Why Health Care Reform could lead to [i]Less[/i] Coverage

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Vaniver
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Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Vaniver » Wed Sep 30, 2009 9:16 pm UTC

source
If the Max Baucus iteration of health care reform eventually becomes law, then as soon as the federal mandate for individuals to carry health insurance goes into effect, I will very likely defy the mandate, cancel my health insurance, and pay the $950 annual fine. It will not be done out of protest, but out of sheer rational cost-benefit calculation.

As a healthy male in his late 20s living in New York City, I purchase my own health insurance, which costs me approximately $4,440 annually. The primary reason I carry that insurance is to protect myself from economic ruin and ensure medical treatment in the event of a catastrophic medical development. Like many young healthy people who have health insurance, I under-use my plan because I rarely seek medical attention. When I do, it is often for routine check-ups.

But the new plan that is working its way through the Senate Finance Committee will significantly alter my economic calculus. That is because insurance companies will no longer be able to deny coverage for a preexisting condition if I develop an ailment and require treatment. Therefore, I can simply wait and see if I ever need coverage, and if I do, then purchase health insurance. In the meantime, I will pay out of pocket for predictable, routine care. Furthermore, the new plan will likely require community ratings, which will prohibit insurance companies from discriminating against me with higher prices if I one day develop a condition. That means there would be little economic downside in not carrying coverage while I'm still young and healthy--other than the $950 fine. Overall, however, I would save up to $3,500 per year.

Herein lies one of the great vulnerabilities in the Obama health care reform push. Obama wants to require insurance companies to cover people with preexisting conditions and, furthermore, not to discriminate in terms of pricing by charging higher prices for more expensive to treat conditions. However, that would enable some people to wait until their house is in flames before purchasing fire insurance--metaphorically speaking. As a concession to private insurance companies, the federal government must require everyone to carry insurance, so as to create a larger pool of insured people from which private companies can collect premiums, and to prevent people from waiting until they get sick to buy insurance.

The only way to make the mandate effective is to impose costs for not carrying insurance. If policymakers try to criminalize not carrying it--there are actually some discussions on this--it very well could ignite a new political tinderbox in the health care debate. And if they make the fine too large, they will also alienate centrists and members of the middle and working classes who are skeptical but potentially amenable to some type of new legislation.

So instead, the Baucus plan seeks to impose a fine, which is really just a hidden tax. The perverse effect of this tax, coupled with the preexisting condition mandate and price controls, is that people like me will actually drop health care and pay the tax. This has happened in Massachusetts, which has a similar mandate to the one being proposed in the federal bill. Incidentally, while the number of uninsured in Massachusetts has declined, costs have increased at a faster rate than the national average.

Of course, dropping health coverage would not be risk free, as it could still mean economic devastation in the event of a sudden emergency that required care and was not covered. The big difference, though, would be in my long-term cost-benefit analysis. There would be no incentive for me to buy insurance now, when I don't have any "preexisting conditions," as a hedge against future developments. I would know that even if I waited, insurance companies could not deny coverage for serious, long-term problems.

It is ironic that a health care plan supposedly designed to ensure coverage for all could actually cause certain people to drop their coverage, while imposing costs on the system as people wait until they need coverage to purchase it. But stupid policy breeds stupid results, especially when it creates perverse incentives.

Instead of using mandates and price controls, the government should be breaking down barriers to entry in the insurance market. It should be encouraging new providers to enter the market and provide tailored coverage to people depending on their needs, including new markets for preexisting conditions. That is the underlying philosophy that should guide reform. Otherwise, the system will eventually pay for people who are given incentives to free ride. That may shift costs, but it certainly will not bring them down.
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Endless Mike
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Endless Mike » Wed Sep 30, 2009 9:20 pm UTC

His logic is pretty poor. Well, maybe not, but he is gambling on not having an accident that he can't afford. I haven't read the actual proposal, but I'm sure there has to be some limitation on the definition of pre-existing condition. Of course, my coverage costs me barely more than the penalty, so it's not really a concern of mine. I think he could easily find a plan that costs $950 per year that won't cover as much as his current plan, but would actually be useful in case of an emergency.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby BlackSails » Wed Sep 30, 2009 9:25 pm UTC

Endless Mike wrote:His logic is pretty poor. Well, maybe not, but he is gambling on not having an accident that he can't afford.


He can still drop comprehensive coverage in favor of high-deductible catastrophic coverage

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Heisenberg » Wed Sep 30, 2009 9:30 pm UTC

Point holds, though. If the fee is less than the cost of coverage, we'll see plenty of folks opt for the fee. I've definitely chosen beer over health care before. Does this make kind of an idiot? Yes. Are many Americans idiots? Yes.

