Cost of Employer-Provided Health Insurance Rises Toward $19k a Year
wsj.com
wsj.com
Leave it to the consumer to buy just like all other insurance. In fact the increase in wages could be used to fund a basic preventative care plan (read not full on single payer) for all Americans.
If you don't want employers to give it to employees, then we should fix the tax situation.
The actuarial assumption is that substantially all white collar employees will get group coverage and therefore any company's 25, 100, or 500 pulls out of the pool of white collar employee health risks will be actuarially consistent with random selections from the underlying distribution. This is not true of individual insurance purchasers, because the individual purchasers can have more signal on their health risks than their insurance companies. They can, for example, purchase insurance when they know they're likely going to require treatment and decline to purchase (or shift to different coverage options) when they're likely to be healthy.
This is called "adverse selection" and it is the tradeoff in individual insurance. For a while, the US's policy was that insurance companies could underwrite individual health insurance policies in a fashion roughly similar to underwriting business liability policies, which could be caricatured as "We'll give a policy to anyone with a pulse but if you've so much as glanced in the general direction of an expensive outcome at any point, our answer is Hell No, just like substantially every other insurance company's will be."
If you let insurance companies do underwriting, health insurance is (relatively) cheap and lots of people can't buy it on the individual market at any price. If you require "guaranteed issue", health insurance is only (relatively) cheap if everyone buys it.
The US has been wrestling this tradeoff with Obamacare and subsequent proposals. There are no simple solutions to it that make everyone happy.
And given the healthcare policy landscape, there are 0 insurers willing to offer such a contract.
As Charlie Munger says: "Never think about something else when you should be thinking about the power of incentives."
So if you didn't start your new job right away, and weren't paying for COBRA or other insurance in the interim, you could have been in trouble.
[1] - https://www.irs.gov/publications/p535/ch06.html#en_US_2016_p...
In general I think the point is, why can corporations just straight write off premiums for their employees when self-employed types have all these special rules to follow vs just a standard deduction?
If you're a sole proprietor, the tax impact should be equivalent whether you choose to take draws or salary:
> Sole proprietors and members of partnerships are free to pay themselves — or otherwise take the profits out of their businesses — whenever they’d like. Payroll withholdings do not apply, but each individual essentially pays the equivalent on his or her reported income at tax time.
https://quickbooks.intuit.com/r/payroll/salary-or-draw-how-t...
Yes, I could continue to pay myself just $65,000, but the IRS could come knocking and say, "you said you paid for health insurance through S-Corp payroll, so that means you only gave yourself a $45,000 salary which is not fair and reasonable.
There's a lot of other good reasons to incorporate as well. Use an S-corp election (as an LLC) and you can get out of paying the SE tax on a significant portion of your income. There are some limitations and you need to bill over a certain amount, but anybody who makes a six-figure income consulting should be doing so under an LLC, not as a 1099 contractor.
Going from being an employee to being 1099 and SE is still getting fucked on taxes, just in a different position.
If you're serious about freelancing, your income should be split between a W2 and a K1.
I am not a CPA. This is what I pay him to do for me.
In effect, instead of the employer picking the employee's health insurance the employee could go to the open market, but both the employer and employee get the same tax benefits via putting money pre-tax into a HSA which can then be used to pay for health insurance.
It would require massively increasing the maximum contributions on HSAs (currently only $6,750 for a family), since HSAs weren't originally designed to pay for your health insurance, just healthcare costs. But conceptually it is the easiest way to allow consumer choice in the health insurance market.
Surprisingly (it was to me, anyway), health insurance premiums don't qualify as a medical expense, so any funds withdrawn from an HSA for insurance premiums will be subject to taxes and penalties.
1) Company pays you 100k of which you then go spend 19k in the private insurance market to buy insurance leaving you with 81k after insurance costs.
2) Company pays for your health insurance and then pays you a salary of 81k.
They sound the same right? But they aren't! In #1 you will pay income tax based on a 100k salary. In #2 you will only pay income tax on 81k of salary. So you're better off in scenario #2.
Given the strong employee preference for #2 most employers in competitive hiring situations will tend of offer employer sponsored health care.
There are some other reasons why this happens too, but this is one of the biggest.
Once consumers are directly exposed to the shit show that is insurance and pre-existing conditions and zero price transparency, and they have no collective negotiation power as they do when a company purchases, they will revolt and it will force a change.
