Congress is Set to Repeal Obamacare: What Should Replace It?

The House is voting today on a reconciliation bill that would repeal much of Obamacare. It’s expected to pass easily – and be vetoed by President Obama.

Before we discuss what should replace Obamacare it would be a valuable exercise to revisit what needs to be repealed.

  • The employer mandate has to go. It’s hurting the very people it was designed to help.
  • The individual mandate has to go. It’s forcing people to buy something they don’t want.
  • Regulations guaranteeing coverage regardless of health status are not sustainable. Premiums are reaching the stratosphere and there is a perverse incentive to game the system.

Representative Tom Price reports a bill with a proposal to replace Obamacare will soon follow. The following are some of the elements that a new Obamacare replacement bill should include.

  • The open-ended tax exclusion should be converted to a fixed sum. This could be adjusted for age, health status or some other factor. But the government should subsidize core needs not marginal spending on Cadillac plans.
  • Community rating should be used only to create beneficial incentives; not to increase cross-subsidies. The right to buy insurance at modified community-rated premiums needs to be conditioned on continuation coverage. A regulation such as guaranteed renewability would not allow people go years without coverage and then expect others to subsidize their decisions.
  • Americans deserve the right to purchase the coverage of their choice; not the coverage Obamacare proponents believe Americans should have. This means affordable coverage with limited benefits, high-deductibles or coverage that rewards them for taking care of their health if that’s what consumers want.
  • Americans should be protected from surprise medical bills (but not necessarily from high medical bills) – ones where patients cannot ascertain prices in advance or verify that doctors providing care are even in their network. Public policy should encourage discussions about prices between doctors and patients — not reward barriers to competition.
  • The federal government should grant states the flexibility to design Medicaid programs that meet states’ needs. The federal government should not match state Medicaid funds. Rather, it should negotiate a block grant and a state contribution; and make states pay for all cost overruns. States should have the authority to design innovative Medicaid benefits, where some beneficiaries pay premiums, experience nontrivial cost-sharing, pay a penalty for inappropriate emergency room use and have work requirements. Moreover, states should have the authority to kick beneficiaries off the Medicaid rolls who break eligibility rules.

These are just a few of our ideas. What are your thoughts? Give us your comments and tell me what have we have missed?

Comments (123)

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  1. Jimbino says:

    Force all healthcare providers to post prices for all procedures and drugs. Force insurance to cover procedures and drugs provided soverseas. Force the gummint to recognize insurance providers from other countries.

    • Devon Herrick says:

      I don’t believe it is beneficial to force hospitals to post their prices because there is not one price, but dozens of prices for different payers. Laws requiring posting prices would result in the chargemaster of list prices being posted. The key is to make hospitals, doctors and other medical providers to want to disclose accurate prices. You can only do that by making it to their advantage. You make them want to have discussions about prices by making it much more difficult to collect outstanding bills unless they have a signed agreement acknowledging the price and network affiliation. It’s just a thought, but I believe it would encourage more doctors and patients to discuss charges ahead of time.

      • Jimbino says:

        “Laws requiring posting prices would result in the chargemaster of list prices being posted.”

        Not so. You never heard of competition or the “invisible hand”? Every economist praises price competition for its effect on the market for every good. A provider who insisted on posting only the chargemaster figure would soon find he has no patients to charge.

        Clients of Medicare, Amazon and Walmart get along just fine by their posting all their prices. And those who don’t post accurate prices are soon punished by the market.

        • Devon Herrick says:

          …Amazon and Walmart get along just fine by their posting all their prices. And those who don’t post accurate prices are soon punished by the market.

          I share your goal. But I do not believe price transparency can be simply forced on providers with a law saying they must post prices. Price transparency is the natural result of price competition. Walmart posts prices because it’s competing on price. Hospitals don’t post prices because they are not competing on price. The reason why lasik physicians readily post prices and offer package deals is because they too are competing on price. It’s due to the fact that patients themselves pay the bills for corrective eye surgery (rather than third-party insurers).

          Hospitals are beginning to be more transparent and some are lowering prices for outpatient services because more of their customers are asking about CT scans, lab tests and so on. As deductibles rise, hospitals will increasingly face pressure to be more transparent about prices for outpatient services. I’m merely trying to think of a way to encourage providers to be more transparent with some of the prices for more expensive procedures. It’s about creating the appropriate incentives.

          • John Fembup says:

            “Walmart posts prices because it’s competing on price. Hospitals don’t post prices because they are not competing on price.”


  2. The big ham says:

    The federal gov. Should not be aloud to actively participate in the commerce they are only authorized by the constitution to regulate. The federal gov. Actively selling insurance on behalf of insurance companies is the greatest threat to our constitutional rights since communism

  3. Ron Greiner says:

    “The right to buy insurance at modified community-rated premiums needs to be conditioned on continuation coverage.”

    People should not be allowed into Individual Medical (IM) plans from employer-based health insurance. The people on IM should not have to pay for the sick coming off of employer-based plans. Just make employer-based plans guaranteed renewable.

    The tax credit should be used for the healthy on Medicaid. We need to do away with Medicaid for healthy people.

    Taxpayers need to know how much we are spending for city, county and State employees’ health insurance. Taxpayers should know how much Medicaid costs in every State.

    I don’t like anybody’s health insurance being terminated because of Eligibility Requirements, including Medicaid. If everybody had an age-based tax credit then all of the healthy would have insurance with a deductible and Medicaid would only have to pay for the deductible for those that were too strapped.

    Of course we are then back to how do we fund the high risk pools for those that don’t qualify for medically underwritten health insurance. The insured person should have to pay double so there would be a good reason to always have insurance.

    What ever we do we are talking Market Disruption, big time.

    • Devon Herrick says:

      I don’t like anybody’s health insurance being terminated because of Eligibility Requirements, including Medicaid.

      By that I meant if enrollees are required to pay modest premiums, experience cost-sharing of say, $10 (instead of $3), pay $50 for a unnecessary ER visit and be working (or actively seeking work), failure to do so could ultimately result in termination of benefits. Currently, someone who is required to pay modest premiums of $10 per month and required to pay $3 copays knows they cannot be withheld services or denied coverage if they refuse to pay. I’m not suggesting I would require these provisions. I’m just saying states should have the right to experiment with these types of proposals. So far HHS has not allowed any states to terminate coverage for failing to follow the rules (whatever those rules may be).

  4. Barry Carol says:

    Ron says: “Of course we are then back to how do we fund the high risk pools for those that don’t qualify for medically underwritten health insurance.”

    Yes we are. Prior to the ACA, 35 states plus DC had high risk pools and 15 states didn’t. Altogether, they covered about 200,000 people generally at a high premium for mostly inadequate coverage with comparatively low maximum benefit limits. Many states limited enrollment and had waiting lists for coverage. At the same time, experts estimated that there were probably at least 4-5 million people who would be considered uninsurable under traditional medical underwriting.

    At a conference I attended a couple of years before I retired at the end of 2011, a panel of several state insurance commissioners told the group that, in aggregate, the high risk pools then in existence had a medical loss ratio of 250%-300% which means the premium paid by the beneficiary covered only 33%-40% of medical claims depending on the state. The rest was covered by general state revenue and surcharges on insurance policies and allocated among insurers by market share.

    Some states offered these policies as far back as the 1970’s but the coverage was inadequate and the premiums were largely unaffordable for many of these people. I’ve suggested several times that these policies were inadequate because state politicians were never willing to spend the money that it would take to make them work.

    Insurers love to collect money from people who are unlikely to have significant claims but would be all too happy to dump anyone who they think would be unprofitable to cover into a high risk pool funded by taxpayers, either state or federal or both.

    If I saw a credible estimate of how much high risk pools might cost, how many people they would likely have to cover and how they would be paid for, assuming they could pass each state’s political process in the first place, I would take the idea more seriously. Until then, it’s little more than a glib throwaway line to rationalize medical underwriting so healthy people can buy inexpensive coverage, at least until they get sick while leaving sick people to fend for themselves.

    • Ron Greiner says:

      Barry, Individual Medical (IM) doesn’t terminate coverage because someone gets sick. That is employer-based coverage that is terminating people’s insurance.

      The States I am familiar with the high risk pools had very good coverage but you keep saying it wasn’t. You keep saying, “for mostly inadequate coverage with comparatively low maximum benefit limits.” Name the States that had this type of high risk pool.

      YOU say, “Insurers love to collect money from people who are unlikely to have significant claims but would be all too happy to dump anyone who they think would be unprofitable to cover.” Again, that is employer-based health insurance that terminates coverage and not Individual Medical. We need to stop the employer exclusion because employer-based health insurance just dumps their sick onto the taxpayers or high risk pools.

      YOU also keep saying that because something didn’t work in the past that it can never work in the future. That is what all losers think when they quit trying.

      The high risk pool in MI, IA and NE never had the problems you keep talking about.

      Barry, YOU never once say employer-based health insurance terminates insurance coverage but we all know it does. Why don’t you just admit it?

    • Bart I. says:

      Right, IM doesn’t terminate coverage on sick people, it merely raises rates on the entire pool until healthy people leave for another plan and everyone else is priced out.

      Regarding risk pools, also consider HIPAA plans available for people with expiring COBRA coverage. I would expect the loss ratios to be in the same range, but not I’m sure how the shortfall is funded. Maybe the same except for direct state revenues.

      • Ron Greiner says:

        Bart, you should tell a client I have named Barb who insured her 6-year-old son in 2001 and when he was 9-year-old he was put in a wheel chair and has been there ever since. Their insurance is being Terminated in a couple of months. They have not experienced your old pool trick exactly like the other clients of mine who are being terminated.

        Bart, tell your thought to someone with cancer on their 18th month of their COBRA extension that these IM companies will get you too because of an old pool sooner or later. I’m sure they would think that losing their COBRA at the end of the month is of more immediate concern.

        Sounds to me Bart you were dealing with a Blue Cross IM because they use the pool thing and it is the way they limit their liability. Also, IM that uses brokers, like TIME, will have the brokers switch the healthy every 12 months to get paid 1st year commissions. That is a good reason to not use a broker and instead use a captive agent.

        However, it would be pretty easy to pass laws to restrict Blue Cross from using the old pool trick if we put our minds to it.

  5. Barry Carol says:

    Regarding Medicaid, I’m all for state level experimentation and innovation.

    However, governors will tell you that 80%-85% of their budgets are spent on three things – education, including K-12 and higher education, Medicaid, and law enforcement, including their state prison systems. Medicaid is the 2nd biggest budget item for most states.

