HHS has unwrapped its latest “Holiday” gift to the public – a spiffy new regulation in which HHS confirms, once again, its intention to ignore the rising cost of medical care in the United States.
Instead, HHS will require that health insurance companies “disclose and justify any rate increases of 10 percent or more.” The New York Times further notes, “The proposed rule represents a major expansion of federal authority in an area long regulated by states.”
For several reasons, I think the bigger picture is - this is good news. Because HHS has once again underestimated the intelligence of the American public.
First of all, the immediate effect will be to increase the cost of insurance, not reduce it. HHS will spend more money regulating, and the industry will spend more money responding to regulation. There will be few meaningful premium reductions - on the contrary, premium increases will be larger. (More about this below). You will pay for these higher costs thru your taxes, thru lower wages, thru the prices of products you buy, and of course thru your insurance premiums. Only Washington DC claims to save money for the taxpayers by forcing them to bear more cost. And isn't it always "for the taxpayers"? (Probably the same principle at work here as last year’s splendid federal insight that PPACA reduces the cost of medical insurance in part by taxing insurers an additional $60 billion annually.)
Anyway, here is a CORRECT insight: the rising cost of medical care explains almost 100% of rising medical insurance premiums. Check the numbers here, in Table 12, Lines 1 and 2. The increase to premiums year over year, and over many years, tracks exactly with the increase in the cost of medical benefits paid. That’s a fact.
The public does not understand this fact; mainly, I think, because the media have chosen to hide it; and the political classes pretend they don’t know about it.
However . . . the rate reviews now required by HHS will generate a great deal of public discussion that will be centered on this fact. Public discussion means no more hiding of the fact, no more pretending it doesn't exist, no more excuses not to know it.
In this way, the public will discover the correct insight that the underlying problem is the high and rising cost of medical care in the United States.
This correct insight won’t be easy to ignore, because there will be rate hearings every month, perhaps every week. Why? Because almost every insurance rate increase for every company will be higher than 10%. Why is that? Because the current trend in the cost of medical benefits paid is about 9%. And, as Table 12 linked above shows, insurance premiums follow the medical costs.
If the rate for 2011 is $100, one might expect that the rate for 2012 will be $109. And maybe it will be. But premiums are based on the actual medical benefits paid by the policies. If actual benefits paid exceed the estimated costs, the following year’s premiums will have to increase more than the base trend. Remember employers have found that PPACA will increase their 2011 medical benefit costs by 2% to 4% - - despite HHS hysterical blustering to the contrary. So the base trend rate will be higher than 9% meaning that for 2011, 2012 and on into the future, premium increases of 10% and more are likely to be common.
And, btw, incessant rate hearings will also remind people in every state what a fraud the government has perpetrated in claiming to have "reformed" health care. All the government has done is attempt to slap price controls on insurance. That does not come close to reforming the delivery of medical care so that it will cost less.
I am not talking about reducing the incomes of physicians. I think physicians earn their incomes. I'm talking about changes in the delivery system that will reduce their COSTS, so they can reduce their fees and still maintain their incomes. I’m talking about changes in the delivery system that will relieve hospitals of some of their COSTS, so their charges don’t need to be so high.
I’m also not talking about subsidizing insurance. All insurance subsidies do is pour oceans more money into a system that has not shown the will or the ability to restrain its own costs. That is no solution. In fact subsidizing costs makes the cost problem worse. It’s running thru Hell in gasoline pants. Unfortunately, it’s all our government has shown that it knows how to do.
Most other developed countries, and many developing countries, deliver medical care of comparable quality to the U.S. at substantially less cost. We need to understand as a nation how they do this, and a national debate will help meet this need. The rate reviews required by HHS will, I think stimulate just this sort of national debate. That is clearly not the outcome HHS expects. To which I say, good !
So, yes, please - - it's high time the public begins to understand that our insurance is expensive because medical care is expensive; and that our insurance premiums are rising because the cost of medical care is rising.
The cost of medical care is the problem that must be addressed. HHS is not doing it.
So I say, let the rate reviews and the debates begin. And I say, the sooner the better.
Thursday, December 23, 2010
Shecantbeserious and the Uncertainty Bubble [UPDATED]
UPDATE: Definitely see Mike's more in-depth analysis of this idiocy.
Apparently, she just can't help herself: ObamaCare© applies to everyone, except it doesn't. Then the doc fix is in, except it isn't. ObamaCare© will insure millions of children, except it won't.
And the list goes on.
The newest twist is the (potentially illegal) usurpation by the Fed's of states' rights to regulate health insurance. In a blatant move to wrest those powers, without any apparent statutory justification, HHS Secretary Shecantbeserious has set her sights on rate increases:
"In a new HHS regulation ... if a health insurance company’s “proposed rate increase equals or exceeds a defined threshold, it would be considered ‘subject to review.’ The review process would then determine if the increase is, in fact, unreasonable.”
That threshold, by the way, is 10%.
Are you kidding me?
Here's the problem: by assigning an apparently arbitrary ceiling on costs over which insurers have little (if any) control, coupled with the draconian MLRs (medical loss ratios), insurers are hobbled. If they raise rates to cover costs, they face expensive regulatory battles. By law, they can't just "eat" the expenses, so they'll seek the path of least resistance: phased plan withdrawal. What will that look like? Well, come 2014, they won't be able to decline applicants for health issues. But for the next three years, you're going to see underwriters with guns pointed squarely at their heads, the result of which will be that marginally healthy folks will be declined or offered extremely unattractive rates.
Why is that?
Simple: if carriers know that they can't count on making up the difference next year, they'll impose them beforehand. The result: fewer folks insured, paying more premiums for less service (hey, those home office CSR's are cost centers, not revenue producers).
Way to go, Kathy!
MVNHS©: Achoo!
It seems that the Much Vaunted National Health System© is woefully unprepared for the massive outbreak of flu currently sweeping The Empire (exacerbated, no doubt, by the feet, er, meters of global warming piling up on its roadways and runways):
"The NHS Direct helpline is at ‘breaking point’ as parts of Britain experience the worst flu outbreak in a decade.
Patients calling the service are being forced to wait up to two days before they can speak to a nurse, and managers have launched an emergency recruitment drive."
Interestingly, the Service is itself digging deep, shoveling out almost $300 an hour to doc's in the most brutally-affected regions. That's interesting because it means that the doc's understand their own value to The System, and that System has no choice but to comply.
One wonders if there isn't a larger lesson here.
On the other hand, it's hard to know which is scarier: that the Brits are experiencing the "worst flu outbreak in a decade" on the one hand, while on the other "ministers and leading doctors insist the outbreak is ‘no worse than usual."
Cognitive dissonance: (apparently) not just a theory.
Wonder if that's a covered condition.
"The NHS Direct helpline is at ‘breaking point’ as parts of Britain experience the worst flu outbreak in a decade.
Patients calling the service are being forced to wait up to two days before they can speak to a nurse, and managers have launched an emergency recruitment drive."
Interestingly, the Service is itself digging deep, shoveling out almost $300 an hour to doc's in the most brutally-affected regions. That's interesting because it means that the doc's understand their own value to The System, and that System has no choice but to comply.
One wonders if there isn't a larger lesson here.
On the other hand, it's hard to know which is scarier: that the Brits are experiencing the "worst flu outbreak in a decade" on the one hand, while on the other "ministers and leading doctors insist the outbreak is ‘no worse than usual."
Cognitive dissonance: (apparently) not just a theory.
Wonder if that's a covered condition.
Wednesday, December 22, 2010
STOLI Revisited
When last we discussed Stranger Owned Life Insurance (STOLI), it was in the context of certain actors (in the business, not entertainment, sense) duping vulnerable seniors into buying, and then selling, life insurance policies. What was missing from that equation was, of course, the ultimate owner of those policies.
Turns out, it's not so much owner as owners:
"Life Partners, a fast-growing company in Waco, Texas, has made large fees from its life-insurance transactions ... Since its founding 19 years ago, Life Partners has sold its clients rights to the proceeds of 6,400 life-insurance policies with a total face value of $2.8 billion."
It works like this: Life Partners (LP) arranges to buy a policy from, say, John Smith, a 72 year old in apparently poor health (and please note that term "apparently;" we'll be coming back to it), and then sells shares in it to individual investors. The investors believe that their contribution will be leveraged by the large face amount on the soon-to-be-announced demise of the insured. They rely on LP's expert, a Nevada-based oncologist with a less-than-stellar track record when it comes to actually making the call. Remember that word, "apparently?" Well, here you go:
"Dr. Cassidy said Life Partners paid him a monthly retainer of $15,000, plus $500 for every policy bought by Life Partners clients ... Life Partners put a life expectancy of two years or less on the insured person in a third of the 297 policies it sold ... A total of 262 were still alive, of whom 64% had lived at least twice the life expectancy Life Partners gave them, and 34% at least triple."
Ooops. Seems to me, the investors would have been just as well off using Bob's Magic 8-Ball.
So who really loses here?
Well, probably not the insured: it's almost a safe bet that if LP wants to buy your policy, you should be prepared for a long and healthy life. And not LP's CEO, Brian Pardo, who "holds about half of Life Partners' stock and owns a Lear jet." And certainly not Dr Cassidy, who's made over $1 million since hooking up with the LP folks.
No, it would have to be the poor saps who bought into this idea, and forked over $50,000 (minimum!) to do so. Caveat emptor, indeed.
Turns out, it's not so much owner as owners:
"Life Partners, a fast-growing company in Waco, Texas, has made large fees from its life-insurance transactions ... Since its founding 19 years ago, Life Partners has sold its clients rights to the proceeds of 6,400 life-insurance policies with a total face value of $2.8 billion."
It works like this: Life Partners (LP) arranges to buy a policy from, say, John Smith, a 72 year old in apparently poor health (and please note that term "apparently;" we'll be coming back to it), and then sells shares in it to individual investors. The investors believe that their contribution will be leveraged by the large face amount on the soon-to-be-announced demise of the insured. They rely on LP's expert, a Nevada-based oncologist with a less-than-stellar track record when it comes to actually making the call. Remember that word, "apparently?" Well, here you go:
"Dr. Cassidy said Life Partners paid him a monthly retainer of $15,000, plus $500 for every policy bought by Life Partners clients ... Life Partners put a life expectancy of two years or less on the insured person in a third of the 297 policies it sold ... A total of 262 were still alive, of whom 64% had lived at least twice the life expectancy Life Partners gave them, and 34% at least triple."
Ooops. Seems to me, the investors would have been just as well off using Bob's Magic 8-Ball.
So who really loses here?
Well, probably not the insured: it's almost a safe bet that if LP wants to buy your policy, you should be prepared for a long and healthy life. And not LP's CEO, Brian Pardo, who "holds about half of Life Partners' stock and owns a Lear jet." And certainly not Dr Cassidy, who's made over $1 million since hooking up with the LP folks.
No, it would have to be the poor saps who bought into this idea, and forked over $50,000 (minimum!) to do so. Caveat emptor, indeed.
Tuesday, December 21, 2010
Fees not the same as Income? Who knew?
How many times do we read of physicians' complaints that the fee allowances insurance companies use to reimburse them have not increased in "x" years? Is there a reasonable response to such complaints?
Yes, as Uwe Reinhardt of Princeton University explains today in the New York Times.
