Archive for the ‘#medicalinsurance’ Tag

Confessions of an Uninsured Graduate | Marianne March   Leave a comment

A few days ago I donned my gown and my cap with its little gold tassel, and I graduated with highest honors from my college. Now that I am transitioning out of student life, I have many decisions to make. What will I do? Where will I work? What am I going to do without my generous Obamacare stipend?

Image result for image of the happily uninsuredImmediately following high school, I entered the working world as a retail manager. I enjoyed the hard work, the promotions, and the encouragement I received from my supervisors. I was making just enough money to live in a rented 2-bedroom townhouse with a roommate, and my full-time status qualified me for healthcare coverage through the company. At the same time, I longed for work that would be more meaningful for me. I was disinterestedly interviewing to be the manager of my own store when I decided to pursue my education.

My passion for politics steered me towards a degree in policy and economics. For over four years I diligently prepared for exams, listened to several hundred hours of lectures, and participated in group projects that made me wish I could strangle my classmates without repercussions. I also worked part-time jobs, volunteered, interned at three different organizations, and attended a semester abroad.

When I turned 27, I was no longer covered by Mom’s insurance plan. As a student with a low-wage part-time job and the occasional unpaid internship, my tiny income allowed me to qualify for bodacious healthcare stipends. As a wage-earner in the lowest tax bracket, over 90% of my Obamacare costs were covered by a so-called premium tax credit. In 2017, things will be more complicated.

Related imageAs a recent graduate, I imagine myself carving a path in the world with the same patience that the Colorado River took to erode the Grand Canyon: slow and tedious, but not when you think of the intensity of the rapids and the roar of water as the waves pummel through the canyons and stone is forced to make way for water. I am taking a chance and accepting a temporary apprenticeship which excites me and will give me an opportunity to test-drive a career of passion.

At least one person looked me in the eye and urged me to reconsider. After all, I’m 28, I live in my parent’s basement, and I had a post-graduation plan that included dental and a 401k, not a benefit-free six-month gig. I admit it, this choice is a gamble. What am I going to do about money and healthcare? I have six months before student loan collectors come a-knockin’. Sure, there are many jobs that will provide for a closet full of clothes, a pile of bricks, and a matching storage unit. However, this opportunity just might be the onramp to a life that I long for and that I didn’t think was possible.

Unfortunately, as a temporary employee, I am not eligible for benefits like a 401k or employer-generated healthcare. I will receive compensation for my work, but my modest income will render my healthcare stipend to nearly evaporate. I will be earning too much money to keep my government assistance, but earning too little to comfortably afford the monthly premiums. Of course, there is always a choice to make: I can go back to work that is completely unfulfilling but will allow me to pay for healthcare coverage, or I can try to earn less money so that I qualify for support.

I can even shove my fists in my eyes and out-ugly Kim Kardashian’s cry-face, or I can be grateful that my organization is taking a chance on me. I can be happy that, although my financial future is questionable, delayed gratification is the very hallmark of adulting. I can’t know the future, but I believe this is the best move I can make at present.

And so, when the enrollment deadline for HealthCare.gov rolled around, I had another choice to make. My decision is to go without health insurance.

For weeks, I have received emails, automated phone calls, and voicemails, sternly reminding me, “Don’t wait for your monthly health care costs to increase by 50 percent or more in January,” and, “Come back to HealthCare.gov and try to find a less expensive plan.” But the plans are already outrageous. So, last night, at the zero-hour for signing up for healthcare, I decided to go without.

It makes me nervous. I fear the penalty. It seems ridiculous that my choice to pay out of pocket for medical visits will be punished later, and at a rate of 2.5% of my income. I think we can all agree that a monetary penalty would be better spent compensating a doctor, nurse, or dentist for their skills. The incentives are completely out of whack.

Weaning off the government teat is painful, I don’t enjoy the sensation, but there are no satisfying alternatives. So pass the vitamins and kale chips, I can’t afford any illnesses for at least six more months.

Source: Confessions of an Uninsured Graduate | Marianne March

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ObamaCare House of Cards   Leave a comment

The Congressional Budget Office scored the American Health Care Act and claimed the bill will reduce deficits by $119 billion over the next decade and result in 23 million fewer people being insured by 2026. So clearly, people would be better off if Obamacare were unchanged. This new report from the Department of Health and Human Services dispels that myth.

Reality Bites

The DHHS report shows that premiums in the individual market exchanges increased by 105% in the 39 states using Healthcare.gov from 2013 to 2017. This is equivalent to $244 per month ($2,928 per year) in additional premium payments for people buying insurance through the exchanges. People not eligible for exchange subsidies are fully exposed to these increases, while taxpayers will bear the brunt of subsidies for eligible enrollees.

Despite the promises that Obamacare would “cut the cost of a typical family’s premium by up to $2,500 a year,” average premiums on the exchanges more than doubled over this period. In some states, such as Alabama and Alaska, the average premium more than tripled. Welcome to my world.