    Eligibility is based mainly on income and before the ACA, healthy adult males generally didn’t qualify for the program. Over 70% of Medicaid dollars are spent on the elderly and disabled, much of it for nursing home custodial care and home healthcare.

    Lots of states deliberately make it administratively complex to apply for benefits and then require fairly frequent reverification of income to recertify eligibility for the program. That’s how a significant number of eligible people either lose coverage or never sign up for it in the first place even though they would qualify.

    I’m told that a lot of people on Medicaid, especially in our large cities, see going to the ER as a one stop shop and the quality of care is perceived as higher than they could get from a community health center. I don’t think charging them $50 for using the ER for a non-emergency would accomplish much. If they can’t pay it at the time of service, it will probably become an uncollectible debt. If we want to save money on Medicaid and on the broader healthcare system more generally, we need to do a better job managing the high cost cases including those with CHF, CAD, COPD, Asthma, Diabetes and mental illness.

    It’s also worth noting that if someone on Medicaid goes to a hospital and is diagnosed with cancer, they can get follow-up treatment including surgery and expensive specialty drugs. If they’re uninsured, they probably can’t unless they can find a charity to pay for them.

  6. Devon Herrick says:

    Ron and Barry have raised an important issue, which is what to do about high-cost people. It’s not a perfect solution, but high-risk pools should be allowed to require that certain conditions be met. For instance, if you’re a high-cost diabetic, a condition of having subsidized coverage in the high-risk pool should be following chronic disease management guidelines. This may involved blood pressure meds, taking blood glucose readings, staying off sweets and some foods, etc.

    Most people have a hard time imagining letting sick people fend for themselves or die on the streets. I’m one of those people. At the same time, I believe there are limits to the cross-subsidies society should have to endure. As a society we cannot all have first-dollar health insurance coverage for $100 a month regardless of our health status — all paid for by someone else’s money. I believe states should have the right to determine the level of funding available for high-risk pools. I also believe there is nothing inherently wrong with expecting people with serious health conditions to help pay for some of that high cost.

  7. Barry Carol says:

    Ron – If someone gets so sick that they can no longer do their job and have to quit or if they retire or leave for another employer that doesn’t offer health insurance, they can get coverage under COBRA for 18 months at the average community rated premium for insuring the active (as opposed to retiree) workforce. In NJ, when COBRA ran out, they could get community rated coverage under the state’s guaranteed issue rules as long as they had prior coverage with no more than a 63 day gap between losing the old coverage and starting the new policy. The premium might be unaffordable but that’s a separate issue. That’s what subsidies are for. What happens when someone with IM gets sick, has to quit their job and can no longer afford to pay their premium? Does the insurer waive the premium? I suspect not.

    Secondly, if 10,000 people buy IM coverage this year, after a while some will start getting sick. Then the insurer can start a new block of business that will attract the still healthy people that can pass underwriting again. Gradually, the original block has mainly sick people left in it and the premiums go way up to reflect that. Most of those sick people will no longer be able to afford the premium and will have to drop the policy. Isn’t that pretty much the way it works? Wasn’t that the Golden Rule model?

    As for the old high risk pools, I’m just relating what the state insurance commissioners said at a healthcare conference I attended. I don’t know the details of each state’s plan and I don’t know how many people each state covered or how many sick people who wanted the coverage couldn’t get it because of limitations on the number of policies the high risk pool was willing to sell and subsidize or how many people just couldn’t afford it even if they qualified for it. With enough money for subsidies, they can work. So far, they largely haven’t. I would be very happy to see a high risk pool that actually worked for the people who need it at a cost that taxpayers could afford.

    Devon – Sure, let the states experiment and see what they can come up with to cover low income and high risk people. While I understand your point about requiring diabetics, for example, to behave in ways that will help control their condition, any doctor will tell you that they can’t enforce compliance in either taking medications or making lifestyle modifications including changes in diet and exercise regimens.

    My bottom line when it comes to health insurance reform is that whatever system we come up with has to work for low income people who make too much to qualify for Medicaid and it has to work for the unhealthy and already sick who can’t pass medical underwriting. If it only works for healthy people, it’s not acceptable in my opinion.

  8. Ron Greiner says:

    Barry, you are confusing two separate issues. I know there was guaranteed issue in NJ and NY that has been forced onto the rest of America with Obamacare, thank you.

    YOU admit employer-based health insurance works only with guaranteed issue on Individual Medical. But, then you turn around and ask about non-payment of premium on IM, that is a different story. Why do you just try your Liberal confusion all the time. Employer-based insurance TERMINATES after 18 months regardless if the client wants to continue or not.

    YOU got your Liberal ways with Obamacare and now the entire country has to repeal Obamacare because your way was a huge failure.

    My clients are being TERMINATED and after 15 to 20 years their premiums are still much lower than Obamacare premiums with an HMO. I know about starting new pools because Blue Cross of Iowa sent their renewal notices and told the clients that they were in an old pool and they should call their agent and move to the new pool. Of course their cash cow is employer-based health insurance where they can terminate all employees if they become too sick to work.

    Defend employer-based health insurance all you want but you know that it terminates their employees that are too sick to work and that is the point of insurance isn’t it?

    You are the Liberal mindset that is causing America so much grief with Obamacare. Now that you have destroyed the Individual Market what do you plan to do next?

  9. Barry Carol says:

    I think the 18 month limit on COBRA coverage could be easily fixed by changing the law to allow former employees to keep it indefinitely. The employer shouldn’t care as long as the former employee continues to pay a premium equal to the average cost of insuring the active workforce on a community rated basis. Of course, only about 2% of people eligible for COBRA coverage today pick it up because they can’t afford the premium. When I retired, I picked it up for my wife for five months until she aged into Medicare. Cost: $437 per month for the first five months of 2012. Since my employer has an active workforce that’s older and sicker than average, I told her to first call Horizon (NJ) Blue Cross to see if she could get a better deal from them. Their quote: $722 per month for less comprehensive coverage than my employer offered.

    If the former employee is too sick to work forcing him or her to leave the job, the chances are their life expectancy either isn’t more than a few years anyway. If it’s longer, they would probably qualify for social security disability in which case they would be eligible for Medicare after two years from the start of disability benefits.

    What happens to people with IM coverage when they get too sick to work and can no longer afford the premium? Aren’t they out of luck too?

    By the way, the majority of employers of any size (a few hundred employees or more) are self-funded these days. The insurer generally provides administrative services only which includes processing claims and providing a network of doctors, hospitals, labs, etc. It’s a decent margin business but the gross profit dollar opportunity per member is only about one-sixth of what it is on fully insured business. Employers save 6%-10% on average from self-funding.

    Finally, for the record, I would much prefer to see a free market solution to health insurance but it needs to work for low income people and those who are unhealthy or already sick. So far, I haven’t seen one. If high risk pools can be made to actually work for sick people, that’s great.

    • Ron Greiner says:

      I think the 18 month limit on COBRA coverage could be easily fixed by changing the law to allow former employees to keep it indefinitely. – That is goofy because then employer-based insurance could not terminate the sick and throw them into the Individual Market. This defeats the purpose of employer-based insurance eliminating their liabilities.

      It is obvious that employees would not spend as much as employer-based health insurance costs if they were in control. You admit they refuse to pay COBRA unless they are sick.

      I ran radio spots in Philly for the tax-free HSA in 2006 and the NJ people were calling crying about how much they were paying but of course TIME couldn’t get into NJ so there was nothing I could do. So now Obamacare has thrown all of America into the problems of NJ.

      “By the way, the majority of employers of any size (a few hundred employees or more) are self-funded these days.” YES, and they dump their sick onto the rest of us.

      “If the former employee is too sick to work forcing him or her to leave the job, the chances are their life expectancy either isn’t more than a few years anyway.” I had a client that took 4 years to die with ovarian cancer. Lucky for her she had Individual Medical (IM) and not just 18 months of COBRA. Besides, tons of people don’t die so what you say is meaningless.

      “Finally, for the record, I would much prefer to see a free market solution to health insurance but it needs to work for low income people and those who are unhealthy or already sick.” The reason we need high risk pools is because employer-based health insurance terminates their sick.

      Barry, Pasco schools are charging teachers $1,168 a month to add 2 children onto the school’s PPO insurance. What is interesting is that the Life Insurance that they are selling to teachers also TERMINATES if the teachers get cancer and can no longer work. Do you think there should be COBRA for the Life Insurance too?

      TRUST ME, employees do not know that they will lose their health and life insurance if they become too sick to work 30 hours per week. It’s a scam Barry.

      • Barry Carol says:

        “Do you think there should be COBRA for the Life Insurance too?”

        Actually no. I think younger people should buy term insurance. Once their kids are grown and their house is paid for, they will have less need for life insurance.

        By the way, to the extent that employer provided life insurance has a benefit that exceeds $50,000, the value is fully taxable as ordinary income.

        My former employer provides it even in retirement. I wish they didn’t and used the savings to strengthen the funded status of their defined benefit pension plan instead.

        • Ron Greiner says:

          Barry, the School District is selling Term Life that the employee loses if they get cancer and cannot work 30 hours per week. When a woman gets cancer she will lose her hair, will not be able to work, lose her life insurance, and she will be totally surprised. YOU think this is OK. I’m so happy everything worked out so well for you back in the pea-pinkin’-past.

          Employers are selling insurance, health and life, with non-licensed HR bozos without Full and Proper Disclosure. These HR people just lie if you ask them if the employee will lose their insurance if they become too sick to work. Their answer is always a 2 letter word when the correct answer is a 3 letter word – YES!

          This is a serious ETHICS violation but these HR bozos don’t have a license so they are not bound by ETHICS.

  10. The big ham says:


    What Ron is saying is if you get so sick you can not meet your 30 hour eligibility clause in order to qualify for the employers group insurance plan. You are then offered a cobra plan that is 102% of the actual cost. Employers share and the employees share pulse 2% sir charge. You can keep that for 18 months if you can afford the premium but at the end of 18 months it terminates. Before the ACA this caused anyone with a pre existing condition a problem. The problem still exists today but at least the people who lose there benefits Can now get coverage.

    Eligibility clauses are in every employee benifit program I have ever read. This includes health insurance and employer sponcerd life insurance. They are not convertible at the current premium or coverage to individual plans. People are paying for insurance every day out of there checks that they can not keep if they can not maintain eligibility.

