Another Obamacare Architect Recognizes Its Unintended Consequences

KocherDr. Bob Kocher, an Obamacare architect turned venture capitalist, has admitted the law has had a significantly negative unintended consequence:

When I joined the Obama White House to advise the president on health-care policy as the only physician on the National Economic Council, I was deeply committed to developing the best health-care reform we could to expand coverage, improve quality and bring down costs.

What I got wrong about ObamaCare was how the change in the delivery of health care would, and should, happen. I believed then that the consolidation of doctors into larger physician groups was inevitable and desirable under the ACA.

Well, the consolidation we predicted has happened: Last year saw 112 hospital mergers (up 18% from 2014). Now I think we were wrong to favor it.

(Bob Kocher, “How I Was Wrong About Obamacare,” Wall Street Journal, July 31, 2016.)

Dr. Kocher joins Dr. Zeke Emanuel as another Obamacare architect who has realized giving the federal government this much power to shape the heath system is not having the outcome he anticipated. Back in 2009 and 2010, Dr. Kocher believed that the consolidation of physicians and hospitals into large health systems would lead to higher quality care at lower cost. As Dr. Kocher notes, the systems are consolidating, but they are not hitting cost and quality targets.

Instead, smaller, physician-led practices do better at such improvements. Now that he is a professional investor in medical innovation, Dr. Kocher sees something that was not apparent when he worked in government. He recognizes that smaller practices are nimbler and more responsive to patients’ needs.

However, practices are consolidating because larger, bureaucratic health systems are better able to comply with the massive regulatory burden imposed by Obamacare. Dr. Kocher invites the federal government to rewrite the rules to allow smaller, nimbler practices to succeed.

Dr. Kocher and other former Obama officials who are now pursuing entrepreneurial opportunities in the health system they wrought are in the best position to advocate for such reform. Unfortunately, it is just not in the nature of big government to favor smaller, nimbler competitors over large, bureaucratic ones.

Comments (155)

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  1. Big Truck Joe says:

    He’s an idiot. When does a bigger bureaucracy/company/football team or any other entity you can compare work more effectively and efficiently than one that is smaller and more nimble. He should be sued for malpractice. He was too incompetent to diagnose the financial cancer that he has now let metastatized into the entire healthcare body economic. The prognosis is grim for the country’s healthcare system because myopic fools like “Dr” Kocher were allowed to operate. We best get a priest over here fast because it won’t be long before we code and call a time of death. RIP US healthcare system- it was fun while I knew ya.

    • I am very slightly acquainted with Dr. Kocher. I am highly confident he is a very accomplished physician, public servant, and venture capitalist of good will. He is learning, as are we all.

  2. Lee Benham says:

    Well here is some more information that will help shed the light on what is happening with Obamacare.
    I met a nice couple last night who were paying over $1,100 a month for insurance.
    55 year old wife 53 year old husband.2 daughters 20 and 18 Wife worked for the school district as a teachers aid. only earning $20,000 a year. husband works as a wood worker earning $27,000 a year,
    Combined income of $47,000 a year and having $1,100 taken out of the wife’s check for dependent coverage.
    Family doesn’t qualify for tax credits because the Architects were to incompetent to realize the Hillary glitch when they designed this monstrosity.
    Wife quit her job at the school district to take a slightly better paying job (starts 9/1)at a company that is smart enough not to offer employee benefits and disqualify the employee dependents from tax credits. Family had no life insurance or critical Illness insurance.

    Now family applies for BCBS HSA plan (BCBS is the only company left on the exchange)Qualifies for a little more than $1000 a month in tax credits.
    Family finds a Bronze Plan for $32 a month. Silver plan would have cost about $500 a month.
    family buys a life insurance plan with ci coverage for about $167 a month and a Accident plan up to $5000 with a $500 deductible for $72 a month. Family went from paying $1,100 a month to $271 and added benefits they never had under the employer sponsored plan.

    Is Obamacare in this instance working as it should or was intended?
    Employer based insurance is disqualifying millions of people of from receiving tax credits.

    If only an aggressive young attorney would see the damage caused by employers offering benefits and disqualifying dependents of there tax credits and sue the employer for damages.

    • You are quite right. That is why NCPA proposes a universal tax credit.

      • Lee Benham says:

        I can appreciate that the NCPA supports Universal tax Credits. It would certainly be better than the current system. However they will do nothing to cure the underling problem of affordable health care.

        • “Nothing”? “Nothing”! Then what would be the point of proposing it?

          • Lee Benham says:

            Sorry John,

            I didn’t intend to strike a nerve. its my opinion Individual tax credits would be a far more efficient and fair plan than the current system. it would make the premiums for insurance less costly for individuals purchasing insurance.

            However I stand by my original statement that they will do nothing to make health care more affordable. Throwing more money to the insurance industry to pay the medical industry will probably speed up the inflation of the cost of medical care.

            I could be wrong. Please explain to me how giving more tax dollar to the insurance company will make health care more affordable?

            • If you see an article by an NCPA analyst advocating sending tax credits to health insurers, point it out to me. I will find him/her and flog him/her with a wet noodle.

              We would never recommend sending tax credits to health insurers. That is what Obamacare does. We recommend tax credits for individuals. Individuals could use them to pay for care directly and/or pay premium to insurers.

              We anticipate it would result in a better consumer-driven market where most transactions are paid directly by patients with prices determined in a more normal market. Insurance would have low premiums and look more like indemnity insurance.

              The reality would be more complicated (especially for low-income people who are now on Medicaid), but we are confident prices would decline.

              • Lee Benham says:

                John,

                Sorry I’m still not following the logic. I’m not a PHD in fact I never even went to college. So you might have to get the crayons out for me.

                If I understand correctly, what you are advocating is “GIVING” credits to the consumer. Who would then give them to the insurance company to lower there cost of insurance or to pay for minor health care.

                Isn’t that just semantics? The same subsidies still flow into the medical community.

                So please explain how is giving credits to a consumer who then gives it to the insurance company will actually lower health care costs?

                It appears to me you are not advocating insurance you are encouraging a bill paying service.
                Insurance is the transference of risk. Giving tax credits is not transferring risk its just absorbing costs. The costs will continue to increase.

                I read somewhere if insurance is unaffordable to the individuals then it will also be unaffordable to the collective.

                • We ate all the crayons. You are trapped in a mental model that all medical spending has to go through an insurer. Why?

                  The federal government gives tax credits to buy energy efficient residential heating and cooling systems. The government does not give those tax credits to your homeowner’s insurer. You claim them directly to pay for the “EnergyStar” product.

                  (I am not stating I approve of tax credits for this purpose, just stating the fact that they do not go through insurance.)

                  We need to get insurers out of the business of fixing prices and interfering in payment for every single medical service.

                  • Lee Benham says:

                    I completely agree. the definition of insurance is spreading a risk over a large group of people for something that can not be personally financed. With the average family premiums exceeding a $1,000 a month. Frankly a $1000 a month finances a hell of a lot of healthcare.

                    Consumers need to realize our current system is not Insurance. We have created a bill paying service with the insurance industry acting as a middle man.

                    Home insurance, Auto insurance, life insurance, None of these insurances have the same tax advantages that health insurance enjoys. However Health insurance is the only insurance industry almost completely funded by tax payers. whether Employers take tax deduction for benefits or consumers get tax credits directly, tax payers are still subsidizing the premiums. Funding by tax payers has allowed the costs of Medical Care to sky rocket.

                    This brings me back to my original statement that giving tax credits directly to individuals will not help lower healthcare costs.

                    The only way to get control of healthcare costs is to remove the tax advantage treatment of ALL HEALTH INSURANCE.

                    If we have come to a conclusion that healthcare is a right and every American is entitled to the best care possible. Then why do we have the Insurance Industry involved at all?
                    why not give the funds directly to the medical industry?

                    Giving tax credits to individuals is just mirroring Employer based benefits. This leads to people not understanding what they get for what they pay for because someone else is paying the lions share of the premiums.

                    I have sat across the kitchen table of thousands of consumers who thought Doc office co pays were great. That was until I showed them how much they actually cost and what they got for what they paid for then not one of them wanted the co pay.

                    The reason they no longer wanted the copays is because it was 100% their money being spent. As long as subsides are available to the consumer the consumer will not make an inelegant informed financial decision.

                    So how will giving tax credits directly to the consumer help control health care costs?

                    • Perhaps in a perfect world there would be no subsidy for consumption of medical care. But that is not characteristic of any democracy. I cannot imagine such a proposal getting any support by a plurality of the population.

                  • J McClure says:

                    Consider that medical bills are the most frequent cause of personal bankruptcy.

                    The fallacy in the proposal to move toward a self pay medical care model is that a catastrophic illness could and would wipe out all but the wealthy. With the average new chemotherapy regimen costing over $100,000 a year and all the ancillary costs of a cancer diagnosis few would have the resources for appropriate care. Insurance spreads this risk across a large population so that the individual is not so exposed.

                    Granted the high deductibles in some bronze plans would also be problematic for lower income participants. A better insurance structure is needed.

                    • Lee Benham says:

                      Sorry I still have to disagree. Insurance is not the problem never has been.

                      The cost of insurance is a reflection of the cost of healthcare. Granted The tax advantages of employer based insurance has had a direct impact on the inflation of medical care and will continue to have a negative impact as long as there are tax advantages.

                    • Allan says:

                      “medical bills are the most frequent cause of personal bankruptcyf”

                      That is not true and if you critcally read the article promoting that view you would see that for yourself.

                      Example: A man with 100 million dollars makes a foolish investment at the same time he had $1,000 in medical bills. The cause of bankruptcy listed by the writers of the study promoting this crap would be bankruprtcy due to medical bills instead of bad investments even if he lived in a $15 million dollar home where homesteads are not affected in bankruptcy.

                      The authors of the study promoting this fantasy used interviews when all they had to do was go to the court houses since all bankruptcies are recorded and one would discover a completely different story.

                      Catastrophic illness need not wipe out one who carries insurance.

  3. John Fembup says:

    “sue the employer for damages.”

    Lee, it seems to me your theory id that employers are liable for damages when they comply with Obamacare. Is that what you are saying?

    • Lee Benham says:

      John,

      People have sure sued for far less. The above case I referenced the employer has cost this family over $30,000 in tax credits over the last 3 years.

