Tag: "consumer driven health care"

Is Obamacare’s Failure Intentional, to Promote Medicaid-for-All?

A recent commentary in the Wall Street Journal announced, “Obamacare’s meltdown has arrived.” Health insurance premiums all over the country have skyrocketed. Numerous insurers have pulled out of state and federal exchange marketplaces. Many consumers have only one choice of health insurer and can choose from only a couple different plans. State health insurance CO-OPs have been falling like dominos and the program is now all but defunct.

None of this should have come as a surprise. Over the years I’ve heard conspiracy theories that Obamacare was designed to fail to nudge a reluctant nation one step closer to a single-payer system of socialized medicine. Think of this as Medicaid-for-All.

Consumer-Driven Health Plans Reduce Health Spending One Eighth

credit-card-2The Health Care Cost Institute has released its analysis of claims data for the years 2010 through 2014, examining consumer-driven health plans (CDHPs, which HCCI defines as High-Deductible Health Plans coupled with Health Savings Accounts or Health Reimbursement Arrangements). HCCI examines a database of claims submitted by Aetna, Humana, Kaiser Permanente, and UnitedHealthcare for their employer-sponsored group plans.

CDHPs shift payment from third-party bureaucracies (that is, insurers) back to patients directly. The results continue to impress:

Is Pet Health As Dysfunctional as Human Health Care?

clemvet1Health policy analysts have long blamed the inefficiencies that befall the U.S. health care system to our over-reliance on third party payment. About 89 percent of all medical care is paid for by third parties — either employer-sponsored health plans, Medicare, Medicaid or individual medical insurance. Indeed, about 90 percent of the U.S. population have some type of health coverage. Thus, one could make a valid argument that medical markets devoid of insurance should function more like normal consumer markets. For instance, there is significant evidence that cosmetic medicine and corrective eye surgery both experience lower price inflation than medical care. These services are rarely covered by insurance. Another notable medical market that does not rely on insurance is veterinary medicine.

Premiums For Employer-Based Family Health Insurance Up One Fifth Since Obamacare

The Kaiser Family Foundation/Health Research Educational Trust has released its 2016 Employer Health Benefits Survey. The survey covers almost 1,900 private and public (non-federal) employers. The results show Obamacare has not reduced premiums, which have increased by one fifth for family plans since 2011.

The good news is the proportion of beneficiaries with “High-Deductible Health Plans with a Savings Option” (HDHP/SOs) has increased from 20 percent to 29 percent in two years. Only four percent of covered worker were in such plans in 2006, and 17 percent in 2011. (In 2015, a HDHP had to have a minimum deductible of $1,300 for single coverage and $2,600 for family. The “Savings Option” would be a Health Savings Account or Health Reimbursement Arrangement.)

These plans were first available in 2005, and correspond with an immediate slowdown in the rate of growth of employer-based benefits. In real terms (adjusted for changes in the Consumer Price Index), dropped from double digits in the early 2000s to single digits after 2005 and bottoming out at an increase in premium of just two percent in 2009. There was an immediate jump of 11 percent in 2011, Obamacare’s first year. Since then, both High Deductible Health Plans and the burden of Obamacare have continued to grow. This struggle has resulted in mid-single digit premium growth.

See Figure I below the fold:

Consumer Driven Health Care Gets Messy: That’s the Good News

According to a new health benefits survey by the Kaiser Family Foundation, premiums for employer coverage rose only about 3% in 2016. The low increase was due to rising deductibles. A slight majority (51%) of workers have a deductible of $1,000 or more. Two-thirds of workers in small firms do, while slightly less than half of large firm workers (45%) are covered by $1,000 or higher deductible.  About 10 years ago, only 4% of workers were enrolled in a high-deductible plan with a savings component. Now, nearly one-third are. [See the figure.]

The “Right to Shop” For Health Care

credit-card-2Anyone who has undergone a medical procedure knows it is very difficult to figure out how much an insured patient will pay out-of-pocket. It is often not clarified for months after the procedure, after a flurry of incomprehensible paperwork from insurers, doctors, labs, et cetera, has landed in the patient’s mailbox.

(Personal aside: A couple of years ago, my health insurer encouraged me to go paperless, and I signed up for electronic messages about claims. It was so confusing, I went back to paper after a few months. At least you can scrunch up a letter and throw it across the room with an anguished scream, which you don’t want to do with your computer.)

This problem has led to a bunch of state laws attempting to impose “price transparency” on medical providers. As discussed previously, they do not work, because relationships between insurers and providers inhibit transparency. Medical providers “customers” are insurers, which pay most of their claims, not patients. Further, the real problem with medical prices is not that they are opaque, but that they are not formed in a normal market process. Instead, they are negotiated by third-party bureaucracies.