There are three charts in the linked article. I draw your attention to the third chart, "Medicare Spending on Physician Services 2000 - 2009". Here is Dr. Reinhardt's key insight, illustrated in this third chart:
". . . "the top line (in black) shows that, in spite of Medicare’s miserly fee updates, total Medicare spending on physician services per Medicare beneficiary actually has grown by fully 60 percent from 2000 to 2009, at an average annual compound rate of 5.4 percent. [snip] Thus, after blushing over miserly fee updates, taxpayers might go on to ask physicians why an average annual compound increase of 5.4 percent in spending per Medicare beneficiary was not enough to give the nation’s elderly good medical care and, if it was not enough, what would have been an adequate annual increase in Medicare spending on physician services — perhaps 7 percent, or 10 percent, of 15 percent, or how much?"
The phenomenon of income growth in excess of fee growth is not limited to Medicare spending nor is it limited to physician spending. It occurs in in hospital costs as well, both in Medicare and in the private sector.
So a reasonable response to a physician complaining about the absence of growth in insurance company fee allowances, is simply to ask - "has your income grown in the past x years?" For the majority of physicians the answer will be "yes" - as Dr. Reinhardt's data show.
In essence, this important insight is no more profound than to observe the purchase of two rakes at the hardware store costs more than one rake, even if the cost per rake has not increased in "x" years.
And while Dr. Reinhardt's findings are certainly welcome they are not, of course, news to insurance professionals including us at InsureBlog.
But, sometimes, it takes an academic study by a respected health economist at a prestigious university to explain the basics to a doubting public.
Thanks be to Dr. Reinhardt for making the explanation !
Yes, as Uwe Reinhardt of Princeton University explains today in the New York Times.
There are three charts in the linked article. I draw your attention to the third chart, "Medicare Spending on Physician Services 2000 - 2009". Here is Dr. Reinhardt's key insight, illustrated in this third chart:
". . . "the top line (in black) shows that, in spite of Medicare’s miserly fee updates, total Medicare spending on physician services per Medicare beneficiary actually has grown by fully 60 percent from 2000 to 2009, at an average annual compound rate of 5.4 percent. [snip] Thus, after blushing over miserly fee updates, taxpayers might go on to ask physicians why an average annual compound increase of 5.4 percent in spending per Medicare beneficiary was not enough to give the nation’s elderly good medical care and, if it was not enough, what would have been an adequate annual increase in Medicare spending on physician services — perhaps 7 percent, or 10 percent, of 15 percent, or how much?"
The phenomenon of income growth in excess of fee growth is not limited to Medicare spending nor is it limited to physician spending. It occurs in in hospital costs as well, both in Medicare and in the private sector.
So a reasonable response to a physician complaining about the absence of growth in insurance company fee allowances, is simply to ask - "has your income grown in the past x years?" For the majority of physicians the answer will be "yes" - as Dr. Reinhardt's data show.
In essence, this important insight is no more profound than to observe the purchase of two rakes at the hardware store costs more than one rake, even if the cost per rake has not increased in "x" years.
And while Dr. Reinhardt's findings are certainly welcome they are not, of course, news to insurance professionals including us at InsureBlog.
But, sometimes, it takes an academic study by a respected health economist at a prestigious university to explain the basics to a doubting public.
Thanks be to Dr. Reinhardt for making the explanation !
Grand Rounds: Resolutions edition
Chronic Babe resolved to host this week's roundup of inspirational medblog posts, and delivers a great edition.
Monday, December 20, 2010
Bone Marrow Models [UPDATED]
Quick, what do you think of when you hear the term "skimpily-clad models?" New car shows, or Victoria Secret catalogs, perhaps?
How about bone marrow?
NotWithStanding blog tipped us to this story about the Caitlin Raymond International (CRI) bone marrow registry service, which used "flirtatious models in heels, short skirts and lab coats" to convince random mall shoppers and baseball fans to offer up a swab of DNA. No harm, no foul, right?
Wrong: the service neglected to mention that it was billing insurers over $4000 a pop [ed: an interesting question would be "and how much did the insurance companies actually end up paying?"]. Adding insult to injury, CRI is actually a subsidiary of the UMass Memorial Medical Center (located in saucy Worcester. MA). Caught red-handed (so to speak), the hospital has agreed to suspend this practice.
Apparently, "volunteers" gave up more than their DNA: they were also asked for their insurance information, apparently without being informed that said insurance company would be dinged for up to $4300. So successful were these worthies, they got up to 185,000 swabbers. That math doesn't seem to add up, though: 185 thousand donors at better than $4000 per would be three quarters of a billion dollars in billings. That's a lot of loot, even by RomneyCare standards.
So next time you see a pretty girl in a short skirt, make sure no one swabs your wagging tongue.
UPDATE: Definitely click through to NWS's take on this. He hit the nail firmly on the head with this spot-on observation:
"This is one of those problems that seems like it could only be caused by idiotic regulation ... It’s an elective procedure that has absolutely zero health benefit for the insured party. New Hampshire’s legislators, in their infinite wisdom, decided to mandate coverage anyways."
Bingo!!
How about bone marrow?
NotWithStanding blog tipped us to this story about the Caitlin Raymond International (CRI) bone marrow registry service, which used "flirtatious models in heels, short skirts and lab coats" to convince random mall shoppers and baseball fans to offer up a swab of DNA. No harm, no foul, right?
Wrong: the service neglected to mention that it was billing insurers over $4000 a pop [ed: an interesting question would be "and how much did the insurance companies actually end up paying?"]. Adding insult to injury, CRI is actually a subsidiary of the UMass Memorial Medical Center (located in saucy Worcester. MA). Caught red-handed (so to speak), the hospital has agreed to suspend this practice.
Apparently, "volunteers" gave up more than their DNA: they were also asked for their insurance information, apparently without being informed that said insurance company would be dinged for up to $4300. So successful were these worthies, they got up to 185,000 swabbers. That math doesn't seem to add up, though: 185 thousand donors at better than $4000 per would be three quarters of a billion dollars in billings. That's a lot of loot, even by RomneyCare standards.
So next time you see a pretty girl in a short skirt, make sure no one swabs your wagging tongue.
UPDATE: Definitely click through to NWS's take on this. He hit the nail firmly on the head with this spot-on observation:
"This is one of those problems that seems like it could only be caused by idiotic regulation ... It’s an elective procedure that has absolutely zero health benefit for the insured party. New Hampshire’s legislators, in their infinite wisdom, decided to mandate coverage anyways."
Bingo!!
The (Evil) Individual Mandate: It's Expensive, too
Although it's not often mentioned, the individual mandate isn't just unconstitutional, but it's darned expensive, too:
"Sen. Tom Coburn (R-Okla.) on Tuesday sent around the Congressional Budget Office's June estimate for repealing the mandate. The bottom line, according to CBO: Doing so would bring in $202 billion from its 2014 start date to 2019"
But at what cost?
Well, according to the CBO, it "would also cause the number of uninsured people to increase by 16 million."
Not so fast there, fella: first, it presumes that these are folks that wouldn't buy insurance of their own volition. It certainly can't be because they're "uninsurable:" after 2014, there's no such animal. According to the Census Bureau, there are about 307 million (legal) Americans; 16 million represents about 1/2 of 1% of that total. $200,000,000,000 seems like a pretty big price tag for such a statistically insignificant-sized group.
Which is not to say that their individual needs are insignificant (least of all to themselves), but it's further proof that ObamaCare© is not, and never has been, about seriously cutting the cost of health care.
"Sen. Tom Coburn (R-Okla.) on Tuesday sent around the Congressional Budget Office's June estimate for repealing the mandate. The bottom line, according to CBO: Doing so would bring in $202 billion from its 2014 start date to 2019"
But at what cost?
Well, according to the CBO, it "would also cause the number of uninsured people to increase by 16 million."
Not so fast there, fella: first, it presumes that these are folks that wouldn't buy insurance of their own volition. It certainly can't be because they're "uninsurable:" after 2014, there's no such animal. According to the Census Bureau, there are about 307 million (legal) Americans; 16 million represents about 1/2 of 1% of that total. $200,000,000,000 seems like a pretty big price tag for such a statistically insignificant-sized group.
Which is not to say that their individual needs are insignificant (least of all to themselves), but it's further proof that ObamaCare© is not, and never has been, about seriously cutting the cost of health care.
Benefits Package #2: Now up
Evan Falchuk once again hosts this new carnival, a great compendium of health benefits posts from some new (to me) sources).
Package #3, the first of 2011, will be right here at InsureBlog.
Package #3, the first of 2011, will be right here at InsureBlog.
Saturday, December 18, 2010
That MVNHS©: Naughty Again
Geez, you'd think at this time of year, the folks behind the Much Vaunted National Health System© would be on their best behavior. After all, the Man in the Red Suit is keeping tabs on all the naughty boys and girls, especially those responsible for this:
"Hundreds of thousands of NHS patients are being denied routine procedures as dozens of trusts cut back on surgery, scans and other treatments in order to save money"
See, that's how rationing works, and that's what ObamaCare© is really all about. Now there are those who would argue - erroneously - that insurance companies do the same thing.
They don't:
Insurers simply finance care, they're not charged with delivering it. Not so a nationalized system (such as the MVNHS©): that scheme is responsible for providing care, not just paying for it.
Or not:
"Trusts around the country are refusing to pay for operations ranging from hip replacements, to cataract removal and wisdom tooth extraction."
[ed: Our Cousins Across the Pond© refer to hospitals as "Trusts." And yes, the irony is palpable]
Another key difference: insurers are regulated by the government. Nationalized healthcare systems are run by the government. When insurers screw up, they face fines and lawsuits. When government bureauweenies running the healthcare system screw up, they get raises.
Oh Brave New World, indeed.
"Hundreds of thousands of NHS patients are being denied routine procedures as dozens of trusts cut back on surgery, scans and other treatments in order to save money"
See, that's how rationing works, and that's what ObamaCare© is really all about. Now there are those who would argue - erroneously - that insurance companies do the same thing.
They don't:
Insurers simply finance care, they're not charged with delivering it. Not so a nationalized system (such as the MVNHS©): that scheme is responsible for providing care, not just paying for it.
Or not:
"Trusts around the country are refusing to pay for operations ranging from hip replacements, to cataract removal and wisdom tooth extraction."
[ed: Our Cousins Across the Pond© refer to hospitals as "Trusts." And yes, the irony is palpable]
Another key difference: insurers are regulated by the government. Nationalized healthcare systems are run by the government. When insurers screw up, they face fines and lawsuits. When government bureauweenies running the healthcare system screw up, they get raises.
Oh Brave New World, indeed.
Friday, December 17, 2010
We're gonna have rationing of medical care - so you better watch out !
Many, perhaps most, health policy planners believe that rationing of medical care is necessary and that the best way to ration medical care is to do it “invisibly”. Invisible rationing would not mainly be enforced by making people follow complicated rules, nor by price, nor by obliging people to queue up for treatment – but instead would flow naturally downward from government budget ceilings imposed on physicians and hospitals. The policy wonks usually then add “combined with universal health care access”. Sounds nice, doesn't it?
Well, I think this is more like a hope chest than a plan, and I think the experience of other countries reveals the difficulty in this set of beliefs.
First of all, the record shows that such rationing systems are not more fair or more humane. This blog alone has posted numerous examples of failures of government-run rationing systems to behave in uniform or humane ways, for example – here and here and here and here and here and here and here and here and here and here. There are many, many more examples, including Medicare and Medicaid in the US. The record shows that, among its other problems, explicit rationing results in (1) the use of governmental power to deny care and (2) everyone being treated equally poorly. Surely America can do better.
Can a system with budget ceilings hope to simultaneously offer universal access? I doubt it. I can’t think of a single example in which the access to care; or the quality of such care; or both, are not compromised when government sets the budget. Indeed, the reality of people queuing up for medical care and the linked examples from countries that have such budget controls refute this hope.