      I guess I would look at the fact, has the employee been damaged by the actions of the employer?

      If the employer offers coverage and does not provide adequate subsides for dependents to match the tax credit they would receive had the employer not offered coverage. then the employer damaged the employee. Erisa does not mandate employers offer coverage for a spouse only dependent children. So again the question becomes is the Employer negligent in deigning tax credits by offering converge without a subsidy?

      • John Fembup says:

        Lee, I don’t think you actually answered the question I asked.

        I’ll ask it another way:

        Is your theory that an employer commits a legal tort by adopting a legal plan that is not as generous as different legal plan it could have adopted instead?

        • Lee Benham says:

          I believe I did answer your question. I will try and answer it again although I don’t possess any of your poetic flair.

          The ACA mandates Employers with more than 50 full time employees offer the employees ACA compatible coverage or pay a penalty for not doing so. The ACA does not mandate the employer offer coverage for dependents. it only mandates coverage for the employee. I would argue the reason for the Hillary Glitch in the first place is because the designers of Obamacare were only concerned about the employee and knew employers such as Walgreens and UPS would take steps and not offer spousal coverage.(we assume it is an unintended consequence but how do we really know) Employers are choosing to offer spousal coverage. Because they are choosing to offer the coverage they are damaging the spouses who would have otherwise qualified for tax credits.
          Because the employer offers coverage to employees ERISA mandates they offer it to dependents as well. The employer does not have a choice but to offer the plan to the dependents. However they do have a choice in offering it to spouses.

          Do you really think a family making $47,000 a year was not damaged by the employer for disqualifying them from $12,000 a year in tax credits?
          The employee didn’t have a choice.

          • John Fembup says:

            So Lee, your answer is “yes”?

            • Lee Benham says:

              John can you answer a simple yes of no question?
              Are employers hurting some employees by offering coverage to spouse?

              • John Fembup says:

                I asked whether it is your theory that an employer commits a legal tort by adopting a legal plan that is not as generous as different legal plan it could have adopted instead?

                It seems to me that, after reading all your words, your answer is “Yes”.

                So your lawyer would be forced to argue in court that an employer liable for damages inflicted on its employees, when it offered them a legally-compliant Obamacare plan.

                In another age, in another country, compliance with the law was regarded as a defense – not a tort. But not in America, and not today.

                Ayn Rand was right. A government of laws can be turned into a tyranny by enacting laws so convoluted that anyone may be guilty of a crime just by following the law.

                • Ron Greiner says:

                  Killer John never answers a question but always has questions for other people.

                  Killer John, if Hillary has been diagnosed with subcortical vascular dementia, will you vote for her anyway?

                  I’m interested how you liberals think.

                  • John Fembup says:

                    “never answers a question but always has questions”

                    Asking questions is how people learn. But that’s usually a problem for folks like our own Senator Foghorn Leghorn here.

                    My dad, along with many others I’m sure, wisely advised “Never wrestle with a pig; you’ll just get dirty and the pig likes it”.

                    So thanks for the entertainment Senator. I’ve lost patience waiting for you to answer a simple, obvious question about your claim to be the excellent person to ask about underwriting. You don’t intend to answer, and your refusal has become a permanent state despite the humor from Ted Knight:

                    https://youtu.be/angi1vwUkQc#sthash.ahTkmd0t.dpuf

                    • Ron Greiner says:

                      Killer John, I told you the Republicans want High Risk Pools so the workers you terminate with health issues can get insurance. You said that Republican ideas are just slogans.

                      I asked you if you wanted me to explain medical rate ups but you refuse to answer a question, like a typical liberal.

                      Medical exclusionary riders are another way to get your terminated workers insurance.

                      When your Dad was talking about pigs, he was talking about you John. But, you didn’t learn from your Dad.

                    • Lee benham says:

                      now that was funny I don’t care who you are :)

                    • Lee benham says:

                      nothing like a good caddy shack clip

                • Lee benham says:

                  John,
                  I don’t think I said a crime has been committed. I’m saying a Lawyer could make an argument that an Employer breached there fiduciary duty to the employees beneficiary’s.

                  Erisa states that employer sponsored plans act in the interest of plan participants and their beneficiaries.
                  I think an argument can be made that an employer has breached there fiduciary duty.

                  The article talked about unintended consequences. MY original statement was to point out that something like this could happen and be another unintended consequence.

                  So are employers taking into account the damages they are potential causing employees spouses?

                  You still haven’t answered my question. Are employers potentially hurting some employees spouse by offering coverage?

                  • John Fembup says:

                    “I’m saying a Lawyer could make an argument . . . ”

                    Lee, I agree – a lawyer could make an argument and the argument would be made in a court, no? My point is that the employer can be in serious legal doo-doo even if it establishes a perfectly legal plan under Obamacare. That also explains my reference to Ayn Rand.

                    Employers didn’t build this Rube Goldberg Obamacare so full of flaws; they didn’t write the law, pass it without reading it, or sign it without knowing what was in it. Our government did all those things. And now we see that if employers make legal choices under Obamacare, they still have legal liability for exactly the reasons you have been pointing out.

                    Catch -22.

                    Meanwhike what is our problem, really? Same as it’s always been: people can’t get affordable medical care. And the reason is that medical care is simply unaffordable. Yet our debating and arguing and even Obamacare are all about insurance. I think our so-called leaders have mistaken the symptom for the disease. You can’t obtain less-costly medical care by using an insurance mechanism like Obamacare to pour more money into medical care. Aside from the mistaken economics, it’s an error to confusie the symptom (high insurance premiums) with the disease (high medical delivery cost). I think Obamacare should be repealed because it’s worse than useless, it’s harmful; but I do not suggest that its repeal would reduce the cost of delivering medical by a nickel. We need a different kind of solution.

                    And I’m not talking about what physicians and hospitals charge; that’s revenue. I’m talking about the factors that drive their costs to deliver medical care. If those costs remain high, and keep going up, insurance premiums will remain high and keep going up. The fundamental problem is the cost of medical care not the cost of medical insurance.

                    That is a crucial distinction, because it is impossible to have affordable insurance without also having affordable medical care. Yet after 50 years (!!) we remain mired in arguments over insurance (allocation of cost; who will be made to pay for others’ cost) when the task is to figure out if there is any way to reduce the cost of delivering medical care in the first place. There may be such ways; or, there may not. Shouldn’t we at least know?

                    Moses only needed 40 years get out of his wilderness. After more than 50 years, are still hopelessly lost in ours. I don’t see any way out that is either practical or political.ly possible. Do you?

                    • Allan says:

                      Of course, there are ways to cut costs and one of those ways is a better use of the free marketplace. Unfortunately, we have dug a deep hole so that the shock in changing to a free marketplace might be too great. Therefore, a second best solution is required and one of those possible solutions so happens to have been offered by the NCPA with the plan described in one sentence by John Graham above.

                    • Lee Benham says:

                      John,
                      I could not agree more.

                    • Lee Benham says:

                      John,

                      Can we then agree that the underling cause of high medical care is that a third party is usually paying the majority of the cost of that care?

                    • Lee Benham says:

                      “I don’t see any way out that is either practical or political.ly possible. Do you?”

                      John, no I do not see anyway out that is practical or politically possible.

                      The question is how do we finance a persons life time health care.

                      I read somewhere that the average American will spend about $320,000 in a life time on healthcare. (not sure how they came up with that number when in the 1930’s a doctors office was $4) Assuming that number is correct for an average person born today. If that person lives to be 80 and inflation has caused medical care to rise to say $500,000 in that life time.

                      How do we as a society finance this $500,000?

                      Better yet why is the society responsible for the $500,000 in care?

                      If a person averages $500,000 in medical care in a 80 year life time then that would be about $6250 a year.

                      $6250 is less than the deductibles on ACA compliant plans so why does the insurance cost so much?

        • Lee Benham says:

          Who Is A Fiduciary?

          Many of the actions involved in operating a plan make the person or entity performing them a fiduciary. Using discretion in administering and managing a plan or controlling the plan’s assets makes that person a fiduciary to the extent of that discretion or control. Thus, fiduciary status is based on the functions performed for the plan, not just a person’s title.

          As noted above, group health plans can be structured in a variety of ways. The structure of the plan will affect who has fiduciary responsibilities. Most employers sponsoring fully or partially self-funded group health plans exercise some discretionary authority and therefore are fiduciaries. If the employer sponsors a fully insured plan, fiduciary status depends on whether the employer exercises discretion over the plan.

          A plan must have at least one fiduciary (a person or entity) named in the written plan, or through a process described in the plan, as having control over the plan’s operation. The named fiduciary can be identified by office or by name. For some plans, it may be an administrative committee or a company’s board of directors.

          A plan’s fiduciaries will ordinarily include plan administrators, trustees, investment managers, all individuals exercising discretion in the administration of the plan, all members of a plan’s administrative committee (if it has such a committee), and those who select committee officials. Attorneys, accountants, and actuaries generally are not fiduciaries when acting solely in their professional capacities. Similarly, a third party administrator, recordkeeper or utilization reviewer who performs solely ministerial tasks is not a fiduciary; however, that may change if he or she exercises discretion in making decisions regarding a participant’s eligibility for benefits. The key to determining whether individuals or entities are fiduciaries is whether they are exercising discretion or control over the plan.

          A number of decisions are not fiduciary actions but rather are business decisions made by the employer. For example, the decisions to establish a plan, to determine the benefit package, to include certain features in a plan, to amend a plan, and to terminate a plan are employer business decisions not governed by ERISA. When making these decisions, an employer is acting on behalf of its business, not the plan, and, therefore, is not a fiduciary. However, when an employer (or someone hired by the employer) takes steps to implement these decisions, that person is acting on behalf of the plan and, in carrying out these actions, may be a fiduciary.

          What Is The Significance Of Being A Fiduciary?

          Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of participants in a group health plan and their beneficiaries. These responsibilities include:
          Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them;
          Carrying out their duties prudently;
          Following the plan documents (unless inconsistent with ERISA);
          Holding plan assets (if the plan has any) in trust; and
          Paying only reasonable plan expenses.

