Drain the Health Care Swamp that’s Awash in Other Peoples’ Money

Caduceus with First-aid Kit --- Image by © Royalty-Free/Corbis

Caduceus with First-aid Kit — Image by © Royalty-Free/Corbis

The 2017 winner of the Miss USA pageant ignited a firestorm on Twitter when she opined that nobody is entitled to thousands of dollars worth of free goods and services which they did not earn. The tempest in a teapot resulted when Kára McCullough said health care is a privilege, not a right. Her answer was far from perfect; she mentioned that to have health coverage you need to work.

One could infer from her answer that she assumes the only way to get coverage is though a job. However, the fallacy that health benefits are a perk for having a job is just that — a fallacy. Economists generally agree that health benefits are not free; they’re a non-cash portion of employee compensation. That said, Ms. McCullough’s answer was far better than the liberal pablum one would expect to hear from many young people her age. Many Coastal Millennials espouse the knee jerk idiocy that everyone has a “right” to health care.

Health care is not a right nor is it a privilege; it is a costly service. Health care consumes nearly 20 percent of our economy. Obamacare was premised on the notion society has an obligation to share health care risks and medical costs regardless of health status or ability to pay. After all, the penalty for violating the individual mandate is a “shared responsibility payment.” Go figure: the one time Democrats back individual responsibility it’s when there is a requirement to buy health plans that nobody would buy absent a subsidy or a coercive mandate.

What is our responsibility to those who are sicker or less able to pay for medical care? This question is more than philosophical. The U.S. Senate is working to hammer out a compromise to the House’s American Health Care Act. At the heart of the debate is how much you believe society should pay for other peoples’ medical care when they are sick or cannot pay.

Americans have been conditioned to think most health care should be paid for by someone other than the patient. This view was likely spawned by government entitlement programs: Medicare for the elderly, Medicaid for the poor and the tax exclusion for employee health insurance. Paradoxically, this view has cost American plenty! According to the 2017 Milliman Health Cost Index, typical families with employee health benefits pay $7,151 in direct employee contributions and pay another $4,534 out of pocket for care. Their employers pick up another $15,259 towards employee health costs.

Most working families do not understand that they actually bear their employer’s cost. Employer contributions are just a non-cash form of employees’ compensation. Families realize they are withholding from their paychecks for premiums and accept that cost-sharing is part of the bargain. Yet, I suspect the average working family would start a riot if they really understood they are paying around $20,000 in pretax earnings for half a dozen doctor visits. HR would get sacked and burned by an angry mob of employees. Workers would then demand control of their own health care dollars to prevent those dollars from being sucked into the labyrinth of health bureaucracy.

A better way would be to have young people begin saving so they can fund their own needs when they get older and their health status declines. What if rather than contributing say, $25,000 of workers’ wages for employee health coverage, that money was placed into a tax free account each family controls? This is the way it works in Singapore. In Singapore, every person is supposed to save for their own future medical needs, while every family is supposed to save for their future medical needs. By contrast, Obamacare is premised on coercing young people into paying double their expected costs so older, sick individuals get a great deal.

The answer to reining-in runaway medical costs is to put consumers in charge of the funds. Draining the health care swamp effectively means depriving our health care system of all the cross-subsidies and huge sums of money floating around that nobody seems to have an incentive to manage. If the ocean of funds becomes scarce, health care providers — doctor, hospitals, drug makers and medical device manufacturers — will be forced to compete on price and become more efficient. This will only happen when they are no longer awash in other peoples’ money.

Comments (57)

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  1. Ron Greiner says:

    Devon, you are correct. A 30-year-old State of Iowa employee would not pay Blue Cross $27,000 a year if she had at least ONE other choice. She is a slave trapped on the Blue Cross plantation. So she pays $27,000 a year, year after year, then if she gets Ovarian Cancer Blue Cross and Obamacare rules switch her to another insurance company, in the Individual Market, to pay her expensive cancer treatments and Blue Cross laughs all the way to the bank.

    Well, Medica isn’t stupid and they say they are done paying for Blue Cross sick people and now there is no insurance company in Iowa, Nebraska or South Dakota in 2018.

    Poor President Trump is trying to get an insurance company to pay for all of Blue Cross’s cancer patients coming off of their groups and offer Individual Insurance but nobody wants to lose that kind of mega bucks and just tell the President, “No way Jose.”

    Devon, this Blue Cross scam is much like the Mafia and their Protection Racket. It should be illegal to scam the taxpayers, employers and employees like this.

    No insurance company is going to go into the Individual Insurance market with Obamacare’s GUARANTEED ISSUE. But, if medical underwriting is allowed my insurance company in 44 states, America’s oldest health insurance company, would be in all of them in a New York minute.

    I’m sure that these Blue Cross CEOs would look at us and see T-Rex and 6 inch teeth. Competition can be mean.

