Obamacare

[bondi688]

Back of the envelop math on healthcare insurance policy cost.

Healthcare today costs, on average, $8k or so per person. Adding an additional 20% , the average policy would cost between $9 to $10k. The allowable range for age is 3x, so that could mean a policy for a whippersnapper is $5k and for an old phart is $15k.

People paying less that than should expect to see their policy costs increase over time.

Can you define your parameters? At what age does a person become an old phart, and the true cost of his/her insurance policy should be around 15k? This is not asked in a snarky way.

 

[heeyy_joe]

Since insurance companies are limited to a percentage of the profits, and they are the ones supposed to be negotiating pricing, it seems to me they have every incentive to have higher prices. Wouldn't high health care costs increase their actual profits?

 

[MichaelB]

Is it $8K per PERSON

Hmm, I see you say healthcare cost and not insurance cost... but still want to check what you are saying.. IOW, our company insurance cost about $4K for individual and a bit over $10K for a family... this is total costs paid to the insurance company...

Check away. Total US healthcare in the US in 2011 was $2.7T. That works out to $8.6K.

Can you define your parameters? At what age does a person become an old phart, and the true cost of his/her insurance policy should be around 15k? This is not asked in a snarky way.

Not my parameters. The PPACA limits cost increases based on age to 3x. Individual policies begin at age 26 and end on the first day of 65th birthday.

In both cases, I'm just doing the math.

 

[bUU]

I always thought that high deductibles, would lead folks to a healthier life style, i.e. less costly health insurance. Now it looks like you don't have to care. Eat, smoke, drink, and be merry.

You could say the same thing about just about every west European country that has universal health care. They don't have to care. They can eat, smoke, drink and be merry. Yet, they spend less than us on healthcare, while at the same time they are healthier and live longer than us.

Good point. The cost issue isn't related as much to subscriber deductibles as it is to how much pharmaceutical companies, medical device manufacturers, and to a lesser extent, health care service providers are able to charge; and tangentially, to lifestyle considerations that are relatively unaffected by how health care is arrayed.

ACA has everything to do with controlling how profits are allocated.

It is important to note that ACA is a prerequisite to any serious cost reduction efforts, paving the way for such efforts without the risk that rationing of health care based on affluence will come into play. Once ACA is fully deployed and operating, then we can take the next steps toward reducing costs responsibly.

i am not an expert on healthcare but-most european countries have universal health care(run by government). if they say an MRI is 200 for example it's 200 dollars-they set the price. in the US the government does not set the price( although individual insurance plans negotiate a price). because of this i don't think you can compare the costs.

Actually, nothing about that says you cannot compare the costs. If their infant mortality rates were significantly higher, or life expectancy was much lower, or their general level of fitness and health were inadequate, then I could understand not wanting to compare costs.

 

[ERhoosier]

Check away. Total US healthcare in the US in 2011 was $2.7T. That works out to $8.6K.


Not my parameters. The PPACA limits cost increases based on age to 3x. Individual policies begin at age 26 and end on the first day of 65th birthday.

In both cases, I'm just doing the math.

Total US healthcare costs also include care for non-citizens (illegal aliens, medical 'tourists', etc.), so it's a bit more complex than dividing official US population # into $2.7T. For example in some areas along US northern border up to 10% of patients are Canadians paying cash to get visits/procedures done (inc. sooner, perceived quality, etc.). But agree Michael's calc should put us somewhere in the ballpark when using PPACA's cost limits, at least as they are written now.

 

[gerrym51]

Good point. The cost issue isn't related as much to subscriber deductibles as it is to how much pharmaceutical companies, medical device manufacturers, and to a lesser extent, health care service providers are able to charge; and tangentially, to lifestyle considerations that are relatively unaffected by how health care is arrayed.

It is important to note that ACA is a prerequisite to any serious cost reduction efforts, paving the way for such efforts without the risk that rationing of health care based on affluence will come into play. Once ACA is fully deployed and operating, then we can take the next steps toward reducing costs responsibly.