A Bipartisan “Yes” On A Health Care Tax Credit

health-insurance(A version of this Health Alert was published by RealClearHealth.)

Ready for some good news on health reform? Both the presumptive Democratic candidate for President and the Republican majority in the U.S. House of Representatives agree people should be able to spend more money directly on medical care without insurance companies meddling.

Both sides would be shocked to have their respective health reforms described as sharing any common ground. However, identifying this common ground might be necessary if either side wants to fix the worst aspects of Obamacare.

If Republican politicians in Congress want to give people any relief from the burden of Obamacare, they need to be prepared for the possibility they will have to deal with Hillary Clinton’s White House next year.

Speaker Ryan’s recently released Better Way health reform plan would offer a refundable tax credit for health care, to anyone who does not have employer-based health benefits. This tax credit would increase with age, but be available regardless of income. It would be a fixed-dollar amount for each age bracket. This is superior to Obamacare for at least two reasons.

More Evidence Against Health Insurance

doctor-mom-and-sonDavid Lazarus of the Los Angeles Times, whose columns on health policy tilt heavily towards single-payer advocacy, has done a great service to the cause of consumer-driven health care, describing how much more sense it makes to pay cash prices for health services than pay what your health insurer “negotiates.”

Five blood tests were performed in March at Torrance Memorial Medical Center. The hospital charged the patient’s insurer, Blue Shield of California, $408. The patient was responsible for paying $269.42.

Tests that were billed to Blue Shield at a rate of about $80 each carried a cash price of closer to $15 apiece.

This is one of the dirty little secrets of healthcare,” said Gerald Kominski, director of the UCLA Center for Health Policy Research. “If your insurance has a high deductible, you should always ask the cash price.”

Not all medical facilities will be open to sharing their cash prices with an insured person, Kominski said, but many will.

Will You Ever Understand Your Medical Bill?

stress(A version of this Health Alert was published by Forbes.)

It is hard to exaggerate how painful the medical billing process is for patients. Steven Brill, an entrepreneurial lawyer turned journalist, became one of the most famous critics of American health care when Time magazine published a long article by him in 2013. It was a wide ranging criticism of pretty much everything in U.S. health care, which grabs and keeps our attention because it uses the absurd hospital bill as the fulcrum for his case:

The first of the 344 lines printed out across eight pages of his hospital bill — filled with indecipherable numerical codes and acronyms — seemed innocuous. But it set the tone for all that followed. It read, “1 ACETAMINOPHE TABS 325 MG.” The charge was only $1.50, but it was for a generic version of a Tylenol pill. You can buy 100 of them on Amazon for $1.49 even without a hospital’s purchasing power. Dozens of midpriced items were embedded with similarly aggressive markups, like $283.00 for a “CHEST, PA AND LAT 71020.” That’s a simple chest X-ray, for which MD Anderson is routinely paid $20.44 when it treats a patient on Medicare, the government health care program for the elderly.

(Steve Brill, “Bitter Pill: Why Medical Bills Are Killing Us,” Time, February 20, 2013)

It is hard not to get carried away on a wave of outrage when reading stories of patients faced with ridiculous bills, which (even if they can understand them) they might never be prepared to pay. A new crop of entrepreneurs is hoping to solve this problem.

Wrong Way for Consumer-Driven Health Care?

Peterson KaiserGary Claxton and colleagues, of the Kaiser Family Foundation, have written a concise analysis of the evolution in health payments from 2004 through 2015:

From 2004 to 2014, the average payments by enrollees towards deductibles rose 256% from $99 to $353, and the average payments towards coinsurance rose 107%, from $117 to $242, while average payments for copays fell by 26%, from $206 to $152.  Overall, patient cost-sharing rose by 77%, from an average of $422 in 2004 to $747 in 2014. During that period, average payments by health plans rose 58%, from $2,748 to $4,354. This reflects a modest decline in the average generosity of insurance – large employer plans covered 86.7% of covered medical expenses on average in 2004, decreasing to 85.3% in 2014. Worker’s wages, meanwhile, rose by 32% from 2004 to 2014.

I would quibble with Claxton, et al’s use of the noun “generosity” to describe the share of health costs paid by insurers. Insurers pass costs through: Claims they pay are covered by premiums, which are charged to either beneficiaries or employers. If the latter, beneficiaries pay through lost wages. Plus, because claims processed and paid by insurers add administrative costs (“load”) to the costs of actual medical care, total health costs are higher. Quibbling aside, the analysis gives great insight into how the way we pay for health care has changed.