Archive for the ‘health insurance companies’ category

Healthcare Math

June 22, 2017

News reports quoting prominent Republicans say Republicans are worried, because the healthcare industry makes up about 1/3 of the entire US economy. Rash cuts might kill the golden “jobs creation” goose. Hmmm.

This is a mind boggling statement for Republicans to admit. The GOP ran in the last election on repeal and replace and previously during the Obama Administration tried to hinder the Affordable Care Act when ever and where ever they could. Now suddenly Republicans are waking up to the broader role healthcare plays?

Now for the math. Total healthcare spending in 2016 came in around $3.2 “trillion”. The US population was about 320 million. That means that on average, each American consumed about $10,000 of healthcare (per capita). In actuality, some Americans consumed little or none and others consumed a lot more.

So, a family of five (mom, dad, brother, sister, sister) represent, if they were average, $50,000 a year on healthcare costs. That would represent $4166 per month from this families budget. So even if the household head earned $15 per hour ($31,200 per year), this family can not buy health insurance.

Most people, especially young and healthy Americans do not consume $10,000 a year in healthcare costs. From an insurance company’s perspective, those who consume less help offset those who consume more. In a somewhat complicated process, insurance companies dial in rates (young and healthy pay less, older and sicker pay more) and there you have it, the American healthcare delivery system.

Let’s consider the pending Republican “repeal and replace” healthcare legislation. What math questions arise?

First and foremost, and unfortunately never asked publicly, is $10,000 spending per capita reasonable? Does the US possess a older or sicker population, or are Americans more prone to serious illness than other parts of the world?

In comparison with the rest of the world, especially other modern economies like the US, the US spends almost twice as much as other modern countries. There are no indicators other than over consumption and inefficiency to explain this difference.

So does the Republican plan tackle this spending issue? Regrettably no. One would assume that cutting Medicaid and individual subsidies is intended instead to simply reduce the number of people seeking healthcare coverage, not increasing the number. Since those without insurance seem to consume a lot of healthcare once enabled to get coverage, cutting Medicaid and individual subsidies would help to keep rates from rising too much.  I suppose this could be viewed darkly as a cost control mechanism.

 

Second, the Republican plan shifts the tax burden away from those who can most afford paying to those who can the least. Estimates show an approximate $200 million tax cut for the wealthy while at the same time making it more difficult for lower income Americans to afford healthcare coverage.  This is an unforced error.

 

Third, pre-existing condition bring a bazaar ingredient to healthcare. The Affordable Care Act required insurers to cover all Americans regardless of pre-existing conditions. Republicans have been all over the map with respect to whether pre-existing conditions would be covered, how long, and for how much.

Covering pre-existing conditions, but charging exorbitantly higher premiums is tantamount to not covering those conditions.

 

Fourth, cutting Medicaid enrollment which provides coverage for the sickest and least able to afford insurance is a prescription for increasing the uninsured rolls. Republicans spin this issue by saying States are better able to determine how to deal with the poor.

What?

The nation’s poor are US citizens who just happen to live in a particular State. Some richer States can afford (at the same tax burden) to provide benefits and other States can not. How can healthcare be viewed as a privilege owing to which State one happens to live in?

 

Fifth, value add of insurance companies? The Republican plan doubles down on the existing cadre of healthcare insurance companies. Each healthcare insurance company demands healthcare service providers (hospitals, doctors, and drug companies) to use specific reporting forms for pre-approval and payment. As a consequence, healthcare service providers have increased their operating costs significantly by necessarily adding “non-medical” staff to process paper work.

 

Sixth, fee for service is alive and well. The Republican proposals are silent on changing the basis for paying hospitals, doctors, and drug companies. Republicans claim that the “free market” will magically pit one insurer against another with the average American coming out the winner. This is a delusion.

Summary. There are gaps in the Affordable Care Act coverage (not everyone is covered) and there are anomalies in subsidies such that some Americans still can not afford to purchase subsidized insurance. And, the real healthcare cost drivers are not addressed sufficiently. There exists a pressing need to improve/reform Obamacare.

The Republican proposal does nothing to address Obamacare defects nor does it portend to deal with reigning in the obscene yearly cost increases. What a shame the country is being lead towards third world healthcare delivery standards (best healthcare money can buy) instead of rivaling the best of the best.

Free Market Health Care

June 11, 2017

When President Obama set in motion steps to expand healthcare coverage, in the wealthiest country in the world, for more Americans than ever before, he and his aides made a questionable decision to build the expansion around traditional healthcare insurance companies, like Aetna, Cigna, Anthem, etc. These cowardly chickens are now coming home to roost.