    –The Ever Elusive Future, it just sowes the seeds of TIME,
    It’s mission’s been a secret, No Reason nor No Rhyme.
    It’s hiding in a wormhole, or behind some distant moon,
    But the one thing you can count on, it will be here fairly soon.

    And there’s always something lurking in the jungle,
    Better watch your step, it’s not a place to stumble.
    Something’s movin’, something’s comin’.

    The Ever Elusive Future


  2. Ron Greiner says:

    Devon, Lee and I had a radio show called “The Uncouth Truth” live from Tampa Bay back at the beginning of Obamacare. We talk about Scott Gottlieb, M.D. Dr. Scott Gottlieb was sworn in as the 23rd Commissioner of Food and Drugs on May 11, 2017.

    We discuss Rush Limbaugh, FOX News, Heritage, Hobby Lobby…

    We discuss the propaganda in America and it was flying. Lee is a very funny guy. The show starts off with a bumper that says, “listen to the radio or watch TV and you will never learn a thing. The TRUTH is like Katrina, it blows the LIES away. Prepare for deprogramming.”


  3. Rab Beverly says:

    Any way you look at it, someone has to pay for health services if those services are to be rendered. People who claim that healthcare is a “basic human right” just do not understand economics. Nothing they say will make healthcare “free” unless they enslave all the doctors and medical school staff. Even then they would have to feed these people.

    “Free” doesn’t really exist when you are talking about a craft that takes 10 years and many thousands of dollars to learn. Or when the providers of the service can be sued for 20x their net worth for trying to save a life and failing.

    What people really mean when they say they want “free” health care, or free health insurance, is that they want anyone other than themselves to be forced to pay for it. Doctors, other taxpayers, whoever. If they mean anything else, they are falling for a pitiful fallacy; how can something be free if you are simply paying for it through your own taxes? So they are willing to corrupt the government, and destroy other people’s freedom to do as they wish, in order to get “free” healthcare for themselves. This is a sickness, and a dirt poor ethic.

    What the young lady in the beauty pageant said was not bad at all. She simply stated a wholesome traditional ethic – that she does not want what she has not earned, if it must come at a cost to someone else. What an excellent thing to hear; now if more people would understand the same thing, it would be an improvement.

  4. Barry Carol says:

    Devon, I’ll offer a few of thoughts on this.

    First, it’s important to note that Singapore pairs its Medi-Save accounts, which are funded with a payroll tax, with a catastrophic insurance plan. As I understand it, that plan is a single payer system financed with tax dollars. According to Hong Kong’s Food and Health Bureau, 41.7% of Singapore’s healthcare spending in 2014 was publicly financed vs. 48.3% in the U.S.

    Second, Asian cultures are very different from the United States while the populations are more homogeneous. Asians are more subservient to authority and are more willing to put the group’s needs ahead of the individual. Do you really think Americans would ever accept a benevolent dictator like Lee Kwan Yew? Moreover, Singapore is a tiny city-state with less population than NYC.

    Third, while Singapore spent 4.9% of GDP on healthcare in 2014, Mainland China spent 5.5% and Hong Kong spent 5.7%. Japan, which has a single payer system, spent 10.4%. Most of the other developed countries in Western Europe plus Canada and Australia spent between 9% and 12% of GDP on healthcare. Socialist Sweden nudged past market oriented Switzerland for the #2 spender at 11.9% of GDP vs. Switzerland at 11.7%.

    The increased share of GDP spent on healthcare between 2004 and 2014 ranged from a low of 0.1 percentage points in Taiwan and 0.2 percentage point in Hong Kong to 3.1 percentage points in New Zealand. Sweden went up by 2.8 percentage points while the U.S. increased by 2.0 percentage points. Most other countries were in the 1.0 percentage point area. It’s hard to draw any conclusions from this variance in trend growth except that how much of GDP any given country is willing to devote to healthcare spending probably has more to do with consensus around political consensus than anything else.

    • Ron Greiner says:

      Barry, did you see Dr. John Goodman’s FORBES story today? Dr. John Goodman, who calls himself the father of HSAs/MSAs even though it is my agent number that is attached to the 1st HSA, Beverly Gossage and Linda Gorman have a refreshing article in FORBES. It’s strictly commercial on how premiums have exploded under Obamacare. They write, “For example, Kansas premiums for a 27-year-old man have quadrupled – rising from about $50 a month in 2009 to $205 a month in 2016.” Of course everybody knows this. What is refreshing is Dr. John Goodman is not calling for the government to start taxing the tax-free HSA like a ROTH. Dr. John Goodman just can’t stand Americans having any tax FREEDOM. Goodman thinks tax FREEDOM is stealing from the government.

      I tried to comment but I’m banned at FORBES.


  5. Bob Hertz says:

    this is an old debate, but I could not resist diving in for a minute.

    The state of Iowa employee is not paying $27,000 in any real way.

    The state of Iowa employee has a perfectly normal and (given state pay scales) probably an above normal salary of $60,000 a year or more.