          The duty to act prudently is one of a fiduciary’s central responsibilities under ERISA. It requires expertise in a variety of areas. Lacking that expertise, a fiduciary will want to hire someone with that professional knowledge to carry out those functions. Prudence focuses on the process for making fiduciary decisions. Therefore, it is wise to document decisions and the basis for those decisions. For instance, in hiring any plan service provider, a fiduciary may want to survey a number of potential providers, asking for the same information and providing the same requirements. By doing so, a fiduciary can document the process and make a meaningful comparison and selection.

          Following the terms of the plan document is also an important responsibility. The plan document serves as the foundation for plan operations. Employers will want to be familiar with their plan document, especially when it is drawn up by a third-party service provider, and periodically review the document to make sure it remains current. For example, if a plan official named in the document changes, the plan document must be updated to reflect that change.

          Limiting Liability

          With these fiduciary responsibilities, there is also potential liability. Fiduciaries who do not follow the basic standards of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of the plan’s assets resulting from their actions.

          However, fiduciaries can limit their liability in certain situations. One way fiduciaries can demonstrate that they have carried out their responsibilities properly is by documenting the processes used to carry out their fiduciary responsibilities.

          A fiduciary also can hire a service provider or providers to handle fiduciary functions, setting up the agreement so that the person or entity then assumes liability for those functions selected. If an employer contracts with a plan administrator to manage the plan, the employer is responsible for the selection of the service provider, but is not liable for the individual decisions of that provider. However, an employer is required to monitor the service provider periodically to assure that it is handling the plan’s administration prudently.

          Other Plan Fiduciaries

          A fiduciary should be aware of others who serve as fiduciaries to the same plan, since all fiduciaries have potential liability for the actions of their co-fiduciaries. For example, if a fiduciary knowingly participates in another fiduciary’s breach of responsibility, conceals the breach, or does not act to correct it, that fiduciary is liable as well.

          • Lee Benham says:

            “These responsibilities include: Acting solely in the interest of plan participants and their beneficiaries”

            • Ron Greiner says:

              Lee, nobody here thinks that employers should look after the best interest of employees or even be required to give Full and Proper Disclosure to employees.

              Employers sell insurance to employees with non-licensed employees who are not bound by ethics so they can and do lie to employees. This is not illegal, it’s sad.

              John Fembup won’t even answer if employees deserve Full and Proper Disclosure.

    • Lee Benham says:

      As a follow up, I would say the Employer is liable for negligence for offering more than what the law says. I would also say that the companies would have a claim against the insurance agents and companies for not properly disclosing that if the employer offered coverage to the spouse that it would disqualify the spouse from any potential tax credits.

  4. Big Truck Joe says:

    Over the years in the healthcare industry, I’ve met plenty of so called well intentioned, intelligent and seemingly “brilliant” people who make such sophomoric mistakes and errors of judgement, that anyone else in a lower level job would be fired with prejudice but, since they are so well respected in the industry, excuses are made for their mishaps and they go on to lead other projects or head up businesses. I’m just tired of incompetence being excused – when one can’t see the forest for the trees they are simply….blind.

  5. bob hertz says:

    Lee, thank you for showing the family glitch in detail.

    This glitch is one of several areas where the ACA could have been patched up and repaired at any time after it was passed.
    The Urban Institute has published a laundry list of these desirable amendments, none of which would be free but most of which would cost in the $8-$20 billion range.

    However, since 2009 the Republicans have shown zero interest in helping actual families, instead focusing entirely on repeal of the ACA. The Democrats had no majorities after 2010, but I did not even hear them propose any improvements.

    Medicare and Social Security had many such patches and improvments after they were passed. The ACA glitches have been left to fester.

    • Ron Greiner says:

      Republicans want to repeal Obamacare not try and fix a flawed law.

      YOU liberals just have to live with that, sorry Bob.

  6. bob hertz says:

    Here is the Urban Institute catalog:

    http://www.urban.org/sites/default/files/alfresco/publication-pdfs/2000328-After-King-v.-Burwell-Next-Steps-for-the-Affordable-Care-Act.pdf

    I believe that fixing the family glitch comes in at $7.8 billion a year.

    • Lee benham says:

      well I will read the report because you posted it but I have to say when the second paragraph states

      “The Affordable Care Act (ACA) has achieved SUBSTANTIAL SUCCESSES in its first two years of implementation, despite a difficult launch.”

      I’m assuming it will be a nice fictional read.
      Much like everything Hillary (fiction) Clinton says.

    • Lee benham says:

      Bob this thing is pure fiction! I need a Whiskey already and its only 10 am.

      “and the reformed nongroup market has seen many insurers enter, strong competition, and unexpectedly low premiums”

      • Ron Greiner says:

        It is reported that in 667 counties in the USA there will only be one insurance company on the Obamacare exchange in 2017.

        ONE company is not “strong competition”.

        Come to the NCPA blog for a Democratic Socialist point-of-view.

  7. Lee benham says:

    Bob,

    I would respectfully disagree with all of the proposed fixes. throwing more money at the problem will not fix the underling problems the law has.

    “ Improve premium tax credits and cost-sharing reductions
     Ease access to marketplace financial assistance for those affected by the “family glitch”
     Allow states the option to expand Medicaid to 100 percent of the federal poverty level instead of 138 percent
     Increase federal grants for information technology development and operation; education, outreach, and enrollment activities; and oversight and enforcement of insurance regulations”

  8. Bob Hertz says:

    Lee you are partly correct. To praise the existing law is just cheerleading.

    But the extra tax credits to persons over 400% of poverty is (for example) a solid change that would make insurance more affordable.

    There are a number of other areas in the Urban Inst. material that are also part of Republican alternatives.

    I am still correct that the Republican Congress did not raise any proposals to make ACA policies cost less. All their energy was to repeal the ACA.

    • Allan says:

      “I am still correct that the Republican Congress did not raise any proposals to make ACA policies cost less. All their energy was to repeal the ACA.”

      Bob, the Republican party didn’t pass the ACA. It opposed it. The Democrats passed it through without even reading it or trying to figure out where it erred. The Democrats screwed up on social policy which is what they are best known for. They should be front and center trying to fix the thing or simply admit they were wrong. Unfortunately, there hasn’t been a social policy the Democrats almost unilaterally pushed that hasn’t run into problems where their major contribution in repairing the problem is to throw more money at it.

      Understand this is not meant to promote the Republican Party that as a whole seems directionless. They are like a circular firing squad shooting at one another and mostly afraid to act or alternatively are like the Democrats looking out for themselves instead of the American public.

    • Lee Benham says:

      Bob,

      I’m sorry I still have to disagree. Extra tax credits do not make the insurance more affordable. I will concede they make the insurance less costly to the person receiving the tax credit. More tax credits cost tax payers more which is not more affordable.
      If the insurance was affordable it wouldn’t need subsidies from employers or tax payers.

  9. John Fembup says:

    Lee the other thread was full so I started another one.

    You asked “Can we then agree that the underling cause of high medical care is that a third party is usually paying the majority of the cost of that care?”

    I agree with part of your proposition, and disagree that it’s a true statement in general.

    Where we agree is that third party reimbursements tend to make total costs higher, mostly because they make it easier for physicians to recommend more services, and for patients to expect more. The economic idea is that reducing the cost to the consumer e.g., thru insurance, usually increases consumer demand. The RAND Corporation completed a landmark study demonstrating this effect back in the early 1980s.

    On the other hand third party reimbursements are providers’ revenues which are on a different ledger from costs and anyway don’t really affect the cost of delivering any given unit of care. That latter cost is the “delivery cost” I keep mentioning. Hospitals’ and physicians’ revenues must cover their total costs, but i don;t believe they drive the delivery costs per unit of treatment (however one defines “unit”). I think the effect of third party reimbursement is much less obvious with, and I suspect has little impact on, the cost per unit of treatment – the delivery cost.

    • Lee Benham says:

      John,
      I understand where you are coming form.
      However when we deal with health care we are dealing with Social, financial and emotional concerns.

      I had a cat scan a few years ago and the cost was about $3500.

      My dog had a cat scan a few months after mine and the bill was $180.

      I know these is not an apples to apples comparison because the deliver costs are different but I think it will illustrate my point.

      My $3,500 bill was from an emotional and financial decision. I had pain that I was sure was a kidney stone. the emotional decision was this freaking hurts I’m going to the ER. I didn’t really care about the financial aspect because I knew the family deductible was almost met. After 4 hours in the waiting room and passing the stone with no treatment other than the scan I was billed $3,500. My portion was $800

      My dog doesn’t look well we take her to the vet(emotional Decision) and he says we need to do a cat scan. Ok how much for that he says $180 (financial decision) if he would have said $3500 I don’t think the dog would have liked my decision.

      Another example my brother has an inoperable brain tumor. lets do a $100,000 gamma knife treatment. Treatment did absolutely nothing. He didn’t care about the cost his out of pocket was already paid.

      I think these examples illustrate the parts that we agreed on. I also think they show how reimbursements can be inflated over the cost of the actual care.

      I could be wrong but that’s my perception

  10. Barry Carol says:

    The only reason to socialize at least part of the cost of health insurance through either tax credits, direct subsidies, or the employer tax preference is to make it more affordable at the individual level. The aggregate cost of the subsidies to society and its affordability is a separate issue.

    Most people who didn’t have health insurance before the ACA became law didn’t have it because they couldn’t afford it. Only a relatively few didn’t have it because they didn’t want it.

    • John Fembup says:

      Barry that’s correct and I mostly agree with you. Even if medical care is “affordable” at the aggregate level, insurance will be necessary to socialize the costs, because the costs are not distributed evenly among the population. That’s what insurance is for. I get that.

      However, there is no affordable way to make insurance “affordable” for very long if the underlying cost of medical care is not “affordable” in aggregate. I’ll bet you agree.

      Is insurance necessary as an emergency. palliative measure? Sure. Just like aspirin is necessary when you have a splitting headache.

      But if you’ve had your splitting headache for, oh, FIFTY YEARS and all your doctor has to say is “take more aspirin” – you have the wrong doctor.

      • Barry Carol says:

        John — We agree about the cost of medical care being a problem. It’s also likely that costs are higher when insurance is paying than they would be if the individual paid. The same is true for the cost of a car damaged in an accident or a home damaged in a storm or a fire.

