Unpopular Individual Mandate Fails to Make People Buy Insurance
Just before Christmas, Congress voted to deficit fund Obamacare by imposing moratoria on a number of Obamacare taxes that are unpopular with interest groups. Left in place was the unpopular individual mandate to buy health insurance, which has no organized interest to lobby against it. Nevertheless, it is the most unpopular part of Obamacare.
The New York Times reports that a number of relatively high-income earners are choosing to remain uninsured, or even drop Obamacare coverage, and pay the fine instead:
Rachel Kulus, 46, opts to keep antibiotics in her medicine cabinet rather than buy health insurance through the California exchange.
“I do not believe it serves the public good to entrench private insurance programs that put actual care out of reach for those they purport to serve,” she said.
Ms. Kulus, who works for a small marketing firm outside San Diego, paid about $300 a month for an exchange plan. But when she injured her back and wanted physical therapy, she was offended to learn she would have to pay for it in full because of her plan’s $6,000 deductible.
“I just went on YouTube and tried to figure it out on my own,” she said. She added that her auto insurance included personal injury protection, so “anything catastrophic will hopefully happen in the car.”
Ms. Kulus estimates that she will pay a penalty of $750 for flouting the individual mandate last year, and $950 in 2016.
(Abby Goodnough, “Many See I.R.S. Penalties as More Affordable Than Insurance,” New York Times, January 3, 2016.)
People’s willingness to swallow the penalty is driven by the fact that the plans are not worth the money. Plus, if they get sick they can enroll without penalty at the next annual open enrollment (something they could not do if they remained in the pre-Obamacare individual insurance market. In most states, if they became sick, they would be charged a much higher than standard premium).
Unsurprisingly, this means Obamacare will leave behind far more uninsured people than originally estimated. The Congressional Budget Office’s March 2010 estimate figured 26 million uninsured in 2015 and 23 million in 2019. The March 2015 estimate figured 35 million uninsured in 2015 and 26 million in 2019.
Further, the estimate of the non-elderly population has dropped: In March 2010, CBO figured 276 million in 2015 and 282 million in 2019. In March 2015, the 2015 estimate was 270 million and the 2019 estimate was 275 million. In other words, the CBO’s estimate of uninsured in 2015 has increased over five years from 9 percent of the non-elderly population to 13 percent.
The March 2015 estimate of 26 million uninsured in 2019, an increase of just 3 million from the March 2010 estimate, appears very optimistic. The 2015 estimate deteriorated by 9 million people (over one quarter of the original estimate) as we approached the actual year; and it is hard to see what is going to improve about Obamacare that will attract more enrollees in future years.
The opportunity to repeal and replace Obamacare with patient-centered health reform is as good as it has ever been.
She also needs to simply adjust the withholding to prevent clawback of a refund.
So millions of people went from having no insurance to having no insurance plus a fine for not having insurance.
Others have insurance that only kicks in once you’re financially crippled, lost your job due to illness or injury, and can no longer afford the coverage.
This like a Kafka story. Well, maybe just another chapter of a Kafka story; Congress is already a bunch of giant insects.
😎
I would also add that millions of people went from having no insurance to having insurance with no value. Also, millions of people went from having insurance to having insurance with no value.
😎😎
That was the point of my second paragraph.
Rachel said, “anything catastrophic will hopefully happen in the car.”
I’m sure her ovarian cancer will happen in the car. If she only wanted accident insurance that is cheap.
Jeb Bush said that he wants State Exchanges that will be guaranteed issue. It sounds to me that Jeb would outlaw healthy people from getting low cost insurance with medical under-writing. So Jeb would outlaw freedom in America. Maybe Jeb would outlaw medical underwriting in Life Insurance too because when Rachel gets ovarian cancer that is the best time for her to purchase $1 million in life insurance without medical underwriting.
So Stephanie Carlton, Jeb’s healthcare policy adviser, doesn’t believe in Freedom. John, you said Stephanie was really smart.
