Yep, I likewise agree that subsidies should be separated out from whatever form of healthcare we have, to keep things transparent. But I’m not sure exactly which reforms you are favoring. Testing the efficacy of various treatments is a public good and I’d be on board with the government funding it, just like it funds lots of basic science. But that’s not a way to bring down costs for the government plan; it’s information that all insurers and doctors will have access to. So what competitive advantage do you see the public plan having?
What would be a fair settlement for a kid who a doctor screwed up in birth and will live a lifetime retarded and needing care?
Overcharging is what the insurance companies do. You pay a lifetime of fees and then get booted when the tables indicate you may in theory cost them money. You pay way too much. that is why our system is so expensive. Then when you might actually need coverage, you are booted. We charge the most and cover the least.
You know, I would have no problem with rolling a few more jingles down to Uncle Sam to see that more Americans have healthcare. (I have a couple friends and know the children of friends who are serving overseas. When these people risk their lives and sacrifice years away from home and family for our country, I’m not going to complain if my taxes go up a couple points, provided it makes sense.) The problem is, as **Shodan **and others here have pointed out, that simply raising taxes is not enough (you’d have to tax the rich ‘til they become the poor to pay for it all). It seems to me that there are aspects to President Obama’s plan that are about reducing costs in other ways. The idea that the only way to pay for stuff is to raise taxes or deny procedures/coverage, that doesn’t make sense to me. There are lots of other ways, many mentioned in this thread, to save money.
Wait, **Voyager **said it better here:
I guess the point I was trying to ask about here is not about the public option, but about the idea that asking Americans (especially young, healthy ones) to voluntarily join this public option would make the public option more financially self-reliant, mebbe even to the point that it could pay for itself out of premiums paid by the covered. Is that possible, anybody think? ‘Cause if we could avoid making people pay for a program they don’t believe in…
It has always seemed to me to be problematic to link healthcare to employment to the extent that we have, for a couple of reasons. Again, y’all correct me where I’m wrong. We want to encourage business, right? But already, businesses that are too small to provide healthcare are at an immediate disadvantage in competing for good employees, and, if the only way most people can possibly get insurance is through working for a big enough company, doesn’t that limit their employment options? Also, how many people would start a business or do non-traditional work if only they didn’t have to choose a job with health insurance? And, sure, business get tax write-offs (which still sort of cost the government money, only because they never collect it rather than collect it and spend it), but these companies also have to pay HR employees to deal with the insurance (that they also have to pay for). This might not be a big deal for a giant corporation, who can afford well-trained and educated people to do this kind of job, but in smallish-to-middling companies, you’ve got mebbe one or two, $9.00 an hour employees who are sometimes ill-equipped to resolve problems with the company’s health insurance.
So, if there was this public option, maybe more people could start businesses. Maybe big companies could spend a little more on research and development or marketing or what have you. Maybe people who have sick relatives or young children could do freelance work from home, saving money on childcare or avoiding having to put Moms or Pops in a nursing home.
Oh, here’s Voyager, once again, saying it better than me:
All of these ideas are very helpful to me as I begin to try to understand healthcare issues. (I’m not even beginning to grasp the issue of “rationing” or the ones related to malpractice yet. Damn, this stuff is complicated.) Also, please forgive me for mostly restating ideas that other people have already said, but it helps me understand better and gives y’all the chance to correct me if I’m wrong, which I also appreciate.
Thank you all for being willing to revisit this issue.
It doesn’t need to be that complicated. We just move the malpractice insurance over to a single payer model. 
Hi, hunny! mwuh mwump
When did you get home?
Then why do people do business with them? If their product (increased predictability of expenses) is not worth the price (higher average expenditure), willingly buying their product means deliberately making yourself worse off. Either other people disagree with you, or their stupidity is their own problem.
Because hope springs eternal that maybe this time, with this insurance comapany, they will get a fair shake.
“You fucked up; you trusted us!”
Are you asking why people buy health insurance if there are these kind of problems?
Seriously?
All the companies charge more every year. They all fight to keep from paying. You really do not have a choice. Your employee makes a contract that covers all the employees. Then you go to battle if you or someone in your family gets sick.
I love it when people talk about if you have a lot of companies they will compete. They will offer more services and cut prices. But that is in cartoonland. In America they will price fix, collude and cheat.
This seems like a good point to me, and it’s something I’ve thought a lot about. It seems to me that free-market competition makes sense on the simplest level of, say, goods and non-essential, personal services. In such an environment, if you invent a new and improved mousetrap, say, build a business making a selling these mousetraps with good customer service at a reasonable price, you will sell lots o mousetraps. As people who buy and use the traps find them to be nifty, and get the word out, your business grows and you can even charge less for each trap, 'cause you’re selling more and able to buy raw materials in bulk and therefore cheaper. And, here’s the relevant part: if you decide to save money by switching to inferior materials, and people start getting hurt trying to set your traps because they’re defective, and then you compound the problem by telling these folks they can’t get a refund unless the fill out this special, complicated refund request in five languages and get it certified by notary public or a noted republican or a nosy rotarian or what have you, then, guess what? The free market is going to kick your ass. 'Cause there’s 97 other kinds of mousetraps out there (including cheaper versions of yours), and there’s eleventy-billion vendors on the street and the internet that your customers can by them from.
