The Health Insurers have already won

[ERD50]

RE: vouchers for ins:

Quote:

Originally Posted by . . . Yrs to Go But it wouldn't because the insurance company still has a powerful financial incentive to shed unprofitable customers, raise their rates, deny claims, or withhold service in other ways ("please hold while your insurance representitive serves more profitable customers").

Yes, but I was envisioning that that voucher system would also include provisions that the ins co could not drop you or raise your rates (no underwriting) - in return, they get a larger market. All they need to do is provide better service than the public option. If they don't, they loose business. Lots of business.

Quote:

BTW, there is no reason "single payer" insurance can't also have high deductibles and be "customer driven" with respect to suppliers.

Agreed. And if there is a public option, I sure hope that a $5,000 deductible (as an example) is available. That is what I would prefer, yet that is not an option with my retiree plan.

I think that in order to keep any public option "customer driven", there must be competition from private companies. Who is going to keep the public option in line (recall my analogy to public schools w/o a voucher system)?

Quote:

Originally Posted by . . . Yrs to Go A couple of comments here . . . Point two, I strongly suspect that most places have pricing regulations on tow truck operators because of just the kind of abuse you mention. Imagine doing that for the entire medical profession.

heh-heh-heh - in the back of my mind I was kinda wondering if there were regulations on the towing companies, but I didn't have time to google it. Thanks for challenging me on that. I should have picked another example

But along those lines, transparency is often preferable to regulation. If it was known that Hospital X charges an average of $250,000 for a specific time-critical procedure, and Hospital Z charges an average of $150,000 for that same procedure and has better results, wouldn't a voucher system drive the multiple payers to Hospital Z when possible, and start questioning Hospital Y on their practices (which Hospital Y should already be doing to improve business)?

-ERD50

[Martha]

Part of the problem with dealing with health care reform is the lack of bargaining power of the consumer. Large companies have the easiest time buying health insurance and often are able to offer multiple plans to their employees if they are mega corps.

Small businesses pay more and often have a hard time finding a plan. And if they want to change plans often there is no insurer that will bid on the group.

Individuals have the biggest problem because of underwriting.

If we made insurance mandatory and barred underwriting I am still not sure that would address the problems with the individual market and small employer market.

New Report: Individual Health Insurance Market Failing Consumers - The Commonwealth Fund

This article summarizes some of the issues with the individual market:

The individual health insurance market is not a viable option for the majority of uninsured adults, a new report from The Commonwealth Fund finds. Seventy-three percent of people who tried to buy insurance on their own in the last three years did not purchase a policy, primarily because premiums were too high. In addition, among adults with individual coverage or who tried to buy coverage in the past three years, 57 percent said it was very difficult or impossible to find coverage they could afford, 47 percent said it was very difficult or impossible to find a plan with the coverage they needed, and 36 percent were denied coverage or charged more because of a pre-existing condition, or had the condition excluded from their coverage.

If we have a purchase mandate for health insurance are going to have to have cost regulation to insure affordability? Is the individual market large enough and stable enough to function based on price competition alone? This article talks about the substantial differences between he individual and group markets: http://www.hcfo.net/pdf/policybrief0508.pdf

There seem to be big problems in creating a stable individual market if employer based insurance is retained with its substantial tax benefits. A person who is in the individual market gets a job with an employer offering health insurance is likely to drop the individual insurance for the employer coverage. And we are then back to adverse selection and very high prices.

[haha]

Gotadimple who has extensive professional experience in health care finance has suggested that health insurance, individual or group, is a sellers' market. In other words, doctors, hospitals, pharmaceutical and medical device firms are price makers and insurance companies are price takers. At least that is what I think she said.

If that is correct, we can't really get control of costs as a nation until the purchasers, be they the federal government or private insurers can exert more effective downward pressure on prices for elements of care.

Does anyone know of analyses that investigate healthcare market structure on these terms?

Ha

[Gotadimple]

Quote:

Originally Posted by haha Gotadimple who has extensive professional experience in health care finance has suggested that health insurance, individual or group, is a sellers' market. In other words, doctors, hospitals, pharmaceutical and medical device firms are price makers and insurance companies are price takers. At least that is what I think she said.

Ha,
That's correct. Because the agreement between health plans and providers is piece work, the health plans can exert certain influence on prices based on the membership they can drive to the provider. That is, they may have 600,000 members in a metro area who would be likely to use one of the major hospitals. The hospital would then consider reducing the piece rate base on a steady flow of patients inherent in the health plan's membership.

