Uninsured, and Lovin’ It
Back in December I decided to drop my health insurance coverage.
I was hit with a 19% rate increase thanks to ObamaCare. All those “enhanced” benefits like free preventive care, unlimited lifetime benefits, and paying for 26-year old slackers came with a cost. In my case it was more money than I could afford now that I am retired. So, bye-bye, Blue Cross.
Plus I had about $12,000 saved up in my HSA, so I figured that I could pay for most services out of my account. And if anything untoward happened, Obama had required every state to start a risk pool that charged no more than a standard premium, so I could enroll in the high-risk pool.
The only problem with the risk pool was that you have to be uninsured for six months to be eligible, so I figured the sooner I dropped my coverage the better. Now the six months have passed and I am good-to-go. And I have saved about $3,000 by not paying insurance premiums.
To summarize:
- I pay for small stuff out of my HSA. This includes twice-annual doctor’s visits at $60 a pop and three prescriptions that cost about $30/month.
- If something bad happens I can sign up for the risk pool and pay standard rates.
- I have already saved $3,000 in premiums.
Of course I was curious about how the risk pools are going, so I did a literature search. I could find absolutely no enrollment information since February. Back then CMS was mocked because only 12,000 had signed up when CMS had estimated 375,000 would be enrolled by then, according to the Washington Post:
The Obama Administration does not like to be mocked, so apparently it has stopped releasing enrollment numbers. But we can guess that not many more have enrolled or they would have trumpeted it. Plus, they are so desperate to enroll people that on May 31 they announced they would be slashing premiums, in some cases by 40%, and easing criteria for eligibility. Now you don’t ever have to be denied coverage in the private market. All you have to do is “simply provide a letter from a doctor, physician assistant, or nurse practitioner dated within the past 12 months stating that they have or, at any time in the past, had a medical condition, disability or illness,” according to Employee Benefit Advisor.
This is great! Not only do I save a ton of money by not paying premiums, but when I get sick, they have already cut my “standard premium” by 40%—no questions asked.
Now the only remaining question is—why haven’t you done the same?
Great post. Greg, this is the best thing you have ever written — at least that I have seen.
I agree with Ken. This is great.
When the state health insurance exchanges are up and running in 2014, many people will decide they can go without health coverage – secure in the knowledge they can always sign up should they become sick. The only uncertainty has to do with whether or not they should pay the fine up front or wait to be caught before paying it.
If you want to be uninsured, and still have help for catastrophic needs, and you’re a Christian, you can check out Samaritan Ministries (www.samaritanministries.org) and be a part of a group of 17,000+ families sharing over $4M/month in needs *without* insurance. And being a part of a health care sharing ministry like Samaritan will also exempt you from the individual mandate penalty under the PPACA.
Good Post…ironic that health reform with a insurance mandate would favor individuals to forgo real insurance.
James, is Samaritan Ministries also an option for those who are Medicare eligible? I was talking to someone about Samaritan just last night, I think it is a great option. We’ve come full circle. Would oyu be able ot come to the http://www.DoctorsTownHall.com to talk about this?
@Ralph
Yes. In fact we even have a provision for those over 65 that a) gives them a lowe monthly share than those under 65, and b) allows for a personal conscience decision as to whether they participate in Medicare.
RE: the other website: I’ll get there today if time allows.
Just realized you’re talking about an event, not a web site. Sorry about the confusion. Normally I’d be happy to come, and I’ll check my calendar to see if it’s possible. My wife and I have a baby due in late July, but I’ll check the flights home from Nashville to see if I can make it.
Great post, Greg.
Where can I find out more about the coverage that Greg has, after being uninsured for 6-months?
What a moronic post that shows a complete lack of awareness for how 95 percent of people live.
You went without insurance because you could afford 6 months without coverage. Great, good for you! A lot of people can’t take that risk. You have thousands of dollars in an HAS. Great! Like all HSAs they’re great if you can afford them, but they’re completely worthless if you’re underinsured or your employer doesn’t offer insurance.
So, yes, people should absolutely follow your advice if they have the means. If you’re one of many that can’t go that long without insurance or don’t have the savings then, well, there’s always the ER.
Kim,
I don’t have coverage, but if you want to look into the risk pools go to http://www.pciplan.com/index.html
Andy,
All of my HSA money came from the money I saved by reducing my premiums with an HSA-qualified high deductible plan. But you are right. I am unlike 95% of the population because I have been buying my own insurance for a very long time.