But the world has grown more complicated, and insurance is more complicated than mousetraps, and healthcare insurance and making medical decisions more complicated still. How can an average consumer, even one who can afford private healthcare and can get it, who is mistreated by a company who is playing these games simply say, “I’m going to go out and find a better health insurance company!” If the only way you can get it is through your job, and you can’t convince your company to change plans (betcha you can’t, at least not just for you), and you can’t afford private insurance, and besides, you don’t really know if the next insurance company is going to pull the same ol’ crap anyway, how is that really free market? So the amazing beauty and power of the free market tends to break down on this level.
Make sense?
I don’t think you want to compare health insurance to auto insurance.
Imagine if auto insurance had no deductible, and the insurance companies weren’t allowed to raise your rates if you filed claims. Think about what that would do to the number of claims being filed. Think about how much paperwork the auto companies would be forced to deal with, and how many regulations they’d have to put on auto suppliers about docomenting work to make sure bills weren’t being padded and fraud taking place. It would be a disaster.
That’s what health insurance is like right now. Friedman is exactly right - any time you put a third party in the middle of a transaction, you distort incentives, hide information, and generally mess things up.
The solution:
-
Remove the tax subsidy for employee health care programs, to put everyone on a level playing field.
-
The government offers catastrophic universal care. No one will die or go bankrupt because they need a heart transplant or long-term dialysis.
-
Offer a deductible that varies with income. Try to set the tax increase so that utility remains close to the same across income groups (i.e. a person making $20,000 might only have a $200 deductible. A person making $200,000 might have a deductible of $40,000. The level of pain should be about the same.
-
Employers can now offer gap insurance to employees to cover the deductible. Such insurance would be much cheaper, because the insurance companies liabilities are strictly capped at whatever the size of the deductible is. This also means that gap insurance for low-income workers would be much cheaper, making it equally affordable for all.
This system keeps incentives - for 80% of health care, the transaction is between the health provider and the patient. The patient is spending his own money, and the health provider doesn’t have to justify the bills to anyone but the customer. Gap insurance muddies this a bit, but in general gap insurance is much less intrusive. It’s like those insurance plans you can get that pay out $1000 if you lose a finger or something. That stuff is dirt cheap, and simple to administrate.
The revenue gained from taxing employer health plans goes into paying for the catastrophic insurance. The extra cost to business is offset by the much cheaper cost of gap insurance for their employees, or no insurance at all.
There’s a further benefit: One of the major problems with private health care is information asymmetry. Health providers take on huge risks when giving out insurance, but they don’t know as much about the health of the client as the client does. So there’s an added risk premium, which makes insurance a bad deal for healthy people. So they drop out, and the risk pool gets even riskier, and premiums go up even more. It’s a ‘lemon market’.
Universal catastrophic coverage solves this problem. The risk cost of gap insurance is much lower because the maximum risk is known and capped. As a result, the insurers charge a much smaller risk premium, and a lemon market shouldn’t form. It will look more like auto insurance. I imagine a lot of the gap insurance might just take the form of a lowering of your deductible. If you catastrophic coverage starts at $10,000, you might get gap insurance for it - but with its own deductible of $1000, or $500 for a higher premium, etc. You’ll be able to choose your own comfort level and save money, and you’ll benefit from saving your own money so that you can buy insurance with higher deductibles.
Anyway, the incentive changes are good in pretty much every direction.
Ah, but health insurance does have a deductible already - often 10% of the bill or a co-pay. Smaller than auto, but interactions are more frequent.
Auto insurance companies raise rates when there is an indication that the driver is at greater risk because of his own actions. Health insurers raise rates for smokers for the same reason. Things that happen through no fault of your own should not cause an increase. When I was in grad school a drunk hit my car. It was parked off the street, and I was 800 miles away at the time. My rates went down.
The last time I dealt with my auto insurance, they had a limited number of body shops to which I could take my car, and adjusters who checked what was needed. They did get an electronic version of the bill of work, and had rates set for repairs, just like health insurance. This is all due to the large amount of fraud that used to happen (and still does for all I know.) The volume of auto work is smaller, and the range of costs is smaller (no $100 charges, but no $50K charges either.) So, I’m not sure what your point is. Perhaps Canadians never have cheated on their insurers, so you guys never had to worry about this. And it isn’t a disaster. It looks like the average body shop is better connected to the insurance company than the small doctor’s office.