    My first experience with this group nightmare happened almost 25 years ago. I sold a group health plan to a mom and pop auto dealership. The wife of the owner was diagnosed with cancer. They were close to retirement so he said I want my wife to have what ever she wants as she fights for her life. .The owner sold his business and moved to Arizona. Take a wild guess what happened . That’s right insurance terminated because the owner was not working 30 hours a week performing his usual duties at his place of employment. Because there were only 5 employees the group plan did not have a cobra continuation option so it just terminated. So lose your wife and everything you ever worked for all because of eligibility clause through an employer.

  11. Barry Carol says:

    Big Ham,

    How many employees do you need in a group plan to be eligible for COBRA continuation? If it’s more than two, the minimum for a group, I don’t see why the law can’t be changed. I understand about the COBRA premium being the sum of the employer and employee contribution plus the 2% which I knew about but forgot. I don’t see any reason why the 18 month continuation limit can’t be expanded to 36 or 60 months if it can’t be eliminated altogether.

  12. The big ham says:


    It took 25 employees on a group before a cobra was offered. However that still would not solve the problem if the company went out of business …let’s use your New Jersey as an example. Usually a hurricane does not come ashore and remove the business from the face of the earth. Usually. However if the business is gone what happens to employee benefits? Just ask you Govenor.. He is aware of it but he couldn’t get the blues to fund his campaign if he talked about it.

    • Bart I. says:

      In California, if you burn through the 18 month COBRA period you are entitled to another 18 months under Cal-COBRA.

      But you’re right, if the company goes out of business or drops its group coverage for any reason, then all forms of COBRA terminate.

      In either case, once COBRA eligibility runs out, you are then eligible for HIPAA coverage (Kaiser also offers continuation coverage which is identical to HIPAA but waives the requirement to have used up all COBRA eligibility).

      At least this was the case a few years ago in California. I don’t know what changes ACA may have caused.

      HIPAA was age-banded, as are small business plans in California. The last time I checked, HIPAA was slightly more expensive than small-business COBRA, which means it was moderately expensive for someone in their 50’s, but probably no worse than other risk pool coverage.

      • Ron Greiner says:

        Bart, you sound a lot like someone who sells those dangerous employer-based plans.

        Do you sell employer-based plans Bart?

        • Bart I says:

          Nope. I’ve used COBRA and HIPAA in the past because I was advised I wouldn’t qualify for the available IM plans at the time my employer folded.

          The disqualifying medical events may have aged out by now, but I’ve known people who couldn’t qualify because of relatively minor conditions.

          • Ron Greiner says:

            Bart, you sound extremely well versed in bad mouthing IM exactly like those merchants of death who sell employer group plans. What does this mean that you used HIPPA because you didn’t qualify for IM?

            What relatively minor conditions would cause someone to be declined on IM?

            How did you get COBRA if your employer folded and went out of business?

            I do admit that I don’t know all of the laws in California but I am licensed in a lot of states.

            That Kaiser is an HMO deal, right?

            • Bart I says:

              I knew someone you used antidepressants and had a daughter with asthma (mild as far as I could tell). When attempting to purchase IM when between jobs the agent returned her application “so she wouldn’t be declined by the insurer.” Apparently having an application refused was also a pre-existing condition.

              Ron you seem pretty quick to accuse someone of having a vested interest in employer plans, but don’t you have a vested interest in what you sell? I’m not opposed to underwritten IM insurance for people who qualify, so long as I don’t have to subsidize it as a taxpayer.

              • Ron Greiner says:

                Bart, your employer-based plan is subsidized by the taxpayer. What, you don’t want other people to get tax relief like you enjoy. That’s pretty cold Bart.

              • Ron Greiner says:

                Antidepressants used to be an automatic decline but that has changed because so many people are slammed onto medication today. So things do change. If you ever get Life Insurance they will ask you if you have ever been declined before so the agent was doing what he thought was a favor.

            • Bart I says:

              I was on COBRA for a few months while the company was winding down. Since a health plan was maintained for the shutdown crew, I was eligible to be on it as well.

        • Bart I says:

          I’ve said before that I’m not a particular fan of employer plans, but I’d need to see an alternative before I’d support pulling the rug out from under people who use them.

          • Ron Greiner says:

            I think that there should be a warning that says: WARNING – if you get a head full of brain tumors and can’t work you will lose this health insurance! Sign here……….

            Same with your life insurance: sign here…….

            Full and Proper Disclosure should be enough.

            • Bart I says:

              Had one. Luckily it was benign. I couldn’t complain about my coverage and certainly got my money’s worth.

  13. The big ham says:

    Oops I posted this on wrong thread. But I’m old and tiered

    Let’s think outside the box if we want real solutions.

    The bottom line of all of this is how much do we have to pay for Doctors, Hospitals and RX’s in any one individuals lifetime. Or another way of looking at it how much are they allowed to make?


    When you are born the federal government establishes a lifetime health coverage plan for you in a guaranteed interest baring account of Some amount. (THAT THE GOV CAN NOT TOUCH!!!) For arguments sake let’s say $100,000. This account is established the day you are born and is your lifetime healthcare account. Let’s assume a modest 3% guarantee rate of return. This account can only be used for major medical and maintenance medication. Not physicals or preventative stuff just normal health care and RX’s if you get sick..when you are young and still feel immortal your account will grow. Let’s say the average person will take out $1,000 a year worth of healthcare. At the end of year 1 you would then have $102,000. Buy the time your are 30 you will have approximately $350,000 and at age 60 you would have approximately $900,000. Obviously some will have more some will have less depending on health care used in the 60 years.

    This pool of money is all the healthcare industry is Intitled to. If you have someone young and sick and uses up the $100,000 then the healthcare industry picks up the tab. ( just like Medicaid today) once a persons accent goes to 0 then they are on the healthcare industries dime.

    Any money left in an account upon death can be left as an asset To your estate at normal tax rates.

    If a plan like this was implemented after WW2 instead of tax payer funded employer based benifits how much would the tax payer have saved? Better yet how much would we save over,the next 60 years?
    Obviously there are problems like what todo with the old as we wait 60 years for the young ones. To catch up.

    But yep it’s out of the box 😄

    – See more at:

    • Devon Herrick says:

      A defined contribution system, such as you illustrated, essentially recognizes that there are limits to how much society should have to pay for other people’s health care. I personally don’t have a problem setting limits using a defined contribution. Most young Americans would gladly forgo an extra three months of life (in a nursing home at age 90 with dementia) for a bigger house, newer cars, more frequent vacations, while young and raising a family. The opportunity costs of setting no limits on medical care is a lower standard of living for our grandkids.

    • Barry Carol says:

      Big Ham,

      If someone uses up their account, you suggest that any future care they might need would have to be absorbed by the healthcare industry, that suggests that the patient will no longer care about costs and the system really isn’t setting any cost limits. To set cost limits would imply that if the person can’t pay out of pocket or find a charity to pay for him once the account is used up, he will be allowed to die. I find it hard to envision the society coming to grips with let alone embracing that concept.

      Separately, what would you do about legal immigrants who come here later in life? Do they get a proportionately lower amount put into their account depending on how old they are when they come here? If so, it will have much less time to compound to cover future healthcare bills.

      At the same time, the society needs to somehow determine how much it should be prepared to spend to keep one person alive which ultimately means putting a value on a life. Of course we do that all the time when balancing new regulations coming out of the EPA with the compliance cost imposed on businesses and individuals. We try to strike a similar balance with safety regulations in the transportation sector. Even in the workplace, the marketplace sorts out how much more to pay a coal miner than a bank teller because coal mining is a much more dangerous job, especially underground coal mining.

      I think QALY metrics would be a useful alternative approach and other countries already have some experience with it. I think we should be prepared to just say no to the cost of certain specialty drugs that cost more than they’re deemed to be worth and then invite the drug manufacturer to come back with a lower price if it wants the drug included on the formulary. Maybe certain expensive procedures should just not be offered to people beyond a certain age unless they can self-pay. We already have elaborate rationing protocols for organ transplants.

      The other issue that I think needs to be addressed is what is a reasonable balance between the health insurance deductible vs. the premium charged for the policy and then reconcile that with the inability afford the deductible or the full premium among people below a certain income level.

      In the meantime, maybe we should let people who don’t want to buy health insurance remain uninsured but make medical debt not dischargeable in bankruptcy like student loans are today.

      • The big ham says:

        I don’t have all the answers. this was just an idea that came to me last night while setting back reading and having a nice 10 yr old rye.

        If someone uses up their account, you suggest that any future care they might need would have to be absorbed by the healthcare industry, that suggests that the patient will no longer care about costs and the system really isn’t setting any cost limits. To set cost limits would imply that if the person can’t pay out of pocket or find a charity to pay for him once the account is used up, he will be allowed to die. I find it hard to envision the society coming to grips with let alone embracing that concept.

        Sounds just like current Medicaid.

        Separately, what would you do about legal immigrants who come here later in life? Do they get a proportionately lower amount put into their account depending on how old they are when they come here? If so, it will have much less time to compound to cover future healthcare bill.

        i like how you used the term legal immigrant. I have never understood the term illegal immigrant. You are ether an immigrant or a criminal. Obviously part of the immigration process would have to have extra funding.

        As far as society having A problem with capping costs I fail to see the differance in today’s system. How many people have gone bankrupt from health care bills even when they had an insurance plan in place?

  14. Bob Hertz says:

    Note to Devon:

    I love the idea that you raise about forcing providers to give cost estimates or else it will be hard for them to collect on medical bills.
    I raised the idea 5 years ago in my own writing and have rarely encountered it since.

    Anyways, this will not be easy to get through Congress. The hospital lobby I assume will go ballistic against it, and they must make a lot of campaign contributions. If such a bill went to the Senate today, I bet it would get about 4 votes (Sanders, Warren, Franken, and Paul). If Mitch McConnell supported it, I might have to go the hospital in shock.

    • Barry Carol says:

      Maybe a few states could try it first. If it works without the medical world collapsing, which I think it would, the idea would gain a lot of credibility around the country and, at a minimum, could be adopted by more or even most states.

      The problem is that both Medicare and Medicaid already use administered (dictated) prices so they don’t have nearly a big a dog in this hunt as commercially insured individuals and the uninsured do.

    • John Fembup says:

      I think the key element is value competition not price disclosure. As Devon points out, organizations that do not compete on price have no reason to disclose their orices; orgainzations that do compete on price have every reason to disclose their prices,

      But it’s more than that. No one wants to buy medical care on the cheap. People seek the best value. When price is no object, only the best perceived quality is good enough. when price is part of the picture, the idea of value enters too, In other words, a cost/ benefit calculation is necessary. That can’t be done unless each person can know the retail cost to them at the pharmacy, doctors office, or hospital.