In Tennessee there is no way that a plan which is not HSA compatible makes fiscal sense. It’s like throwing your month away. A plan with a $10,000 family deductible for a family or 4 costs $4,600 a year, and aplan with zero deductible costs $17,000 per year. Why pay $12,400 to buy down a $10,000 deductible. This makes no fiscal sense.
My health insurance went up 24% from 2004-08. Was this also due to Obamacare?
Your article is interesting but it would be more valuable to include what the risk pool would cost were you to need to use it. I have no idea what that costs and it seems like your plan presupposes that you sign up 12 months before you need it, which takes remarkable foresight to know when catastrophe will happen.
Greg, in all seriousness, I’m glad you made it through six months alive and well. But, and I’m sure you thought of this during those six months, if you had contracted a serious illness, taken a wrong step off the curb that necessiated a trip in an ambulance, torn an ACL while going up for a dunk in a pickup basketball game, had a piano fall on you head, etc., you would be in an incredibly difficult financial place. (If you’re well off enough to self finance a serious medical emergency, good on ‘ya.)
Also, I’m guessing there aren’t others that rely on your insurance for that would be incredibly irresponsible. You gambled and won. My point is that you were in a very unique position to take that gamble.
So basically you are pulling your money out of the private market, blaming the government for it, and then asking the taxpayers to subsidize your catastrophic care when you (will) need it. As a health care wonk, you no doubt know your 12K will be used up with one overnight stay at a hospital (plus you will have lost your private insurance pre-negotiated lower price, and be charged the full cash price for hospital services). What you are doing is actually further stressing the private health insurance system, with your “I’m not sick so I don’t need to pay for insurance” attitude. By shrinking the healthy pool paying in to it, YOU are making private insurance more expensive for those of us still purchasing it for ourselves and our employees. Also, as a physician, the only people who can see me for “$60 a visit” are people I give a huge discount to because they are (truly) uninsured. You are taking advantage of your doctor, too. I’m not impressed.
So you have a heart attack. An ambulance takes you to the emergency room where you are given diagnostic tests and medicine to dissolve the clot. You are told that you need an immediate angioplasty with stent to avoid permanent damage to your heart. Your total bill for this whole episode is $50,000, and it happens so urgently you can’t pause to sign up for a high-risk pool.
What do you do then?
In a way the whole problem starts with the $50,000 bill that Nancy mentions above.
I had a heart attack myself in 2007, and I had emergency surgery with the placement of a stent.
It was a wonderful thing and saved my life. My gratitude to the doctors is immeasurable.
But as a health care wonk myself, the marginal cost of the whole episode was acdtually about $4,000. The drug-coated stent itself should cost about $100, not $1,400, the ambulance ride should cost $200, not $1,800, and so on down the list billing.
Because the $50,000 bill is so bloated, then the cost of a $10,000-deductible insurance policy is equally bloated…..$4,600 a year is wildly too much, given that the insurer is almost certain never to pay a claim.
The long-term answer is to pay for hospitals the way we pay for fire departments — i.e. with general taxes on all business and all citizens.
Then hospitals will not need radical overcharges to keep their doors open, and the patients will not need such expensive insurance.
Publicly-funded fire and police departments have been part of America for over 100 years, and this modest form of socialism has certainly not destroyed our liberties.
Bob Hertz, The Health Care Crusade
Scot and Andy understandably seem to be jumping down Greg’s throat until one actually thinks about it and looks at the numbers.
Scot, Greg likely has some assets so should he go uninsured to the hospital he has a high likelihood of being charged many multiples of what the insurance company would have paid. Thus he likely would be putting more money into the system than many of the insured. The problem faced is that insurers like everyone scared so when they see that hospital bill of $100,000+ they sing with glee that they had insurance, but many times the insurer only pays $5,000 to $20,000. At $5,000 would one be quite so happy with that $12,000 premium payment?
Andy, what do you mean gambled? We gamble every day of our lives. If one sees an auto accident where someone died one doesn’t stop driving their car. By the way, what about a similar thought regarding how to pay for other big ticket items like homes, cars, kids education or special needs, loss of a job, etc.? What makes that slight healthcare risk any different especially when one is spending thousands of dollars a year on premiums that mostly go to places other than important health care needs?
Jerry,
First, your insurance going up 24% over four years is a tad different than mine going up 19% in one year. Second, I wouldn’t blame ObamaCare for your increase, but I sure would blame other governmental meddling such as piling on mandated benefits.
Andy,
If you are that risk adverse you may want to stay home and just peer fearfully out the window from time to time. What a nation of weenies we have become.
