Category: Health Insurance

The “Burden” of High Deductibles

The folks at Harvard really, really hate cost sharing (i.e., deductibles, coinsurance and co-pays) in health care. They are much less concerned about high premiums or taxes. At least that is the conclusion one might draw from a new article in Health Affairs.

The authors examined the fate of 393 families enrolled in high-deductible plans through Massachusetts’ Commonwealth Connector. The families were well off enough to be unsubsidized and enrolled in a Harvard Pilgrim health plan. These were compared to similar families in plans with no deductible. They were looking for –

…respondents’ reports of any financial burden, higher-than-expected out-of-pocket costs, or discussions of costs with doctors. To measure financial burden, we asked enrollees whether, in the prior twelve months in the Connector plan, they or a family member had had problems paying or had been unable to pay medical bills; had had to set up a payment plan with a hospital or doctor’s office; or had had trouble paying for other basic needs such as food, heat, and rent because of medical costs. An affirmative answer to any of these three questions was considered an indication of financial burden.

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May 16, 2013 | 21 comments | by

One State That Won’t Be a Train Wreck

Maryland is an example of what an on-track and well organized effort looks like for any exchange hoping to be ready to enroll people on October 1–– and ensure that they will be covered should they walk into a doctor’s office on January 1, 2014…

Maryland is simply ticking through all of the key milestones they must meet…[And] unlike the federal exchange, Maryland will have the SHOP option…

Now, here it is April 30th and what have we heard from the feds on their progress on each of the critical milestones toward being ready with the federal exchange in the 33 states not building their own?

The comparison between the transparent and organized way Maryland is handling this and the Obama administration’s so far top secret approach is striking.

Robert Laszewski at The Health Care Blog.

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May 03, 2013 | 12 comments | by

Schadenfreude and a Response to Aaron Carroll

Congressional leaders in both parties are engaged in high-level, confidential talks about exempting lawmakers and Capitol Hill aides from the insurance exchanges they are mandated to join as part of President Barack Obama’s health care overhaul, sources in both parties said.

The talks — which involve Senate Majority Leader Harry Reid (D-Nev.), House Speaker John Boehner (R-Ohio), the Obama administration and other top lawmakers — are extraordinarily sensitive, with both sides acutely aware of the potential for political fallout from giving carve-outs from the hugely controversial law to 535 lawmakers and thousands of their aides. Discussions have stretched out for months, sources said. (Politico)

Here’s the problem: lawmakers and their staffs will no longer be eligible for federal employees insurance (which is 75% subsidized by the federal government). They will have to go to the exchange instead. But the only subsidies in the exchange are for people below 400% of poverty. For family coverage, this implies a loss of about $12,000 in tax free benefits for the others.

Under the heading “Does Congress Understand How ObamaCare Works?” Aaron Carroll had this to say:

There’s nothing in the law that prevents Congress from paying for the insurance, and they will. Congress covers most of the cost of insurance now, just like tons of employers, and they will continue to do so in the future. This is only a change in purchasing venue for the plans. I don’t know whether the legislators interviewed for this story don’t understand the law, or are purposely making up facts about it for political gain. I also don’t know which of those two options is worse.

Oops, sorry Aaron. You are the one who is misinformed here. HHS has made it abundantly clear that employers may not use pre-tax dollars to pay premiums for their employees in the health insurance exchange. They may give employees after-tax dollars (say, by increasing their wages by the amount of the current health insurance benefit they must give up), but that would decrease its value to the employee by 30% to 50%, depending on the employee’s tax bracket.

Even worse, I suspect, is the kind of insurance the employees will have. If the Massachusetts reform is precedent, insurance sold in the exchange will pay doctors only slightly more than Medicaid. Think of those plans as Medicaid Plus.

And that seems fitting. Shouldn’t the members of Congress who have been telling us how wonderful Medicaid is experience it first hand?

…Hmmm…I wonder if there is any way we could enroll Paul Krugman?

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Apr 30, 2013 | 12 comments | by

I Don’t Understand This

Traditionally, insurers are liable for processing a claim regardless of whether a consumer has paid his or her premiums. However, the ACA allows insurance plans offered through the exchanges to delay paying the claims of consumers who have failed to pay their premiums for two months and to deny all claims for beneficiaries who have not paid for three months. As a result, physicians who want reimbursement from such consumers will have to recoup their expenses directly from the patient…the claims of beneficiaries who have not paid their premiums might create a “dramatic financial challeng[e]” for physicians and potentially exacerbate a physician shortage, MedPage Today reports.