And with the provisions in this bill which seriously increase the financial burden held by insurance companies, I doubt that his premium will be coming down.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby frezik » Wed Sep 30, 2009 9:39 pm UTC

Herein lies one of the great vulnerabilities in the Obama health care reform push. Obama wants to require insurance companies to cover people with preexisting conditions and, furthermore, not to discriminate in terms of pricing by charging higher prices for more expensive to treat conditions. However, that would enable some people to wait until their house is in flames before purchasing fire insurance--metaphorically speaking.


We have this situation right now. Because an insurance company can drop you right now when you get a significant illness (perhaps legally, perhaps not, but they have better lawyers than most sick people), it's rational for a young and healthy person to avoid any coverage at all. If you happen to get sick, you're still guaranteed at least a certain level of care, and then you can declare bankruptcy.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Dauric » Wed Sep 30, 2009 9:48 pm UTC

frezik wrote:
Herein lies one of the great vulnerabilities in the Obama health care reform push. Obama wants to require insurance companies to cover people with preexisting conditions and, furthermore, not to discriminate in terms of pricing by charging higher prices for more expensive to treat conditions. However, that would enable some people to wait until their house is in flames before purchasing fire insurance--metaphorically speaking.


We have this situation right now. Because an insurance company can drop you right now when you get a significant illness (perhaps legally, perhaps not, but they have better lawyers than most sick people), it's rational for a young and healthy person to avoid any coverage at all. If you happen to get sick, you're still guaranteed at least a certain level of care, and then you can declare bankruptcy.


There is a difference though. In the current system someone who is getting older, but is still healthy, has a reason to get insurance so that they have it before they develop something expensive and chronic. The problem this has led to is issues of "Portability" when someone had insurance with a company, then changes jobs only to discover that their insurance does not go with them to the new job and they have to apply for new insurance.

In the 'reformed' system there is no such incentive to be insured until they come down with something, since when it happens you can just change coverage. A lot of people with comprehensive coverage may opt for cheaper coverage, and thus contribute less to the insurance pool, then swap plans later if they need to.

Laws of Unintended Consequences.

edit:
Ohh, and hey, look: A rational argument against the current healthcare reform that doesn't rely on instilling hysteria and panic. Can we get more of this?
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby cerbie » Wed Sep 30, 2009 10:01 pm UTC

Dauric wrote:Laws of Unintended Consequences.
How on Earth are they unintended? It's not like ideas that would solve this problem have not been put forth, nor that this problem has not already come up with the plan. Every other day the proposed plan seems to go back to being a pro insurance company bill, and screws over the people who need the insurance, and the institutions offering the care.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Dauric » Wed Sep 30, 2009 10:05 pm UTC

cerbie wrote:
Dauric wrote:Laws of Unintended Consequences.
How on Earth are they unintended? It's not like ideas that would solve this problem have not been put forth, nor that this problem has not already come up with the plan. Every other day the proposed plan seems to go back to being a pro insurance company bill, and screws over the people who need the insurance, and the institutions offering the care.


Except that if this were to pass it wouldn't support the insurance companies. People would have less reason to pay in to the insurance pool, and more reason to take the taxation, which in theory would go towards "Insuring the Uninsured" but odds are it would be raided by the politicians like any other "Public (mis)Trust".
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby cerbie » Wed Sep 30, 2009 10:16 pm UTC

Dauric wrote:
cerbie wrote:
Dauric wrote:Laws of Unintended Consequences.
How on Earth are they unintended? It's not like ideas that would solve this problem have not been put forth, nor that this problem has not already come up with the plan. Every other day the proposed plan seems to go back to being a pro insurance company bill, and screws over the people who need the insurance, and the institutions offering the care.

Except that if this were to pass it wouldn't support the insurance companies. People would have less reason to pay in to the insurance pool, and more reason to take the taxation, which in theory would go towards "Insuring the Uninsured" but odds are it would be raided by the politicians like any other "Public (mis)Trust".
Insurance would become at least $80/mo cheaper (using the article's figure), thanks to the tax. I fail to see how that increases the incentive to not be insured, compared with not having such a tax/fine.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby MrGee » Wed Sep 30, 2009 10:59 pm UTC

The article's reasoning is correct. But it's really just a matter of numbers. Suppose the real, actual cost of health care in the new system is $3k per year instead of the profit-bloated $4.4k that he pays now. And suppose we increase the fee to $3k. Then he's basically buying insurance whether he wants to or not. Problem solved.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby ThomasS » Wed Sep 30, 2009 11:20 pm UTC

MrGee wrote:The article's reasoning is correct. But it's really just a matter of numbers. Suppose the real, actual cost of health care in the new system is $3k per year instead of the profit-bloated $4.4k that he pays now. And suppose we increase the fee to $3k. Then he's basically buying insurance whether he wants to or not. Problem solved.