      I think it follows that the competition that matters is competition among medical service providers – not among insurers. Medical insurance is costly because medical care is costly. The high cost of medical care is the principal barrier to its access. Trying to lessen that barrier using some sort of insurance scheme – i.e., subsidizing the cost – only enables higher demand which increases the cost. Higher cost requires higher subsidies. Eventually the whole contraption collapses. Voila Obamacare.

      So it seems to me that a reduced role for insurers – including government insurers – is a key part of stimulating price competition among medical service providers. It would have to be phased in. But I think it would have to be,

      That means consumers will pay a greater share of their medical expenses. (Im not including welfare systems like Medicaid which are necessary for the poor. In fact the only component of Obamacare that has ever seemed rational to me, is the expansion of Medicaid eligibility).

      Many people argue that it’s possible to reimburse most of people’s medical expenses in a government “single-payer” scheme. Theoretically, anyway. Control of cost is still necessary in such a system and must rely on a different means – e.g., strict rationing. I think rationing requires enormous governmental regulation, as in UK, and would also require political discipline that does not exist in America. I could be wrong about that. Maybe.

      • Devon Herrick says:

        …the key element is value competition not price disclosure…

        In retail competition price is always a consideration, but not the only one. A Ford Focus is cheaper than a Mercedes. Yet, both Ford and Mercedes are competing on price and quality. Many people are willing to pay more for the Mercedes and buy it instead of the Ford. But Mercedes knows better than to not disclose prices when selling its cars. It would lose sales. Of course, the sticker price is not the final price; it’s a negotiating point. But there is still an element of price competition.

        • John Fembup says:

          Devon, we agree.

          I did not mean to suggest price drops out of the calculation. I meant that to determine value, a buyer must know the price. Otherwise, it’s not possible to decide if the product offered is worth it’s cost.

    • Devon Herrick says:

      Maybe what has changed in the past five years is that deductibles have risen sharply and networks have grown more narrow. Increasingly, Americans are paying virtually all their day-to-day medical bills out of pocket. The problem of “surprise” medical bills and out-of-network balance bills is becoming increasingly common.

      • John Fembup says:

        I would guess most reimbursement surprises happen to patients who haven’t read their plan descriptions. Reading these descriptions won’t change the coverage, but it would al least transfer the point at which an individual will experience surprise.

        The really unpleasant surprise may be the dawning realization that most people will never again have insurance that covers all or nearly all, their bills. Because insurance is steadily and surely evolving into coverage mainly for very large or catastrophic costs.

  15. Jimbino says:

    I can’t wait until somebody like Uber starts providing health care or selling healthcare insurance based in Cuba. That would bring an end to the entire scummy insurance, healthcare and pharmaceutical monopoly in the USSA. We wouldn’t have to wait for Congress to act in the interests of the Amerikan people.

    Just as Uber is little by little eliminating the scummy Taxi monopolies throughout the world, only better, since no USSA legislature could vote to hobble Cuba as they’re currently trying to do with AirBnB and Uber.

    • Devon Herrick says:

      The regulation of medial care is part of the problem. Doctors don’t want Nurse Practitioners providing care unless they are working for doctors. Dentists don’t want dental hygienists cleaning teeth unless they are working for dentists, and so on.

      Now that the Supreme Court has come out with a ruling that state regulatory bodies are not immune from antitrust (because they are not adequately supervised), maybe some of the barriers to competition can be dismantled over time.

  16. Bob Hertz says:

    Devon, you made a provocative comment earlier in this string…

    The opportunity costs of setting no limits on medical care is a lower standard of living for our grandkids. –

    Most Americans would disagree, in that they see the benevolent side of health care — saving crippled children, relieving pain, halting cancer, et al.

    But you may in fact be right. The huge amounts that government spends on Medicaid and Medicare is not available for free college tuition or repairing our infrastructure. The huge amounts that businesses spend on health insurance is not available for pensions. The insurance premiums that families must pay are not available for vacations or home improvements.

    Still it is a tricky concept. Health care has propped up the American labor market for 20 years (see the writing of Michael Mandel and Richard Spence). If we made serious reductions in health spending, millions would lose their jobs, they would stop consuming, and this would lead to other layoffs. Whether this would be just a temporary jolt, I am not wise enough to know.

    • Devon Herrick says:

      Bob, my concern is not that we spend too much; it’s that spending is on autopilot and nobody is allowed to make the trade-offs they may prefer. The ACA is an example. It requires that everyone buy health coverage, much of which pays few benefits until a deductible has been met that is far higher than most Americans expected costs.

      The average employer family plan was $17,545 in 2015, with workers picking up $4,955 of that. As you know, labor economists tend to count fringe benefits as part of compensation. If workers didn’t get health coverage, they get a similar amount in cash (minus taxes). The problem is most workers don’t realize they are paying for benefits. They see their costs as $4,955 (or about $3,000 net of taxes). If workers really understood they are forgoing $17,545 (pretax), I believe most would opt for cheaper insurance or at least coverage where they controlled more of their own dollars. Maybe they’d opt for a $10,00 deductible and put $10,000 into an HSA. That would certainly result in fewer dollars flowing into the health care system.

      You allude to the fact that nearly 20% of our economy is health care. You are correct that making patients much more price-sensitive, defining the contribution that Medicare owes seniors and implementing other strong cost-control measures would cause a recession in the health care industry. It would do so for the same reason over-building spec houses and underwater mortgages caused the Great Recession — health care is in a bubbled of sorts where it has grown accustomed to consuming 20% of our national income. The pain would be temporary, however. As with any bubble, the solution is not to prop it up. Rather, the solution is to allow the market to reallocate resources. In other words, if workers truly understood they are paying $17,545 of their earnings for health coverage that provides little more to them than half a dozen doctor visits, some prescription drugs and protection from catastrophic events (they don’t actually expect to occur), I suspect workers themselves would reallocate a portion of this income to bigger houses, newer cars, more frequent vacations, eating out more often, etc.

      • The big ham says:

        I sold the very first Medicare MSA plan in the United States to my in laws. They are not wealthy. My father in law worked as a church custodian his whole life.
        His plan cost him 0 premium it Had a $2,500 deductible and the insurance company deposited $1,250 into his MSA. This made his total out of pocket costs to be $1,250 a year.

        It’s very interesting how he procevied his MSA account. He hated going to the doctor because he didn’t want to use his MSA funds. He would say that’s my money and the insurance should pay the doctor. The insurance company quit offering that plan after the first year so he went to a med sup.. He likes the med sup more because he dosent have to pay anything when he goes to the doctor. Even though his med sup is costing him $180 a month he prefers it over the MSA because he dosent have to spend his money to go to the doctor. He now goes to the doctor about once a month. He dosent care about the cost because he has 100% first dollar coverage.

        • Ron Greiner says:

          big ham, that is funny. To slow your father-in-law down we need to make his Madigap coverage only pay 99% of his expenses because then he wouldn’t see the doctor if it was going to cost him a dollar.

  17. Barry Carol says:

    I thought one of the more useful provisions of the ACA is the provision requiring employers who offer employee health insurance to include in Box 12-c of each employee’s W-2 wage form the value attributed to health insurance provided to each employee beyond the employee’s own contribution. I’m not sure if it’s had any impact or not on employees’ thinking about this issue but it’s at least better to be informed than not informed.

    I also think more employers could provide annual compensation statements to employees listing the employer’s total contribution including wages, profit sharing and/or 401-K contributions, the employer’s share of FICA taxes, disability and life insurance benefits, health insurance benefits and anything else for which the employer pays cash. Many employers already do this and have done it for years but there are many who don’t do it. I think they all should do it to help employees more fully understand just how much they are being paid in total compensation. For defined benefit pension benefits, quantifying the value of each year’s incremental accumulated benefit obligation is a tougher challenge but not impossible.

    As for potential tax changes, I think we could limit the value of benefits to which the tax preference applies as a replacement for the Cadillac tax. For example, we might limit the tax preference to $30,000 for family coverage and $10,000 for single coverage. Anything above that would be taxed to the employee as ordinary income. This is the way it has long worked for life insurance benefits for which the death benefit exceeds $50,000. The preference amount could even be phased down over time with other taxes reduced to ensure that the change is revenue neutral to the federal government.

    • Ron Greiner says:

      Barry, now you want to raise the employer-based subsidy? But you say we can’t afford employees who buy their own insurance any tax relief at all.

      Then you say young families in New Hampshire cost more than 50% than old people on Medicare. I just don’t understand how you can justify the things you say. My insurance company is in New Hampshire and we don’t have to charge young families $31,000 a year with a $2,500 deductible. You say it is because Boston is close.

      You want to raise the amount of the employer exclusion but you never did say that it must be paid for like you always do for employees. I think you are here just to spew your Socialist mindset and then say how conservative you are.

      You are way to selfish Barry.

      Also, shouldn’t these employees know what their COBRA would cost if their employer was giving them Full and Proper Disclosure?

  18. Al says:

    Cobra eligibility is tied to the workplace and that is intricately tied to third party payer insurance which is the culprit of so many of our healthcare problems that existed before the ACA was passed and continue to this day. I take note how to some every problem has a simple corrective new rule or regulation where it is unrecognized by the one suggesting it that such a corrective action has more unintended consequences frequently requiring further correction and generally more money.

  19. Al says:

    Devon, I keep hearing an overbearing suggestion that the traditional uninsurable are more important than the rest of the 300+ million people that are also citizens. I think that is a BS argument from those that favor a collectivist approach to our healthcare problems.

    If we had a market place for our 300+ million people we would be saving considerable amounts of money some suggesting savings of 33% to 50% that could more than pay for the traditional uninsurable. In the interim we all recognize that somehow they need care, but I have never seen a break down of the individuals involved, have you?

    We say traditionally uninsurable. Is some of that due to the fact that insurers are not permitted to create policies that would adequately manage the so called uninsurable? Further if the uninsurable’s deductible was doubled with an increase in copay would insurer’s be able to insure that person under similar conditions as they insure the healthy? Additionally wouldn’t a patient be able to carry such insurance if the government were willing to subsidize part of the deductible and copay so the patient could remain in the market place? That leads to the question of how many of the uninsurable have incomes higher than the mean or average of all citizens? [Remember that if health care costs fall in a marketplace the insurer and the patient would be dealing with lower costs and lower premiums to begin with.]. There is even Medicaid which seems to be good enough for those that lost their good insurance because of the ACA, so why isn’t it good enough for those that do not have funds to fit into this type of subsidized program?

