Tag: "Health Care Costs"

ObamaCare Fan Learns She Has Second Thoughts

Jessica Sanford, a self-employed single-mom, was so ecstatic at being able to purchase affordable health coverage for her and her son that she wrote President Obama a fan letter. The president even acknowledged her letter and quoted from it in an October 21 speech.

Ms. Sanford later discovered the state website she had used to calculate her subsidy had made an error:

Originally it said Sanford and her child would get a whopping tax credit that would reduce their total premium to $169 a month. Now the state is telling her it goofed — twice — and she has to pay full ticket. There may even be a third goof involved: At least one health-insurance broker says she may qualify for a tax credit after all, albeit a small one.

According to the Kaiser Family Foundation Subsidy Calculator, family of two with an income of just under $50,000, living in Washington State would be required to spend nearly $4,750 per year on health coverage before it qualified for a subsidy. This is more than double what she was originally told she would be required to spend.

Israel’s Two Tiered Health Care System

Foreigners are in the top tier:

People from Easmedical-travel1tern Europe, Cyprus and the United States have been flocking to Israel’s public and private hospitals over the past five years for inexpensive, high-quality medical treatment.

But this cash cow for the Israeli health care system may be in jeopardy.

…[M]any worry that the lure of foreign money is creating a two-tiered medical system, where hospitals shift the best doctors and facilities to the high-paying customers and lessen service to Israelis. (USA Today)

How the ObamaCare Subsidies Work

A number of commentators have incorrectly concluded that the ObamaCare subsidies insulate buyers from higher premium and premium increases, because the subsidies cap out-of-pocket spending as a percent of income. (See Jonathan Cohn, for example.) To explain why this view is wrong, I posted this comment at Marginal Revolution:

arrow-going-up1. The premium the individual pays is not fixed as a percent of income. The subsidy is fixed, based on the second lowest silver plan premium and that amount is based on income. But the consumer is free to buy any plan. Remember, the second lowest priced silver plan may be a really lousy plan. It might have a very narrow network, for example. So, all the plans are competing against each other, with one fixed subsidy and an array of premiums. The premium an insurer charges will matter very much.

2. After 2018, the out-of-pocket premium for the second lowest priced silver plan will no longer be fixed as a percent of income. Premium subsidies as a whole will grow no faster than GDP + 0.5%, the same rate of growth that is in the Obama budget for Medicare.

Tyler Cowen reposted it and the comments that follow are very interesting, including an explanation of a Vickery auction (which is how the pricing works in the exchange). Bill Vickery BTW was my teacher at Columbia.

Navigators at Work

The total vs_500_opednews_com_0_belladepaulos-jpg_58398_20131102-687alue of grants doled out for nonprofits and community organizations to hire navigators has topped $67 million nationwide, and some of the money is going to a group run by ACORN’s highly controversial founder…

“You lie because your premiums will be higher,” one navigator advises an investigator for O’Keefe’s Project Veritas, who tells the worker he sometimes smokes. “Don’t tell them that. Don’t tell ’em.”

The investigator then poses as a low-income worker at a university who has unreported cash income on the side, worrying about how that might affect his premium subsidies. That’s no problem for a navigator, who says, “Don’t get yourself in trouble by declaring it now.”

“Yeah, it didn’t happen,” another navigator says. One more chimes in: “Never report it.”

John Fund.

Do We Really Want Mental Health Parity?

The final rules are out and it seems that the quest for mental health parity has been wholly successful. I’m convinced that almost no one understands what it means (see our previous post). Nonetheless, everyone is cheering.

Everyone that is, except for a few of us here at the NCPA. This is from a Health Alert I wrote six years ago:

Hebalancing-health-costsre’s the question: Would you want an insurance plan that had the same deductible and co-payment for every procedure? Need time to think about that? Then try this: Does it make sense to have the same deductibles and co-payments for chiropractic therapy as for setting a broken leg? Or from the mental health field, should the payment terms that cover bipolar disorder be the same as those that apply to marriage counseling (required coverage in some states)? Should pastoral counseling (also required in some places) be reimbursed the same way as coverage for schizophrenia? If you have any sense, the answers are: No, No, No and No.

One way to keep insurance costs down is through incentives. Patients should pay more of their bill when they exercise discretion and especially where patient discretion is appropriate. In mental health, this principle applies in spades because:

  1. the illness is often experienced subjectively,
  2. there are often no objective standards for diagnosis or treatment,
  3. doctors often exercise enormous discretion,
  4. patients also exercise a lot of discretion and
  5. patient cooperation is often crucial to any cure.

