The Lesson of Anthem Blue Cross
nytimes.com
nytimes.com
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Insurance companies are not money piñatas. They are insurance. The premise is that you have a low probability of having a massive expense. You pool your money with others (via the insurance company) to cover it if it happens to be you who gets unlucky.
The insurance model falls apart when somebody is already sick. Then it's no longer a low probability of having the expense, it's almost guaranteed. So now insurance is the wrong financial model. Charity, or a publicly funded option is, since it becomes a moral issue (we don't let people die of stuff we can fix), rather than a financial (I pay in a bit, possibly need large payout).
That's not to say they aren't evil, and want their profits, and go out of their way to be dicks about it, but all the hubbub about existing conditions just shows that insurance is the wrong model for health care coverage.
I fully support a public option, which is effectively an insurance company that also has the moral backing of paying for blatantly unprofitable cases. It won't be perfect, and might suck in many cases, but it sure would be much better than any insurance based health care system could be.
If you believe that a wealthy society like ours has a moral imperative to take care of its poor and sick and elderly, then the insurance model is hopelessly broken. It doesn't mean there's some perfect model out there that has perfectly aligned incentives and no moral hazard, just that this one is probably one of the worse ways to organize things.
If you don't believe that there's any such moral imperative, then that's an entirely different debate.
Maybe this is why people are hung up on it, because of the word? It's not insurance and it's never been intended to be insurance. IMHO, medical care is a basic human right, and needs to be treated as such.
Whether people with "risky lifestyles" should be forced to pay something more is a separate issue. (Incidentally, smoking is a bad example, though, because lung cancer tends to kill relatively early and quickly. I've seen figures that it actually lowers the lifetime health care cost compared to decades of geriatric care.)
The new healthcare bill is great, except of course if you are young, healthy, and don't need insurance at all, in which case, your premiums will go up and you will be forced to buy insurance or face fines.
And, because the health care laws in congress will require a maximum premium variability of 2-3x, meaning the most expensive insurance plans (for older unhealthy people) can only be 2-3 times the cost of the cheapest ones (for young, healthy people) then what I predict the insurance companies will do is dramatically increase premiums for the young to keep the upper end of premimum costs, which are currently 10x or more than the cheapest, right where they are and raise the lower levels to come in line with 1/3 of the most expensive.
Essentially, this health care bill legally requires young healthy people to buy insurance at high rates to pay the medical bills for the older people.
It's a TAX on the YOUNG to care for the OLD.
(not that I don't think pregnancy should be covered, just not by an insurance company, but by a morally based public plan without the profit motive, or insurance model).
but since you have a profit-based model, excluding planned (or unplanned for that matter) pregnancies from coverage is the same problem as excluding pre-existing conditions. insurance companies cherry-pick the risk pool to increase profits - they only want to give insurance to people unlikely to need it.
for private insurance to provide any social value, you need a large risk pool that includes healthy and high-risk patients, and the insurance companies must be required to actually cover people who need medical care.
the healthy can't be allowed to opt out, and the insurance companies can't be allowed to decline coverage to anyone in the group.
But expecting insurance companies as they currently exist to pay for pre-existing without that kind of tradeoff is like crashing your car into a pole, then walking down to state farm and being like "ohh, I need car insurance, full coverage, and pay for my repairs. I don't expect my rates to be different because of that though".
And really, a planned pregnancy is mostly a pre-existing condition. I wonder why there aren't any supplemental policies for complications though. Something that wouldn't cover the expected stuff, but would cover real medical complications.
This assumes that the alternative maximizes efficiency - and can you honestly say that about how the US government administers Medicare? Look at education - sure it's not "for profit" if you ignore the ever increasing profits that accrue to teachers' unions.
Besides, despite all the handwringing over those profit maximizing bastards at private healthcare insurers, guess who is the largest denier of healthcare claims? http://biggovernment.com/ptuohe/2009/10/05/ama-endorses-larg...
Anti-inflammatories for example. Inflammation is bad stuff, so keeping it down keeps you healthy. You often need only a prescription to get free anti-inflammatories with certain health insurance plans.
Of course that tactic will also be quite strategic in a single payer system.
EDIT (from your linked article): In short, the AMA is endorsing a plan whose closest existing example is the most frequent denier of claims. How the public option exemplifies “delivering care to patients” is unclear.
Maybe more claims should be denied. Maybe insurance companies pay for things because the patient wants it and the doctors think it is unnecessary. Or perhaps medicare pays more overall even though it denies more claims. We don't know what the ulterior motive is, and the article implies there is one.