There are a few people who cannot get insurance individually thanks to pre-existing conditions. They can only get insurance via employers group plans. Short-term a few of these people go bankrupt or die, but whats a few deaths in service of a good ideology?
Denying insurance due to pre-existing conditions is currently prohibited unless the Affordable Care Act is repealed.
https://www.hhs.gov/healthcare/about-the-aca/pre-existing-co...
I agree with your other points though ("directly exposed to the shit show that is insurance"): removing employer provided health insurance would speed up the current system's collapse and push us to single payer at ludicrous speed. There would be no other option palatable.
Considering how many people are against any kind of collective payment for health and how many protections Republicans are happy to sacrifice... is it really the only option? It could just go worse with few people getting any kind of insurance. (Enough to keep the system profitable, but not necessarily helpful)
There is more support for single payer than you might have been led to believe.
"Currently, 60% say the federal government is responsible for ensuring health care coverage for all Americans, while 39% say this is not the government’s responsibility. These views are unchanged from January, but the share saying health coverage is a government responsibility remains at its highest level in nearly a decade."
"Even among those who say the federal government is not responsible for ensuring Americans have health care coverage, there is little public appetite for government withdrawing entirely from involvement in health care coverage. Among the public, 33% say that health care coverage is not the government’s responsibility, but that programs like Medicare and Medicaid should be continued; just 5% of Americans say the government should not be involved at all in providing health insurance."
Emphasis mine.
http://www.pewresearch.org/fact-tank/2017/06/23/public-suppo...
EDIT: HN throttling, sorry for editing this instead of replying.
@nerfhammer:
That doesn't mean you don't try.
I'm talking financial analysis and quality of life.
It's allot more than a few. Insurance companies consider a single night in a hospital a pre-existing condition.
What insurance companies want to avoid is people who go without insurance until they are sick, and then want everything covered. As long as you don't have gaps in coverage, pre-existing conditions are not a huge showstopper at least in my individual experience.
Does double healthcare cost = less wait times? Are there less wait times for private insured vs those using public system? Would love to see the data if you have any...
I did find some stats around infant mortality and life expectancy. US ranks 5th on infant mortality and 31st on life expectancy. https://en.wikipedia.org/wiki/List_of_countries_by_life_expe...
Yet US still ranks #1 on total health expenditure. https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
I'm trying to schedule an MRI and the first appointment was 2 months out (I might have been able to get an earlier appointment somewhere else, but the neurologist said I should just keep this appointment). I've been trying to schedule PT for a couple months, as well. I've called the PT office every single day for over a week waiting for my approval to come back from billing so I can schedule an initial evaluation.
Ironically, there's a program funded by my state offering in-home OT services twice a week. I don't pay anything out of pocket. It did take a month to set up, but everything that would have been covered by insurance would be in an office (but they didn't even have those options available).
OK that's not really "value".
They do add jobs though. There's "coders", they deal with medical codes.
To use an analogy, it is like how vehicle manufacturers adds 10% to reach the MSRP, which is "discounted" at the dealership for every vehicle sold. It is a shell game, there is no winning when the game is rigged for the game's own existence.
If discounts were banned tomorrow on medical services, you'd see the costs drop significantly to reflect that.
You have the same backwards concept of Healthcare as everyone else who is rich; it's only for me. Healthcare is for everyone, it is a right. It is not a privilege that you only get if you can afford it. Health insurance is THE PROBLEM.
If you don't have car insurance, you might be financially strained. If you don't have flood/fire insurance, you could loose your stuff. If you don't have health insurance (in this country) you could die. If you think these things are the same, there is no hope.
In the case of healthcare it is effectually a demand of the government. Because language frames the debate it would be nice to have a better word to describe this.
What's interesting about the current "health care reform" taking place is that there doesn't seem to be any discussion of how to actually decrease costs other than denying coverage.
You really do sound like you work for the insurance industry, claiming their functions are necessary (even though every other country manages without them). Also, government run healthcare is bad because they are going to shoot people (or threaten to) and put them in jail for not paying their medical bills? Come on.. are you serious?
>>Personally, I feel that the government's tactic of taking someone's freedom for refusal to participate is much worse than refusing coverage, which is what the private companies do.
