Romney is an ignoramus on health care...

Great Debates
21

Yeah, the idea that individuals could acquire insurance on the open market if only they got a federal income tax deduction for the premiums seems farfetched, especially when you consider that those that are uninsured tend to not pay very much in federal income tax anyway.

When you add in the desire to repeal the bans on pre-existing conditions I don’t see how the Romney proposal makes it more possible to change insurance providers than the Obamacare provisions do. I have to think that the Obamacare premium support subsidies will go much farther than a federal income tax deduction would, at least according to the numbers I’ve seen.

Also, unreimbursed medical expenses are already tax deductible, IIRC, once they exceed 7.5% of AGI, which I think would kick in pretty quickly for low-income filers. I think this number is raised in Obamacare, however (10% seems to ring a bell).

22

Does Romney propose forcing insurance companies to take people with pre-existing conditions? Because if he doesn’t, he is not really backing a plan where people have the freedom to move. Employer-based healthcare plans typically prevent insurers from canceling coverage, and give coverage to new employees even with pre-existing conditions.
Second, a bulk purchaser of insurance is always going to be able to do better than a single purchaser, assuming best effort. You don’t need a PhD in economics to figure that out.

it seems that most of the expectation of savings on individual healthcare is supposed to be from the consumer with a gunshot wound shopping around for the cheapest emergency room, and from people not wasting money on checkups and cancer treatments and stuff.

23

But Republicans inherently must start by denying that premise, because accepting it inevitably leads you to a single-payer system.

24

What sounds awful? This: “Absolutely nothing will change for those who like their current coverage.”

25

Not necessarily - it could also lead you to a free-market-based exchange, with an individual mandate and rules against exclusion based on pre-existing conditions. Couple that with generous subsidies for low-income families and you could achieve universal coverage in a market-based private system.

I wonder if anybody has ever tried that kind of plan at the state level?

26

That’s good as far as it goes, but it still has a great many relatively small groups doing the negotiating. If it’s cheaper for a larger group to negotiate, then the end result is the largest group of all, consisting of everyone, to negotiate as a bloc.

27

Unless there are very stern provisions to prevent insurance companies from discriminating on the basis of pre-existing conditions, free market solutions like Romney’s will be a disaster. (And, of course, the only way you can keep health insurance affordable in that case is some sort of mandate so that the healthy pay into the system too, rather than just going without and becoming free-riders if they do end up needing expensive medical care.)

When I was in grad school, the health insurance we had through the university only covered up to $20,000. Some of the grad students got together and had the insurance company come in and offer a policy on an individual basis with a $20,000 deductible that would cover up to $1 million. When I talked to the insurance guy and it came out that I had had kidney stones, he said that would be excluded as a pre-existing condition. Then, he asked, “Just once, right?” and I said that, no, I had had 2 or 3 events. He looked up in his big book and said I was “NCA” (no coverage available)…All he could do is write me an accident-only policy!

I mean, it wasn’t even rational, given that a kidney stone is not likely to be something that is going to lead to medical bills over $20,000…but, here I was a young healthy male in my mid-20s and I couldn’t even get health insurance because I had had a few kidney stones.

That is one f-cked up “free market”!

28

Well, what you’re talking about is not insurance. If you brought your car in to be insured and the breaks light didn’t work, would you expect the insurance company to just ignore that and give you liability insurance?

29

There are several aspects to Obamacare. For one thing it tries to reduce long term medical costs via programs like medicare, it will start cutting medicare funding later this decade to stop long term medical inflation.

But as far as what you are asking, Obamacare sets up state wide insurance policy exchanges where insurers are required to cover applicants (you can’t be denied for a pre-existing condition). There is also a subsidy for buying private insurance based on income (I think it maxes out at about 45k income for a single and 80k for a family, the lower the income the higher the subisdy).

The theory is that by creating real competition (by having insurers forced to take all applicants, and by having insurers compete) this will drive down overhead costs and improve quality. I have no idea if it’ll work or not, I don’t think it reduced costs in MA.

30

Romney’s plan is that pre-existing conditions would be covered if the person had been covered previously covered by insurance for a significant amount of time.
If a bulk purchaser is always able to do better than a single purchaser in markets why do we not buy everything in bulk? I could save a significant amount of money if my employer had a deal with a developer to buy homes in bulk, or I could save on my food bills if my employer bought groceries in bulk. My employer could also buy fire, flood, life, and car insurance in bulk. Yet most employers only buy health insurance and a token amount of life insurance for their employees.
The price of automobile insurance seems to be much less than health insurance and that did not come about by people who just had accidents shopping around for the best price on tow trucks and body shops. It came through competition and efficiency. There is nothing about the market for health insurance that keep competition for customers from lowering the price of health insurance. An example is the price of Lasic eye surgery. Since it was introduced the cost has fallen almost 50% in nominal terms and the quality is better. This is because insurance does not cover the procedure and doctors have to compete on price. Safeway has kept the cost of its plan from rising by introducing plans which require employees to pay some of the costs of their care after 1,000 dollars.
Romney’s plan is to end the preferential tax treatment of employer plans which will allow users to shop around and to end the ban on inter-state purchase of health insurance which would allow low cost insurers to compete nationally. This enhanced competition will lower the cost of health insurance as competition has lowered the cost of all other goods.