    • Devon Herrick says:

      I’ve always heard the number of true uninsurables was lower than estimated prior to the ACA. I’ve had a lot of insurance agents tell me that most of those who applied were able to get coverage. But some of them could not get coverage on terms they found desirable. They had to suffer from pre-existing condition exclusions. They had to deal with high deductibles and high premiums. But, then again, high premiums coupled with high deductibles sounds like what is the norm today for middle-age people.

      • Al says:

        Devon, I have a problem with the term “uninsurable”. What does it really mean? To me it means that according to the rules and regulations specified by government an insurer cannot offer an adequate policy that satisfactorily recognizes the risk .

        I decided to move away from my group insurance plan because I knew it would be gone in a number of years. I didn’t want to wait until I was “uninsurable”. Both my wife and I were rejected even though neither of us had significant illnesses in decades. We filed appeals and in 1 year my wife was provided insurance and one year later I was provided insurance as well.I don’t know if either of us ever reached our deductibles on those policies.

        Was I really uninsurable or are there certain risks assumed by insurers that don’t exist? A rhetorical question for there are many things insurers worry about when issuing non group insurance including the question why doesn’t he take group insurance.

        I was one of the uninsured that we hear about day after day yet I was able to self pay virtually any bill presented. There must be others that are as lucky or have adequate funds to tailor their insurance to their needs so I think this claim about the uninsurable is mostly a collectivist ruse especially since there is Medicaid, bankruptcy and laws on the books that make hospitals treat anyone with an urgent or emergency condition.

  20. Barry Carol says:

    “You want to raise the amount of the employer exclusion but you never did say that it must be paid for like you always do for employees.”

    What the heck are you talking about, Ron? I’m trying to LIMIT the employer tax preference, not raise it. As I’ve said countless times, I would get rid of it altogether if it were up to me but it’s not up to me so let’s start with an approach that might be able to make it through our political process and phase it down from there. The Cadillac tax has already been deferred for two years and will probably be eliminated altogether if a Republican becomes president.

    All you want to talk about is cheap health insurance for healthy people and then throw in a tax credit to make it even cheaper than it already is now for those who can pass underwriting. I don’t hear anything about covering sick people except vague references to high risk pools but no estimate of what they might cost and where the money would come from to pay for them or how many people might wind up in them.

    What good is a health insurance system that can’t serve the people who need it most? You said in an answer to one of my questions that as many as 30% of people who currently get their health insurance through an employer may not pass underwriting but new companies might spring up to serve up to two-thirds of them. Of course you didn’t say at what premium above the preferred rate that TIME offered to the super healthy.

    “Also, shouldn’t these employees know what their COBRA would cost if their employer was giving them Full and Proper Disclosure”

    If they made it through 4th grade arithmetic, they could easily determine that by adding their own contribution toward the premium to what the employer paid. That estimate is only missing the 2% premium they would have to pay which I consider inconsequential. Or, if an employee wanted to know that, he could ask the HR department.

    • Ron Greiner says:

      Barry, let me help you about the real world. Employees don’t want to ask HR how much the COBRA is because they are afraid of getting fired before they quit.

      I can’t give you exact numbers about the future and you are crazy to think I could tell you about something that is not already happening.

      Raising the employer exclusion higher than the $27,500 would have to be paid for using your logic.

      Why didn’t you use $27,500 that is already current law?

      Come on Barry the additional $2,500 would have to be paid for and you know it.

  21. Barry Carol says:

    “Why didn’t you use $27,500 that is already current law?”

    Because current law has already been deferred for two years and will probably never go into effect if a Republican wins the presidency. I read about someone who proposed limiting the tax preference to $30K for family coverage and subjecting any excess to income and payroll taxes and I thought it was a reasonable idea.

    I would support the lowest number that could pass through the political process down to zero if that could make it but then there would need to be offsetting tax reductions to ensure that the change was revenue neutral, at least for the bottom 80%-90% of the income distribution.

    • Ron Greiner says:

      “Because current law has already been deferred for two years and will probably never go into effect.”

      Barry, $27,500 is the current law and it cost $20 Billion to postpone it for 2 years. You can’t say lets raise the current law without paying for it and strapping my Grand kids for paying the bill, plus interest, because you think it sounds reasonable.

      King George didn’t make you Governor so you can just pass laws that you think sound reasonable without thinking of the future generations. That is inter-generational theft Barry and you know it. We should prosecute people like you who steal from the unborn.

      • Barry Carol says:

        “That is inter-generational theft Barry and you know it. We should prosecute people like you who steal from the unborn.”

        I didn’t see any proposals from you for how to pay for giving a health insurance tax credit to people who buy their own coverage since the current tax treatment of employer coverage probably isn’t going to change anytime soon in any significant way. That looks like stealing from the unborn too. I guess we should prosecute people like you too.

        • Ron Greiner says:

          Barry, that’s not true. I said the Fed’s and States are spending too much on employer-based health insurance and it would be less expensive for the age-based taxed credit. Remember when I said that no country is so broke that they can’t afford to save money?

          Barry, you Hillary and the Democrats think that you can just keep passing more and more laws to restrict freedom in the country but that is unconstitutional and you just don’t care.

          YOU want to central plan the economy because you are so much smarter than free and open markets. Next you will want those who purchase home owners insurance to pay for low income housing.

          Insurance Barry is different than how to pay for sick peoples’ health expenses. That is something you, Hillary and Obama will never understand.

          • The big ham says:


            The democrats will never understand that insurance is a for profit industry not a wellfare system. They are so confused they are regulating the third party payer to save costs. Insurerds buy insurance to transfer there risk of financial loss to an insurance company in case something happens …insurance comapines take premiums and assum the risk hopefully for a profit . The democrats say let’s regulate who pays the bills but not the consumers or the providers ..its just insanity

          • Barry Carol says:

            Ron — You’re not going to get your age based tax credits and I’m not going to get my elimination of the employer provided health insurance tax preference coupled with offsetting tax reductions elsewhere.

            I dispute your contention that age based tax credits would save money and I suspect many others do as well. The total amount spent for health insurance premiums and subsidies to help low income people and sick people pay for health insurance premiums cannot fall unless the aggregate cost of healthcare falls.

            The redistribution of health insurance premiums among individuals is a separate issue. Healthy people would save a lot of money through medical underwriting while sick people would either need to be very heavily subsidized through high risk pools at high aggregate cost or just left to fend for themselves.

            • Ron Greiner says:

              “I dispute your contention that age based tax credits would save money and I suspect many others do as well.”

              No Barry you are the only one. You are not an expert at all. You “forgot” that COBRA was 2% more than the employer-based premium. That makes you somebody with an uninformed opinion.

              YOU don’t know anything about insurance.

  22. Bob Hertz says:

    Devon, I think there is a ‘stretch’ in your comment about reallocating a $17,000 family insurance premium.
    You imply that if the employee accepted a $10,000 deductible, then his/her premium would drop to $7,000 and the other $10,000 could be used more productively.

    Unfortunately the premium would not drop nearly so fast.
    The actual insurance markets prove this time and again.

    Dr Goodman used a similar argument several years ago and I piped up then to.

    I am not against high deductibles, if they are coupled with a well funded HSA. But even then, insurance premiums are a problem. And of course, millions of ACA buyers are stuck with high deductibles and have no HSA whatsoever.

    • Ron Greiner says:

      Bob, If someone has a $1,000 deductible and they take that to a zero deductible the premium goes up more than $1,000. So when you say, “Unfortunately the premium would not drop nearly so fast. The actual insurance markets prove this time and again.” THIS IS NOT TRUE!

      When people have a zero deductible they don’t care about spending other peoples’ money. If they have to spend some of their own money the incentives change. Incentives are important.

      Same with food Bob. Texas Senator Phil Gramm said, “If you had a zero deductible on a food security card and the government paid for all of your food I’m sure you would eat differently and so would your dog.”

  23. Bob Hertz says:

    I am going the other direction, Ron.

    If a family pays $17000 a year for health insurance in the individual market, with a $500 deductible, going to a $6850 deductible should lower the premium by about $2500 a year.

    You cannot go to a $10,000 deductible on qualified plan any more, but if you could, I firmly believe that this would only lower the premiums by another $2K a year.

    This is due to the vast influence of large claims on health premiums.

    • Barry Carol says:

      Bob – I agree with you on this one. It defies common sense to expect insurers to reduce the premium by more than their expected avoided claims costs plus, perhaps, associated administrative costs. In any given year, half of members will incur little or no claims costs. Even Medicare works this way as the healthiest 50% of beneficiaries account for only 4% of Medicare costs in any given year. So, if going from a $500 deductible to a $10,000 deductible reduces claims costs, on average, by $4,000 to $5,000, there should be no reason to expect the premium to fall by more than $4,000 to $5,000 plus associated claims costs.

  24. Barry Carol says:

    Correction: Last sentence should read: plus associated administrative costs.

    • Ron Greiner says:

      Barry, you mean administrative costs plus PROFIT. YOU stick around here long enough you will learn something Barry.

      Barry, if you didn’t know, Dr Graham is for tax credits for the purchase of IM. Dr. Graham calls the universal credits instead of age based credits. There is a woman running for Senate against John McCain and she says $2,500 tax credit per person in the family. That is much more than age-based tax credits for younger people and less for a 60-year-old couple.

      I think even you would agree that my idea is better than hers. She would give a 30-year-old couple and 2 children $10,000 tax credit and they can purchase insurance for less than $5,000.

      Maybe I should run for the Senate, what do you think Barry?

  25. Barry Carol says:

    “Maybe I should run for the Senate, what do you think Barry?”

    Maybe you should, Ron. Go for it!

    With respect to insurer profit, I get the impression that you think their profits are huge as a percentage of revenues. They aren’t. The big insurers such as United, Anthem, Aetna, Cigna and Humana all target a 5% pretax margin on their Medicare Advantage business and 3%-5% on their managed Medicaid business. They hoped to ultimately make about 5% on their ACA exchange business but are losing significant money because their pools are turning out to be older and sicker than expected. Those target profit margins, by the way are all pretax. The non-profit Blues generally report profit margins in the 1%-2% range and, as non-profits, don’t pay taxes. Moreover, the MLR rules require the insurers to spend at least 80% of premiums on medical claims in the individual and small group market and 85% in the large group market which doesn’t leave a lot of room for profit after broker commissions, claims processing, advertising and marketing and other administrative costs.

    I know John Graham’s position on the age-based tax credits. I can’t see it replacing the employer based system. What I could see is something like that applying only to people who do not get their coverage through an employer but it wouldn’t be paid for just like Part D wasn’t paid for and, more recently, the doc fix wasn’t paid for. So you may well get what you want but the cost will just be added to the deficit and accumulated debt for our kids and grandkids to pay down. It also would still leave us with the issue of figuring out how to pay for high risk pools which would probably be significantly more expensive than most people think it will be.