The Obama White House convinced the legacy healthcare insurers that their margins would be protected when they were presented with new enrollees who might not be able to pay for the entire premium. There would be government subsidies in other words.  That promise was enough to get the insurance companies loyalty.

With this promise (and recognition that there would be another 7 years with a President Obama), healthcare insurers signed on citing the importance of new customers and their dedication to improving Americans’ health.

When the Democrats lost control of Congress, the wheels soon began to come off the Affordable Care Act wagon. Republicans tried their best to outright repeal Obamacare and when not possible, the GOP tried to jeopardize the subsidy streams. Any uncertainties about rate coverage was enough to send healthcare insurer CEOs into orbit.

“Oh my, our shareholders simply won’t accept that”, these CEOs moaned.

In quieter moments, healthcare insurers raised rates and cited the “higher than expected” number of “sicker than average” enrollees. Imagine, these big name insurance companies were finding that previously uninsured Americans were devouring healthcare services at amounts greater than the average American?

After thought (and realization that not much more money was coming from the government), these insurance companies proposed a resolution. They would exit the market!

The Aetna’s of this world would no longer sell policies to exchanges and abandon the exchange market to someone else. So, unless the government renewed its pledge to provide adequate subsidies, these newly healthcare covered Americans would join the ranks of the uninsured again.

So much for these insurance companies’ concern about individual healthcare.

One might fantasize that a Government truly interested in its citizens’ healthcare might say to these companies that they might as well withdraw from the rest of the State’s health insurance business. Cheery picking is not in the publics best interest.

Should that hard ball tactic not convince the insurance company to stay, then employing the “public option” might win the day. Expanding Medicare (with its requirement for paying premiums) would be quick and easy to roll out. Insurance companies might then think carefully on whether they needed to become more efficient or face the creeping invasion of “single payer” insurance.

Republicans might jump up and say “how is the government going to fund the public option?  Of course the answer is through taxes combined with individual payments.  And if the Affordable Care Act is repealed or simple succumbs to the death spiral, how is the cost of the 25 million or so Americans without coverage to be covered?

How about taxes and higher doctor and hospital payments?  Which path seems more humane?  Oh, I forgot the Republicans want to cut taxes, not increase them.  Take a hike you 25 million soon to be without insurance Americans.

Hmmm.

Healthcare, A New Take?

June 5, 2017

Former Oklahoma US Senator, Tom Coburn, gave a genuinely heartfelt argument on how to fix healthcare. Coburn’s solution  –  total free enterprise. Use the free market, Coburn said, where millions of Americans could seek “great quality” healthcare at the lowest prices. The former Senator used the Amish as an example of price shopping with the outcome – great coverage at low cost. Hmmm.

Tom Coburn is a doctor (MD) by education and should know something about healthcare. Senator Coburn is a conservative and has a history of concern over healthcare cost.  Senator Coburn, needless to say, was not a fan of the Affordable Care Act (Obamacare).

And to be sure, there are situations with our current healthcare delivery model ripe for abuse.  Fee for service, Medicare payment for unneeded services, and non-negotiated drug costs in Medicare Part D are a few examples.

Most Americans are largely divorced from healthcare’s actual cost. Most Americans are covered by group health plans (paid for by employers) or for those over 65, Medicare. While there are deductibles and co-pays, these costs are nominally small compared to the overal healthcare cost. Consequently most Americans are content with and expect their employer and their insurance provider to fight with doctors, hospitals, and drug companies and manage these healthcare services prices.

Do you think insurance companies, who have built into their policy prices their earning would welcome a lower premium cost which would in turn lower profits for their shareholders? Hmmm.

In addition to employer provided and Medicare, there are Medicaid (for those who qualify) and the single payer market to make up the rest. (I am excluding the VA system for reasons of simplicity.) It seems ridiculous to believe that Americans on Medicaid roles, who can not afford to buy their own healthcare policies now because they are too poor would suddenly be able to find their way through the medical and insurance maze and buy adequate healthcare insurance.

The individual market could be different however, since the members might have the financial means. But, does anyone think that suddenly insurance companies will welcome Americans with pre-existing conditions and charge them the same low rates as healthy young Americans? One might wonder what Senator Coburn has been smoking?

