Obamacare’s sinking safety net | Hacker News Reader

Obamacare’s sinking safety net

politico.com

28 pointsmkane84840 comments

  Before the ACA, there were a handful of ways insurers could balance their risk 
  pool. One big tactic was just to avoid covering sick people, filtering out
  individual customers who appear likely to need lots of expensive medical care.
  But Obamacare made that type of discrimination illegal: One big selling point
  of the law was that everyone would be eligible to sign up.

Companies that profited off of denying helping people with pre-existing conditions are finding they can't profit anymore? Allow me to play a little ditty on the world's tinniest violin for them.

The honest reality is that these costs did exist before, it's just they were paid by the sick in our society by dying, while the health insurance companies skimmed off the cream from the healthy. No free lunch, right? So this cost existed, only by law, it was pushed onto the healthcare companies after the ACA

It is quite bad though, as the article details, costs have reached 100% of premiums at least in NC it looks like. That is unsustainable, and since the ACA went ahead with requiring healthcare companies to help pull this off, without something like a public option to cover say the super sick, this isn't good news.

All around, this is a bad. But it's not like ACA made it worse, it just made the costs appear somewhere else, and as the article states, absent of any new policy, that cost will shift back to the sick who will have to die again.

Companies that find they are losing money in individual states should be forced to bite the bullet.

I'm still amazed that these companies are allowed to make a profit in the first place. Yes, there will be bad states, but you shouldn't be allowed to just stop offering coverage until you're actually losing money as a company overall.

The ACA provided over $2 billion in startup funds for about three dozen non-profit health care co-ops (new insurance companies) who were meant to provide competition, increased choice and lower prices for consumers. Almost all of these co-ops are now bankrupt thanks to a medley of fraud and incompetence. As noted elsewhere in the thread, Land of Lincoln in IL just publicly announced their dissolution today. What happened? Well, it turns out running an insurance company is hard, and in return for doing that hard job, the executives, even of these non-profits, want to be paid a lot of money. In many cases the Government allocated startup funds to politically-connected individuals who sucked it out of the system and into their own pockets. So no, the grass isn't always greener. You can't just slap a ''non-profit'' label on something and expect problems to be fixed. And to the extent you pay executives less money, they will work less, and in the absence of that leadership, systemic future risks start to accumulate. The selfish profit motive is still one of the core values that our society depends upon in order to function the way we expect it to. Gordon Gekko put it one way: ''Greed is Good!''. Milton Friedman another: ''Nirvana is not for this world.'' Not yet, at least.

Congress also pulled funding for the risk corridors system that was supposed to keep insurers who were unlucky in the exchanges (i.e. getting sicker, more expensive customers) afloat. The co-ops suffered particularly badly from that.

> denying helping people with pre-existing conditions

This is literally the definition of insurance: insurance is a pool of risk, entered into by a large number of people who have not incurred a certain rare circumstance, against the possibility of them encountering that circumstance. This isn't insurance companies being greedy! What if all insurance worked this way?

It's true, but what this really demonstrates is that insurance is not the best model for delivering healthcare. Unfortunately it's our starting point in the US and a more fundamental change is not politically tenable now (or in the foreseeable future), so we have to take what incremental improvements we can get.

Health insurance is different from most other forms of insurance, though - auto insurance, for example, doesn't pay for oil changes to mitigate the risk of expense of future liability claims.

At least in my country it is very common for auto insurance companies to pay to have windscreen chips repaired, as it's cheaper than waiting for the whole window to fail (possibly causing am accident in the process).

True, but that's still not preventative any more than a tooth filling is (Sorry, switched industries, but I think it still makes sense).

automobile risk avoidance is a lot less complex than health risk avoidance - a lot more people change their own oil than draw their own blood. Also, oil changes would only mitigate the risk of early engine failure which wouldn't be covered by typical policies.

Okay, that was a bad example. I've never carried comprehensive/collision insurance, so I mistakenly thought there was coverage for mechanical failures. As you stated, this is not common.

Eh, I don't see my health insurance as "insurance". I see the company as my health care "agent". When I get sick, I'm not in any position to negotiate or compare prices between providers, so I'm going to rely on the negotiating that my insurance company has already done on my behalf. And what better way to ensure that my agent is really trying their best to get the best price for me? Make them pay the cost and I'll pay a set monthly fee for everything.

This would be like car insurance covering you for damage incurred in the first 5 seconds of a crash, or the first inch of a flood, and then declaring everything that happens afterwards as a "pre-existing condition".

i think the dictionary definition of 'insurance' is beside the point. this is really about sustainable ways ('sustainable' comes with many facets to be considered, to be sure) to ensure health care is provided to society and how we shape/modify our social contract to attain that.

I'm not sure you actually know how insurance schemes work.