        However, paying out of pocket and doing without insurance is just not an option for most people. They need insurance but it doesn’t have to cover the little stuff and it shouldn’t just as car insurance doesn’t cover oil changes and homeowner insurance doesn’t cover lawn maintenance or gutter cleaning.

        • John Fembup says:

          Barry you say “likely that costs are higher when insurance is paying than they would be if the individual paid.”

          It’s true that insurance reimbursements reduce the cost to the consumer. Reduced consumer costs usually mean higher demand or, in insurance-speak, higher utilization – an important driver of total cost.

          But let’s not forget that total cost equals cost per unit times number of units delivered (however one may define “unit”).

          Seems to me different techniques are needed to deal with these two components I of total cost..

          Even if some optimal insurance mechanism resulted in the optimal number of units of care (how likely?) that wouldn’t affect the providers’ cost of delivering each unit of J care. Therefore it wouldn’t change the cost per unit times the optimal number of units. That’s why I resist the notion that insurance schemes can be the solution to our cost problems. They can help. But they can’t solve the problem – or, I suspect, even solve the majority of the problem.

    • Lee Benham says:

      Barry,

      sorry I’m not following you on this. the only reason to socialize part? How is throwing tax payer money make things affordable at the individual level?

      “Most people who didn’t have health insurance before the ACA became law didn’t have it because they couldn’t afford it”

      I would disagree with your statement. It was my experience dealing with clients before the ACA that people who didn’t have it could have afforded it but chose not to have it.

      • Barry Carol says:

        Lee — If the full or real cost of family coverage is $16K per year, it’s unaffordable for most people. If subsidies, tax credits or a large employer contribution bring the net out-of-pocket contribution to be paid by the individual down to $4K per year, it’s affordable for a lot more people. It’s as simple as that.

        Your client base may not be a representative sample of the previously uninsured population. How many of the 20 million people who now have Medicaid or heavily subsidized exchange plans would have been your clients? None of them could have afforded to pay the full cost of guaranteed issue insurance on their own.

        • Lee Benham says:

          “Most people who didn’t have health insurance before the ACA became law didn’t have it because they couldn’t afford it. Only a relatively few didn’t have it because they didn’t want it.”

          Barry this is where we are disconnecting.
          in your first statement you said before the ACA when underwriting was allowed. then you contended that none of them could afford to pay the cost of guaranteed issue.

          ” If the full or real cost of family coverage is $16K per year, it’s unaffordable for most people. If subsidies, tax credits or a large employer contribution bring the net out-of-pocket contribution to be paid by the individual down to $4K per year, it’s affordable for a lot more people. It’s as simple as that.”

          This is where we have a philosophical difference. if the premium is $16,000 using subsidies, tax credits, or employer contributions does not make the insurance any more affordable. the premium is still $16,000 its just tax payers are paying the difference. Just because the individual benefiting from the other tax payers is paying less premiums it does not change the overall cost of the insurance and it is still unaffordable.

          • Barry Carol says:

            More people will have health insurance if they are subsidized than if they aren’t while the population at large will pay higher taxes if subsidies exist than if they don’t. It may not affect affordability by your definition but it does affect the number of people who, at the end of the day, have health insurance. That was the goal of creating the subsidies.

            • John Fembup says:

              “That was the goal of creating the subsidies.”

              Barry, yes that’s true. It was the goal. And it suffers the fatal flaw of trying to treat a cost disease as though it were an insurance disease. Misdiagnosing the problem won’t yield a cure. Insurance subsidies are only a palliative.

              A necessary palliative, yes. But it won’t last for long. While it lasts, our so-called thought leaders in government and private enterprise have a little more time to reach a consensus on what to do next. I don’t have much confidence that’s happening; do you?

              Meanwhile, more and more people are coming to realize that despite government subsidies of the end cost of insurance to the consumer – the total cost of medical care just keeps on growing.

              And because the total cost keeps growing, subsidies must grow, too, or benefits must be reduced – or both. Because if those don’t happen the subsidies and the “insurance” becomes unaffordable even for the government.

              That’s when the piper pipes up and demands payment.

              • Barry Carol says:

                John — So do you think the ultimate outcome will be a single payer combination of Medicare FFS and Medicare Advantage for all with the medical cost issue addressed, in part, through rationing via Canadian style waiting lists for services, tests and procedures? While I wouldn’t like it, I also wouldn’t be surprised if it ultimately comes to that.

                Of course, one big advantage of taxpayer financing is that your insurance won’t be TERMINATED if you lose your job. In the end, we can have our healthcare good, fast, or cheap. Pick any two.

              • Allan says:

                Subsidies mean that for each dollar spent on healthcare one gets more than a dollar’s worth in return. That incents the consumer to use more of the product. Thus we see a spiral of ever-climbing costs.

    • Allan says:

      Out of the 47 million people that didn’t have health insurance some time before the financial mess one estimate demonstrated that only about 8 million couldn’t afford it or couldn’t get it through no fault of their own. One can argue about the exact number but they broke the claim down. A large proportion were illegals or could file for Medicaid. The big group was the young, the invincibles ,whose insurance was relatively low. A large number of families earned in excess of $75,000 per year and many more earned in excess of $50,000. This was long before the ACA when premiums were much lower. These numbers were substantially based upon the government’s own figures.

      From that sampling, less than 20% of the uninsured were uninsured through no fault of their own. We needed to attack costs, but Obama pushed in an ideological fashion causing rates to climb and both deductibles and copays to rise. We can keep attempting to insure everyone by subsidizing more and more people,but eventually the cost exceeds our ability.

  11. Bob Hertz says:

    As an insurance guy, I would posit that any form of health insurance which is guaranteed issue will be unaffordable to many citizens.

    The employer policies are only “affordable” if the employer pays most of the premium. Look what happens when COBRA is made available.

    The only “affordable” health insurance occurs with underwriting and with short term horizons. But that only fits some persons.

    Thus our dilemma.

    • Ron Greiner says:

      Bob, you say, “The employer policies are only “affordable” if the employer pays most of the premium. Look what happens when COBRA is made available.”

      COBRA is just the real price of over-priced employer-based insurance that consumers refuse to pay.

      You also say, “The only “affordable” health insurance occurs with underwriting and with short term horizons.”

      That’s not true Bob. Individual Medical (IM) does not have a short term horizon but it did have medical underwriting to make it affordable.

      I talk to people every day that wait until they have cancer and now they want “INSURANCE”. It is not insurance that they want it is for somebody else to pay their medical bills.

  12. Allan says:

    The premiums are as high as they are today because of the collectivist policies and the ACA.

    Average health insurance premiums as a percent of median income family coverage:

    2003 15% 2013 23%

    There was a $7,000 increase in premium to $16.000 during that time period and deductibles more than doubled.

    Let us get real. It is the collectivists and the supporters of the ACA that have led us into such a deep hole and now they cry that we need more collectivism to get us out of it. Their track record stinks so I don’t know why we would follow their advice.

  13. Barry Carol says:

    If the brilliant free market types wanted to sustain low cost underwritten insurance for healthy people, they could have done so by funding high risk pools that actually worked for people who couldn’t pass underwriting and by providing subsidies to fill the gap beyond what they could afford to pay in premiums.

    Pre-ACA high risk pools existed in 35 states and never insured more than 200,000 people altogether. In many states the policies weren’t very good, the number of people who could get coverage was capped and benefit limits were often pretty low. Fifteen states didn’t offer high risk pools at all.

    The market failed these unhealthy and already sick people as well as those who otherwise couldn’t afford coverage due to low income. We got the ACA to address a market failure.

    • Allan says:

      You are always telling everyone else what to do yet you support the collectivist approach and the ACA. I guess misery loves company and the socialist way of doing things leads to an abundance of misery.

      The free market type believes in high deductibles and insurance that is bought and sold in the free market (willing buyer and willing seller). The individual doesn’t need you to force him to buy an insurance policy from another private individual that isn’t offering him what he wants or needs.

      That 8 million people could have received subsidies which would have not involved that much money for in the free market healthcare might only cost 50cents on the dollar. Collectivists argue against big savings because they believe that only the government is smart enough to buy insurance for them.

      Just think of that high-risk person today trying to be insured when the premium on normal families is in the $16,000 range $7,000 more than when the flaming Liberal was chanting in the street for greater government involvement. Just think, the deductible more than doubled! While you push for more of the same we can find these costs doubling again and no one will be able to afford insurance.

      Of course, you blame the free market types for the failure of high-risk pools, but high-risk pools were state run and most definitely weren’t run by the marketplace, though I understand some collectivist feel that price controls and mandates are part of the free market.

      • Barry Carol says:

        High risk pool subsidies were state financed. Therefore, state politicians are within their rights to determine the aggregate sum they were willing to spend for subsidies and to work with insurers to design plans, including benefit caps and to use caps on the number of policyholders to make the program fit their budget. That budget was woefully inadequate in most cases because politicians weren’t willing to spend enough to make them work adequately for all the people who need insurance but couldn’t pass underwriting.

        • Ron Greiner says:

          Barry, it was Federal law that allowed Hobby Lobby and Killer John Fempump to come into Florida and sell dangerous employer-based insurance to young uninformed women that they lose when they get cancer and cannot work the required 30 hours per week, which is deadly.

          Just because High Risk pools didn’t work in the past does not mean that they cannot work in the future now that we have the motivation of repealing Obamacare. High Risk pools will allow Hobby Lobby to continue to TERMINATE their young female workers who PAID for their insurance and did not understand that they were in big trouble if they became sick or hurt.

          When they tried to invent the light bulb it didn’t work the 1st TIME.

          • Barry Carol says:

            Ron — if underwriting came back, the ACA is repealed and the 150 million people with employer coverage are suddenly told it will go away but their salary will increase by the amount previously spent for health insurance so they can buy private coverage, you told me a number of months back that as many as 30% of that population wouldn’t pass underwriting. That’s 45 million lives including family members. You also told me that market solutions might emerge to take care of maybe 10-15 million of them at higher than standard rates. That still leaves 30-35 million lives. The cost of covering them through high risk pools along with the people who never had employer coverage but can’t pass underwriting would be enormous. Then you also have the healthy lower income people, including those older than 40 or 45, who can’t afford even underwritten coverage unless they’re subsidized. What about them? Then for those who can pass underwriting and afford the premium, what happens when they lose their job and their source of cash flow and can no longer afford to pay the premium?