I’m going through a list of clients who are being terminated with $6,000 deductibles on tax-free HSA PPO health insurance. Many of these people got their insurance 10 to 15 years ago and some are 60-years-old paying around $250 a month. Their Obamacare options double their premiums plus they are now herded onto HMOs like cattle.
When these old clients got their insurance, when they were 45-year-old, their initial premium was $58 a month with $5,000 HSA deductibles.
So this Rachel is earning $49,000 a year and must purchase her coverage with after tax dollars. Barry wouldn’t want her to be able to deduct her premiums because his Grandkids would have to pay off her part of the national debt plus interest.
I was uninsured while growing up, and all through college. I didn’t have health insurance until I got my first good job and I was again uninsured later while in grad school. I am none the worse for wear. And the money I deprived the health care system of benefited not only me, but also the health care system. You see: wasting money by pouring it unnecessarily into our health care system is actually part of the problem. What incentive does an industry have to improve, become more efficient and compete when employers, insurers, consumers and government are all willing to inject unlimited resources into it?
Devon, you rolled the dice and won. Good for you. If you lost, you would probably have a different view today.
“What incentive does an industry have to improve, become more efficient and compete when employers, insurers, consumers and government are all willing to inject unlimited resources into it?”
I must have missed that memo. As far as I can tell the unlimited resources started drying up about 30 years ago. Those of us who provide health care have been implementing greater and greater efficiency every year.
Hospital productivity has declined since 2001. See http://www.bls.gov/opub/mlr/2015/article/new-measure-of-labor-productivity-for-private-community-hospitals-1993-2012.htm
Productivity is not the same as efficiency.
You can get increasingly efficient but if the bureaucratic burdens outpace that you lose ground.
I decided looking this a little further. The American Hospital Association publishes an annual “TrendWatch”.
During the period 2001-2013, annual admissions fell from 33.8 million to 33.6 million as the population grew in raw numbers but also aged.
Total patient days fell 6.4% from 194.1 million to 182.4 million from 194.1 million, despite increased severity scores and stable total admissions.
Ergo, the system is keeping more people from being admitted to the hospital and reducing length of stay.
You have a problem with that?
Ok, rewritten in English:
“I decided to look at this a little further. The American Hospital Association publishes an annual “TrendWatch”.
During the period 2001-2013, annual admissions fell from 33.8 million to 33.6 million as the population grew in raw numbers and also aged.
Total patient days fell 6.4% from 194.1 million to 182.4 million, despite increased severity scores and stable total admissions.
Ergo, the system is keeping more people from being admitted to the hospital and reducing length of stay.
You have a problem with that?”
All in favor of it. However, hospitals are still too expensive. I don’t deny government rules harm productivity increases. Nevertheless, the hospitals never seem to want to shrink the role of government in health care.
Barry ,
Devon did not roll the dice! Insurance is a transfer of risk …if you are youung with no net worth you have nothing at risk. Why would he buy insurance to transfer risk when he had nothing to lose? Even if he got sick and ran up $1,000,000 in claims he had nothing at risk.
BK the bills and starting over is easy when you are young. It’ gets harder as you get older.
Why don’t you people buy insurance. Because they are mostly healthy and have nothing to lose.
If you’re young and uninsured and run up $1,000,000 in bills it’s not risk-free. By being uninsured you transfer the financial risk to someone else, probably the people who were ethically and legally obligated to save your life, or perhaps the taxpayers.
Michael, you don’t pay taxes on your health insurance and yet you are worried about the taxpayer, that’s odd. These young people have to purchase their health insurance with after tax dollars which makes them pay more than you.
The big ham is saying that when you have no assets you have nothing to lose – except your life – so why bother trying to protect your assets. It’s not like school loans that even a bankruptcy doesn’t wipe out the debt.