The article seems to be quite aware that a stronger mandate might solve the problem. However, it asks the obvious question: will such a stronger mandate be politically tenable? Moreover, if you strengthen the mandate, what happens if there are people who for whatever reason simply cannot afford coverage at the price that is available to them?

Also note that by removing bracketing, the young and healthy end up subsidizing the infirm, when compared to the current bracketing model used by health insurance companies. So young health people, as the author claims to be, might well end up with a higher bill for health insurance. Unless of course you have either a government plan to go with your mandate, or a requirement that insurance companies not actually take a profit from the mandatory basic health insurance policies. (As I understand it, Switzerland does this. Switzerland also defines what that minimum policy must cover, so economically it is effectively a socialist/government run solution.)

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby MrGee » Wed Sep 30, 2009 11:26 pm UTC

Shh...it's not a mandate, it's a fee! You can always just pay the fee. These are not the droids you're looking for *hand wave*

And why would anyone in Switzerland start an insurance company that is guaranteed not to make a profit? I guess you might as well ask why anyone would work for the government when they're guaranteed not to get rich. But still.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby NoodleIncident » Wed Sep 30, 2009 11:42 pm UTC

No profit on the basic, mandatory care =/= no profit on the more expensive and comprehensive care.

In regards to the article, the fallacy comes from the fact that catastrophic accidents are the main reason for insurance in the first place, not routine costs or sudden chronic conditions. I would still get health insurance under this plan.

Also, I'm sure that there either already is or that there will be something in the bill defining "pre-existing condition" to exclude i-just-got-cancer-itis.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby ThomasS » Wed Sep 30, 2009 11:47 pm UTC

MrGee wrote:And why would anyone in Switzerland start an insurance company that is guaranteed not to make a profit? I guess you might as well ask why anyone would work for the government when they're guaranteed not to get rich. But still.

I believe that they make profits by selling add-on plans to increase your choice of doctors and such. Y'know, for people who want to spend the money to have more options, private rooms, and so on. Now in Germany you sign up for a state plan with a broker and he might also try to sell you add-on plans from private insurance companies. Same idea. So these two countries provide choices. I'm pretty sure that England and Canada do also TBH.

Whereas here in America, somebody who has had, say, a gall bladder removed, might be said to have a preexisting conditions. So for people like that, the only choice tends to be whatever your employer happens to offer.

NoodleIncident wrote:In regards to the article, the fallacy comes from the fact that catastrophic accidents are the main reason for insurance in the first place, not routine costs or sudden chronic conditions. I would still get health insurance under this plan.

Are you saying that the primary motivations for health insurance is catastrophic accidents? Like what, being hit by a car? Oh wait, a pedestrian hit by a car should have his bills paid by the driver's insurance. I totally believe that lots of healthy, well educated people would take the 3k per year benefit at the risk of having some expensive single event.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby MrGee » Wed Sep 30, 2009 11:57 pm UTC

ThomasS wrote:
MrGee wrote:And why would anyone in Switzerland start an insurance company that is guaranteed not to make a profit? I guess you might as well ask why anyone would work for the government when they're guaranteed not to get rich. But still.

I believe that they make profits by selling add-on plans to increase your choice of doctors and such. Y'know, for people who want to spend the money to have more options, private rooms, and so on. Now in Germany you sign up for a state plan with a broker and he might also try to sell you add-on plans from private insurance companies. Same idea. So these two countries provide choices. I'm pretty sure that England and Canada do also TBH.


Okay. It still sounds unpleasant though.

"Oh, yes, I can sell you some basic, zero profit insurance. BY THE WAY WOULD YOU LIKE TO BUY SOME EXTRA INSURANCE???? I BET YOU WOULD!"

Kinda like freecreditreport.com. It's not free. It's not free. :(

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby The Reaper » Thu Oct 01, 2009 12:08 am UTC

MrGee wrote:
ThomasS wrote:
MrGee wrote:And why would anyone in Switzerland start an insurance company that is guaranteed not to make a profit? I guess you might as well ask why anyone would work for the government when they're guaranteed not to get rich. But still.

I believe that they make profits by selling add-on plans to increase your choice of doctors and such. Y'know, for people who want to spend the money to have more options, private rooms, and so on. Now in Germany you sign up for a state plan with a broker and he might also try to sell you add-on plans from private insurance companies. Same idea. So these two countries provide choices. I'm pretty sure that England and Canada do also TBH.


Okay. It still sounds unpleasant though.

"Oh, yes, I can sell you some basic, zero profit insurance. BY THE WAY WOULD YOU LIKE TO BUY SOME EXTRA INSURANCE???? I BET YOU WOULD!"