(Of course, the politically powerful or “the rich” are always able to escape these outcomes because they can jump the queue or pay extra for better treatment or go abroad for their care. Recall a couple of years ago the prime minister of a Canadian province who chose to visit a U.S. hospital for his treatment. That is but one of many similar examples.)
There are more specific questions people need to be asking themselves. Why would you prefer to give some politician or anonymous bureaucrat the ultimate power over your family’s access to medical care? Why would you want to allow the government to make such decisions for yourself or your family “invisibly”? Why would you accept decisions about your family’s medical care that are made without your knowledge? Or that are forced on your physician without your knowledge? Do you think these conditions would lead to more humane treatment - or would even make you feel more humanely treated? For my part, it all sounds more like a veterinary ethic than a medical ethic. That is, someone called “master” will make the important medical decisions for you and your family, and one day the decision will be to put you down. And these decisions will have the force of law. Seems to me that is highly worrisome, and not the best America can do.
I’m certain no one would feel more humanely treated if private insurance companies made these decisions about one’s family’s medical care invisibly, behind the scenes, unilaterally reducing the amount that will be spent, all without accountability. But then why in the world would you trust a government institution to take on this invisible role and be fairer or more humane? What government institutions have ever justified such trust?
Well, I think this is more like a hope chest than a plan, and I think the experience of other countries reveals the difficulty in this set of beliefs.
First of all, the record shows that such rationing systems are not more fair or more humane. This blog alone has posted numerous examples of failures of government-run rationing systems to behave in uniform or humane ways, for example – here and here and here and here and here and here and here and here and here and here. There are many, many more examples, including Medicare and Medicaid in the US. The record shows that, among its other problems, explicit rationing results in (1) the use of governmental power to deny care and (2) everyone being treated equally poorly. Surely America can do better.
Can a system with budget ceilings hope to simultaneously offer universal access? I doubt it. I can’t think of a single example in which the access to care; or the quality of such care; or both, are not compromised when government sets the budget. Indeed, the reality of people queuing up for medical care and the linked examples from countries that have such budget controls refute this hope.
(Of course, the politically powerful or “the rich” are always able to escape these outcomes because they can jump the queue or pay extra for better treatment or go abroad for their care. Recall a couple of years ago the prime minister of a Canadian province who chose to visit a U.S. hospital for his treatment. That is but one of many similar examples.)
There are more specific questions people need to be asking themselves. Why would you prefer to give some politician or anonymous bureaucrat the ultimate power over your family’s access to medical care? Why would you want to allow the government to make such decisions for yourself or your family “invisibly”? Why would you accept decisions about your family’s medical care that are made without your knowledge? Or that are forced on your physician without your knowledge? Do you think these conditions would lead to more humane treatment - or would even make you feel more humanely treated? For my part, it all sounds more like a veterinary ethic than a medical ethic. That is, someone called “master” will make the important medical decisions for you and your family, and one day the decision will be to put you down. And these decisions will have the force of law. Seems to me that is highly worrisome, and not the best America can do.
I’m certain no one would feel more humanely treated if private insurance companies made these decisions about one’s family’s medical care invisibly, behind the scenes, unilaterally reducing the amount that will be spent, all without accountability. But then why in the world would you trust a government institution to take on this invisible role and be fairer or more humane? What government institutions have ever justified such trust?
Say it ain't so, Erin, say it ain't so !
Here's a report that says the widely-publicized weapons of mass carcinoma have not been found after all, in Hinkley California.
Maybe the mayor hid them in the sand.
Or maybe the State of California is in on the cover-up.
Or something.
Maybe the mayor hid them in the sand.
Or maybe the State of California is in on the cover-up.
Or something.
Thursday, December 16, 2010
The Truth Will Out
FoIB Bob D passed along a little nugget (via The American Spectator). During a recent news conference, Mr Obama responded to the suggestion that his signature legislative "victory" wasn't getting enough credit from the left. It's a very telling statement
"(I)n order to get stuff done, we’re going to compromise. This is why FDR, when he started Social Security, it only affected widows and orphans. You did not qualify. And yet now it is something that really helps a lot of people. When Medicare was started, it was a small program. It grew."
"It grew."
Hunh.
Let's dispense with the false analogy between Social Security/Medicare and ObamaCare©, and focus on what this startling admission signifies: a public repudiation of his own stated promises. That is, as ObamaCare© grows, it becomes more expensive, and more restrictive. It's also an admission that the plan is designed to fail in one of its most imprtant goals: to rein in the cost of health care.
Thanks, Mr President, for clearing that up for us.
"(I)n order to get stuff done, we’re going to compromise. This is why FDR, when he started Social Security, it only affected widows and orphans. You did not qualify. And yet now it is something that really helps a lot of people. When Medicare was started, it was a small program. It grew."
"It grew."
Hunh.
Let's dispense with the false analogy between Social Security/Medicare and ObamaCare©, and focus on what this startling admission signifies: a public repudiation of his own stated promises. That is, as ObamaCare© grows, it becomes more expensive, and more restrictive. It's also an admission that the plan is designed to fail in one of its most imprtant goals: to rein in the cost of health care.
Thanks, Mr President, for clearing that up for us.
Wednesday, December 15, 2010
HHS Shecantbeserious vs The Truth
Having lost in a court of law, HHS Secretary Shecantbeserious (and her attorney) has taken the case to the court of public opinion. To wit, an op-ed in today's Washington Post, wherein she repeated the oft-used - and completely erroneous - conflation of auto and health insurance:
How come no one's clamoring for a law that mandates coverage for wiper blades, or that requires insurers to charge the same rate for careful drivers and those with multiple DUI's?
More importantly, there's just no comparison between the term "driver" and "citizen." That is, one need only buy car insurance if one operates a vehicle on public roads. Take the bus? Insurance not required. Ride a bike? Insurance not required. Drive the '66 Blazer on your farm? Insurance not required.
Breathe the air? Insurance required, according to Shecantbeserious and her fuzzy-minded minions.
And there's this: in most (all?) states, one isn't actually required to buy insurance even if one does drive on the public roads. One has the option to post a "bond" as proof of financial responsibility. So why isn't this an option for the purchase of health care? Seems to me, fair's fair: if you want to conflate the two, then do it right: offer the option to post a bond and allow insurers to charge appropriately for the risk.
And, of course, drop this (evil) individual mandate nonsense.
"Imagine what would happen if everyone waited to buy car insurance until after they got in an accident. Premiums would skyrocket, coverage would be unaffordable, and responsible drivers would be priced out of the market."Let's recast this, shall we?
"Imagine what would happen if everyone waited to buy [health] insurance until after they got [sick]. Premiums would skyrocket, coverage would be unaffordable, and responsible [citizens] would be priced out of the market."D'unh!
How come no one's clamoring for a law that mandates coverage for wiper blades, or that requires insurers to charge the same rate for careful drivers and those with multiple DUI's?
More importantly, there's just no comparison between the term "driver" and "citizen." That is, one need only buy car insurance if one operates a vehicle on public roads. Take the bus? Insurance not required. Ride a bike? Insurance not required. Drive the '66 Blazer on your farm? Insurance not required.
Breathe the air? Insurance required, according to Shecantbeserious and her fuzzy-minded minions.
And there's this: in most (all?) states, one isn't actually required to buy insurance even if one does drive on the public roads. One has the option to post a "bond" as proof of financial responsibility. So why isn't this an option for the purchase of health care? Seems to me, fair's fair: if you want to conflate the two, then do it right: offer the option to post a bond and allow insurers to charge appropriately for the risk.
And, of course, drop this (evil) individual mandate nonsense.
Freedom of (from?) Association
From the mailbag:
"Something that I have counted on for 12 years is changing. The [State] Bar Association is dropping its group health plan effective 12/31/10.
Oxford insurance, which provides health coverage to the [State] Bar Association, has dropped coverage to the 60 members who are in the group. We have all aged, some members have major health issues, probably all of us have some minor ongoing health issues, and apparently are no longer a good risk. I have been covered by this plan for the last 12 years, since I became a solo practitioner. Now, with less than 30 days notice, I am scrambling to find alternate coverage or find an of-counsel relationship to become part of a law firm "group."
What are my options with regard to the [State] Bar Association on whom I have counted for my coverage for so long? Should I ask them to file suit against Oxford (what grounds)? Any suggestions of possible options would be much appreciated.
Thanks for any and all suggestions."
Thanks, Karen [not his/her real name] for your email; we'll do our best to answer your questions.
You've already answered why this has happened: "the 60 members who are in the group." Add in major (and minor but chronic) claims and an aging population, and what carrier would choose to stay on this risk? The sticking point is that little word "choose:" in most circumstances, the carrier has no such choice.
But this is an Association plan, so there's a loophole:
When you purchase coverage through an Association, rather than on the open market (preferably through a professional, independent agent), you're not a "policyholder," you're a "certificate" holder. There's a world of difference: a policyholder has a direct contractual relationship with the insurer, with specific rights and protections which a certificate holder lacks. Policyholders can (generally) be cancelled only for failing to pay premiums, for fraud or if the carrier goes bankrupt. In the latter case, one generally has recourse to the state's Guaranty Fund.
A certificate holder, however, has none of these rights. The organization (association) is the policyholder, and the carrier can drop it like a hot potato pretty much any time it wants (with proper notice, of course). If you could prove that the association didn't receive the proper notice (eg the policy says 60 days and they only gave 30), then the association (not you) may have a leg to stand on, but I would be very surprised if that were the case.
I don't know much about [your state's] insurance issues, but I would have to guess that being "of counsel" will have little effect on your ability to glom onto a larger firm's group coverage. After all, you'd still be an independent contractor, and most likely ineligible. Which is not to say that you shouldn't ask, but don't get your hopes up too high. Keep in mind, too, that you'd still be at the mercy of someone else's insurance buying (and shopping) decisions: what if the new group's plans become too expensive, or they don't offer a plan that fits your needs?
All of which to say: buy your own insurance. Consult with a local, professional independent agent, preferably one with at least 5 years of relevant experience. Don't know one? Then ask your relatives, your friends, your colleagues for referrals.
You'll be glad you did.
[Special Thanks to Bob, Bill and Mike for their help on this]
"Something that I have counted on for 12 years is changing. The [State] Bar Association is dropping its group health plan effective 12/31/10.
Oxford insurance, which provides health coverage to the [State] Bar Association, has dropped coverage to the 60 members who are in the group. We have all aged, some members have major health issues, probably all of us have some minor ongoing health issues, and apparently are no longer a good risk. I have been covered by this plan for the last 12 years, since I became a solo practitioner. Now, with less than 30 days notice, I am scrambling to find alternate coverage or find an of-counsel relationship to become part of a law firm "group."
What are my options with regard to the [State] Bar Association on whom I have counted for my coverage for so long? Should I ask them to file suit against Oxford (what grounds)? Any suggestions of possible options would be much appreciated.
Thanks for any and all suggestions."
Thanks, Karen [not his/her real name] for your email; we'll do our best to answer your questions.
You've already answered why this has happened: "the 60 members who are in the group." Add in major (and minor but chronic) claims and an aging population, and what carrier would choose to stay on this risk? The sticking point is that little word "choose:" in most circumstances, the carrier has no such choice.