If you cared so much about everybody having insurance to pay your bills you might consider advocating that everybody get the same tax dodge when they buy insurance that you currently are using. You might consider that the doctors who put their employees on employer-based health insurance, that they lose when they become too sick to work, consider insurance that is permanent and portable so they don’t become uninsured when they need it most.
There are more considerations than doctors need to make a lot of money. Notice how the insurance agents are getting zero commissions because the government is now the agent. In my years of experience when a client was not getting their claims paid we figured out that the doctor’s office was sending all claims to Blue Cross no matter who the client had their insurance with.
I love it when people say that maybe they will just drop their health insurance because they are not using it anyway. I tell them that’s great if you have no assets but because you have this business they will drain you dry if you have a claim. Of course without insurance these medical providers will charge you 10 times more because it is legal for them to do it. Florida Governor Rick Scott calls this practice of medical providers – price gouging.
“Florida Governor Rick Scott calls this practice of medical providers – price gouging.”
That’s rich Ron. When Scott was CEO of Hospital Corporation of America, now HCA, he made price gouging an art form and headed a corporation that committed massive fraud to boot for which HCA paid about $1 billion in fines to settle the case with the government.
Barry, that was $1.7 billion, the largest Medicare fraud fine of all time. But that still doesn’t discount the fact that Florida hospitals will charge an uninsured child 10 times more than an insured child. It is legal.
Of course this will ruin a young family if the $3,500 hospital bill is increased to $35,000 and the bill collectors are set lose on the family. YOU just need to grow a heart Barry and care more about the Americans that don’t get the same tax dodge that you have always enjoyed. PLUS, your inflated prices for Individual Medical makes it more difficult to purchased health insurance with after tax dollars.
YOU pretend you care about the poor but then change the subject to some distraction like Liberals always do.
Remember, these poor uninsured are paying Medicare tax on every dollar earned so you can live the good life in retirement on the backs of the young and poor. Plus, the young are paying IRS fines as well for being unable to afford these sky-high guaranteed issue premiums for HMOs with $6,850 deductibles. You Liberals must be smiling from ear to ear.
Ron you don’t understand how it works. Consider the costs of EMTALA. EMTALA cost hospitals about $60 billion in 2004. What happens when a public hospital like LBJ in Houston gets stuck with a huge unpaid tab after saving the life of a gangbanger who got shot and spent 5 months in the ICU? Shock-Trauma in Baltimore is publicly funded. Who makes LBJ or Shock-Trauma whole?
When an uninsured woman comes into the ER in labor the hospital and doctors must provide care under EMTALA. The hospital often works around this by signing them up for Medicaid on post partum day 1 if they’re indigent. I worked at a hospital that serviced a significant illegal alien population and that’s how it worked when a 16 year old came in to deliver her second child.
Just a couple of f’rinstances of how taxpayers pay for the uninsured.
And those doctors you like to snipe at usually provide millions of dollars of uncompensated care every year thanks to EMTALA. Federal law requires ER doctors, OB’s, etc to provide free emergency care. And we thought Lincoln freed all the slaves.
When my ancestors from Iowa were in Texas during the Civil War and they changed the status of slaves to employees and then left. They told the slaves to just stay where you are. When Trump builds his wall between Texas and Mexico there should be a door and nobody can come in without purchasing health insurance.
Micheal, I know all about uncompensated care, I’m a health insurance agent. I spend hours and hours with people and then they forget about that medical problem that makes them a decline. I find it hard to believe they can’t remember they had a stroke.
Today we have to enroll people without commissions and of course when they have a problem guess who they call. Why would these insurance companies pay commissions when the Government will sign people up for free?
So Obama has made me a slave too.
The cost of caring for the uninsured is minor. It is the insured, not the uninsured, who are responsible for the health spending spiral.
Spoken like someone who isn’t coerced into providing free services by the federal government.
You’ve strayed off the point of the discussion of Devon’s remarks, which is that the uninsured are shifting their risk to others who pay the price.