  26. Bob Hertz says:

    In any discussion of high risk pools and the uninsurable, I think back to a fascinating discussion of the subject in the Incidental Economist.
    Read the comments especially.

    • Ron Greiner says:

      Bob, maybe we should change the name from high risk pools to: Government Welfare for People how have Lost Their Employer-Based Health Insurance Because of Their Eligibility Requirements.

      Then everybody could pay for this welfare instead of only the people who buy Individual Medical insurance.

      I don’t see how the Central Planners can outlaw free people from entering a contract to purchase health insurance from an insurance company that wants to sell it to them in America, the land of the free. Where in the Constitution does it give the Government the right to outlaw low cost medically underwritten health insurance? Is it the “Common Good” excuse? Why do Socialists have to outlaw FREEDOM to make their plans work? Is it that Socialists have to be in control of all of the money to make their plans work?

  27. Ron Greiner says:

    “I get the impression that you think their profits are huge as a percentage of revenues.”

    Why do you put words in my mouth? I didn’t say that. But because you brought it up, how much did Aetna pay for Humana? I don’t believe the Liberal propaganda like you. The USA is a land of laws, poorly written and randomly enforced.

    The employer-based insurance industry is in bed with the White House. You say you want to do away with the employer-based tax code. So you want the New Hampshire government employees to pay taxes on their over-priced $31,000 a year health insurance with a $2,500 deductible? If that is true then that would kill employer-based health insurance because that is the only reason people get their insurance from an employer. I think you are just saying drivel as usual.

    “I know John Graham’s position on the age-based tax credits.”

    Good, why don’t you explain it to me or provide a link.

  28. Devon Herrick says:

    Bob, what I find interesting about Austin Frakt’s post was where he cited James Capretta estimating a high-risk pool would need up to $20 billion annually in federal-state subsidies to cover perhaps 4 million people. That works out to $5,000 per high risk enrollee plus premiums. Yet, in the exchange, premiums for middle-aged enrollees are $6,000 apiece in my area. That’s not $6,000 for each high risk enrollee; that’s $6,000 for every enrollee over a certain age for a BlueCross $6,750 deductible. Premiums in my area are probably higher because insurers in Texas are finding the exchange business is brutal. But it still seems the premiums (and underwriting losses) are excessive. It almost seems that the entire market for Texas Bronze plans for middle-age enrolled is turning into a high-risk pool subsidized by the federal government and healthy enrollees.

    A point you have made repeatedly in earlier posts is a good one: health reform requires reforming the cost problem. (That is especially true for costly patients.)

    • Ron Greiner says:

      Devon, in Dallas zip code 75201 a 50-year-old couple has a premium of $710 a month with a $6,750 deductible from Blue Cross.

      In Casper, WY the same couple has a premium of $1,145 a month from Blue Cross. One big difference is that in Casper Blue Cross is the only plan with no competition.

      I know everybody will say that because of the laws that restrict Blue Cross from making any money on premiums that it has nothing to do with competition. I would submit that they are playing us all for suckers.

      I bet Docs and hospitals in Casper are not making 75% more than Dallas doctors. Nobody believes me but these Blue Cross bloodsuckers know exactly what they are doing. When they get rid of the competition in Dallas your premiums will shoot sky-high too.

  29. Bob Hertz says:

    I cannot speak for Wyoming, but I am an agent for Blue Cross of MN and their story is interesting. They lost over $35 million on ObamaCare business in 2014 and this was on less than 25,000 enrollees, plus their premiums were not the lowest.

    The real cause of last year’s losses was that Minnesota’s high risk pool was dissolved, and most of the persons from that pool chose to move over to Blue Cross — widest networks, familiar name, et al.

  30. Barry Carol says:

    “One big difference is that in Casper Blue Cross is the only plan with no competition”

    Did it ever occur to you, Ron, that there might be other legitimate reasons for the difference in premiums between Dallas, TX and Casper, WY?

    I can offer at least three alternative differences. First, most doctors and their spouses prefer to practice in urban and suburban areas where there are more cultural opportunities, services are more plentiful and distances between your house and places you need to go on a regular basis are much shorter. That means the local marketplace has to pay doctors more to attract them to rural areas and small cities like Casper with nothing else around it.

    More importantly, hospitals in less populated areas generally have much lower than average occupancy. Indeed, Medicare pays what it calls critical access hospitals more than it pays other hospitals because their costs are higher. Critical access hospitals have 25 or fewer beds and are located in sparsely populated areas.

    To illustrate the difference in occupancy, Texas has 382 acute care hospitals statewide with a total of 58,789 beds. Wyoming has 13 hospitals with 1,183 beds in a state that covers 100,000 square models. The TX hospitals in 2013 had 11,709,000 million patient days for an average implied occupancy rate statewide of 54.6% which was probably higher in Dallas. WY had 124,391 patient days for an average occupancy rate of 28.8%. Hospitals are high fixed cost businesses. The lower their average occupancy rate, the higher their average costs will be other things equal.

    The third issue is that if you’re the only hospital for hundreds of miles around or maybe one of only two hospitals, you have a lot more bargaining power against commercial insurers like the Blues than if there were more hospitals competing against each other.

    So, in all likelihood, the Blue Cross licensee in WY isn’t the bloodsucker you make it out to be.

    • Ron Greiner says:

      Barry, you will defend that no competition is good and everybody in America needs monopoly pricing.

      That makes perfect sense then how a single payer Socialistic system is so much better. If Socialism is so good Barry what happened to the USSR?

      I didn’t think you were going to say that MRIs were 75% more expensive in Casper. Just more of your justification for Central Planning and the NJ way that must be forced onto the rest of us. I thought you would say that Physicians were paid 75% more but you say something about how there is less culture there. You are a waste of time to discuss anything with.

      • Barry Carol says:

        “you will defend that no competition is good and everybody in America needs monopoly pricing.”

        I didn’t say that no competition was good. I pointed out why health insurance may cost more in WY than TX including higher cost of operating hospitals and more market power allowing hospitals to negotiate higher reimbursement rates with insurers.

        It has zero to do with single payer, which I don’t support by the way, or with central planning.

        • Ron Greiner says:

          Barry, you say no competitor and monopoly pricing is not the reason the prices are so high. You will argue about anything with your opinions that don’t make any sense.

          You also say that the $31,000 premium for government workers in New Hampshire is because they are so close to Boston. In the New Hampshire zip code 03044 (Fremont) a 30-year-old couple with 2 children can get coverage on the Exchange with no medical underwriting for $556 a month. See how wrong you are about everything?

          My coverage is almost half that price again with medical underwriting. So I guess your Boston idea is just you saying drivel like usual.

          I know, you can say that those people who work for the government are a bunch of sick people and their premiums are adjusted due to their claims experience. It’s not that Blue Cross is scamming the taxpayer is it Barry?

          On the Exchange it’s $556 a month for a 4 person family and the government program could be for a 3 person family. Are these people farther from Boston or what?

  31. Bob Hertz says:

    Quite a few small states have only one or two carriers in the individual market (like Wyoming). An insurance exec explained it to me this way:

    There might only be 20,000 potential customers for non-employer insurance in the whole state, at least for Obamacare compliant policies.

    If Blue Cross has these customers, is it really worth while for another company to enter the state? Entering a state for insurance is a heck of a lot more complicated than Amazon selling books. An insurer has to negotiate with providers, set rates and submit them to the state, and have the state review their 90-page plan documents, and then advertise….

    Why bother to do this just to peel off 5,000 persons from Blue Cross, and you might get the 5,000 sickest ones anyways…..

    • Barry Carol says:

      Bob — That’s yet another example of why costs might be legitimately higher in WY even if the insured pool isn’t unusually sick. It’s just a smaller population base over which to spread the minimum fixed costs for the infrastructure necessary to do business in any given state.

    • Ron Greiner says:

      Bob, the Individual Medical companies used existing networks but of course they have been run out of business. This using the Government to eliminate competition works out pretty good for non-profit Blue Cross.

      In Florida Blue Cross spends more on politicians than any other entity. Is it any wonder they have every government contract. I know, it all just a big coincidence.

      TIME was in 44 states Bob. So when TIME was killed that did lower the competition in a lot of states. TIME did not negotiate with every hospital like you suggest.

  32. The big ham says:

    The question was will replace Obamacare .

    I think we can all agree that Obamacare is a disaster and it will only get worse before it is repealed. I think we can also all agree that employer based health insurance is well on its way to extinction. Obamacare was created to level the playing field in the small group and individual markets. This was done to stop the migration of insureds from the group plans to individual plans. The politicians fully expected small companies to take advantage of the shop plans and tax credits. They also didn’t realize that the premiums on individual policies would be so high that most of the population would be exempt form any mandated penalty. We are now 6 years into this mess and Obamacare looks nothing like the law that was passed that was only supposed to cost 900 billion dollars. This first thing repealed was the Ponzi scheme long term care program. Then the employer mandates were pushed back Now they are pushing the Cadillac tax back. Remember when the president said that we will save $2500 a year on insurance. Nothing that Obamacare tried to fix has worked except for guaranteed issue.
    We all know that group insurance is the single largest tax expense this country has. Unfortunately the American people are so accustomed to getting insurance through there employer they think they are getting a good deal. It’s not that they are stupid like Jonatan Gruber suggested , they are just unaware of how the system works.. The first politician that can explain to the American people how they will be better off buying personal and portable insurance on their own vs renting it through an employer will win the white house. We know the Democrats will not push for this because individual tax credits and individual insurance puts to much money in the private sector.

    • Barry Carol says:

      big ham,

      It still leaves the issue of how to pay for the unhealthy and already sick, including among the 150 million lives that are currently insured through employer provided coverage. How many of those folks probably can’t pass underwriting and how much would it cost to cover them and the others among the currently uninsured and beneficiaries of guaranteed issue who also couldn’t pass underwriting? How would the high risk pools be paid for and how much would they cost when the political appetite to fund them adequately never existed in the past? Fifteen states didn’t even offer them at all in the pre-ACA days.

      Personally, I would be ok with high risk pools if they actually provided people who can’t pass underwriting with decent coverage at a subsidized premium that they could afford. I’m also assuming that Medicare and Medicaid remain in place.

      Aside from illegal immigrants, I don’t think anyone should have to fall between the cracks or just be told, in effect, to fend for yourself.