B-b-but, Alaska is a small-population state with a huge land mass and people who have to travel long distances to medical care. Surely ….

No, the high average increase is not driven by a few outliers. Twenty-three out of the 39 states included in the analysis experienced premium increases in excess of 105%. Only three states, North Dakota, New Hampshire, and New Jersey, had cumulative premium increases below 50%.

 

As the report acknowledges, the composition of the population enrolling in plans through the exchanges has changed over time due to the adverse selection problems created by the law’s subsidy and regulation frameworks.

Example?

The community rating age bands, which dictate how much more companies can charge older, higher-risk enrollees, were set at 3:1 under Obamacare. A recent study by Milliman estimated that relaxing these age bands to 5:1 would reduce premiums for people aged 20-29 by 15% while increasing premiums for older enrollees.

Lower premiums for younger, healthier people would encourage more of them to enroll through the exchanges instead of foregoing health insurance because it is too expensive for them. Older, less healthy people make up a larger share of the exchange population now than in earlier years, which exacerbates the premium increases on that population.

Due to data limitations, the report does not deal with the population getting plans on the individual market but not through the exchanges. These people accounted for more than a third of the total individual market. They are not eligible for the law’s subsidies, so there is likely less adverse selection for the off-exchange population, but these enrollees have to bear the entirety of the costs of those increases.

Families choosing a plan through the exchanges have seen their premiums more than double since 2013. Alabama and Alaska, which have seen the two highest cumulative premium increases, are both down to only one insurer. In the entire country, only Virginia saw the number of participating insurers increase from 2016 to 2017. Just today, Blue Cross Blue Shield of Kansas City announced it would be exiting the exchange, leaving 25 counties in Missouri without a participating insurer for now.

The trend is absolutely unsustainable.

The lack of choices and competition in a growing number of places makes it unlikely that there will be an end to rapid premium growth without reform. While the CBO estimates will provide some insight into the effects of the bill in its current form, a working group of Senators is crafting a revised bill with major alterations.

Getting the design of replacement legislation right is important, and the CBO score will give the working group more information about which aspects of the bill that passed the House need the most adjustment. Provisions that allow for more competition and choice for people trying to get insurance through the individual market should help bring down annual premium increases.

It Stinks Less, but It Still Stinks   Leave a comment

Rick, my cousin who is a world-class research doctor who has been helping me to understand medical insurance reform, finally got around to sending me his analysis of the most recent Republican effort to sort of repeal and sort of replace the Affordable Care Act. If I were a Trump voter who voted for Trump and the GOP believing the promise that they would repeal of the Affordable Care Act before it bankrupted me, I’d be a bit annoyed. I am a bit annoyed and I didn’t vote for them expecting them to actually do anything because I knew Trump likes universal medical insurance and socialized medical care. He said things supportive of it back in the run-up to the ACA passing.

Related imageBut, here we are, waiting with baited breath to see if the Republicans actually have a votable bill this time.

The AHCA relies on three stages. The passage of the AHCA is simply Stage 1. As Senator Ted Cruz pointed out when the original iteration of the AHCA was being debated, the basket of goodies in the second and third baskets are what the GOP has been promising voters for over half a decade. The problem is that the first “basket” changes almost nothing and the subsequent baskets rely on easily changed mandates from the Secretary of Health and Human Services, who could be a raving progressive from England after 2020.

If the AHCA can in any way be heralded as a conservative win, it’s the amendments made since the March failure-to-launch that move us toward a medical care system based on free markets that are note-worthy, but the AHCA still isn’t a “free market solution.” To make the bill palatable to the must-have House Freedom Caucus, two amendments were added that allow states to apply for waivers to opt-out of the pre-existing conditions requirement and the provision regarding “essential health benefits”.

However, with one dumb comment from President Trump and a moving story from Jimmy Kimmel — another amendment was added that provides $8 billion over 5 years for the nearly inconsequential issue of “pre-existing conditions.”

People really should know, about pre-existing conditions coverage in America, because mention of the phrase seems to halt all rational discussion, while precious few Republicans are prepared to defend the point eloquently or adequately. It is something vital to understand.

Rushing the medical care vote in March has made Americans, and particularly Republicans, wary. The president and Republican Congress only have themselves to blame because they should have spent months talking about the bill before voting on it. That talking would have educated people on what is actually in the bill. Falling short on today’s vote will leave most Americans who voted for Republicans because they promised to repeal Obamacare and later to replace it with something better, with the clear understanding that Republicans never meant what they said. Bye-bye, GOP!

So we’re stuck with what it is … at least for now.

In broad terms, the bill would likely reduce government spending and decrease insurance premiums for people who are healthy and young and don’t get insurance through their employers. It also likely will increase costs for older, sicker people and take away government-provided coverage from people in the lower middle-class. Those are, despite what the naysayers want you to believe, are good things.