There is no federal law that forces you or any hospital to provide care. If you accept Medicare, you must comply with EMTALA. If you do not accept Medicare, no EMTALA. It is your choice.
A glib throwaway response given the realities.
“These young people have to purchase their health insurance with after tax dollars which makes them pay more than you.”
I pay for health insurance with after tax dollars.
Ad hominem + ignorance = foot in mouth disease.
My wife and I pay for our Part B Medicare premium + our supplemental plan + our Part D plan all with after tax dollars as well — over $9K per year for the two of us combined. On top of that, we pay a significant amount in IRMAA surcharges. We pay another $5,900+ per year for long term care insurance in after tax dollars as well.
It costs a lot of money to make healthcare feel free at the point of service and I still have hundreds of dollars per year in drug copays to cover out-of-pocket.
“Even if he got sick and ran up $1,000,000 in claims he had nothing at risk.
BK the bills and starting over is easy when you are young”
In other words, be a freeloader because you can. I must have missed that memo too because I was taught to pay my own way to the extent that I could whether I had already built some net worth or not.
“Of course this will ruin a young family if the $3,500 hospital bill is increased to $35,000 and the bill collectors are set lose on the family.”
Ron – As Bob Hertz wrote about on another thread, since 2009, uninsured people in NJ can’t be charged more than 115% of Medicare as long as their income is 500% of the FPL or less which currently equates to about $120K for a family of four. So the 10X charge is bogus at least here in NJ which you like to disparage so much. Maybe FL and the rest of the states should enact a similar policy
“Americans that don’t get the same tax dodge that you have always enjoyed.”
I always supported getting rid of the employer tax preference including when I was still working. I don’t care one way or the other about extending the tax break to people who buy their own health insurance but if we do it, we should pay for it by either raising other taxes or finding offsetting spending cuts. Conservatives always seem to want any new federal spending to be paid for so we don’t burden our grandkids with any more debt to pay off but like most people with an ax to grind, you want your preference to be passed without any offsets. That sounds like a variation on the common desire to cut the federal budget deficit but not my program and not at my expense. You can’t have it both ways. So let’s hear how you’ll pay for the new tax break.
“YOU pretend you care about the poor but then change the subject to some distraction like Liberals always do.”
I’m actually a free market guy on most issues and I spent my career in the money management business which is all about sound stewardship and efficient allocation of resources. I’m trying hard to maintain civility in my responses to you but you’re not making it easy. We can do without the personal attacks here.
“so you can live the good life in retirement on the backs of the young and poor”
The vast majority of older folks on social security and Medicare are not well off. I paid my share of taxes and then some over the years and my wife and I are paying the IRMAA surcharge on Medicare now.
Barry, you wrote, “I’m trying hard to maintain civility in my responses to you but you’re not making it easy. We can do without the personal attacks here.”
Then you attack me with, “That sounds like a variation on the common desire to cut the federal budget deficit but not my program and not at my expense.”
I suggest that everybody get the same tax relief and then employer-based insurance would be gone because they could not survive with a level playing field.
So it sounds like we are finally in agreement except you still want to restrict the freedom of offering people healthy discounts in health insurance like they do in life insurance with medical underwriting because you believe in controlled markets. Where in the constitution does it give you the right to restrict anybody’s freedom?
You central planners always know what is best for everyone and must enact laws to stop freedom in the land of the free.
Ron – No matter how much you or even I might like to see the employer tax preference disappear, I just don’t see it happening mainly because of the power of organized labor, especially the public sector unions. John McCain proposed replacing the employer tax preference with a universal tax credit in 2008 but he didn’t become president and the idea didn’t gain any traction.
So, if people who don’t buy get their health insurance from an employer were offered either a tax deduction for the cost of their premium or a tax credit, age based or otherwise, it would not apply to people with employer coverage. What I want or don’t want isn’t relevant. Ditto for what you want. It’s the way the political process is most likely to work. We’ve had the employer tax preference since World War II. It’s not going anywhere unless someone running for president campaigns on getting rid of it and wins and, even then, it would be a heavy lift.