Scott,
Yes, I am blaming the government for it. It has prevented me from buying the type of coverage I would prefer to have and my insurers have been willing to sell me at a price we can agree on. This was once known as the Right of Contract. It has been abolished.
Bob,
You are absolutely right on the bloated charges. But the answer is not to turn it into a politically managed utility, but to lessen our reliance on third-party payment, whether public or private.
Greg
I disagree. It has been repeatedly documented that prices for health care in the U.S. are much, much higher than in other industrialized countries. The free market is not the solution to this problem, it is the origin of it. Individual payers (that is, insurance companies) in most cases don’t have enough market power to bargain down provider prices. It is not an accident that the nation’s single biggest payer, Medicare, can get away with paying so much less than anyone else. To fragment the payer market further by putting the bargaining “power” in the hands of individuals would make matters worse, not better.
As much as free market zealots would like to believe otherwise, health care is not the same as any other consumer good or service. Our country is almost a case study in the failure of this market.
And please don’t trot out lasik or liposuction to disprove my point. They are relatively low cost and entirely optional cosmetic procedures. I’ll believe this argument when someone can explain to me how you bargain down prices when you have just been diagnosed with colon cancer and are staring at a $200,000 course of chemotherapy without which you will die.
Ok then. I’ll trot out MRIs CTs and ultrasounds. Locally the average price at an OB office for an ultrasound in Peoria, IL is over $700. I can get one at local radiology service for $150 because they’re catering to cash patients instead of insurance companies who just pay the negotiated rate no matter what the “list price” is, and cash patients pay that.
The reason that that market isn’t to blame here is because less than 11% of costs are paid for by the patient (aka the end user/consumer). If the patient was paying for a chunk of that chemotherapy out of his/her own pocket, you could look qt multiple providers and go back and forth to push prices down. But in a more market friendly service (read- no employer provided insurance subsidy) economy, high deductible, catastrophic policies (read – real insurance not prepaid health care) would be plentiful and inexpensive like they once were and fewer incentives would be there to inflate prices. This is how it was before the tax exclusion for employer insurance and Medicare/medicaid vastly changed the way we think about and practice health care. Plus driving down the smaller items (e.g. Colonoscopies, mammograms, blood tests) in health care is a bigger deal than the huge onesif you’re looking to lower aggregate costs.
Medicare has exacerbated the situation, and giving 100% of control to the government may reduce aggregate costs in some models but come with huge unexpected consequences including decreasing supply of acute care services. ERs are clogged with Medicaid patients, not primarily the uninsured, because fewer and fewer doctors take Medicaid. If we’re all on Medicaid….
Nancy if as you say: “It is not an accident that the nation’s single biggest payer, Medicare, can get away with paying so much less than anyone else” then why is Medicare pushing us towards bankruptcy? If they can do things so inexpensively why do we have financial problems with Medicare?
Also when you say”when you have just been diagnosed with colon cancer and are staring at a $200,000 course of chemotherapy without which you will die” are you referring to the majority of cases or just a rare case? Can you produce any semblance of a usual bill (where the total amount billed is expected to be paid) that reaches that $200,000 number. Perhaps that is a gross exaggeration and in reality is quite different from what you presume.
Al, re. colon cancer costs:
http://www.acscan.org/federalhealthplan
see in particular p. 12
also
http://www.consumerreports.org/health/insurance/health-insurance/overview/health-insurance-ov.htm
see the story of the Iowa guy on the first screen
I wrote and researched this story. He sent us his bills so we could verify everything.
James,
Small ticket items do not drive health care costs. Catastrophically sick people do. The rule of thumb is that 20 percent of people account for 80 percent of costs.
You can’t compare the situation today to the days before Medicare. Back then, our guy with a heart attack would have been admitted to the hospital, put on a bit of oxygen and given nitroglycerin pills, and everyone would hope for the best. He would either have recovered or he would have died. In either event, the bill wouldn’t have been high because none of the life-saving interventions we take for granted today — clotbusting drugs, angiography, angioplasty, stents, bypass surgery — even existed.
But we can compare the highly regulated systems of other industrialized countries to those of places where people are not given health insurance but rather left to duke it out in the free market. China. Pakistan. Haiti. Mot of Africa. Health care free-market paradises, one and all!
Also, Al, re Medicare:
Medicare needs more tools for cost control. The independent payment review board set up by the Affordable Care Act needs to stay in place (Republicans are trying to kill it). Comparative effectiveness research needs to be fully funded and used to make coverage decision (Republicans are trying to kill it). Medicare D needs to be allowed to bargain for bulk discounts on prescription drugs, and there also needs to be a competing public Medicare D plan (both measures are anathema to Republicans, needless to say).