            • Ron Greiner says:

              Barry, many of the 30% could get coverage but may have a rate up. That means the premium would increase from $100 a month to $125 a month with a 25% rate up. Still much cheaper than Obamacare’s $400 a month premium for the 40-year-old in CA on the Silver Plan with $7,150 annual Out-Of-Pocket.

              You always say that it is OK to TERMINATE peoples’ insurance because some cannot make the premium payments anyway when they lose employment. That is just faulty stinkin-thinkin. A TERMINATION notice from Killer John is a totally different deal.

              • Ron Greiner says:

                Barry, people like Hillary would be a decline and would have to go to the High Risk pool because she is on blood thinners.

                We need to know about Hillary’s medical history and don’t start screaming HIPPA.

                Hillary probably has issues with problems she contracted from Bill and his sexual problems.

                https://www.youtube.com/watch?v=OY1gAqq4iFA

        • Allan says:

          “High-risk pool subsidies were state-financed.” and state-controlled, therefore, they belong in the collectivist camp, not on the free marketplace side. Blame collectivist thinking.

          • If the government is going to finance high-risk pools, I do not see why that is superior to just subsidizing the individuals directly and letting them buy underwritten insurance.

            That would probably be a better way for Mr. Greiner to get his commission income back up to where he thinks it should be, too.

            • Ron Greiner says:

              John, I’m sure you know that many Obamacare plans pay ZERO commission. Agents still have all of their expenses and customers call when they have questions and it is very hard when the commission is ZERO.

              I have not seen the media or the non-taxed think tanks discuss this issue.

              John, you say, “superior to just subsidizing the individuals…” How do you subsidize the dying drunk who needs a new $750,000 liver?

              • In any society, there is some proportion of people who cannot or will not live responsible lives. They need clothing, food, health care, etc. Only for health care do we design the system with the implicit assumption that everyone fits that description.

            • Allan says:

              That is what I think as well. Subsidies can be used in a way so they don’t interfere with the marketplace.

    • It was not a market failure in the literal, academic sense. A market failure occurs when resources exist such that a willing buyer and willing seller would be able to agree on a price that would be mutually beneficial but cannot.

      A functioning market in medical care, housing, food, or anything else is not characterized by failure just because there are people who cannot afford to buy.

      Of course, this academic understanding of market failure is appalling to many people. On the other hand, markets result in innovation that reduces costs, thereby bringing more customers into the market in the future.

  14. bob hertz says:

    Free market health insurance sounds attractive — no mandates, no subsidies — but would it work?

    I fear it might wind up like disability and long term care insurance. I sell these products, which have been free market for a long time. They feature tight underwriting, many fights on claims, and are pretty much limited to the affluent. Mutual of Omaha recently stated that the average buyer of LTC coverage is a 60 year old woman with financial assets of $500,000….and good for her, but this is not a mainstream product.

    Or, health insurance might wind up like term insurance, which is cheap and plentiful for the young, but about 90% of policies have lapsed by the time there is a death claim.

    Insurance companies are a little like banks They are glad to offer you a loan as long as you don’t need it.

    Free market insurance would I think guarantee that most people under 65 who show up at hospitals would be uninsured. Eventually many hospitals would go broke. Which may be an acceptable free market consequence, but let’s not pretend it would be painless.

    • Barry Carol says:

      Great comments Bob.

      Only 8% of the elderly have an LTC policy. My wife and I bought a policy back in 2002. The premium was recently raised 60% phased in over three years. We now pay just shy of $6K per year for the two of us for a benefit that started at $150 per day in 2002 and is indexed to inflation at a 5% annual rate since then. Many insurers have withdrawn from the market or sharply raised premiums because more people are going on claim than expected and are staying on claim longer than expected.

      You’re also right about underwritten insurance not working for the elderly. Even most of the healthy elderly folks probably couldn’t afford underwritten insurance that reflected their medical risk because of very low incomes. The term insurance analogy is a good one.

      Lots of young and healthy people would also probably choose to remain uninsured because they don’t want to spend the money on premiums. They would rather wait until they are diagnosed with cancer or are badly hurt in a skiing accident and then would call an insurance agent expecting to be able to buy insurance then. Good luck with that.

      • Ron Greiner says:

        Barry, Hillary is on blood thinners so she is an automatic decline in health insurance. She has had problems with blood clots for 20 years and she is 70-years-old.

        Life insurance medical underwriting will look at family history many times and Hillary’s father died at a young age from a stroke.

        Polling indicates that a vast majority of Americans believe that Presidential candidates should go through medical underwriting too.

        What do you think Barry? We might have to put Hillary in a High Risk pool because of her blood clots on the brain. We don’t want sick Hillary’s finger on the button at 2 AM in an emergency.

        • Barry Carol says:

          I’m on blood thinners too and have been for the last 17 years but,of course, I’m not running for president. I would be uninsurable in your world of medical underwriting though.

          So, I guess Hillary and I would have relegation to a high risk pool in common. That is, if they existed. Otherwise, tough.

          At least the 65 and older population plus some folks on social security disability or in need of kidney dialysis have Medicare to provide subsidized health insurance.

          While you’re selling underwritten insurance to healthy people, maybe you should support high risk pools that actually work for people who need them as well. What do you think, Ron?

          • Ron Greiner says:

            Barry, you know I support high-risk pools because people like Killer John are going to keep terminating sick employees insurance. That is the problem with employer-based insurance.

            It’s not just health insurance that you would have a problem with medical underwriting Barry. You would have a problem buying $1 million in life insurance too.

            Do you think life insurance is evil too?

            YOU are right, you should not be President on your blood thinners, sorry.

            • Barry Carol says:

              Nobody dies sooner than they otherwise would have because they don’t have life insurance. Interestingly, it’s younger people who need life insurance more than older folks. Younger people with children to raise and mortgages to pay down need insurance against premature death more than an older person with fully grown children and a debt-free home. I have zero need for life insurance myself. Ditto for my wife.

              • Lee Benham says:

                Nobody dies sooner than they would have with out health insurance either.

                Maybe you could use life insurance proceeds to help fund high risk pools. That way you could help people that cant be underwritten.

                • Barry Carol says:

                  Try getting cancer treatment at M.D. Andersen or MSK or other well known cancer centers without health insurance or the cash to pay the bills. Try getting life saving but very expensive specialty drugs without health insurance or plenty of cash to pay out of pocket.

                  • Lee Benham says:

                    Those are choices Barry,
                    If you want choices to go to the best then that cost $

                    through process of elimination someone is the best doctor in the world and someone is the worst.

                    the guy that graduates first in his class from Harvard might be able to demand more for his services than someone who didn’t.

                    You are talking about choice and who preforms those services. So collectively you want everyone to pay for the Harvard Doctor when a Yale doctor could preform the task.

                  • If you are an international patient, MD Anderson has an entire department to ensure you understand your charges and pay via cash, check or credit card (http://tinyurl.com/gvta9dv).

                    Expensive? Yes, but recall prices in U.S. health care are artificially high because of the dominance of third-party payment. Market forces drive prices down.

              • Lee Benham says:

                Very interesting statement. you want society to collective finance healthcare because you have a want for healthcare.

                17 years on blood thinners would have me assume you have had some fairly expensive medical expenses in your lifetime. I would also assume you have received far more proceeds than you actually paid in.

                So because your health history made you uninsurable you feel society should collective solve a problem for the few. However you do not want to collective contribute to life insurance because you find no need for it.

                what a selfish way of thinking.

                Let me explain how life insurance works.

                lets use Credits as an example.
                Lets assume everyone has 75 credits at birth.
                You first have to understand that everyone will die someday.

                so the average person lives to be 75 years old.

                some live longer and some die sooner.

                every birthday you have to give up 1 credit to the collective. upon death the remainder of your credits if any will go to the collective.

                someone who dies at 40 leaves 35 credits to the collective.

                now what about the people who live longer than 75.

                for every year after 75 the person must borrow 1 credit from the collective.

                so a person who lives to be 80 would have borrowed 5 credits from the collective.

                that’s a very basic understanding of life insurance.

                So you do not want to help the collective with an insurance product you don’t feel a need for but you expect the collective to finance a product you do use.

                • Barry Carol says:

                  “I would also assume you have received far more proceeds than you actually paid in.”

                  Your assumption is wrong.

                  • Lee Benham says:

                    Then why a need for Insurance?

                    • Barry Carol says:

                      The purpose of insurance is to mitigate actuarial risk. Insurers are in the business of assuming actuarial risk in exchange for a premium. I retain some of the risk though a deductible that I’m comfortable with.

                      I’ve carried homeowner and umbrella liability insurance for 43 years and never had a claim. If my house burns down or I’m sued for a lot of money, the financial consequences could be severe if I don’t have insurance. I can’t predict such events in advance. That’s why I carry insurance. I don’t consider it a bad deal if my lifetime premiums exceed my covered claims. I got what I paid for — the mitigation of actuarial risk that I didn’t want to retain myself.

    • Allan says:

      Bob, I don’t think your view of health insurance is the right way of looking at it. There is an infinite desire for healthcare and that desire cannot be met. Rationing has to take place.Who should do the rationing? A bureaucrat with a one size fits all method or the individual who is better able to determine needs?

      I think you need to look at what health insurance is for.

      1) To protect assets.
      2) To permit pooling of money so that rare unaffordable treatments become affordable to that rare individual.
      3) As a substitute for a loan utilizing #2.

      If unaffordable treatments to most patients are common then they are unaffordable with or without insurance and have to be forgone.

      Subsidies, charity etc. can help those with insufficient funds to permit these people standard treatments.

      A free marketplace permits insurers and the insured to deal with one another satisfying the consumer’s appetite for access, cost and quality simultaneously dealing with the consumer’s pocketbook.

  15. Ron Greiner says:

    Barry, this babe knows that medical underwring is coming back in health insurance. Tavenner was in charge with the failed roll out of Obamacare. Now she is CEO of AHIP and worked for VP candidate Tim Kaine.

