The “Unaffordable” Care Act Turns Six
This week marks the sixth anniversary of the Patient Protection and Affordable Care Act (ACA). But it’s hardly anything to celebrate. The average bad marriage that ends in divorce lasts about eight years in the United States. So maybe there’s still time to end this ill-conceived union of bad health economics and income redistribution.
The ACA was intended to make health coverage affordable using an age-old strategy — other peoples’ money. For instance, ACA regulations require insurers to accept all applicants — including unprofitable ones — at rates not adjusted for their health risk. Premiums can vary somewhat based on age, but not health status. A plethora of new taxes — mostly on medical care and health insurance — are supposed to somehow make coverage more affordable. For those who don’t understand economics, taxing something raises its cost, not lowers it. Other funding mechanisms include draconian cuts to Medicare and higher deficits to expand Medicaid.
In an attempt to transfer wealth from medical low-spenders to big-spenders, Obamacare has purposely undermined affordable coverage. In the process it also removed the incentives health plans use to encourage healthier lifestyles. Healthy Middle-class folks, who don’t qualify for subsidies, have largely shunned Obamacare Marketplace plans. The inevitable result is that the exchange has become an expensive high-risk pool for people who are poorer or sicker than average. Obamacare is a bad deal for all but the most costly enrollees or those receiving lavish subsidies. Indeed, 83 percent of exchange enrollees are ones who receive subsidies. A report from the University of Pennsylvania’s Wharton School found all but the most heavily subsidized Obamacare enrollees would still be better off financially if they skipped coverage and pay for their own medical care out of pocket.
People often make the mistake of assuming that everyone needs comprehensive coverage that protects them from medical problems that are exceptionally rare. But most people covered by health insurance actually experience very low claims in any given year. About half the population spends less than $500 annually on medical care. Thus, health plans with benefits less generous than Obamacare would be both affordable and meet the typical medical needs of most Americans. But to accomplish the goal of making generous health coverage affordable to people with health concerns, the ACA had to force Americans to purchase health coverage and limit their choice of health plans. Health insurance that does not cover a plethora of preventive care, plans that cap benefits at predetermined levels and plans that reward Americans for having led healthy lifestyles are no longer allowed.
Prior to ACA, health plans with limited benefits (or high deductibles) were less expensive than coverage with onerous mandates and costly regulations. Those who could not afford comprehensive coverage could choose to either self-insure for day-to-day medical needs (now illegal), enroll in a limited benefit plan (now banned under Obamacare) or enroll in a high-deductible plan. Of those three options the only option left are high-deductible plans. Prior to the ACA, high-deductible plans were very affordable. Premiums were low enough to have money left over to fund Health Savings Accounts to cover a portion of the costs below the deductible. Since Obamacare high-deductible plans have become costly even though they cover almost none of Americans’ day-to-day medical needs.
Consider this: according to the comparison website, HealthPocket.com, a family who receives no subsidies pays nearly $1,000 per month for a bronze plan with a high deductible. I priced Bronze plans for my own family and premiums would run $12,000 per year and require deductibles of $6,750 apiece. A family deductible of $13,500 means that despite sending $12,000 to a health insurer, all of our health care needs must be paid out of pocket. That akin to throwing money down a rat hole to most sensible Americans.
I’ve talked to people who say they’ve made the conscious decision to forgo health coverage and just pay the penalty and pay cash for medical care. A few even think they can get out of the penalty. One lady I talked to suggested she’d be far better off just taking the money she would have spent on largely worthless insurance coverage and using it to pay for actual medical care. She will pay out of pocket for her physician visits. She will use a discount pharmacy card for her prescription drugs. She will pay for laboratory testing out of pocket.
Many enrollees remain uninsured despite the mandate — only signing up for coverage if they become sick or need expensive medical services. Eager to grow exchange plans as much as possible, the Obama Administration foolishly created multiple special enrollment categories that allows just about anyone to sign up long after the open enrollment deadline has passed. Individuals signing up using special enrollments aren’t just slackers who lost track of time during open enrollment. Late enrollees use more medical care than those enrolling during open enrollment. They are also more likely to drop coverage soon after receiving expensive medical care.
Many of those enrolled in Obamacare are gaming the system, cheating insurers and driving up the costs for honest folks who just want affordable coverage. It’s rather sad when you realize the Affordable Care Act made health care unaffordable for millions of middle-class families and left many formerly-insured better off with no coverage. Obamacare is hardly a legacy to celebrate. It’s time for Congress to go back to the drawing board and work together to find a solution that creates the appropriate incentives for all stakeholders.
Obamacare is a nightmare designed to limit the competition that low-cost portable Individual Medical (IM) was creating on employer-based health insurance companies and slowly “splintering” their market share year after year.
Now the crooks have no competition. Employer-based companies can raise workers’ premiums and deductibles during the employers’ Open Enrollments and the workers cannot enroll into Individual Medical (IM) because their Open Enrollment is at a different time of year, too pathetic and corrupt.
Devon writes, “Individuals signing up using special enrollments aren’t just slackers who lost track of time during open enrollment.” This is harsh. In the past if a citizen started earning money in June and could now afford health insurance they could get it in the old land of the FREE. Those days are long gone but it’s not that the citizen is a slacker but rather the government has taken away the citizens’ rights to help large corporate interests scam the American population.
When employers try and sell health insurance to their employees’ families for $1,200 a month the employers are STEALING the employee’s tax credits. I’m surprised that employees have not had class action law suits against their employers for stealing these huge Federal tax credits. The employer might be saving $3,000 in fines but at the same time they are stealing possibly $10,000 in tax credits from employees.
We need more class action law suits against selfish employers.
I remember how six years ago we worreed that Obamacare would cause employer plans to wither away by giving workers an alternative to employer plans. Little did we know that the exchange plans would cause individual insurance to become unaffordable for all but the least healthy, modest income folks.
Devon, if employees do go ahead and enroll their children into their employer’ health insurance in August for $1,200 a month and then in November, Open Enrollment for IM, they find out they can get coverage on their children for 1/2 that amount with Individual Medical the IRS won’t let employees cancel their employer-based health insurance.
Every law, and regulation, is designed to help employer-based health insurance and nobody cares about the uninsured population. Uninsured people is a fake reason to eliminate competition to employer-based health insurance companies.
Got the Blues? Being scammed? Are the Blues bribing your politicians?
Ron — Why wouldn’t the employees in your example just sign up to cover themselves through the employer and cover their family members in the IM market if they can get a better deal there assuming they could pass underwriting?
My wife’s former college roommate worked for a small college in Ohio. Salaries were pretty low. Single coverage was relatively cheap but family coverage was prohibitively expensive. Most employees just covered themselves through the college’s plan and found other options to cover their family members.
Barry, you ask, “Why wouldn’t the employees in your example just sign up to cover themselves through the employer and cover their family members in the IM market if they can get a better deal there assuming they could pass underwriting?
If the employee is paying $1,000 a month and this August, during the employer’s Open Enrollment, the cost goes up to $1,200 for the children the employee has to take the employer plan or pay the IRS penalty. Individual Medical’s Open Enrollment has a start date of January 1st of the next year. BUT – there is no medical underwriting on IM even if it is half price. With medical underwriting the price will be cut 1/2 again for those children.
Obamacare’s Open Enrollment and the employers’ Open Enrollments are at different times of the year. They probably did this intentionally to help employer-based health insurance companies. The IRS won’t let employees cancel insurance outside of Open Enrollment. See why its all a scam?
Calls to replace the ACA and, presumably, replace it with something better would have more credibility if they offered (1) a viable option to take care of the unhealthy and already sick at a premium they can afford and capped at some reasonable percentage of income, (2) subsidies to help lower income people buy insurance which they otherwise couldn’t afford even if they’re healthy and with access to age-based tax credits and (3) a mechanism that would govern eligibility to access more comprehensive health insurance later for those who either bought minimal coverage like a mini-med plan or chose to remain uninsured.
It’s easy to call for freedom and free market options for people who are healthy and relatively inexpensive for insurers to cover profitably. It’s not acceptable to just tell the people who need insurance the most and those who make too little to afford coverage but too much to be eligible for Medicaid that they’re out of luck and should just suck it up.
Finally, I don’t think it’s right to tell insurers that they can cover all the healthy people and make a nice profit margin by doing so but tell taxpayers they have to pay to cover all the unhealthy and already sick people that insurers can’t make money on without charging the healthy considerably more to cover those costs. Healthy people are healthy until they aren’t. Be careful what you wish for.
“It’s easy to call for freedom and free market options for people who are healthy and relatively inexpensive for insurers to cover profitably.”
It is easy to take away the freedoms from others and make them purchase products from private for profit sellers if you control the arms, the IRS and the jails.
Why not let all these people that are able to buy their own insurance privately buy it and focus on those needing help. We don’t suddenly nationalize (which is essentially what is being done though the government uses private parties) the housing industry or the food industry just because some people are homeless and others need some food.