You can’t complain that Medicare cost are out of control while at the same time doing everything possible to deny the tools to fix this.
Nancy we have not had a free market for medicine in the us in over 60 years. Medicare admin costs are higher than private insurance and less admin is performed… Private insurance is oases on price fixing. Government programs have had three times the inflation of private plans
Nancy,
You really need to catch up on the literature. There is no longer any question that consumer-directed care (paying money directly) saves big bucks. It goes beyond the small-dollar stuff. Activated consumers also effect the use of big ticket items. This really is no longer in dispute.
NCPA will soon post another blog I did showing that according to the OECD, the U.S. has one of the lowest rates of out-of-pocket spending of all the OECD countries. It is not price controls that lower costs, but competitive markets.
You are right about that. High-deductible plans do save big bucks because the deductibles are so high they render a lot of people effectively uninsured. They don’t run up medical bills because they can’t afford to go to the doctor.
http://www.rand.org/news/press/2011/03/25.html
http://www.kff.org/insurance/chcm041508nr.cfm
http://archinte.ama-assn.org/cgi/content/short/170/21/1918
I’ll never forget a very pleasant woman I profiled once for an article. She lived in Missouri and ran a small business with her husband. Money was very tight and only plan they could afford had a $3500 deductible. She had a miscarriage. She tells her story in this video, starting about 30 seconds in:
http://bcove.me/2cpbyzh8
No doubt she saved the system “big bucks” by having her miscarriage at home without medical attention.
@James, we just had a Canadian who can not get care in Canada get a bid on http://medibid.com for $12,000 for open heart surgery to repair a hole in his heart. The free market DOES work. We have a client with 17,000 members and saved them $40,000 in just over 2 months by allowing doctors to compete, which is a concept which does NOT exist in the status quo, or under obamacare. We’re getting full knee replacements for $12,000, hips for $13,500. MRI’s for $350, GABG for $10,000. The free market DOES work, no one has seen a free market in medicine for over 60 years. And the above prices are right here in the US. Some overseas prices are even less.
Greg, if oyu do need medical care, check out MediBid.com and you’ll be surprised.
I think programs like what James is talking about through Samaritan Ministries are the answer to the stronghold that insurance and government has on price fixing.
Ralph,
Question your statement that government health programs have grown faster than private plans. For instance:
http://facts.kff.org/chart.aspx?ch=1804
and
http://theincidentaleconomist.com/wordpress/wp-content/uploads/2011/03/mcare-pri-moon.jpg
and
http://content.healthaffairs.org/content/22/2/230.full?sid=ef0e8785-cc58-4688-b495-ee80db7e78bf
Greg,
It is nice to see someone else using a common sense, pragmatic approach to the trade off between health care and health insurance. Since 2000 my family and I have been primarily without health insurance. In 200 I was between jobs and COBRA insurance seemed to be way over priced at $600 per month for healthy people. In the previous 20 years we had made only two claims, the costs related to the birth of our son and an emergency room visit when he was bit by a snake. So while I was between jobs it seemed pragmatic for us to save our cash and self-insure. It is now ten years later and I have no regrets. Despite paying for two minor operations for my wife over the last ten years, our total lifetime expense on health care is only around $15,000. Naturally it was puzzling to me that a recent Milliman publication stated:
“Since 2002, the total cost to American families for their health care has more than doubled to $19,393 from $9,235.”
Health care costs have gone up but it is not because of me or the other healthy people. Our health care system seems to be focused on the chronically ill and now we have health care system that costs twice as much as the rest of the world for the same health care outcomes. Just because large businesses, union health care plans, and government health care plans are spending between $14,000 to $20,000 per year make it necessary that we follow their path. The rest of the world seems to be getting it done with $6,000 per year. I cannot fix the economic stupidity that is so prevalent in the health care market but I can do my small part at bringing some street smarts to my health care decisions. It may be strange to some people but health insurance is just one of several ways to pay your heath care bill. Several people have have already pointed out some interesting alternatives, cash and Samaritan Ministries. I know a person who negotiated directly with a hospital and got an inclusive package for the birth of their next child that was 30% of what he paid for his first child. I think the key issue is for us to stay flexible, savvy to the rules, and hedge our risks. Maybe the rest of the market will come around to a little common sense when nothing else seems to be working.