But this is an Association plan, so there's a loophole:
When you purchase coverage through an Association, rather than on the open market (preferably through a professional, independent agent), you're not a "policyholder," you're a "certificate" holder. There's a world of difference: a policyholder has a direct contractual relationship with the insurer, with specific rights and protections which a certificate holder lacks. Policyholders can (generally) be cancelled only for failing to pay premiums, for fraud or if the carrier goes bankrupt. In the latter case, one generally has recourse to the state's Guaranty Fund.
A certificate holder, however, has none of these rights. The organization (association) is the policyholder, and the carrier can drop it like a hot potato pretty much any time it wants (with proper notice, of course). If you could prove that the association didn't receive the proper notice (eg the policy says 60 days and they only gave 30), then the association (not you) may have a leg to stand on, but I would be very surprised if that were the case.
I don't know much about [your state's] insurance issues, but I would have to guess that being "of counsel" will have little effect on your ability to glom onto a larger firm's group coverage. After all, you'd still be an independent contractor, and most likely ineligible. Which is not to say that you shouldn't ask, but don't get your hopes up too high. Keep in mind, too, that you'd still be at the mercy of someone else's insurance buying (and shopping) decisions: what if the new group's plans become too expensive, or they don't offer a plan that fits your needs?
All of which to say: buy your own insurance. Consult with a local, professional independent agent, preferably one with at least 5 years of relevant experience. Don't know one? Then ask your relatives, your friends, your colleagues for referrals.
You'll be glad you did.
[Special Thanks to Bob, Bill and Mike for their help on this]
Cavalcade of Risk #120: Risk/Aversion edition
Jason Shafrin presents a unique and wonderful Cavalcade of Risk. There's a set of posts for risk-takers, and another one for those of us who are a bit more risk-averse.
Either way, there's zero risk of disappointment.
Either way, there's zero risk of disappointment.
Tuesday, December 14, 2010
But [gasp] that's . . . that's . . . that's . . . What IS that?
Research published this month in Health Affairs notes that women consume significantly more medical care than men.
“Except for children, total spending for and by females was greater than that for and by males, for most services and payers.”
Cheese, wouldn't that, you know, mean that medical insurance premiums should be higher for women?
No, silly - because that wouldn't be faaaairrr. It would be discrimination. And that's wrong. Isn't that right?
Who knew?
“Except for children, total spending for and by females was greater than that for and by males, for most services and payers.”
Cheese, wouldn't that, you know, mean that medical insurance premiums should be higher for women?
No, silly - because that wouldn't be faaaairrr. It would be discrimination. And that's wrong. Isn't that right?
Who knew?
Grand Rounds is up...
Dr John Mandrola makes his Grand Rounds hosting debut, and it's a beaut! Check it out for the great posts, and enjoy the beautiful pics.
Monday, December 13, 2010
The Commonwealth vs ObamaCare©: What's it mean?
As I'm sure our readers already know, a federal judge in Virginia has ruled the (Evil) Individual Mandate unconstitutional. There are a lot of legal eagles already dissecting the various legal implications, but I'd like to share some thoughts about the ruling from the perspective of risk management. Of course, these are not incompatible, so please pardon my use of some legalistic terminology in this analysis.
Let's start with this: if one presumes (as I do) that the true goal of ObamaCare© is to destroy the health insurance system that over 85% of us currently enjoy, then this ruling is a boon to those who favor it. Since the judge has ruled that the precept of "severability" does not attach, then we are left with a system that will require insurers to ignore pre-existing conditions while driving away healthy folks who would represent a "cushion" against increased claims. As insurers face more expensive and frequent claims from those who are ill, premiums will escalate even faster than they already do, driving away healthy folks who know that, if and/or when they get sick, coverage will be readily and immediately available. What possible reason would they have to remain insured?
Of course, since we already know that this is the desired outcome of those who favor ObamaCare©, it makes perfect sense: once enough people leave the system, and premiums increase beyond our wildest imagination, the government will have little choice but to step in. Whether that's through price controls or simply moving everyone to a nationalized scheme, the result will be an insurance system far different than what we have now. The problem, of course, is that "different" doesn't necessarily mean "better;" as we've seen from (for example) the MVNHS©, such a system does little beyond rationing to rein in increased health care costs, while subjecting its victims, er, insureds to lengthy waits and poorer outcomes.
Obviously, Judge Hudson's ruling is merely a stepping stone; there are still approximately 4.8 million other lawsuits currently wending their way through the judicial system. I do appreciate that at least one jurist has "seen the light" regarding the Evil Mandate, but I'm less sanguine that this represents a meaningful step forward. Still, it's preferable to a ruling approving the mandate.
Absent imposition of severability, I give it a B-.
Let's start with this: if one presumes (as I do) that the true goal of ObamaCare© is to destroy the health insurance system that over 85% of us currently enjoy, then this ruling is a boon to those who favor it. Since the judge has ruled that the precept of "severability" does not attach, then we are left with a system that will require insurers to ignore pre-existing conditions while driving away healthy folks who would represent a "cushion" against increased claims. As insurers face more expensive and frequent claims from those who are ill, premiums will escalate even faster than they already do, driving away healthy folks who know that, if and/or when they get sick, coverage will be readily and immediately available. What possible reason would they have to remain insured?
Of course, since we already know that this is the desired outcome of those who favor ObamaCare©, it makes perfect sense: once enough people leave the system, and premiums increase beyond our wildest imagination, the government will have little choice but to step in. Whether that's through price controls or simply moving everyone to a nationalized scheme, the result will be an insurance system far different than what we have now. The problem, of course, is that "different" doesn't necessarily mean "better;" as we've seen from (for example) the MVNHS©, such a system does little beyond rationing to rein in increased health care costs, while subjecting its victims, er, insureds to lengthy waits and poorer outcomes.
Obviously, Judge Hudson's ruling is merely a stepping stone; there are still approximately 4.8 million other lawsuits currently wending their way through the judicial system. I do appreciate that at least one jurist has "seen the light" regarding the Evil Mandate, but I'm less sanguine that this represents a meaningful step forward. Still, it's preferable to a ruling approving the mandate.
Absent imposition of severability, I give it a B-.
Oh Baby, Baby!
The LA Times has this breathtaking lede:
"Before Joanna Joshua and Kyle Winning started a family, they hunted for health insurance to cover the increasingly high cost of having a baby."
Let's reword this, shall we?
"Before Joanna Joshua and Kyle intentionally burned down their house, they hunted for homeowners' insurance to cover the increasingly high cost of rebuilding it."
There, isn't that better?
Of course, both circumstances are silly, but they underscore the principle of risk. Being pregnant is not a disease, and it is easily avoided (we'll leave rape out of the equation, since that is, in fact, an unforeseeable risk). Insurance companies know this, and know that the utilization rate for maternity riders approaches 100%. That's not risk, that's cost-shifting. So to the extent that such riders are available at all, carriers price and configure them to essentially refund (at best) the premium paid.
Here's where it gets dicey, though:
"The dearth of choices forces many would-be mothers into government insurance programs paid for by taxpayers ... All of this drives up costs for hospitals, insurers and consumers buying individual policies."
It's a heads-I-win-tails-you-lose proposition: folks see no problem with mandating birth control, and also want coverage for having a baby. Neither of these pass the test of "medical necessity," and both of them drive up health care costs for everyone. The result? Even more uninsured:
"The industry's trade group, the Assn. of California Life and Health Insurance Cos., pointed to a study that found the most recent maternity bill in Sacramento would drive up insurance rates as much as 28%, and would prompt more than 9,000 mostly young policyholders to give up their insurance."
But don't we want more people to be insured, not less?
"Before Joanna Joshua and Kyle Winning started a family, they hunted for health insurance to cover the increasingly high cost of having a baby."
Let's reword this, shall we?
"Before Joanna Joshua and Kyle intentionally burned down their house, they hunted for homeowners' insurance to cover the increasingly high cost of rebuilding it."
There, isn't that better?
Of course, both circumstances are silly, but they underscore the principle of risk. Being pregnant is not a disease, and it is easily avoided (we'll leave rape out of the equation, since that is, in fact, an unforeseeable risk). Insurance companies know this, and know that the utilization rate for maternity riders approaches 100%. That's not risk, that's cost-shifting. So to the extent that such riders are available at all, carriers price and configure them to essentially refund (at best) the premium paid.
Here's where it gets dicey, though:
"The dearth of choices forces many would-be mothers into government insurance programs paid for by taxpayers ... All of this drives up costs for hospitals, insurers and consumers buying individual policies."
It's a heads-I-win-tails-you-lose proposition: folks see no problem with mandating birth control, and also want coverage for having a baby. Neither of these pass the test of "medical necessity," and both of them drive up health care costs for everyone. The result? Even more uninsured:
"The industry's trade group, the Assn. of California Life and Health Insurance Cos., pointed to a study that found the most recent maternity bill in Sacramento would drive up insurance rates as much as 28%, and would prompt more than 9,000 mostly young policyholders to give up their insurance."
But don't we want more people to be insured, not less?
Friday, December 10, 2010
Healthcare Shortages Coming up: Thanks Lots, ObamaCare©! [UPDATED]
FoIB Bob D tips us to this interesting (if disheartening) news:
"(C)hildren’s hospitals are facing drug price hikes that will cost them hundreds of millions of dollars to supply needed medicine to children with rare diseases."
This is a direct, if unintended, consequence of the rush to get ObamaCare© passed before anyone actually, you know, read it. Because it was rammed through so quickly, but haphazardly, crucial wording that would have allowed the discounts to continue was omitted. Already, two major drug manufacturers have announced that these deals will be "suspended."
And lest you think this is heartless of "Big Pharma," remember whose perfidy caused this problem in the first place. Here's a hint.
But it's not just "the children" getting the short end of the stick; New York-based internist Dr Marc Siegel reports that, in a recent survey of 2400 practicing physicians, two thirds were against ObamaCare©. Worse yet, three fifths expected to "close or significantly restrict their practices to certain categories of patients." Almost as many acknowledged what we already knew: that they'd be required to spend less time with their patients. So much for "if you like your doctor, you can keep your doctor."
Thump, thump, under the bus you go.
Piling On: In case you thought Dr Siegel's piece was an outlier, here's this from Investor's Business Daily:
"Four in nine doctors responding to an IBD/TIPP poll sent out in August 2009 said they "would consider leaving their practice or taking an early retirement" if Congress passed what has become known as ObamaCare ... Now a Merritt Hawkins survey of 2,379 doctors for the Physicians Foundation completed in August has vindicated our poll. It found that 40% of doctors said they would "retire, seek a nonclinical job in health care, or seek a job or business unrelated to health care"
Ooops.
Here's the bottom line: no matter how you slice it, ObamaCare© means less choice, less competition and higher health care costs.
And we all know what that means, right?
"(C)hildren’s hospitals are facing drug price hikes that will cost them hundreds of millions of dollars to supply needed medicine to children with rare diseases."
This is a direct, if unintended, consequence of the rush to get ObamaCare© passed before anyone actually, you know, read it. Because it was rammed through so quickly, but haphazardly, crucial wording that would have allowed the discounts to continue was omitted. Already, two major drug manufacturers have announced that these deals will be "suspended."
And lest you think this is heartless of "Big Pharma," remember whose perfidy caused this problem in the first place. Here's a hint.
But it's not just "the children" getting the short end of the stick; New York-based internist Dr Marc Siegel reports that, in a recent survey of 2400 practicing physicians, two thirds were against ObamaCare©. Worse yet, three fifths expected to "close or significantly restrict their practices to certain categories of patients." Almost as many acknowledged what we already knew: that they'd be required to spend less time with their patients. So much for "if you like your doctor, you can keep your doctor."
Thump, thump, under the bus you go.