    If the state of Iowa cancelled health insurance, say due to an extreme budget crunch, she would NOT get a salary of $87,000. She would just be glad to keep getting $60,000. This sort of thing did happen during the Depression. Public employees held on to their salaries a long time but their benefits disappeared.

    • Allan says:

      What happened to the salaries of those without benefits? The total package value fell. The easiest thing to cut under such severe circumstances is the benefits. If there are no benefits then salaries have to be cut. The changes in the total package for government employees might be somewhat different and might even depend upon the state they are working in.

      • Barry Carol says:

        Since the age of unionization, a change like this is impossible to apply to current public sector employees in the absence of a collective bargaining agreement or a bankruptcy. When times are tough, towns, cities and states resort to layoffs instead and they might be able to negotiate lower pay and benefits for NEW employees hired after a specific date.

        • Allan says:

          “a change like this is ***impossible***”

          I live in two places and in both places salaries or benefits were reduced along with some layoffs.

          He’s the NYTImes blurb from the big city: “The furloughs that popped up during the recession are being replaced by a highly unusual tactic: actual cuts in pay. …”


          Unions may have had some involvement, they always do, but the emphasis of your argument was wrong. In fact the NYTimes made a point about this in the statement above.

          I think you make too many assumptions.

          • Barry Carol says:

            I didn’t say public sector wages couldn’t be cut. I said unionized worker wages couldn’t be cut without the union agreeing to the cuts. They can’t just be dictated like they can for non-unionized workforces. Unions will often go along if they see that times are tough and the alternative is more layoffs or even bankruptcy. Times have to be pretty darn tough though like they were in 2008 and early 2009. Management has much more flexibility in this area if the workforce is non-union.

            • Allan says:

              What you said was: “change like this is impossible” and then added collective bargaining which is a legal no brainer “When times are tough, towns, cities and states resort to layoffs instead” You utilize the word “impossible” quite frequently.

              Both of the cities I live in NYC and my small town didn’t use “layoffs instead” and the NYTimes demonstrated that NYC reduced total packages and didn’t rely only upon layoffs.

              • Barry Carol says:

                You’re nitpicking and parsing words as usual. No city, town or state has imposed wage or benefit cuts on union members without getting the consent of the union through the collective bargaining process. I don’t think you can show any examples of cases where cuts were imposed without the union’s consent or at least acquiescence.

                • Allan says:

                  “nitpicking and parsing words”

                  No Barry, I’m just trying to provide a bit of context to your words.

                  AS you recognize your fault you back step to “or at least acquiescence”

                  “The furloughs that popped up during the recession are being replaced by a highly unusual tactic: actual cuts in pay. …” ___NYTimes

                  • Barry Carol says:

                    Extraordinary times call for extraordinary measures. 2008-2009 was an extraordinary time. 2017 is hardly in the same league with corporate profits at record highs and government tax revenues largely recovered from the recessionary shortfalls.

                  • Barry Carol says:

                    Even in 2008-2009, government and private employers couldn’t just impose pay cuts on unionized employees though they could on non-unionized members. They had to get agreement from the union first even if the agreement was reluctant. Layoffs, by contrast, don’t need union agreement.

                    • Allan says:

                      I am glad that you realize when the workforce is unionized that the union is involved. I think everyone realizes that, but that wasn’t the essence of your statement.

                      You backtrack:

                      Impossible ->
                      or at least acquiescence ->
                      Extraordinary times call for extraordinary measures.

                      “The furloughs that popped up during the recession are being replaced by a highly unusual tactic: actual cuts in pay. …” __NYTimes

                    • Barry Carol says:

                      You can’t seem to let anything go without having the last word so I’m going to let you have the last word. I have nothing more to say on this.

                    • Allan says:

                      The last word? No, I don’t require that. What I look for is the truth. I am not saying you aren’t telling your truth. I am just piecing things together to get to a more exacting truth that you could better explain if you weren’t trying to integrate the truth with your ideology.

                      You could have very easily ended the conversation by merely rewording your initial comments so that they represented the truth in a clear fashion. That would have led to agreement, but you didn’t and that means that there continued to be a difference of opinion that you preferred to call nitpicking. The nitpicking wasn’t nitpicking, rather it was a reply to what appears to be your defense of your ideology.

            • Jimbino says:

              Ronald Reagan would solve the problem by just firing all the unionized public sector employees and then hiring non-unionized employees, or contractors, and paying them on the basis of merit.

    • Ron Greiner says:

      Bob, are you suggesting that if this woman is a janitor she is making over $60,000 a year? Then you write, “employee is not paying $27,000 in any real way.” YES SHE IS, if she gets cancer and becomes too sick to work she is paying $27,000 PLUS 2% for COBRA. Why are you always wrong? We all know Federal law.

      I said she, “would not pay Blue Cross $27,000 a year if she had at least ONE other choice. She is a slave trapped on the Blue Cross plantation.”