Nancy, what do you think Medicare has been doing for the past 45 years, not developing tools for cost control? Medicare hasn’t stopped revising its rules and regulations and keeps adding more and more tools. They do these revisions continuously and release monthly booklets of changes. Have you ever thought about why all these changes haven’t worked and instead led to costs spiraling out of control?
Maybe you just don’t want to look at the data and wish to simply sloganeer “Medicare needs more tools for cost control”. Slogans sound good but add nothing as Medicare and CMS are a near dictatorship to most providers where they befriend those that give political support to those in power. To say they need more tools is an unsound argument.
The tool for cost control have worked, to an extent. The moderator hasn’t approved a comment that contains links to data showing that Medicare costs have risen more slowly tha private insurance costs over the years.
The problem is that Medicare, like most private insurance, pays providers on a per-service basis. So when their fee for a service goes down, they respond by increasing the volume of services.
The Affordable Care Act contains a whole bunch of provisions designed to try to break the stranglehold of fee for service medicine. Basically, they encourage Medicare and private insurers to experiment with other ways of paying doctors that reward them financially for keeping people healthy, managing their illnesses safely and skillfully (for example, by providing followup care so they don’t land back in the hospital), and reducing the incentives for ladling on unnecessary care. The most successful experiments will then be shared.
Medicare costs have risen at 3 times the rate of private insurance
Cite your sources Nancy, you are wrong
Nancy when I hear comments like this “The tool for cost control have worked, to an extent.” I realize discussion of the subject is based upon fantasy. The government had full control over Medicare and used egregious and anti American tactics to control costs. The government was an abysmal failure in this regard and costs for medical care have skyrocketed. Anyone that doesn’t realize this simply isn’t bothering to look at the real data.
True market solutions such as HSA’s have been proven to work. Government and Medicare have hampered or completely prevented these relatively simple market solutions.
With regard to your comment on increased volume of care,
Medicare (government) is the creator of this increased volume which so happens to prove Medicare is a failure. Medicare has had almost 50 years to make the fix, but all they seem to do is make things worse.
There is virtually nothing new or innovative in the Affordable Care Act. The ideas you mention or infer have always been around or are old programs with new names provided solely to fool you and me. It seems you want to debate the ACA and prove that Medicare is superior to things like HSA’s. I am sure you will get your chance on blogs that are written on those specific topics in the future. For now I wish to simply remain on point. Enjoy.
The problem with collectivists is that they believe that control must be centralized and be based on coercion. They hate the thought of the power individuals have though analytical thought.
Al,
Once again, not based on fantasy.
http://krugman.blogs.nytimes.com/2011/06/12/its-the-health-care-costs-stupid/
Ralph,
I did cite my sources. Unfortunately, the moderator has chosen not to approve that particular comment.
Nancy,
I should have specified “credible sources”. Paul Krugman is an opinion editor, he publishes his opinions most of which are NOT based on facts, merely fantasy.
The TRUE facts which I have quoted are directly from CMS, which stands for the Center for Medicare Services, and the US Census bureau. CMS is the agency responsible for doling out our tax dollars. Now you might say that you don’t trust the government’s accounting, and I wouldn’t blame you if you did because this administration has been so dishonest, but anyone that uses numbers other than those reported by CMS is just making stuff up.
If oyu can come up with a credible source of facts which trumps CMS, I’d be interested in hearing about it.
Sorry to have destroyed your fantasy, Nancy, but truth is far stranger than fiction. If you want people to take you seriously, you’ll need to find credible sources anyway.
I don’t have to come up with a non-CMS source.
Go here
https://www.cms.gov/nationalhealthexpenddata/02_nationalhealthaccountshistorical.asp
Download file entitled “NHI Web Tables”
Go to Table 13.
Look at the aggregate figures at the bottom of the table.
Except for the period of 1993-97, the heyday of private managed care, per-enrollee expenditures for private health insurance grew faster than for Medicare.
This same dataset, by the way, is the source of the “fantasy” figures in Krugman’s column, as he clearly noted.
From Nancy’s source: Without mentioning the cost shifting from Medicare to private insurance and the costs such as taxes etc. imposed upon private insurers that Medicare need not face I am still not sure what this table proves since it doesn’t seem to deal in direct comparisons of true cost rather it uses an indirect measure, premiums, where among other things the premium prices reflect the stupidity of government regulation. I don’t know how that is a direct measure of real costs or any helpful comparison in this discussion.