31

So, a young person who plays the odds and chooses not to purchase insurance gets screwed if he suddenly gets sick? The mandate is to prevent this, and to also prevent the young person from gaming the system.

Never been to Costco, have you? You can save if you buy things in bulk. People with freezers buy half a cow and save tons. Restaurants buy in bulk, obviously. My employer buys coffee in bulk so we get it free. That an employer wishes to focus and not provide some things in bulk in no way disproves the principle.

My life insurance is more than token. However, if you are a member of a professional society, especially one in which some members are self-employed, you can usually get a better deal on group insurance than you can independently. IEEE has liability insurance for member conferences which they buy in bulk, and which is very expensive if bought separately.

Ever hear of AAA? Towing in bulk. And if you have a collision, your insurance company will direct you to a body shop with which it made a bulk purchase agreement.
There is a mandate for car insurance, which helps the price. What also helps is that cars have an upper bound on value. If we did health insurance so that we declared a patient as totaled if he required more than $100K of care, our health insurance costs would come way down. (No Mr. Romney, you may not steal that idea.)

It came through competition and efficiency. There is nothing about the market for health insurance that keep competition for customers from lowering the price of health insurance. An example is the price of Lasic eye surgery. Since it was introduced the cost has fallen almost 50% in nominal terms and the quality is better. This is because insurance does not cover the procedure and doctors have to compete on price. Safeway has kept the cost of its plan from rising by introducing plans which require employees to pay some of the costs of their care after 1,000 dollars.
Romney’s plan is to end the preferential tax treatment of employer plans which will allow users to shop around and to end the ban on inter-state purchase of health insurance which would allow low cost insurers to compete nationally. This enhanced competition will lower the cost of health insurance as competition has lowered the cost of all other goods.
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You can bring up plastic surgery also. Optional, non-emergency treatments for which people can shop around are good examples of things the market can regulate - and I’m not aware any mandated health care plan covers these. Nor should it. Treatment for e heart attack is slightly different.
You have not yet demonstrated that individuals would be able to beat the cost of mass company plans. (Most large companies are self-insured, which is always going to be cheaper.)
There are plenty of nationwide health insurance companies already. Since the basic cost of health insurance depends on expectation of use rates by the customers, and this is more accurate the more customers you have, small companies can never beat big companies as far as the base cost of care goes. As I mentioned, big companies buy doctor services in bulk through contracts. Small companies can’t beat this either. Small companies might be more efficient at first in terms of overhead, but because of their price disadvantage the big companies can stomp them at will. The fantasy of boutique health insurance companies beating the big boys is just that - a fantasy.
Plus, there are tons of people without employer paid health care today. Where are these companies? California is plenty big enough to support them, and they don’t exist. So the claim made in the title of this thread stands.
Actually, he isn’t an ignoramus - he is just playing one to appeal to the Republican base which is stupid and doesn’t get these complicated concepts.

32

The problem is that more and more employers are abandoning health care coverage. Around 1993 close to 75% of employers offered health insurance. By 2000 it was closer to 56%, now it is in the mid/high 40s. And the plans can be skimpier, they may only cover the employee rather than the employees entire family. Many people can’t get insurance now. Employers don’t offer it, and pre-existing conditions keep them out of private plans.

Not only that but if you have a small business with 30 employees and one develops a health condition that costs 400k a year to treat, the employers premiums can skyrocket and cause him to drop coverage. So there are tons of holes in the system. Most employers don’t offer coverage, and lots of small businesses can lose coverage if their employees develop a serious illness due to radical premium hikes.

Taiwan has a single payer system and also uses a lot of competition to drive up quality and drive down prices because if doctors can’t offer good service, nobody comes to them. And if they can’t make a profit on the reimbursement rates, they lose money. There is nothing about using competition to increase innovation and quality while decreasing cost that needs to be at odds with a single payer universal health care system. Other nations have found ways to implement competition into their universal systems.

Ending the ban on interstate health insurance purchases will lead to what happened with credit cards, all the companies will move to the 1 or 2 states that have the fewest consumer protections. That is why credit card companies are all in South Dakota and Delaware. The same will happen with health insurance, the insurers will find some ideologically friendly state, offer millions to the politicians if they pass a few laws friendly to their industry and then move their headquarters there. Then insurance truly will become just junk insurance for everyone.