However, when providers align around a pricing strategy, they can refuse to perform services for the health insurer's members because they don't believe the price is adequate. The result is that the consumer is disadvantaged and cannot access health care. All that results between the provider and the health plan is a standoff to see who will blink first. In the end no one gets what they want or need.

My point in all of this is that the piece work model is one of the problems, and is key area to be revised. When you couple that with higher incidences of waste and fraud, and quality of care incidents you end up with a broken model of delivering services. Paying for services rendered needs to accommodate: (1) quality delivery of care, (2) effective use of provider resources, (3) transparency so the consumer can choose, and (4) a payment method that rewards high quality and efficiency.

There are all kinds of suggestions on the table that work in smaller arenas: managed care models (i.e., Group Health of Puget Sound), large hospital-based total quality care models (i.e., Mayo Clinic), cash-only provider services, etc. But we seem to focus on the silver bullet. What works in one community, doesn't work in another. And finally there is the stated need to make sure everyone has insurance ().

It's a Gordian knot that needs to be unraveled. The easiest piece in my mind is tort reform. Easy -- meaning there are no infrastructure issues on the part of providers or health financiers to implement, and thus no immediate impact to the consumer. That would start a process of reducing waste through redundant services (diagnostic testing, record-keeping). The effect is long-term, rather than short-term. The hardest part: payment reform has huge infrastructure issues that will require several years of implementation.

As you can tell, I'm not a fan of the public insurance option. I think it will not lead to competition, but will lead to marginalizing a segment of the population to get sub-standard care because of reduced benefits or piece-pricing which will discourage providers from providing care.

We have that today -- it's called Medicaid.

If we want to encourage competition, pass a law requiring the National Association of Insurance Commissioners to implement competitive practices -- and monitor the state insurance departments (a far less expensive proposition!). Don't set up another money-wasting corporation in hopes they might make for-profit health insurers squirm in their seats. It's not gonna happen! Health insurers have had years of practice in 'not blinking.' See my comments above.

This entire topic tends to make me cranky, but being more cranky than usual must mean its time for dinner.



-- Rita

[ERD50]

Had a discussion with a mostly like-minded libertarian leaning friend the other day. He is big on public govt of health care though, because of all the insurance problems that have been pointed out in this thread (and other places).

I said OK, but here is how it would have to work so that we don't just hand the reigns over to the govt and lose all control (recall that our school system has comparatively poorer results with more money spent, and we the voter don't seem to be able to get govt to respond to that either). It all gets back to the "pay as you go" philosophy, but it puts a little finer point to it. There are a few ways to go, but let's assume a voucher system as an example:

A) Every US citizen currently residing in the US gets a voucher for $X per year.

B) They can choose to invest their voucher in the public admin option, or a private one.

C) We need to know where the money comes from for these vouchers, there needs to be a real "Health Care Account", audited and made public each year. Money in must equal money out. No dipping into the general fund, no "IOUs".

D) For those who choose the public option, the services provided must be funded from those vouchers. No dipping into the general fund, no "IOUs".

It seems that would be the litmus test of a public option. If they cannot provide better service for the dollars received, people will choose private ins. From what some of you are saying, it should be like falling off a log to out-perform these private companies. If so, great - we all choose to go public. But I suspect that private companies will be lured by those $, and they will get innovative very quickly. It's a win-win, public option to undermine some of the inherent problems in the private sector, but opportunity for the private sector to compete with the govt to keep them in-line.

Quote:

Originally Posted by Gotadimple If we want to encourage competition, pass a law requiring the National Association of Insurance Commissioners to implement competitive practices --

I don't think laws are effective for this. A business can be 100,000x faster at figuring ways around the laws than Congress can be to recognize a problem, get it on their agenda, and actually get a bill passed. It's no contest.

Offer them a voucher, and they will come. It's either be competitive or you don't get to play. What's wrong with those ideas (anybody)?

-ERD50

[eridanus]

Quote:

Originally Posted by Gotadimple The easiest piece in my mind is tort reform. Easy -- meaning there are no infrastructure issues on the part of providers or health financiers to implement, and thus no immediate impact to the consumer. That would start a process of reducing waste through redundant services (diagnostic testing, record-keeping). The effect is long-term, rather than short-term. The hardest part: payment reform has huge infrastructure issues that will require several years of implementation.