The label of table 13 was [“Per Enrollee1 Expenditures and Average Annual Percent Change in Medicare Spending and in Private Health Insurance Premiums, Calendar Years 1969-2009”]
Since Nancy is quoting this she can explain it and why this is a good comparison of actual health care costs and perhaps provide those raw numbers for a real comparison. Right above that group of tables was Highlights that provided something that seems more understandable, but again I don’t see how this demonstrates any of the points being made. Perhaps you can use some raw data to compare Medicare health care costs to HSA health care costs and their respective percentage changes over the years. Here are the highlights of the Highlights PDF.
“Medicare: Medicare spending grew 7.9 percent in 2009 to $502.3 billion, the same rate of growth as in 2008.
Medicaid: Total Medicaid spending grew 9.0 percent in 2009 to $373.9 billion, an acceleration from 4.9-percent growth in 2008, and was driven by a 7.4-percent increase in Medicaid enrollment.
Private Health Insurance: Private health insurance premiums grew 1.3 percent in 2009, a deceleration from 3.5-percent growth in 2008. Benefit payment growth also slowed, from 4.4 percent in 2008 to to 2.8 percent in 2009.
https://www.cms.gov/NationalHealthExpendData/downloads/highlights.pdf
Enough is enough. Bye.
Al, this table is a part of a giant dataset about health care expenditures that will answer your questions. I agree that we’re done with this discussion.
Nancy you are right that this discussion is over. As soon as you are faced with having to demonstrate how the data backs up your point you simply refer people elsewhere. If you cannot explain the data you asked everyone to refer to it means that 1) You have little to no idea of what the data represents. 2) You are unable to tie the data into the discussion. 3) The data is meaningless with regard to the discussion. 4) You don’t like serious discussions preferring sloganeering. 5) All of the above and more. By the way Paul Krugman commonly likes to mislead his readership into believing that the statistics he uses are absolute proof of what he says. Therefore I don’t really blame you for quoting things I doubt you understand or even pertain to the argument.
No, I’m done with this discussion because I have a job and a life, and am not going to convince the free-market people here of anything no matter how many facts and figures I marshal. And which I fully understand, thank you very much.
MS. Metcalf has a good source. Nevertheless, it is misleading because private insurance has covered more and more share of health spending whereas Medicare has always covered pretty much the share of beneficiaries’ health spending as it does today.
In other words, the decrease in out-of-pocket spending is accounted for by private health plans, not Medicare. When one normalizes for this difference, Medicare spending per capita has grown much faster than private spending. See http://tinyurl.com/34s3eo6.
@Nancy Re the comments that you posted that you thought were not approved by the moderator…the reason the comments were not posted is because they contained more than 2 links, which automatically kicks any comment over to our WordPress spam filter. Sorry about that!
I’ve manually approved all 3 of your comments that did not get posted. Thank you for your contribution to the discussion ~ Amber Jones (blog manager)
@Nancy,
This kind of hysteria “save big bucks because the deductibles are so high they render a lot of people effectively uninsured.” Serves no useful purpose. High deductible plans means you self insure. Does your car insurance include oil changes, tires and gas? You may like expensive over priced healthplans which feed the insurance companies, but it is fiscally irresponsible and wasteful. Provisions in obamacare which decrease deductibles to the point where healthplans become unaffordable server only to create corporative societies which allow the state to control the state sponsored monopolies which it creates
Thanks for the explanation, Amber.
John — I’ve downloaded the Pacific Research Institute paper but am in the middle of a busy workday and haven’t had time to look at it closely. It has an unusual methodology that I’m going to have to think about for a little while. I wish there were more hard figures in the paper, because total US health care expenditures is a big number to start with and has a lot of public and quasi-public spending (VA, public health, workers comp, for instance) that is neither Medicare or Medicaid, and the Anderson paper doesn’t say how that is treated. In other words, I can’t tell exactly what’s in your numerator.
Ralph,
I’m afraid we must agree to disagree. I think that high-deductible plans that people can’t afford are cruel and punitive. You clearly don’t. I have absolutely no problem with the government regulating health insurance more than it does now. It’s how other industrialized countries do it, it works, and while no country has fully cracked the code of how to afford the high cost of advancing medical technology, the others are doing a much better job than our market-based system.
We as a society have gone WAY over board in relying on payers to decide what we can “get”.