You want to punish good people by taking away insurance they were comfortable with just so they can share the pain with those that have medical illnesses. Next thing we will hear is you forcing people to share their housing with homeless people. Following that perhaps everyone can receive 20 lashes just to show that all Americans can suffer pain, not just those that unfortunately have have to live with it.
If you want to junk the ACA and restore freedom to allow healthy people to buy inexpensive health insurance plans, including mini-med plans or even choose to remain uninsured without any financial penalty, then establish robust high risk pools to cover the unhealthy and already sick and provide adequate subsidies to take care of the folks who couldn’t afford health insurance before even if they were relatively healthy or expand Medicaid. If you want to throw in age-based tax credits to make insurance for the healthy even cheaper, fine.
Before the ACA, we had 45-50 million people uninsured and the number was growing. Most either couldn’t afford coverage or couldn’t pass underwriting. The ACA was a response to that market failure. Expanding Medicaid eligibility to 250% of the FPL and establishing robust high risk pools would be an alternative response. Of course, the cost wouldn’t be cheap and many of the states won’t be anxious or willing to expand Medicaid which is already a huge cost burden for them.
Let’s see who among the freedom loving free market believing healthy folks are ready to step up and pay higher taxes to take care of the unhealthy, already sick and those who make too little income to afford health insurance but too much to qualify for Medicaid under either the old rules or the ACA rules.
If this were an easy problem to fix, we presumably would have fixed it a long time ago.
What do you mean if I want to junk the ACA? It should never have been passed in the first place as it made the situation worse, not better. If you are interested in that population group you come up with a solution. My solution is subsidies where they pay a significant part up to their ability to pay and to permit a freer marketplace to exist that would lower costs for everyone including them.
Your solution is to make the rest of the nation uninsurable. A market place permits spreading the risk while your solution leaves us spreading the pain.
By the way that 45-50 million uninsured before the crash included a lot of illegals, young, people earning over $50,000, so the number is quite deceptive most often used by collectivists.
Allan, the Justice Department is restarting their stealing of citizens’ assets because the government needs the cash.
—Asset forfeiture is fast growing — in 2014, for instance, federal authorities seized over $5 billion in assets. That’s more than the amount of money lost in every single burglary that year.
Reformers had hoped that the suspension of the program back in December was a signal that the Justice Department was looking for ways to rein in the practice. But that no longer appears to be the case.—
The police have stolen more from citizens than in all burglaries in the USA in 2014!!
Make America FREE again!
It’s hard to remain free. Too many gullible conservatives that won’t even protect the Constitution. Think of what happens to the Supreme Court and the Constitution should Hillary win.
Barry a system like used in Singapore would allow much of what you discuss. However, if mandated under the current system, what you describe is basically asking other people to pony up significant amounts of money as a middle-age entitlement — regardless of how people got in their predicament.
Someone who has eaten the wrong kinds of foods, remained sedentary, gradually gained weight and became obese over the course of 35 years and is borderline diabetic (on the wrong side of the border) is going to be very costly. If that person had set aside funds in a Medi-Save account like used in Singapore, they could use their medical savings while possibly having access to a defined benefit, guaranteed-issue plan. Say, one that would cover from $10,000 to $50,000 in a given year – maybe with 50% cost-sharing. But under our current system, what you want is that person to receive an additional $10,000 per year in subsidies that someone else has to pay for.
As we’ve all discussed in numerous posts, our health care system has to apply the appropriate incentives to bring down the cost of medical care. Patients have to pay more out of pocket, face positive incentives, while providers will have to begin competing on price. There is no easy fix to make the healthiest 80% provide the least healthy 20% of patients with a cost-free medical experience year-after-year. (As an aside, the 80/20 rule was not a problem until the average cost per capita reached, say, $8,000 per year and rising; and 20 year olds are expected to chip in their $8,000.)
I’m always leery of redistribution schemes that entitle people to massive amounts of money regardless of financial need. At the same time, someone like I described does not have to be costly to care for. But insurers will always charge high premiums if they can because they cannot control behavior. If that was you and you were paying for much of that care, a diabetes educator could teach you how to care for yourself and it would be your job to ensure compliance.
There is no perfect benefit design or way to tinker with insurance (or the tax on health plans) to make everyone happy. Even if we did, the cost would rise and make everyone unhappy in a couple years. There are not enough taxpayers to sustain the system in its present form. We have to tackle the cost of care for the sickest people. Merely transferring income from the healthy as medical care consumes an ever-increasing proportion of our economy is not a sustainable option.
Devon – I agree with the need to tackle healthcare and health insurance for the sickest people. Whether their health status in due to bad personal choices, a serious accident, bad genes or the result of poverty, it doesn’t really matter. It would cost a lot of money to insure them and probably more than most people think. Either we all help pay for it or we decide to just let them suffer or even die. I’m a free market guy in most areas of commerce but I think healthcare is different.
You always bring up people who made bad choices, especially with respect to diet, exercise, obesity and smoking but I think it’s a lot more complicated than that. I never smoked, don’t drink, always maintained a normal weight but still developed heart disease which required a quintuple bypass operation at age 53. Heart disease runs in my family. Stuff happens. That’s why people need insurance whether they can pass medical underwriting or not. I think high risk pools are a reasonable option for people who can’t pass underwriting but high risk pools that actually work for people don’t come cheaply.
Barry I agree there are people who were dealt a bad genetic hand. My grandfather had his first heart attack in his early 50s and another only a few years later (this third killed him at age 79 in 1980). I bring up bad choices not because I lack empathy; but because about 60 percent of health care spending is on conditions caused by behavior. Clearly most people have some influence over their health needs in mid-life.
Society provides a measure of protection for people who were disadvantaged in life. Medicaid, food stamps, TANF, head start and universal primary and secondary education. The U.S. even provides relatively generous old-age Medical protection that historically has been funded by nominal payroll deductions far smaller than program costs.
These programs mostly attempt to prevent those disadvantaged at the beginning of their life from being disadvantaged throughout their entire lives. However, these programs do not remove all inequity. So the question is: how much should society subsidize health disadvantages, health behaviors, health inequities for people who are otherwise middle-class? Should society allow these people (regardless of whether or not they made bad choices) to spend little more than those who are healthy for whatever reason? Of course my questions are rhetorical. There is no easy answer. But when it comes to something like hunger or illness, society has deemed these problems more worthy of subsidies than, say, someone born with mediocre intelligence, who can easily survive on their own but doesn’t have the earnings capacity to become rich.
Devon, there are several important issues that require a good deal of thought where I believe Barry is probably on the wrong side.
1) Should the funding for whatever program is created come by artificially increasing premiums especially to those that are young and healthy?
To me that is pure stupidity. The goal is to get as many people insured as possible. Therefore raising premiums is contrary to the goal. Raising premiums to the young means that the less financially advantaged will be financing those that are more affluent. Furthermore one should recognize that if we want everyone insured we should be getting the young used to being insured.
2) Just because a person is called “uninsurable” doesn’t make him uninsurable. Just by altering the deductibles and premiums that person becomes as insurable as everyone else.
3) If we are supporting one of those “uninsurable” some believe they should not be paying a substantial amount of their money on their own additional insurance costs. They consider it ‘unfair’ a meaningless and over used argument. They are unwilling to require additional affordable amounts if it negatively impacts the standard of living of one who happens to be ill. They have no concern for those 5 standard of living steps below that are being taxed to maintain that individual’s standard of living 5 steps above.
4) Along with the meaningless ‘unfair’ argument they claim that health care is different as if every other sector of the economy is the same. When asked to show how it is different they resort back to the unfair or emotionally charged arguments. They can see that unfortunate patient who might die unless everyone else contributes when that person could have paid more, but they cannot see the family of 4 additionally taxed that die because they were forced to wait a little while longer before buying new tires that might have prevented the fatal accident.
There are many more issues that need to be discussed but the collectivists plus those that have been duped are causing severe strain on America and future generations. Do they care? Probably not or probably not enough.
I suggested before that a replacement for the ACA could include high risk pools, subsidies to help pay for insurance, expansion of Medicaid eligibility limits and age-based tax credits. Specifically, the Medicaid eligibility limit could be raised from 133% of the FPL to 250% and the Feds can pay for the entire cost of the expansion. That would take care of the vast majority of people currently enrolling in heavily subsidized ACA exchange plans that include very high deductibles. Folks who can’t pass underwriting would be eligible for high risk pools with their contribution toward the premium capped at 10% of income for those with income above 400% of the FPL and a sliding scale percentage between the Medicaid eligibility income limit and 399% of the FPL. Healthy people who can pass underwriting can use an age-based tax credit to cover a good percentage of their premium. Of course, all of that would cost money and taxes would have to be raised to cover the cost but young and healthy people could buy very low cost insurance or even choose to remain uninsured if they want. If they get sick later and can no longer pass underwriting, they can buy into the high risk pool.
If a person that most of us would consider uninsurable is told by an insurer that it will sell him a policy for $100K or $150K per year, I guess he’s suddenly insurable by Allan’s definition but how many people could afford that premium? Pretty darn few.
