Sinaijon, do you mind if I ask if the cost of covering your family falls closer to the $1,500 per person per year that Wesley originally suggested, or the $7,000 that my random number crunching suggested? (Those numbers would include any portion your employer might be paying.)
And does any member of your family have a chronic problem that requires frequent doctor visits and medications, therapy, etc., even if it doesn’t push your total cost over the $5K limit?
(From here, which is probably about the last place people would look for analysis of health care costs and reforms.)
I think there’s a lot of room for rational market reforms. And it’s not necessarily true that anything more than an office visit will automatically eat up the whole deductible. Here’s a site showing colonoscopies from anywhere between $2,000 and $3,700. Would you make a few phone calls to save yourself $1,700?
Absolutely correct. The only way to keep costs down is for care to cost money to the person needing the care.
Yeah but that is a plan for people with pre-existing conditions. Under our current health system a small minority of people use most of the health care. Something like 20% of patients use 80% of health spending. The most expensive 1% of patients use 49% of health spending. That plan covers that 1-20%. So of the 2.5 trillion spent on health care each year, 2 trillion goes to 60 million people and 500 billion goes to the other 240 million.
If you go to ehealthinsurance, quotes for high deductible plans are about $50-100/month for people in their 20s and 30s. In their 50s they are closer to $200.
We spend about 2.5 trillion a year on health care. Of that about 1.2 trillion comes from non-public expenses. So spending $7000 per person would work out to 1.4 trillion, which is far too high of an estimate.
Health care spending per person in the US is about $7000. A little over half that is public (medicare, medicaid, SCHIP, VA, CDC, community care, public employees, etc), so that leaves about $3300 per person private spending annually. A high deductible plan should be a fraction of that $3300.
A high deductible plan for someone who is 60 with pre-existing conditions might be $900/month, but for someone who is 21 with no pre-existing conditions it might be $40/month. With a small minority of patients using most health resources, it should average out to somewhere in the $1000-2000/person/year range.
care to explain how single-payer systems manage to have quite low cost without the patient concerning themselves over price?
Health care expenses are not distributed evenly among the population though. You either need tons and tons of it, or you need very little. There is very little middle ground.
We spend 2.5 trillion on health care a year. Of that
1% of the population use 49% of spending in a given year
20% of the population use 80% of the spending in a given year
If you split the population 50/50 (put the most expensive 150 million on one side and the other 150 million on the other side) I think it breaks down to 97% spending on one side, 3% on the other side. So half the country uses 97% of health spending, the other half uses 3%.
Health spending follows an L-curve. 1% use 49%, 20% use 80%, 50% use 97%.
So to really tackle health costs, you have to find ways to provide high quality care with higher efficiency and less waste to that 20%. They are where the true costs come from.
People with chronic medical conditions use 75% of medical spending.
Point is, it is a minority who need the most expensive medical care. And we have to dramatically improve productivity, transparency and efficiency of care given to them to keep the system solvent.
My family of 5 is covered for about $500 a month. The two adults are something like $120 each, and the kids are $80-$90, for a total of $6000 for the family, or about $1200 per person. It’s not a group policy, so the rates reflect no negotiating power on our behalf. If you want to see hard numbers for comparison, you can check rates for other similar policies at here
One child has a mild chronic condition which incurs semi-frequent doctor visits and medications, and we’ve had the usual assortment of broken arms and childhood maladies.
We’ve maxed out our deductible several times in the past, once just this past fall when my eldest was hospitalized with H1N1. Even so, adding up all of our premiums and medical expenses the over the years, and we’ve still saved a significant money compared to purchasing a more comprehensive policy. Most the savings we put into our HSA.
I think a catastrophic plan is a pretty good idea. That would keep hypochondriacs from driving up the cost of a federal program.
All that talk above about how only a few percent need lots of health care is NOT valid at all, it is just that the other group not using it does not need it YET. That is why they need to be concerned, and even in perfect health you can be in an accident.
Only a fool should think he knows he will never need it, so does not want to pay to have it. Look at all those kind of folk that would not have auto insurance if it wasn’t required, that they are wonderful drivers, same sort of dumb idea. Yes they do need to pay for the ones NOW needing care because they will need it too later. Simple to understand.
This plan seems designed to address the fears of the middle class - they’re the ones who are worried about being bankrupted by a $100,000 medical bill. That’s a legitimate fear but what about the people who can’t afford a $1000 medical bill?
This reminds me of school vouchers. We’re giving something to the people who have a problem while ignoring the people who have a crisis.
I’ve been suggesting a form of catastrophic care since the health care debate began this year. I’ve mentioned it many times on this board.
The reason health care markets are broken is because there is a disconnect between consumers and suppliers caused by 3rd parties being in the middle - the government or insurance companies. This is the fundamental problem that needs to be fixed.
Also, people need to be responsible for their own health care to whatever extent possible. Imagine if car insurance covered all your routine maintenance and provided for every possible little fix to your car, with no deductible. You can imaging how expensive it would be, and how much crap would develop in terms of paperwork and accounting rules and whatnot to keep the system afloat. That’s what health insurance is like. It’s not ‘insurance’ if it covers a known expense like an annual checkup, and since insurance charges a premium, there’s no reason to buy it to cover minor expenses.