The new American Health Care Act would have far less impact on people who get insurance from their employers, but let’s be clear — the AHCA is a complicated bill that builds off of the ACA, another even more complicated bill, so its potential impact is complicated and, therefore, difficult to predict. But Rick identified some of the major changes to the medical care landscape that could occur if the AHCA passes in its current form.

People with pre-existing conditions will no longer be treated as if they are healthy.

The House Freedom Caucus fought for an amendment to be introduced that loosens regulations that requires insurance companies to sell plans to people who buy insurance independent of their employers or the federal government.  It potentially will impact rules that protect people with pre-existing medical conditions from being discriminated against by medical insurers.

Right now there’s panic among Obamacare supporters that the amendment could make insurance coverage unaffordable for people with existing medical issues. And Republicans and conservatives have proved ill-equipped at defending their position as equally compassionate but packaged in a different vehicle. This allows appeals to emotion, like that of Jimmy Kimmel’s tear-jerker about how his baby wouldn’t be covered because he was born with a heart condition, to shut down all thinking and conversation when the phrase “pre-existing condition” is uttered.

 In truth, the MacArthur amendment keeps the ACA’s guaranteed access clause, which requires insurers to provide policies to those with pre-existing conditions. However, the bill would allow states to apply for waivers that could change the cost and quality of their coverage.

First: prior to the ACA, the vast majority of Americans with medical insurance were already in plans that were required to offer them coverage regardless of pre-existing conditions. Employer-based plans were required to offer coverage to everyone regardless of pre-existing conditions. So were Medicare, Medicaid, and other government programs like the VA. Employer- and government-based plans, prior to Obamacare, represented 90 percent of Americans with medical insurance.

The other 10 percent were people buying coverage on their own, on the individual market. In most — but not all — states prior to Obamacare, people buying coverage on their own could, in theory, be denied coverage for a pre-existing condition.

In reality, in practice, a tiny percentage of Americans were being denied coverage due to a pre-existing condition prior to the ACA. We know this in general because surveys consistently indicated that this was the case, and in detail because of an Obamacare program called the Pre-Existing Condition Insurance Plan, or PCIP.

PCIP was designed to work from the years 2010 to 2014, as a bridge until Obamacare’s insurance regulations took effect. During those years, Americans could sign up for heavily subsidized coverage under PCIP if they had documented proof that they had been denied coverage by an insurance company and had a pre-existing condition.

What happened? Enrollment in PCIP peaked in February 2013 at 114,959.

Under the AHCA with the MacArthur amendment, states could opt out of the law’s essential medical benefits measure, which requires insurers to cover 10 main benefits, including hospitalization, prescription drugs and other services. Insurers in those states would likely offer trimmed-down policies might not cover for all the treatments and medications that those with medical issues need. Carriers would likely offer more comprehensive policies to consumers with costly conditions at higher premiums.

Let’s remember that the #1 driver of the out-of-control premium increases under Obamacare has been people with costly conditions paying the same premiums as healthy individuals who don’t go to the doctor nearly as often.

The amendment addresses this by allowing states to change the ACA’s community rating provision, which bans insurers from charging enrollees higher premiums based on their medical history. Under the revised bill, insurers could charge higher premiums to those with pre-existing conditions who let their coverage lapse. This is very similar to what existed prior to the passage of the ACA. It gave people with pre-existing conditions an incentive to remain covered while holding a lid on premium increases for the rest of us.

States that apply for this waiver would have to set up high-risk pools or other programs aimed at minimizing insurers’ exposure to costly policyholders. This would offset some of the price hikes carriers would levy on those with pre-existing conditions. They’ve only set aside $130 billion to fund these programs through 2026, which some observers feel is woefully inadequate, but the alternative is the bankrupting of the middle-class with the ACA’s out-of-control premium increases, so it’s worth it to return to a system that worked in the past. High risk pools existed before Obamacare, but many were underfunded, charged policyholders premiums in line with the costs of their ongoing care and had waiting lists.

 

Lower-income people could get caught by this amendment if the bill becomes law. A Congressional Budget Office analysis of an earlier version of the bill found 24 million people could become uninsured under the GOP legislation. That number is likely ginned up because it assumed that everyone who went on Medicaid under the ACA would be ineligible under reform, but we showed in our earlier analysis that this is not true. The few lower-income folks who become uninsured due to the rollback of Medicaid expansion may encounter higher premiums when they try to get insurance because insurers would be allowed to set rates based on their health backgrounds.

In other words, people will once more pay premiums based on what their cost of care is likely to be.

 

Medical care is incredibly expensive in the United States, and if you get sick, it’s going to cost a lot. Which is why it’s important for older and less healthy people to purchase medical insurance, but when Obamacare required everybody to buy insurance and insurers to offer coverage to everybody, regardless of their cost of care, it distorted the insurance market and drove up premiums to unaffordable levels for everyone. Before Obamacare, insurance companies were required to sell insurance to people with medical issues provided the person could pay the premiums dictated by their cost of care. That was actually a provision within HIPPA that Obamacare supporters refuse to acknowledge.