      • Ron Greiner says:


        Sally Pipes in Forbes today talked about how unfair the employer-based health insurance system is. Sally wrote, “Sixty percent of the subsidies go to the wealthiest 40 percent of families. Meanwhile, those who buy coverage on their own, or pay their health bills out of pocket, must do so with after-tax dollars. This distortion largely explains why 57 percent of people under age 65 get insurance through work.”

        See, Barry, you want to give tax relief only to the richer Americans and that isn’t fair.

        Sally is much more generous than me with the age-based tax credit: “To start, a replacement for Obamacare should provide refundable tax credits to those buying insurance on the individual market. These levels should be roughly equal to the average tax break workers get from employer-based insurance. So credits should be $1,200 for those aged 18 to 35, $2,100 for those 35 to 50, and $3,000 for anyone over 50.”

        Then Sally enhances tax-free HSAs with, “HSA eligibility and contribution limits should also be expanded to match those of IRAs. For 2016, that would be $5,500 per person and $6,500 for those over the age 50. These higher levels would provide further incentive for people to move to HSA plans. People should also be allowed to continue contributing to HSAs after the age of 65.

        In addition, Obamacare’s replacement should cap the value of the tax exclusion for employer-based insurance at $8,000 for single workers and $20,000 for family plans. Because health costs have historically increased at a rate greater than inflation, those caps could rise at the rate of inflation plus 1 percent.”

        The employer-based system would be gone in less than 12 months. You better short the UHC stock.

        Sally isn’t even worried about the high-risk pools and writes, “Obamacare did allow for high-risk pools in every state — but only as a stop-gap measure until the exchanges opened. It would be simple to reopen the high-risk pools after closing the exchanges.”

        So Sally pretty much says exactly like I did in this thread except her age-based tax credits are larger, good for her!

        Check it out Barry:

        • Barry Carol says:

          “See, Barry, you want to give tax relief only to the richer Americans and that isn’t fair.”

          Ron – I really hope you listen to your clients more carefully than you listen to people who may not agree with you on blogs like this. I’ve said countless times that I would get rid of the employer tax preference if it was up to me but it’s not up to me. Short of outright repeal, it would be fairer to convert the exclusion from ordinary income, which more valuable to high income employees than it is to lower income employees to a tax credit. The current exclusion from taxable income for IRA and 401-K contributions is also worth more to high income people than it is to lower income people.

          I’m also fine with capping the value of the health insurance employee exclusion from taxable income if it can’t be eliminated altogether. Limiting it to $20,000 for a family and $8,000 for an individual would be fine with me even though my preferred number is zero.

          You’re telling the healthy that you can save them a lot of money with underwriting and I’m sure you can. What’s your message to the unhealthy and already sick? Tough luck, fend for yourself? You already told me that up to 30% of those who currently have employer coverage may not be able to pass underwriting but new companies might magically appear to insure two-thirds of them presumably at a much higher premium than TIME’s old 50% rate up policy. How much more are they likely to have to pay vs. the preferred rate?

          Sally Pipes, the conservative head of the conservative think tank, Pacific Research Institute, is preaching to the choir in talking to you but she didn’t suggest how the unhealthy and already sick should be covered either.

          Most large employer plans spend an average of $5,000-$6,000 per covered life to provide health insurance to their employees whether they are self-funded or buy full risk insurance. The healthiest members of those groups account for very little of that spending. That’s why they could be covered for a lot less through medical underwriting. But what happens to the folks who can’t pass underwriting? The cost of covering these sicker folks is an inconvenient reality that you and Sally Pipes just prefer to ignore. That doesn’t solve the problem.

          • Ron Greiner says:


            You wrote, “That doesn’t solve the problem.”

            The problem Barry is that employer-based health insurance TERMINATES their sick employees’ health insurance when they can not work the required number of hours to keep their insurance.

            Sally’s solution solves that problem

          • Al says:

            “I’ve said countless times that I would get rid of the employer tax preference if it was up to me but it’s not up to me.”

            You have, but you reject virtually every intermediate proposal which makes you suspect. Along with that I believe you have previously made a case rejecting getting rid of third party payer. That makes you doubly suspect.

          • Bart I. says:

            Is Ron posting under multiple names?

            • Ron Greiner says:

              Bart, I’m not Al too, come on.

              Al wrote, “Cobra eligibility is tied to the workplace and that is intricately tied to third party payer insurance which is the culprit of so many of our healthcare problems that existed before the ACA was passed and continue to this day. I take note how to some every problem has a simple corrective new rule or regulation where it is unrecognized by the one suggesting it that such a corrective action has more unintended consequences frequently requiring further correction and generally more money.”

              I do agree with Al a lot but he is another person.

      • Ron Greiner says:


        Here is my comment to Sally at Forbes:

        Sally, this is a very well thought out plan for Obamacare replacement. It puts the consumer in control instead of an employer who may not have the same interest in the health of a child like a parent who loves them would.

        I assume that any excess credit would go to the consumers tax-free HSA. It wouldn’t take long and the employer-based market would be gone with a plan like yours. Healthy people would be able to purchase Individual Medical (IM) with the tax credits paying 100% of the premium if the insurance was medically underwritten.

        This would drop the employers and the employees’ cost to zero so the economy would boom like never before. Employers would shift into the tax-free HSA deposit business for the benefit of their employees. You have taken Obamacare’s high taxes and premiums and turned them into assets for employees. Good job!

        Barry, you better get to the Forbes comment section and start your complaining before it’s too late and we fix this thing without you.

    • Ron Greiner says:

      big ham,

      “Unfortunately the American people are so accustomed to getting insurance through there employer they think they are getting a good deal.”

      This is not true anymore. Employees don’t think they are getting a good deal any more. Their premiums for family coverage is now over $1,000 a month and their out-of-pockets have exploded so employees are unhappy too.

      Don’t pay any attention to Barry because he says the same thing no matter what you say. He has a big heart like Donald Trump.

    • Ron Greiner says:

      big ham,

      zerohedge reports:

      While insurance can protect people from problem medical bills, the survey suggests that those with employer coverage or other insurance suffer similar consequences as the uninsured once such problems occur. Among those facing problems with medical bills, almost identical shares of the insured (44%) and uninsured (45%) say the bills had a major impact on their families.

  33. Bob Hertz says:

    Sally Pipes writes well, but she makes one assertion that I find baffling…..

    she says that a continuous coverage requirement will lead the young and healthy to buy health insurance in greater number.

    As a parent to three children in their 20’s, I will eat my printer paper if one of them says, “Boy, I had better buy more health insurance today, so that I am not shut out of coverage in my forties.”

    Whereas people in their fifties with chronic illnesses will go to great lengths to keep continuous coverage. This I have also seen in my own family.

    Pipes’ proposal (which is also advanced by Dr Goodman, in what I think is one of his weaker moments) will do nothing to lower premiums in my view. The risk pool for most insurers will still be older and sicker.

  34. Devon Herrick says:

    I am not a fan of an individual mandate. But if I had to choose the lesser of several evils, I would settle for a mandate that young people at least have to withhold a fixed amount of their payroll for health care. I would only be in favor of this if those funds were deposited into a Medi-Save account controlled by the individual like they do in Singapore.

  35. Bob Hertz says:

    I like your version of a mandate. I like to see people recognizing that all successful health care systems require some element of coercion. Either we force people to save ahead of time, or we have to force people to pay taxes to assist the medically indigent.

    The same is true of retirement systems, also. America does not force corporations to establish pension plans, and we do not force individuals to have 401(k)’s or IRA’s.
    So as a result we have many many older persons who are poor. (not starving, as they were in the 1930’s, but not secure enough to pay for health care or long term care on their own. Read about the ‘dual eligibles’ on Medicaid and Medicare for some frightening numbers.)

    The freedom not to save for retirement has some pretty ugly consequences.

    So in the areas of health care and pensions, I am an unabashed paternalist. I favor forced savings.

  36. Devon Herrick says:

    What I like about a Medi-Save account is that the individual would act like a consumer when using the funds on healthcare. And they would still have fun set aside to cover medical costs when they got older. It would not be a coercive tax as such. Rather, it would merely be requiring individuals to delay consumption to ensure they have adequate resources when they can no longer provide for themselves by working.

    • Barry Carol says:

      Devon – I’m not sure what you mean by acting like a consumer. It’s one thing to wait two or three days to see if a minor sniffle or cough will get better on its own instead of running to the doctor. It’s quite another if you’re bleeding, are in excruciating pain or even unconscious. If that’s the case, you won’t exactly be in a position to start dickering with doctors and hospitals about what treating you will cost or who the most cost-effective high quality providers are.

      Price transparency is extremely useful for services that can be scheduled in advance but not as helpful for care that must be delivered under emergency conditions. Also, when you get a diagnosis of cancer, MS, RA, Parkinson’s, and the like, all the treatment options may be very expensive.

      For many people, it’s quite likely that whatever they’ve managed to put away in their Medi-Save account will not be sufficient to pay for their care out-of-pocket or buy adequate insurance to cover high cost care episodes. What happens then? Primary care is comparatively cheap. The big bucks are in all the expensive hospital-based stuff and the specialty drugs.

      • Al says:

        “Also, when you get a diagnosis of” MS

        Barry, I was curious about costs of MS so I looked up some information just to get an idea.

        “The total average annual cost for the 10,099 MS patients in 2004 was $12,879” The majority of costs involved pharmaceuticals. That is a lot of money, but is not outside the reach of many families. The majority of those costs were for pharmaceuticals.

        The vast majority of hospital (and outpatient surgi-centers ) medical care does not arise from the ER and much of the follow-up of ER care leaves plenty of time for the patient to act like a consumer. For example one might go to the hospital for rectal bleeding to be sent home and referred for colonoscopy at which point the patient can choose between hospitals and outpatient surgi-centers. The same for cardiac disease. Some are immediately admitted and treated, but a lot end up being sent home for outpatient evaluation where consumerism functions.

        I think we all want more transparency, but of what value is transparency if someone else is paying the bill.

        • Ron Greiner says:

          Al, here in 2015 my daughter just had some problems with her MS and she changed Rx and now the annual Rx cost is $80,000. She says it costs $20,000 4 times a year. In another 20 years the charge will probably be $400,000 a year.

          My son is on Rx that costs $72,000 a year!

          I do admit that my daughter may be spending more than most MS people but she is informed and is being proactive.

          She has insurance that costs her $300 a month that she purchased the 1st day of guaranteed issue with Obamacare when she quit her job and became self employed.