    —“Tavenner also has an informed perspective on this year’s presidential campaign: She was Tim Kaine’s secretary of health in Virginia, working with the then-governor to craft a bipartisan smoking ban and reduce infant mortality. She admires his grasp of health care and noted his interest runs deep: Even 20 years ago, when Kaine was an up-and-coming politician in Richmond and Tavenner was an executive at HCA, “we’d have these long conversations about health care and where heath care needed to go,” Tavenner recalled.
    Despite that shared history, Tavenner wouldn’t state whether Hillary Clinton or Donald Trump would be better for health care. They both “have some things we like, and … some things we don’t like,” she said.

    She also projected what Trump’s opposition to Obamacare likely means: “Repealing the exchanges and looking at a different view of the individual market,” Tavenner said. That could take the form of creating a high-risk pool for patients with pre-existing conditions, she predicted.—

    http://www.politico.com/story/2016/08/pulse-check-why-marilyn-tavenner-is-worried-about-obamacare-this-fall-226904

    • Barry Carol says:

      Ron — I would be fine with high risk pools if they were adequately funded and actually worked for the people who need them. The feds would probably have to provide that money for that to happen.

      The more interesting issue to me is what would happen to the aggregate cost of healthcare as opposed to health insurance if Obamacare were repealed, employer provided coverage along with the tax preference associated with it disappeared, salaries were raised as an offset, and everyone aside from Medicare and Medicaid beneficiaries were sent into the private underwritten market to buy health insurance with the backstop of high risk pools there to accommodate those who can’t pass underwriting and premium subsidies for those with income too low to afford even an underwritten plan but too much to be eligible for Medicaid?

      To take the 150 million lives that are currently covered by employer provided health insurance, let’s say 20% of that group can’t qualify for an underwritten plan even with a 25% or a 50% rate up. There is no question that the aggregate premium for the 80% that can pass underwriting will be significantly lower than it is now. The question is what happens to the aggregate cost of the healthcare that they need and use vs. what it was before? If employers previously had to spend $5,000 per covered life on medical claims or $750 billion of which $150 billion was attributable to the 120 million people who can now pass underwriting and are now paying very low underwritten premiums, that leaves $600 billion of medical claims that have to be paid for some other way, presumably, through high risk pool financing. Where are the savings for the healthcare as opposed to the health insurance system? What am I missing here?

      • Ron Greiner says:

        Barry, JFK had back problems but Hillary has mental problems with her brain injuries. –Hillary medical history as is publicly known, identifying three major “falls”; in 2009, 2011, and in 2012 in which Clinton suffered a severe concussion and blood clot in her brain which Bill Clinton claims took six months to recover from.

        Rick Manning made a simple request to Clinton, “to allay any concerns about her fitness to perform the duties of the presidency, Hillary Clinton should immediately undergo a full neurological work up with the results submitted to an independent set of neurologists for review and then released to the public. In an era of hypersensitivity surrounding concussions, there’s no reason why Hillary Clinton with her history of brain trauma shouldn’t allay those concerns publicly.”

        Dr. Marc Siegel said, ” “I think a traumatic brain injury with symptoms down the road is very, very likely here especially since she had a blood-clot on her brain. As [Dr. David Samadi] mentioned that could lead to a seizure problem. [A member of the Clinton campaign] is carrying a [diazepam] pen that you’d use in case of a seizure.”—

        http://sonorannews.com/new/2016/08/11/will-hillary-clinton-release-neurological-medical-records/

        Dizziness, fatigue and disorientation, all common side effects of a TBI according to the CDC.

        We need to see Hillary’s medical records.

    • Ms. Tavenner, now an insurance lobbyist, was a hospital lobbyist. Of course she had “long conversations about health care and where heath care needed to go” with the governor! From her perspective, the answer would have been “more taxpayer dollars to HCA.”

  16. bob hertz says:

    Thanks Alan, I think I know where you might be heading.

    Joe Smith is a healthy 30 year old male. He might get cancer 15 years from now. He wants a health insurance policy to protect him if that happens.

    This is a rare and unpredictable event. A health insurer can draft a policy for #250 a month that will cover the cancer if it ever happens. We have a willing buyer and a willing seller.

    However — there is a big slug of people in their 40’s,50’s, and early 60’s, who have asthsma or diabetes right now. They do not have a good job or any stead job, so they are desparate for health insurance.

    My insurance agency get money from Obamacare to help these persons. They show up every day at our office.

    No insurer would be dumb enough to sell them a policy willingly. They do not have the money to buy a regular policy.

    What I am trying to say is that free markets cannot solve these persons’ problems. The ACA may not be the best solution. But it is trying!

    • Allan says:

      Bob insurance is either affordable to society or it isn’t. The free marketplace sorts all that out and in the process pushes for lower prices and better value. That is how this country became so rich.

      It might be that certain risks are not worth the money to insure because that money could be used elsewhere in a better fashion. That is the game. I can tell you from my experience that a lot of the health care I provided wasn’t worth the money to society. Before all my patients were insured I had the opportunity of telling a patient with a lethal disease to save the money on care and spend it on enjoyment.

      Today someone else is paying the bill so that money remains in that person’s pocket, but it is illusory for that money came from somewhere or someone else’s pleasures. Insurance doesn’t increase the amount of health care dollars rather it reduces the number of dollars that are usable for health care or other things.

      The name of the game is trade-offs and until we learn that we are swimming against the tide.

    • Ron Greiner says:

      Bob, you say, “My insurance agency get money from Obamacare to help these persons.”

      I am so happy for you Bob. We have learned what America has done to people in the 3rd World and now the government has turned on the American people to give all the money to monopolies like Blue Cross and I guess – YOU.

      President Obama could have said, “If you like your insurance plan I don’t care. We are going to run all insurance companies out of business except Blue Cross and then pay Bob Hertz to enroll you at much higher prices. You still have a choice, a choice of one.”

      https://www.youtube.com/watch?v=0ziCzzkd6I0

  17. bob hertz says:

    sorry for the misspellings. ‘Steady job’and ‘gets money’

  18. Bob Hertz says:

    Ron, we received a grant for about $30K to help persons who wanted a place to go in person, because they could not deal with the ACA exchange on line.

    People who come to us get the same price and same subsidies as they would online.

    Incidentally, Blue Cross of MN has closed down about 90% of its individual plans in our state. You cannot kick them around any more.

  19. Ron Greiner says:

    Bob, you write, “Incidentally, Blue Cross of MN has closed down about 90% of its individual plans in our state. You cannot kick them around any more.”

    Blue Cross got Obamacare passed to kill the individual market so their employer plans would not have competition. Like I said it is like the Mafia and a protection racket.

    Then Blue Cross shuts down their own individual plans and rakes in the dough with their cash cow, dangerous employer-based insurance that terminates the sick workers, sweet.

    Plus, Blue Cross get the taxpayer to pay you large fees so Blue Cross doesn’t pay there either.

    Blue Cross really knows how to stick it to the taxpayers and sick workers.

    • Barry Carol says:

      People who get too sick to work or are laid off can pick up COBRA if they can afford to. That lasts for 18 months in most cases. In the meantime, with help from certain lawyers and doctors, they can apply for and often be awarded social security disability benefits. Two years after they start receiving social security disability benefits, they become eligible for Medicare even if they’re still in the early 20’s.

      There is a huge increase in the number of people receiving social security disability benefits since the financial crisis. For those who are genuinely disabled or really are too sick to work any longer, it’s a helpful long term safety net for them. If they can’t earn income anymore, they probably couldn’t afford to pay for an IM plan that they previously qualified for either.

      For those who are not really disabled but just have poor long term employment prospects because their plant or mine closed or their skills are outdated, they’re abusing the system with help from professional enablers. They’re the ones sticking it to taxpayers, not the Blues.

      • Ron Greiner says:

        Barry, you are so lost you said you have never heard of an employee losing employer-based health insurance in the last 40 years.

        That makes you one uninformed central planner.

        • Barry Carol says:

          Wong again, Ron. I said I never saw an employee lose employer coverage at any of the four employers I worked for. That includes one who had HIV/AIDS for several years before he died and one who had breast cancer for seven years before she died. I didn’t speak to what may or may not have happened at other employers.

          • Ron Greiner says:

            Barry, so you think employer-based health insurance salesmen like Bob should say – buy my insurance because if you get sick you will end up on social security disability benefits.

            See how silly you sound.

            Do you think the worker should know at enrollment what the COBRA payments are if they get sick?

            • Barry Carol says:

              If they have your IM coverage and can’t afford to pay the premium anymore because they can’t work, they can also potentially get social security disability benefits and then enroll in Medicare two years later. It’s an equal opportunity safety net.

              Do you think your IM coverage will always be there whether the insured can afford to pay the premium or not and what happens if the company goes out of business or withdraws from your customer’s state or county?

              • Ron Greiner says:

                People lose all insurance with nonpayment of premium, including Obamacare. Yet, that is your biggest argument against IM.

                Barry, you know that employer-based health insurance is cherry picking by only insuring those healthy enough to work full time.

                Barry you promised that if you like your plan you can keep your plan but we all know that you lied. Now you swear up and down we should believe you now and forget about all of your Socialist lies. I can’t because I know how you don’t care if we catch you lying.

  20. Bob Hertz says:

    If Blue Cross was conspiring with Obama on the ACA, they sure had an unprofitable way of doing it.
    Blue Cross MN lost at least $300 million on individual plans. Blue Cross of North Carolina, even more.(I do not have the figures for other states.)

    Was this all done just to protect their group business? I think not.

    • Perhaps they thought they would make money on exchanges? Or perhaps they thought they would always be able to go to Congress for more, and were blindsided when Congress turned off the tap?

  21. Ron Greiner says:

    Well Bob, Blue Cross isn’t worried about their slaves on employer-based insurance leaving to the individual market any more. Employer-based insurance is billions and they could care less about the Individual Market that they destroyed.

    They were non-profit too. The taxpayers made a big mistake giving them special treatment for all of these years.

    Age based tax credits will put Blue Cross under and they will never be able to compete.

  22. Barry Carol says:

    The long term secular trend in the employer provided health insurance market is toward self-funding which has been going on for many years. The reason is that self-funding is 6%-10% cheaper on average for the employer than full risk coverage. Employer costs for an administrative services only (ASO) contract while I was still working ranged from about $20-$50 per member per month (PMPM) depending on the set of services chosen. The pretax profit margin on that business was 15%-20% of revenue. If you ask them, insurers will tell you that the absolute dollar profit opportunity from full risk coverage is about five times higher than it is for ASO coverage. That’s why Medicare Advantage is considered such a good business even though the pretax profit margin is only 5%.