Why the ACA is failing is that it regulated how much insurers could charge people with medical issues. This is called “a community rating”. That meant insurers suddenly had to charge everyone the same price for the same coverage. Prices can’t currently be based on factors such as a person’s sex or how sick they are. Under the GOP plan, states could get a waiver that would allow insurers to set prices based on how healthy a person is.

Republicans have argued that they wouldn’t be totally eliminating protections for people with pre-existing conditions because states don’t have to ask for a waiver. Obamacare supporters believe that claim ignores some difficult realities.

Subsidies that help people buy insurance will be reduced under the AHCA. That will likely lead healthier people to leave the insurance market, further increasing premiums for those who remain. Yeah, freedom sometimes allows people to act in their own best interest. States might have to seek the waivers to keep the insurance marketplaces up and running. Yup, that’s the whole supply-and-demand cycle that economists warn us about. All this could add up to insurers’ offering coverage that is unaffordable to people with pre-existing conditions.

The AHCA tries to combat those increased costs through a fund for high-risk pools, insurance programs for people with extremely high health care costs. I am familiar with Alaska’s high-risk pool and it did a good job in covering people with pre-existing conditions … far better than having only one insurance company in all of the state of Alaska to cover everybody in the individual market at very high premium prices.

Monopolies can pretty much charge what they want and Obamacare created a lot of monopoly in the insurance market.

 

Medicaid would go back to being a program for the poor.

Although amendments to the AHCA have gotten the most coverage in recent weeks, changes to Medicaid from the original version of the GOP bill are what cut government spending while rolling back multiple taxes.

Before the ACA, Medicaid was an insurance program for people below the federal poverty line and those who met certain criteria, such as having a disability, being pregnant or being a woman with children. Obamacare changed that by opening up Medicaid to everyone below 138 percent of the federal poverty line in states that chose to expand the program. Thirty-one states and D.C. opted to expand Medicaid, and more than 11 million people joined the Medicaid rolls. Many were already eligible for Medicaid and had chosen not to apply or they only became aware that they were previously eligible when they were forced to apply.  Medicaid expansion included families of four making up to $55,000 here in Alaska. The GOP bill would freeze that part of the program on Jan. 1, 2020.

Some Obamacare supporters claim the AHCA wouldn’t just cut back Medicaid expansion, it would also trim the prior existing program, by capping how much states would be reimbursed for enrollees. The Congressional Budget Office estimates that the net effect of the changes would be 14 million fewer people on Medicaid, which might delay the impending bankruptcy of that program by a decade.

 

Insurance premiums would go down for some, but others would pay more than they currently do.

 

Then there are the insurance subsidies and monthly premiums for people who buy insurance on the private market instead of through an employer. The AHCA would make several big changes that would likely lower premiums somewhat, according to the CBO’s analysis. In addition to potentially changing the costs for people with pre-existing conditions, the bill would allow older people to be charged a lot more than they currently are  …  up five times what younger enrollees pay. Again, older people who are not in good health are a primary driver of the premium increases we’ve seen under Obamacare. Currently, subsidies available to people who buy on the Obamacare marketplaces are calculated so that lower-income people won’t pay more than a set percentage of their income. Subsidies go up if you earn less, live in an area where insurance is more expensive or are older. Under the GOP bill, the system would become simpler: You’d get a subsidy based on your age, which would begin phasing out for people with an income of $75,000 a year.

The McArthur amendment would also allow states to get a waiver on the essential health benefits required by Obamacare. This provision requires plans to cover a range of services, including hospital, maternity and mental health care. So, if you’re a single male, you pay for maternity coverage whether you need it or not. The requirements push up insurance premiums, because insurers must cover more services.

This aspect of the AHCA brings up a larger question facing the bill overall. Passage in the Senate is far from certain, but even before that, the AHCA would have to pass muster with the Senate parliamentarian, the gatekeeper for Senate rule making. See, this GOP replacement bill is not really a full replacement; it’s kind of like an update to the ACA. That’s because the GOP doesn’t have the votes to fully repeal the ACA, which would require 60 senators, so it’s using a process called reconciliation, which allows the Senate to to pass bills that affect the federal budget with a simple majority. Much of the AHCA, such as the cuts to Medicaid and changes to insurance subsidies, falls within that mandate. But other changes, such as waivers to essential health benefits, don’t have a direct budgetary impact, leading some experts to believe the Senate parliamentarian will flag those changes as outside the realm of reconciliation.

 

What We Couldn’t Find in the Bill?

There’s still no interstate purchase of insurance and there isn’t a mechanism for allowing individuals to form groups that are not employer-based, so the two biggest tools for driving down premiums remain unavailable. They may come in one of the two later stages, but as already explained, these are easily swept aside by every new Secretary of Health and Human Services.

While the Republican bill may be a step toward making medical care more affordable to most Americans, it is a far cry from the “repeal” Republicans ran on when the Tea Party began to make inroads and win seats and they realized promising something they couldn’t really deliver was better than being realistic.