People who take care of themselves and reduce their medical risk are being required to pay just as much as people who, every day, consume a liter of coke, 3 packs of cigarettes, and 8 hours of television.
It's not equitable. It fosters resentment, inequality, and discrimination. Not good.
<sarcasm> Yeah! Who do those old people think they are, getting all weak and sickly!? </sarcasm>
Most of the western world believes that society should be taxed to provide health care for everyone. Like education, welfare, and social security, it's something we all pay for to live in a moral, civilized society. Thank God Ayn Rand doesn't run the universe and the government forces you and me to pay for Grandpa's medication.
The screwed up part of the system is that the idea used to be that you'd pay into the system with an expectation that you would eventually get the same services as you got older - but have you even looked at the actuarial tables lately? Practically ever western country has massive unfunded liabilities especially as the baby boomers retire.
Personally I like Megan McArdle's solution - let people buy catastrophic loss insurance and fund the rest out of your own pockets. The premiums would be relatively minimal - but the idea that we have to have the government provide insurance / or that even what's proposed in the current legislation solves this problem is frankly nuts. I find it absolutely bizarre that as a Canadian, that while the US government spends more per capita on publicly funded Medicare/Medicaid than Canadians do, coverage for Americans is spotty at best - and you want the US government to get even more involved in healthcare through regulation and direct interventions?
I'm not saying I have an answer, but we need to address the real question previous generations never had to face before, which is how much burden do we want to put onto the younger generation to take care of the older one when there are so much fewer young people? At what point do you say "The cost to keep Grandma alive another 6 months costs too much."?
As for keeping Grandma alive, the closer we come to a government run system, the less you will be in control of what happens to your Grandma and instead subject to increasingly draconian policies of what is and isn't covered given that governments the world over are trying to do more with dwindling resources - something is going to give.
The fact that a healthy young person can fail to buy insurance because they "don't need it" (because they're never going to get sick - hah!) and then obtain it later on in life when they need medical coverage is completely broken. How are insurance companies supposed to make money like that? Why, by dropping people when they actually get sick.
Who would ever buy this product? How on earth can you sell it? The only way that it even begins to make sense is if you have to have it for your entire life.
I know many believe elders deserve respect, but I disagree. The older generation in this country has sapped our energy sources, polluted the planet, and robbed other nations of their resources for decades.
Now, they want to continue to require other people to pay their bills, ensure their quality of life, and help them live even longer at the expense of all those things for the young.
When the younger generation has nothing positive to look forward to in this nation, they are going to go to another nation that will welcome them and treat them with the same respect and decency that the U.S. currently showers on the baby boomers. The older generation is already rich. They've already saved up their money. They are already getting free rent through social security and medical care through medicare. They are set.
The young don't have jobs and can't get them. They can barely feed their own families and here the government wants to take even more money from them. It is unsustainable.
I've lived in some other places, and let's put it this way... there's a reason why people want to move to the US.
There are all sorts of things wrong with the US, but it's as bad or worse in every other country, be it China, Japan, France, the Netherlands, Germany or any place or whatever that is.
Note, for instance, that all developed countries have universal health insurance, so you've got to go to China or Somalia or some hellhole like that to get away from 'socialized' medicine.
Besides, health care overseas when paid for with cash is often better and more cost effective than the health care that can be acquired in the united states with insurance and a copay.
This new policy will be in place for decades. Let's get it right.
See where the inequality erupts? This is the vision for the new health care plan and it is carrying much future baggage.
This side by side comparison says,
House version
Premiums for older people cannot be more than double
the premium for young adults.
Senate version
Premiums for older people cannot be more than three
times the premium for young adults.I don't have the time to generate the full model, but generally speaking the Senate version of the bill isn't that far off from where variance is in most states today - if you compare the costs between a 20 year old and a 50 year old, you're going to see the 50 year old pays around 3 times what a 20 year old pays. A 64 year old will pay between 5 and 6 times more (these examples are using data from a state with very lax insurance regulation by the way; in states like California and Massachusetts, the variance will be lower).
Insurance rates are determined by guessing at the risk of any given pool of people and the estimating costs that may be incurred given the riskiness of the pool. By forcing healthy people to buy insurance, the pool of insured people should become less risky; hopefully drawing costs down. I've got no idea as to whether or not that might happen, but assuming the actuaries continue to derive rates the way that they always have; it should lower costs on the whole.
downvote away but you know its true.