Archive for the ‘#healthinsurance’ Tag

Medical Insurance Is NOT Medical Care   1 comment

I know that flies right past the ears of many people, but take a pause and consider the implications of that statement.

Medical care is when you interact with medical providers and receive a diagnosis, surgery, therapy, a prescription and so on.

Medical insurance is how you pay for medical care.

Politicians use the terms interchangeably, but they are NOT the same thing. Whenever I hear someone use terms that mean different things as if they are the same thing, I become suspicious of their motives for conflating the two.

Of course, there are other types of insurance that we don’t do this with. Nobody confuses car insurance with vehicle maintenance, for example. I keep my own car clean and I pay out of pocket for repairs. If my car is damaged in an accident, my insurance covers the repairs, less the deductible, but I don’t call my insurance agent if I need an oil change or to replace my starter.

Homeowners insurance is similar. I don’t call my insurance company to finance painting the house. I call them when a tree falls on the roof.

Medical insurance ought to work the same way that car and home insurance do, but right now it doesn’t. Routine procedures, drug prescriptions for chronic disease, and a variety of other predictable and non-urgent procedures are all handled through insurance companies.

Now, take a pause and realize that one of the key differences between medical insurance and car or homeowners insurance is that medical insurance is a state-run and -regulated program with limited competition while care insurance has plenty of competition.

March is the month we renegotiate our car and home insurance and I received dozens of circulars in the mail offering me insurance plans that will meet my needs at a price I’m willing to pay. None of them offer to reimburse me for minor damage because they wouldn’t stay in business for long doing that.

Continuing this theme, repair shops, tire manufacturers, and other car-care providers all compete on price to get the largest possible share of the millions of car owners in the market for their products and services.

Meanwhile, the medical care market we currently know is provided by a mixture of public and private payers, and it funds a significant share of the vast majority of procedures. Providers don’t compete on price even for services that millions need on a regular basis.

When it comes to medical insurance, most people expect their coverage to give them more than they pay in. That makes no economic sense. If one person’s treatment costs $120,000 a year and they pay a monthly premium of $1,000, the company needs nine people to pay $1,000 a month, but those eight other people cannot consume any medical care services in order for the company to even break even.

The primary role of insurance should not be to pay bills. Insurance is customer peace of mind—a guarantee that a catastrophic event will not bankrupt us.

If medical insurance worked as it should, we would only use it for catastrophic medical needs. For more minor medical care services, we would be looking for the best-value care in the market because those costs would be coming out of our pockets. Yet the high levels of medical debt show that our current insurance system has strayed far from this model as the prices for minor procedures and treatments have gone through the roof.

Increased coverage sounds nice, but as our recent experiment in increased coverage shows, we’d still struggle with unaffordable copays and deductibles and staggering levels of medical debt. The first step toward obtaining an affordable medical insurance system that works for the maximum number of people is to let insurance be what it was meant to be: peace of mind against catastrophe.

California Considers Economic Suicide with Single-Payer Health Care | Daniel J. Mitchell   Leave a comment

Image result for image of single-payer health insurance destroying the economyIn the Dirty Harry movies, one of Clint Eastwood’s famous lines is “Go ahead, make my day.”

Source: California Considers Economic Suicide with Single-Payer Health Care | Daniel J. Mitchell

I’m tempted to say the same thing when I read about politicians proposing economically destructive policies.

Indeed, I sometimes even relish the opportunity. I endorsed Francois Hollande back in 2012, for instance, because I was confident he would make the awful French tax system even worse, thus giving me lots of additional evidence against class-warfare policies.

Mission accomplished!

Now we have another example. Politicians in California, unfazed by the disaster of Obamacare (or the nightmare of the British system), want to create a “single-payer” healthcare scheme for the Golden State.

This Would Be a Catastrophe

Here’s a description of the proposal from Sacramento Bee.

It would cost $400 billion to remake California’s health insurance marketplace and create a publicly funded universal health care system, according to a state financial analysis released Monday. California would have to find an additional $200 billion per year, including in new tax revenues, to create a so-called “single-payer” system, the analysis by the Senate Appropriations Committee found …Steep projected costs have derailed efforts over the past two decades to establish such a health care system in California. The cost is higher than the $180 billion in proposed general fund and special fund spending for the budget year beginning July 1.