The AHCA still stinks like three-day-old fish left out on the counter, but it may not stink quite so much as the ACA. Premiums will go down for healthy individuals in the middle class, but so long as we’re still mostly required to buy insurance or pay a penalty, we aren’t really free to make our own decisions.

 

Cultural Attitudes That Harm Us   1 comment

American citizens have several cultural attitudes toward health care and savings that has resulted in an economy that spends one-sixth of the GDP on medical care. Other countries don’t pay so much and many of them have universal medical coverage.

So what’s our problem?

Image result for image of cutting-edge medicalA major issue is that Americans have stopped saving anything. Many of us have retirement accounts, which work because it’s not easy to tap into them, but most of us do not have savings accounts. I recently read an article by a financial guru who spent most of the article ripping into Dave Ramsey for suggesting that paying off debt and having 3-6 months of living expenses in savings made no sense to her. You should be investing those funds, not leaving them in the bank account.

So, naturally, since, they don’t believe in savings, the American middle class does not believe in saving up for medical care expenses. The idea that you should have $10,000 to 15,000 in savings for a potential acute medical episode is ridiculous in most people’s minds. This isn’t pre-World War 2 America, nor are we a 3rd world country. That’s “wasted money” just sitting in a bank.

We object to paying one-sixth of our personal income directly on health-and-medical expenses, but we also resent paying one-sixth of the government’s treasury on health-and-medical expenses. We are less willing to spend public funds to pay for health maintenance than we are to pay for medical services, even though study after study shows that we get better results from getting people to change unhealthy lifestyles than from treating the consequences of those lifestyles. You can’t really blame the American middle class from objecting to paying taxes in order to support people who are very poor or very sick when they themselves work hard to have an income and to take care of their health. Americans are not Scandinavians. We believe in personal responsibility, if only for other people.

 

Americans, especially medical care providers, do not want to think of medical care as a commodity that is bought and sold in an open market subject to supply and demand rules. Providers want to be paid (and paid well), but they don’t want to think of themselves as capitalists selling their services, so they prefer payment that comes from third parties where the price is hidden from consumers.

 

Americans are individualists at heart and object to telling other people how to live their lives or being told by others how to live theirs. This means that the right to live an unhealthy lifestyle is considered sacrosanct in the United States. Under the ACA or universal coverage, that means that healthier individuals pay for the poor choices of less healthy individuals.

Americans also tend to live in a state of denial about some health choices, so that about one-quarter of our population engages in unhealthy lifestyles that have long-term medical care expense consequences, the cost of which are born by people who take care of themselves rather than the poor decision makers who require the expensive long-term care.

Americans enjoy being “early adopters” of new treatments, which are often much more expensive in their early, experimental stages than when they have been available for many years. Forty years ago, when medical care was a smaller share of the economy, we could afford that attitude, but new treatment options now require expensive equipment and highly-trained specialists. Although these treatments promise incredible results, they are expensive to the individuals receiving the treatments … or the group that’s paying the bills.

All of these attitudes conspire to make the “Affordable” Care Act, or any replacement other than the free market, incredibly and increasingly expensive for all of us. Universal coverage will only exacerbate the problems that these cultural attitudes engender, leading inevitably in medical care rationing and resultant lack of availability of care, with the end results being similar to England’s 45% higher mortality rate.

Yes, we could choose universal coverage and then attempt to outlaw everything that makes people unhealthy. Good luck with that! It hasn’t worked in France and England, which is one reason England has a 45% higher mortality rate than the US.

Alternatively, we could work with human nature and return our medical care system to the free market it began in. Lift the government-created restrictions against individuals forming groups to drive down medical insurance costs. Lift the government-created restrictions that prevent us from buying insurance across state lines. Life the government-created monopoly against increasing medical schools and opening clinics.  Yes, that would mean that some people wouldn’t make good health choices and wouldn’t have medical care coverage when those choices require them to seek medical care. That would be the consequence of being a poor-decision maker and it might drive some of this group to make better choices. Additionally, medical care would become less expensive because government-created barriers to care and affordable insurance would no longer be a factor in price.

We have a choice to make in this country. Do we want reduced access to expensive care, but everybody having insurance or do we want improved access to affordable care with some people choosing (for themselves) not to have insurance?

I know which one I prefer and which one I believe would result in improved health results.

Why ACA is Making Us Less Healthy   Leave a comment

I believe sincerely that everyone should have the right to do whatever he wants, provided it doesn’t harm other people or their property. I’m not saying I like it or think it is good for you, but I stand by your right to smoke like a chimney (so long as you don’t do it in my airspace), drink like a fish (but not if I share a household with you), or eat like a hippo (so long as I don’t pay your grocery bill).

Image result for medical careSadly, your lifestyle choices became my problem when the Affordable Care Act was passed. Your poor decisions now cost me money, which is a form of property. Hey, you, with the 50-inch waistline … that’s my kid’s college education in medical expenses that you expect me to pay, so yeah, I have a problem with the Affordable Care Act.