Piling On: In case you thought Dr Siegel's piece was an outlier, here's this from Investor's Business Daily:
"Four in nine doctors responding to an IBD/TIPP poll sent out in August 2009 said they "would consider leaving their practice or taking an early retirement" if Congress passed what has become known as ObamaCare ... Now a Merritt Hawkins survey of 2,379 doctors for the Physicians Foundation completed in August has vindicated our poll. It found that 40% of doctors said they would "retire, seek a nonclinical job in health care, or seek a job or business unrelated to health care"
Ooops.
Here's the bottom line: no matter how you slice it, ObamaCare© means less choice, less competition and higher health care costs.
And we all know what that means, right?
Cavalcade of Risk #120: Call for Submissions
Jason Shafrin hosts next week's Cavalcade of Risk. Submissions are due this Monday (the 13th). Please remember to include:
■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post
And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).
■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post
And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).
You can submit your post via Blog Carnival or email.
NB: The Cav is about risk, but not necessarily or exclusively about insurance. So feel free to think outside-the-box (e.g. driving and texting, the environment, vaccination, etc).
Thursday, December 09, 2010
Skin in the Game
A longstanding meme here at IB is that health insurance costs increase because health care costs increase; a corollary to this is that, because we are insulated from the true cost of health care, we have little or no incentive to demand its efficient delivery. That is, since the majority of (private) health insurance is subsidized by employers, we don't really know what it costs, and since most of us have some kind of co-pay plan, we don't know the true cost of the care we receive.
If, for example, your employer covered a third of your car payment, would you really know (or care much) what that payment is? And if your car insurance covered oil changes, would you know (or care much) what your mechanic charges?
Human nature suggests that the answer would be "no, not really." After all, if someone else is fronting the bill, we don't have much (or any) incentive to question it or look for a better "deal." We saw this most graphically in the lobster dinner allegory, and now Investors Business Daily puts hard numbers to the phenomenon:
"Nearly 60% of American adults are covered by an employer-based plan ... Because Americans who have employer-based coverage see little money coming out of their pockets when they visit a doctor or go to the hospital, they have little incentive to keep costs down."
Or, to put it more bluntly, "(a) primary reason why health care costs are soaring is that most of the time when people enter the medical marketplace, they are spending someone else's money," as Devon Herrick (of the National Center for Policy Analysis) notes.
There are certainly times, of course, when careful shopping is inappropriate: in the ambulance when suffering a heart attack, the CareFlight helicopter at the scene of the crash. But for the most part, and especially when it comes to routine and maintenance claims, why aren't we more involved?
Another example: the typical prescription drug card now carries a $15 co-pay for generics. But who pays $15 anymore? After all, (almost) all can be found for $4 at Walmart or CVS or Krogers (to name a few); yes, it may involve a little time and travel, but it's once a month (or every three months). Even at $3 a gallon, how far would you be willing to drive to save $11 per scrip? And if you're on several such meds, the cost is even less. So why aren't we using this model for other aspects of health care?
Here's why:
"According to Herrick, for every dollar of hospital care that is consumed, a patient pays only 3 cents. The rest is paid by a third party ... When a patient visits a doctor, less than 10 cents of every dollar of care consumed is paid by the patient. Again, a third party pays the balance."
That "third party" is, of course, one's insurance carrier. But even that's not completely accurate: for the most part, the routine claims are really just a transfer of one's premium to the provider; it's not the "house's money." Still, it obscures the actual cost of the care itself, which then further exacerbates the increase in those costs.
And, as IBD points out (and as we've noted), "Medicare and Medicaid have also had an impact on spending, as they too are third-party payers that ... hide from patients the true cost of medicine." These two schemes actually represent a double-whammy: the first (as IBD notes) is that they pick up the bulk of the tab, which hides the cost from the beneficiary. But that cost doesn't go away: a goodly portion of it is shifted to the private insurance sector, which must then recoup that cost by raising premiums.
So what's the solution?
Herrick takes a novel (and, I think, effective) approach: he considers the case of the plastic surgeon. In almost all circumstances, plastic surgery is elective, and thus not available for insurance reimbursement (and, as we've noted, ineligible for network discounts, as well). So the real cost is very easy to determine: it's what the doctor bills you. One would think that, since so few of these expenses are "outsourced," demand would remain fairly level (or even decrease as folks' disposable income plummets in this economy). But that's not the case:
"1.7 million cosmetic surgical procedures were performed in 2008, "more than 40 times the number performed two decades ago." Yet cosmetic surgeons' fees, he says, have remained relatively stable, rising only 21% from 1992 to 2008."
So there are two effects at work here: on the one hand, patients' demand is higher than ever, but the cost of the care isn't. Why is that? Well, it's pretty simple: when folks are spending their own money (as they almost certainly are in this instance), they have an incentive to find the best "bang for the buck." And since providers are truly at the market's mercy, there's an incentive to keep costs as low as possible. The key is that the patient, not a third party, is in control.
Isn't it time we took control of our other health care needs, as well?
If, for example, your employer covered a third of your car payment, would you really know (or care much) what that payment is? And if your car insurance covered oil changes, would you know (or care much) what your mechanic charges?
Human nature suggests that the answer would be "no, not really." After all, if someone else is fronting the bill, we don't have much (or any) incentive to question it or look for a better "deal." We saw this most graphically in the lobster dinner allegory, and now Investors Business Daily puts hard numbers to the phenomenon:
"Nearly 60% of American adults are covered by an employer-based plan ... Because Americans who have employer-based coverage see little money coming out of their pockets when they visit a doctor or go to the hospital, they have little incentive to keep costs down."
Or, to put it more bluntly, "(a) primary reason why health care costs are soaring is that most of the time when people enter the medical marketplace, they are spending someone else's money," as Devon Herrick (of the National Center for Policy Analysis) notes.
There are certainly times, of course, when careful shopping is inappropriate: in the ambulance when suffering a heart attack, the CareFlight helicopter at the scene of the crash. But for the most part, and especially when it comes to routine and maintenance claims, why aren't we more involved?
Another example: the typical prescription drug card now carries a $15 co-pay for generics. But who pays $15 anymore? After all, (almost) all can be found for $4 at Walmart or CVS or Krogers (to name a few); yes, it may involve a little time and travel, but it's once a month (or every three months). Even at $3 a gallon, how far would you be willing to drive to save $11 per scrip? And if you're on several such meds, the cost is even less. So why aren't we using this model for other aspects of health care?
Here's why:
"According to Herrick, for every dollar of hospital care that is consumed, a patient pays only 3 cents. The rest is paid by a third party ... When a patient visits a doctor, less than 10 cents of every dollar of care consumed is paid by the patient. Again, a third party pays the balance."
That "third party" is, of course, one's insurance carrier. But even that's not completely accurate: for the most part, the routine claims are really just a transfer of one's premium to the provider; it's not the "house's money." Still, it obscures the actual cost of the care itself, which then further exacerbates the increase in those costs.
And, as IBD points out (and as we've noted), "Medicare and Medicaid have also had an impact on spending, as they too are third-party payers that ... hide from patients the true cost of medicine." These two schemes actually represent a double-whammy: the first (as IBD notes) is that they pick up the bulk of the tab, which hides the cost from the beneficiary. But that cost doesn't go away: a goodly portion of it is shifted to the private insurance sector, which must then recoup that cost by raising premiums.
So what's the solution?
Herrick takes a novel (and, I think, effective) approach: he considers the case of the plastic surgeon. In almost all circumstances, plastic surgery is elective, and thus not available for insurance reimbursement (and, as we've noted, ineligible for network discounts, as well). So the real cost is very easy to determine: it's what the doctor bills you. One would think that, since so few of these expenses are "outsourced," demand would remain fairly level (or even decrease as folks' disposable income plummets in this economy). But that's not the case:
"1.7 million cosmetic surgical procedures were performed in 2008, "more than 40 times the number performed two decades ago." Yet cosmetic surgeons' fees, he says, have remained relatively stable, rising only 21% from 1992 to 2008."
So there are two effects at work here: on the one hand, patients' demand is higher than ever, but the cost of the care isn't. Why is that? Well, it's pretty simple: when folks are spending their own money (as they almost certainly are in this instance), they have an incentive to find the best "bang for the buck." And since providers are truly at the market's mercy, there's an incentive to keep costs as low as possible. The key is that the patient, not a third party, is in control.
Isn't it time we took control of our other health care needs, as well?
Health Wonk Review: Year-End Wrap-Up
Brad Wright hosts this year's final HWR, and it's a doozy. Lots of great posts, and some interesting illustrations to illumine them.
Wednesday, December 08, 2010
(Military) HealthcareGates
A fundamental premise of ObamaCare© is that government is a more efficient manager of health care costs. As we've already shown, this is simply not the case. Medicare, though, is only one existing federal health care scheme; another, lesser-known one is the military's health care "system," known as "Tricare."
To give readers a sense of how out of control government-sponsored health care is, one need only consider the words of a retired Marine who chose to stay in that system despite the very nice benefits package available from his current employer:
"(H)e and his family remain on the military’s bountiful lifetime health insurance, Tricare, with fees of only $460 a year. He calls the benefit “phenomenal” ... It is so cheap compared to what Booz Allen [his current employer] has ... acknowledging that premiums called for by private employers can run many times greater."
No kidding! Could that be because that cost is borne not by himself or his employer, but by thee and me (i.e. the taxpayer)? And the situation continues to worsen, since so many of those who are eligible opt for the less expensive (for them) Tricare.
But is it really less expensive?
Well, it depends on one's perspective: it sure seems like a good deal for enrollees, but for those of us who actually foot the bill, not so much. It's gotten so bad, in fact, that Defense Secretary Robert Gates "is seriously considering whether to ask for Tricare fee increases in next year’s budget."
"Seriously considering?" Are you kidding me?! At a time of unprecedented national debt, with unemployment consistently hovering around 10% (or, more accurately, 17%, as measured by the more accurate U-6), why is this even a question?
Here's why:
"The battle over Tricare pits the efforts of the Pentagon to contain the exploding cost of health care for nearly 10 million eligible beneficiaries against the pain and emotions of those who say they have already “paid up front” with service in uniform."
While I certainly respect and appreciate that service, not all (or even many) of those "10 million eligible beneficiaries" were front-line troops; in fact, many (most?) are the families of those who served. Yes, they made a sacrifice, but almost all of the service-members were volunteers. But even that's beside the point: the key phrase here is "exploding cost of health care." Now where have we heard that phrase before?
Oh, yeah.
So the Fed's are having no more success containing the cost of health care under Tricare as Medicare, yet we're supposed to believe that adding tens or hundreds of millions more folks to those programs will somehow magically solve the cost problem?
Sure.
Tuesday, December 07, 2010
Risk Management Gone Horribly, Horribly Weird
On the one hand, we've cataloged the unusual things that people seek to insure, and certainly protecting one's "money maker" (so to speak) is high on the list.
But this is just, well, creepy:
But this is just, well, creepy:
Tax Carnival; Stocking Stuffers edition
This is a new one for us: the Tax Carnival is a monthly round-up of tax-blog posts. We're obviously no CPA's (although I understand Bob plays one on the radio?), but our post on new HSA rules made the cut. I apologize for being a bit tardy with the announcement: it actually went "live" yesterday but I just saw it today.
Do check it out.
Do check it out.
Grand Rounds: Impact of Healthcare "Reform"
Over at Highlight Health, Walter Jessen presents this week's extensive round-up of medblog posts, focusing on the effects of "reform" not just today, but moving forward.