The free enterprise system, instead of being healthcare’s savior, is actually its devil. Our free enterprise, capitalist system honors the concept of maximizing profit. American healthcare costs have risen at two times the rate of inflation for years.  No better recent example is the American drug industry where prices have escalated at unprecedented rates. Disgracefully, one can buy in Canada the same US produced drug for substantially less. Hmmm.

Americans are regularly reminded about innovation and increased productivity from competition in a capitalist system. We are asked, “do you want to give that up”?

Americans, instead, need to ask a simpler question, “are there other healthcare delivery models around the world that cost less (say one half what the US spends) and are associated with better health outcomes”?

Senator Coburn’s proposition might work if all Americans had the same health prospectus and the same capabilities to make a deal. Buying an automobile or an airplane ticket are examples of where the free market is working. Americans pay widely different prices for essentially the same goods or services. Americans can, however, chose not own a car or use an airline to travel with no life or death consequences. Healthcare is different.

Over two dozen countries around the world have adopted healthcare delivery systems which cost half that which Americans spend and achieve better outcomes for all their citizens. Broadly speaking these healthcare delivery systems emphasize “prevention” and “ease of use”. These plans insure everyone (universal coverage) and employ a “single payer” administrative model. There are no “negotiations” between citizens and healthcare providers.  The role of doctors, hospitals, and drug companies are to serve the customer while earning a fair but modest profit.

Insurance companies may, if they wish, participate as a “plan administrator” facilitating payments for healthcare providers. Their profit is negotiated with the national healthcare agency (a government organization) so there is no temptation for insurance companies charge “what the market will bear”.

So in countries like Germany, basic healthcare is available to all residents at the same low co-pay cost (a national value added tax pays for most of a German’s healthcare cost). Socialism?

There is no effort or thought, however, that all Germans should be driving a BMW instead of a Volkswagen or  having no car at all.  What type of car a German buys and how much he/she pays for it is a free market event.   Germany has a capitalist economy but treats healthcare as an individual right.

Why is this such a foreign idea in Washington?  Why are Republicans so dead set about reducing healthcare in a land where healthcare costs are two or more times the level of other modern countries?

Are Republicans seeking the best healthcare delivery system money can buy?

Assessment After The House Vote

May 5, 2017

Yesterday the Republican controlled House of Representatives voted narrowly (217-213) to pass the American Health Care Plan which in their eyes is a “repeal and replace” healthcare option. Amazingly, the House rushed to vote with no “official” (CBO) estimate of the cost or impact.  Hmmm.

When the vote was announced, Republican leaders including Vice President Pence stood before photographers applauding each other. Was it a day of rejoicing or a day which will bring telling consequences?

The AHCA retains much of Obamacare but has reduced its benefits and scope. Senator Rand Paul has aptly called AHCA “Obama-lite”. What the AHCA is not light about is the individual mandate and the mix of revenue offsetting taxes designed to make the keep federal budget revenue neutral, they are gone. I wonder whether that is what the GOP leaders were cheering about?

There will be passionate speeches about what the House AHCA version does and does not do. And, until the bill actually goes into effect, no one can be 100% sure. What can be sure is that without the additional income generated by the individual mandate and the special taxes, is that the GOP replacement will (1) swell the deficit since the government must make the insurers whole in some way, (2) Republicans will be content to allow the marketplace to price some Americans out of the market bragging that these fellow Americans made patient centered choices, or (3) some combination of both.  The AHCA is less coverage for more money for fewer people.  Hmmm.

Do the math. Minimum wage is $7.50 per hour, 40 hours (if one is lucky to find work) per week is $300. Therefore in a year this low wage American is earning $15,600. According to published reports, individual purchased family insurance cost $1021 per month, or $12252 per year. Hmmm, $15,600 before food and shelter, and healthcare of $12,252 which must come off the top. Do you think there will be incentives to offer less insurance coverage in order to get the yearly individual market coverage decreased?

How can a major party sleep knowing that its proposal will treat Americans of limited financial means (which could include full time, minimum wage earners) destine for less basic healthcare than more wealthier Americans? Would anyone think that we should ration basic sustenance for water or food based upon ability to pay?

The House vote marks a dark day for Republicans. All the masterful rhetoric the GOP will surely muster will not change the directional outcome. The American Health Care Act now heads to the Senate where it will meet another test.

Some GOP Senators think the House version is far too rich and would advocate an even stingier act. Others are more moderate and find the House version onerous. Regrettably most Republican Senators are likely to find the House bill as no obstacle to a good nights rest.

With a two seat Senate majority, the outcome is too close to call.