I wasn’t attacking you by the way. It’s like those conservative farmers in Iowa who want to balance the budget and cut federal spending but they don’t want to cut farm subsidies or ethanol subsidies. It’s also like when the DOD wanted to get rid of a bunch of surplus military bases in the 1990’s, no congressman wanted to eliminate the base that happened to be in his or her district even if the DOD had no use for it. It took the Base Realignment and Closure Commission (BRAC) to come up with a list of bases to close that would be subject to an up or down vote in congress with no amendments allowed. Virtually all interest groups have a similar attitude on this. They say yes, cut the budget but not my program. If the proposal is to raise taxes, the attitude becomes, as Russell Long once said: “Don’t tax you, don’t tax me, tax that fella behind the tree.” That doesn’t contribute anything to a constructive debate in my opinion.
Barry, I think you are wrong that to replace the employer-based deduction on health insurance someone would have to run for President on it. That doesn’t need to happen because that would open up a can of worms. But, if someone running for President offered an age-based tax credit, like many in the Republican field are currently doing, who would be against individuals getting tax relief like employees currently get? The American public wouldn’t be against this. But, the CEOs of the employer-based health insurance companies would be sweating bullets because that would end the monopoly of the employer-based health insurance scam.
Barry, I think we are passed the point of no return. All that has to happen is for employees to start leaving the employer-based system, which is already happening, and there is no way to stop the unraveling. Actually, it’s been happening for years and Obamacare just slowed the process momentarily. The AHIP wrote Obamacare and at the same time they destroyed their industry, employer-based health insurance.
It is too bad that the Individual Health insurance companies have mostly been killed but that doesn’t matter. New companies will come in and fill the void if we have medical underwriting so that they can predict their losses. Trust me, this is going to happen no matter how much you are against the cherry picking, sorry.
Ron – I have a couple of questions about IM coverage. First, how much variance, if any, is there with respect to scope of coverage offered by a given carrier as opposed to just variance in the combination of deductibles, coinsurance amounts, and out-of-pocket maximum amounts? Second, is it a case of the applicant qualifies or he doesn’t or is there more than one rate for a given age and gender such as a standard rate and a preferred rate?
I think a lot of employers would love to get out of the business of choosing and funding health insurance for their employees, their spouses and children. However, I don’t think an age-based tax credit by itself would be enough to induce any but small and marginally profitable employers to stop offering health insurance coverage to their employees. I think they would also need to see a workable and affordable alternative to take care of employees who couldn’t pass underwriting but are well enough to do their jobs pretty much indefinitely. I personally was in that category probably since about 1993 until I retired at the end of 2011. I would define workable as a policy that after subtracting the value of the age-based tax credit and a premium subsidy would get the actual premium cost down to something about in line with what healthy people would have to pay for comparable coverage.
I don’t think employees of companies that continue to provide health insurance would be eligible for an age-based tax credit. Employees who need family coverage for which the employer charges a high premium, such as the school districts you cite, could opt to maintain coverage for themselves but let their family members use their age-based tax credit to help pay for IM coverage assuming they can pass underwriting. If they can’t, there needs to be a decent, well subsidized high risk pool to cover them.
I’m curious though as to what your estimate is of how many of the current 150 million or so people who now get their health insurance through an employer, including spouses and family members, would not be able to pass medical underwriting. The biggest challenge, at the end of the day, is how to finance the likely very high cost of subsidies for the high risk pools. I’m not saying it can’t happen. I’m saying I’ll believe it when I see it.
Barry, TIME had a Preferred rate, Standard rate, 25% rate up and a 50% rate up.