Monday, December 06, 2010
Mike and Bob on Medical Loss Ratios
Recently, I was privileged to observe a really interesting email exchange regarding the new Medical Loss Ration (MLR) rules which go into effect next month, and which promise to further erode the value of health insurance. The conversation was a result of an email I'd received from Cigna, and which I forwarded to Bob, who then forwarded it on to Mike. The email said, in part:
"On November 22, 2010, the Departments of Treasury, Labor, and Health and Human Services jointly announced Interim Final Regulations for the Patient Protection and Affordable Care Act’s (PPACA) Medical Loss Ratio (MLR) provision.
The provision states that beginning in 2011, insurers and HMOs must annually calculate their MLR and provide rebates to policyholders if their MLR (percent of premium revenue spent on claims/medical care) is less than 85 percent for large groups and 80 percent for small groups or individuals.
MLR applies to insured plans only, regardless of grandfathered status."
It also mentioned that "Non-U.S. insurance companies do not file MLR."
Bob immediately glommed on to that last bit:
"Go back 20+ years or so when self funded plans with stop loss insurance was becoming popular in groups less than 1000 lives. Because US based health insurance carriers were prohibited from offering such plans (stop loss) foreign companies, most notably Lloyds, were major players along with Swiss Re, NRG (Netherlands Reinsurance Group), Sun Life, Manu Life and a few others. Even saw Tokio Fire and Marine on some risks.
P&C companies quickly figured out the ban was on US health insurance companies so carriers like Safeco, Travelers and some minor players got in the game.
This makes me wonder if this opens the door for foreign companies to get in the game and spoil the market? They can apparently skate on the MLR issue but the plans themselves would have to comply with other issues (mandated benefits) or else the insured is subject to a fine."
I had focused on the way MLR will be calculated, but Bob immediately noticed something "under the radar."
Mike then responded:
"I've attached two paragraphs that I found in the preamble to the regulations, together with a full copy of the preamble & regulations. (The preamble is 230 pages long, the regs themselves 78 pages long. In effect, HHS takes three pages to explain each page of their regulation - think that will be enough?)
Anyway, it seems to me that the main thing is whether a health insurance policy is approved by any state, and only secondarily whether the health insurer is domestic or foreign. Therefore I think the CIGNA comment does not fully explain the situation and probably has raised a lot of questions.
As to stop-loss insurance, I don't find where the preamble addresses it. I think that's because the insurance reform law deals with health insurance policies and benefits, not stop-loss insurance. So I assume that none of this applies to stop-loss insurance because it's not "health insurance" and I doubt there will be any disruption in stop-loss insurance markets, whether the insurer is a US insurer, or not."
Which is at once comforting and disturbing: comforting to know that the stop-loss insurance market (a vital component for self-funded plans) is probably going to be alright. But disturbing because, well, as Bob points out:
"Let me see.
Obamacrap is 2200 pages, give or take.
Regs are 78 and preamble 230 pages.
And let's factor in the numerous exceptions (over 100 companies and counting) and this thing will make the tax code seem like a Readers Digest article.
So frustrating to see what they have done, and how they are seemingly clueless about, well, just about anything dealing with the real world."
Just so.
"On November 22, 2010, the Departments of Treasury, Labor, and Health and Human Services jointly announced Interim Final Regulations for the Patient Protection and Affordable Care Act’s (PPACA) Medical Loss Ratio (MLR) provision.
The provision states that beginning in 2011, insurers and HMOs must annually calculate their MLR and provide rebates to policyholders if their MLR (percent of premium revenue spent on claims/medical care) is less than 85 percent for large groups and 80 percent for small groups or individuals.
MLR applies to insured plans only, regardless of grandfathered status."
It also mentioned that "Non-U.S. insurance companies do not file MLR."
Bob immediately glommed on to that last bit:
"Go back 20+ years or so when self funded plans with stop loss insurance was becoming popular in groups less than 1000 lives. Because US based health insurance carriers were prohibited from offering such plans (stop loss) foreign companies, most notably Lloyds, were major players along with Swiss Re, NRG (Netherlands Reinsurance Group), Sun Life, Manu Life and a few others. Even saw Tokio Fire and Marine on some risks.
P&C companies quickly figured out the ban was on US health insurance companies so carriers like Safeco, Travelers and some minor players got in the game.
This makes me wonder if this opens the door for foreign companies to get in the game and spoil the market? They can apparently skate on the MLR issue but the plans themselves would have to comply with other issues (mandated benefits) or else the insured is subject to a fine."
I had focused on the way MLR will be calculated, but Bob immediately noticed something "under the radar."
Mike then responded:
"I've attached two paragraphs that I found in the preamble to the regulations, together with a full copy of the preamble & regulations. (The preamble is 230 pages long, the regs themselves 78 pages long. In effect, HHS takes three pages to explain each page of their regulation - think that will be enough?)
Anyway, it seems to me that the main thing is whether a health insurance policy is approved by any state, and only secondarily whether the health insurer is domestic or foreign. Therefore I think the CIGNA comment does not fully explain the situation and probably has raised a lot of questions.
As to stop-loss insurance, I don't find where the preamble addresses it. I think that's because the insurance reform law deals with health insurance policies and benefits, not stop-loss insurance. So I assume that none of this applies to stop-loss insurance because it's not "health insurance" and I doubt there will be any disruption in stop-loss insurance markets, whether the insurer is a US insurer, or not."
Which is at once comforting and disturbing: comforting to know that the stop-loss insurance market (a vital component for self-funded plans) is probably going to be alright. But disturbing because, well, as Bob points out:
"Let me see.
Obamacrap is 2200 pages, give or take.
Regs are 78 and preamble 230 pages.
And let's factor in the numerous exceptions (over 100 companies and counting) and this thing will make the tax code seem like a Readers Digest article.
So frustrating to see what they have done, and how they are seemingly clueless about, well, just about anything dealing with the real world."
Just so.
Your (Benefits) Package has arrived
Our friend Evan Falchuk has started a new, bi-weekly "carnival" highlighting developments and issues in the world of "benefits;" that is, the folks on the front lines who have to deal with the everyday tasks of deciphering and implementing what Congress has wrought and insurers offer.
The debut edition of The Benefits Package features posts on mini-meds from FoIB David Williams and an exhortation from Dan Buckles ("The Group Guy") on why employee well-being is so critical, not to mention our own Mike Feehan's post on Medicare and Medicaid cost-shifting, and much more.
The Benefits Package promises to be an interesting, and potentially important, resource for folks interested in the real-world application of health care policy.
The debut edition of The Benefits Package features posts on mini-meds from FoIB David Williams and an exhortation from Dan Buckles ("The Group Guy") on why employee well-being is so critical, not to mention our own Mike Feehan's post on Medicare and Medicaid cost-shifting, and much more.
The Benefits Package promises to be an interesting, and potentially important, resource for folks interested in the real-world application of health care policy.
Sunday, December 05, 2010
Our (Current) System isn't "Broken"
Mike sends along this video, admonishing us to "remember this the next time some ignorant yahoo bleats that the US medical care system has "failed:"
Friday, December 03, 2010
The Game of Life
In the past two weeks, I've had the privilege of helping the families of two clients who have passed away. I say "privilege" because it means that we were able to help grieving loved ones with something more tangible that condolences and more lasting than a casserole (which is in no way meant to minimize the value of either). Long after the flowers have wilted and the cookies are gone, the cold, hard cash that is the ultimate result of a life insurance policy will be there to help pay the mortgage, fund a son or daughter's college education, and pay off hospital bills.
The first of these two folks had been a client for many, many years. He lived a reasonably long life, passing away at age 81. His wife, also a client, knows that any expenses left behind will be taken care of, and she and her children and grandchildren will benefit from his legacy for years to come.
The other is more tragic: cut off at the painfully young age of 53, she leaves behind a grieving husband and three daughters, one of whom is to be married in a few short weeks. As a labor and delivery nurse, she was responsible for helping to bring life into this world; as a matter of fact, she helped to deliver our youngest. How does one console the family of one taken so young?
The other day, my good friend Bill M sent along an email he'd received, with the provocative title "Sue thanks God Greg had life insurance:"
"Tuesday, October 18th was one year to the day that my friend and client Greg Murphy died suddenly. He left behind a wife and two children. He was only 52 years of age ... Sue, Greg's wife, is one of the fortunate ones. Greg left her a substantial amount through a life insurance policy. If he had not, their family would be doubly devastated; emotionally and financially."
The scary part came a bit later:
"Statistics show that 34% of Americans have no life insurance [and] 48% don't have enough life insurance for proper family protection."
But that's just one email, right?
Turns out, there's more. A lot more. According to today's McPaper:
"The percentage of U.S. households with life insurance coverage is at its lowest in 50 years, leaving millions of families without a safety net, industry experts say ... Only 44% of households have an individual life insurance policy, and 30% have no individual or employer-provided life insurance."
Professionally, I discount group-based life insurance because it is specifically designed not to be in force when it's most needed. Nonetheless, it's arguably better than none at all. What's so mind-boggling is that, from a simple cost standpoint, life insurance rates are at historical lows.
As always, there's a raft of excuses for why folks keep putting off that purchase. Personally, I think the internet has a lot to do with it: there's so much information, and so many quote-sites vying for attention, that information overload sets in, and the decision-making process grinds to a complete halt. Which is a shame, because it means that there are going to be a lot of un (and under-) protected families out there.
Don't be one of them.
The first of these two folks had been a client for many, many years. He lived a reasonably long life, passing away at age 81. His wife, also a client, knows that any expenses left behind will be taken care of, and she and her children and grandchildren will benefit from his legacy for years to come.
The other is more tragic: cut off at the painfully young age of 53, she leaves behind a grieving husband and three daughters, one of whom is to be married in a few short weeks. As a labor and delivery nurse, she was responsible for helping to bring life into this world; as a matter of fact, she helped to deliver our youngest. How does one console the family of one taken so young?
The other day, my good friend Bill M sent along an email he'd received, with the provocative title "Sue thanks God Greg had life insurance:"
"Tuesday, October 18th was one year to the day that my friend and client Greg Murphy died suddenly. He left behind a wife and two children. He was only 52 years of age ... Sue, Greg's wife, is one of the fortunate ones. Greg left her a substantial amount through a life insurance policy. If he had not, their family would be doubly devastated; emotionally and financially."
The scary part came a bit later:
"Statistics show that 34% of Americans have no life insurance [and] 48% don't have enough life insurance for proper family protection."
But that's just one email, right?
Turns out, there's more. A lot more. According to today's McPaper:
"The percentage of U.S. households with life insurance coverage is at its lowest in 50 years, leaving millions of families without a safety net, industry experts say ... Only 44% of households have an individual life insurance policy, and 30% have no individual or employer-provided life insurance."
Professionally, I discount group-based life insurance because it is specifically designed not to be in force when it's most needed. Nonetheless, it's arguably better than none at all. What's so mind-boggling is that, from a simple cost standpoint, life insurance rates are at historical lows.
As always, there's a raft of excuses for why folks keep putting off that purchase. Personally, I think the internet has a lot to do with it: there's so much information, and so many quote-sites vying for attention, that information overload sets in, and the decision-making process grinds to a complete halt. Which is a shame, because it means that there are going to be a lot of un (and under-) protected families out there.
Don't be one of them.
And another (Symbolic, but still Awesome) Step Forward
A few days ago, we noted the faltering steps toward derailing ObamaCare©. Today brings news that South Carolina's new governor, Nikki Haley, stood up to PresBo, virtually demanding him to repeal ObamaCrap. When he (of course) refused, she then requested (a la McDonald's) a waiver for the Palmetto State. It's doubtful, of course, that this will be forthcoming (although she says he promised to consider it, who would bet on it?), but it's heartening to see the pushback from newly-elected leaders against this train-wreck.