Kinda like freecreditreport.com. It's not free. It's not free. :(

That's cuz you're looking for https://www.annualcreditreport.com/cra/index.jsp
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby zug » Thu Oct 01, 2009 12:16 am UTC

ThomasS wrote:Are you saying that the primary motivations for health insurance is catastrophic accidents? Like what, being hit by a car? Oh wait, a pedestrian hit by a car should have his bills paid by the driver's insurance. I totally believe that lots of healthy, well educated people would take the 3k per year benefit at the risk of having some expensive single event.

It's not quite as simple as that. Yeah, you could be a pedestrian who gets hit by a car, but more frequently vehicles get into accidents with other vehicles.

People who cause car accidents (more than 50% at-fault) are, in many states, barred from recovering anything from the other party's insurance company. So if you're driving an older car with just liability coverage and the other person's insurance adjuster determines the accident was 65% your fault, nobody's paying your medical bills.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby ThomasS » Thu Oct 01, 2009 12:37 am UTC

MrGee wrote:Okay. It still sounds unpleasant though.

For health insurance companies, yes. A good public plan would reduce them to shells of their current selves. From http://en.wikipedia.org/wiki/Health_ins ... ed_Kingdom :
Private health care has continued parallel to the NHS, paid for largely by private insurance, but it is used by less than 8% of the population, and generally as a top-up to NHS services. There are many treatments that the private sector does not provide. For example, health insurance on pregnancy is generally not covered or covered with restricting clauses.[29] One of the major insurers, BUPA, excludes many forms of treatment and care that most people will need during their lifetime or specialist care most of which are freely available from the NHS.

However, when you listen to various emotional testamony it becomes easy to wonder if certain health care decisions should be in the hands of profit driven corporations. It also becomes harder to feel said at the thought of these corporations losing large amounts of the market share.

"Oh, yes, I can sell you some basic, zero profit insurance. BY THE WAY WOULD YOU LIKE TO BUY SOME EXTRA INSURANCE???? I BET YOU WOULD!"

A certain fraction of people in all of the countries that I have mentioned do have additional insurance. A small but well defined market does remain, and this does provide some choice.

zug wrote:People who cause car accidents (more than 50% at-fault) are, in many states, barred from recovering anything from the other party's insurance company. So if you're driving an older car with just liability coverage and the other person's insurance adjuster determines the accident was 65% your fault, nobody's paying your medical bills.

The author of the original article was a New Yorker. There is actually a rather good chance that he doesn't own a car. But you are right in that there is a chance of an immediate catastrophe happening no matter what. The question is what people's estimate of those odds will be and how the risk of the potential bankruptcy compares to $3k per year. Note that these are exactly the situations in which care is assured on humanitarian grounds.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby netcrusher88 » Thu Oct 01, 2009 2:13 am UTC

All this seems a very strong argument in favor of a Canadian style system (or British, except I don't think nationalizing the entire system from the ground up is a good idea yet) - you pay for basic coverage as a part of your taxes and you can purchase add-on coverage. I just don't see how else a universal mandate would work, short of jail time - which is hugely unpopular.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby MrGee » Thu Oct 01, 2009 3:28 am UTC

ThomasS wrote:[
"Oh, yes, I can sell you some basic, zero profit insurance. BY THE WAY WOULD YOU LIKE TO BUY SOME EXTRA INSURANCE???? I BET YOU WOULD!"

A certain fraction of people in all of the countries that I have mentioned do have additional insurance. A small but well defined market does remain, and this does provide some choice.


I was just pointing out that it is likely to be a very high pressure sales situation.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Aetius » Thu Oct 01, 2009 3:54 am UTC

My friend and I were discussing health care the other day, and amidst disagreements and some pie in the sky libertarianism, one solid point came up that I haven't really seen addressed much, and it was the simple question of "why isn't all health insurance catastrophic coverage only?" If the entire point of insurance is to socialize risk by having everyone pay into a pool that then pays out in the event of low-occurrence/high-impact events, why do we have everyone pay into a pool that then pays out for high-occurrence/low-impact events like routine care? Wouldn't the market function better if those instances were handled between a doctor and patient rather than introducing a middleman who will add to overhead, introduce an additional profit margin, and potentially gum up the works and deny care? Both the system we have now and the proposed public option seem to be the equivalent of buying not only fire insurance, but grass-growing insurance as well. On the whole it would seem easier to just buy fire insurance and budget for paying the kid down the street to mow your lawn out of pocket.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby netcrusher88 » Thu Oct 01, 2009 4:03 am UTC

Going to see a doctor is not a cheap thing. Research has proven people are more likely to see a doctor regularly if they have insurance if they don't. Regular visits mean a higher chance of early detection, and issues you catch early are likely to be cheaper and easier to resolve.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Aetius » Thu Oct 01, 2009 4:06 am UTC

netcrusher88 wrote:Going to see a doctor is not a cheap thing. Research has proven people are more likely to see a doctor regularly if they have insurance if they don't. Regular visits mean a higher chance of early detection, and issues you catch early are likely to be cheaper and easier to resolve.