…Lara and Atkins say they are driven by the belief that health care is a human right and should be guaranteed to everyone, similar to public services like safe roads and clean drinking water. …Business groups, including the California Chamber of Commerce, have deemed the bill a “job-killer.” …“It will cost employers and taxpayers billions of dollars and result in significant loss of jobs in the state,” the Chamber of Commerce said in its opposition letter.

Yes, you read correctly. In one fell swoop, California politicians would more than double the fiscal burden of government. Without a doubt, the state would take over the bottom spot in fiscal rankings (it’s already close anyhow).

Part of me hopes they do it. The economic consequences would be so catastrophic that it would serve as a powerful warning about the downside of statism.

Accelerating their Slow-Motion Suicide

The Wall Street Journal opines that this is a crazy idea, and wonders if California Democrats are crazy enough to enact it.

…it’s instructive, if not surprising, that Golden State Democrats are responding to the failure of ObamaCare by embracing single-payer health care. This proves the truism that the liberal solution to every government failure is always more government.

…California Lieutenant Governor Gavin Newsom, the frontrunner to succeed Jerry Brown as Governor next year, is running on single-payer, which shows the idea is going mainstream. At the state Democratic convention last weekend, protesters shouted down speakers who dared to ask about paying for it. The state Senate Appropriations Committee passed a single-payer bill this week, and it has a fair chance of getting to Mr. Brown’s desk.

I semi-joked that California was committing slow-motion suicide when the top income tax rate was increased to 13.3 percent.

As the editorial implies, the state’s death will come much faster if this legislation is adopted.

A $200 billion tax hike would be equivalent to a 15% payroll tax, which would come on top of the current 15.3% federal payroll tax. …The report dryly concludes that “the state-wide economic impacts of such an overall tax increase on employment is beyond the scope of this analysis.”

California’s forecasting bureaucrats may not be willing to predict the economic fallout from this scheme, but it’s not beyond the scope of my analysis.

If this legislation is adopted, the migration of taxpayers out of California will accelerate, the costs will be higher than advertised, and I’ll have a powerful new example of why big government is a disaster.

If Single Payer Gets Enacted

Ed Morrissey, in a column for The Week, explains why this proposal is bad news. He starts by observing that other states have toyed with the idea and wisely backed away.

Vermont had to abandon its attempts to impose a single-payer health-care system when its greatest champion, Gov. Peter Shumlin, discovered that it would cost far more than he had anticipated. Similarly, last year Colorado voters resoundingly rejected ColoradoCare when a study discovered that even tripling taxes wouldn’t be enough to keep up with the costs.

So what happens if single-payer is enacted by a state and costs are higher than projected and revenues are lower than projected (both very safe assumptions)?

The solutions for…fiscal meltdown in a single-payer system…all unpleasant. One option would be to cut benefits of the universal coverage, and hiking co-pays to provide disincentives for using health care. …The state could raise taxes for the health-care system as deficits increased, which would amount to ironic premium hikes from a system designed to be a response to premium hikes from insurers. Another option: Reduce the payments provided to doctors, clinics, and hospitals for their services, which would almost certainly drive providers to either reduce their access or leave the state for greener pastures.

By the way, I previously wrote about how Vermont’s leftists wisely backed off single-payer and explained that this was a great example of why federalism is a good idea.

Simply stated, even left-wing politicians understand that it’s easy to move across state lines to escape extortionary fiscal policy. And that puts pressure on them to be less greedy.

This is one of the main reasons I want to eliminate DC-based redistribution and let states be in charge of social welfare policy.

Using the same reasoning, I’ve also explained why it would be good news if California seceded. People tend to be a bit more rational when it’s more obvious that they’re voting to spend their own money.

Stay Golden

Though maybe there’s no hope for California. Let’s close by noting that some Democrat politicians in the state want to compensate for the possible repeal of the federal death tax by imposing a huge state death tax.

In a column for Forbes, Robert Wood has some of the sordid details.