    Cherry picking healthy people to insure was a highly profitable business for companies like Golden Rule. Administrative costs, including broker commissions, were high as a percentage of revenue and medical claims were low. Of course, there were lots of people who couldn’t qualify for such coverage because they were unhealthy or already sick. The great free marketplace had nothing to offer them and it still doesn’t at least without a lot of financial help from taxpayer funded subsidies.

    • Thank you. What do you think of jumbo employers moving beyond ASO contracts and cutting out insurers entirely. We’ve written about some examples of that (Wal-Mart, BOeing)? Is it a trend or idiosyncratic?

      • Barry Carol says:

        John — I don’t know much about that. I know that Boeing, Wal-Mart, Lowe’s, etc. have contracted with hospitals like the Cleveland Clinic for heart surgery. For employees, they get a high quality Center of Excellence to provide their care. Employers presumably get a competitive price because the hospital has excess capacity and has an interest in capturing patients that it wouldn’t otherwise get. The hospital then provides one of its most lucrative services (heart surgery) and after recovery, sends the patient home for follow-up care with his local doctor(s) as needed.

        I’m skeptical about how well the direct contracting model would work if employers tried to apply it to the entire spectrum of healthcare services, tests and procedures. Historically, one of the main reasons powerful hospitals and physician groups were able to extract ever higher prices from commercial insurers was because employers and their employees weren’t willing to back the insurer up in aggressively pushing back against the providers. They wanted those providers in their network and that was that. The idea was to ensure that employees were happy, at least with respect to health insurance benefits.

  23. Ron Greiner says:

    Barry, you and your Cherry picking, ha ha. Life insurance is cherry picking. Auto insurance is cherry picking. All insurance is cherry picking, you’re a hoot.

    YOU are the liar along with Obama. Your projections about Obamacare were just a bunch of lies.

    Now we are suppose to still believe you?

    • Barry Carol says:

      I try to maintain a basic level of civility when engaging with other people whether I agree with them or not. Your ad hominem attacks are inappropriate and uncalled for.

      As for other insurance markets, they function much better than the health insurance market does because the most expensive 1% of claims don’t account for 20% of claims costs and the most expensive 5% of claims don’t account for 50% of claims costs in any given year.

      Moreover, people can get by without life insurance and, in many cases, auto insurance as well. It’s a lot harder and more dangerous to not have health insurance. Even you agreed in the past that people shouldn’t gamble and go without it.

      • Ron Greiner says:

        Barry, you say health insurance is important yet you support Obamacare killing the Individual Market.

        Why do I have to be civil to a Socialist like you who doesn’t care about freedom?

  24. Allan says:

    “As for other insurance markets, they function much better than the health insurance market does because the most expensive 1% of claims don’t account for 20% of claims costs and the most expensive 5% of claims don’t account for 50% of claims costs in any given year.”

    I don’t know that this is true. The most expensive life insurance policies might be a large part of the payout costs for some insurance companies as well. The reason health insurance doesn’t function as well is that risk assessments and other important financial itens are dictated by socialists rather than by what the market calls for. For instance you call for mandates, restriction on what can be charged for risk, etc.

    Additionally the amounts paid out by insurers for a considerable portion of the costs goes to different people every year.

    • The reason other insurance markets are not as skewed as health insurance is they only cover catastrophic expenses. If auto insurance paid to rotate your tires and change your oil, the skewness would be similar.

      • Allan says:

        Better said and riight though the reason auto insurnace doesn’t pay to rotate tires is because auto insurance is bought by the individual who isn’t stupid enough to insure for such things.

        • Lee Benham says:

          Yes insurance does not pay for preventative maintenance . That’s not what insurance is for. The cost of an unseen illness or injury ..

        • John Fembup says:

          Allan would you agree that most individuals who buy insurance don’t really think of insurance as “insurance”? And therefore don’t really understand what they are buying?

          I ask because I think most individuals simply regard insurance as a way to get money back for certain expenses of living. In other words, it’s insulation. And just as with autos, insulation from routine expenses is a lot more expensive than true insurance.

          I suspect that failure to understand what is being purchased explains many things. For starters, I think it explains why people expect rich benefits and low premiums; because that’s the whole point of insurance – right? And I think it explains why so many individuals feel cheated when their insurance reimbursements are less than their premiums. Reimbursements are supposed to be higher than premiums or what’s the point of insurance – right?

          You can sometimes, but not often enough, enlighten such individuals by asking them this question: “if insurance is such a ripoff, why do you even want it?”

          • Allan says:

            I agree. We need to start teaching logic and statistics in public school and problems involving insurance should be used as a model.

  25. Bob Hertz says:

    Not a major issue, but the service warranties available on new cars (and a few used cars) have a lot of insurance elements in them.

    A bumper to bumper warranty is kind of an HMO, requiring little or no cash outlay for regular maintenance.

    Some people like prepaid stuff. I do myself. And prepaid services are not always more expensive.

  26. Barry Carol says:

    Buying an extended car warranty to cover years 3-6 of ownership is an exchange of a known and budgeted for cost (the warranty premium) in exchange for insulation from unknown and unpredictable costs (needed repairs, if any) over the warranty period that are covered by the warranty. Even if more often than not, the warranty premium exceeds the cost of covered repairs, many buyers feel better because they wanted the insulation from unpredictable costs and were willing to pay a known up front premium to get it. It may not be the wisest use of money from an actuarial standpoint but it’s a reasonable and rational choice especially for people who may not have a lot of money in savings to handle these unpredictable costs as they occur without putting them on a credit card.

  27. Big Truck Joe says:

    Am I wrong or did Obamacare collapse (or will soon collapses) because the republicans shut down the open checkbook for insurance companies to fund the risk corridors? The initial intent of Obamacare was that, if there weren’t enough clients or those clients were too sickly/costly, the US taxpayer and or more profitable insurance companies would come to the poor performing insurance companies and rescue them. So it was a win/win for insurances until the blank check was removed. It’s like having a rich uncle who decides to stop funding your failing restaurant – you eventually close up.

    • I think that is largely it. The insurers’ executives cannot really have expected to make money in exchanges under the Affordable Care Act as written. I doubt these losses are a surprise to them.

      The business plan must have been to get the nation hooked on Obamacare, and then keep going to Congress for more money. Because Congress is not disposed to do that, the business plan is obsolete.

  28. Bob Hertz says:

    I think that the last two comments by Joe and John might be missing a little perspective, namely this:

    When Medicare Advantage and Part D ran into insurance company problems in their early years, the feds were pretty much there with money and protective laws….

    http://chirblog.org/stabilizing-the-affordable-care-act-marketplaces-lessons-from-medicare/

    But when the ACA hits trouble, the Republicans in Congress pretty much kicks the ACA when it is down.

    • John Fembup says:

      Medicare Advantage and Medicare Part D were passed with support from Democrats and from Republicans. Both parties therefore had reason to support it after it was enacted.

      Not true for Obamacare.

      Obamacare received not one single Republican vote in the House, and not one single Republican vote in the Senate. That Rube Goldberg contraption, and its failure, belong solely to one party.

    • Medicare Advantage and Part D benefit seniors. Politicians will always transfer income to seniors, with the health system getting its cut.

  29. bob hertz says:

    John you are correct Republicans were determined that the ACA not succeed, so that Democrats would not get a deeper foothold into the middle class (see Bill Kristol for explicit comments on this.)

    Still I find it rather sad that it would not take an act of God to save the ACA. See the following comments from the always-interesting Charles Gaba…

    ” Fixes are (relatively) easy when no one hates a program. A functional equivalent of raising MA payments to insurers in the ACA marketplace would be to improve the premium and cost-sharing subsidies, which many prospective buyers find too skimpy to render coverage attractive — particularly those with incomes above 200% of the Federal Poverty Level (FPL), the current cutoff for strong Cost Sharing Reduction (CSR) subsidies. At present, most subsidized buyers with incomes over 200% FPL can’t afford a plan with an actuarial value higher than 73%, or over 70% for those with incomes above 250% FPL. The latter generally AV translates to deductibles in the $3000-5000 range. To take an example from the Chicago marketplace: If you’re a single mother earning $32,000, you just may be willing to pay $175 for a benchmark silver plan for yourself (with your child placed in CHIP) — but a deductible of $3,500 or $4,500 may make that plan seem close to useless. Boosting the subsidies is one of Corlette and Hoadley’s “lessons.”

    Subsidies were sweeter in the version of the ACA passed by the House in November 2009, which could not be properly reconciled with the Senate bill after Democrats lost their filibuster-proof majority in January 2010. In the House bill, the benchmark plan for those with incomes in the 200-250% FPL range would have been 85%, vs. 73% in the enacted ACA, and 78% for those in the 250-300% FPL band, vs. 70% in the ACA. Premium subsidies in the House bill were higher for those under 200% FPL, though not for those much above that threshold (and in fact somewhat lower for those over 300% FPL). For those not eligible for cost sharing reduction subsidies, three levels of coverage were available, at actuarial values of 70%, 85% and 95%.There was no AV 60% tier equivalent to ACA bronze, which carry prohibitively high deductibles and copayments for low income buyers.

    Improving ACA subsidies would cost money, of course. A Dec.2009 Urban Institute-RWJF analysis estimated that House-level subsidies would cost about 16% more than those included in the bill introduced by Senate leadership in November 2009, which had a subsidy schedule close to that enacted by in the ACA, though with somewhat weaker CSR. But part of the cost would be offset by improving the risk pool, helping to prevent steep premium hikes.

    Other than being funded adequately, there’s a more fundamental way the ACA marketplace could be made more like Medicare Advantage: the federal government could be the ultimate payer. In MA, the government sets a benchmark capitated rate for each region, calculated so that insurers can be profitable paying something close to traditional Medicare rates to providers. MA is therefore really neither a “public option” nor a private one; it’s a menu of public-private options. The great advantage is that provider payment rates are controlled, at one remove, by the government. The same is true — at lower payment levels — for managed Medicaid plans, and for the Basic Health Plans run under the ACA by New York and Minnesota. I’ve argued before (once, twice) that the ACA marketplace should be structured this way.