Oh fuck right the fuck off. The government does not throw people in jail for not having health insurance or if they can not afford it. Refusing/denying coverage KILLS PEOPLE. You sound like someone who's got it made (so screw everyone else right?), and doesn't give 2 shits about anyone but themselves.
Really their taxes, but yes, dead serious. If you have a decent income, stop paying taxes for a while and see what happens. They'll eventually send the cops to arrest you. Vigorously resist arrest, and you'll end up dead or injured.
> You really do sound like you work for the insurance industry, claiming their functions are necessary (even though every other country manages without them).
That argument can be made for every industry, not just healthcare. If you want to live someplace like that, the best examples in the modern world (since the USSR collapsed) are cuba and venezuela. If you haven't already, I strongly encourage you to research these countries, and I think that you'll find that the downside is much greater than the upside. Corporations are not evil and do perform a valuable function in society -- this coming from someone who works for a corporation that's been having mass layoffs for the better part of a year. The world is a brutal, competitive place. Sticking your head in the sand to ignore it doesn't make it go away, it just makes your entire country poor.
> You sound like someone who's got it made (so screw everyone else right?), and doesn't give 2 shits about anyone but themselves.
Not rich, but solidly middle class. I worked hard for everything that I have, and no, I don't believe people are entitled to confiscate my things just because they've been less fortunate. I believe that people who have been blessed like this should help people who are less fortunate (and I do - through private charities), but I don't believe that the government is the solution to this. If you do believe the government is the solution, I encourage you to voluntarily pay additional taxes, you are allowed to do this but very few people actually do.
In all honesty, what would you expect? The ACA forced millions of people who didn't have health insurance to buy health insurance, and investors responded accordingly by buying the shares of companies who benefited from an influx of new customers.
Of course they pay lots of compensation to people that work there, but the members are effectively disinterested shareholders.
You're probably thinking of universal coverage.
Switzerland doesn't.
"The Pitfalls of Single-Payer Health Care: Canada’s Cautionary Tale"
http://www.nationalreview.com/article/446689/canadas-single-...
For example it links this article:
http://www.commonwealthfund.org/publications/press-releases/...
Which shows single payer and universal healthcare dominating the top spots.
And your #1 on that list? UK's NHS? Both the availability and quality sucks - waitlists and infections galore across their hospitals.
The thing with single payer is it's just like communism.. it looks REALLY great on paper.
That's an exaggeration.
I live in the UK and I know first-hand how it is. I've personally never had to wait more than a day, even for an operation.
There are waiting time and service problems recently, but you can thank the Tory government for purposely underfunding the service ion an attempt to drum up support for privatisation.
I mean, our current health secretary wrote a book stating that he wanted to privatise the NHS and now denies wanting to do so. It would be hilarious if it wasn't so sad.
The thing with single payer is it's just like communism.. it looks REALLY great on paper
We still have people covered for health care better than the US does. So make of that what you will.
Plus, nearly every developed country in the world has free healthcare in some form, it's just the US that refuses to spot a good thing and fix its broken-ass system.
Kinda like the metric system in that respect.
If enough rich politicians and leaders of industry label something communist, enough gullible Americans will drop their support for it even when it would clearly help them.
> In fact the increase in wages could be used to fund a basic preventative care plan (read not full on single payer) for all Americans.
Find out a medical code, call 3 different hospitals in your area and try to nail them down on a price for that billing code - the variance will be large; but given they should all have similar price structures and pay wages that are roughly the same, they shouldn't vary by much more than 5% ...
A birth might be a flat $4000 but what happens if the mother has high blood pressure and needs to be on a magnesium drip? Or the baby is in distress and there's an emergency caesarean? Are you going to call around for a better rate?
The problem with our medical system is insurance. Insurance companies are always playing games to avoid paying bills and they force medical providers to play games to get paid. Vast amounts of money are wasted in billing and claims departments trying to process or deny claims.
It's gotten to the point where an insurer can fine the insured for submitting a claim with a code that requires prior authorization after seeking care from a healthcare provider. I'm not sure how pricey transparency would help with that.
To restate your argument: there are sometimes unpredictable health care events that arise for which one cannot negotiate, bargain, and price compare in advance. Therefore, price transparency doesn't work.
The problem is you wouldn't make this argument about any other sort of good (for example, an emergency or home car repair) because you know exactly how markets function in those cases.