Actually, nothing about that says you cannot compare the costs. If their infant mortality rates were significantly higher, or life expectancy was much lower, or their general level of fitness and health were inadequate, then I could understand not wanting to compare costs.

i did not say you could not compare costs-but that it would not be accurate

 

[bUU]

i did not say you could not compare costs-but that it would not be accurate

I surely did understand your intent, but disagree with it. The comparison would indeed be valid, imho, because the effects are comparable. If you want to factor in a percentage of taxes attributable to the comparison, that would make sense, but it is important to recognize that the comparison itself is valid and important - that they have the system that some people are saying is "bad" and their results are "good".

 

[M Paquette]

i am not an expert on healthcare but-most european countries have universal health care(run by government). if they say an MRI is 200 for example it's 200 dollars-they set the price. in the US the government does not set the price( although individual insurance plans negotiate a price).

because of this i don't think you can compare the costs.

The PPACA is very close to the Swiss insurance program, right down to the tiers of private insurance available.

http://www.forbes.com/sites/aroy/2011/04/29/why-switzerland-has-the-worlds-best-health-care-system/

Now, the Swiss plan is the third most expensive in the world, behind Norway and the US. However...

(1) Switzerland is a rich country, and one cannot discount the likelihood that citizens of a wealthy country will freely choose to spend more on health care; (2) Purchasing power parity adjustments may not fully account for higher Swiss costs of living; (3) the growth of health costs in Switzerland (and the U.S., for that matter) are below the OECD median: from 1996 to 2008, average PPP-adjusted per-capita expenditure growth in Switzerland was 4.6 percent, or 28th in the 34-country OECD rankings; the U.S. averaged 5.5 percent, ranking 22nd. (The U.K. ranked 13th at 6.7 percent.)

Even better, though...

The performance of Switzerland is even more impressive when you consider how fiscally stable it is. The Swiss system, called Santésuisse, is striking in its differences to ours. Government spending on health care in Switzerland is only 2.7 percent of GDP, by far the lowest in the developed world. By contrast, in 2008, U.S. government spending on health care was 7.4 percent of GDP. If the U.S. could move its state health spending to Swiss levels, it would save more than $700 billion a year.

Despite this apparent stinginess, the Swiss have achieved universal coverage for all its citizens. The Swiss have access to the latest technology, just as Americans do, and with comparably low wait times for appointments and procedures. And the Swiss are among the healthiest people on earth: while life expectancy is not the ideal proxy for overall health, nor of a health care system’s performance, life expectancy for a Swiss citizen on his 65th birthday is second only to that of Japan’s.

 

[FinanceDude]

The real fact is that nobody knows how this will affect the health care landscape. The CBO has repeatedly said they can't see how Obamacare will work from a funding standpoint, that "bending the cost curve down" is not going to happen, etc.

We will not know what happens until it is fully implemented. One thing that IS certain is we will need more medical professionals if we are now going to add 20 million or more folks to the health care system.........

 

[FinanceDude]

The PPACA is very close to the Swiss insurance program, right down to the tiers of private insurance available.

Why Switzerland Has the World's Best Health Care System - Forbes

Now, the Swiss plan is the third most expensive in the world, behind Norway and the US. However...



Even better, though...

What is the population of Switzerland?

 

[gerrym51]

I surely did understand your intent, but disagree with it. The comparison would indeed be valid, imho, because the effects are comparable. If you want to factor in a percentage of taxes attributable to the comparison, that would make sense, but it is important to recognize that the comparison itself is valid and important - that they have the system that some people are saying is "bad" and their results are "good".

my opinion is you are saying results per dollar. i have no comment on results-just costs.

if you are saying other countries get better results per their dollars-that a separate issue.