      What are you talking about with your “extreme budget crunch,” and depression hogwash?

      Nice try in changing the subject to make it seem that Blue Cross is not scamming the Iowa taxpayers and the State of Iowa employees.

      She would not pay $27,000 to Blue Cross if she had a choice – PERIOD!

  6. Bob Hertz says:

    Janitors with seniority in state universities can make a pretty decent wage. (this is just from a personal acquaintance in MN, so it may not be accurate.)

    But let’s go back to my main argument here. While this woman works at the atate, the family premium (I assume) of #27,000 was free to her. She did not pay it or pay taxes on it. Her salary was computed on some state pay scale and was (in my experience) not reduced because she got a sweet benefit.

    When she could no longer work, she lost the sweet benefit. The ACA of all things, the oft-reviled ACA, gave her an alterntive to COBRA.

    You are correct that in some cases, Blue Cross profits when a very sick employee has to totally quit.

    However, I did administer a school district health plan, and we paid a lot of claims on very sick employees who hung on to the employment rolls for year after year. There was no quick dumping of liabilities in the manner that you imply.

    • Ron Greiner says:

      Bart, Devon said, “the fallacy that health benefits are a perk for having a job is just that — a fallacy. Economists generally agree that health benefits are not free; they’re a non-cash portion of employee compensation.” Then I said, “Devon, you are correct. A 30-year-old State of Iowa employee would not pay Blue Cross $27,000 a year if she had at least ONE other choice. She is a slave trapped on the Blue Cross plantation.” So Bart, it is Devon that you are disagreeing with. Of course you are wrong, as usual.

      Then you are so twisted that you say that this 30-year-old female janitor has your so-called seniority because you heard a personal acquaintance in MN say so.

      Bart, you never stop with the insanity. Next you assert, “The ACA of all things, the oft-reviled ACA, gave her an alterntive to COBRA.” BART, the ACA let’s Blue Cross employer-based plans dump their sickest employees onto the back’s of self-employed people who purchase Individual Medical (IM) and while their premiums shoot to the moon, the Blue Cross CEOs are laughing all the way to the bank. It’s pure corruption. You do admit, “Blue Cross profits when a very sick employee has to totally quit.”

      Bart, insurance is a contract. YOU write, “However, I did administer a school district health plan, and we paid a lot of claims on very sick employees who hung on to the employment rolls for year after year.” I’m so sorry for your dangerous employer-based group health plan. Had to pay some claims and you couldn’t get some employees to quit. I have always known that health insurance is a pretty good business if it wasn’t for those sick people.

      Bart, then you sum all of your propaganda up with a LIE and say, “There was no quick dumping of liabilities in the manner that you imply.” That is not true. I said, When the employee gets Ovarian Cancer and becomes TOO SICK TO WORK she loses her insurance. It is called the ELIGIBILITY REQUIREMENT – fancy legal term – in your employer-based insurance. It’s not complicated Bob.

      –When you find out things about yourself
      That you hadn’t ought to know
      When your grandma calls and books you
      on the Jerry Springer Show
      And you find out you and your wife of 10 years
      Just might be related
      Brother, life’s not over
      It’s just simply complicated.

      There’s other situations that might challenge you I guess
      When your daughter tries out for the football team
      And your son tries on her dress.
      And you start to think that the devil’s in charge
      Of how you’re situated.
      Life is still worth living
      It’s just simply complicated

      Life is complicated with its if’s and and’s and but’s
      It’s alright to be crazy, just don’t let it drive you nuts.—


      • Barry Carol says:

        Ron, your were mostly quoting comments by Bob Hertz, not Bart. Just wanted to set the record straight.

      • Allan says:

        “Bart, insurance is a contract.”

        Ron, that is true, but is the contract voluntary (consider Hobson’s choice. )? Is the contract unconscionable? That is a variable that changes based upon who is in power and who has the most influence when the laws are written or enforced.

        • Ron Greiner says:

          Allan, the parents are the legal guardians of their children who they love. But, the employers have all of the power on which insurance company is protecting these children. These employers don’t even know the names of the children.

          These uninformed employers might own an auto body shop and only want the cheapest HMO on the children not understanding that some children get cancer like my nephew Nick.

          Parents should be in control of their children health insurance and not RAY at Ray’s BBQ with his greasy fingers.

          • Allan says:

            You are correct Ron and unfortunately the ‘voluntary’ choice of employer sponsored insurance is coerced.

  7. Bart I says:

    According to the 2017 Milliman Health Cost Index, typical families with employee health benefits pay $7,151 in direct employee contributions and pay another $4,534 out of pocket for care. Their employers pick up another $15,259 towards employee health costs.

    Of that $22K premium, U.S. taxpayers pay roughly $9K, and state taxpayers may pay another $1K.

    Of the remaining $12K, I imagine government and union employees are above this average and private employers below. What individuals pay within an employer might depend on the relative bargaining power of healthier versus sicker employers. So beyond some generalizations it’s hard to say who is paying what.