Will It Be This Week, What Republicans and Democrats Won’t Tell

May 3, 2017

Here it comes again. More hints (maybe even boasts) about the repeal of the Affordable Care Act and the replacement with the American Health Care Act. The spotlight remains on the House of Representatives where Republicans hold a firm majority so one might be excused not understanding what obstacles lies before an easy Republican victory. Here’s what a closer look reveals.

Republicans have campaigned against the “job killing”, “train wreck”, “big government” healthcare law known as Obamacare (the ACA). Being against things has become a Republican art form and while Republicans have advocated lustily for many things, they have not been for anything for which they would actually be responsible implementing and having to deal with the consequences. Times have changed.

The Affordable Care Act (Obamacare) is far from perfect legislation. In concept, Obamacare represents a noble step forward by sharing America’s wealth with those less fortunate, specifically providing health insurance to more Americans. (“Noble might be too literary a word since over two dozen other modern countries already provide all their residents healthcare at half the US per capita expenditure with better outcomes!!!). Never the less, Obamacare did represents a giant step forward for the US.

Healthcare is not free. So, Obamacare had to find ways to help Americans “buy” insurance coverage. A combination of mandatory enrollment (for those who game the system by not buying insurance when they are young and healthy), “exchanges” where Americans could buy basic insurance coverage even with pre-existing conditions, a complex system of subsidies the government could provide exchange members, and Medicaid expansion to catch the remainder.

So how would this program be paid for?

Democrats had to come up with a dog’s breakfast of taxes to cover the portion of insurance the new insurance holders could not afford. The individual mandate and these new taxes became the rallying cry for Republicans. Take away the taxes, the additional expense necessary to add coverage to 20+ million more Americans, the cost would flow straight to America’s credit card, the Federal Deficit.

Republicans stood tall, said they had a better plan, and said they would give Americans their freedom back. Hmmm.

Back to this week. Republicans have offered the American Health Care Act to replace Obamacare. Almost unbelievably, the Republicans have discovered that those previously without health insurance like Obamacare’s features (like pre-existing condition coverage, basic services coverage, children on parent’s policies until age 26, and for many, financial assistance to subsidize buying coverage). The American Health Care Act offers much less insurance protection while giving generous tax cuts to the wealthy (not the Americans needing coverage). Hmmm.

To make matters worse for Republicans, they recognize that if they offer the same benefits as Obamacare (and just rename it), there is still the problem of paying for the expanded coverage. Moderate Republicans and conservative budget hawk Republicans cannot agree upon cuts which would lower the AHCA cost nor can they agree upon how to fund an Obamacare look-alike. Hmmm.

Democrats have chosen to hold their fire until the House passes AHCA and fight it in the Senate. Most pundits do not see the current AHCA passing a Senate vote. Time will tell.

The bedrock issue that is not being discussed by either party is whether basic healthcare is a right or a privilege. (Apparently, this comparison does not poll well, republicans do not want to be associated with denying healthcare coverage to Americans. Republicans would prefer to say some Americans choose not to buy insurance or prefer to buy a stripped down policy, and that is their right. Hmmm.)

Astute GOP leaders must be thinking how they can minimize a loss on this issue. Republicans are simply on the wrong side of history. Too much of the modern world has already solved the healthcare problems, and it is unlikely Republicans will wish to boast, “Among third world countries, American offers the best healthcare coverage”.

The issues at hand are not Obamacare versus AHCA because Obamacare has some serious shortcomings and frankly does not insure all Americans. And, the AHCA covers less Americans with less coverage. That doesn’t make it either.

Democrats and Republicans appear content to remain silent on the real elephant in the room.

Public Option?

April 21, 2017

The GOP and the Trump White House are beating the healthcare drum again. The President promises a really good plan for replacing Obamacare. According to a report in the Washington Post, Trump said, “We’re doing very well on health care.” “The plan gets better and better and better, and it’s gotten really good, and a lot of people are liking it a lot.”  “We have a good chance of getting it soon. I’d like to say next week, but we will get it.” Hmmm.

I suspect those Americans who loose their coverage or those who subsequently find out their coverage covers a lot less will not think their health plan got “better and better”.

Republicans are now debating behind closed doors a plan which seeks to bring together conservatives (Freedom Caucus who do not want any hint of entitlements in healthcare and would prefer for the government to not be involved at all), and moderates (The Tuesday Group who fear sharp political retribution if the benefits of Obamacare are rescinded). The Tuesday crowd are offering weasel words that would allow States to opt out of certain Obamacare services. Hmmm.