The problem with that is that the inhumanity and frustration caused by our health care system will get worse, which may lead to even more rebound changes down the road.

33

I don’t believe my insurance agent has ever looked at my brake lights. I give him the VIN and some cash, he gives me insurance.

Laser eye surgery is an elastic demand. It’s a luxury good; the vast majority of folks can get along just fine with contacts and glasses. That’s why competition has lowered the price. Same for most cosmetic surgery.

The majority of major health care (heart attack, stroke, diabetes, liver cancer, what have you) is not. Your other choice is dying. That makes it much less responsive.

The two areas are not really comparable.

Let’s talk about this ‘consumer choice will lead to better, more informed decisions’ nonsense.

In general, I will agree with that idea. HOWEVER, that is not the case with insurance as it exists today in the US.

Don’t believe me? Try to get your standard insurance company to tell you how much a particular procedure will cost you. Go ahead, give it a try. You can’t do it. They will not tell you. The customer service reps don’t even have access to that information.

So, there’s no way in hell you’ll get any real info to compare plans with. About the only info you can get is for basic office visits and such that have standard copays.

Without that sort of information, you can not make an informed decision about what you’re purchasing.

As an example, say that one plan has a 20% coinsurance and another has a 15% coinsurance. In other words, the doc charges X amount, the insurance company agrees to X-Y amount as “appropriate” or “usual and customary” or however they want to word it. Then you pay 15% or 20% of that amount plus your deductible, and the insurance pays the rest.

But percentage of what? If the first plan is only allowing $500 for a procedure and the other plan is allowing $700 for the same procedure, the 15% copay will cost you more. Of course, that plan will probably have a better choice of providers, but good luck on getting that list either.

The only way to find out APPROXIMATELY how much you’ll pay is to have the doctor’s office do it - which means that you can’t price shop on doctors, either, because the doctors generally won’t tell you until you are in their office to schedule the procedure.

Why won’t the insurance company tell you? Because they negotiate different allowable amounts with different doctors, and they like to keep that quiet. Not just like to a little bit - they actually prohibit their contracted providers from giving out that information except to actual patients after the procedure has been approved.

If all the regular individual doctors found out how much they were paying those docs over there in the group practice that had more clout, they might get upset and gang up together to negotiate themselves better rates. It happened once. So the insurance companies do everything in their power to keep that information suppressed.

Yay for the free market and informed consumer choice!

34

Not only that, if their competitors found out it would guarantee that the competitors would never pay the doctors more than they do, and give them a great competitive advantage. When I was involved in negotiating software licenses I’d have loved to know what my competitors paid. Of course not only didn’t they tell me but this is the most proprietary of proprietary information, and it would be unethical (and maybe illegal) for me to try to find out.

35

Some things are bought in bulk and some things are not. There are disicentives to scale as well as incentives. The disenctive is things are not customizable and fraud is harder to monitor. If you want a different kind of coffee than your company buys you are SOL. If you want to buy a health insurance policy different than your company offers you can not. I am through having children but unless things change I will have a policy that covers pregnancy expenses until I qualify for Medicare. There is nothing unique about health insurance where buying in bulk leads to unique savings. You cite AAA and CostCo as examples but there is a reason CostCo is not the only store in America. If Ford, GM, Toyota, and Mercedes merged they could get great deals on parts and theoretically pass the savings on to the customer. Yet in practice whenever there is monopoly or monopsony service and price do not become better for the customer.
As has been pointed out, health care is one of the few retail services where they try to hide the price from you. The reason that they can do this is because the customer is not paying. I guarantee that the insurance company knows how much it is paying. If consumers were paying the doctors would have no choice but to reveal how much things cost and begin to compete on price.
When people pay no marginal cost usage goes up. I am old enough to remember when you paid for the internet by the hour and when long distance calling was only for special occasions. Paying the marginal cost led to people using the service less. The same is true for health care. In the definitive study of health care utilization the Rand corporation found that people used more health care when it was free and health outcomes were no better. The implication is that increasing marginal costs for the consumer will decrease money wasted on unnecessary health care.

36

The difference is that some of us feel that bad health should not doom you to a life of poverty and destitution. If you feel differently, that is your prerogative.

The main point is that bulk purchasing of insurance evens out the cost distribution. The problem with the insurance “free market” is that, left to its own devices, what you get are insurance companies who are willing to insure the healthy people but balk at insuring people who they think might actually get sick (or at the very least, charge them exorbitant rates). On the other side of things, those who think they are most likely to get sick are those who are most likely to buy insurance…and to buy the best policies, whereas those who think they are unlikely to are the ones who are likely to do without (and then end up “free riding” if they do have bad fortune).

“Free markets” are not some magical solution that always work for anything. Some of us think that markets should be considered as a very useful economic tool, but one that doesn’t work well for everything, not as a religion.

37

So are you talking about getting rid of the insurance industry entirely? Because that’s the only way for that to work.