    All the adjustments go away with COBRA, of course, except for the case of the employee who takes a job anticipating going on COBRA in the near future and has factored that into his wage negotiation.

  8. Ron Greiner says:

    I introduced myself Saturday to Adam Putnam and said, “I can help you become Governor.” He looked at me and said, “Really?” I said, “You know how President Trump said he was going to replace Obamacare with Health Savings Accounts?” Adam said, “Yes.” Then I asked, “Do you know that Health Savings Accounts are the center-piece of Republican health care Reform?” Again he said, “Yes.” Then I told him, “I enrolled the first tax-free HSA back when you were in High School.” Adam immediately said, “Where?” He was probably hoping I was going to say Florida but I said, “Nebraska, a 24-year-old male and the premium was $24 a month. After his HSA deposit he saved more in taxes than the cost of his insurance!” Usually people don’t understand what that means but Adam looked at me and said, “Interesting.”

    I gave Adam a folder with 3 HSA thoughts and a mission statement. The 1st HSA thought was the secret of MSAs in Medicare with an example. I pray that Adam becomes the Florida Governor with his huge VOICE and High Pressures the insurance industry into making the MSA option available to those on Medicare and HSA-Hating AARP loses every single, and very profitable, Medicare Supplement policy that they are earning money on. AARP was and is a big supporter of the nightmare of Obamacare. AARP has always hated the tax-free MSA and HSA.

    I met was a woman on Medicare paying $500 a month for her and her husband’s Medicare Supplement. I pointed her out to Adam and the MSA Medicare example I gave him has no premium, the government pays 100% of the insurance premium and then deposits $5,040 yearly into the couple’s MSA at the bank. We need to get AARP crying, “The government is paying these seniors cold hard cash to cancel our Medicare Supplement plans, all tax free.” The question to a couple on Medicare is; Would you prefer to pay AARP $6,000 a year OR would you prefer to get $5,040 a year, tax free? That is a swing of $11,040 a year per couple and some seniors would love to make that choice.


    • Allan says:

      “AARP was and is a big supporter of the nightmare of Obamacare. AARP has always hated the tax-free MSA and HSA.”

      Ron, you are correct. AARP is an insurer and I never felt they cared about seniors except that they buy their insurance. I don’t know why AARP is given tax free status nor why it has been so favorably treated.

  9. Ron Greiner says:

    ArmstrongEconomics Posted May 22, 2017 by Martin Armstrong
    The Buffoons – Congress and Mainstream Media Join Forces

    The manner in which the press acts and Congress, shows they are colluding to the point that they are desperately trying to get rid of Trump at all costs. However, what they are doing in the process is completing the forecast made by our model that this is the collapse in the confidence of government.

    This desperate act to prevent any reform is dangerously taking the domestic political situation in the United States and attributing everything to Russian influence. What they are actually doing is harming the image of the United States globally. Their actions reveal that they are either just stupid or they are really sinister, dangerous, and highly dishonest people seeking to establish their own personal agenda regardless what the people vote for or what is best for the nation.

    There are many politicians who are against democracy for this is exactly what is going on. We are witnessing an unprofessional and detrimental agenda to the entire business of managing any state. Of course there will be those who instantly say I am referring to Putin. No – this anti-democratic movement applies directly to those in Washington DC as well as Brussels.

    What is taking place in the United States at this moment indeed exposes the fallacy of democracy. The move to overthrow Trump is the belief that democracy is not fair when one side loses. They refuse to accept anything that Trump promised, and we have women being removed from airplanes for beating up a fellow passenger because he voted for Trump. They really expect that removing Trump will not further divide the country and send it into serious civil unrest. We are witnessing the end of any pretended democratic process.


    • Ron Greiner says:


      So why is the press and the Democrats fighting so hard no less the pretend Republicans like John McCain and Lindsey Graham? McCain and Graham are simply against reforming a perfectly good corrupt system where they get all the perks. The Democrats and the Press are in crash mode. They are fighting against extinction.

      The confidence in the mainstream media is at historic lows. You would think they should look at what they are doing and reflect upon reform. No, they simply go all the way with their bias. The Gallup Poll is now at 32% of the people trust the media.

      When we look at the Gallup Poll in the degree of trust people have in Congress, we see an astonishing 6% number.

      As the confidence in government and the press collapses, this is what is undermining the future. They are not merely destroying the image of the country while making themselves look like buffoons, they are setting this all up for a collapse in the bond markets and a shift to private assets as we conclude this economic business cycle wave. Confidence in Congress and the Press are collapsing.

  10. Lee Benham says:

    why AARP and other insurance companies hate the Medicare MSA. The Cash portion of the MSA can only be funded by the GOV. I sold a Medicare MSA plan in December of 2006. The company was called Unicare out of Oxnard California. The premium to the client was Zero. The deductible was $4500 and the Gov. deposited $2250 a year into the insureds MSA account at Mellon Bank.
    Unicare also had a plan in s neighboring county that was a $2500 Deductible and the Gov Deposited $1250 a year into the MSA.