If every vendor in the world (from gas stations to taxicab drivers) can verify a credit card in a matter of seconds, why can’t doctors verify whether an insurance card is valid?

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Apr 19, 2013 | 10 comments | by

What Happens When Demand Exceeds Supply?

In a major break with the past, 3 million to 5 million people with drug and alcohol problems — from homeless drug addicts to working moms who drink too much — suddenly will become eligible for insurance coverage under the new health care overhaul…

The new demand could swamp the system before even half of the newly insured show up at the door, causing waiting lists of months or longer, treatment agencies say…

In Minnesota, which has one of the higher substance abuse rates in the nation — 11.6 percent of the population — there are slightly more than 3,900 inpatient beds for the 491,000 people who need treatment, according to federal data. Occupancy is over 100 percent.

Source: The Associated Press.

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Apr 19, 2013 | 14 comments | by

Why the New MLR Rule Will Cause Higher Insurance Premiums

The [minimum Medical Loss Ratio (MLR)] rule will make it necessary for state regulators to require higher premiums. Why? Before the MLR rule came into effect, insurers could use reserves built up in low-claim years to pay claims in high-claim years, thus reducing premiums (averaged over multiple years) from what they would have been otherwise. Now, with the MLR rule in effect, in low-claim years insurers will have to pay higher rebates rather than accumulate more reserves. This means that premiums will, on average, have to be higher than they would have been otherwise — because insurers will have to pay more claims in high-claim years, without being able to accumulate as much reserve funding in low-claim years. Now, when a specific insurer has a low-claim year, they will end up paying rebates — including federal subsidy dollars — to their customers.

More from Robert Book.

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Apr 18, 2013 | 14 comments | by

Mankiw Explains Insurance to Sebelius

From the Associated Press:

At a White House briefing Tuesday, Health and Human Services Secretary Kathleen Sebelius said some of what passes for health insurance today is so skimpy it can’t be compared to the comprehensive coverage available under the law. “Some of these folks have very high catastrophic plans that don’t pay for anything unless you get hit by a bus,” she said. “They’re really mortgage protection, not health insurance.”

Greg Mankiw responds:

I have the same problem with my other insurance policies. My homeowner insurance doesn’t cover the cost when my gutters need cleaning, and my car insurance doesn’t cover the cost when I need to fill the tank with gas. Instead, the policies cover only catastrophic events, like my house burning down or a major accident. Now that the Obama administration has fixed the health insurance system, I trust they will soon move on to solve these other problems.

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Apr 10, 2013 | 22 comments | by

Austin Frakt and I Agree on Something

Across-the-board deductibles don’t make a lot of sense. In Priceless, I argued that whole categories of care should be transferred to the patient in some cases and there should be first-dollar coverage for other kinds of services. Austin Frakt seems to agree, reproducing this graph from the book, and remarking:

LASIK is an elective procedure, the purpose of which is well understood by the patient. I’m on board with the idea that insurance shouldn’t cover such things, or if it does, not the full cost and certainly not the marginal cost. All health procedures just like this are good candidates for the purview of John Goodman’s “New HSA.”

New HSA

The issue is not whether the procedure is like LASIK surgery, however. The issue is whether choices by the individual will create costs for other members of the insurance pool. Where there are no “financial externalities,” the case for individual decision-making is strong.

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Apr 02, 2013 | 11 comments | by

What If They Gave an Exchange and Nobody Came?

With almost one in five of its residents lacking health insurance, officials in Palm Beach County thought they had hit on a smart solution. The county launched a program that offered subsidized coverage to residents who couldn’t afford private insurance, but made too much to qualify for Medicaid, the state-federal program for the poor. Enrollees would be able to buy policies for about $52 a month — far cheaper than what private insurers were offering. But a year after the program began, fewer than 500 people had signed up — less than a third of the number expected.

More examples from Kaiser Health News.

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Apr 02, 2013 | 12 comments | by

Massachusetts Update

The untold story of the Massachusetts reform is that the small business community has been paying more for health insurance since the commonwealth’s 2006 reform merged sicker individuals into the same risk pool. The legislature has only made matters worse by passing 12 additional mandated benefits since 2006, a cost borne completely by small companies and individuals.

Now the future looks even bleaker for small business. Not only will their highest-in-the-nation premiums go up because of these new [ACA] regulations, but they will be paying on average $8,000 per family, per plan more in taxes over the next ten years.

More from Josh Archambault.

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Apr 01, 2013 | 11 comments | by
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