Texas has tort reform. It hasn't helped reduce health care costs, though insurance premiums have decreased. In fact, McAllen (TX) is featured in the New Yorker article for over-prescribing tests -- not because of concerns about malpractice but because of the additional pay for additional tests.

This probably goes back to the transparency issue. That, of course, is no panacea. It works for preventative or elective or delayed care but it doesn't work for emergency care.

[eridanus]

Quote:

Originally Posted by ERD50 D) For those who choose the public option, the services provided must be funded from those vouchers. No dipping into the general fund, no "IOUs".

You're dreaming.

[youbet]

Quote:

Originally Posted by ERD50 D) For those who choose the public option, the services provided must be funded from those vouchers. No dipping into the general fund, no "IOUs".

I hear ya...... but isn't the whole point of the proposed "public option" that it be more attractive in terms of lower premiums and better benefits which it will be able to afford because of backdoor financial supplements provided by the general fund? Anyone sticking with unsupplemented private insurance would have to be nuts and, before long, all of us will belong to the "public option."

[Martha]

Quote:

Originally Posted by ERD50 Had a discussion with a mostly like-minded libertarian leaning friend the other day. He is big on public govt of health care though, because of all the insurance problems that have been pointed out in this thread (and other places). I said OK, but here is how it would have to work so that we don't just hand the reigns over to the govt and lose all control (recall that our school system has comparatively poorer results with more money spent, and we the voter don't seem to be able to get govt to respond to that either). It all gets back to the "pay as you go" philosophy, but it puts a little finer point to it. There are a few ways to go, but let's assume a voucher system as an example: A) Every US citizen currently residing in the US gets a voucher for $X per year. B) They can choose to invest their voucher in the public admin option, or a private one. C) We need to know where the money comes from for these vouchers, there needs to be a real "Health Care Account", audited and made public each year. Money in must equal money out. No dipping into the general fund, no "IOUs". D) For those who choose the public option, the services provided must be funded from those vouchers. No dipping into the general fund, no "IOUs". It seems that would be the litmus test of a public option. If they cannot provide better service for the dollars received, people will choose private ins. From what some of you are saying, it should be like falling off a log to out-perform these private companies. If so, great - we all choose to go public. But I suspect that private companies will be lured by those $, and they will get innovative very quickly. It's a win-win, public option to undermine some of the inherent problems in the private sector, but opportunity for the private sector to compete with the govt to keep them in-line. I don't think laws are effective for this. A business can be 100,000x faster at figuring ways around the laws than Congress can be to recognize a problem, get it on their agenda, and actually get a bill passed. It's no contest. Offer them a voucher, and they will come. It's either be competitive or you don't get to play. What's wrong with those ideas (anybody)? -ERD50

How do you determine the amount of the voucher? Must insurers take you for the amount of the voucher? Is underwriting banned? Is employer provided insurance out of the mix? Is there a certain minimum level of benefits that must be offered?

What we want insurers to do is compete based on price, not compete based on who can get the healthiest people. How would insurance companies compete for your voucher?

[Martha]

Quote:

Originally Posted by youbet I hear ya...... but isn't the whole point of the proposed "public option" that it be more attractive in terms of lower premiums and better benefits which it will be able to afford because of backdoor financial supplements provided by the general fund? Anyone sticking with unsupplemented private insurance would have to be nuts and, before long, all of us will belong to the "public option."

The idea is that the public option would be run like a non-profit with premiums paying the entire cost of care plus administration. Insurance companies would have to be lean and mean to do the same and turn a profit.

[eridanus]

Quote:

Originally Posted by Martha The idea is that the public option would be run like a non-profit with premiums paying the entire cost of care plus administration. Insurance companies would have to be lean and mean to do the same and turn a profit.

Which would spur innovation and cost savings, as BC/BS couldn't depend on a captive audience. Maybe they'll also start to investigate fraud claims called into them by consumers.

[modhatter]

The most "cost efficient" system any way you slice it is a single payer system. Only all the political leaders don't want to put all the insurance companies out of business. Any other attempt at a fix is a band aid, without true cost savings possible in the long term. There is too much money currently being taken out by the insurance companies not designated to health care. There are too many young people without coverage, cause they think they are invincible, and too many people using the emergency rooms for their health care, cause they can. Think social security. You probably don't need it when you are young unless you become disabled, but you pay it when you are young, so you have it when you get older and need it.

It appears as not enough people have suffered the wrath of the insurance companies, and until more are personally effected, we may not be able to make necessary changes.