Healthcare is different for a number of reasons. One important one is unpredictability. I can budget quite accurately for my food and for housing costs, especially if I were renting. If there are unforeseen costs for home or car repairs, they are unlikely to be catastrophically expensive and even if they are, they are unlikely to be life threatening.
If you’re in a serious accident or are diagnosed with a life threatening disease or condition, you could easily and quickly die without prompt medical treatment. If you don’t have insurance, you can be bankrupted in no time. I think healthcare is indeed quite different from the other necessities of life and people need insurance to help cover the potentially ruinous costs that can strike any of us at any time.
If a person is netting $300,000 per year why only a 10% cap on his income? That cap is not very far off from the cap that exists for people with much lower incomes that have little to no disposable income. Do you think the latter should subsidize the former?
You suggest a whole slew of things for those that don’t easily fit into a plan insuring most Americans. That is fine, but we don’t have to let 300 million Americans suffer until those details are worked out to your satisfaction especially since you believe (see above) poorer and younger people should be subsidizing people that are older and richer.
The two needed programs, based upon your suggestions, are not necessarily intertwined even if desirable. Remember we don’t have an insurance program for food. We subsidize people in need though probably do too much of that.
“If a person that most of us would consider uninsurable is told by an insurer that it will sell him a policy for $100K or $150K per year, I guess he’s suddenly insurable by Allan’s definition but how many people could afford that premium? Pretty darn few.”
Stay in the real world Barry so when you draw up a health plan it makes rational economic sense rather than the types of plans you have been supporting with faulty logic and data utilizing outliers to form the guts of an insurance program. That’s nuts.
We have to remember that:
1) Much of the expensive care is a one time phenomenon that can be financed much like a house or a car.
2) Many of the sickest die in short order.
3) The costs aren’t as high as you make them out to be. You have talked about your illnesses which probably cost more than the vast majority have paid out. Add up the total amount paid over the years and let us know how unaffordable those fees were when amortized. I am sure it didn’t require anywhere near the $1Million to $1.5 million per decade that you suggested with your glib unreasoned response ($150K per year).
4) There is nothing stopping government from subsidizing high deductibles or subsidizing the premiums for 1 or two years after that high deductible is reached or any variation of this concept.
“ Healthcare is different for a number of reasons. One important one is unpredictability. ”
I can’t believe you made that comment. One of the primary items necessary for REAL insurance is unpredictability. That is why we don’t insure for the payment of tires, brakes, tires etc.
“ If you don’t have insurance, you can be bankrupted in no time.”
Bankruptcy is far preferable to death and can be prevented by buying insurance. Health insurance has three major reasons for its existence. 1) To protect assets 2) To provide healthcare otherwise unaffordable and 3) a collectivist desire for government intervention.
If one has no assets one has nothing to protect. If one is trying to pay for things that would otherwise be unaffordable then high deductible insurance is purchased. Before the crazies mucked things up high deductible insurance used to be quite affordable. Understand there are limits to affordability for the individual and the group. Some people don’t understand limits and they presently occupy the offices of our present administration.
“I think healthcare is indeed quite different from the other necessities of life and people need insurance to help cover the potentially ruinous costs that can strike any of us at any time.”
You keep saying that, but so far you haven’t proven that it is any different from any other sector of the economy. Insurance exists in every sector of the economy to help cover the “potentially ruinous costs that can strike any of us at any time.” You are going to have to try again.
From “Healthcare.Gov”
“The Exchange must permit individuals whose existing coverage through an eligible employer-sponsored plan will no longer be affordable or provide minimum value for his or her employer’s upcoming plan year to access this special enrollment period prior to the end of his or her coverage through such an eligible employer-sponsored plan.”
Affordability is a qualifying event gentlemen. If it’s more than 9.5% of total income you can change.
Three years ago, on the eve of Obamacare’s implementation, the Congressional Budget Office (CBO) projected that President Obama’s centerpiece legislation would result in an average of 201 million people having private health insurance in any given month of 2016. Now that 2016 is here, the CBO says that just 177 million people, on average, will have private health insurance in any given month of this year—a shortfall of 24 million people.
Indeed, based on the CBO’s own numbers, it seems possible that Obamacare has actually reduced the number of people with private health insurance. In 2013, the CBO projected that, without Obamacare, 186 million people would be covered by private health insurance. 160 million on employer-based plans, 26 million on individually purchased plans. The CBO now says that, with Obamacare, 177 million people will be covered by private health insurance. 155 million on employer-based plans, 12 million on plans bought through Obamacare’s government-run exchanges, and 9 million on other individually purchased plans (plus a rounding error of 1 million).
In other words, it would appear that a net 9 million people have lost their private health plans, thanks to Obamacare—with a net 5 million people having lost employer-based plans and a net 4 million people having lost individually purchased plans.
None of this is to say that fewer people have “coverage” under Obamacare—it’s just not private coverage. In 2013, the CBO projected that 34 million people would be on Medicaid or CHIP (the Children’s Health Insurance Program) in 2016. The CBO now says that 68 million people will be on Medicaid or CHIP in 2016—double its earlier estimate. It turns out that Obamacare is pretty much a giant Medicaid expansion.
—it would appear that a net 9 million people have lost their private health plans, thanks to Obamacare—
Obamacare is stripping Americans of private health insurance and also Obamacare has forced sky-high deductibles and out-of-pocket costs on those that have kept their insurance.
PLUS, premiums have gone up and not down like President Obama promised.
Happy birthday Obamacare!!
Erik,
What you are talking about is the affordability of an individual on employer based plans.
Employers will never offer a plan that is not affordable to the individual because of the $100 a day fine per affected employee. What Ron is talking about is the affordability exemption of the dependents cost which in 2016 is 8.13 % of household income. There is no open enrolment for family affordability. Most employer based plans renew between July and August. This forces employees to enroll in plans and be locked into the plan for one year.
Here in California 85% of our book renews December 1, due to extensions given and used to avoid entry into ACA so it currently aligns with IFP Open Enrollment.
This is from Healthcare.gov
“If insurance is not considered affordable a person may qualify for an exemption, and/or for catastrophic coverage through the marketplace.”
This sounds like it allows for a change based on income?
If Ron is talking about the “Family Glitch” that is another issue.
In his second paragraph, Devon criticizes the ACA for “using other people’s money.”
I think this criticism is incomplete. Medicare uses mainly ‘other people’s money’ to cover the elderly. Medicare uses pure ‘other people’s money’ to cover kidney dialysis patients.
Any and all attempts to assist persons who are ill and infirm will use other people’s money.
But the ACA was drafted with the goal of being more or less revenue-neutral. If the ACA had included a general income tax hike or a payroll tax hike, it probably would never have passed.
(I personally would have passed it. I personally would pay a small extra income tax to help the uninsurable, because I have been uninsurable. I might also vote for Bernie Sanders, but I am not the majority of Americans.)
The ACA in effect taxes the other, healthier buyers in the individual market, as Devon points out. People who used to get affordable high-deductible plans cannot find these plans any more.
Will this angry group be enough to bring down the ACA? I do not know.
(one tiny error in Devon’s piece was his reference to ‘draconian Medicare cuts’ as part of the ACA. The cuts were not draconian at all, being mainly a reduction in future increases….and plenty of the cuts have not happened anyways.)
Allan – Since the columns are too narrow above, I’ll respond here.
Before the ACA, I think you would be hard pressed to find anyone making $300K who lacked health insurance. I don’t think anyone should have to pay more than the actual cost of the insurance. If you want to collect more money from higher income people, do it through the progressive income tax.
Lots of people are very expensive to cover or are otherwise undesirable risks for health insurance companies. Have you priced some of the drugs advertised on TV lately? Humira, for RA, costs about $40K per year. Even Xifaxan, a Valeant product to treat IBS, costs $22K per year. Ron Greiner told us his daughter’s MS drug costs $80K per year. People with congestive heart failure or severe mental illness frequently wind up in the hospital. Cancer treatment is extremely expensive and often includes significant ongoing costs even after the disease is driven into remission. Kidney dialysis would be very expensive for insurers to cover if Medicare didn’t pay for it. If employer coverage went away in favor of some voucher or age-based tax credit, as much as 30% of that population wouldn’t pass underwriting according to Ron Greiner. The fact is that most people can’t afford to spend 10% of income or more for health insurance even if they were paying with pretax dollars.
Whether people have assets to protect or not, they still expect to be treated when they get sick. Providers, for their part, expect to be paid. Try getting an expensive course of cancer treatment without a way to pay for it if you have no insurance. Millions of people didn’t have health insurance before the ACA not because they didn’t want it but because they couldn’t afford it. You say we can just subsidize people in need but you don’t say how many people might need a subsidy, how much it would cost and how we would pay for it.
Before the ACA was passed, health insurance executives would tell you that no more than 20 million people were buying health insurance in the individual insurance market. The average premium collected was $250-$300 per month in 2009. How many of these folks were actually happy with their coverage nobody knows.