With these age-based tax credits: age 1-18 = $1,000, age 19-35 = $1,500, age 36-50 = $2,000, age 51-64 = $3,000. A 30-year-old couple with 2 children would receive a $5,000 tax credit to purchase IM insurance ($2,000 + $2,000 + $1,000 + $1,000 = $5,000). All Standard people could have health insurance with the tax credits alone. I am just guessing now because there is no IM with medical underwriting but the deductible would be $5,000 with 100% coverage there after. The reason I can make this guess is because I currently sell a STM with a $3,000 deductible which would be less than IM which is permanent coverage.
I would say 30% of the population would be declined for IM the way it has been underwritten. If age-based tax credits were the new way I’m sure another 10% would be able to get coverage from an insurance company that would specialize in coverage that would take low cost consumers who are currently a decline. For example, a woman who tried to commit suicide at 17-years-old but was really bad at it and lived. I’m sure after a few years some company would take her for a premium in the future. So, that leaves about 20% of the population which would be declined.
There probably is another 10% that could get coverage at a rate up if we had companies that were fighting for this market share. People who are diagnosed with stuff like Rheumatoid Arthritis which today are just a decline. So I would say 10% of the population would be a decline with expanded underwriting. The bad ones would be like my son with crohn’s and my daughter with MS and of course the alcoholics, heart attacks, strokes and cancers.
Employer-based insurance would be a thing of the past with this concept, and that’s good. Employers would rapidly switch to the tax free HSA deposit business instead of the health insurance business. There is no Payroll Tax, Unemployment or Workers’ Comp expense on employer HSA deposits so employers LOVE them when they understand them. Tax-free HSAs are compensation without taxation. You can calculate your HSA balance over a long period of time using this link from HSA bank.
http://www.hsabank.com/hsabank/education/hsa-savings-calculator
Now the last 10%, people like my children, would need a high risk pool that is subsidized by Federal Tax Dollars.
But, a lot more people would need professional advise on how to manage their HSA balance because smart people don’t spend their money that is growing tax free no matter what Ben Carson thinks.
25-year-old couples need to show up at Medicare age in the future with $2,000,000 in their tax free HSA in 2055.
Ron – Thanks for the information.
How much do you think one of the new companies you referred to would charge for the girl who failed to kill herself at 17 and the folks with RA as compared to the preferred rate for someone of the same age with no health issues?
If we ever replaced the employer system with your proposed age-based credits, I estimate it would cost $400 billion per year in foregone tax revenue based on about 40 million children net of the 29 million currently on Medicaid and 180 million adults not currently on Medicare or Medicaid and excluding the illegal immigrants assuming a median age of 40 and a $2,000 tax credit on average for each person. By contrast, the current employer based system which covers 150 million lives is estimated to cost about $250 billion in foregone tax revenue. That means we would need to find a way to cover the cost of an additional $150 billion per year in foregone tax revenue. We would also need to come up with the money to subsidize the significant number of people who will wind up in the high risk pools. Even if there were broad support for completely replacing the employer based health insurance model with something along the lines of your proposal, financing it would be a huge challenge. Also, if we don’t reduce the cost and utilization of actual healthcare as opposed to health insurance, we will still spend just as much on healthcare as we do now but will just change how the cost is distributed among the insured population and the taxpayers. It sort of feels like rearranging the deck chairs on the Titanic from as healthcare cost perspective as opposed to a health insurance cost perspective.
I’m open to a wide variety of ideas and approaches to health insurance. My only requirements are that we need to subsidize low income people who can’t afford the premium even with an age-based tax credit and we need to provide affordable insurance to those who can’t pass underwriting. My main problem with both the employer tax preference and the age-based tax credits is that they incentivize people to consume more health insurance and more healthcare than they would if they were paying their premium with after tax dollars. That’s why I would prefer that everyone buy health insurance with after tax dollars just like they buy every other type of insurance and use tax dollars to subsidize people with incomes too low to afford the premium and people too sick to qualify for underwritten insurance.
It does not look like you have included Medicaid in the available money.
I’m assuming that Medicaid stays in place but moves more toward managed care which it’s been doing for a number of years now. It’s the non-Medicare and non-Medicaid population where most of the problems are with respect to both affordability and sustainability of health insuance coverage.