As a self-employed developer I have an ACA plan and I can tell you first-hand it feels like a total fraud. I pay $300/month but also have a $6k deductible, which means the plan doesn't really pay for anything until I've already spent $6k out of pocket. I have no problem with a $6k or even $20k deductible because I work hard to remain healthy but then my premiums for what is essentially a catastrophic policy should be much lower (around $75/month). Fortunately I can afford the extra amount, but I can see how it would be extremely painful for a family at the median income. My MD friends tell me the economics are based on people who work diligently to improve their health subsidizing people who could care less and actively sabotage themselves (e.g. non-compliant diabetics who eat like crap and don't medicate...not even diabetics as a whole). Unless and until the conversation about personal responsibility starts it seems hopeless. Whatever Obamacare started out trying to be, it has been twisted into something else and badly needs reform.

Just out of curiosity, when did you make the move to self-employment and the individual exchange?

I was self-employed for years prior to the advent of the ACA, and my experience was that my premiums were about the same, deductibles were the same or higher, PPOs were out of the question, and I was rolling the dice on whether I could even get coverage for myself or my family because of preexisting conditions. If that market were in place today, getting coverage would be an impossibility for myself and my wife, who is a cancer survivor, leaving us to the high-risk pools where the premiums would be in the 5 figure range annually.

Yes, the ACA has some problems, but if the right wing in Congress hadn't been so hell-bent on making it fail to the detriment of all constituents, chances are we'd have something that works a bit better (if still imperfectly.)

I've been self-employed for about a decade. Prior to ACA I had catastrophic insurance with IIRC about a $10k deductible for 25% of the ACA cost. But I was a healthy, non smoking male in my mid 20s (back then) with no pre-existing conditions. If you had pre-existing conditions then it doesn't surprise me that your ACA rates were the same or lower, which illustrates what ACA really is: a subsidy (tax) helping out the (mostly) old and (mostly) chronically ill paid for by the (mostly) young and (mostly) healthy. I prefer not to think of it as red-versus-blue partisanship and instead in objective economic terms. Personally I have no problem subsidizing people who are born with chronic illnesses, or fall on hard times; I have a few cancer survivors in my immediate family and I've seen the impact it can have. But I don't think that we should be subsidizing people who have diseases borne of negligence (adult onset diabetes and other obesity related diseases) who refuse to do anything to help themselves and as a result consume extreme amounts of health care resources. It's becoming clear that for the time being at least demand far exceeds supply in the health care services market, and that means having to decide how and when to ration care. I can afford to pay inflated ACA rates and I can afford to pay for private concierge-style care in the face of a supply-demand imbalance in the market. But what about the middle class family making $50k/year who is now spending 20% of their net take home income on health care? Unfortunately there aren't many easy answers in this debate and it's especially difficult to even start the discussion given how polarized it has become.

Why should people who live further north have to subsidise those in more southern sunnier climate and are more likely to get skin cancer? Why should I as a non-rock climber subsidise those that do? Why should those without children subsidise those who do? Why should those in walkable cities subsidise those who drive more in less walkable ones? Why should those who have taken a vow of abstinence subsidise those who haven't? For virtually everyone there are always some discretionary choices they make that increase their health risks.

There is a fix, but it involves government taking a big picture view. Stop subsidising bad food, and ensure people have as good access to "good" food as they do to bad. Provide youth centres and similar community access to places where people can get into the habit of exercise. Examine transit and see how to get people to spend less time sitting in cars. See what can be done about improving the quality and happiness of all citizen's lives. All of this isn't instant or a magic wand, but is something that can collectively help a lot over time.

Same here. My family is healthy and yet my (self-employed) health costs were increasing by double-digit percentages every year pre-Obamacare. Go back and look at the news articles for that time. Lots of articles about small businesses unable to afford health care insurance for their employees, statements about salaries remaining stagnant because health costs were a larger and larger part of total compensation. Not to mention the rampant coverage refusal from insurance companies. (I even ran into that practice after mentioning to my doctor one time that my back was sore from picking up my infant son. It went in my medical file as "acute back pain" and bam, back conditions excluded on my policy. Even after jumping through hoops and getting a letter from my doctor.)

Once Obamacare kicked in, my health costs dropped nearly in half. It may not be perfect, and I blame the right-wingers for preventing it from being improved, but it solved a very real problem. Things are undeniably better now.

I had roughly the same plan as you (I'm on a sabbatical). I thought autopay was set up but my second month's payment failed to go through. I was traveling for a few months at the time, and since insurance companies are universally incompetent, they sent me a few letters (and zero emails to the address they had on file) before cancelling my coverage.

The nice part is that, since I'm not not eligible to re enroll on the exchanges, the short term insurance plan I have to buy is MUCH cheaper. For the months of July - December, I'm paying around $350 for a catastrophic plan. If I was working the penalty would probably hit me hard but since I'm on vacation, getting dropped out of the exchange has actually saved me quite a bit of money.