        • Barry Carol says:


          I think new drugs to treat MS have come to market since 2004 and drug companies are pretty aggressive about raising prices every year, often more than once during the year, on existing drugs. I don’t think Ron’s daughter’s cost experience is atypical for MS patients in 2015.

          I’m all for price shopping where possible but lots of people find it hard to get good reliable information about insurer contract reimbursement rates or estimated out-of-pocket costs despite the rapidly growing number of people with high deductible plans including HDHP employer plans.

          Doctors generally don’t know what anything costs outside of their own fees for work done in their offices so they usually can’t help patients find out precisely what procedures cost and insurers are not very helpful except, perhaps, when the member has a tiered network plan.

          • Al says:

            Barry, I agree that prices are probably higher today and that is why I specified the date, but even at $20,000 some are able to afford it and some are able to afford a good chunk of it.

            It’s funny, but I don’t know how much a lot of things covered by insurance costs, but when it came to things the patients had to buy out of pocket I had a firmer grip of their costs and how they could use their dollars best.

            My uninsured patients would get a lot of DME goods used and at a huge discount from what Medicare would pay. My insurance paid $300 for form made brace for my hands. When I needed it again I couldn’t find it so I went to Walgreens and paid $25. That brace worked better. Was insurance helpful providing me with something that didn’t work as well where my co-pay was greater than what I bought for cash?

            • Barry Carol says:

              Al — I know there is a lot of fraud and other craziness that goes on in the DME space.

              The biggest problem, as I keep saying, is with hospital based care and very expensive specialty drugs. If a hospital charges over $15,000 (at Medicare rates) for an overnight stay following a heart procedure, I can’t just go stay at Walgreens for $500 instead.

              • Al says:

                That is what insurance is truly for. The question is:

                Is that what the hospital charged or what they were paid?

                A lot depends upon the “heart procedure” you had and your location. If it was for certain procedures that is a good bang for your bucks though perhaps the prices could be cut by a third or so if we utilized the advantages of a free market place.

                I doubt you were billed for the room which seemed to be where your emphasis lay. Instead you were billed for the hospital component of the procedure and if you required an extra night or so the cost would have been the same. In fact I believe if you had a heart attack or another illness after that procedure it too would have been covered under the same fee until outlier charges were reached.

                • Barry Carol says:

                  The hospital was paid $15,000+ by Medicare. There were quite a few people in the OR. The chargemaster rate was $222,000!!

                  • Al says:

                    Right, they were mostly paid the $15,000 for the procedure that requires an operating room and many personal including personal not in the room at the time along with expensive equipment. (Your focus on the $15,000 cost appeared to be on an overnight stay rather than on the procedure which was the major cost factor.)

  37. Bob Hertz says:

    I not only favor a mandate to fund an HSA or MSA, I also favor a mandate to buy catastrophic insurance.

    And to avoid the ups and downs of private carriers, going in and out of markets and varying their premiums, I would use Medicare Part A as the public option.

    In my scheme, every person who decides not to carry health insurance will pay an extra 1% or 2% of income toward Medicare Part A. Every employer who does not cover an employee will match the contribution.

    That money will go toward Medicare Part A for hospital room and board.

    This money is easy to collect, it would be added on to the existing Medicare payroll tax for those affected.

    Libertarians will protest, and my answer is this: We in America are going to have a sophisticated emergency care system. Everyone is going to benefit, so everyone should pay, not unlike fire protection. Running hospitals where patients must pay cash is grotesque, so a public fund like Medicare Part A makes sense.

  38. Ron Greiner says:

    “And to avoid the ups and downs of private carriers, going in and out of markets and varying their premiums, I would use Medicare Part A as the public option”

    So you are a Bernie Sanders guy who wants the government option. Don’t you mean to avoid the ups and downs of private carriers going out of business because of government regulation of the private sector? Can you even name any private carriers in the Individual Market after Obamacare?

    Socialists are coming out of the woodwork here in 21st Century America.

    So Bob, you must think Obamacare has worked out pretty good.

  39. Barry Carol says:

    Ron – Here’s another IM insurance question for you. You have a client who is healthy and qualifies for the preferred (lowest) rate for his or her age. Then a few years later, the client gets sick – cancer, heart attack, stroke, or whatever. The client won’t be dropped and the policy is guaranteed renewable. My question is what happens to the premium? Is the client shifted to one of the rate up categories or quoted a higher premium to reflect their new circumstances or is the premium based on the combined medical cost experience of the entire pool? If it’s the latter, what’s to stop the insurer from just starting a new pool (block) that the healthy people can still qualify for at the low rate and leave all the sicker folks behind in the more expensive block so many of them will drop their policy because they can’t afford the premium anymore?

    Separately, I’m curious about what you think about zero deductible policies but with 30% coinsurance on the first $20,000 of medical services which equates to a $6,000 out-of-pocket maximum amount per person? Would 30% coinsurance be enough to make people cost conscious? If not, how about 50%? Such policies would presumably be more attractive to healthy people than high deductible plans but I don’t know what the difference in premium would be between those and a plan with a $6K deductible and then 100% coverage beyond that.

    • Ron Greiner says:

      Barry, once the consumer is insured then their premium is locked in and they can start smoking and not be moved to smoker rates. Or, if they are a smoker when they get coverage they can drop to non-smoker rates if they quit smoking for a year. Then they can light up and start smoking again and their rates will continue to be non-smoker rates.

      I’m sure there are companies, like Blue Cross, that use your old pool trick. Another problem is when the insurance company uses brokers and they switch their healthy clients every 13th month to another company which also leaves only the sick. Probably the smartest way is to have a captive field force that only works for one company then that problem doesn’t happen. I think that the company that gives the best value to the consumer over the long haul is going to be the winner.

      TIME used brokers but they still had a culture of giving value to the consumer and they didn’t move old clients into newer pools. I would never expect that from Blue Cross who has their man cash cow employer-based insurance so their culture is sick people are a liability and their insurance must be canceled. With Blue Cross the healthy are an asset and everybody else must be eliminated.

      TIME was the first company to do away with all deductibles below $500 which was a smart move. TIME had every choice available in co-insurance and I pretty much just stuck with a deductible then 100% coverage. TIME also had the option to add a co-pay for an additional premium and when the consumer saw exactly how much a co-pay would cost nobody purchased it.

  40. Bob Hertz says:

    Ron, I have been an insurance agent for several years, and I was in the benefits business before that.

    I have watched carriers jump in and out of the markets, have watched them play games with creating expensive pools of old insureds, and many other maneuvers.

    Of course there are exceptions among carriers, but overall I like the stability of social insurance for at least part of our needs.

  41. Barry Carol says:

    I note that Medicare charges an extra 1% for each month that a beneficiary delays enrolling in Part B and Part D coverage from when he first becomes eligible unless he can meet one of CMS’s life changing event rules.

    I think a similar approach might be appropriate for younger folks who choose to remain uninsured until they perceive a more immediate need for coverage like after they get sick or, in the case of younger women, pregnant.

    Guaranteed issue is not sustainable without a mandate to purchase insurance or at least a significantly higher premium for those who wait until they get sick to buy coverage.

    • Devon Herrick says:

      That is a good model for private health insurance. People who wait to sign up should pay higher premiums. In the past we’ve argued in favor of guaranteed renewability but allowing risk-rating for people when they sign up. If they wait or have gaps in coverage, they’re likely to pay higher premiums. I’m not sure how it should be structured for younger people though. I’d like a mechanism, such as the Medi-Save payroll deduction, where a portion of the premiums accrue in an account for later use.

      It was discussed earlier in this post that raising deductibles does not reduce premiums as much as I had hoped. It’s been discussed elsewhere that huge claims do not raise the cost of premiums by much either (i.e. repealing unlimited benefits would not reduce premiums more than single digits). I wonder if there is a way to design coverage where only a portion is guaranteed-issue. Maybe the first $10,000 is risk rated. Then claims $10,001 to $25,000 require 50% cost-sharing. Claims from $25,001 to $100,000 require 25% cost-sharing, while coverage above $100,000 is entirely optional and risk rated. This would allow everyone to have a measure of guaranteed health benefits without making the cross-subsidies open-ended.

      • Barry Carol says:

        Devon – To gain some insight into what percentage of the premium is attributable to large claims, it would be useful to have quotes on what it would cost a self-funded employer with, say, 10,000 or more covered lives to buy reinsurance at attachment points above $50,000 and then in $50,000 increments up to, maybe, $300,000 or so.

        In his presentation at the J.P. Morgan conference, CMS’ Andy Slavitt stated that $7.9 billion was paid out in ACA reinsurance claims which cover 80% of claims costs from an attachment point of $60,000 up to a maximum of $250,000 with the insurer resuming full responsibility for claims above $250,000.

        I’ve heard from experts in the past that the first $5,000 of claims, including the first $5,000 of the very expensive claims, accounts for only 25%-33% of healthcare costs. I’ve also heard that the 10 million or so seniors eligible for both Medicare and Medicaid (dual-eligibles) account for over $300 billion per year of claims, including long term custodial care claims paid mainly by Medicaid.

        Finally, insurers keep telling us that in any given year, the sickest 1% of members account for 20% of claims costs, the sickest 5% account for about 50% of claims costs and the sickest 10% account for 65% of claims costs. Half of the insured population uses little or no healthcare in any given year. Even within Medicare, the healthiest 50% of seniors account for only 4% of costs but, of course, they are not the same people from one year to the next.

        The bottom line, I think, is that the very expensive cases are a big deal in driving premiums. In the commercially insured population, the most expensive cases tend to be low birth weight premature babies, especially multiple births where medical bills can and often do run into seven figures.

  42. The big ham says:

    Ron is spot on with the cost of MS meds. I talked with a 34 year old female client today who i moved to a Medicare advantage plan in November because of Medicare disability. Her co pays on her RX are over $2500 a month . She will hit her max out of pocket in February and be out of the donut hole by March …her RX cost for the year will be over $70,000 she will,have to pick up about $7,000 of it.

    • Ron Greiner says:

      big ham,

      So Americans pay for the R & D for these drugs then Big Pharma sells the Rx world wide for cheaper than the United States. Is this one of the reasons that Socialized Medicine is made possible in the other countries because we in America are paying for it?

      • Ron Greiner says:

        I would also say that Socialism is cheaper in other countries when the United States pays for their defense. Maybe Trump is right and America is just a bunch of incompetent losers that enables Socialism worldwide and US citizen picks up the tab.

  43. Barry Carol says:

    According to the Multiple Sclerosis Foundation, 400,000 people in the U.S. have MS and the worldwide number is 2.5 million. 200 new cases are diagnosed each week on average in the U.S.