NCPA’s longstanding proposal takes Medicaid funding and applies it to tax credit. People who don’t clai the tax credit fall back on to Medicaid (or whatever it would be called in the future).
Barry, we spend a trillion dollars on Medicaid that we would save a lot on the poor healthy people. We would save on all of the government employees health insurance. We have discussed that the New Hampshire government employees cost $31,000 a year per family with a $2,500 deductible. Then the taxpayers are giving the amount of the deductible to these employees in a FSA so Blue Cross has minimal expenses. Here is a link to the cost:
http://www.ccsnh.edu/sites/default/files/content/documents/HRdocuments/MonthlyPremiumRates2015.pdf
You know the Federal Government loses Federal Income tax and Payroll Tax on this $31,000 or $10,000 a year is lost. An age-based tax credit cuts the Government’s cost in half and drops the employer’s cost to ZERO.
You know we spend $2,000 a month on you and your wife for Medicare so I don’t think $1,000 a year for a child is too much when we save money doing it.
We are talking about lifting the heavy burden of health insurance expense off of the backs of American employers so the economy would soar like never before.
You just can’t imagine a world where the Fascist pigs are not stealing us blind with the help of politicians who are bribed by special interest money.
Can you explain why taxpayers are spending $31,000 a year for young families and you and your wife only cost $24,000 a year and you are old as the hills and need much more medical care?
Taxpayers are scammed into paying $31,000 a year with a $2,500 per person deductible. With an age-based tax credit the cost for local Government drops to ZERO so local taxes should drop like a rock.
We can’t continue because this system is not workable. The $31,000 family premium for young people will soon be $62,000 per year per family. These premiums are like your wife’s age, they only go one direction – UP!
We have 10,000 people a day aging into Medicare. We can’t continue being scammed because we can’t afford to be so wasteful anymore.
Wake up Barry, you have been brainwashed into oblivion.
Ron – To you, this whole issue seems to be mainly about changing the system so healthy people, especially young healthy people, can buy health insurance cheaply. Even if we did that, it still wouldn’t change the aggregate cost of actual healthcare in the country.
As I’ve noted before, over 70% of Medicaid dollars are spent on the aged, blind and disabled (ABD) population. Children are already pretty cheap for Medicaid to cover and, until the ACA became law, healthy male adults generally weren’t eligible for coverage in most states if not all. Also, we’re not spending $1 trillion on Medicaid today. We’re spending a bit over $1 trillion on Medicare and Medicaid combined including the states’ share of Medicaid.
As I’m sure you must know, insurers will tell you that in any given year the sickest 1% of members account for about 20% of medical claims, the sickest 5% account for 50% of claims and the sickest 10% account for 65% of claims. In addition, experts tell us that about 75% of healthcare spending is attributable to the management of chronic disease including virtually all of my own claims.
I don’t think Blue Cross is making huge profits on the NH community college that you cited due to the MLR rules if nothing else. I suspect that a disproportionate percentage of the care these folks receive is in Southeastern Massachusetts around Boston which is probably the most expensive area of the country for healthcare. Lots of routine care takes place in Boston’s academic medical centers which are frightfully expensive.
As I understand it, total commercial health insurance premiums, excluding those attributable to managed Medicaid and Medicare Advantage, are between $900 billion and $1 trillion, most of which is for people who get their insurance through an employer. If we siphoned off $300 billion of that by moving healthy people into cheap underwritten plans, the aggregate healthcare costs would still be there which means that money would presumably have to be made up with subsidies for high risk pools. Other taxes would have to be raised to cover that cost which somebody will have to pay for. Unless you think you can stick all or most of that bill to the top 1% of the income distribution, most people won’t be any better off than they were before. Sure some young and healthy people might be better off but people with employer coverage who can’t pass underwriting but can easily continue to perform their jobs indefinitely will be worse off. I don’t like the tradeoff.