The big worry people without insurance have is that they will have some sort of health issue that will bankrupt them. So if that’s the problem, provide catastrophic insurance to protect people against that, and allow the market to be free for the 80% of health costs that do not involve destroying someone’s financial future.
Little Nemo: If health insurance was capped, people who cannot afford $1000 bills can buy gap insurance. Gap insurance is cheap, because the potential downside cost for the insurer is fixed and manageable. I have all kinds of supplemental insurance - prescriptions, optical, dental. It’s all cheap, because the insurance companies never have to pay any huge costs in our system.
This is the kind of reform that could have had widespread bipartisan support from the beginning. Economists on the right and left were suggesting it. But this administration refused to listen, and screwed the pooch. Now I don’t think even this can pass - there’s too much fatigue over the whole issue.
Care to give a cite that 80% of healthcare costs are those which would not destroy someone’s financial future, but for the existence of their insurance plan?
If you believe that most health care costs are incurred in small amounts by most everyone for routine care, then sure a catastrophic plan makes sense.
If you believe that most health care costs are incurred in very large chunks by people who are afflicted with abnormal (i don’t mean exotic, but i’m talking about diseases with names and other things other than “the cold” or “a sprain”) injuries, ailments, and disesases, then a catastrophic plan will a) do nothing to reduce the cost of health care and b) make the government pay for the lion’s share of all medical expenses - at that point you’re almost there in terms of government paying for everything, so why not just extend it to non-catastrophic care at the time
Again, the feasibility of this depends on what types of medical costs the money we spend today goes towards.
From a theoretical point of view, great. From a practical point of view forget it, the GOP are going to continue with their scorched earth tactics and not allow the Democrats to do anything useful. The only thing they’ll allow through the Senate is more tax cuts.
Wesley Clark outlined some numbers upthread, mostly getting them right. I tracked down the data from 2002 (on this webpage) and 2004 (on this pdf). Then the answer to your first question depends on what you mean by “80% of healthcare costs.” The pdf shows that 80% of individuals spent less that $3,735 in 2004 (“including direct payments from individuals, private insurance, Medicare, Medicaid, and miscellaneous other sources”). Not an amount most people let go of on a whim, but not a permanently crippling amount either. On the other hand, these same bottom 80% payed only 20% of the total health care bill. Missing from the study is any information about how health care costs compare for individuals year-to-year (i.e., did most of the people from the top 20% fall down a couple categories in the next year, or did they stay there?).
I like the idea of a universal catastrophic plan. However, I would say that the deductible should change with your income. People at poverty level should pay nothing, or damn near nothing out of pocket. If middle-class people are expected to pay 3-5k out of pocket, then I don’t see why people making seven figures shouldn’t have to pay six figures out of pocket. Perhaps couple this, as mentioned upthread, with a law that breaks the tax privilege of employer-funded health insurance, and deregulate the insurance industry.
ETA: The website shows that about half of health care spending is done on those over the age of 65. Perhaps this makes the case for including long-term HSAs into the system as well?
well, if that’s the case, that 80% of medical spending is by people who spend more than 3800 a year, then i’m sticking to my point: a government-run indemnity program won’t have cost savings (assuming that we make the out of pocket limit something close to 5k, which is sane; any higher and a median wage worker couldn’t afford that)
not to get all weepy liberal here, either, but there are large portions of society who couldn’t even cover the 5k a year limit - it’s pretty crippling if it’s a yearly limit (say median income is 40k, that’s like 12% of your pre-tax earnings) so if the gov’t is now paying for, something like 2/3 of the costs of care in this country anyways (going from 80% to 66% to account for the 5k that those people would still pay), why not just go whole hog?
Your figures, if correct (and I have no reason to doubt them) open up another whole can of worms.
We’ll have one percent of the population getting 49% of the benefit that 100% of the population is paying for, and 80% probably getting nothing out of it.
Oh no! Income redistribution on a nationwide scale! My hard-earned money going to support those people who smoked/drank/got in a car accident while talking on their cell phone/had a baby when I chose to remain childless/dared to need a hip replacement even though they’re 80 years old/ad nauseum.
Of course you’ll get a counterargument from people on the other side. A $5,000 deductible is too costly for poor people; it wouldn’t cost that much more to cover everyone; can’t the millionaires pay for their own heart bypass, etc.
Then you’ll get people in the middle worrying about whether they’ll be able to choose their own doctor while they’re laying in a hospital bed with tubes coming out of them, and complaining that the catastrophic coverage didn’t cover the plastic surgery to remove the scars after the windshield was dug out of their face.
And someone, somewhere will figure out how to game the system and we’ll hear endless stories about how our tax dollars are paying for face lifts for illegal aliens.
Don’t get me wrong. I happen to think it’s at least a start to the health care mess, but unless someone comes up with some really indisputable numbers to show Joe Middleclass that the $5,000 in new taxes that he and his family have to pay are going to save him (and everyone else on his block) at least that much in insurance premiums – and by that, I mean hard cash that comes out of his pocket, not his employer’s – my guess is this proposal will be just as politically nonviable as all the others.