Friday, November 11, 2016

Republican Healthcare Insurance Proposals Mired in Obamacare Expectations

I've been following some of the commentary on Republican proposals for replacing Obamacare.

Seems Republicans and President-elect Trump want to keep the popular portions of Obamacare. Inability to be excluded for preexisting conditions and kids staying on their parents' plans until age 26 being two of them.

Some are saying the money problem with preexisting conditions is that people don't have to buy insurance until they are sick. The fix is supposedly to require that people have ongoing insurance if they get to keep being covered. Thus, you force people to pay for insurance when they are well if they want it when they are sick (the usual carrot for buying any kind of insurance) ever onward.

But, how that differs from the pre-Obamacare model of not being accepted if you have a preexisting condition is a question. If you already had healthcare insurance then you would already have been accepted before getting your condition. So preexisting condition would not be an issue. (However, the change would help those who were dumped when a serious health condition came on or for those who had a preexisting condition as children before ever getting their own health insurance.)

More importantly, the individual market is not presently a big generator of health insurance premiums. Only 7% of people currently covered do it through the individual market. The elephant in the room is employer coverage. That amounts to 49% of the coverage given.

It's hard to find apples to apples statistics, but Kaiser Foundation research shows that the average individual employer covered plan cost $6,251 per year in 2015. By contrast the 2015 average "second lowest cost silver plan" for "a 40 Year Old Non-Smoker Making $30,000 / Year" before subsidies was $3,192. So, employers pay about double the average rate as individuals for an individual policy. That would make employer covered policies the biggest income producer for health insurance companies.

So, the employer mandate requiring companies to cover their employees is much more important for health care insurance providers than the individual mandate requiring individuals to buy insurance. This is both in terms of the premiums paid (about double) and the number of policies issued (about 7x more).

Obamacare's nice benefits cost money. So, if we're going to keep requiring health care insurance companies to provide them, we can't expect health insurance costs to go down. Or at least not without insurance companies being forced to pull out of markets or go bankrupt.

Full service healthcare for everyone is a wonderful goal. But, it costs lots of money. And when people don't directly see how much a service costs and have a stake in paying that cost, non-essential services will be recommended and accepted just because they're available at little or no extra cost. Similarly, high cost peripherals will be used because they are as readily available as lower cost options. In almost every other area of life (food, clothing, transportation, education, recreation, technology) you choose the level you want and pay for the level you choose. But, if the "Virgin Mobile paylo healthcare plan" costs about the same as the "iPhone healthcare plan", who wouldn't choose the iPhone version?

There needs to be a clear incentive for the individual to cut medical costs to services and supplies that are important or essential. Until then we're fooling ourselves about this plan being substantially better than that plan. Right now the Republicans do not have a plan significantly different than Obamacare.


MAX Redline said...

kids staying on their parents' plans until age 26

From what I've seen, Trump wants to drop that part, which makes sense: Obamacare was predicated on the fact that young and healthy folks would subsidize the others, so why let them out until age 26 (age 27, actually)?

You're right about the employer mandate being the greater moneymaker than the individual mandate - and providers aren't dropping out of employer-covered policies, just those were they had a lot of individual policies.

One key reason why non-essential tests and other services are performed has to do with malpractice laws. Naturally, the providers cover all of the bases, even those deemed unneeded, to avoid litigation. That needs to be addressed, but as yet hasn't been.

OregonGuy said...

What would happen to pricing if your home insurance, or auto insurance, was provided by your employer?

T. D. said...

OG, yes, and you and they would get tax breaks for it not being part of your income.

"If an employer pays the cost of an accident or health insurance plan for his/her employees, including an employee’s spouse and dependents, the employer’s payments are not wages and are not subject to Social Security, Medicare, and FUTA taxes, or federal income tax withholding. Generally, this exclusion also applies to qualified long-term care insurance contracts. However, the cost of health insurance benefits must be included in the wages of S corporation employees who own more than two percent of the S corporation (two percent shareholders)."

Max, apparently Trump is open to retaining the 26 year old provision.

"Trump said that after meeting Thursday with President Obama that he is contemplating maintaining Obamacare's ban on insurers excluding people with pre-existing conditions and the provision that lets people stay on their parents' health plans until they are 26, Trump told the Wall Street Journal.

"'I told him I will look at his suggestions, and out of respect, I will do that,' he said in his first interview as president-elect."

And, thank you for adding the part about malpractice suits. Certainly, that is important and needs to be addressed.

I've just noticed how much "service" is built into my medical care. They want me to come in every year. I want to go in when I have a problem. They are concerned about issues I'm not concerned about. My view: dying of something is better than going senile and withering away.

MAX Redline said...

Yes, TD - after I left that note, I read where Trump was adamant about keeping pre-existing conditions but was less so about the 26 year-old part, saying that he would look into that. Previously, he'd said that the latter was out.

I've just noticed how much "service" is built into my medical care. They want me to come in every year. I want to go in when I have a problem. They are concerned about issues I'm not concerned about.

Yes, I've noticed that same thing. And a lot of it seems based on age; the older you get, the more often they want to see you (and get those co-pays). My answer for the most part is "thanks, but no".

Last time I was in, the doc wanted to have me get a PSA test. Well, the CDC doesn't recommend those any longer because of all of the false positives generated. So once again, it was "thanks, but no.".

T. D. said...

I stretch out my appointments except for those specialties monitoring issues I too think might get serious. But, not as well as you. I still end up going about every 1-1/2 to 2 years.

Interesting that though I pay entirely for my dental, I go every six months just for the teeth cleaning. But, I'm willing to pay for that and it's well worth the service. But, for medical care, except for co-pays (which are fairly low on my plan so the time is worth more than the money) I pay big bucks every month no matter what I do. Which is why I think most people do whatever is suggested.

It also bothers me that they charge so much (and recoup so little). My mom broke her hip last year. The emergency room, partial hip replacement and rehab center all cost $250 out of pocket. The total billed was about $80K, but only $26K was paid by her plan. Something is very wrong when billing is 3x more than what is actually paid. Either their billing includes extreme gouging or they're going to go broke soon.

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