Back in 2009 when the Democratic-dominated government started touting the Affordable Care Act, they assured that the expansion of medical insurance coverage to all Americans would come at no cost to any citizen. A lot of us (about 60% of the electorate) were skeptical and that time and anyone paying even cursory attention to their medical insurance premiums since the go-live date for Obamacare knows our skepticism was well-founded. Medical insurance premiums have dramatically increased for most Americans not in the subsidized classes.

 

It might have seemed like a noble idea – that everyone should be required to have medical insurance just in case, but the Affordable Care Act also required medical insurance providers to cover pre-existing medical conditions.

That means that health-conscious people like me must subsidize medical care costs for people who make poor health choices. These poor health choices lead to diabetes, coronary artery disease, cancer, obesity, COPD, etc., all long-term chronic diseases that require expensive treatment. Coverage of pre-existing medical conditions greatly increased the cost that medical insurance providers were forced to pay out for treatment. This was supposed to be offset by young, healthy adults joining the health insurance pool, but younger, healthier people take one look at the expensive premiums and choose to pay the mandatory fine, because it is less than the premiums. This increases medical insurance premiums even more.

As Rick tried to highlight, individuals are less likely to make wise health choices if it is perceived that they will not have to bear the financial consequences of those choices because insurance paid by others covers the majority of the costs. Medical insurance holders are able to seek out healthcare services without the cost of those services being a major deterrent, which encourages people to go to the hospital and doctor for very minor ailments. After all, you want to get value for what you are paying for. Then doctors are motivated to extract the maximum amount of payment … prescribing expensive and sometimes unnecessary treatments and medications because insurance is covering the cost.

Rick points out that doctors and hospitals are often at the mercy of insurance companies and what gets approved for coverage, so they use a scatter-gun approach toward billing. Patients often demand more expensive treatment because of an impression that it’s better and because cost isn’t an obstacle. This completely undermines doctor-patient relationships where the goal is to choose the best and most sensible treatment options based on a cost-benefit analysis.

All of this has increased the cost of medical insurance. While providing medical coverage to everyone seems very humanitarian, it forces health-conscious people to subsidize the medical care costs of people who make poor choices and is causing employers to drop insurance coverage as it becomes unaffordable. If current trends hold, and there’s no reason to believe they won’t, the Affordable Care Act is going to bankrupt the middle class.

We’re not joking when we call it the UN-Affordable Care Act.

In a perfect world where liberty was still an ideal we upheld, everyone would be able to live their life however they want and be accountable for the personal and financial impact of their choices. The fact that I love bacon even though my family has a history of stomach and bowel cancer would not matter in the least to you because it wouldn’t affect you. Unfortunately, with the ACA, we’re all in this mess together, which means we all affect each other. It becomes absolutely imperative that we all strive to be the healthiest people we can be so as to reduce the economic burden on our neighbors.

Please don’t think I’m down on obese people to the exclusion of smokers or alcoholics or whatever. I’m using obesity as my demonstration condition because of the costs associated with it and it’s lack of social stigmaticism. My Baptist friends who don’t drink or smoke will smugly sit on their ample rears complaining that I’m wrong. “Being overweight is not unhealthy and has no impact on the cost of healthcare,” they will say.

Sorry, folks. You’re wrong. Research demonstrates that obesity and even being moderately overweight are the second leading causes of preventable death, right behind tobacco usage.

Here are some alarming economic implications for obesity:

  • Obese adults spend 42% more on direct medical care costs than adults who are a healthy weight.
  • Per capita medical care costs for severely or morbidly obese adults (BMI >40) are 81% higher than for healthy weight adults. In 2000, around $11 billion was spent on medical expenditures for morbidly obese U.S. adults.
  • Moderately obese (BMI between 30 and 35) individuals are more than twice as likely as healthy weight individuals to be prescribed prescription pharmaceuticals to manage medical conditions.

Did you know that 68.8% of the US citizens are considered overweight and obese? That represents a dramatic impact of overweight and obese individuals upon our medical care system.

Obesity is just one of many other preventable medical conditions that contribute to the cost of medical insurance, but obesity and being overweight are the most widespread.

We would all be personally well-serviced by quitting smoking, drinking less alcohol, exercising more, making better food choices, taking supplements wisely, and getting adequate sleep. There’s the direct positive impact on yourself, but better health habits would have a direct positive impact on the economy, and especially those of us who are forced to bear the cost of our nation’s medical care costs.

Unfortunately, you won’t see a financial benefit to making these changes. Unlike car insurance, where you receive lower premiums if you are a good driver who doesn’t have a lot of accidents, getting healthy doesn’t work the same way. Unlike life insurance, where you receive lower premiums if you’re a healthy individual, the ACA assures you will be paying for others who don’t make the same wise choices.

The result?

A less health population, which is indicated by slipping mortality rates. Although it sounds like such a great idea to provide medical insurance to everyone so they will be “healthier”, the reality is that the United States population has become less healthy as more of us have become covered by medical insurance.

