Some would. Some would not. So there would be some cost pressure. But I believe most people who currently have group coverage would still want health insurance if given the option, and this would be an enormously large group(s) to pool risks, without a precedent in any previous unaffiliated group insurance program. So, portable health insurance would IMO be costlier, but not materially so, and would have the added benefit of not disappearing when I lose my job. Therefore, I see it as a peachy idea. Feel free to think otherwise, of course.
For a guy who agreed this should be portable, you sure don’t seem to think much of the concept.
They might if they show up at a hospital and get stuck with an enormous bill they have to pay, because they didn’t buy insurance. That would be a painful, but useful, lesson to learn.
Young people voluntarily set aside money for retirement, and for their kids schooling, and for down payments on homes, and for dream vacations some years in advance, and for lots of other things. They do so because they know there are consequences of not doing so.
What makes you think they won’t spend money on insurance premiums, if there are similar consequences for not doing so?
I am not so enamored with portable insurance that I am willing to overlook the very real problems that will have to be dealt with by more than blind faith in the free market.
Because in my experience, the vast majority of young people don’t demonstrate the forethought you seem to thing they do. Hell, most middle aged adults don’t; look at the savings rate for people approaching retirement.
So what you say, it’s a good learning experience? So you don’t care that learning experience is costing you higher insurance premiums and higher taxes when they default on medical debts? Someone is being very short-sighted.
The problem is that the few who won’t will be the ones that are the very least likely to have medical expenses–the ones for whom insurance is not a good bet.
So even if you only have 5% fewer people purchasing insurance, it’s the 5% that were paying the most in terms of net premiums. Furthermore, those 5% will tend to purchase insurance when they start to suspect they will need it: when they decide to have a baby, or take up skydiving, or feel the first twinges of their mother’s arthritis. There is a fundamental imbalance of information when it comes to buying health insurance, and it makes for an inherently skewed market.
I am all for separating insurance from employers–if nothing else, I think it really inhibits entrepreneurship because the sorts of people that ought to be striking out on their own are the same that are too practical to do so without insurance–but I don’t see how that’s possible without an individual mandate.
People need to stop saying this. It’s not true. There will be some savings, but the idea that opening Medicare to the general population will drastically reduce administrative costs has to die. The per patient administrative cost isn’t that different between CMS and private insurers. As a percentage, the difference is huge, but people who qualify for Medicare generate far more charges than the average person on a private plan. They also don’t spend much on fraud detection, rarely challenge claims, have terrible IT infrastructure, have terrible customer service… the list goes on and on. And the idea it would save providers or hospitals any administrative costs is pretty humorous. Ask any doctor if he’s trade his Aetna patients for more Medicare patients.
Heh. What do you mean by controlling Medicare reimbursement rates? I mean, the only thing worse is Medicaid reimbursement rates. There’s a reason most providers try to phase Medicare patients out of their practice after a several years. But to your broader point, I agree. Rationing, or something of that nature, is needed if we want to control costs long term.
You know, while I agree in general with making rational decision with our health care dollar, examples like the one you provided aren’t going to win over many seniors to your new plan. The 35 year old might have about 3-4 more years left than the 75, but having the government make value judgements on the meaningfulness of your life is something I imagine most people find very, very distasteful. You could just as easily argue (and many do) that the 75 year old has paid into the system for many more years than the 35 year old and deserves to reap the benefits.
To address another point in this thread: Individuals can’t buy insurance because insurance companies have noticed that people are actually fairly good at predicting their need for healthcare. Even with the elevated premiums, individuals who purchase individual policies usually get more back than they paid for. In other words, if a 30 year old goes to the trouble of buying an individual premium, there’s usually a reason. This pushes premiums up to the point where even sensible, healthy 30 year olds decide not to buy it if they can’t get it through work. They’re willing to take the risk.
It’s not blind faith. You were questioning whether or not an unaffiliated group was viable, and I see no actuarial reason why a group that large wouldn’t be. That’s certainly opinion at this point, but it’s got a basis in fact. Very, very large groups tend to dissipate risk.
But I guess that doesn’t fit well with a “you conservatives and your blind faith in the free market” non sequitur counter. So fire away if it makes you feel better to describe the Law of Large Numbers as some sort of conservative article of faith, but the free market is not the relevant issue in a discussion of group risk. The Law of Large Numbers:
I’m impressed by the fervency of those who are ardently opposed to “Obamacare” but themselves espouse an approach that is essentially the same fucking thing. Not surprising really, since mandatory purchase is a Heritage Foundation idea first implemented under Mitt Romney, but still disappointing.
So when do we get that “repeal and replace” stuff the 'baggers promised in the last election? You know, the Don’t Let the Democrats Get Credit for Doing Anything So Let’s Do the Same Thing Ourselves Instead Bill? Still waiting.