We currently have about 155 million people getting coverage through an employer, 68 million through Medicaid and about 54 million on Medicare including disabled people younger than 65 years old. That’s 277 million people. Another 30 million or so remain uninsured including, presumably, the 10-11 million illegal immigrants. That leaves the 12 million or so in exchange plans. That’s probably where most of the people who would need a high risk pool if the ACA were repealed are. If the ACA is repealed but the Medicaid expansion is sustained, at least most of them would still be better off than they were before. If the 19 states that refused to expand Medicaid decided to expand it, another 4 million people would be eligible for Medicaid. Let the feds pay for that and raise taxes if necessary to cover the cost.
Barry, Obamacare is a failure. Millions of people from coast to coast are losing private health insurance.
—Three years ago, on the eve of Obamacare’s implementation, the Congressional Budget Office (CBO) projected that President Obama’s centerpiece legislation would result in an average of 201 million people having private health insurance in any given month of 2016. Now that 2016 is here, the CBO says that just 177 million people, on average, will have private health insurance in any given month of this year – a shortfall of 24 million people.—
Obamacare is a giant failure.
We need to hit the reboot in America. Maybe we should change and increase how much you pay for Medicare by looking at your total assets Barry. Young people shouldn’t be paying for your Medicare just so you can leave your children great wealth. If you want Socialism so bad — you, your wife and children should help pay for it.
Contradiction alert: Barry writes: “I don’t think anyone should have to pay more than the actual cost of the insurance.” But elsewhere he supports having the young pay more than the actual cost of the insurance so that the old and sick can be subsidized by them.
“If you want to collect more money from higher income people, do it through the progressive income tax.” Unfortunately both you and the ACA have a lot in common. You both want some premiums subsidized by artificially raising the premiums on the young and healthy to pay for the old and sick even if those older people can afford a risk based premium. Since that makes their dollars worth more the older and sicker people consume more and costs continue to rise.
Health care is expensive. The most expensive items are generally rare and unpredictable so that THEY ARE INSURABLE INTERESTS. We are not arguing about helping people have access to healthcare. We both want such access to exist. We are talking about how to pay for the access and you are fixated on insurance when insurance doesn’t EVEN guarantee access.
“Providers, for their part, expect to be paid.” Sometimes I wonder why healthcare providers have to have their payments guaranteed by the federal government. Does the federal government guarantee payment to most businesses?
Our difference is that you want the federal government to set prices and tell us what we should buy. Do you really think the guy sitting in the oval office has any knowledge of your needs or even cares what is happening to you. You are a pawn to be manipulated by him and everyone else that has a permanent career in government.
“Let the feds pay for that and raise taxes if necessary” Medicaid isn’t really insurance, but you think that more are insured when more people end up on Medicaid. Maybe we should take your suggestion and place all those that are so called “uninsurable” and place them on Medicaid. Those that have assets should pay for their Medicaid or buy a private plan. If they don’t and they get sick the assets they hold could all be taken to pay their debts. That is why most affluent people carry insurance in the first place.
“But elsewhere he supports having the young pay more than the actual cost of the insurance so that the old and sick can be subsidized by them”
Wrong. I always thought the 3 to 1 age rating band was too low and unfair to young people. I thought it should have been closer to 6 to 1 or 5 to 1 or whatever insurers say it should be so that each age group pays for its own actuarial risk but no more. Heck, even the temporary high risk pool that was in effect before the exchanges started up allowed for a 4 to 1 age rating band. Guaranteed issue vs. underwriting is a separate issue. Guaranteed issue roughly doubles the premium vs. what it would be for an underwritten product at least for those who can pass underwriting.
“Does the federal government guarantee payment to most businesses?”
No it doesn’t but most businesses don’t provide products or services without a reasonable expectation of payment. If a medical provider, especially a hospital, learns that someone doesn’t have insurance, it’s highly unlikely that it will be paid more than a tiny fraction of what insurance would pay and they may not collect anything at all. Home sellers, car dealers, supermarkets, gas stations, etc. don’t offer to sell their products to people they know can’t pay.
“Our difference is that you want the federal government to set prices and tell us what we should”
I’ve said several times now that I would go along with scrapping the ACA and let people buy what insurance they want if they can pass underwriting or even remain uninsured if that’s their preference. They can even have age-based tax credits. At the same time, I expect there to be a mechanism to cover people who can’t pass underwriting and subsidize people who can’t afford the full premium even if they can pass underwriting. The issue is how much does it cost, how does it get paid for and by whom? As for Medicaid, it’s not great insurance but most hospitals will accept it and while they claim it doesn’t pay enough to cover their costs, the Medicaid payment rate is a lot more than hospitals are likely to collect from most uninsured patients.
Contradiction alert again: “Wrong. I always thought the 3 to 1 age rating band was too low and unfair to young people. I thought it should have been closer to 6 to 1 or 5 to 1 or whatever insurers say it should be so that each age group pays for its own actuarial risk but no more.”
You are very much involved in group think. I am not wrong rather exactly right. You supported the ACA and belatedly discovered your position was untenable for your personality so you started to play with the age bands. However, the same question arises. Why should a poor older person pay for a sick rich older person’s premiums just because they are in the same age band?
One of the problems with the ACA was that older people have much higher premiums and many of the elderly are not affluent. Now you wish to increase their premiums making them more risk based. I understand that. Unfortunately this latest solution places an additional tax on already high premiums to pay for rich elderly that are sick.
Gradually you inch from one position to the next to make you appear like a nice guy trying to help everyone, but you are left in the same untenable position as before except instead of the young it is the non affluent older group. I expect that soon you will come up with a modification again and then based upon that future modification claim you were wrongly accused once again.
You are not going to get away with it. You believe in shifting the responsibility of healthcare costs onto different people or hiding them hoping people won’t notice. The problem is your ideology in at least this sector of the economy. You are quite transparent, You are promoting collectivism.
“No it doesn’t but most businesses don’t provide products or services without a reasonable expectation of payment.”
But most businesses in order to attract clientele treat their clientele in a fashion that satisfies the clientele. You are advocating that satisfied or not the provider should be guaranteed payment by the government or a poor person barely making ends meet. Maybe we need a bit more provider/ patient dependence rather than the provider saying I can do anything I want because I will be paid.
You are right. Companies that sell tires will not sell them without payment and that is why that family of 4 (mentioned earlier) died. Their tires should have been replaced sooner, but that money saved for tires went to pay to a rich guy’s health insurance. Maybe we need government sponsored tire insurance.
“I’ve said several times now that I would go along with scrapping the ACA … ”, but you EXPECT (no different than a government mandate) “there to be a mechanism to cover people who can’t pass underwriting and subsidize people who can’t afford the full premium even if they can pass underwriting. ” Isn’t that known as a Hobson’s choice? Stalin would be proud.
“You supported the ACA”
Yes I did. I thought it was a reasonable effort to cover the large and growing number of uninsured people. The exchange plans aren’t working because of adverse selection and all the special enrollment periods that make it too easy to game the system. I’m willing to either try to fix the current system or try something new altogether but I laid out the principles that I think any revised or completely new approach has to address. Namely, it has to find a way to cover people who can’t pass underwriting at a premium they can afford and it has to subsidize low income people who couldn’t afford health insurance before but earn too much to qualify for Medicaid.
“Why should a poor older person pay for a sick rich older person’s premiums just because they are in the same age band?”
How many rich older people do you think there are who don’t already have Medicare and how do you define rich in the first place? Besides, I said I was willing to go back to underwriting as long as there are decent high risk pools to take care of the people who can’t pass it.
“Now you wish to increase their premiums making them more risk based.”
No I don’t because the premium would be capped at 9.5% or 10% of income. If there are a few higher income people that can afford more, throw in an IRMAA surcharge like Medicare does to offset some of the costs of Part B and Part D.
“You are promoting collectivism.”
And you are promising vague subsidies to help the undefined less fortunate with no suggestion of how to pay for them. Or let them buy into Medicaid which would probably be unworkable.
“there to be a mechanism to cover people who can’t pass underwriting and subsidize people who can’t afford the full premium even if they can pass underwriting”
And you would tell them to go pound sand or find a charity to pay for them if they can. Good luck with that.
Barry, no healthcare plan can be constructed to cover all people even if we both agree they need coverage. You want a healthcare program that mandates what can be purchased and what can be sold with all sorts of specificities as to price, etc. You chose the ACA and weren’t initially vocal about its failures. In fact you argued they weren’t failures until it looked foolish to argue in that fashion. You have been pulled away from the ACA while you grab at anything to provide you more waiting time to see if eventually the ACA works.
It doesn’t work and won’t work in the future. In fact we will not come up with a satisfactory plan run by government. Therefore you have to let go and let the market place do its magic. You can then suggest government take over the functions of those things not adequately addressed by the marketplace. You always are willing to leave it to a vote by the people to repeal the ACA. Now you should be leaving it to a vote by the people as to how they will help those that fall through the cracks. It is their money and the American people have always been responsive to people in need.