The answer is: when there's price transparency, and consumers are incentivized to shop around and demand lower prices, prices come down. This benefits not only yourself, but also consumers who don't want to (or are unable to) perform this role themselves.
This is why you pay cheap prices at the grocery store even if you don't haggle, clip coupons, and so on. This is why "emergency" home and car repair (while it may cost more) does not cost an order of magnitude more than "non-emergency" home or car repair.
- Prices are extremely inelastic: You'll pay whatever you have to not die.
- Consumers have far less control over what they purchase: they are told to purchase things by doctors, who may have different incentives.
- Healthcare isn't a "commodity" that can be easily swapped out. Prescription drugs may be commodities, but doctors are not. People won't easily swap doctors, making the entire system less efficient.
- There is no "perfect information", in economics speak: people know very little about what the quality of care they are receiving.
- It's extremely expensive to bring healthcare "products" to market (e.g., new drugs, hospitals, etc.). Like building a nuclear plant, very high capital costs reduce the number of players that can enter.
I do think price transparency would help preventative care, but (even if you're thinking in the aggregate) it won't help people in an ambulance on the way to a hospital. Other comparable services, fire and police, are already socialized but have similar, horrible, stories from before they were paid for by the government.
The problem with your argument is that healthcare is a service, not a good; and unlike a commodity, every human body is different. A box of Nabisco crackers is the same regardless of where shop. Even service based industries like automotive repair have limited variability with parts or process. The service provided by healthcare providers varies dramatically depending on the procedure desired and who is performing it. Simple procedures like wart removal can be performed a dozen different ways and each has a different cost.
Routine healthcare services have relatively fixed costs and insureds typically pay small deductibles for these services. Uninsured individuals can absolutely call around for quotes on exams and common procedures like wart removal.
Unplanned and Emergency healthcare services are an entirely different story and aren't comparable to any other service. The nearest I can come up with would be an emergency plumber and, like emergency healthcare services, you play through the nose for them. The primary difference is that a plumber can triage the situation by shutting off the water before discussing options and payment. Doctors don't have such luxuries.
To the extent that certain complications can be managed, this creates good alignment of incentives. The hospital bears the cost of not managing the complications and thus has an incentive to manage the complications.
To the extent that certain complications can't be managed, I still find it an appealing way to distribute the low frequency costs (it builds the systemic cost of offering the procedure into the price).
Outcome based payment schemes are probably how it happens though.
Uploading this pricing data to the database would have to be mandated by the federal government.
Getting an answer on all of those for costs is going to be very hard. You might be better off finding someone who'll give you a fixed cost that they're pretty sure will provide them a profit when everything is done.
Not sure what to call a service like that though.
[1] https://www.hcup-us.ahrq.gov/reports/statbriefs/sb204-Most-E...
Edit: predicting eventual bill, not the outcome.
The Fortune 1,000 won’t do this because they can control employees, wages and competition. Getting a small company off the ground is so much harder because only recent grads are willing to take a job without healthcare. I’ve turned down a dozen companies because of healthcare issues.
I also find it strange that we discuss guaranteed income as a viable solution but not guaranteed healthcare.
It's funny that I often hear about how expensive COBRA is and how it's not a good deal. That's what your employer is paying for your insurance. (in an ideal world) that is would-be compensation of your's.
I know the actual cost of healthcare isn't pretty, but it does no one favors by hiding it and tying it to your employer with weird tax incentives.
Do you think they would do better in a bigger version of this for the whole country?
No, they HAVE to earn less.
Also, if the exact same medicare that pays out today is replicated to the whole population the medical industry will go broke overnight.
Also, we are very likely doctor constrained. The patients/doctor in the US isn't hugely different than other countries, but it is difficult to estimate the impact of how a payment model causes them to direct their care. The current US model needs lots more doctors.
If healthcare works it prevents unnecessary medical procedures
More medical procedures because of less preventive care, or more procedures "to cover their ass". I heard doctors tend to be on the super cautious side to reduce liabilities, and require more testing, procedures, and what not.
Yes, I hit reply on the wrong box.
Given my experiences with in-person doctors I think video-chatting with one would be about the most idiotic waste of my time possible.
Turns out they charge a not-insignificant fee per use. I can't remember exactly how much, but I'm not sure where that card is (with the number on it) and I don't plan on using it.