California…sure does like tax increases. …The latest is a move by the Golden State to tax estates, even if the feds do not. …A bill was introduced by state Sen. Scott Wiener (D-San Francisco), asking voters to keep the estate tax after all. …if the feds repeal it, and California enacts its own estate tax replacement, will all the billionaires remain, or will high California taxes spark an exodus? It isn’t a silly question.

Of course billionaires will leave the state. And so will many millionaires. Yes, the weather and scenery are nice, but at some point rich people will do a cost-benefit analysis and decide it’s time to move.

And lots of middle-class jobs will move as well. That’s the inevitable consequence of class-warfare policy. Politicians say they’re targeting the rich, but the rest of us are the ones who suffer.

Will California politicians actually move forward with this crazy idea? Again, just as part of me hopes the state adopts single-payer, part of me hopes California imposes a confiscatory death tax. It’s useful to have examples of what not to do.

The Golden State already is in trouble. If it becomes an American version of Greece or Venezuela, bad news will become horrible news and I’ll have lots of material for future columns.

Posted June 8, 2017 by aurorawatcherak in economics

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ColoradoCare Isn’t What it Seems   Leave a comment

Pierre-Guy Veer

Found on Fee

Image result for image of health care waiting listEvery few election cycles a proposition to have universal healthcare pops out. This year, Colorado voters will have to vote on Amendment 69, which would replace the present Affordable Care Act (aka Obamacare) provisions with a single public option; a kind of Medicare for all for the state.

At first, the proposition looks enticing. The present healthcare system is riddled with inefficiencies and high costs. Indeed, the U.S. spends 17.4 percent of its total GDP on healthcare; Canada is only at 10.2 percent despite universal healthcare. According tosupporters of the proposition, Coloradans would save $4.5 billion just during the first year thanks to lower bureaucratic costs, higher purchasing power thanks to bulk negotiations and less fraud. These claims are defended by the Canadian Union of Public Employees, even adding that fewer people die in a public healthcare system.

More Spending on Health, Less on Everything Else

However, by looking closely at the data one can doubt that Amendment 69 will save money in the long run. Healthcare expenditures are approaching 50 percent of the Quebec federal budget.Present trends inMedicaid – the universal healthcare program for low-income people – show that the program is taking a larger share of the states’ budgets. It therefore crowds out spending from other domains like transportation or even corrections.

Image result for image of health care waiting listSuch a crowding out is happening with universal healthcare. In the Canadian province of Quebec, nominal spending on the public healthcare system (through the Ministère de la Santé et des Service Sociaux) has increased 13.2 percent during the past 5 budgets, 46.6 percent during the past 10 years and 263 percent since the 1997-1998 budget.Excluding debt service, health care expenditures have gone from 37 percent of the budget 20 years ago to 49.6 percent of the budget. In other words, the Quebec government is becoming a huge ministry of health.

And since these healthcare expenditures are financed through general taxation – there is no dedicated tax unlike Medicare in the U.S. – the “free” care people received costs them about $12,000 a year for a family of three in Canada according to the Fraser Institute. The institute estimates that the real cost has increased nearly 48.5 percent for all households in 2015 in the past 10 years.

In Colorado, Amendment 69 proposes a $25-billion tax hike to pay for this program, which will be financed by a 10-percent payroll tax. Such a perspective discouraged Vermont to enact a similar measure just two years ago. Then-governor Peter Shumlin thought that “the potential economic disruption and risks would be too great to small businesses, working families, and the state’s economy.”

“Patients” Deserve their Names

The disruption of universal healthcare is just not economic; it’s also social.

In Quebec, despite spending all that money on health care – $33 billion for a province about as populous as New York City – waiting lists are growing. If one’s health is in immediate danger one will see a doctor as soon as one is available, but otherwise more populous regions will tend to have overcrowded emergency rooms – the only ones with physicians available on weekends. At the time of this writing, (October 21, 2016), Hôpital de l’Enfant-Jésus ER in Quebec City had an occupancy rate on the gurneys of 108 percent, with 4 patients waiting for at least 48 hours to get their own room. In Montreal, Hôpital général Juif is 200 percent full with 12 patients waiting for at least 48 hours.In order to cut on costs governments limit the number of patients doctors can see during a week.