Kudos, Nikki!
[Hat Tip: RedState]
December Wikio Health Rankings
Once again, we've been asked (exclusively!) to post the new Wikio Health blog rankings. Although we've slipped a couple spots, we're still in the Top 20 (which still amazes me):
Thursday, December 02, 2010
$3 Million Seersucker Suit
With emphasis on the "sucker" part:
"The federal government spent $3.1 million on TV ads in which actor Andy Griffith touts the new health care law, but a non-partisan watchdog group says those ads are misleading."
Well, it's not just the "watchdog group" (FactCheck.org) who made that call; we "fisked" the former Mayberry star's infomercial in August, pointing out, for example that:
"as a senior citizen, he's about to see his own Medicare benefits - including choice of doctors - severely curtailed."
We were off the mark, though, in one aspect: we understood that the effort cost less than a million dollars. Turns out, it actually cost about 4 and a half times that.
That's more than Floyd charges for a perm!
"The federal government spent $3.1 million on TV ads in which actor Andy Griffith touts the new health care law, but a non-partisan watchdog group says those ads are misleading."
Well, it's not just the "watchdog group" (FactCheck.org) who made that call; we "fisked" the former Mayberry star's infomercial in August, pointing out, for example that:
"as a senior citizen, he's about to see his own Medicare benefits - including choice of doctors - severely curtailed."
We were off the mark, though, in one aspect: we understood that the effort cost less than a million dollars. Turns out, it actually cost about 4 and a half times that.
That's more than Floyd charges for a perm!
Wednesday, December 01, 2010
One step forward, one step back...
First, the good news:
Once again, we see misinformed individuals (notably, in this case, a Federal jurist) conflate health care with health insurance.
Sheesh.
"Florida Rep. Dean Cannon, the state's new House speaker, took a shot at healthcare reform ... questioning whether government should require citizens to purchase health insurance or raise taxes to give insurance to those who can't afford it"Now the bad:
"A federal judge in Virginia on Tuesday rejected a legal challenge to the healthcare reform law"U.S. District Judge Norman Moon based his (wrongheaded) decision on the stretched-beyond-anything-meaningful Commerce Clause, ruling that "there is a rational basis for Congress to conclude that individuals' decisions about how and when to pay for health care are activities that in the aggregate substantially affect the interstate health care market." [emphasis added]
Once again, we see misinformed individuals (notably, in this case, a Federal jurist) conflate health care with health insurance.
Sheesh.
Wednesday LinkFest
■ First up, from FoIB Bob D:
"In an open letter to America's medical students, Representatives [sic] John Barrasso (R-WY) and Tom Coburn (R-OK) warned of the consequences the health care law will bring to their future practice of medicine. In particular, they chastised the law for interfering with the personal relationship between doctors and patients."
Ya think?
■ Next, HHS Secretary Shecantbeserious has allowed the CMS to publish next year's Medicare premiums and deductibles:
■ And finally, FoIB Holly R tips us to this little life insurance doozy:
"Insurers have long used blood and urine tests to assess people's health — a costly process. Today, however, data-gathering companies have such extensive files on most U.S. consumers—online shopping details ... that some insurers are exploring whether data can reveal nearly as much about a person as a lab analysis of their bodily fluids."
On the one hand, insurers aren't allowed to use genetic testing, but if shopping's in your blood...
"In an open letter to America's medical students, Representatives [sic] John Barrasso (R-WY) and Tom Coburn (R-OK) warned of the consequences the health care law will bring to their future practice of medicine. In particular, they chastised the law for interfering with the personal relationship between doctors and patients."
Ya think?
■ Next, HHS Secretary Shecantbeserious has allowed the CMS to publish next year's Medicare premiums and deductibles:
■ And finally, FoIB Holly R tips us to this little life insurance doozy:"Insurers have long used blood and urine tests to assess people's health — a costly process. Today, however, data-gathering companies have such extensive files on most U.S. consumers—online shopping details ... that some insurers are exploring whether data can reveal nearly as much about a person as a lab analysis of their bodily fluids."
On the one hand, insurers aren't allowed to use genetic testing, but if shopping's in your blood...
Cavalcade of Risk #119 is up!
Nina Kallen makes her CavRisk hosting debut with this terrific edition, categorized and anotated for your reading pleasure.
Tuesday, November 30, 2010
The (Doc) Fix is in....Or is it?
FoIB Holly R tips us that the so-called "Doc Fix" is in, meaning that (as we discussed over the weekend) providers' fees have once again been spared the axe:
"Congress agreed to a one-month delay in Medicare payment cuts to doctors yesterday, giving a short-term reprieve to a looming crisis over treatment of the nation’s senior citizens."
Except that it really doesn't. Let's ask Kelley Beloff, our resident Medical Office Manager, what this really means:
"What was passed was the extension of the current fee schedule that was supposed to expire today, to go to the end of this year. However, we are still facing a 29% cut on Jan. 1, 2011. That was not in this piece of legislation. While history is not always an indicator, Congress has let cuts go into effect at least 3 times since the cuts were started in the mid 1990's. I am anticipating the cut to go through on Jan. 1, 2011.
As to physicians opting out of Medicare. Now is the time to opt out. In fact I have sitting on my desk the CD with the forms in it to opt out of Medicare. Once the New Year begins, the physician is locked in for another year. So the physician has to ask himself, does he feel lucky, do I opt out on the chance the cuts will go into effect, or do I stay in and hope that Congress reverses themselves. My guess is that physician's will not opt out in the numbers predicted and continue to see Medicare patients, though on a more limited basis."
Gee, good news all around.
Thanks, Kelley!
"Congress agreed to a one-month delay in Medicare payment cuts to doctors yesterday, giving a short-term reprieve to a looming crisis over treatment of the nation’s senior citizens."
Except that it really doesn't. Let's ask Kelley Beloff, our resident Medical Office Manager, what this really means:
"What was passed was the extension of the current fee schedule that was supposed to expire today, to go to the end of this year. However, we are still facing a 29% cut on Jan. 1, 2011. That was not in this piece of legislation. While history is not always an indicator, Congress has let cuts go into effect at least 3 times since the cuts were started in the mid 1990's. I am anticipating the cut to go through on Jan. 1, 2011.
As to physicians opting out of Medicare. Now is the time to opt out. In fact I have sitting on my desk the CD with the forms in it to opt out of Medicare. Once the New Year begins, the physician is locked in for another year. So the physician has to ask himself, does he feel lucky, do I opt out on the chance the cuts will go into effect, or do I stay in and hope that Congress reverses themselves. My guess is that physician's will not opt out in the numbers predicted and continue to see Medicare patients, though on a more limited basis."
Gee, good news all around.
Thanks, Kelley!
And what is the most significant way the Federales control their medical care costs ?
Milliman has calculated the cost-shift from Medicare and Medicaid into the private sector as roughly $90 billion a year, or 15% of private insurance costs.
In brief, this happens because:
(1) the government plans pay less than what the medical service providers think their services are worth (2) How does the government get away with this? Just as Hank says, "because they're the government". (3) service providers then increase the fees they bill their privately-insured patients, to make up as much of the difference as they can, meaning that (4) there is a significant shift of costs actually incurred under Medicare and Medicaid, but which emerge as private insurance costs and are then paid for by private insurance plan sponsors and privately-insured people.
This so-called "cost-shift" makes Medicare and Medicaid appear less expensive and makes private insurance appear about 15% more expensive. Private plans would have 15% lower premiums in the absence of the cost-shift and Medicare and Medicaid would have higher premiums. The Milliman work reveals this difference is a serious amount of money.
This cost-shift from the public sector into the private has been going on for as long as I've been in the business. In fact, I first learned of it in this iconic 1970 Atlantic Monthly article.
You’ll find the cost-shift mentioned toward the end of this article, just click to page 4 and read the author’s 4th and 5th conclusions. He calls the cost shift "welfare reimbursements". The amount in his analysis is $10.00 added to the daily hospital cost of $60.00, resulting in a total billed charge of $70 per day (remember this was 40 years ago) - - in other words, the need to recover federal cost underpayments in 1970 resulted in a daily hospital charge 16% higher than it would otherwise have been. Remarkably, just about the same as Milliman finds today.
The author of the article was a 27-year-old physician. You will recognize his name - and you'll do yourself a big favor if you take the time to read his entire article.
So there is no doubt that this cost shift has existed for decades, and that it makes private insurance premiums roughly 15% higher than they need to be. Its existence raises important questions that need to be answered. Here are some of the questions:
1. What will Medicare do, if or when there is no longer a private sector into which it can shift a meaningful share of its costs? How would the Federales explain the noticeable increase in required funding that will emerge? Who would the Federales then blame? Who would the Federales then tax?
2. What will medical service providers do, if they can no longer recover from private insurance plans some or all of the revenues they cannot collect from Medicare or Medicaid? How might threats of reduced incomes affect medical professionals' fee negotiations and their willingness to participate in Medicare and Medicaid? How would community hospitals survive? How many physicians might simply retire early? How many talented young students might decide not to pursue careers in medicine?
Where have you seen these questions addressed? Where have you even seen them asked?
In brief, this happens because:
(1) the government plans pay less than what the medical service providers think their services are worth (2) How does the government get away with this? Just as Hank says, "because they're the government". (3) service providers then increase the fees they bill their privately-insured patients, to make up as much of the difference as they can, meaning that (4) there is a significant shift of costs actually incurred under Medicare and Medicaid, but which emerge as private insurance costs and are then paid for by private insurance plan sponsors and privately-insured people.
This so-called "cost-shift" makes Medicare and Medicaid appear less expensive and makes private insurance appear about 15% more expensive. Private plans would have 15% lower premiums in the absence of the cost-shift and Medicare and Medicaid would have higher premiums. The Milliman work reveals this difference is a serious amount of money.
This cost-shift from the public sector into the private has been going on for as long as I've been in the business. In fact, I first learned of it in this iconic 1970 Atlantic Monthly article.
You’ll find the cost-shift mentioned toward the end of this article, just click to page 4 and read the author’s 4th and 5th conclusions. He calls the cost shift "welfare reimbursements". The amount in his analysis is $10.00 added to the daily hospital cost of $60.00, resulting in a total billed charge of $70 per day (remember this was 40 years ago) - - in other words, the need to recover federal cost underpayments in 1970 resulted in a daily hospital charge 16% higher than it would otherwise have been. Remarkably, just about the same as Milliman finds today.
The author of the article was a 27-year-old physician. You will recognize his name - and you'll do yourself a big favor if you take the time to read his entire article.
So there is no doubt that this cost shift has existed for decades, and that it makes private insurance premiums roughly 15% higher than they need to be. Its existence raises important questions that need to be answered. Here are some of the questions:
1. What will Medicare do, if or when there is no longer a private sector into which it can shift a meaningful share of its costs? How would the Federales explain the noticeable increase in required funding that will emerge? Who would the Federales then blame? Who would the Federales then tax?
2. What will medical service providers do, if they can no longer recover from private insurance plans some or all of the revenues they cannot collect from Medicare or Medicaid? How might threats of reduced incomes affect medical professionals' fee negotiations and their willingness to participate in Medicare and Medicaid? How would community hospitals survive? How many physicians might simply retire early? How many talented young students might decide not to pursue careers in medicine?
Where have you seen these questions addressed? Where have you even seen them asked?