Therefore, stop telling the people what they “must” do and stop hiding behind being a conservative when in this discussion all your tendencies are directed towards collectivism. Stop making explanations for the failures. You were provided many of these explanations before the ACA was even passed.
“How many rich older people do you think there are who don’t already have Medicare”
I am utilizing your age bands to separate the older from the younger, not mine, so those on Medicare are not part of the discussion. In the age band that contains the oldest group we now see a lot of less than affluent people paying even a higher amount of their premium that some thought was unaffordable to them. That is why the collectivists made the young supplement the old. Now under your new age band regulations that discount is gone and they have to pay full price plus an additional price for those that are sicker than them and richer. Why are you having the less affluent subsidize the more affluent?
I won’t respond to your: “Besides, I said I was willing…” That is your brain shouting out collectivist thoughts providing Hobson’s choices to the masses.
“the premium would be capped at 9.5% or 10% of income.”
In other words the couple supporting 6 children and hoping all their children attend graduate school can be capped at $5,000 while the single man earning $200,000 is capped at the same percent even though he is that outlier you always worry about that uses more healthcare than he pays for. In this fashion the healthy family is subsidizing a rich single guy. But you remind me that you can throw in an IRMAA surcharge like you pay for Part D. Let’s see… 75% of Part D is financed by the tax payer and you think that measly surcharge you pay for Part D reimburses the system for the other 75% of costs? I think you are in a dream world.
Allan:“You are promoting collectivism.”
Barry: “And you are promising vague subsidies”
It’s not vague at all. In fact it is quite direct. I am saying for most of healthcare let the free market work and let people buy the insurance they want and need while letting insurers create contracts that suit the individual’s needs as best as possible. The rest require charity and if it is government charity it is the right of the American people to decide how that charity should be dispensed. …Or have you all of a sudden lost your taste for democracy? The free market will substantially lower cost and permit more people to be able to afford insurance while saving more money so that others can be subsidized.
“Or let them buy into Medicaid which would probably be unworkable.
It wasn’t unworkable for the government under the ACA to offer Medicaid to more people of low income. it shouldn’t be any more unworkable to integrate those in need because they are “uninsurable” and if they have extra cash charge them for the cost of their Medicaid. Alternatively, those with significant assets that were unwilling to pay for insurance can be sued for the costs they incur. That will prompt them to purchase high deductible insurance to protect their assets.
I would add this; there is a reason why there are drugs that cost that much. The reason is because there is mandatory insurance, and health plans with unlimited lifetime benefits, and guaranteed issue/community rating requirements.
As we at NCPA have said for years, we could spend our entire GDP on health care, but that would crowd out other areas of consumption and erode our standard of living. I don’t have specific knowledge of those drugs. But many high-cost drugs are costly because of economics rather than value. A biologic has near lifetime patent protection. Even if its only benefit is the placebo effect, insurers mostly have to pay for it. Hillary Clinton wants to cap out-of-pocket co-pays, which would have the effort of removing any price sensitivity patients may have.
My actual point is that there has to be some limits to cross subsidies ACA proponents want insurance to provide. As Allan suggested, many are one-time events. A $30,000 CABG surgery or a $30,000 hip replacement may be highly beneficial, whereas an IBS drug for $2,000 a month; or a $3,500 per month RA drug for the next 30 years may not be. In any event, drug companies are all on the lookout for new biologics they can sell for $2,000 to $5,000 a month.
(How I long for the good old days when drug makers were all looking to cash in with me-too drugs like Lipitor, Zocor, Prilosec, etc. intended to treat widespread chronic diseases.)
Devon, the first paragraph in your last post — “Xifaxan costs…Humira costs….MS drugs cost…….”
is a phrasing to which I might object.
As shown by Dr David Belk, Merrill Goozner, and others, most drugs like this cost a hundred dollars or so per month to produce. Their price is set to recover millions in sunk costs.
I know this may not be a perfect analogy, but Microsoft spends many millions on developing Windows, but sold it for $137. I see the American drug industry as very arrogant about reovering all its costs.
As for the healthy debate between Barry and Al on health insurance for the near elderly —
you could have had the same debate in 1965 about how to provide health insurance to people over age 65. I once had occasion to review a lot of old private health policies sold to the elderly before 1965, and they were really dreadful frauds.
But the whole issue became moot with the introduction of Medicare. In one swipe we no longer had to worry about how much premium an 80 year should pay and who should subsidize them. The taxpayers paid for all of it.
My gut feeling is that we should extend Medicare down to age 55 or 60, and raise the payroll tax to do it.
Yes the young worker will be tapped again, but the rich elderly help pay for his children’s education through their property taxes. It is a decent trade.
“Yes the young worker will be tapped again, but the rich elderly help pay for his children’s education through their property taxes. It is a decent trade”
Bob, maybe it’s time for a gut check on Medicare-For-A-Few-More.
1. If the “rich elderly” weren’t already paying property taxes, and if governments weren’t already spending at least 100% of those taxes on education or whatever – you might have a point. But since both those things are already true, your idea is In no sense a “trade” – decent or not. It would just tap the young worker again, with no offsetting new benefit realized by the young worker.
2. In my state, young workers also pay property taxes. I’ll bet they do in your state, too. It’s not correct to suggest the “rich elderly” are the only ones funding education – or any other government services for that matter.
John and Bob —
Here in NJ, at any given time, only about 30% of families in most of our suburban school districts have children in school. The typical school budget spends close to $20K per child and in some cases considerably more. So, anyone with even one child in the K-12 school system is receiving significantly more in education benefits than they are paying in property taxes. If they have multiple children in school and / or a child in need of special education services, the cost to educate their children is multiples of what they pay in property taxes. Meanwhile, the older folks whose children have long since aged out of the system no longer receive any direct benefits though they do receive the broader societal benefit of an educated population as well as the benefit to their property values that come with a highly regarded school system.
As for these rich elderly people, how many are there? What income level makes one “rich” in this context? I note that Medicare’s IRMAA surcharge applies to single filers with incomes of $85K or more and couples with incomes of $170K or more. That’s 2%-3% of the Medicare eligible population. In the 50-64 age group, I suspect that most of the higher income people already have employer based coverage. Much of the lower income population doesn’t even pay income taxes anymore and millions are eligible for the Earned Income Tax Credit which was originally passed to reimburse them for their payroll taxes.
Finally, when Medicare became law in 1965, many millions of elderly people were suddenly eligible for a new entitlement benefit that they didn’t pay for or only paid into the system for a few years but became eligible for as they turned 65. Marginal income tax rates were considerably higher back then as well even when converted to today’s dollars. While there was a lot of resistance to the program from the medical lobby, it became law and I think the society is better for it because as Bob Hertz intimated, it was a needed response to a market failure. In Allan’s free market world where medical underwriting rules, the free market will fail the unhealthy and already sick because there will be no willing sellers of insurance at a price these people can afford. Lower income people who can’t afford the premium quoted by insurers will also effectively be subject to a market failure even if they’re healthy. The ACA was an attempt to address their needs. If we repeal it, we need to replace it with something that addresses those market failures.
If I were in one of these two groups, I would hope that there was a mechanism to help me get coverage that would cover my medical needs beyond a reasonable deductible and out-of-pocket maximum liability. If it takes higher taxes on all of us, including younger people, to do that, so be it.
“In Allan’s free market world where medical underwriting rules, the free market will fail the unhealthy and already sick because there will be no willing sellers of insurance at a price these people can afford. Lower income people who can’t afford the premium quoted by insurers will also effectively be subject to a market failure even if they’re healthy. The ACA was an attempt to address their needs”
The problem Barry is that all those programs you support with every fiber in your body, though they did and do some good, failed. What is failure? When you start a business and it doesn’t thrive and daddy has to keep pumping in money it means the business failed. If all businesses failed in the US there would be no money for entitlements.
You believe these failed entitlements (though helpful to many people) are successful because daddy, the taxpayer, keeps pumping in more money. Eventually even daddy runs out of money. The fact is that if Medicare did not constantly have to be propped up with more and more money I would consider it successful, but that is not the case. Medicare requires more and more money, the satisfaction with Medicare is declining by both the recipients and the payers, the government is becoming more intrusive and whole new industries have developed around healthcare that are either unnecessary or ineffectual, all costing tons of money. I think most of us pretty much assume Medicare in the future will drastically change because of lack of funding for the generation presently paying for the program. They will likely have to fend for themselves.
While Medicare can still be felt to be somewhat cuddly, like mommy’s bed, that is not true of the ACA that has taken the same route. I don’t have to talk about all its negatives because though they are not easily apparent to you they are apparent to everyone else including our government officials though they pretend otherwise. You play word games while others suffer from what you believe to be good policy. You say: “As for these rich elderly people, how many are there?” demeaning the idea that less affluent people suffer when money is transferred to the more affluent. There are rich people and there are poor people, but there are also people more and less affluent that are not a few, but comprise the entire group. You apparently do not care if the less affluent group subsidizes the more affluent group because from your perch high above it’s only a little bit of money that differentiates the two, but it was also only a little bit of money that could have prevented the family of 4 from dying because they were driving on worn tires because of the tradeoff you so vigorously support.