Even for “medically necessary” procedures waiting lists test the patience of the people. The aforementioned Fraser Institute study found that, in 2014, the average waiting time for such procedures was 18.1 weeks compared to 9.3 weeks 20 years before. Those who can’t wait and can afford it will therefore travel abroad to seek the care they need. Or they will move and invite people to do the same, as Julie Lesage famously did to get the care her daughter might have never received – a doctor told her she would have a better shot in Houston, where she moved.

Why so much waiting despite a sharp increase in spending? It’s simple: in order to cut on costs, governments limit the number of patients doctors can see during a week. And they have to make a choice: either they work for the public system or they work in a private practice. They cannot do both; therefore many doctors (especially younger ones) are going into private practices. While this “migration” represents only about 2 percent of family doctors, 45,000 patients were still left without a “free” doctor.

This migration away from government-paid health care is also happening in the U.S. Since Medicaid only pays 60 percent of what private insurers will pay, more and morenew patients will likely have a hard time finding a doctor if Medicaid is their only means to pay. And with an aging doctor population (52 years old in 2014, compared to 50 in 2010) that will eventually retire, finding a doctor will become increasingly harder.

It would likely be even harder in Colorado. Since ColoradoCare would be financed through taxes there would have to be some limitations on healthcare spending so income tax brackets don’t look like Quebec’s – the highest marginal bracket is at 25.75 percent, and that’s not including the federal one at 29 percent. Therefore doctors’ reimbursement would be lower, likely creating dissatisfaction and a shortage.If competition works in markets for things like TVs and computers – both are cheaper andmore efficient – why can’t it work for healthcare? 

So if Coloradans want their fellow citizens to have access to better and cheaper healthcare, there is one simple solution: laissez-faire. By abolishing the monopoly of employment supported by the American Medical Association, by abolishing the thousands of pages of regulations on how and when to provide care, in short by letting market forces act as they should cost will very likely decrease.

If it works in (relatively) free markets like TVs and computers – both are cheaper and more efficient – why can’t it work for healthcare?Such a market is already expanding with concierge doctors – they deal directly with patients rather than through a third party like an insurance company. Costs are affordable for middle-class households – $4-5 per day – and, according to a peer-review study, their approach decreases hospitalizations.

Source: ColoradoCare Isn’t What it Seems

Stories from Obamacare’s Path of Destruction | Melissa Quinn   Leave a comment

For the past 15 years, Warren Jones has had the same health insurance plan with Blue Cross and Blue Shield of Kansas City.

Image result for image of aca failureBut over the years, Jones, of Kansas City, Missouri, has watched the coverage offered in his policy “erode” over time.

First, the company got rid of the dental and vision coverage he had.

Then, Jones’ deductible increased – to $2,500 – for his plan alone.

But perhaps the most significant change for Jones, a veterinarian, has been the rising cost of his monthly premiums.

Jones’s premium will increase by 45.8 percent between 2016 and 2017.In 2014, the year Obamacare took effect, Jones paid $318 in monthly premiums. In 2015, the price went up to $394 per month, then to $491 for 2016.

For 2017, Blue Cross and Blue Shield of Kansas estimates that Jones will pay $716 each month for his premiums – a 45.8 percent increase – according to a letter the insurer sent him.

“You can’t keep doing this because people’s wages don’t increase by that amount,” Jones told The Daily Signal. “Nobody’s wages are increasing, so it’s taking a bigger chunk of the budget.”

“That’s the scariest part,” he continued. “It takes a bigger chunk of the budget, and there’s no relief in sight.”

Image result for image of aca failureLike millions of other Americans nationwide, Jones, 55, doesn’t buy his insurance on Obamacare’s state and federal exchanges.

And even if he did, he wouldn’t qualify for the subsidies that lessened the cost of health insurance for 7.3 million Americans who received the tax credits last year, according to regulatory filings.

Instead, the veterinarian falls into an overlooked subset of consumers who pay full price for their health insurance in a time of skyrocketing premiums and deductibles.