    This plan lasted one year. At that time the Gov. monthly payment to the Medicare plans in Nebraska was $724 a month. Insurance companies are like Hillary. they don’t like part of the $724 they were getting being taken away and given directly to the insured.

    It would really help the rest of the county if Florida would have an MSA option. Florida’s per capita Medicare costs are over $10,000 and has a 41% of Medicare eligible individuals using the Medicare Advantage Program. The highest in the country.


    • Bart I says:

      I can see why insurance companies would prefer the more stable and risk-free business of reimbursing out-of-pocket costs, over the riskier business of insuring against catastrophic illness. Free money, with administrative costs the only overhead.

  11. Lee Benham says:

    Medicare pays Medicare Advantage plans a capitated (per enrollee) amount to provide all Part A and B benefits. In addition, Medicare makes a separate payment to plans for providing prescription drug benefits under Medicare Part D. Prior to the BBA of 1997, Medicare paid plans 95% of average traditional Medicare costs in each county because HMOs were thought to be able to provide care more efficiently than could be provided in traditional Medicare. These payments were not adjusted for health status, and HMOs typically enrolled beneficiaries who were healthier than average.

    Beginning in the late 1990s, Congress revised the payment formula to attract more plans throughout the country, particularly in rural and certain urban areas. The BBA of 1997 established a payment floor, applicable almost exclusively to rural counties. The Benefits Improvement and Protection Act (BIPA) of 2000 created payment floors for urban areas and increased the floor for rural areas. The MMA of 2003 increased payments across all areas.

    Since 2006, Medicare has paid plans under a bidding process. Plans submit “bids” based on estimated costs per enrollee for services covered under Medicare Parts A and B; all bids that meet the necessary requirements are accepted. The bids are compared to benchmark amounts that are set by a formula established in statute and vary by county (or region in the case of regional PPOs). The benchmarks are the maximum amount Medicare will pay a plan in a given area. If a plan’s bid is higher than the benchmark, enrollees pay the difference between the benchmark and the bid in the form of a monthly premium, in addition to the Medicare Part B premium. If the bid is lower than the benchmark, the plan and Medicare split the difference between the bid and the benchmark; the plan’s share is known as a “rebate,” which must be used to provide supplemental benefits to enrollees. Payments to plans are then adjusted based on enrollees’ risk profiles.

    The ACA of 2010 revised the methodology for paying plans and reduced the benchmarks. For 2011, benchmarks were frozen at 2010 levels. Reductions in benchmarks will be phased-in over 2 to 6 years between 2012 and 2016. By 2017, when the new benchmarks are fully phased-in, the benchmarks will range from 95% of traditional Medicare costs in the top quartile of counties with relatively high per capita Medicare costs (e.g., Miami-Dade), to 115% of traditional Medicare costs in the bottom quartile of counties with relatively low Medicare costs (e.g., Boise). The ACA also reduced rebates for all plans, but allowed plans with higher quality ratings to keep a larger share of the rebate than plans with lower quality ratings.

    • Ron Greiner says:

      Lee,the public is just too dumbed down. The choices that the seniors are given help the insurance companies and not the consumer. Humana won’t offer the MSA option in Medicare in Tampa Bay because they don’t want the consumer to get any funds. Instead, they offer an HMO that the seniors pay $95 a month or $1,140 a year then have a maximum Out-Of-Pocket of $6,700 in network and $10,000 Out-Of-Network. Plus, the seniors have co-pays on everything like $225 a day in the hospital.

      Here it is:


      So the choice for the couple on Medicare would be for them to get this Humana plan and pay $2,280 a year and then possibly owe $20,000 in medical charges


      Get $5040, tax free, and the maximum they could owe is $9,000 with the Medicare MSA plan.

      I wonder which program the insurance company would prefer to sell?

      After a decade, why is the media still censoring the tax-free MSA?

      FOX News Chris Wallace was accusing Ben Carson of “ELIMINATING” Medicare when Carson wanted to offer HSAs in Medicare and I was thinking – boy, the MSA is already passed and it didn’t ELIMINATE Medicare and neither of these two bozos know it.

      FOX News Chris Wallace is all in for Socialized Medicine. Chris Wallace calls GUARANTEED ISSUE – Preexisting Protections.

  12. Lee Benham says:

    Looks like Trump and the rest of the republicans are pussing out and letting Obamacare limp along. asking for another 90 day delay. I’m sure its just to keep Anthem happy and still selling in the 14 states.


    • Ron Greiner says:

      That is the same reason that Tom Price won’t rescind the UNCONSTITUTIONAL ban on Short Term Medical (STM) because Anthem would just throw their arms in the air and say we are out of these 14 states so you DC regulators have holes in coverage coast to coast.