Tradeoffs, that is the name of the game. Whatever good we get from Medicare we could have traded off for more substantial good while still helping those in need. That is right. Medicare wasn’t the only program considered at the time. Yes the seniors needed help and some pointed that out, but the standard of medical insurance, access and care at the time was much lower so everyone needed help, senior or not. Had we used another type of insurance then perhaps there would have been a market today from which seniors would purchase insurance (at the time vast numbers of non seniors didn’t have insurance either). Seniors were being insured at greater rates at the time just like the general population so we don’t know what alternate system would have developed had we carefully targeted our funds rather than using the funds as carpet bombs.
Because the numbers of seniors was very low and the age of death compared to today low as well it didn’t seem like a big task to insure that small number shortly ready to die so for political reasons (not altruistic) our leaders passed a bill that negligently did not prevent the upward creep of cost. That is part of what they should have done so that our GDP could be higher which would lead to more money in peoples hands, less people in need and more money for those in need. Medicare failed even though it appears alive and well today because Medicare did not control costs.
What is Barry’s answer. He has none. Thus he relies upon tax, tax, tax, borrow and spend other people’s money. Barry will even look towards the smaller bands of the ACA so that the very expensive costs can be paid for at least in part by those that are not just healthier, but may also be less affluent.
The reason Barry does this is clearly stated in his last paragraph. “If I were in one of these two groups, I would hope that there was a mechanism to help me get coverage that would cover my medical needs beyond a reasonable deductible and out-of-pocket maximum liability. If it takes higher taxes on all of us, including younger people, to do that, so be it.” He prefers the security of the collective to freedom. We already know from a long period of history the collectivist model doesn’t work and the free market model does. However, Barry persists. Stalin would be proud.
Allan, Barry thinks he can come to the NCPA and talk us into Socialism and get us to agree to turn the young into tax slaves so he can live high off the hog with his under priced Medicare for him and his wife.
Hillary, Bill and Chelsea wants to meet the illegal aliens at the border and hand them Medicaid cards. We already hand Medicaid cards and food stamps to the LEGAL aliens.
GOT CANCER – get to America and get a Medicaid card. American’s have big hearts.
FORWARD SOVIETS
Barry you lie and say, “While there was a lot of resistance to the program from the medical lobby, it became law and I think the society is better for it because as Bob Hertz intimated, it was a needed response to a market failure.”
Bob is a Democrat Socialist just like you. In 1963 all of America’s doctors thought like Allan and fought Medicare tooth and nail and beat JFK’s attempt to enslave the American people into Socialized Medicine with Medicare. JFK with all of his BS propaganda, lies and media support lost the battle with America’s MDs and the voting public. There was a huge national debate and Medicare went down in flames in the land of the free.
At the time private insurance in America was growing rapidly for people over 65. We had already passed Federal legislation to help older people who need financial help. That wasn’t good enough for Democrat Socialists and they demanded everybody over 65 had to be in their national one-size-fits-all Medicare, including multi-millionaires.
JFK died and then we had a lot of Democrat Socialists in DC. LBJ got us into Vietnam and said that Medicare was the “dying wish” of the dead President and they got Medicare passed and it’s been a nightmare ever since. Medicare was passed because JFK was killed.
We have no idea how prosperous the American economy could be without expensive Socialized Medicine.
A lot of these Democrat Socialists think they have big hearts but they are the useful idiots that Socialists always use.
Of course Barry would love Medicare because it discriminates against black males who have the shortest lifespans between the races and genders. Black males pay Medicare tax their whole lives and then die before they collect one thin dime on Medicare and all the money goes to old white women like Barry’s wife.
Medicare could never be passed today because it is way too racist.
Barry – Black Lives Matter!!
Ron, some believe that though JFK initially supported Medicare he had an about face the evening before his speech at Madison Square Garden. They attribute that very poorly delivered speech to the visit Edward Annis paid him the night before which might have convinced him of the inherent problems of Medicare. Medicare went down as you say only to be revived and passed by LBJ.
When one looks carefully at the Medicare program one realizes that the one’s that would benefit most aside from seniors was physicians and other providers who were guaranteed payment by the government with a floor of what Medicare allowed. (Not that dissimilar to what we see with Part D Medicare) yet they opposed it and were right. The ones to pay for it were those with jobs whose incomes in general were far below the income of a physician and many other providers. Those workers needed that money to care for their children, you know the one’s running around in the street creating havoc while mom and dad are working.
If I place a guarantee of payment for any prime sirloin steak, guess what? The stores will only be stocking prime sirloin steak and skip the non prime. If before that action was performed non prime was $6 and prime $10 then the new price for prime sirloin would likely rise to between $16 and $20, maybe more, (at least the price of non prime to at least the oop price people paid before. That is what we did in health care. Instead of taking a tylenol for a couple of days we encouraged a visit to the doctor. Costs dramatically rose after people learned how the system worked and gave up on their reluctance to suckle on mama government. Suddenly Medicare costs rose and kept rising. Medicare then removed balance billing the only thing that kept costs in check. That led to higher volume and Medicare countered with price fixing.
That, however, did not stop the rise in costs. For 50 years and into the future the collectivist inclined government thought like Barry that all we need is to control prices and tell people what to buy. That didn’t work because everyone or almost everyone maximizes their own profits and needs. A dummy could tell Medicare that in a free nation their attempts would only lead to increases in costs.
Take all the people that have entered the field from computer engineers to economists and beyond. Those working in the healthcare environment all derive their income from it even those like the ones at the NCPA who fight against the spread of this collectivist disease. All of this ups the costs of healthcare with very little going to patient care.
Once they are entrenched they make themselves necessary and fight for the dollars meant to save lives. Even physicians do this.
Why have cuts in physician reimbursement raised Medicare costs over the past 50 years? Physicians desire to earn what they earned before. Thus if the physician take home is reduced to 90% (assuming an overhead of 50%) then physicians will try to bill at least 20% more in volume just to make up the money lost.
—JFK initially supported Medicare he had an about face the evening before his speech at Madison Square Garden.—
I did not know this but it explains why JFK’s speech at the Garden was so poor.
Dr. Annis hit the nail on the head with his prediction at the Garden on what would happen to our freedom and health care if Medicare was passed.
Here we are!
I believe Annis had no position with the AMA at that time so they made up a position to make him appear as a high ranking official to be respectful to the President and make the President want to listen.
Really!! That is interesting.
Dr. Annis was like a father to my nephew after his father died in 1983. My nephew doesn’t know anything about this war against the Socialists because he was born in 1967.
I’m saying my nephew doesn’t understand how important Dr. Annis was. Dr. Annis worked for his Dad.
Send your nephew a present of Dr. Edward Annis’s book Code Blue Health Care in Crisis
good idea
Barry, my comment above was directed at Bob’s flimsy arguments for his Medicare-For-A-Few-More idea.
Choosing the Form of Our Destructor is a whole ‘nother conversation.
But as an aside, I doubt it would fly to honestly present an expansion of public insurance as requiring higher taxes.
Isn’t it becoming clearer that “Obamacare” addresses the problem of the uninsured by raising premiums, in order to avoid raising taxes?
And isn’t it clear that this scheme was sold to us using a web of deception, starting with a promise not to increase the deficit by “one dime”, followed by a promise that annual premiums for the average family would decrease “by $2,500”, and then other assorted bad-faith promises that succeeded because the American public is “gullible”? And isn’t it at last clear why the large majority of newly-insured people in Obamacare have enrolled thru Medicaid?
The problem was that Medicaid was failing to do what it was designed to do: ensure the poor had access to medical care. But fixing Medicaid would have required higher taxes. So instead we have Obamacare that, not so coincidentally, transfers vastly more money and power to government.
(There’s more but I gotta stop – I must seem like another Michael J. Fox when he realized everyone had stopped listening to Johnny B. Goode). 😎
Collectivism and freedom are not absolutes. They’re continuums just like the political left, center and right are continuums. Reasonable people can differ moderately or widely along those continuums. You’re arguing black vs. white. I’m arguing about shades of gray.
You are absolutely correct that collectivism and freedom aren’t absolutes, but there is a wide span and here at the NCPA you have stayed close to the absolutist collectivist side. Your gray can only be defined as black unless one takes absolute care in trying to determine if one can cast a light on your position that can make it seem gray.
—You’re arguing black vs. white. I’m arguing about shades of gray.—
It’s exactly black and white Barry. YOU love government Medicare because it discriminates against black males who have the youngest lifespan between the sexes and genders and pay heavy Medicare tax their whole life, on every dollar earned, then die before they collect one thin dime of Medicare. Medicare is rigged against black males and steals their lifetime of wealth — and it’s all legal.