I was unaware that Friedman was against insurance in principle - since any insurer is going to get between the provider and the client. No way around that.
Lots of insurances offer once a year deductibles today - though preventative care is always covered. I’m not sure how you’d set yours to be either not great enough to discourage people from getting needed care and not low enough to be useless.
I wonder how much of an insurance company’s payout is from catastrophic events as opposed to tests, visits, and small in-office surgery.
But the real lack in your plan is the structural improvements we need to cut costs. Once you get over the hump of the gap we’re in the same place we are today. If a person has a kidney stone, he is going to the doctor no matter what his deductible status is. How do we convince the doctor to give him the cheaper and less profitable treatment? The patient is not going to be educated enough to make this decision, and the insurance company isn’t doing it now, and won’t in your plan either. There is nothing in your plan that will prevent the very expensive last week of life treatment we see today.
Getting people to call the advice nurse instead of going in to see the doctor for every sniffle is great, but it isn’t going to solve the problem.
I covered most of this already. Insurers don’t have an incentive to not pay for useless treatment today - perhaps because customers want it, perhaps because they are afraid the regulators will get after them. If the public plan does it, we can see if it really cuts costs. The public plan might have a big enough base, including the uninsured, to be more cost effective. Requiring all people to buy insurance puts the healthy ones back in the rate base. Private insurers can’t force people to buy insurance. Most health insurers are pretty much the same - besides the forms changing, I didn’t see a lot of difference when I got switched. Bringing a public plan in with a very different perspective might increase competition a lot. The outcome I’d most like to see is a good balance between public and private with better efficiency and reduced costs over what we have today. Now we need the public option to light a fire under the private insurers, but we will no doubt need a private option to light a fire under the public one.
Thanks for the kind words. For the healthy, you don’t ask, you tell. On average a young person is going to pay more into a plan than he gets out. It is obviously to his advantage to keep from joining until he gets old enough to make the expected value out greater than the cost, with some risk premium. But this clearly raises the costs for those who need the care - including the person himself when he gets older. So, making him pay now reduces his cost later. The young person isn’t being evil. This is yet another case where regulation is needed because locally optimizing decisions hurts everyone in the long run.
Rationing is very simple. If there is more demand for healthcare than money to pay for it or doctors to provide it, something has to give. In my understanding, in countries with government run health care priorities are set so that those who really need the care get in ahead of elective care. Here, people like me with good insurance can see a doctor quickly about anything, and the rationing happens by discouraging those without insurance or with bad insurance from seeing a doctor unless the need is very urgent. It really wouldn’t have killed me to wait an extra month to see a doctor about my bunion, and I would be happy to do so if some kid gets in faster. A lot of conservative plans would ration by making it costly for people to get non-catastrophic basic care, which will reduce usage. Not for the rich, of course. So, the question is whether we ration based on medical need or money?
Yes, seriously. Either buying insurance makes you better off or buying insurance makes you worse off. Neither option explains why you need to force us to subsidise your cover, because you’re either going fine without our help, or you’re trying to drag us into your stupid decisions.
You’ve got your logic backwards - the young person is only “rais[ing] the cost for those who need the care” in the same sense that someone is committing robbery by not falling for a 419 scam. Just because you think insurance is good does not mean anyone else is obligated to let themselves be ripped off to fund your cover.
Waitasecond, I thought the insurance companies were the ones obstructing people from getting reimbursed for their healthcare. I could see doctors having an incentive to push for expensive procedures, because they’ll get reimbursed. But an insurance company will take that as a loss, and will fight tooth and nail against having to pay for it. A public plan, without a profit motive, will be much worse at this.
It sounds like you’re invoking the “adverse selection” model: if you’re healthy, you don’t need insurance, so you stay out of the market, meaning it’s full of sick people that drives up rates. However, this paradigm appears notto be the case.
Basically, there is a good reason for young’uns to join up, and that is because insurers recognize that they’ll be easy to cover, and offer them lower rates as a result. The only time adverse selection is a problem is in a few states where insurance companies are forced to accept all comers at the same rate. In most states, if you’re a health hazard, then you’ll pay higher rates, just like a riskier driver pays more for auto insurance. There is market equilibrium, and no adverse selection.
Now, you can throw up your hands and say that that’s terribly unfair, and we should have the healthy should subsidize the sick. But as we agreed earlier, subsidies should be separated from systems. Adverse selection only happens when the government overregulates healthcare markets, and if we want to subsidize the sick we should leave that particular market alone, and give them money directly.
The healthy do subsidize the sick. That is the present system. They collect insurance fees and payout for those who are sick. They collect a hell of a lot more than they pay out. That is exactly what what is happening now. But when people get very expensive illnesses the company will refuse to pay and drop them.
Home - National Coalition on Health Care This article says in 2008 the employee cost for a family averaged 12,700 dollars a year. That is a huge price.