      Obamacare is a nightmare that was thrown on America by these DC politicians who only care about keeping their jobs, unreal. Politicians don’t care about WE THE PEOPLE and the Constitution.

  13. Lee Benham says:

    Agent Abuse.

    They are raising their rates 20-50% and no more comp, even on renewals, and it looks like they are not going to let agents sell their products even for free:

    “Chet Burrell, the CEO of CareFirst, informed the broker community at the CareFirst Broker Forum that commissions for the individual, under 65 market in MD, DC and VA will cease effective 1/1/2018.

    A lot of questions remain unanswered such as the procedures CareFirst will employ to support this change. We don’t have any detail on plans for notification to policy holders of this change and the fact that brokers will not have any contractual relationship or legal standing with the policy holder. While this planned action will be a significant blow to brokers engaged in the individual market, it appears that CareFirst is determined to proceed with this change in its distribution strategy. CareFirst laid out the circumstances that have driven them to take this course of action, namely the huge losses they have incurred in the individual market (6.6% of total CareFirst membership), namely half a billion dollars in losses with no recovery in sight. We know all too well the consequences this will have on broker revenue and client service. We will follow these developments over the coming months and keep you informed. “

    • Bart I says:

      Sound a bit like Ford and GM desperately forcing dealerships out of business during the 2008-2009 collapse.

  14. Ron Greiner says:

    So, Dr. John Graham goes to HHS in DC and the House bill changes to stop Short Term Medical (STM) from getting age-based tax credits.

    Also, it’s the same across the Nation, HSA discrimination. Now the unused tax credit is NOT deposited into the consumers’ tax-free HSA.

    That is EXACTLY what America needed was a Canadian in DC telling us all how to live our lives, the bean counter. Graham never thought much of us salespeople. Now all of America has an Open Enrollment of 6 weeks over Thanksgiving. I’m sure agents will take the TIME to explain the HSA now. OH, agents are not needed because the consumer already knows everything, that’s right.

    Trump said hire American then he hires John. The Canadian rule maker.

    I’m the tool of the Government
    And industry too
    For I am destined to rule
    And regulate you

    You will obey me while I lead you
    And eat the garbage that I feed you
    Until the day that we don’t need you
    Don’t go for help . . . no one will heed you
    Your mind is totally controlled
    It has been stuffed into my mold
    And you will do as you are told
    Until the rights to you are sold

    That’s right, folks . . .
    Don’t touch that dial
    Thanks John


  15. Ron Greiner says:

    Paige, you write, “Sen. Orrin G. Hatch (Utah), top Republican on the Finance Committee, teamed up with Rockefeller to pass CHIP initially and has been a top proponent for it ever since.”

    That just goes to prove Hatch is clueless about keeping children save. Just ask yourself this ONE question, Senator Hatch, “Is it smart to put millions of children on health insurance that they AUTOMATICALLY lose on their 19th birthday regardless if they have just fought off cancer like my 18-year-old nephew Nick?” Let me answer that for you Orrin – NO, NO, NO – it’s STUPID!

    2nd – it’s Hillary Clinton’s BRAINCHILD – KidPloy


  16. Ron Greiner says:

    Blue Cross Blue Shield (NE) writes Obamacare repeal wish list (LOL) NCPA NEWSFLASH: too funny)

    1. “We need strong incentives for younger, healthier people to obtain coverage and for everyone to stay covered year-round.” (Bigger penalties for citizens unless they buy the BLUES)

    2. “Health insurance should be available to everyone, regardless of pre-existing illnesses, and that adequate federal funding should be provided to assist with medical costs, taking into account income, age and regional differences.” (GUARANTEED ISSUE is mandatory so Individual Medical (IM) premiums don’t drop too low and everybody leaves our CASH COW – over-priced employer-based insurance)

    3. “Healthcare must be more affordable for patients, families and taxpayers, and key protections — such as no lifetime caps on benefits and allowing young people to stay on their parents’ plans until age 26 — should remain in place.” (Keep those single Moms paying $500 a month at their employers to add on their lazy 22-year-old son, it’s a big money maker)

    Dream on BLUES, it’s just a DREAM. There is nothing that anybody can dream up to save the employer-based health insurance scam, sorry. Employer-based health insurance is the TITANIC and it is impossible to save. United Health Care stock was $17 when Obama was elected and now it’s $170! When employer-based insurance DIES this stock is headed back to $17 before it becomes ZERO!


    • Ron Greiner says:

      United Health Care stock is $174.25 today!

      • Barry Carol says:

        Most of United’s profits these days come from Medicare Advantage, managed Medicaid and its Optum segment. Even within its commercial health insurance segment, well over two-thirds of the members are in fee based contracts on which the annual profit opportunity is only about one-fifth that of risk based contracts.

        • Ron Greiner says:

          UHC has AARP or the other way around. The MSA in Medicare could end a big chunk of that business.

          UHC has IA CHIP and that should be eliminated because it’s too dangerous for children.