As I have already demonstrated, adverse selection makes your large group weighted towards high risk individuals.
If you think the Law of Large Numbers trumps adverse selection, I can only conclude you also think you can lose a little on each transaction, but make it up in volume.
What you pointing out is irrelevant. There are few problems with individual markets that would necessarily raise prices:
Selection bias. As pointed out, employment groups are, for all intents and purposes, a random (healthier) portion of the population. When you group people in way that are non-random (eg. people who really fucking need insurance, like right now) you are going to see far more variation in costs.
Individuals would only get health insurance once they are at a higher risk of injury or illness. Spreading costs only works when you have a sufficiently healthy portion of the people to, in essence, support the unhealthy portion.
Employer-based insurance means there is a fairly static client base, which results in more predictable revenue. That predictability lowers costs.
Employer-based insurance means lower administrative costs are there are fewer negotiations and less oversight since there are, in essence, fewer consumers (eg. HR reps at companies) than there would be if individuals purchased them.
Even if you had lower premiums for healthy people, the sick people could not afford individual health insurance. The reality is sick people CANNOT AFFORD the healthcare they consume. We all know this. A diabetic, or a family with 2 autistic kids, cannot afford a plan that in any way accounts for the costs they are going to incur. This happens with car insurance too btw, where certain drivers cannot find insurance at any reasonable price. That why many states have uninsured motorist coverage, and/or state insurance plans. Again, a plan that reflects the real costs of coverage sounds good, but ultimately breaks down because most chronically ill people cannot afford care.
Well, if I were a conservative, I’d advocate that all hospitals be shut down and simple Darwinian selection come into play. Except I’d be a rich conservative, so I’d also advocate taking the guns off the poor in order to make it fairer.
I’ve thinking about this too. If I’m a 75-year-old retiree, a picture of health for my whole life, and then I’m diagnosed with stomach cancer, I’m going to be pissed that I’m being the denied the use of the healthcare I’ve paid into my whole life.
So let’s say I get treated for cancer over the next three years and it’s successful. But then I break a hip, develop Parkinson’s, and then diabetes. I suppose a heartless person could regret having decided to treat the cancer, but we can’t go back in the past and fix that. So do I continue to get coverage for the current crop of problems? Or does some stone-faced committee rule that I can get my hip replaced, since that’s urgent, but I’m on my own for everything else?
I have no idea what argument you think you’re countering, but it looks like there’s a boatload of stuff in there. Maybe you’ll listen since Fear Itself won’t. If health insurance is portable, that means that the large population of people currently shackled to their employer will no longer be so. That group of people would be enormous, and though there would be more adverse selection in play (and some cost as a result) the large numbers would make this work effectively as group insurance does, albeit with slightly higher loss experience. I’m not discussing at all in this exchange what people who can’t afford insurance will do. I am reacting to the notion that portable health insurance is inherently unaffordable (or something), when it would be largely the same people insured, or at least an enormously large percentage of them. It’s okay to disagree with this, but replies like “how about people who can’t afford insurance” or “there goes your blind faith in the free market” means that people are having a tough time with the concept I’m discussing, which is a rather narrow one in the realm of health care issues.
Adverse selection is always an issue, but less so when the group in question is enormously large and peopled in the majority by those who may have a catastrophic illness, but don’t currently. Namely, most of us. I would purchase portable health insurance, for example, and I have no health issues currently.
This is getting silly, and it’s clearly the talking points of people who refuse to accept any solution that doesn’t fit with the current orthodoxy (e.g., we must have a mandate, pre-existing conditions must be covered by insurers, etc.) and can’t concede the simplest of points.
This is a highly subjective question, but I will give you some specifics. For example, 35 states currently have laws related to coverage for autism related interventions and treatments. In Missouri, benefits include up to $40,000 in treatments a year, covering things like, “psychiatric care, psychological care, habilitative or rehabilitative care, applied behavior analysis, therapeutic care, and pharmaceutical care.” In Missouri, 1 in 72 kids is on the autism spectrum. That is a huge cost to insurers. Why would any insurance company cover that if they didn’t have to? They could just set up in another, less restrictive state.
Another example is California. They require all insurers to coverlead poisoning. This is because exposure to lead-based paints and other things has become a problem there. Coverage of diabetes is another issue. To quote this article on the disparities between states:
Again, why would any company locate in a state like Missouri, which require up to 40k/year in autism coverage and mandate diabetes care, when you can set up in Idaho? This is just small slice of the numerous things that would not be covered if you were given your druthers. It’s fine, I suppose, if you don’t have an autistic kid, or a spouse with diabetes, but if you do, you would be fucked.