So basically we pay more and give a soulless corporation control over our health because we're too stupid to get care without the impetus of knowing we've already [over]paid for it. I think we may be too stupid as a species to deserve health care.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby cerbie » Thu Oct 01, 2009 4:34 am UTC

Aetius wrote:My friend and I were discussing health care the other day, and amidst disagreements and some pie in the sky libertarianism, one solid point came up that I haven't really seen addressed much, and it was the simple question of "why isn't all health insurance catastrophic coverage only?" If the entire point of insurance is to socialize risk by having everyone pay into a pool that then pays out in the event of low-occurrence/high-impact events, why do we have everyone pay into a pool that then pays out for high-occurrence/low-impact events like routine care? Wouldn't the market function better if those instances were handled between a doctor and patient rather than introducing a middleman who will add to overhead, introduce an additional profit margin, and potentially gum up the works and deny care? Both the system we have now and the proposed public option seem to be the equivalent of buying not only fire insurance, but grass-growing insurance as well. On the whole it would seem easier to just buy fire insurance and budget for paying the kid down the street to mow your lawn out of pocket.
It's too expensive for most to do, so health insurance has become a way to distributed and dilute cost more than risk. On the whole, what's easier now is to not get your grass mowed. The idea (well, the most relevant to your post, anyway), with a public option, is to fix that first, using group bargaining and reduction in risk to the health institution to reduce costs to at least normal insurance levels, even for the currently uninsured, and ease the personal financial burden. After that, there are many ways to go, which would depend on what's horribly broken shortly after implementation.

With 400+ seats in Congress open every two years, if it goes into effect and fails, it will be entirely on the majority of the people's gerrymandered heads, as we all effectively become share holders.
Aetius wrote:
netcrusher88 wrote:Going to see a doctor is not a cheap thing. Research has proven people are more likely to see a doctor regularly if they have insurance if they don't. Regular visits mean a higher chance of early detection, and issues you catch early are likely to be cheaper and easier to resolve.


So basically we pay more and give a soulless corporation control over our health because we're too stupid to get care without the impetus of knowing we've already [over]paid for it. I think we may be too stupid as a species to deserve health care.

Off the top of my head, but they're in the ball park (assuming similar coverage with the two insurance options):
Doctor visit, no insurance: $50-300
Any coverage, no insurance: (insurance rate) * (random real between 1.5 and 5)
Individual insurance: ~$400/mo, ??? co-pays
Employer insurance: $50-100/mo, ~$30 co-pays
What your paycheck has taken out of it even if you opt out: $100-200
If you get stuck getting sick or injured near an out-of-network care facility: you're almost as screwed as if you had no insurance ($1800 for burnt fingers, and insurance savings of <$100--amazing!*).

It doesn't take much for the employer-provided option to pay for itself, relative to other options, if you are not in emergencies, so it's a nice gamble. Without it, simple things like broken bones could ruin many people. But, with even that insurance going up in cost, and/or the actual coverage getting to near nothing, and available household income is hardly increasing, we're about at the end of the rope, trying to decide who's going to get a noose.

* yes, there's more to the story. Still, 1/3 of that, and 1/3 the wait time, would have been reasonable.
Last edited by cerbie on Thu Oct 01, 2009 4:42 am UTC, edited 1 time in total.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby ThomasS » Thu Oct 01, 2009 4:40 am UTC

Aetius wrote:So basically we pay more and give a soulless corporation control over our health because we're too stupid to get care without the impetus of knowing we've already [over]paid for it. I think we may be too stupid as a species to deserve health care.

Well, there is also the fact that the insurance company price for most things is far less than the "retail" price. I've known people who would not be wiped out by any sort of medical bills. However, insurance coverage still makes sense for them, because of the insurance company negotiated discount rates.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Aetius » Thu Oct 01, 2009 4:47 am UTC

ThomasS wrote:
Aetius wrote:So basically we pay more and give a soulless corporation control over our health because we're too stupid to get care without the impetus of knowing we've already [over]paid for it. I think we may be too stupid as a species to deserve health care.

Well, there is also the fact that the insurance company price for most things is far less than the "retail" price. I've known people who would not be wiped out by any sort of medical bills. However, insurance coverage still makes sense for them, because of the insurance company negotiated discount rates.