    In addition to proposing subsidy sweeteners, Corlette and Hoadley suggest other incremental reforms, such as easing network adequacy requirements for new entries in a a market, or to create a “fallback plan” for markets left with no regular market entrants, or rendering the reinsurance program permanent.”

    I still maintain that Republicans are going to make some individual lives harder in pursuit of their narrow goals. Whether they are preserving the honor of the nation, well I doubt i.

    • John Fembup says:

      “John you are correct Republicans were determined that the ACA not succeed,”

      More precisely, Republicans were determined Obamacare not pass in the first place. Failing that they are now indifferent to calls for help to save it. Obama proceeded without persuading any Republican to support his plan. That was a political error. But forget the politics, i think Obamacare could not succeed anyway.

      “it would not take an act of God to save the ACA”

      I suspect God is not going to step in to save it, don’t you? Obamacare was fatally flawed on March 23, 2010. The fatal flaw was, and is, that Obamacare is not a solution to the problem.

      The problem is that so many people cannot access medical care. The reason is that medical care is unaffordable for them. Our leaders for years told us the problem was the “uninsured”. That was a misdiagnosis of the problem which led people to believe that “insurance” was the solution. It’s not.

      Obamacare is an insurance scheme that does nothing to restrain medical costs and worse, by subsidizing those costs thru insurance, it promotes their continued growth. Economics Law of Demand. Obamacare is simply not a solution to the problem. That’s a fatal flaw.

      “Fixes are (relatively) easy when no one hates a program”

      Maybe sometimes, but I think Obamacare was doomed to fail regardless whether anyone hates it or not, whether it has enemies or not, whether it has opponents or not, whether the Exchanges go broke or not, or whether it’s tinkered with or not. I think Obamacare would have failed even if Republicans had originally voted for it. And it will fail even if your source’s suggestions are followed.

      A reasonable tactic in 2009 would have been to expand Medicaid as temporary relief for the uninsured – pending the development of a strategy to restrain medical care costs and to educate the public to th need to do that. It would have been reasonable because, in 2009, most of the uninsured were poor. Some of those poor qualified for Medicaid but for whatever reason did not enroll; others were not poor enough to qualify.

      But that’s the road not taken. Meanwhile, we have squandered seven more years, the medical cost problem has grown worse, and still we have no reliable leadership in health policy.

  30. bob hertz says:

    Thanks John, I have had similar thoughts myself, i.e.:

    “Why is Washington so focused on the price of insurance, when we ought to ask why we need so much insurance in the first place?”

    Dr David Belk in his blog True Cost of Care once outlined how little money is really required for many kinds of chronic care, so long as one sticks to generic drugs and modestly priced diagnostic tests. His number was about $500 a year for a large majority of citizens.

    In Belk’s view, we should not expect to eliminate expensive care for accident victims, stroke victims, cancer victims, etc. That kind of care will always require some form of insurance, shared savings, and/or government funded institutions.

    But in his view, the average person should not need health insurance to get through an uneventful year.

    But we then confront shall we say a political challenge.
    Will an American president and a political party come out with a health care platform that calls for price controls on drug companies and price controls on hospital outpatient departments? I mean, if caring for a child with diabetes now costs $6,000 a year and requires insurance, that is thanks to drug companies. And there are many other examples.

    As you have noted about the ACA, it is easier to spend federal money on health insurance, which garners grateful voter-recipients and does not alienate the executives of drug companies and hospitals. In fact Obama had ludicrous ‘summit meetings’ with these executives to ‘sell’ the ACA.

    There does not seem to be much political payoff for someone who would go to Washington and single-mindedly attack the price gougers in health care. A Ralph Nader goes in that direction, but I do not see his name on any legislation.

    Is there another way to challenge high cost medicine besides
    regulation? I am open to listening, I do not have all the answers.

    • John Fembup says:

      “Will an American president and a political party come out with a health care platform that calls for price controls”

      You concede prices are not the fundamental problem; then scamper right back intto pricing.

    • Allan says:

      “Is there another way to challenge high cost medicine besides regulation?”

      If more and more regulation increases the cost of healthcare then moving towards a free market likely would reduce the cost. Doesn’t that make sense?

    • Yes: Reduce regulation and the role of health insurance. Medical markets in which patients pay directly, without government or insurer interference, work well.

  31. Bob Hertz says:

    How can patients pay directly for lengthy hospital stays, helicopter rescues and sewing limbs back on,
    septic shock treatment, et al?

    There are not too many $100,000 HSA’s around.
    I realize that drastic hail-mary treatments are not all of medicine, by any means, but there has to be some role for insurance and spreading the costs.

    • John Fembup says:

      Bob, please: John did not say eliminate – he said reduce.

      Auto insurance manages to cover catastrophic accidents and still remain affordable for most owners.

      But imagine the cost of auto insurance if it were required to cover routine maintenance, oil changes, car wash, gasoline, tolls, new tires, etc. Yet insurance is not needed for these expenses because owners pay them directly without government or insurer interference.

  32. bob hertz says:

    that is a fair point, but auto insurers can “total out” a car that costs more to repair the policy limit.

    Blue Cross of Iowa recently announced that part of their rate increase was due to one person (!) on claim for $1 million a month for drugs that covered a genetic disorder.

    I still maintain that drug price controls will be needed to drive insurance premiums down. Tnat is what happens every single day in Germany, Switzerland, France, Sweden, Japan, and other nations.

    • John Fembuo says:

      It’s been my understanding that drug price controls have worked in other countries for two main reasons: (1) growing availability of generics and (2) US pharmas can recover the bulk of their brand development costs here, meaning they can use a lower cost basis in other countries and sell their brand drugs at a profit, even with other countries’ price controls.

      If or when the federales implement the drug price controls you want, revenues here, especially brand revenues, will begin to dry up. Then we’ll see if that affects drug prices and drug availability in other countries. We’ll also see if that affects brand development in the US. Keep in mind that without new brands, there won’t be new generics.

      • I would agree with the second but not the first. Certainly until quite recently, the U.S. had the most competitive generic market.

        • John Fembup says:

          I’m afraid you lost me. Ii was speaking of the impact of generics on price controls in other countries.

          • Now I am afraid you have lost me. When a generic enters, the brand-name competitor often (usually) raises the price of the off-patent branded drug because only a small segment of the market will continue to prefer the brand and they are price insensitive.

            Or are you speaking of countries where they don’t respect patents and impose compulsory licenses? In that case you don’t need price controls.

  33. John Fembup says:

    “Blue Cross of Iowa recently announced that part of their rate increase was due to one person (!) on claim for $1 million a month for drugs that covered a genetic disorder.”

    I would say the number of persons is not relevant. A $12 million annual hit to costs is. And who else will bear such costs, if not other Blue Cross members?

    This also brings up the uncomfortable question Barry and others sometimes raise: what to do about end of life care? And as the Iowa Blue Cross claim illustrates, some individuals face “end of life” at a heartbreaking early age.

    Yes, an automobile can be totaled. But a human being?

    Here is an opinion to ponder. It was expressed by an internationally-prominent, early advocate of a British national medical care system . . . more than a hundred years ago:

    “In legislation and social organization, proceed on the principle that invalids, meaning persons who cannot keep themselves alive by their own activities, cannot, beyond reason, expect to be kept alive by the activity of others . . . The theory that every individual alive is of infinite value is legislatively impracticable”.

    This opinion speaks directly to costly end of life care, and is relevant to the Iowa Blue Cross claim. No one wants to talk about such things,but technology and high cost is forcing the policy issue. What to do?

  34. bob hertz says:

    The ACA made a very timid, tentative step toward limits on end of life care.

    The ACA said that doctors would be paid for end of life counseling.

    Yet this timid step was siezed on by opportunists like Betsy McGaughey and Sarah Palin as an invasion of ‘death panels.’

    Americans in general are so used to infinite sums spent on one life that they think that anything less is cruel and unusual.

    We have a ways to go!

    • I think government paying for it brings about a conflict of interest. The concept is very good, I think.

    • Allan says:

      Bob, Medicare always paid for end of life counseling without a specific code. They paid by time or an increase in the level of the visit.

      Does a healthy 65-year-old need end of life counseling?

      Do you believe doctors didn’t provide end of life counseling before government made them aware of this medical advancement?

      Maybe Obama’s statement that someone’s elderly mother might have to learn to live without (?) a pacemaker has to do with the firestorm that followed.

      Few recognize that decades ago HCFA wanted the VN’s to document an evaluation that could be added up numerically having to do with end of life concerns. The disabled community started off with a low number and made a very appropriate big stink and the study quietly seemed to die.

  35. Bob Hertz says:

    Good point, Allan.
    Part B of Medicare is sometimes the nanny state at its worst. Endless regulation and mind-numbing supervision of doctors who, as you say, have been mainly doing the right thing for 100 years.

    I would prefer that Medicare give each senior an annual voucher for $1500 to use for office visits and medical tests. Then the enormous Part B fee schedule could be put into the trash barrel.

    • Allan says:

      Thanks, Bob. Years ago among other ideas I was favoring a policy where there would be no gap insurance and Medicare would take on the catastrophic portion offered by gap insurance. That would have made everyone a little more cost conscious. I also favored higher deductibles than existed at the time and an end to balance billing. I would have loved to get rid of the fee schedule. I also wanted Medicare to eventually be able to integrate into private insurance.

      I never understood why Medicare made insurance king. I always thought that if a doctor accepted Medicare he was guaranteed payment so he should pay a sum for that certainty.

      • “I never understood why Medicare made insurance king.” I think the answer is in your paragraph: The providers wanted the government’s credit risk, not that of individual patients.

        Our health system would have been very different if Medicare had paid out money to seniors, like Social Security does, to spend directly on health care.

        • Allan says:

          John, I never liked the idea of being paid by anyone other than the patient. In my area, I was one of the last to accept Medicare payments. Once I did I no longer concerned myself with what was spent on entities where I had no personal gain. It is much easier to order a test than explain why it is not needed and incur the wrath of a patient. It was much easier when they had more to pay for that alone made people willing to listen to reason.