To your other intimation that one state would not likely have the perfect storm of lax regulation, I would counter that such an environment would naturally occur because companies would lobby for it. For the same reason why many small islands become tax havens. Insurance companies would do what credit card companies did:
Profit-seeking companies will always go towards the path of least resistance. That’s fine in general, but the concern would be that insurance companies typically do that by limiting care, or rather, limiting the way the subsidize care, which in effect rations care. That is usually a bad thing.
More importantly, selling across state lines will not really save money, or produce better outcomes. The CBO looked at this during the debate over H.R. 2355, Health Care Choice Act of 2005. The conclusion was as follows:
Doesn’t sound so bad until you look a little deeper. To quote Princeton health care economist, Uwe Reinhardt:
His last point is the most important. Insurance premiums are highly correlated with actual health care costs, not administrative overhead and regulatory burdens. This is because the health outcomes and the care given vary wildly even within states.
So you will never get Alabama prices in New York, because the underlying costs (eg. NY property costs, taxes, etc.) and standards of care, are very different.
Furthermore, what you are often buying with health-insurance is the provider network. Why would any doctor accept lower payments that don’t cover the costs? So even if your out of state company can attract customers via lower costs, they don’t necessarily have a local provider network that will agree to accept their rates.
Think about it. Let’s say some rich guy wants to start Joe’s discount insurance company. I can do a few things to be profitable:
Charge more in premiums than I pay out in fees and admin costs
Negotiate discounts with providers in exchange for customer volume
It’s very hard to achieve #2 because it raises admin costs, thus raising premiums, which chases away customers…
This idea you have that this is come panacea doesn’t really pan out. More importantly, why can McDonalds, Home Depot, WalMart, and every other company navigate this regulatory nightmare of state mandates and laws, but health insurance companies can’t?
You’re the one who doesn’t believe that the race to the bottom will happen and that via magic prices will lower and quality of care won’t if insurance companies get to look at a list of 50 sets of regulations and move to the state that’s the most profitable to them.
Carriers can and do navigate the multi-state regulatory framework. I think we’ll continue to be at loggerheads, because I firmly believe that in an environment where choices are available, understood, and priced appropriately, people will buy what they want, assuming it’s available. It is not a given for me, as it seems to be for some, that there would be an inexorable progression to horrible coverage, that this is necessarily the end to a less restrictive environment.
I think another fundamental disagreement is that I disagree the state should be able to compel a carrier what coverage they must provide. But setting that aside, if people want autism coverage, and are willing to pay for it, why wouldn’t a carrier provide it? Now, once someone already has someone with that condition, they no longer need insurance. They need someone to pay their medical bills. I don’t mean to trivialize that, but it’s not an insurance issue. It needs a solution that is not insurance.
ETA: I also have no illusions that opening the regulatory borders solves all health care issues.
This is not an absolute good if the alternative is to buy it individually. The fact that is employer based makes it a more stable market, with more stable revenues for insurance companies. That stability and predictability reduces costs.
Furthermore, it serves as a useful proxy for weeding out the sick and costly from the group. Those who cannot work will not be included in the group, and people who have very costly disease will often be fired. I know it’s illegal, but it happens enough to recognize it’s not a bug, it’s a feature. Obviously, there are downsides to employer-based insurance, but it’s not the absolute good for insurance companies that you present it as.
But it’s not a “group”, its a bunch of individuals. That is a very different thing.
But that’s the point. The main thing all of these people are trying to address how to deliver healthcare more efficiently. Leaving people uninsured raises the costs because the providers pass that on to insurance companies who then pass it on to the insured. Any system that increases the number of uninsured, as portable insurance without sufficient regulation would, is a net loss.
But many wouldn’t. Put it this way. Let’s talk about a typical diabetic. With portable insurance, could they afford coverage?
You literally believe that all states are equal, right? That with tens of billions of dollars on the line, that insurance companies won’t look for the state that allows them to make the most money by flocking to the most favorable (for the insurance companies) set of rules, right?
You think that the competition will drive prices down, right? Where am I dishonest there? Specifically.
What process would you call it where insurance companies go against their economic interests and lower costs and keep services even? You may not believe it is literally magic, but I’m not sure science has an explanation.
No! Why would you say that? I have said I believe there is no state whose regulatory framework is inadequate, or at least that no one has provided evidence for that conclusion.
Where did I say competition will drive prices down? I said less regulatory restrictions tends to increase expenses.
And the trifecta. I specifically explained to you that it is in the company’s economic interests to provide fair, quality coverage. You can disagree with that, but it is a dishonest summation to say I believe companies will ignore profits (or something, your posts are a bit incoherent, frankly). I realize it’s a given for you that “evil” equals “most profits,” but that has not been my experience in 30 years in the financial services industry.
