I put this in GD because there will be a debate on the answer to my question.
If I understand the bill that will be passed:
You MUST buy health insurance
An insurance company may not deny you for a pre-existing condition, nor charge you a higher rate
There is no public option, or any type of government control to set prices
Doesn’t 1 and 2 guarantee higher prices? I am old enough to remember when auto insurance became mandatory in most states. Costs skyrocketed.
And pretend that State Farm had to insure your drunk next door neighbor’s 22 year old kid with 8 DUIs and they had to charge him the same rate as you.
How can prices not skyrocket? How can the small business owner not be floored with the new price of his health insurance premium? Or the healthy contract worker who is now buying a private plan?
I understand that this will be helpful to a person who has had heart disease or cancer in the past, and currently can’t get any insurance at all. I really am only concerned in this thread with the out of pocket costs for the average Joe.
In other words, if I am forced into a pool with people who are near death from health problems, how can my monthly payments NOT increase? And since that, by law, I must buy into the system, that will make them increase even more, perhaps to a level that I can afford.
What if my family’s premium came to $5000 a month? Would I be a criminal if I didn’t pay?
Unless it has changed from the version I last saw, the fine was only ~$900 per person. Of course, this is still a bad thing, and still gives the insurers free reign to overcharge their customers by that much over the actual value of their service.
The insurance companies will also be covering those people who have avoided getting insured because they are younger and generally in good health. That will help to balance out costs.
Remember too that the high hospital bills that everyone receives are in part because we are paying for the care of the uninsured. The hospital can’t just turn them away. If everyone is insured, hospital charges should go down and insurance companies would have to pay out less.
At least maybe insurance rates won’t go up as quickly.
When you speak of costs, you don’t make clear whether you mean insurance premiums or actual health care costs, which are related but affected by different forces.
As to insurance costs qua insurance costs, the CBO projects that the bill will not significantly raise premiums, in part because of the subsidies that will be provided, and in part because of the influx of healthy individuals into the system.
As to health care costs – which is the real problem here – the bill relies on a number of cost control pilot programs. The idea is that instead of dictating ideas from above, just about every good idea will be subsidized somewhere to see what works. Whatever can be shown to work will save money, and there will be no need to mandate it. It seemed like a pretty hoaky idea to me, but that Gawande article I linked to is pretty compelling, especially from him.
The real answer is nobody knows for sure. We’re all just guessing, but here’s what I think.
Forcing people to have insurance will lead to fewer emergency situations from preventable diseases. People don’t go to the doctor when they fell bad, because they don’t have insurance. If people scheduled doctor appointments for their upper respiratory infections, they wouldn’t get pneumonia and tie up a hospital bed and ambulance ride. This will help lower costs of medical care overall.
Healthy people don’t always get health insurance. Now they will. This will lower the average cost per person for insurance companies to provide benefits to.
Hospitals get paid for the services they provide. If you think a sick person without insurance who goes to the hospital for an emergency ends up getting “free” treatment because they never pay for it, you’re wrong. It’s not free. Hospitals just raise the price of treatment for people who CAN pay to make up the difference. This causes insurance companies to have to pay out more in benefits. When everyone has insurance, this phenomenon goes away and prices go down.
Personally, I think the insurance companies will see this as an opportunity to simply increase their profit margin without raising prices. If you think about it, this health care reform is an insurance company’s wet dream. The government is FORCING people to buy their service, and there are no new significant insurance price controls in the proposed legislation. If the insurance company’s profit margin was regulated in the same way things like utility companies are, we’d certainly see a decrease in health care costs. Instead I predict we’ll see no change at all.
It seems the only reason for prices to go down would be through the kindness of the insurance companies hearts. We’ve granted them more customers in hopes they’ll throw us a bone and lower costs. Kinda like that time we gave banks a bunch of money and hoped they’d all use that as incentive to lone out more money
The bills didn’t do much of anything to actually regulate costs. I hear they can only charge 3 times as much to less desirable customers. I guess costs for those people may see a decrease from 10x or no will longer be denied coverage.
Just curious, but does the bill specify the minimum level of coverage/deductible a person is required to buy? If it doesn’t, then I can easily see some enterprising health insurance company coming out with a very high deductible plan (say $500,000 or so) that happens to cost less than the fine for not being covered. If the bill does have a plug for this loop hole, what happens to be the minimum level of coverage a person can buy and still be covered.
The house bill includes a tax of 2.5% of adjusted gross inceom; the senate bill has penalties starting low in 2014 but rising to 2% of AGI from 2016. Both have exemptions for people who can show financial hardship.
“The bill?” There are two of them - House and Senate versions. Both include the fact that there will be a minimum package of benefits that the insurance company must offer. The federal government will specify what these benefits are, but that is still to be defined.
