think they are woefully inadequate. I think what you will see is young healthy people opting for the least expensive coverage they can find.. Whereas older, sick people will opt for more comprehensive insurance making those policies prohibitively expensive. To fix that problem, the legislation mandates fairly high minimum coverage levels, which obviates the need for the waiting periods and other things you recommend.

I'm not sure what your earlier question was...re-post it? What happens when #7 doesn't cover #9 because #9 ends up being 4 times the estimated amount? Will #7 go up 400% to cover it?

Said it before, will say it again regarding mandated benefit levels: If you can't write the check, then you can't write the check!

 

[Gone4Good]

I'm not sure what your earlier question was...re-post it? What happens when #7 doesn't cover #9 because #9 ends up being 4 times the estimated amount? Will #7 go up 400% to cover it?

Said it before, will say it again regarding mandated benefit levels: If you can't write the check, then you can't write the check!

Here you go.

With regards to the rest of your post, I think I'll decline to engage in a debate where I'm being asked to account for outlandish assumptions (e.g. 4x cost overruns).

 

[dgoldenz]

Here you go.

With regards to the rest of your post, I think I'll decline to engage in a debate where I'm being asked to account for outlandish assumptions (e.g. 4x cost overruns).

I don't think anybody really has an answer for how to handle "low-income" subsidies. What is low-income? What's not low-income? $100k for a family of 5 surely isn't low-income, yet they are still getting a subsidy. For the ultra-poor, they have Medicaid and SCHIP already.

The bill ties a maximum out-of-pocket premium to the income level. If you make 4x the poverty limit as a family of 4 ($88k), you can't spend more than 9.5% of income on premiums. What happens when the premiums continue to spiral upwards at 20-30% increases each year? If you think 4x cost is an outlandish assumption, you better think again. What happened to Medicare and Medicaid?

In 1965, the House Ways and Means Committee estimated that the hospital insurance program of Medicare - the federal health care program for the elderly and disabled - would cost $9 billion by 1990. The actual cost that year was $67 billion.

In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion.

In 1987, Congress projected that Medicaid - the joint federal-state health care program for the poor - would make special relief payments to hospitals of less than $1 billion in 1992. Actual cost: $17 billion.

The list goes on. The 1993 cost of Medicare's home care benefit was projected in 1988 to be $4 billion, but ended up at $10 billion. The State Children's Health Insurance Program (SCHIP), which was created in 1997 and projected to cost $5 billion per year, has had to be supplemented with hundreds of millions of dollars annually by Congress.

 

[Texas Proud]

I agree with all of this stuff.

But none of this takes a radically different approach from the law that was recently passed. You'd think with all of the hollering, including from members on this board, about how truly awful this legislation was that someone would have a pretty significantly different idea about how to do this. But instead, everyone now apparently agrees that a very significant government [-]takeover[/-] involvement is needed (in the way of mandating individual coverage, mandating minimum benefits, mandating that insurers provide coverage, regulating prices, etc.).

So if everyone mostly agrees, why do I keep seeing threads about how awful the legislation is? And if everyone doesn't agree, why can't anyone explain to me how chronically sick people get health care under an alternative system?

Not to get side tracked on this... but my biggest complaint with the law passed is it does not do what they said they wanted to do 'in the beginning'... it is a welfare healthcare bill... a good number of the improvements could have been done without spending $1 trillion of tax money that you have to get from someone...

If we get over the notion that everybody should have the same level of health care... then things might change..... since we will not... it will stay the same, new bill or not...

 

[barker]

I think separating health insurance and heathcare away from employment in the long run is a good idea. There is no reason to tie employment and healthcare together - it's not good for employees, companies or the economy as a whole.

And if you think employers are paying for part of healthcare out of the goodness of their hearts, forget it. You and I pay for the companies to give their employees health insurance via higher prices on products.

So we can either pay for peoples' health insurance through taxes or we can pay by higher prices on all the products we buy being more expensive.

We pay either way, so what's the big deal?

 

[Gone4Good]

I don't think anybody really has an answer for how to handle "low-income" subsidies. What is low-income? What's not low-income? $100k for a family of 5 surely isn't low-income, yet they are still getting a subsidy. For the ultra-poor, they have Medicaid and SCHIP already.