My "fantacy dream" would be for every member of congress to lose their insurance with no alternatives but to try and buy private insurance for themselves and their family. A few years of this, and we would have a very speedy solution.

[youbet]

Quote:

Originally Posted by Martha The idea is that the public option would be run like a non-profit with premiums paying the entire cost of care plus administration. Insurance companies would have to be lean and mean to do the same and turn a profit.

That might be the idea but I presume in real life the "public option" would be run like Amtrak......... fares are supposed to cover the cost but the system receives tax sourced supplements every year. And so be it. As long as the private companies are given a graceful way to exit without stock and bond holders paying the price, it will be no skin off my nose. I'll be on Medicare, or whatever geezer insurance they have in 3 yrs, by then.

[ERD50]

Quote:

Originally Posted by eridanus You're dreaming.

Yes, I know.

Quote:

Originally Posted by Martha see Q/A below (your Q's in italics)

How do you determine the amount of the voucher? Whatever the govt determines is needed to provide reasonable coverage for the average person under the public option. And no more than the govt takes in to support the program. Ins companies (or co-ops, or whatever), would need to compete with that.

Must insurers take you for the amount of the voucher? Is underwriting banned? Yes, Yes. This is basically what samclem outlined a while back.

Is employer provided insurance out of the mix? I don't see why - If a business can make a group deal for its employees, why not allow it? It should not get any tax benefit, and unemployed people have the public option.

Is there a certain minimum level of benefits that must be offered? Yes, like in samclem's outline, you could probably have a few different plans (high deductible would be one option), but they would all need to meet some basic requirements.

How would insurance companies compete for your voucher? Like any other market, by offering something better than the public option (if they can). We would need some level of transparency, so that people can make informed choices, but I prefer that to "trusting" that the govt is going to do a bang up job of it.

And w/o that transparency, how would we ever know how good a job the govt was doing (my wife's cousin's barber got treated badly/wonderfully...)? So it's needed in either case.

Quote:

Originally Posted by modhatter The most "cost efficient" system any way you slice it is a single payer system.

Theoretically, maybe. But w/o competition, how can we ever know, and what is the motivation? It would be like a monopoly saying "We really give you the best deal, really (trust us)."

If it was so black/white, we would all be clamoring for govt run grocery stores, govt run barbershops, govt run restaurants, govt run oil change shops, etc. Right? W/o the profit motive, all these could theoretically be provided better/cheaper. See why so many of us are skeptical?

-ERD50

[Martha]

Quote:

Originally Posted by youbet That might be the idea but I presume in real life the "public option" would be run like Amtrak......... fares are supposed to cover the cost but the system receives tax sourced supplements every year. And so be it. As long as the private companies are given a graceful way to exit without stock and bond holders paying the price, it will be no skin off my nose. I'll be on Medicare, or whatever geezer insurance they have in 3 yrs, by then.

I don't know that Amtrak really was contemplated as self supporting. Was it? I know some want it to be.

All the current proposals for the public option make it self supporting pay as you go.

[ERD50]

Quote:

Originally Posted by youbet I hear ya...... but isn't the whole point of the proposed "public option" that it be more attractive in terms of lower premiums and better benefits which it will be able to afford because of backdoor financial supplements provided by the general fund? Anyone sticking with unsupplemented private insurance would have to be nuts and, before long, all of us will belong to the "public option."

But then it is just a shell game. It won't "prove" that the insurance companies were ripping us off, it only proves that the govt can go do something that private companies can't - go into debt to provide health care for all. Let's ask future generations under the voting age if they are OK with that.

-ERD50

[Martha]

Quote:

Originally Posted by ERD50 Yes, I know. How do you determine the amount of the voucher? Whatever the govt determines is needed to provide reasonable coverage for the average person under the public option. And no more than the govt takes in to support the program. Ins companies (or co-ops, or whatever), would need to compete with that. Must insurers take you for the amount of the voucher? Is underwriting banned? Yes, Yes. This is basically what samclem outlined a while back. Is employer provided insurance out of the mix? I don't see why - If a business can make a group deal for its employees, why not allow it? It should not get any tax benefit, and unemployed people have the public option. Is there a certain minimum level of benefits that must be offered? Yes, like in samclem's outline, you could probably have a few different plans (high deductible would be one option), but they would all need to meet some basic requirements. How would insurance companies compete for your voucher? Like any other market, by offering something better than the public option (if they can). We would need some level of transparency, so that people can make informed choices, but I prefer that to "trusting" that the govt is going to do a bang up job of it. -ERD50

I am not remembering all of SamClem's "proposal." If you issue everyone a voucher that is sufficient to buy a plan, what would you do about people who have no money to pay a deductible? For example, the people on medicaid. Would you have the same voucher issued no matter how rich or poor you are? Would you have providers bear the risk of not having a deductible paid?