The overall facts appear unchanged. The American Health Care Act, even as amended, will provide less coverages to fewer Americans than Obamacare and will provide huge tax savings for the wealthiest Americans. The GOP’s embrace of “the best healthcare money can buy” is a sad replacement for the Affordable Care Act (Obamacare). Is that the best we can hope for?

Here’s a dream.  “Medicare for all” could be a next step in healthcare. Compared to the “oh so many” for-profit insurance companies today (which stand between you and your doctor), Medicare, which insures post 65 year old Americans, and fits seamlessly into existing doctors, hospitals, and pharmacies, could offer “a ready to go” alternative.

Of course Medicare is not without some problems, namely how it is funded. Republicans will decry the expansion of government and seek ways to defund Medicare. Cooler minds, however, might see Medicare as the ideal vehicle to determine what is basic healthcare and how to pay for it, especially if Medicare became the standard package for employer provided healthcare.

No sane discussion of healthcare reform should avoid the obvious elephant in the room. Americans spend more on healthcare than any other country in the world and receive mediocre healthcare outcomes in return. The difference in cost is significant (greater than two times).

An additional revelation is that balancing the Federal Budget can not be achieved unless there is a fix for Medicare and Medicaid, both of which collect less in tax revenues than they spend on healthcare benefits. With “Medicare for All” there is one program providing basic coverage with significant negotiating power with healthcare providers. Existing insurance companies could continue to “administer” Medicare benefits but would be unable to set different conditions around services.

Most likely efficiencies associated with a single payer would be insufficient to assure Medicare would be solvent. Consequently tax reform coupled with healthcare reform could be seen as reforms aimed at serving all Americans and not as ploys to pass on huge tax breaks to the already very wealthy.

Despite wrong headed GOP motivation on both tax reform and healthcare, Democrats, unfortunately, appear willing to simply play for a tie (defined as thwarting the American Health Care Act thereby keeping Obamacare) and rejecting tax reform unless the proposal is revenue neutral or positive.  Hmmm.

The can is poise for another kick down the road.

Republican Healthcare Secret

April 6, 2017

Today there were reports that the unofficial  second effort to repeal and replace Obamacare had collapsed. It appears that potential changes to the initial failed repeal and replace (American Health Care Act), while encouraging to the Freedom Caucus was unacceptable to moderate Republicans. In other words original no votes that were willing to change to yes votes were offset by original yes votes who would now vote no. Hmmm.

These healthcare deliberations speak volumes about the Republican Party. For the better part of seven years the standard Republican Obamacare line has been “job killer”, “a disaster”, and “we will fix healthcare”. Through the buzz of political speak, one can see that there never was a Republican Plan. Many different Republicans may have had plans but as a Party there was never agreement on anything other than the value of insinuating that the Affordable Care Act was in someways defective and by association, Democrats were also defective. Hmmm.

Republicans are now revealing (1) they are not a party of one mind, and (2) the Freedom Caucus hold views which are mean spirited, ill informed about basic healthcare, and really represent a third party, not a faction of the larger Republican Party.

Around the world, other modern countries have settled on healthcare models which provide basic healthcare to their residents. These countries have found that preventive care and reasonable controls on healthcare provider’s profit incentives produce superior health outcomes for their residents and much much lower costs to boot.

The Freedom Caucus is claiming they won’t agree to any Obamacare changes unless there is a reason to believe healthcare premiums will decrease. On the surface this sounds reasonable. But when one considers the Freedom Caucus approach (eliminate Federal mandates over what services healthcare policies must cover), one suddenly realizes that the Freedom Caucus is comfortable with insurance companies reestablishing pre-existing condition limits and embracing stripped down policies (like catastrophic care only) which provide no access to basic preventative healthcare. The Freedom Caucus has written the book on “the best healthcare money can buy”.

The Republican Healthcare Secret is much more about the party itself than healthcare. The Freedom Caucus would also seek to not just roll back (or moderate) recent gains in civil rights, human rights, and environmental protections, the Freedom Caucus would seek to deny there is any basis for these rights to exist or protections to be implemented.

One might think the right thing for Republicans to do would be to expel the FC from the Party. But the Freedom Caucus has been beneficial to the GOP also. Caucusing with the Republican Party, the combination has been able to “control” Congress, and thereby chair the major committees. While the GOP was the Party in opposition, there was always a greater danger than ideology, the other Party. Now the Republican Party has control of the executive and Congress and can no longer ignore the role of responsible governance.

Damn that Freedom Caucus.