But from an economic perspective it doesn't make any sense for a product being resold to be cheaper than the product was in the first place.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby krynd » Thu Oct 01, 2009 5:08 am UTC

Aetius wrote:
netcrusher88 wrote:Going to see a doctor is not a cheap thing. Research has proven people are more likely to see a doctor regularly if they have insurance if they don't. Regular visits mean a higher chance of early detection, and issues you catch early are likely to be cheaper and easier to resolve.


So basically we pay more and give a soulless corporation control over our health because we're too stupid to get care without the impetus of knowing we've already [over]paid for it. I think we may be too stupid as a species to deserve health care.


If the choice is between going to a doctor for a perpetual pain in your side vs. eating for the next week/month, how do you think the poor are going to decide?

It isn't that people don't want to go to the doctor for routine care (supposing they don't have insurance/can't affort their co-pays), it's just that they can't afford to go to the doctor at all. Doctors charge an insane amount of money (let's hand-wave some "Invisible Hand" stuff to justify that. I personally find it abhorrent that someone who's supposedly in the field to help people charges that much), and insurance companies help defer that cost (over time and across a larger pool of people) so that those who don't have an insane amount of discretionary income[1] can afford care.

[1]Spoiler'd for length.
Spoiler:
About a two weeks ago, I went to the dentist. I recently received my insurance statement, which lists what the dentist charged, what the insurance paid, my co-pay (paid at the dentist's office), and the remaining balance (which I will most likely have to pay). Now, a bit of warning: 99% of people I know say I have excellent dental coverage (off-set by crappy medical coverage, but I'm young and am unlikely to need it as much as dental care. Healthy teeth last a lifetime, ya' know). Here's the printout:

For one standard cleaning and filling (two teeth), it cost my insurance over $300. My co-pay was $20, and my remaining balance was waived (it was under $10). So, for a total cost of about $350 (where I had paid only $20), all I got was a teeth cleaning and two fillings. Now, I haven't any discretionary income, and had to borrow that $20. While that may not be much to you, it does point out that not everyone (personally, I'm just poor, but that's another thread. College students and those just starting their Real LivesTM would also fill in this "niche") can pay out-of-pocket for routine/preventative care. Also, there's this really fun-tastic gap between how poor you'd have to be to (currently) qualify for Medicaid and how "rich" you'd have to be to pay entirely out-of-pocket for preventative care. What do we do about these people?

Anyway, if I didn't have insurance, I'd be SOL, w/rt cost, and likely wouldn't have went (my teeth weren't bothering me, and I hardly noticed I had a cavity). If I had let it go, I'd probably have needed the tooth replaced with a false one. Also, tooth removal is almost certainly unlikely to be covered by "catastrophic care" (yet it'd still be important to me), which means I'd probably just yank it out myself (causing a real medical problem if something goes wrong). Further, catastrophic care wouldn't cover the infection I'd likely develop from an amateur-hour tooth removal (it's possible). Supposing a worst-case scenario (for teh_lulz), I could conceivably die from said infection (because at what point would it become "catastrophic", and how would I know? I'd probably be reluctant to go to the doctor to shell out hundreds of dollars for antibiotics, and may decide to consult the local Witch Doctor instead (there'd be some who seriously would)). Yes, I know that's taking this argument to the extreme, then shooting it in the head with a cannon made of hysteria, however this argument that you should ditch preventative care entirely (if I read the OP's quoted material properly, and assuming you're too poor to pay for it yourself) is equally absurd to me.

Unless the government provides a provision to extend Medicaid, I don't see how the author of that article can justify his actions regarding those currently insured, but nearing poverty and unable to qualify for Medicaid (who'd likely be the first ones to drop their coverage to save a few thousand/year). [sarcasm]I'm at least comforted by the fact that anyone who'd do this would likely fall victim to social Darwinism, and that society would be better off without those who'd risk destroying their health to save a few dollars a year[/sarcasm].
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Silknor » Thu Oct 01, 2009 7:05 am UTC

cerbie wrote:Insurance would become at least $80/mo cheaper (using the article's figure), thanks to the tax. I fail to see how that increases the incentive to not be insured, compared with not having such a tax/fine.


The reduced incentive to get insurance doesn't come from the fine, it comes from preventing insurance companies from denying coverage for pre-existing conditions. As it is now, if you don't have insurance and get sick, you may be unable to find any at all, or at least anything affordable that is willing to cover your pre-existing condition. Since if you do get sick, you'll want to have the insurance, the only way to reduce this risk of a major loss is to get insurance while you're still healthy. If you allow anyone who is sick to get insurance and still have full coverage for their costly condition, then there's less reason to get it ahead of time. That's why the author has less incentive to be insured, he values the ability to get insurance if he does get sick at higher than $80/month, and so even with the fine, he still comes out ahead.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Zamfir » Thu Oct 01, 2009 12:10 pm UTC

MrGee wrote:
ThomasS wrote:
MrGee wrote:And why would anyone in Switzerland start an insurance company that is guaranteed not to make a profit? I guess you might as well ask why anyone would work for the government when they're guaranteed not to get rich. But still.