So what if no insurer wants your voucher? A public option? Many insurance companies only do group coverage. That is what insurers are going to want to chase if they get the same amount of money for each individual of a group as they do per individual on a non-group plan. Currently, people who buy individual insurance tend to have it for a very short time and then pick up insurance from an employer. IIRC, the average time on a non-group plan is something like eight months. Even risk pools have a fair amount of turnover, as people become eligible for medicare or get a job. I am concerned about the private insurance market and how it works (or more accurately, doesn't work) and therefor am concerned about the public option and how it would work. If it makes financial sense for most people to get insurance through employers the private market and the public option could be unstable and expensive. Or end up with second class status ala medicaid. This is Rita's concern and mine as well.

If it matters. After all, we are unlikely to be an effective lobby.

[youbet]

Quote:

Originally Posted by Martha I don't know that Amtrak really was contemplated as self supporting. Was it? I know some want it to be. All the current proposals for the public option make it self supporting pay as you go.

I thought ALL the current proposals provided for govt funds to start the public option and a "hope and a prayer" that it's profitable and pays back.

[Gone4Good]

Quote:

Originally Posted by ERD50 A business can be 100,000x faster at figuring ways around the laws than Congress can be to recognize a problem

Which is precisely the concern many people have about relying on laws to force insurance companies to cover money losing chronically ill patients.

Quote:

Originally Posted by ERD50 Must insurers take you for the amount of the voucher? Is underwriting banned? Yes, Yes.

[ERD50]

Quote:

Originally Posted by Martha I am not remembering all of SamClem's "proposal." If you issue everyone a voucher that is sufficient to buy a plan, what would you do about people who have no money to pay a deductible? For example, the people on medicaid.

No different than "single payer" - those who can't pay would get their voucher subsidized. All I ask is it be transparent, so that we all understand that that is exactly what we are doing. Don't try to pass it off as "free".

Would you have providers bear the risk of not having a deductible paid? Hadn't thought about it - so, OK, I guess if you you can't afford the premium you can't afford a deductible or co-pay. So those on the dole should be on some kind of no-deductible, no co-pay plan (which is another reason to have a few different plans). And it should be a relatively bare-bones plan, yet "sufficient".

Would you have the same voucher issued no matter how rich or poor you are?

Yes. If you can afford it and desire it, you could buy "upgrades" (private rooms, etc). If I can live in a nicer house than someone at the poverty level, why shouldn't I be able to buy nicer coverage (assuming some reasonable minimums are met by the voucher)?

So what if no insurer wants your voucher? A public option? Exactly - that is what free markets are all about, If no one wants to fill your demand at the price you offer, it goes unfulfilled. If that happens, there is the public option.

I am concerned about the private insurance market and how it works (or more accurately, doesn't work) and therefor am concerned about the public option and how it would work. If it makes financial sense for most people to get insurance through employers the private market and the public option could be unstable and expensive. Or end up with second class status ala medicaid. This is Rita's concern and mine as well.

Not sure I follow this part. If the govt can provide some acceptable level of coverage at $X/year, doesn't that stabilize things? Why would it make sense for most people to get private ins? I keep hearing how the private ins cos are wasteful (and I think there is some truth to that, under the current "rules of the game"), and if that is true, and govt is so effective, then it seems most people would go with the public option. Where's the problem?

Now (trying to read into your question), an ins co might determine that employed professionals have lower costs than the general public (as an example). So, they could offer more services for your voucher if you are an employed professional at XYZ Corp. OK, but I don't think that undermines the value of the voucher to anyone else, does it? Others don't get some perks, but they get reasonable coverage. Isn't that an improvement over today?


If it matters. After all, we are unlikely to be an effective lobby.

Well, a couple ways to look at that one. In reality, I don't expect anything more to come out of these discussions than for me to get an education. Having my thoughts challenged helps me to see where my thinking needs adjustment. Listening to others helps open my eyes to other viewpoints. Or maybe just find out what my reps in Congress are responding to.

But the fact that these current HC proposals have not been able to be rammed through a Congress dominated by a single party tells me that the people with well thought out viewpoints may have a little more power than we might think. Or maybe not .

-ERD50