38

What that study found was that among middle class, healthy people higher copays did reduce unneeded care. But among poor people and people with chronic diseases higher copays led to higher medical expenses because people avoided needed medical care for certain conditions. RAND recommended a mix of higher copays for some care with lower copays for other care. One thing they recommend is lowering the copay for statin cholesterol medication (which may not matter as much now since most are $4 a month).

http://www.rand.org/pubs/research_briefs/RB9174/index1.html

Also, medical care is not split evenly among the population. Statistics show roughly 50% of the population use 96% of health care spending, the other 50% use about 4%. On top of that, the sickest 20% use 80% of spending, the sickest 5% use about 50%, and the sickest 1% use nearly 20% of all spending. Medical care is like that, most people just need a few prescriptions, doctor visits and dental visits, while a handful of people need 300k in medical care in a given year. In a given year, about 15 million Americans use 1.3 trillion in health care dollars, the other 285 million or so use the other 1.3 trillion.

To get cost down you have to find a way to deal with chronic illnesses cheaply and effectively. There are pilot programs doing that and what they have found is the opposite, that more intensive and available care draws down cost. Studies in Chicago and New Jersey found more intensive visits by physicians, nurses, aides, etc. to the sickest and most expensive patients could cut their needed medical care costs down. Having a doctor or nurse visit someone who has several chronic illnesses and ensure they are sticking to their treatment regimin is cheaper than high copays since that means the patient will avoid filling prescriptions and keeping appointments.

So the concept of copays is kindof counterintuitive. If you are a well off middle class person with a not so serious illness that can be treated at home, a copay will result in less health care spending. If you are among the 5% who use up 50% of health care spending, copays will end up costing more because you will neglect your condition.

39

I can go out the door to a Starbucks and get coffee. I’ll pay more, of course.
You are quite right that things bought in bulk are not customizable - but customized things cost more. There is a difference between the chain that buys truckloads of meat and the gourmet restaurant where the chef personally picks the meat each day. I’m not saying bulk is always better - just that it is cheaper. Cheap is not always good.
As for fraud, the bulk seller has more to lose, and the purchaser can amortize quality checks over more products. If you buy a memory chip you hope it works. When we buy tens of thousands of memory chips, we can afford to monitor supplier quality and even, if we wish, tie into their databases to check serial numbers for counterfeits.

Sure - and the person of childbearing age is paying for the coverage of your (and my) greater chance of getting sick. Like you said, it is not customizable. And there is certainly nothing unique about health insurance and buying in bulk - it is just another example. BTW, I do have a choice - I can switch to an HMO. I believe in my new company I can turn down health insurance entirely and buy it outside. I don’t get the employer contribution, and I would pay a lot more.

I never claimed that buying in bulk scales infinitely. Remember,. Safeway buys in bulk also. The corner grocer did not, and the corner grocer is gone. There was a recent book on A&P - it became one of the biggest companies in America by good inventory management and buying in bulk, unlike its competitors. The competitors got wiped out.

Why the customer does not know this is already covered. Actually, my statements say how much the list price is and what the insurance company paid and what I have to pay. I don’t believe a word of it. And, as mentioned also, you don’t know which services you are going to purchase, so there is no way of making a good decision.

We will always pay through insurance companies, not directly, by the way. I trust I don’t have to say why insurance makes sense for healthcare.

I see Wesley covered this. We have a large population now, getting bigger all the time, who has to pay directly for care. I’m eagerly awaiting the results showing how well this is working for them.
I remember paying for service also. If we still did that, usage might be down, but do you think we would have Amazon and EBay? People see really big cost savings from unlimited internet availability, as you are easily able to find the lowest cost supplier. You think we’d have a better economy with expensive internet connections?
Ditto phones. When I was in college I spoke to my parents once a week. Today my kids are in NJ and Germany, and we get to be a lot more a part of their lives than my parents were in mine due to free long distance through our cell phones and Skype. That, and free internet, allowed my daughter and me to write papers together and collaborate on a class we teach together. Reduced usage is not better.
Plus, since my doctor visits are effectively free, when I got rejected from donating blood I went to my doctor, though I was 99% sure it was just too much Mountain Dew for lunch. I was wrong - I had atrial fibrillation, and if I had ignored it to save money I could easily be dead today, or at the least cost the system a ton for treating a heart attack. So I’m not a big fan of reduced access to health care.

40

For all of you thinking that cobra is the be all and end all of insurance protection for employees changing jobs I give you the actual experience of my daughter. She left one job on Friday and started her new job on Monday. Her corbra payment for the transitional 30 days was $1700 for her and her healthy 1 year old child. Any of you, except for Bricker who thought this was cheap, think this is an acceptable price for basic health insurance? How about those who don’t start a new job in two days? Cobra payments of $1700 a month for months while looking for a new job??