Hospitals charge an order of magnitude too much.
http://www.kff.org/health-reform/issue-brief/an-early-look-a...
Here's an article on Blue Cross that covers profits, claims, etc: http://www.wral.com/blue-cross-profits-soar-as-losses-on-aca...
In summary, it's mostly going to outpatient care. The US spends only a small percentage more on in-patient care. In fact, the US spends less on durables and long-term care than most other countries.
[1]http://www.mckinsey.com/industries/healthcare-systems-and-se...
Thanks.
I'm interested in new models, but I'm tired of the US thinking it has to be special with its healthcare system and wasting a trillion dollars a year.
Your "market" approach fails the minute someone is born with preexisting conditions. Or if someone needs emergency care, but doesn't have the right plan.
Try again.
HMOs are really the way to go, but unfortunately Americans stupidly prefer to pay a huge premium for more choice (or at least one very specific dimension of choice). A family member who is a long-time partner at a law firm forced her firm to purchase a plan that allowed her to keep her doctor of 20+ years. This happened during the nationwide market reconfiguration as the mandates rolled out and insurers aggressively re-architected their plans and provider networks. Now she rants and raves about how Obamacare raised the costs of healthcare, and her partners resent her for forcing the huge premiums on everybody. She's totally unwilling to consider that the problem was entirely of her own making; that her firm could be paying a fraction of their current costs for the same quality of care, just not including that one specific doctor.
HMOs aren't very common, and in many regions they seem to suck. Fortunately, Northern California Kaiser is one of the best hospital systems in the nation. If you live in the Bay Area I highly recommend it. Kaiser aggressively pursues cost-cutting measures and efficient service delivery procedures. Appointments go through a phone bank of nurses with a rotating staff doctor, so minor illnesses like a cold or flu don't require wasting your primary physician's time. For more serious but still common injuries like a broken wrist you're directed to, e.g., their sport injury unit clinic; again saving both the ER and the primary physician's time. Kaiser runs their own labs, and the volume of people their labs efficiently handle is incredible. All the doctors are employees (as opposed to independent, affiliated providers like in many for-profit hospitals), and Kaiser doctors very consistently apply uniform policies on best practices, prescriptions, etc. I think they're large enough that they run their own studies; at least that's the sense I get when I've inquired about why they choose X instead of Y.
All of this comes across to some people as impersonal, but personally I think it's amazing. I've never had an interaction (nor have any of my family members, AFAIK) that left me feeling cheated for attention, even though there's always the sense that everybody--doctors, nurses, staff--is working to keep things moving along at a brisk pace. The way they've balanced conflicting requirements is really laudable. After being with Kaiser for many years, other hospital systems seem downright chaotic.
Not saying this is practical for everything but people really should start considering alternate countries for healthcare.
The US is a mess.
Math checks out.
If you're a christian you could lower that considerably. Medishare.
This is a forum populated primarily by hackers and people interested in starting or working at start-ups -- should we also have a single payer of all hackers? The notion is laughable, but it's put forth seriously when it comes to medical care. Like all problems of costs being "too high" this one is caused by artificially restricted supply (govt regulation of medical system) and skyrocketing demand (much of which is driven by the abysmal nutrition advice the US govt has doled out over the past 50 years which has only made 2/3 of the country obese and overweight).
Control economies do not work, how much more evidence do we need before people stop saying "this time is different, we just need the RIGHT people this time"?
It genuinely blows my mind that some of the top comments are pro-socialized policing.
It genuinely blows my mind that some of the top comments are pro-socialized sanitation.
The current system is just a different control economy. Companies don't really care about the cost because non-transportable health care is one lever of control that enables then to depress wages.
First, it's not socialist, healthcare is a fundamental asset in modern societies
Having different healthcare standards for different social classes is detrimental for society development
Second, public healthcare is not a single player system, is a decentralised system with many actors competing under the same rules
If you don't believe me, just take a look at what happens in Japan or Europe or in Italy (my country, generally a disaster but second after Japan for average life expectancy)
That's exactly what a hacker culture supports
US healthcare reflects US mentality that market can fix itself so instead of net neutrality you're going towards net conglomerates
I'll wait, because it doesn't, and will never, exist.
Sort of sad how you fall for the trap of the "regulation" boogeyman. Regulation is what covers preexisting conditions, buddy.