Same with Social Security, which also discriminates against black males the most and all men in general.
It’s like the KKK thought up Medicare funding and qualifications to steal from the black population and make them slaves again.
This is black and white Barry.
How are you central planners going to fix this discrimination before the public figures it out and we have Race Wars?
There is no question that our society’s health care spending has grown very rapidly since the passing of Medicare.
What fascinates me is whether this is a bad thing (as Ron and Alan and Devon have implied constantly in this string of posts.)
Looking back to 1965, it is clear that seniors as a whole are much better off, the millions who work in health care are much better off (this includes doctors, nurses, pharmacy salesmen, et al et al.)………and is the average worker worse off? Have factories closed because the employers were paying too much for health insurance? Are young people more in debt because we spend so much on health care for the old? Are there businesses who cannot borrow money because of our national debt (some of which is due to Medicare??
I do not have the time or the skill to do a massive econometric study like this. I am not sure that anyone else has done one either.
I am not quite in the camp of Bernie Sanders and his economist Gerald Friedman, who take the pure Keynesian view that government spending makes us richer on a net basis, even accounting for taxes and debt.
However, I do not think the issue is a slam dunk for the opponents of Medicare either. I have said before on this blog that health care spending has propped up the US labor market for about 20 years. Without health care spending, the layoffs due to automation and outsourcing would be even more crippling than they are.
I do not agree with John F or Alan about the average worker being exploited to pay for Medicare.
A worker pays 1.45% in payroll taxes (matched by the employer for W-2 workers) for Part A of Medicare,
Part B of Medicare is funded mainly by income taxes, but workers who make less than $35,000 pay little income taxes.
So in exchange for his 1.45% of payroll and maybe some income taxes, the worker gets a great chance for health care jobs, and the worker can be quite confident that his parents will not be made poor due to illness. (long term care is a separate matter)
That seems like a good deal to me.
“What fascinates me is whether this is a bad thing …
Looking back to 1965, it is clear that seniors as a whole are much better off”
This reminds me of the medicine man of an ancient tribe. He has his people throw 10 woman and children into the fire so that the rain comes and the crops grow. If there isn’t enough rain he states they didn’t throw in enough people and if he has good rainfall it is all due to his wise management policies.
We have spent an absolute fortune on Medicare, but you don’t think about what would have happened if we used an alternative which also existed at the time with even additional assistance to seniors. You are only looking at one side and not the tradeoffs. Maybe if one of the other plans including additional assistance to the elderly were passed the savings could have been spent on cancer research and led to a cure. Maybe that extra money would have grown our GDP to such an extent that seniors would have a lot more money and wouldn’t need subsidies. They have a lot more money today than in the past even without that additional thrust to our GDP.
Medicare crowded out and prevented MBM (Much Better Medicare) from ever being considered at tremendous cost. It’s good for the seniors but MBM might have been better for them and also better for our children and non seniors.
Bob, you’re right. I frequently point out that Original Medicare (Part A and Part B) does not provide adequate Medical coverage for seniors. That’s because it doesn’t.
Which means Original Medicare not the good deal you make it out to be. If otherwise, seniors would be content with it. But that’s not the case and you know it’s not the case.
Most seniors notice the inadequacies of Originak Medicare and buy some form of supplemental coverage at their own expense. You do the same, having stated on this blog some time ago that you purchase Medicare Advantage for yourself.
I think that’s a rational decision, btw. I also have a private Medicare Advantage policy – as do 33% of all seniors. According to Kaiser Health, another 17% of seniors purchase a private Medicap policy, at their own expense. And 34% more get private Medicare Supplemental coverage thru a former employer. That adds up to 84% of seniors who know that Original Medicare is not adequate. The private supplemental coverage they have substantially fills the significant coverage gaps that exist in Part A and Part B. That private supplemental coverage would not exist, and seniors would not be buying it, if not for the inadequacy of Original Medicare.
What does strike me as irrational is your insistence that Original Medicare is a good deal for the average senior. You insist this is true even though 84% of seniors disagree with you and even though you yourself choose coverage in Medicare Advantage.
Your idea of Medicare-For-A-Few-More won’t be a better deal for the few more, than Original Medicare is for currently-eligible seniors. That is, the additional people will have inadequate government coverage unless they buy additional private coverage at their own additional expense – thru Medicare Advantage, or Medicare Supplement, or an employer plan.
The only way I see seniors might feel “exploited” by Medicare (your term, not mine) is if the federales suppressed or prohibited access to private supplemental coverage – coverage that most seniors have now. As you recall, the Obama administration did take a run at shutting down Medicare Advantage early on in the ACA campaign, but seem to have abandoned their goal to eliminate it. At least for now.
John, we may be talking about different cohorts of seniors.
For a person who had good employer coverage while working, going to Medicare may indeed be a step down. This is why a few employers and unions still cover persons after retirement, and why many large employers subsidize supplemental plans.
But for persons in the individual market before retirement, Medicare is a wildly good deal even without a supplement.
A 64 year old might be paying $600 a month for a Bronze plan with a $5000 deductible and a narrow network and very modest drug coverage. (this is before AND after the ACA).
When this person turns 65, they get free Part A and Part B for $120 a month, and Part D for about $30 a month. At my insurance agency I have seen 65 year olds virtually stand up and give a prayer to Lyndon Johnson.
Both Medicare and the ACA have spent a lot of time and money trying to make American health insurance a little more equal – i.e. by trying to substitute government generosity for the persons who do not receive employer generosity.
Whether this is all worth the cost is perhaps a further debate, I admit.
Bob, yeah, the entire individual market is maybe 6% or 7% of the total. I’d guess the individuals you are talking about – those who cannot obtain supplemental coverage (e.g., underwriting) and/or cannot afford supplemental coverage (e.g., low income but too high for Medicaid) are a subset of that 6%-7% – maybe less than 3% of all seniors, although that percentage may be growing. It’s likely most of the individuals you are talking about are counted within the 16% of all seniors who do not buy any supplemental coverage.
Most distributions contain extremes. It’s a mistake to base policy on extremes, even health policy. Thats why the 84% of all seniors who buy coverage supplemental to Original Medicare are so important.
Of course if all one can get (or, afford) is Original Medicare then by definition it’s the best available deal. But – the coverage in Original Medicare remains inadequate so the best available deal does not magically become a “good” deal.
PS – As you may know, large employers (including my former employer) have been abandoning their subsidized retiree coverage for future retirees. It’s now more common to find that employer-sponsored coverage for retired seniors is now “access-only”. That is, the employer continues a Medicare-supplemental benefit, but the retiree must pay 100% of the premium. This will mean even more seniors moving into private individual options – i.e., Medigap or Medicare Advantage. I think that’s a good thing.
John and Bob –
My wife and I both have standard FFS Medicare plus a supplemental plan for which we currently pay roughly $400 per month (after tax dollars) for the two of us. If standard Medicare offered an alternative that included a $1,000 or even a $2,000 per person Part B deductible vs. the current $150 or so plus an out-of-pocket maximum liability of $10,000 vs. the current unlimited liability, we would forgo the supplemental plan. Unfortunately, politicians prefer to sprinkle at least some benefits over as many voters as possible rather offer alternatives that make sound actuarial sense.
With respect to the supplemental plans specifically, I was in a meeting a number of years back before I retired with Tom Scully, a former CMS Administrator. He told the group that the medical loss ratio for the supplemental plans was around 65% and they’re not subject to the ACA’s MLR rules. It’s a very profitable product for the AARP, United Healthcare, Aetna and whichever other insurers offer them.
Regarding what would have happened to the economy if healthcare spending were, say, 11% of GDP now instead of 17.5%, that’s unknowable. People might have had more money for bigger houses, fancier cars and nicer vacations. Maybe our infrastructure would be in a lot better shape and up to date and there would be less damage to cars from potholes and other road hazards. Maybe we could have done more to alleviate poverty and, in turn, reduced crime and disease associated with poverty. There is just no scientific way to tell.
I do agree with Bob that original Medicare is a good deal for seniors despite the coverage gaps noted by John vs. what would have been otherwise available to them in the marketplace if anything, especially if they already have a pre-existing condition or multiple chronic conditions.
Before you convince all of us that such a saving is not a big deal.
“Regarding what would have happened to the economy if healthcare spending were, say, 11% of GDP now instead of 17.5%, that’s unknowable.”
We never can predict the future, but sometimes we can get a pretty good idea of what is likely to happen in broad based terms. That is 6.5% of 17.5 Trillion dollars going mostly to a service whose value is almost nil shortly after the service is provided. Recognize also that the last dollars spent generally give less value for the dollar than the first.
That gives us a figure of $1.15 Trillion per year or over a period of 10 years that government likes to talk about that is $11.5 Trillion that would not have disappeared after spending. That is about 2/3rds of the national debt. Alternatively 1 year and 4 months using todays dollars would have funded the Apollo moon mission.
Take note, we would still be spending more money on healthcare than any other nation.