An Affordable Health Insurance   1 comment

Amid rising hmedical insurance costs and the debate over reforming/replacing the ACA, it’s easy to miss that an alternative already exists and needs to be protected in any health care reform plan. As Obamacare has driven up the cost of insurance premiums, a growing number of consumers and employers have turned toward high-deductible health plans (HDHPs), often known as “catastrophic health insurance.”

Image result for image of the american health care billThese plans feature lower-than-average premiums in exchange for higher-than-average deductibles, and many on the market today are paired with tax-advantaged health savings accounts (HSAs).

This is as opposed to some small group and individual market policies where you pay high premiums, but you also have a high deductible as a cost-savings means.

Brad and I used to have one of these in the individual market before I accepted a job with medical insurance that covers the family … for a price. There were no attached Health Savings Accounts available in those days and we only satisfied the deductible when we had our daughter through midwife delivery. Prenatal and labor and delivery just topped over the deductible and because we had chosen a low-cost (and much healthier option for childbirth) the insurance company reimbursed the entire bill … a nice baby-warming gift.

We looked into it when Obamacare drove up my family premiums by more than 50% over two years, but we couldn’t find one that covered our family … only individuals. I’ve heard that’s changed, but we don’t need the coverage currently.

Under a high-deductible health plan, you pay for all your medical expenses, except for qualified preventive care (which the ACA made mandatory), up to the annual deductible. After that, some plans pay 100 percent of your covered medical expenses. Others initially pay a share of your medical bills (maybe 80 percent) before paying 100 percent when you reach an out-of-pocket maximum.

TRelated imagehese plans are sometimes referred to as catastrophic health insurance plans, but the name is not exactly accurate. Under health care reform, the plans must cover 100 percent of preventive care, even before you pay the deductible. Additionally, many of the plans cover a full range of health care services – not just hospital and emergency medical costs you might associate with catastrophic care. So, if you’re someone with a chronic disorder, you still might use health insurance coverage for regular doctors’ visits after the deductible is satisfied.

But how do you pay for the medical care you need before the deductible is satisfied? Often the HDHP is paired with a tax-advantaged Health Savings Account. HSA-qualified, high-deductible health plans have been covered by federal law since 2004. These plans are coupled with a health savings account that lets you set aside pre-tax money to use for medical care today. In recent years, these plans have been reformed to allow them to roll over from year to year and now you can even pass them to your heirs.

Consumers shopping for affordable individual health insurance were the first to gravitate toward HSA-eligible plans, followed by small employers, but larger businesses are now looking at them as well. In the latest data, nearly 17.4 million Americans were covered by “health savings account/high-deductible health plans” in 2014, which was a 12 percent increase over 2013. Since 2011, HSA plans have grown on average 15 percent annually.

Currently, not all high-deductible health plans can be paired with an HSA. To qualify for HDHP status in 2016, the plan must have a deductible of at least $1,300 for an individual and $2,600 for a family. Out-of-pocket maximums can be no more than $6,550 for an individual and $13,100 for a family. My former small-group employer has employees paying $1000 a month for an “ordinary” insurance plan that has similar parameters, so they wouldn’t be losing much with an HDHP.

You can contribute up to $3,350 per year in pre-tax dollars to an HSA as an individual or up to $6,750 as a family. You can save an additional $1,000 in the account if you’re 55 or older.

The money in the account grows tax-free, and in some cases companies that service the accounts provide investment options, such as mutual funds to promote further savings growth.

When you withdraw the funds, you don’t have to pay taxes so long as the withdrawals you take are for qualified medical expenses, such as the HDHP’s deductible or medical costs not covered under the plan, including dental and vision care. You can even save for long-term care not covered by Medicare.

An HSA account is portable. Even if you switch to a different type of health plan or change employers, the money is still yours to spend on health care.

They’re a no-brainer for the young and healthy, but Rick believes they’re well-suited for all age- and health groups. There are currently 20 million active HSA accounts in the US, but expansion plans could increase the number significantly.

“I believe everyone should be in charge of their own health care decisions. These plans mean that consumers care how much medical care costs. It incentivizes them to make informed decisions. Last year, my son chose to forego expensive surgery in favor of physical therapy to correct an orthopedic injury. He’s back doing stupid athletic things in less time than the recovery from surgery would have been. He’s less likely to hurt himself in the future because he’s learned a great deal about body mechanics. If he’d been covered by “full-coverage” insurance, he would have been less conscious of the costs and asked fewer questions about the alternatives. Yes, he cost a surgeon a lot of money, but that money went to a physical therapist, a gym membership, and whatever investments his HSA is attached to. Yes, Lela, I read “The Broken Window” by Bastiat when you suggested it and I can apply it.” Rick (a doctor)

Rick supports the government funding HSA’s for lower-income people, paired with a HDHP, as an alternative to the one-size-fits-all (but it doesn’t) current medical insurance scheme. It would save the government money in the long run and it would force people to pay attention to their own medical care decisions and by the time someone turned 18 and was responsible for their own health care, they’d have plenty of money in the account to act as a cushion for any future medical expenses.