Or competition. People seem to think that there is no competition and insurance companies are free to set whatever rates at whatever profit margin they like. Nonsense.
I have made health insurance purchasing decisions on behalf of my company and price-competition definitely comes into play. It is also possible to negotiate with the companies and show them that their competitors are offering better deals. We shaved 1.5% off our rates with our incumbent provider this year after shopping around. It’s not much, but it helps. I just wish we could have included out-of-state providers on our list.
There is an issue, of course, that individuals do not have the same purchasing power. Both House and Senate bills include the setting up of insurance markeplaces that will allow individuals to shop for coverage and compare prices and benefits.
The insurance companies do currently enjoy protecton from antitrust legislation. The House bill would remove that; the Senate bill would not. Go House!
Total healthcare costs will only go up, unless something else (very specific rationing, e.g.) brings them down.
More people covered means more total cost; it’s really that simple.
Who is going to pay that cost? No matter what anyone tells you, no-one can accurately predict that. There is no chance that the assorted efforts of hundreds of inputters will result in predictable consequences. It’s never happened before and it won’t happen now.
I am of the opinion that people with good coverage now will find themselves with poorer and/or more expensive coverage; people with poor coverage will find themselves with better coverage; and there will be a tax increase (or pulling some current tax benefit, which amounts to the same thing) to pay for the difference between total healthcare costs now and total healthcare costs under the new legislation.
It has that effect because the insurance company also knows what the result will be on the individual side. The purpose of the individual mandate is make it so the individual cannot choose to not buy insurance, if not buying insurance is the smartest, most beneficial option available. This means the insurer no longer has to provide a service better than no insurance at all if they want customers, they just have to provide a service marginally less bad than getting screwed for $900 by the government.
It’s the whole reason that that the concept of unconscionable conduct exists: if you’re at a disadvantage, and they know you’re at a disadvantage, they’re not going to offer you a fair deal.
What possible factors could control costs? Insurance firms already had the profit motive to keep costs down before, and prices kept rising (presumably because people really want good medicine and get pissed when you “ration” it.) Now with this reform they have increased market power in the form of a requirement to purchase their goods. And somewhat innovative firms like low-cost catastrophic insurers are being forced out of the market, leading to stagnation.
Forget healthcare, imagine that Congress had a “Universal Shoes Coverage” program that forced everyone to buy either Nikes or Reeboks, subsidizing the poor’s purchase of said shoes while fining people who prefer sandals. Will the price of shoes rise or fall?
The insurance companies have been able to dictate the prices for many years. There are no downward price pressures. Hopefully the new bill will give you a public option. Then prices would drop while the insurance companies would spend billions trying to get it hamstrung . They would start bribing congressmen and senators to push bills through to kill competition. They may have already succeeded if reconciliation drops the public option.
There is more than one insurance company. Of course many are of the mind that all businesses collude. Most of those same people think that the government is made up (from elected politicians to the lowliest employee) of competent and efficient people who only have the best interest of all the people at heart.
I’ll grant you that it would make sense for an insurance company to offer a $900 policy that provides a small benefit.
I still don’t understand why my policy that currently costs about $6000 will automatically go up by $900
When I first started my business our entire group consisted only of a few young men. We were able to choose from a number of $0 deductible PPOs with copays of $5-20 for just under $200 a month for singles, which we all were. As we added old people with their chronic diseases and women of child bearing age with their expensive child birth hospital visits, our premiums went up significantly every year we had to renew.
We got cheap premiums because once the carriers had underwritten us they realized we’d be a cheap group to insure. They didn`t try to gouge us anyway because they knew my agent had gotten me 3 other quotes who all offered essentially the same coverage.
So with these bills you have millions more people, many of whom are very healthy and cheap to cover, all getting insurance. You also create a national insurance marketplace so instead of getting 4 quotes you can get even more and much easier.
I can’t say for sure insurance costs will go down overall but saying there’s no incentive for them to drop seems deliberately obtuse.
One thing I’m curious about is the break down of the uninsured. How many are young and healthy and don’t see the value in insurance and how many are chronically ill and currently uninsurable? I’d really like to see data on it but I imagine that substantially more are young and healthy. My perception has been that as much as it’s a problem to let our sick go uninsured and untreated or treated very expensively at emergency rooms, it’s a problem on the margin and we’re not talking about insuring 30,000,000 sick people.
Issues - Center for American Progress Obama said 14,000 people lose health insurance every day. They are from all walks of life. they include spouses, and children.
There are roughly 46 million people without health insurance in the US. About 18 million of those are under the age of 34. (Cite - pdf). About 10 million are non-US citizens (cite - pdf again).