What I wanted to know was whether you favored any subsidy or not. I'm guessing from your responses that the answer is a qualified 'yes' but you don't want to say as much.

The whole point of that and the other questions was to see how close your view of a health care fix is to what we actually have passed in the law. And the answer seems to be 'quite close'. Several months ago people were up in arms about a "government takeover of health care". But now it seems as if everyone is on board with a 'big government" approach. The debate here isn't whether we should have massive government intervention into the healthcare system or not, it is over much smaller points like the size of deductibles, the length of waiting periods, penalties for going without health insurance, and so on. That is a much, much different debate then we had last year. And a more reasonable one too.

 

[Gone4Good]

Not to get side tracked on this... but my biggest complaint with the law passed is it does not do what they said they wanted to do 'in the beginning'... it is a welfare healthcare bill... a good number of the improvements could have been done without spending $1 trillion of tax money that you have to get from someone...

The cost of the bill is obviously determined by the generosity of the subsidies. It would have been worthwhile to have a full debate on what the subsidies should be. I don't recall one.

But some level of subsidies are necessary. And not just for "welfare" or "social justice" reasons. In order to keep premiums low, healthy people need to be in the pool. But to keep healthy people in the pool, particularly younger people who are earning their first paycheck, premiums need to be affordable. We can mandate that everyone have insurance, but if you can't afford it, you can't afford it. So to get everyone in the pool, we need to subsidize some folks.

Of course a national health care system gets around the need for explicit subsidies, phaseouts and "individual mandates" but we decided early on that was a non-starter. So here we are.

 

[Gone4Good]

In 1965, the House Ways and Means Committee estimated . . .

The joke with this argument is that subsequent administrations increased the benefits substantially under those programs. It's not accurate to say that the original cost projections in 1965 were too optimistic when the program itself is deliberately changed in a way that adds expenditures. You positioned it as a fait a compli that costs would exceed current estimates by 4x based on the history of medicare. But that only makes sense if we assume the same deliberate expansion of benefits, in which case those subsequent administrations will have to deal with the costs involved.

 

[ziggy29]

The joke with this argument is that subsequent administrations increased the benefits substantially under those programs. It's not accurate to say that the original cost projections in 1965 were too optimistic when the program itself is deliberately changed in a way that adds expenditures.

Perhaps so, but isn't this the way it always is? In good times we're flush with cash so lets increase the benefits to buy votes (it happens with some public pensions, too). Then the downturn hits and we hit a crisis point because we've already committed all of what should have been a "surplus" or a "rainy day fund" to higher benefits that are impossible to scale back and can't be funded except with higher taxes that are a bad idea in an already weak economy.

Plus, I doubt that the benefits increased by a factor of 9.

 

[dgoldenz]

Perhaps so, but isn't this the way it always is? In good times we're flush with cash so lets increase the benefits to buy votes (it happens with some public pensions, too). Then the downturn hits and we hit a crisis point because we've already committed all of what should have been a "surplus" or a "rainy day fund" to higher benefits that are impossible to scale back and can't be funded except with higher taxes that are a bad idea in an already weak economy.

Plus, I doubt that the benefits increased by a factor of 9.

x2

Politicians love to increase benefits because it looks great politically. When the money runs out, the public gets left holding the bag. Who isn't to say that future politicians won't increase the subsidies required in the new health bill? Who will pay for those? You told me that costs being "off by 4x the estimate" was outrageous....but it has happened over and over and over again. Perhaps I should bash my head against the wall one more time to see if I'll break through it yet.

There must be some form of subsidy, but the amount of those subsidies is one of the biggest problems. As premiums continue to massively increase, the subsidies will get bigger accordingly. The CBO score and reports I've seen say that rates could go up 17% for young people. That's outright BS. I pay $95/month for my coverage right now....how much do you think I'll be paying come 2014? I'll take "over $250/month" for $500, Alex. And I'm just one person, not a family of four. Of course, I am "rich" by the government's standards (and no, I make nowhere close to $250k...yet) so I will not get any subsidy. This bill expands coverage, it does NOT control costs and overutilization, which are the two biggest problems in the system.