How Could They Make It Worse   Leave a comment

So when Rick and I started our series, we didn’t yet know what Congress was going to propose for certain, but they came out with the House plan now (March 8), so we decided to write up our impressions.

The draft House health insurance bill fails to correct the features of Obamacare that drove up health insurance and medical care costs and mainly just tweaks Obamacare’s financing and subsidy structure.

The bill focuses on protecting those who gained subsidized coverage through the law’s exchange subsidies and Medicaid expansion, while failing to correct Obamacare’s misguided insurance regulations that drove up premiums for Americans buying coverage without government subsidies.

 

The draft bill leaves Obamacare’s costly insurance regulations in place and attempts to offset those costs with the same basic approach.

Approximately 22 million individuals currently receive subsidized health insurance coverage through the exchanges (8 million) and the Medicaid expansion (14 million). For them, Obamacare’s higher insurance costs are offset by the law’s subsidies.

About 25 million Americans with unsubsidized individual-market coverage (10 million people) or small-employer plans (15+ million people) are the ones who most need relief from Obamacare that can only be supplied by repeal, and they probably don’t care about or for replacement. Their experience of Obamacare has basically been “all pain, no gain,” as they have been subjected to significant premium increases and coverage dislocations with no offsetting subsidies.

Unfortunately, the draft House bill provides no meaningful relief for that group of middle-class Americans who are most adversely affected by Obamacare and are most supportive of repeal.

The draft bill leaves Obamacare’s costly insurance regulations in place and attempts to offset those costs with even more subsidies.

The draft bill’s new Patient and State Stability Fund is particularly problematic. It would provide grants to states of up to a total of $100 billion over the nine years, 2018-2026. What are the significant problems with this new program? They’re substantial.

  • It substitutes new funding for old Obamacare funding without adequately addressing the misguided Obamacare insurance market rules and subsidy design that made the exchanges a magnet for high-cost patients. Those Obamacare mistakes created an insupportable burden on the individual insurance market by concentrating expensive patients in only that small portion of the total market.
  • Like Obamacare, it doesn’t actually reduce premiums, but rather uses subsidies to mask the effects of Obamacare provisions that drove up premiums in the first place.
  • It creates a new entitlement for states.

Furthermore, without a resulting reduction in unsubsidized premium levels, future Congresses will likely face pressure from states and constituents to extend and expand the program. It will become a creeping Medicaid-like drain on resources that will destroy medical care access in this country. Under the Medicaid expansion, the federal government reimbursed states 100 percent of the cost of expanding Medicaid to able-bodied adults, with federal support eventually declining to 90 percent. These are able-bodied people who earn a living (in Alaska, up to $52,000 a year for a family of four) and their medical care is paid for by the taxpayers.

Yet, states continue to receive significantly less federal assistance (50 percent to 75 percent, depending on the state) for covering the more vulnerable populations (such as poor children and the disabled) that the program was intended for. That policy was both inequitable and unaffordable.

The draft bill does not correct that inequity, but rather reduces the enhanced match rate from 95 percent to 80 percent. The better approach would be to allow states to immediately cap expansion population enrollment, while also setting federal reimbursement for any new expansion enrollees at normal state match rates.

Such changes would likely limit the addition of new individuals to the program, and also substantially reduce the size of the federal revenue loss that expansion states will incur when the program terminates. That is because a significant share of current enrollees can be expected to leave the program for other coverage during the transition period.

Yet another policy mistake is the failure to take the first step toward providing more equitable tax treatment of health insurance.

The House version drops a proposed cap on the unlimited tax exclusion on employment-based health insurance contained in an earlier version, while retaining the so-called “Cadillac tax”—the 40 percent excise tax on so-called “high-cost plans”—and delaying its implementation until 2025.

Congress should kill this punitive excise tax and replace it with a cap on pre-tax funding so as to encourage employers & workers to evaluate the trade-off between higher health care spending and higher cash wages, to rethink how much of total employee compensation should be devoted to health benefits.

While the Cadillac tax would force employers to alter the health benefit plans that they provide their workers, no such effect would result from the cap on the exclusion. It would instead limit the amount of employer health benefits that constitute pre-tax income to workers, which would make the tax treatment of employer-sponsored health benefits consistent with the tax treatment of other benefits (such as retirement savings plans, group life insurance, and dependent care) offered by employers.

Workers would still be able to use after-tax income to purchase additional coverage, just as they can with other employer benefits, and the employer would still be able to offer a plan whose value exceeds the level of the cap on pre-tax funding.

This bill misses the mark primarily because it fails to correct the features of Obamacare that drove up health care costs. Congress should continue to focus on first repealing the failed policy of Obamacare and then act to offer patient-centered, market-based replacement reforms. Stop making patients into a group where things are done to them and put them back in control of their own health care.

Sherry Parnell

Author of "Let the Willows Weep"

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