I believe that they make profits by selling add-on plans to increase your choice of doctors and such. Y'know, for people who want to spend the money to have more options, private rooms, and so on. Now in Germany you sign up for a state plan with a broker and he might also try to sell you add-on plans from private insurance companies. Same idea. So these two countries provide choices. I'm pretty sure that England and Canada do also TBH.


Okay. It still sounds unpleasant though.

"Oh, yes, I can sell you some basic, zero profit insurance. BY THE WAY WOULD YOU LIKE TO BUY SOME EXTRA INSURANCE???? I BET YOU WOULD!"

Kinda like freecreditreport.com. It's not free. It's not free. :(


Well, you could theorize on the internetz about how this could never work in real life, or look how it apparently does works in Switzerland.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby cerbie » Thu Oct 01, 2009 12:33 pm UTC

Silknor wrote:
cerbie wrote:Insurance would become at least $80/mo cheaper (using the article's figure), thanks to the tax. I fail to see how that increases the incentive to not be insured, compared with not having such a tax/fine.


The reduced incentive to get insurance doesn't come from the fine, it comes from preventing insurance companies from denying coverage for pre-existing conditions. As it is now, if you don't have insurance and get sick, you may be unable to find any at all, or at least anything affordable that is willing to cover your pre-existing condition. Since if you do get sick, you'll want to have the insurance, the only way to reduce this risk of a major loss is to get insurance while you're still healthy. If you allow anyone who is sick to get insurance and still have full coverage for their costly condition, then there's less reason to get it ahead of time. That's why the author has less incentive to be insured, he values the ability to get insurance if he does get sick at higher than $80/month, and so even with the fine, he still comes out ahead.
Meanwhile, you're racking up bills while you wait for the policy to go through, and it still won't cover things before its effective date (often 30-60 days after you apply). So, you are assuming that you won't have much to pay for before then, too. That's quite a gamble. I'll cede that for a very healthy person who would need a lot of money to be insured, but can pay some out of pocket, you have a point, there, though.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Zamfir » Thu Oct 01, 2009 12:50 pm UTC

cerbie wrote:Meanwhile, you're racking up bills while you wait for the policy to go through, and it still won't cover things before its effective date (often 30-60 days after you apply). So, you are assuming that you won't have much to pay for before then, too. That's quite a gamble. I'll cede that for a very healthy person who would need a lot of money to be insured, but can pay some out of pocket, you have a point, there, though.

in the end, if the system is going to help chronically sick people pay their bills, the result is always going to be that not-chronically sick people overpay in some form. throguh taxes, higher premiums, fines or whatever.

I don't see how having the healthy pay more to aid the sick is such a bad thing. If the fear is that some of the healthy will be too poor to aid the sick, then make a system in which the rich and healthy overpay more than the poor and healthy.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Vaniver » Thu Oct 01, 2009 2:07 pm UTC

MrGee wrote:The article's reasoning is correct. But it's really just a matter of numbers. Suppose the real, actual cost of health care in the new system is $3k per year instead of the profit-bloated $4.4k that he pays now. And suppose we increase the fee to $3k. Then he's basically buying insurance whether he wants to or not. Problem solved.
But, do you really think that profit and paying for the uninsured represents a third of his health insurance payment? Together those represent less than 10% and less than 5%, I'm not sure how you add them to get 32%.

NoodleIncident wrote:In regards to the article, the fallacy comes from the fact that catastrophic accidents are the main reason for insurance in the first place, not routine costs or sudden chronic conditions. I would still get health insurance under this plan.
You misunderstood the article.
He currently has health insurance because of the risk of a chronic condition (or accident)- if he's inflicted with one, he's out of luck unless he bought insurance beforehand. Under the new system, developing a chronic condition while being uninsured will no longer be a problem- meaning that he can just pay the routine costs out of pocket, and be insured against catastrophic accidents and chronic conditions by the government for 'free' (that is, $3,500 cheaper than the insurance company will insure him).