Unlike fixing a broken leg, these are precisely the conditions that make patient cost sharing highly desirable.

If I haven’t convinced you so far, consider this National Bureau of Economic Research study finding: 38 percent of all mental health patients ― representing 28 percent of all treatment visits ― are people who do not have any mental health disorder.

The NCPA has published three short analyses (here, here and here) that describe in more detail the case against mental health parity.

Is This an Opportunity for Entrepreneurs?

Tom Scully thinks so. This is from the NYT Magazine:

Medicare, which picks up a majority of their health bills, encourages hospitals to discharge patients quickly after surgery, but it doesn’t offer financial incentives to choose one form of post-acute care over another. And because discharging a patient to home care requires a lot of extra work — ensuring that the correct equipment will be in the home, training family members and so forth — many doctors choose the easier option. They can simply ask a nurse to send the patient to a rehab facility, and everything is handled in about a minute. Medicare automatically approves payment for 20 days of recuperation in a nursing home, and many facilities simply treat the patient for the full allotment. “Miraculously, everyone is cured on the 21st day,” Scully says…

On average, Medicare’s fee-for-service model pays for about 2,000 days in a post-acute care facility for every 1,000 beneficiaries. By comparison, Kaiser Permanente, a provider of low-cost quality care, averages 600 days per 1,000 clients while achieving better outcomes.

Scott Burns on Priceless

Is pricelessthere a solution? Yes, I believe there is. It’s radical. It will destroy many institutions that won’t be able to adapt. It’s something we haven’t seen in health care for decades — it’s called price. If we had to pay the price of our care, we might negotiate it. We might not buy it. We would consider alternative treatments. If possible, we’d shop the cost. Do that, and the price of care would, however imperfectly, decline until it met what we are able to pay.

This isn’t a crazy idea from a deranged newspaper columnist. You can read how and why restoring price to health care will work by reading John C. Goodman’s Priceless: Curing the Healthcare Crisis (The Independent Institute). (More)

Knocking on Heaven’s Door

“The doctors were considering giving my mother coronary artery bypass grafts plus the two valve replacement surgeries she’d rejected when she had a far better chance of surviving open-heart surgery in decent shape. My mother seems to be heading down the greased chute toward a series of ‘Hail Mary’ surgeries — risky, painful, dangerous and harrowing, each one increasing the chance that her death, when it came, would take place in intensive care.

“The cost to Medicare would probably have been in the $80,000 to $150,000 range, with higher payments if things had not gone well. More than a third of Medicare patients have surgery in their last year of life, nearly a 10th have surgery in the last month of life, and a fifth die in intensive care.”

Scott Burns reviews Knocking on Heaven’s Door by Katy Butler.

India Shows the Way

Necessity spawns innovation. Despite the pressing demand and constrained supply, a few relatively new Indian hospitals have devised ways of providing world-class health care…These hospitals target well-off patients, which forces them to provide care that meets global quality standards. But their purpose is to serve everyone, including patients with very low incomes, which Innovation-Raceputs pressure on the organizations to lower costs dramatically. Such a business model scales because the low costs of these hospitals attract large volumes of patients and allow the overall enterprise to be profitable. As a result, the hospitals are able to sustain their operations not through the usual government subsidies, charitable donations, or insurance reimbursements but through their revenues. Aravind Eye Care System, for instance, has paid for all its expansion projects from its profits, even though two-thirds of its patients receive free or subsidized care. These extraordinary private Indian hospitals should serve, we believe, as an inspiration to those in other developing nations and as a wake-up call to hospitals in Europe and the United States. (More)

See previous my posts on India here and here.

Domestic Medical Tourism is Taking Off

Premera Blue Cross Blue Shield, Alaska’s biggest health insurer, started a program in January that will pay expenses for some of its members to fly to Seattle for some procedures that come with huge price breaks. For instance, a knee surgery that costs $27,100 in Alaska can be performed for $13,000 in Seattle, according to the insurer…

inbound_outbound_imageSome patients are deal-hunting on their own. The website Medibid, which launched in 2010, connects patients who are paying out of pocket with doctors who bid to provide care. The website’s founders say they’ve helped about 1,800 people find care.

Patients register with the site and pay either $25 per request or $4.95 a month for a year so they can post their medical needs on the site to solicit bids. Care providers, who register and pay fees of either $24.90 per month or about $250 annually, respond to patients with a bid.

Tom Murphy, AP.

Sen. Tom Coburn on this issue. See more stories here, here, here and here.