They don’t qualify for the tax credits offered under the health care law, and they don’t receive their coverage from employers, since many are self-employed.

“I have seen so many people, self-employed people, many started their own little business and make whatever they do, they have a small business, and they buy their individual policy or buy for their family, and what are their options?” said Beverly Gossage, a broker who has worked in the Kansas City area for 14 years.

“Do they no longer be self-employed? Maneuver taxes to make less than the income threshold to get subsidies?” Gossage continued. “They don’t want to do that, but they’re being pushed to do that. I get this question every day – ‘What am I supposed to do?’”

Gossage ran as a Republican for Kansas insurance commissioner in 2014.

Hooked

Image result for image of aca failureOver the past few months, insurers have been submitting rates to state regulators for the 2017 benefit year.

In most states, companies are requesting double-digit rate hikes for those selecting plans sold in the individual market both on and off the Obamacare exchanges.

Experts say insurers are playing catch-up after setting rates too low in the early years of the health care law and enrolling a sicker – and costlier – population than anticipated.

“A lot of insurers didn’t understand that the market was going to be skewed in terms of income and health status as severely as it was,” Ed Haislmaier, a senior research fellow in health policy studies at The Heritage Foundation, told The Daily Signal. “Generally, the pool was much worse than anybody expected because of things the administration did that made it worse.”

Insurers are playing catch-up after setting rates too low in the early years of the health care law.In response to questions about the growing cost of health insurance for consumers who buy plans sold in the individual market, the Obama administration has said that many Americans are shielded from premium hikes since they buy coverage on the exchanges and receive a subsidy from the government.

Many of the exchange enrollees who qualify for a subsidy may end up paying as little as $75 per month in premiums, Health and Human Services Secretary Sylvia Mathews Burwell said earlier this month.

But that’s not the case for people like Jones and the 10 million others paying full price for their coverage.

“The traditional individual market, which consisted largely of middle-class people who are self-employed, those people are hooked onto this,” Haislmaier said. “It’s kind of a situation where you have an anchor that’s too big, and it’s pulling the boat under.”

Jones is considering selecting a new health insurance plan altogether, but because Missouri hasn’t yet approved rates for 2017, he’s unsure if he’ll even be able to find a cheaper alternative.

“The big thing is the unknown still,” Jones said. “But we know we’re getting inundated with increases in premiums.”

The Missouri man said he is familiar with Blue Cross and Blue Shield of Kansas City, and switching to another carrier may leave him with even less coverage.

“You get a comfort level, and at least you know what you’re getting,” Jones said. “If I had to change insurance, you miss the changes that occur. You don’t know what you’re signing up for.”

‘50-50’

While Missouri residents like Jones are confronting a spike in rates, consumers across the state’s western border also are facing fewer insurers to choose from.

Among the insurers that will continue to sell coverage in Kansas, the number of plans they’re offering both on and off the Obamacare exchange is decreasing.

Many insurers, large and small, have decided to leave the exchanges after losing millions of dollars last year; they either withdrew from states altogether or decreased the number of policies offered.

According to an August study from the Kaiser Family Foundation, six in 10 counties may have a maximum of two insurers on the exchanges next year. Additionally, five states will have one insurer selling coverage on an exchange.

In Kansas, 17 carriers sold policies in the state before Obamacare’s implementation, Gossage said.

Before Obamacare, 17 carriers sold policies in Kansas. Now there are two.This year, the majority of consumers in Kansas will have only two insurers to choose from on the exchange, according to the Kansas Department of Insurance.

Those buying plans sold in the individual market off the exchange have five insurers, according to the state.

It’s a similar landscape in Missouri, where four insurance companies are selling coverage on the exchange, according to regulatory filings.

Off the exchange, consumers can choose from at least seven different companies.

Gossage said that over the last few years, she has seen insurers significantly lessen the number of policies they’re offering.

“What we did is we went from a very vibrant, competitive marketplace with extremely low rates and lots of different plans to pick from to over-overregulation with the type of plan you have and to mandates placed on insurance companies which led to high premiums and fewer carriers in the marketplace,” Gossage said.