Barry, you say, “I do agree with Bob that original Medicare is a good deal for seniors despite the coverage gaps noted by John vs. what would have been otherwise available to them in the marketplace [[if anything]],”
You think the people on the receiving end of the entitlement transfer are getting a good deal, oh really. The payroll tax is 15.3% on every dollar earned to subsidize rich people when they turn 65-years-old. The middle class is almost extinct. Young people can no longer afford to have children.
—What made the West great in the past is in large part no longer in existence. The hard work of the past has essentially been replaced by a welfare class, strategically put in place over the decades by a ballooning government that covets more and more control over its people. The most sure-fire method of doing this is through programs that make people dependent upon their government – justifying their growth and expansion.
It would be one thing if this growth and expansion came along with prosperity and wealth, but this simply isn’t the case. The West has thrown away much of its wealth and replaced it with a stifling debt – a debt that will ultimately be the end of the very system that created it.—
You folks can put lip stick on your Socialism pig but ugly goes to the bone.
Even hard right Tea Party types will tell the government to keep their hands off social security and Medicare which they paid for during their working years. They say they want smaller and more limited government and lower taxes but they don’t want cuts in entitlement programs that benefit them. Typical hypocrisy but virtually every interest group behaves the same way.
By the way, 12.4 percentage points of the 15.3% payroll tax pays for social security including its disability program. Only 2.9 percentage points pays for Medicare Part A. Parts B and D are paid for from income taxes and beneficiary premiums, not payroll taxes.
So do you want to get rid of social security too in order to maximize your freedom and minimize your taxes? The vast majority of people over 65 are far from rich.
I like Jose Pinera and tax-free Personal Savings Accounts (PSA) as an OPTION to Social Security.
My brother fought in Vietnam and spent his life paying high payroll taxes and then died at 62-years-old and his son didn’t get one dollar from a lifetime of taxes.
We are broke and have 20 Trillion of debt. When we all put our money in one big pot we will all go broke together.
You know that black males are discriminated against with Social Security and Medicare because they die young like my brother and their families get nothing. Why do you think it’s fair to steal a lifetime of wealth from black men?
Why not give people the option for tax-free PSAs in Social Security?
Let’s not use the outliers of a group. Demographically they were better than most groups and the vast majority agreed fully with the tenets of the Tea Party movement far more than other groups would agree with the tenets of their own.
Your problem is that you watch too much TV and see someone holding up a sign and assume that singular person represents all the members of the party when the truth was that the most controversial signs were held up by people who were not part of the Tea Party.
You seem not to like the Tea Party whose basic tenets are 1)follow the Constitution 2)balanced budge and 3)smaller government. I can see why you don’t like them because you want to borrow large amounts of money for entitlements of one portion of the economy and by doing so require a bigger government than necessary managing problems that are not considered federal in the Constitution.
Another problem is that all Social Security and Medicare beneficiaries are not identical as a group. My maternal grandfather benefited more than most since Medicare was signed into law in 1965 and implemented in 1966 — the year he turned 65. He’s one of those who had severe heart disease in his 50s, but somehow made it to age 79 and died in 1980. I doubt if he paid any payroll taxes into the program. I, on the other hand, paid into both programs. I am the tail end of the Baby Boom generation. About the time that program is straining under weight of 78 million Baby Boomers and I’m too old to take care of my self Medicare will likely implode, while Social Security will pay me a negative return.
Ron – First, I’m sorry to hear about your brother. As someone who served in Viet Nam myself (1968-1969), and later developed severe heart disease in my early 50’s, I can empathize.
One issue with the personal social security accounts is that growth in their value is uncertain depending on how the investment choices perform and where we are in the economic cycle when the individual reaches retirement age. If there are options to withdraw the money early under certain circumstances, the individual could easily wind up with a significantly lower monthly benefit than what social security would have provided. Even if the accounts provided a higher return on average across the population, there could be a huge variance in benefits available to any given person even if they made similar contributions during their working years.
Regarding black vs. white life expectancy, there is about a four year difference at birth. By age 65, though, the difference is less than two years and at 75, it’s less than one year. Black life expectancy is brought down by several factors. One is early death due to murders and drug overdoses. Another is a higher incidence of smoking which is a personal choice. One offset is that the social security benefit structure provides a much higher wage replacement ratio for low and middle level earners than it does for high earners which means the lower earners recover their lifetime contribution much faster than high earners do.
CDC data on life expectancy by both gender and race is available at the link below.
http://www.cdc.gov/nchs/data/hus/hus14.pdf#016
With your numbers Barry in 1990 a white woman lives to 80 years old and a black man lives to 64 years old and Medicare starts at 65-years-old.
Medicare taxes young black males for Medicare and then they die before they collect.
Medicare and Social Security are racist.
YOU can’t say that black males smoke so it’s OK.
It doesn’t make any difference what you say because Medicare is unsustainable and big changes have to come to this ponzi scheme soon. I predict a big drop in benefits and covered services. PLUS, additional premiums for those under 65, plus more costs for older people with higher net worth. This nightmare will end vary badly. But, Socialism always ends this way so no surprise.
Ron, though to some degree I believe you to be correct, overall Barry is correct in what he says. The number of black children killed or dying from drugs is tremendous and that skews up the life span significantly. That is part of the reason using life expectancy as a metric to study the efficacy of various countries is totally flawed.
Government welfare programs has produced black children in families with no fathers. They tell black mothers, “You can get more money but your husband can’t live in the house. We don’t care if another man is in the house as long as it’s not this child’s father.”
I know these useful idiots and their redistribution schemes have good intentions and they have big hearts but the non-intended consequences are just as destructive as if they had planned it.
But, it’s impossible to talk a Socialist out of Socialism until everything falls apart.
Ron I was not disputing the terrible effect our welfare programs has had on blacks. This is well known but not easily admitted by the socialist. Before all these attempts were made blacks had a higher marriage rate than many other groups, their education level and income were spiraling upwards The downturn occurred after the government interfered.
Everyone should pick up a couple of books by Thomas Sowell who makes mincemeat of the socialist prescription for social policy. He made his points using real data instead of the contrived data used by the left.
Thanks for your service Barry.
I hope someday to have a beer with you. I can only imagine that you have to be a hell of a funny individual with a few beers in ya. Some of the stuff you come up with is just hilarious .
Thanks for making my day.
I am one of those who think that Medicare will likely not financially implode in the coming years.
Let’s say that Medicare expenses per person can be held to the rate of general inflation (not medical inflation.)
Expenses per person today are about $11,000 I believe, and there are about 50 million persons covered (not all are seniors).
The baby boomers will come on, though of course some existing recipients will die.
So let’s say that Medicare has 75 million beneficiaries by 2025, and the expenses per person are $15,000.
The cost per year will thus be about $1 trillion.
The total incomes of all Americans in 2025, assuming modest income growth, might be in the neighborhood of $12 trillion.
So it would take a tax of about 8% on all incomes to pay for Medicare.
Given the voting strength of elders, a tax like that could probably pass Congress.
I am not saying that this is a good thing. An 8% tax for just Medicare would slash into education, national defense, and infrastructure, at the least. I do favor cutbacks in Medicare to mitigate this kind of tax.
My only point here is that this is not some automatic implosion where the Medicare checks just stop.
What we do need are politicians who will at least tell the public what is happening.
You are absolutely right Bob it is unlikely for Medicare to implode, unless we add political revolution. The government can print all the money it wants so that everyone’s true wealth continually decreases. It could also change Medicare so that per capita it spends less than Medicaid. The government could also fund Medicare with $1 and adjust the payment schedule so technically it would still exist. It could also just shut down Medicare tomorrow without explanation to the American public. It is not a true debt and all the taxes people pay into Medicare don’t guarantee them squat.
Has anyone commented on how inconceivably wrong the Obama Health Care law is when it comes to couples that gets married late in the year and the one spouse who has been receiving the premium tax credit because of their low income end up having to repay it when they file a joint tax return with their new high earning spouse? For example, two people who don’t even know each other at the beginning of the year start dating in July, fall in love and get married in November. Wife was not employed and easily qualified for the premium tax credit. Month before the marriage she calls and cancels her health insurance because she knows that the next month she will be on her husband’s insurance. They file a joint tax return and override the recapture of the premium tax credit because congress certainly did not intend to penalize people for getting married. The IRS disallows the tax return as filed and insists the credit be repaid (although they have no authority to enforce collection). Even after several letters explaining the situation the IRS will not budge. The Democrats in congress that voted for this law should be ashamed of themselves! They don’t even have the decency to fix these kind of mistakes.
Thanks for the interesting twist. It demonstrates why the law shouldn’t have been passed without further review and further demonstrates how incomplete the law is. The Supreme Court under Judge Roberts even had to rewrite a crucial portion of the law. [It should have been sent back to Congress]
Those in favor of the ACA yell at Republicans for not fixing the problems, but they don’t even bother to solve simple problems like the one you just mentioned.They just can’t fathom that this law was a very bad idea.