          UHC has Medicaid that is in big, big trouble with TrumpCare.

          UHC has government employer-based plans if Blue Cross doesn’t have them. Everybody knows that employer-based health insurance is the TITANIC and can’t be saved.

          I think it is safe to say that UHC stock is headed back to $17 before it goes to ZERO.

          Little-Bitty Golden Rule (GR) will probably make it though, so not everything will be destroyed. UHC will probably sell GR to make payroll some gloomy month in the future.

  17. Lee Benham says:

    So much for California’s solution to the health care problem. Just Double the budget.

    The price tag is in: It would cost $400 billion to remake California’s health insurance marketplace and create a publicly funded universal heath care system, according to a state financial analysis released Monday.

    California would have to find an additional $200 billion per year, including in new tax revenues, to create a so-called “single-payer” system, the analysis by the Senate Appropriations Committee found. The estimate assumes the state would retain the existing $200 billion in local, state and federal funding it currently receives to offset the total $400 billion price tag.


    • Ron Greiner says:

      Lee, SURPRISE: CA needs more billions for Mud Slides, it’s getting bad out there.

      A massive landslide that went into the Pacific Ocean is the latest natural disaster to hit a California community that relies heavily on an iconic coastal highway and tourism to survive, and it adds to a record $1 billion in highway damage from one of the state’s wettest winters in decades.

      A massive landslide that went into the Pacific Ocean is the latest natural disaster to hit a California community that relies heavily on an iconic coastal highway and tourism to survive, and it adds to a record $1 billion in highway damage from one of the state’s wettest winters in decades.

      Last year, a wildfire burned for nearly three months in the Los Padres National Forest and on private land, sparked by an illegal campfire. Thousands of visitors were shut out from signature state parks and the businesses that cater to those tourists.

      If you are a tourist the smart move is to forget about CA and vacation in sunny Florida where you and your children will be safe. Florida’s palm trees are better than CA’s too. Florida has more shoreline, tons more tiki bars and crab shacks.

  18. Lee Benham says:

    They say the idea is gaining momentum. The politicians feel they can take 100 billion from the employers who are already paying for employer sponsored plans. (Guess they don’t realize that is actually the employee’s compensation not the employer’s gift.) The other money will come from workers compensation medical payments. They also want to keep the U.S. Gov. Money.
    I’m sure the rest of the county will want to contribute to California covering everyone regardless of immigration status at 100%.

    • Ron Greiner says:

      Lee, these beach boys and valley girls should slow down and think. President Trump is taking $800 billion out of Medicaid so a big chunk of that was ear marked for CA. So they are going to lose mountains of money right there.

      Granted, CA workers’ compensation rates are by far the highest in the country so they can shuffle those funds around. But, taking $100 billion from employers as the rest of American employers are dropping their cost to ZERO with TrumpCare sounds like an up hill battle to me. These employers will just move operations to sunny Florida with NO STATE INCOME TAX, much better palm trees and gators. CA has no gators.

      Last business leaving California – turn out the lights.

  19. Ron Greiner says:

    New York is following California. –New York State Assembly passed on May 16 legislation A.4738, also known as the New York Healthcare Act, which would create a universal health care system within New York state and expand coverage eligibility to include all residents, regardless of their income, age, wealth or pre-existing conditions.

    Also, state and federal funding that are received for Medicare, Medicaid and Child Health Plus will be used to create the New York Health Trust Fund. New York would look to completely fold these programs into the New York Healthcare Act through federal waivers which would eliminate the local share of Medicaid funding, offering major property tax relief for New Yorkers.

    An inability to pay, or a pre-existing condition, should never stop you from going to the doctor’s appointment, receiving the tests and getting the treatment that could save your life,” Nolan added. “In the long run, this single-payer system may improve care, and save taxpayer money.”

    NY will save so much they will lower property taxes! unreal


  20. Ron Greiner says:

    Blue Cross and Blue Shield of Kansas City announced Wednesday that the company has decided to not offer or renew individual Affordable Care Act (ACA) plans in the company’s 32-county service area in Kansas and Missouri for 2018. This decision will affect Blue KC members with both on- and off- exchange individual plans.

    Blue Cross has decided to keep their employer-based groups, their cash cow.

    • Ron Greiner says:

      Twitter Democratic Strategist Comment on Blue Cross:

      Zac Petkanas Retweeted Sarah Kliff

      “This is a direct result of Donald Trump’s sabotage.

      Shame on him.”

      Sure, sure, President Trump made the KC Blues quit, right.

      • Ron Greiner says:

        Who else could be responsible for this? Obama and the Democrats? Unpossible!

        DaveinTexas @DaveinTexas

        Right. In 4 months Trump blew up Obamacare.

  21. Ron Greiner says:

    About 25 counties in Missouri might have no insurers on the ObamaCare exchanges next year after Blue Cross Blue Shield of Kansas City (Blue KC) announced Wednesday it won’t participate.