NoodleIncident wrote:Also, I'm sure that there either already is or that there will be something in the bill defining "pre-existing condition" to exclude i-just-got-cancer-itis.
Why? That's just what's happening now, except on a smaller scale. If they can't discriminate against people with pre-existing conditions, why would Benevolent Leader want them to discriminate against people who developed the condition today, and just spare the people who have been suffering for weeks or months?

netcrusher88 wrote:All this seems a very strong argument in favor of a Canadian style system (or British, except I don't think nationalizing the entire system from the ground up is a good idea yet) - you pay for basic coverage as a part of your taxes and you can purchase add-on coverage. I just don't see how else a universal mandate would work, short of jail time - which is hugely unpopular.
Indeed- that seems to be pretty much the only sensible way to extend health coverage to all citizens. That doesn't mean that goal is worth the cost and side effects, but it does mean it's better than alternatives.
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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby iop » Thu Oct 01, 2009 2:41 pm UTC

Vaniver wrote:
netcrusher88 wrote:All this seems a very strong argument in favor of a Canadian style system (or British, except I don't think nationalizing the entire system from the ground up is a good idea yet) - you pay for basic coverage as a part of your taxes and you can purchase add-on coverage. I just don't see how else a universal mandate would work, short of jail time - which is hugely unpopular.
Indeed- that seems to be pretty much the only sensible way to extend health coverage to all citizens. That doesn't mean that goal is worth the cost and side effects, but it does mean it's better than alternatives.

Switzerland has universal coverage but no government health insurance. Basic insurance is mandatory for everybody (the government subsidizes those who can't afford it), and insurance companies have to accept irrespective of prior conditions. Supplementary insurance is not mandatory, and insurance companies are free to choose who they want to insure for how much.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Crius » Thu Oct 01, 2009 3:17 pm UTC

Apparently, something similar is already happening in Massachusetts, which has a similar plan.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Heisenberg » Thu Oct 01, 2009 3:25 pm UTC

Crius wrote:Apparently, something similar is already happening in Massachusetts, which has a similar plan.

Yet these mandates allow people to wait until they're sick, or just before they're about to incur major medical expenses, to buy insurance. This drives up costs for everyone else, which helps explain why small-group coverage in Massachusetts is so much more expensive than in most of the country.

This points to the issue. If the uninsured acquiesce to Obama's mandate, insurance premiums could drop, and it may be cheaper to purchase insurance than it is to pay the fee. If, instead, the uninsured don't rush to purchase a plan, they'll end up paying the fee later, and premiums will go up as they are forced to later accept the ill, while not receiving payment from the healthy. Trouble.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby iop » Thu Oct 01, 2009 3:32 pm UTC

I guess the reason this system works in Switzerland, but would not work well in the US is that the Swiss government knows who lives in the country, and where, and that insurance companies report to the government who took out basic insurance with them. Thus, it is virtually impossible to be uninsured in Switzerland.
Since the US does not know who lives in the country and where, ensuring that everyone has taken out mandatory health insurance is impossible.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby BlackSails » Thu Oct 01, 2009 3:35 pm UTC

Also the swiss as a whole, have a much more organized and homogenous society.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby Chen » Thu Oct 01, 2009 4:12 pm UTC

Vaniver wrote:
NoodleIncident wrote:Also, I'm sure that there either already is or that there will be something in the bill defining "pre-existing condition" to exclude i-just-got-cancer-itis.
Why? That's just what's happening now, except on a smaller scale. If they can't discriminate against people with pre-existing conditions, why would Benevolent Leader want them to discriminate against people who developed the condition today, and just spare the people who have been suffering for weeks or months?


I could see something like this occurring exactly to prevent the sort of thing that is being stated in the article. If you want to benefit from insurance you need to pay into the system both when healthy and not. If insurance companies can be allowed to require a certain period of time (and thus input) before they provide coverage it would essentially prevent people from cherry-picking insurance only once they've become ill. Clearly there'd need to be some grandfather clause for some time once the system comes into effect that would allow anyone to purchase immediate coverage, but once the system is rolling it "effectively" makes insurance mandatory unless you want to risk the chance that you'll need to pay for a good amount of health care if something comes up and you need to wait for your coverage to kick in.

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby iop » Thu Oct 01, 2009 5:22 pm UTC

BlackSails wrote:Also the swiss as a whole, have a much more organized and homogenous society.

Organized I can see. But what makes you think that Switzerland is more homogeneous?

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Re: Why Health Care Reform could lead to [i]Less[/i] Coverage

Postby cerbie » Thu Oct 01, 2009 6:00 pm UTC

iop wrote:I guess the reason this system works in Switzerland, but would not work well in the US is that the Swiss government knows who lives in the country, and where, and that insurance companies report to the government who took out basic insurance with them. Thus, it is virtually impossible to be uninsured in Switzerland.
Since the US does not know who lives in the country and where, ensuring that everyone has taken out mandatory health insurance is impossible.
The US government has the IRS. Worrying only about people that must file tax forms seems reasonable enough to me (I await the clerical error horror stories :P).
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