In Nashville my family of 4 can get 4 different plans:
Plan A) with a $10,000 deductible and 100% coinsurance for $4,600 per year;
Plan B) with a $2,000 deductible and 100% coinsurance is $13,600 a year;
Plan C) with a zero deductible and 70% coinsurance is $17,000 a year;
According to Nancy’s post, plan A would leave you “effectively uninsured”. I’m trying to understand that statement. OK, if you own stock in healthcare companies, I can understand why you might want to pay an extra $9,000 to reduce your deductible by $8,000, or an extra $12,400 to reduce your deductible by $10,000 but intelligent analysis can only lead you to one conclusion on which one is REALLY the “best” plan here.
Nancy,
How is saving money and being responsible “cruel and punitive”? Is it cruel not to pay extra premiums to the insurance company?
Tell me 3 programs which the government has managed more effectively than private industry.
If other contries are doing so much better than we are, then why was Gabrielle Gifford not transferred to one of these countries that is so much better than we are?
Ralph,
Your list of plans should be Exhibit A for why our system desperately needed reform. Families with meager resources can’t afford ANY of these individual plans. It is the main problem that the Affordable Care Act will fix.
Nancy, you obviously have not paid any attention. The “affordable” care act reduces the maximum deductible allowable to $2,000 for a single person, and $4,000 for a family, so plan A will be outlawed, and plan B and C will be the only ones available. This makes healthcare LESS affordable, not more affordable. Most smart Americans will still chose Plan A and pay the $695 per year fine, and still be better off, while oyu try to increase the cost of care.
You had stated: ” you have just been diagnosed with colon cancer and are staring at a $200,000 course of chemotherapy without which you will die.”
My question was as follows: “Also when you say ”when you have just been diagnosed with colon cancer and are staring at a $200,000 course of chemotherapy without which you will die” are you referring to the majority of cases or just a rare case? ”
I went to the site you suggested and the exact page. What I found was that you grossly exaggerated the cost and used selected data that represented a stage 3 cancer. In your example the patient dies after three years of maximal treatment which negates the survival element in your response to Greg. He doesn’t receive the usual treatment for those with lower stages thus the chemotherapy figure listed is far higher than one expects on average in the general population. Not only was the exaggeration selective but it was also quantitative. You boosted the costs from $165,000 to $200,000. When you add the error of both your selective calculation and your quantitative calculation together one discovers a wild exaggeration.
This is the problem I have with the Affordable Care Act. To pass it they created scenarios that were rare, highly exaggerated or didn’t exist. Then without proof they used the same type of exaggerations to show how much money they would save while not looking at the unintended consequences. The ACA must be repealed because in the end it wastes tremendous amounts of resources and reduces the care of our citizens. That is “cruel and punitive.”
Ralph,
I am happy to continue this conversation but would ask you to stop telling me I don’t understand anything.
The people who are suffering most under the current system — households with incomes of under 400% of poverty — will get very large subsidies to limit their premiums and out of pocket costs when buying coverage on the health exchanges created by the Affordable Care Act.
The Kaiser Family Foundation has a calculator that you can play with to see the extent of those subsidies, and I encourage you to take a look at it. It’s based on the Silver plan, which under terms of the ACA has an actuarial value of 70%.
http://healthreform.kff.org/subsidycalculator.aspx
I just ran numbers for a family of four earning $44,000 a year (188% of poverty). After the subsidy their premium would be $2526 a year and ther maximum OOP would be $4,617.
Nancy writes —
“I’m afraid we must agree to disagree. I think that high-deductible plans that people can’t afford are cruel and punitive. You clearly don’t. I have absolutely no problem with the government regulating health insurance more than it does now. It’s how other industrialized countries do it, it works, and while no country has fully cracked the code of how to afford the high cost of advancing medical technology, the others are doing a much better job than our market-based system.”
And yet Consumer Reports (her employer) has always recommended high deductibles for auto insurance. Somehow that is not “cruel and punitive.”
Nancy, there is a simple trade off between deductibles and premiums. Surely you know that. High deductibles = low premiums and low deductibles = high premiums. There is noting punitive about it. It is an individual choice. Some people would prefer to pay more in premiums to have less out-of-pocket when they need services. Others make the opposite decision. One is not superior to the other. But every dollar sent to the insurance company to keep a low deductible is lost forever.
Greg,
You are completely right that there is a tradeoff between deductibles and premiums. My point is that there are millions of lower-income Americans out there who can’t afford any part of that tradeoff. For them it is a choice of going broke on a monthly basis or all at once.
Nancy,
As Greg states, a low deductible, high premium plan GUARANTEES high cost, while self insuring with a higher deductible plan means that more than 80% of Americans will NEVER use the deductible and will be saving money. This holds true whether it is their own money, or money taken from taxpayers as a subsidy.