My story is very similar except my insurance company went out of business yesterday:

http://www.chicagotribune.com/business/ct-land-of-lincoln-sh...

Where's the fraud? It seems that your complaint is that health insurance is surprisingly expensive when it includes too many people who might need it. Catastrophic health care protection costs $4K/yr, about as much as transportation or food, less than rent, more than telecommunications. So? Where's the fraud in that?

I just priced out a (non ACA) catastrophic insurance policy with roughly the same deductible as my ACA plan. It came in at $75/mo versus the low $300/mo for what I pay for my ACA plan. I assume this reflects the fact that I am being risk pooled with other non smoking healthy mid 30s males without any pre-existing conditions. By ''fraud'' I meant that I feel like I am being charged too much for too little, and those price points would support that. Of course it's happening in the context of a subsidy that society has determined it wants to create as discussed elsewhere.

You don't seem to realise that you're subsidising your future (potentially hypothetical) self.

You have to run the numbers and put in the chance of you marrying and having kids and someone having cancer or being in a bad car crash or similar, or just getting older, and potentially getting refused coverage or going bankrupt due to medical bills.

Only then, if the NPV is less than under the current scenario is there something worth complaining about. (Since no one ever makes this argument and instead says silly things about the costs for healthy young single men with no history of health problems, I'd guess you are actually saving money under ACA)

Otherwise you're just gambling, but not even admitting you're gambling, which is pretty dumb behaviour.

These plans were expensive and shit long before ACA. My parents were self employed so I had these plans all the way up to 26.

Obamacare was a patch designed to eventually fail with a complete overhaul of the system needed with single payer and private system on top. Unfortunately I don't see that happening in this country.

I don't know anything about the details of this situation. But maybe someone else here does.

How is the US so inefficient at healthcare? We spend more per person (or per GDP?) than many (most?) other countries and we get less in return.

Where is this money going?

No one has an incentive to fix it. Tour round the various entities that money is spent on, and try to find a single one that is campaigning to reduce their income. (eg doctors, practises, drug makers, equipment manufacturers, health "insurance" companies, hospitals). Any reduced spending is coming out of their pockets - turkeys don't campaign for xmas!

So you have a bright idea. You'll open up an excellent well run hospital, using best practises, big picture approaches, and due to all that you'll save everyone money. Of course opening that hospital will take patients away from existing more expensive providers. But it is a free country, and in other commercial sectors that seems like progress. In many states you can't do this by law. You have to show there is unserved "need" and get a certificate of need, including that existing providers are not harmed. https://en.wikipedia.org/wiki/Certificate_of_need

Price competition is mostly illegal due to the way the health industry has been successfully cartelized over the years. The usual benefit of free-market competition is that inefficient providers are allowed to go broke while better ones expand, but the field is so over-regulated that we simply don't allow that to happen. So lots of ridiculous inefficiencies persist.

In a more free market, insurance wouldn't be tied to specific states - you could buy insurance from any firm in the nation willing to provide it. Hospitals would be allowed to expand and compete and go out of business like restaurants are - there wouldn't be any "Certificate of Need" process preventing that. Doctors wouldn't be tied to specific states or nations and medical schools wouldn't have their enrollment limited via licensing rules.

In short, we have an artificial shortage of both doctors and hospitals which makes healthcare inherently expensive and low-quality compared to what it might otherwise be.

>In a more free market, insurance wouldn't be tied to specific states - you could buy insurance from any firm in the nation willing to provide it.

That's an idea that sounds good but turns out to be a nightmare in practice. You would end up with a classic "race to the bottom" scenario of the sort seen in credit card regulations, corporate tax rates, and employee disability reimbursements -- eventually you would end up with a state that allows such egregiously poor insurance practices that every company would flock there to avoid more onerous regulations.

The current system is byzantine and a nightmare to deal with -- I still wake up in the middle of the night with implementation guides scrolling behind my eyelids -- but it's an improvement over a policy that would, in effect, let the payers pick and choose the least-protective regulatory structure.

Administrative fees, paying too many MD's to do work that PA's and NPP's could accomplish if they were allowed to, as well as paying high salaries because our education costs have skyrocketed so we have people leaving school with tens to hundreds of thousands of dollars of debt to enter the medical field. People abusing the emergency room (especially Medicaid members) for the sniffles instead of going to an urgent care or a family practice.

Oh, and let's not neglect that hospitals have no choice but to jack up prices to insane rates because insurance companies will just negotiate them down heavily.

The whole system is messed up.

>paying high salaries because our education costs have skyrocketed

This whole thread is chockablock with fallacies, but let's limit ourselves to this one for now.

Education costs are sunk costs. Doctor's salaries have nothing to do with education cost.