 

[pb4uski]

Your ignorance of the law is astounding. How sad for someone to comment here while lacking proper understanding. ACA has everything to do with controlling how profits are allocated. Suggest you read up on this.

Last time I checked, everyone is allowed to express their opinions and views here, so please don't denigrate with your soapbox comment. I hear people get grumpy as they get older...

OK, I'll bite. I challenge you to post a link to the specific sections of the law that regulate "how profits are allocated" (your phrase).

The restriction is that a certain percentage of premium must be spent on benefits and if the percentage is less than the minimum then the insurer must rebate any excess. So if the prescribed benefits must be 80% or more of the premium and for a group of individual health insurance policies the insurer collects $100 million and benefits are $75 million, then the insurer must rebate $6.25 million, which would then result in at least 80% of premiums being paid in benefits.

See http://www.fas.org/sgp/crs/misc/R42735.pdf

The 2010 Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) requires certain health insurers to provide rebates to their customers for each year that the insurers do not meet a set financial target called a medical loss ratio (MLR). At its most basic, a MLR measures the share of a health care premium dollar spent on medical benefits, as opposed to company expenses such as overhead or profits. For example, if total premiums collected are $100,000, and $85,000 is spent on medical care, the MLR would be 85%. The ACA sets the minimum required MLR at 80% for the individual and small group markets and at 85% for the large group market. In general, the higher the MLR, the more value a policyholder receives for his or her premium payment. Congress imposed the MLR in an effort to provide “greater transparency and accountability around the expenditures made by health insurers and to help bring down the cost of health care.” Insurers that fail to meet these minimum standards must provide rebates to policyholders.

P.S. IIRC the reason that it was designed this way was based on a belief that it is easier to define "medical losses" than "profits" since the former is narrower and the latter is broader so it would require more rules to define what expenses other than medical losses can be included (direct, indirect, corporate overhead allocations, taxes, etc). IIRC there were still many nitty-gritty questions about what can be included in medical losses that regulators and insurers were working out the details for at the time I retired at the end of 2011.

 

[Mulligan]

I always thought that high deductibles, would lead folks to a healthier life style, i.e. less costly health insurance. Now it looks like you don't have to care. Eat, smoke, drink, and be merry.

I don't know if it has lead to any healthier lifestyles, but it sure as heck saved me an incredible amount of money the past three years. Factoring HSA tax deduction, my premium has been free on my HD plan. I have saved $18000 the past three years, by not staying on companies $500 a month plus group plan. If my grandfathered plan ever folds, I will probably wind up, giving it all back and then some based on projected premiums.

 

[gerrym51]

I don't know if it has lead to any healthier lifestyles, but it sure as heck saved me an incredible amount of money the past three years. Factoring HSA tax deduction, my premium has been free on my HD plan. I have saved $18000 the past three years, by not staying on companies $500 a month plus group plan. If my grandfathered plan ever folds, I will probably wind up, giving it all back and then some based on projected premiums.

since no new people will be able to buy the plan it probably will fold at some point.

 

[mpeirce]

since no new people will be able to buy the plan it probably will fold at some point.

That assumes the status quote going forward.

May of us have high hopes that over the next decade more market oriented options, like HDHP/HSAs, will not wither on the vine and actually be encouraged.

Only time will tell.

 

[Mulligan]

since no new people will be able to buy the plan it probably will fold at some point.

That concerns me as well. I don't understand fully the individual market and how I am commingled with "a group", but I would think if the other participants remain healthy, there definitely would be no incentive to drop out and join the exchange as the prices there will be tremendously higher.

 

[gerrym51]

That assumes the status quote going forward.

May of us have high hopes that over the next decade more market oriented options, like HDHP/HSAs, will not wither on the vine and actually be encouraged.

Only time will tell.

well a bunch of new plans-is not the same plan.

all i can say as i read obamacare is that it has minimum requirements. if you can only join those plans?

now employer supplied plans especially those companies that self-insure might have different possibilities-but a plan on a government exchange-no

 

[bondi688]

The real fact is that nobody knows how this will affect the health care landscape. The CBO has repeatedly said they can't see how Obamacare will work from a funding standpoint, that "bending the cost curve down" is not going to happen, etc.