Ultimately our current system is not sustainable, and the ACA has increased costs and sent it into an even faster escalation of costs.
if the goal is not to decrease costs, then what is it?
By all means, Nancy. So let’s subsidize those people. But we can subsidize them equally by funding their HSA or by funding their insurance premiums (or some combination.)
The question then is not which is more virtuous, but which is more efficient, i.e., which approach gets us more health care services for the money spent.
Given the burden of administrative costs imposed by insurance companies (not just their own costs but the costs they impose on providers as well), it makes sense to maximize cash (HSA) payments and minimize the role of insurers.
Greg,I’m confused with the risk pool. From what it appears in your article, you have to join the risk pool 12 months before any diagnosis. Is this correct?
So with your method described in your article it appears to me that you have to join a risk pool 12 months prior to any financially crushing diagnosis. Is this accurate? I’m not familiar with the risk pools since I get my insurance through my employer.
Al,
A majority of colon cancer is diagnosed at an invasive stage that requires chemotherapy.
http://seer.cancer.gov/csr/1975_2008/browse_csr.php?section=6&page=sect_06_table.13.html
And it’s the chemotherapy that’s so expensive — ballpark of $30,000 a month and it typically goes on for at least six months.
The gentleman whose story we told had such a cancer, and fortunately in his case the chemotherapy worked. It cost him, yes, $30,000 a month. We saw the bills.
But was the $30,000 the chargemaster price, or the paid rate?
What he had to pay.
Nancy, you saw the bills, but did you see what was actually paid? This is a big problem because the data coming out from the left is contrived and not consistent with the raw data that is available. The data is then quoted and re quoted until many, perhaps like yourself, believe the data is correct when it is abysmally wrong.
Nancy, I doubt very much that anyone was paid $30,000 per month though anything is possible. Nothing stops a person from paying more than everyone else. Instead of dealing with the “he said she said” type of argument why not use the data you provided. This data seemed to be using a high level of care and reimbursement leading to a first year reimbursement of ~$56,000. Your data says that the treatment takes 24 weeks just a bit short of 6 months or a bit more than $9,000 a month. Once again we find a wild exaggeration of cost, three-fold. The insurance companies may like that type of exaggeration because it intensifies the desire of people to carry expensive insurance. People like Greg know better and thus can better assess the risks.
You say that a majority of colon cancer is diagnosed at an invasive stage that needs chemotherapy and then referred me to the SEER data. I assume the data includes those polyps that were found to be malignant with a cancer free stalk and I’ll assume you to be correct that the majority of cancer of the colon discovered requires chemotherapy that costs ~$56,000. The problem I have with all the data you bandy around is that you keep claiming numbers and data that are not even backed up by the literature you post and I am not certain that the literature you post is the best literature to provide us the best facts. $9,000/ mo according to your literature and $30,000/ mo according to your present claim.
Since you seem to use SEER data and you make claims that we are “almost a case study in the failure of this market.” perhaps you ought to use the SEER data and compare it with the OECD data so that you can see that overall we have better outcomes than these other nations. Wow! Why would you want to give up on better outcomes?
Nancy, Al is absolutely correct. Third party payers thrive in a lack of transparency, but the average paid costs for chemo therapy on http://medibid.com in the US is about $5,600 per month. What they bill has no basis on reality, and though they might try to collect that amount since they feel like they are underpaid by Medicare, it is extremely rare for them to get that.
When YOU can’t afford health insurance and bail out -who do you think pays for your care?WE who pay haigher premiums and taxes to carry YOU!
Prostate cancer -$300,000 costs. Family member crused upper shoulder – replacement over $200,000. Another member skiining accident, – rods pins etc, over $200,000 cost. Like many I had to budget to pay insurance premiums but thank God it was in place when needed.
How far do you think your saved “$12,000” will carry you when you need care and who do you think has to pick up the tab for the rest of your bills. Duh…
AS a broker I sell and own Long Term Care Insurance so I can stay in my own home and get quality care when needed, as will 70% of the population someday. Life is about choices. I’d rather skip a few nicities and own qualaity insurance than depend on welfare, family and charity when the time comes. What’s your plan other than “Stay lucky – and accept whatever the State will hand down to you”?
Ron, I have never heard of anyone paying these outrageous costs for surgical procedures.
We’re a group of volunteers and starting a brand new scheme in our community. Your site offered us with helpful info to work on. You’ve
done a formidable process and our whole community will be thankful to you.
Also visit my blog Edison