While much of the focus has been on the declining number of choices for consumers selecting coverage on Obamacare’s exchanges, those with plans sold in the individual market off the exchanges are hurting, too.

Rochelle Bird, who is self-employed and lives in Overland Park, Kansas, has had a policy through Coventry, a subsidiary of Aetna, for two years.

In that time, her monthly premiums have risen from $335 to $487, and her deductible went from $1,200 to $6,200.

Late last month, Bird received a letter from Coventry notifying her that her policy will cease to exist at the end of the year.

“We may still offer coverage in your area, but most of the options available today will not be available for 2017,” the letter stated.

Bird said she wasn’t surprised to learn her policy was being canceled. Rather, she expected it.

“I know that this act has created chaos,” she said of Obamacare, formally the Affordable Care Act. “When I get a thing [in the mail] saying that my rate has changed, I know it’s 50-50 when I open it. It’s either a letter saying this is what you’re going to pay starting Jan. 1, or we’re no longer offering that plan anymore. It wasn’t a total shock to me.”

Bird said she has started researching other policies with different insurance companies, but because officials in Kansas only recently finalized rates, she hasn’t yet made a final decision on her coverage for next year.

She has, however, set expectations for the terms of her next plan.

“I am now faced with the fact that unless something changes, there will be one health care provider presumably with two different health plans that I will have a choice of [while] living in the state of Kansas,” Bird said. “That’s absurd. How is that helpful?”

“I’m expecting (a) I’ll pay more, (b) I’ll have less, and (c) I may or may not have the same doctors,” she said. “Those are always the moving parts.”

Backward

Bird herself didn’t purchase her plan on the Obamacare exchange, and she wouldn’t qualify for a subsidy if she did.

While going without insurance and paying the fine – $695 per adult or 2.5 percent of household income for 2016 – isn’t an option for her, it is for other Kansas and Missouri residents.

Jessica Huayaban of Olathe, Kansas, and her husband, Joel, each purchased plans in the individual market off the exchange in 2014.

Jessica, 36, bought a plan through Humana, and her husband, 35, through Coventry.

Some residents are choosing to forgo insurance and pay the fine rather than spend money buying insurance.The couple, who own a painting and remodeling company, previously were uninsured and saving money each month to pay for a costly knee surgery Joel needed.

Jessica and Joel had insurance before, but when the recession hit in 2009, coverage was too expensive so they decided to go without.

“It was way cheaper to cash pay,” she said of the years they needed medical services but didn’t have insurance.

In 2014, when Obamacare was implemented, the couple purchased their own coverage, but only because the law required it.

“I wasn’t getting [insurance] for even the coverage part,” Jessica told The Daily Signal. “I was getting it for the compliance.”

Over the past two years, the monthly premiums Jessica pays for her Humana plan have gone up minimally, but her plan has a high deductible.

Then, last month, the 36-year-old mother received a letter from her insurer notifying her they’re canceling her policy.

“This is just something that continues to happen, and I don’t have a choice in it,” Jessica said.

She said she isn’t sure whether she and her husband will purchase plans on Obamacare’s exchange when the open enrollment period opens in November.

And although she may qualify for a subsidy, the young mother fears she’ll be stuck with an expensive tax bill when she files with the IRS for 2017, since her income – she is self-employed – fluctuates drastically from month to month.

“All of it is so backward,” she said of the health insurance system.

Source: Stories from Obamacare’s Path of Destruction | Melissa Quinn

‘Affordable Care’: Higher Premiums, Higher Deductibles, Worse Healthcare | Michael F. Cannon   1 comment

The “affordable” plans make consumers pay higher premiums and more out of pocket costs.

Source: ‘Affordable Care’: Higher Premiums, Higher Deductibles, Worse Healthcare | Michael F. Cannon

Posted July 29, 2016 by aurorawatcherak in Uncategorized

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Health Insurance Is Illegal | Warren C. Gibson   Leave a comment

If you tried to offer a real health insurance policy, they might throw you in jail.

Source: Health Insurance Is Illegal | Warren C. Gibson

Posted July 28, 2016 by aurorawatcherak in Uncategorized

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