We will not know what happens until it is fully implemented. One thing that IS certain is we will need more medical professionals if we are now going to add 20 million or more folks to the health care system.........

The Brits imported a lot of foreign trained doctors to staff the NHS. And you will see a much bigger role for nurse practitioners in the US in provision of medical care.

 

[grasshopper]

I don't know if it has lead to any healthier lifestyles, but it sure as heck saved me an incredible amount of money the past three years. Factoring HSA tax deduction, my premium has been free on my HD plan. I have saved $18000 the past three years, by not staying on companies $500 a month plus group plan. If my grandfathered plan ever folds, I will probably wind up, giving it all back and then some based on projected premiums.

Mulligan yours just happen to be the last grasshopper quote, no offense.

I think I left out a thought that, if out of pocket was a bunch of giggle, than folks may take better care of themselves. Free care costs all of us.

 

[bUU]

One thing that IS certain is we will need more medical professionals if we are now going to add 20 million or more folks to the health care system.........

I think it is important to realize what system those 20 million people were getting health care from previously.

if you are saying other countries get better results per their dollars-that a separate issue.

Yet, it is the crux of the issue. The point another poster raised was cost. There are two basic ways to reduce how much cost the health care system represents: Fewer people getting cared for, or paying less for each person getting cared for. My vote is for the latter.

 

[John Galt III]

That concerns me as well. I don't understand fully the individual market and how I am commingled with "a group", but I would think if the other participants remain healthy, there definitely would be no incentive to drop out and join the exchange as the prices there will be tremendously higher.

Tremendously higher only if you don't get a substantial subsidy. I am paying $220 a month for a $5,000 HDHP individual policy now, and in 2014 I plan to be paying about $50 a month for a $2,xxx max out of pocket PPACA health plan, according to the Kaiser calculator website. I will be heavily subsidized due to low MAGI. Sounds too good to be true, eh?

 

[Mulligan]

Tremendously higher only if you don't get a substantial subsidy. I am paying $220 a month for a $5,000 HDHP individual policy now, and in 2014 I plan to be paying about $50 a month for a $2,xxx max out of pocket PPACA health plan, according to the Kaiser calculator website. I will be heavily subsidized due to low MAGI. Sounds too good to be true, eh?

You definitely benefit that is for sure! Definitely winners and losers as far as how it appears to be unfolding. I am part of the 3 strikes and your out club..male, healthy, and income above the cliff.

 

[REWahoo]

I am part of the 3 strikes and your out club..male, healthy, and income above the cliff.

You gotta know there are millions who would gladly trade you that healthy "strike" for their max subsidy...

 

[Mulligan]

You gotta know there are millions who would gladly trade you that healthy "strike" for their max subsidy...

You definitely can't put a price tag on good health especially when you do not have it. I was only commenting in terms of the potential cost facing me, without even commenting on the good or bad of the Act itself. I appear to come from a different background from most people here concerning costs of insurance (any type). I spend $27 a month for car insurance and $76 a month for health insurance ($5500 deductible)and have never spent a dime on any other type of insurance ever in my life. Maybe I whistled through the graveyard, but I have always viewed insurance as a way to become broke from protecting yourself from becoming broke. So I have always self insured what I believed I could afford to. I would have taken out a $10k deductible if the HSA was allowed with it. I am just not used to spending money on insurance that would be more than my house payment. It's just hard for me to wrap my head around spending so much on something I haven't much used or benefited from, YET anyways.

 

[youbet]

Definitely winners and losers as far as how it appears to be unfolding.

It's easy to find folks who will benefit financially from the ACA who are for the ACA. It's a bit harder to find folks who will be ACA financial losers pushing as hard for it!