Doctor's salaries are high because the government restricts the number of doctors. That leads to high salaries for doctors. Supply and demand, not sunk costs.

Hint: you've got a bunch more fallacies in your post!

If the insurance companies are successfully negotiating the prices down so low, shouldn't they have more money?

This part only affects the underinsured.

Let's say you have some crazy medical test, like an MRI. It costs roughly $2,000 to run the test (totally random number out of my hat). If a hospital is negotiating a contract with an insurance company, and says "An MRI costs $2,000 here" the insurance company will say "We will pay you $500".

So, to make sure they can be correctly compensated by insurance carriers they instead say "An MRI costs $8,000", the insurance company will then say "Okay, we will pay you $3,000". It's total luck to get the correct amount, so you will usually WAY over compensate and end up getting more than you NEED to be reimbursed in return, just to provide a safety net for insurance carriers messing around with you.

Under most cases people with amazing low-deductible plans are fine, they pay their $500 deductible for the year plus 20% of the remaining and make off quite well for the procedure. People with high deductible plans (like mine) get screwed, I would end up having to meet my $2,500 deductible and then pay 20% after that (up to my annual out of pocket max, which is $5000).

Because hospitals have to play this stupid game with insurance companies, it's rare that you can get charged the "real" price of any procedure or lab time. People without insurance can negotiate extremely discounted rates based on financial need, but if you are underinsured you are stuck with whatever contracted rate the facility has with your insurance company.

Why don't insurance companies own the vertical and purchase healthcare providers, in order to control costs?

It seems like cost controls are the root of the problem.

Some do, they're called HMO's (Health Management Organizations), Kaiser Permanente being a prominent one. A lot of people don't like having to see a doctor not part of the organization without going through headaches, however, which lead to the prevalence of modern PPO's.

> Some do, they're called HMO's (Health Management Organizations), Kaiser Permanente being a prominent one.

KP is an HMO, and does own its provider network rather than contracting with providers (for most things, at least), but that's not a defining characteristic of HMOs. Many HMOs have contracted, rather than insurer-owned, provider networks.

But the issue is still the same: the network of doctors you can see is very much restricted. And in any event, the way Kaiser is structured (at least in Southern California, where a friend is a Kaiser doctor), the doctors are employed by separate legal entities which contract with the hospitals. So it's kind of a distinction without a difference. HMO implies vertical integration where incentives line-up differently than when providers and insurers are more at arms length.

That said, PPOs also have in-network restrictions. They're looser, but PPOs are also often significantly more expensive.

In my limited experience, it's not the network restrictions per se, but that people want to continue going to a specific doctor or to a specific hospital. My relative who is a partner at a law firm rails against Obamacare because of the ridiculous premiums her firm has to pay. But they only pay those premiums because she demanded a policy that allowed her to continue seeing the same doctor she's seen for over 20 years. She's smart and almost always votes Democratic; the cognitive dissonance in her rants would be comical if it weren't for the fact that so many people exhibit that kind of thinking.

I use Northern California Kaiser and love it. For one thing, it's ridiculously inexpensive, all things considered. And I don't expect the kind of relationship with my doctor portrayed on television. Kaiser is very technologically savvy and data driven. (Though that doesn't mean they used the latest & greatest tech). Their doctors are disciplined to attend to patients efficiently. I've never felt rushed or anything of the sort (even during the 48 hour birth of my son), but neither the doctors nor staff will linger unnecessarily.

But because Kaiser works as a holistic entity, some people may feel neglected. Kaiser dis-intermediates you from the doctor and his personal staff. Appointments are booked on the web or via a call center. For illnesses, you first contact the Kaiser nursing call center, where a nurse and on-call doctor will do a preliminary diagnosis over the phone and often even write a prescription. For common injuries like sprains, etc, you might be scheduled to see a doctor at their sports injury center or similar specialized department, which at my medical center is conveniently (and I doubt coincidentally) located across the corridor from the imaging department. Follow-ups with a doctor will often use their electronic messaging system (basically, web mail).

I _love_ that aspect of Kaiser because I appreciate the effort that goes into reducing costs and improving outcomes. For people who want to feel coddled by their doctor and his staff, or use them as an outlet for their anxiety, it's probably a nightmare.

It's of course very complex, but three things not always mentioned: Dealing with the insurance companies and their Byzantine billing practices requires hiring additional staff to specifically deal with billing issues, with that cost passed to the patient. Electronic medical records slow down physicians, (fewer patients seen requires billing more for those you do see) and at least the ones I've experienced end up being more expensive than paper records. The insurance companies also are very slow in reimbursements to physicians (sometimes several months behind) which requires billing more to help compensate for the uncertainty.

Also, insurance frequently doesn't reimburse enough to cover the actual cost of a procedure, e.g., vaccines.

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