Post-Thanksgiving Grand Rounds
Our friends Jay and Louise Norris of the Colorado Health Insurance Insider blog host this week's terrific round-up of interesting and diverse medblog posts.
Monday, November 29, 2010
In Vino....What?
At the Jewish New Year, which we call Rosh HaShannah ("Head of the Year"), we celebrate by dipping apples in honey. There are various interpretations of this ritual, but the most prevalent one is that the apple represents life ("the circle of life") and, of course, the honey represents sweetness.
We also offer a "kiddush," a blessing over wine as we toast the New Year.
And how, exactly, does any of this relate to health, much less insurance?
Turns out, more than is immediately obvious:
"Supplements derived from apple skins, red wine and tumeric might someday help slow the onset and progression of Alzheimer's and related diseases..."
Apple parings and a nice Merlot contain within them copious amounts of a "compound that, in Petri dishes at least, sops up type-2 alkenes and protects nerves from harm."
Although scientists still have no idea what causes Alzheimers, neurotoxicologist Richard LoPachin believes that stopping type-2 alkenes holds promise, and both apple skins and red wine are able to drink them up and throw them off.
L'Chaim ("To Life")!
We also offer a "kiddush," a blessing over wine as we toast the New Year.
And how, exactly, does any of this relate to health, much less insurance?
Turns out, more than is immediately obvious:
"Supplements derived from apple skins, red wine and tumeric might someday help slow the onset and progression of Alzheimer's and related diseases..."
Apple parings and a nice Merlot contain within them copious amounts of a "compound that, in Petri dishes at least, sops up type-2 alkenes and protects nerves from harm."
Although scientists still have no idea what causes Alzheimers, neurotoxicologist Richard LoPachin believes that stopping type-2 alkenes holds promise, and both apple skins and red wine are able to drink them up and throw them off.
L'Chaim ("To Life")!
Presenting Ezra the (Not So) Magnificent!
Once again, Ezra the Disingenuous demonstrates his inability to prove an argument. Last time out, he tried to (re)sell the snake oil that is RomneyCare, only to be taken to the woodshed by Bob. This time, he wants us to believe that the federally implemented national health care system known as Medicare is just hunky dory, and actually better than insurance companies at controlling health care expenses.
Here's his "evidence:"
Here's his "evidence:"
And here's his interpretation of said "evidence:"
"One of the dirty little secrets of the health-care system is that Medicare has done a much better job controlling costs than private health insurers." [emphasis added]
Wrong.
Medicare, owing to the power that is the Federal Government, can control expenses in a way that no insurer can, simply because the law says that it can. Not the marketplace, not the free and unencumbered exchange of goods and services: simply, The Law. Which Law, by the by, means that the costs aren't gone or even lower, they're just shifted to thee and me.
So again, Ezra, you're certainly entitled to your own (wrongheaded and disingenuous) opinions, but you are not entitled to your own facts.
[Hat Tip: FoIB Holly R]
The (True) Cost of Health Care
An overarching theme here at IB has been that health care costs drive health insurance costs. While this may seem obvious to us, it bears repeating.
Why, you ask?
Well, a fundamental precept of ObamaCare© is that by controlling health insurance costs, health care costs can be better controlled. This is patently and (more important) demonstrably untrue:
"What Anderson might not know, however, is how Sutter's battle for market share in her corner of suburbia is affecting her bottom line. Hospital prices in the Sacramento region are among the highest in California, driven in large part by the negotiating clout of the hospital chain Sutter Health."
The Anderson family lives in a suburb of Sacramento, California, but their plight is far from unique or geo-specific. As hospital "chains" grow, competition is reduced, and prices increase. That's basic economics, of course, but a lesson lost on many folks who continue to believe that "reforming" health insurance will have any impact on the cost of care. In fact, the opposite is true. As we've previously discussed, ACO's (Accountable Care Organizations) threaten to dramatically change how health care is delivered, and the price we pay for that delivery. Bob sent me an interesting link, from an outfit called American Medical News, which underscores just how insidious these new entities really are. Here's what they want us to see and believe:
"Accountable care organizations ... generally involve a combination of physicians and hospitals taking responsibility for a defined population, working together to improve care and cutting costs."
Can you see the problem in that very short statement? A "combination" implies a partnership of co-equals. But that's laughable on its face. In any such "relationship," the hospital (and more likely, the chain of hospitals) is going to be the Big Dog, and is going to determine how the organization behaves. The doc is simply another vendor in this equation, with precious little say-so in how (and how much) health care is delivered.
And there's this little tidbit:
"Though ACOs are primarily defined as cooperative agreements between hospitals and physicians, health plans are keenly interested in the model and need to keep on top of developments because they will be the ones to reimburse the new entities for care."
Once again, what they want you to see and what's really happening are two very different things. The primary problem is that there's still that pesky third-party (the insurer) sandwiched betwixt the provider and the patient. Let's ignore for a moment the lack of consumer participation in this equation; if consumer-centric health care is predicated on choice (and it is), then it's DOA when it comes to ACO's. That is, what choice does one have when, as in the Anderson's case, there are only one or two plans that include the biggest ACO, er, hospital chain in the area?
And then apply that to the whole country.
This is a recipe for economic disaster: less choice (competition) means higher health care prices, which means higher health insurance premiums. And, as Bob's pointed out, this is exacerbated by the looming shortage of carriers.
Talk about your death spiral.
[Hat Tip for NPR item: FoIB Holly R]
Why, you ask?
Well, a fundamental precept of ObamaCare© is that by controlling health insurance costs, health care costs can be better controlled. This is patently and (more important) demonstrably untrue:
"What Anderson might not know, however, is how Sutter's battle for market share in her corner of suburbia is affecting her bottom line. Hospital prices in the Sacramento region are among the highest in California, driven in large part by the negotiating clout of the hospital chain Sutter Health."
The Anderson family lives in a suburb of Sacramento, California, but their plight is far from unique or geo-specific. As hospital "chains" grow, competition is reduced, and prices increase. That's basic economics, of course, but a lesson lost on many folks who continue to believe that "reforming" health insurance will have any impact on the cost of care. In fact, the opposite is true. As we've previously discussed, ACO's (Accountable Care Organizations) threaten to dramatically change how health care is delivered, and the price we pay for that delivery. Bob sent me an interesting link, from an outfit called American Medical News, which underscores just how insidious these new entities really are. Here's what they want us to see and believe:
"Accountable care organizations ... generally involve a combination of physicians and hospitals taking responsibility for a defined population, working together to improve care and cutting costs."
Can you see the problem in that very short statement? A "combination" implies a partnership of co-equals. But that's laughable on its face. In any such "relationship," the hospital (and more likely, the chain of hospitals) is going to be the Big Dog, and is going to determine how the organization behaves. The doc is simply another vendor in this equation, with precious little say-so in how (and how much) health care is delivered.
And there's this little tidbit:
"Though ACOs are primarily defined as cooperative agreements between hospitals and physicians, health plans are keenly interested in the model and need to keep on top of developments because they will be the ones to reimburse the new entities for care."
Once again, what they want you to see and what's really happening are two very different things. The primary problem is that there's still that pesky third-party (the insurer) sandwiched betwixt the provider and the patient. Let's ignore for a moment the lack of consumer participation in this equation; if consumer-centric health care is predicated on choice (and it is), then it's DOA when it comes to ACO's. That is, what choice does one have when, as in the Anderson's case, there are only one or two plans that include the biggest ACO, er, hospital chain in the area?
And then apply that to the whole country.
This is a recipe for economic disaster: less choice (competition) means higher health care prices, which means higher health insurance premiums. And, as Bob's pointed out, this is exacerbated by the looming shortage of carriers.
Talk about your death spiral.
[Hat Tip for NPR item: FoIB Holly R]
Karma's a (W)itch
Looks like somebody didn't send in their WaiverMania check to HHS Secretary Shecantbeserious:
"One of the largest union-administered health-insurance funds in New York is dropping coverage for the children of more than 30,000 low-wage home attendants ... The union blamed financial problems it said were caused by the ... new national health-insurance requirements."
Looks like they won't be #112 on "the list."
I found this little tidbit interesting:
"Currently about 6,000 children are covered by the benefit fund, some until age 23."
"Age 23?" Under ObamaCare©, that's supposed to be "age 26." Someone miss the memo?
For its part, the union is pointing the finger of blame at the Empire State, claiming that, under directives that took effect 2 years ago, "it expected that ... many of its members would qualify for state assistance for health-insurance coverage." So the wonderful gunion members counted on saps, er taxpayers to foot their bills?
State officials, on the other hand, are having none of that:
"The state is not forcing 1199 to do anything regarding its employee health insurance,” said Jeffrey W. Hammond, spokesman for the New York Department of Health."
Classic Mexican standoff, or missed opportunity? You be the judge.
"One of the largest union-administered health-insurance funds in New York is dropping coverage for the children of more than 30,000 low-wage home attendants ... The union blamed financial problems it said were caused by the ... new national health-insurance requirements."
Looks like they won't be #112 on "the list."
I found this little tidbit interesting:
"Currently about 6,000 children are covered by the benefit fund, some until age 23."
"Age 23?" Under ObamaCare©, that's supposed to be "age 26." Someone miss the memo?
For its part, the union is pointing the finger of blame at the Empire State, claiming that, under directives that took effect 2 years ago, "it expected that ... many of its members would qualify for state assistance for health-insurance coverage." So the wonderful gunion members counted on saps, er taxpayers to foot their bills?
State officials, on the other hand, are having none of that:
"The state is not forcing 1199 to do anything regarding its employee health insurance,” said Jeffrey W. Hammond, spokesman for the New York Department of Health."
Classic Mexican standoff, or missed opportunity? You be the judge.
Sunday, November 28, 2010
MVNHS©: A Most Deadly Game
Our Cousins Across the Pond©, whose "health care" scheme we're attempting to emulate, have a little problem:
"Nineteen hospital trusts are today exposed as having alarmingly high death rates in a major report that also reveals how hundreds of people are dying needlessly because of substandard NHS care."
Okay, so not so "little," after all. A new report, compiled by the British Department of "Health," and Dr Foster Intelligence ("a public-private partnership ... that aims to improve the quality and efficiency of health and social care through better use of information") casts an unflinching eye on the debacle that passes for health care in the UK, finding that tens of thousands of innocent Brits "developed avoidable blood clots, suffered from obstetric tears during childbirth, had objects left inside them after operations or were not given immediate treatment after a stroke."
Still not convinced? Then click here for the gory details.
Told ya so.
"Nineteen hospital trusts are today exposed as having alarmingly high death rates in a major report that also reveals how hundreds of people are dying needlessly because of substandard NHS care."
Okay, so not so "little," after all. A new report, compiled by the British Department of "Health," and Dr Foster Intelligence ("a public-private partnership ... that aims to improve the quality and efficiency of health and social care through better use of information") casts an unflinching eye on the debacle that passes for health care in the UK, finding that tens of thousands of innocent Brits "developed avoidable blood clots, suffered from obstetric tears during childbirth, had objects left inside them after operations or were not given immediate treatment after a stroke."
Still not convinced? Then click here for the gory details.
Told ya so.
We have to pass this bill so that you can find out what is in it
Perhaps missed in the excitement over other wonderful things we have been finding out about health insurance reform, here is a snippet from the Institute of Medicine:
"At the request of the Secretary of HHS, the IOM is undertaking a study that will make recommendations on the criteria and methods for determining and updating the essential health benefits package."
At first I misread this. At first I misunderstood that the Institute of Medicine was asked to define essential medical services. I am relieved to find out instead that IOM has been assigned to work on the design of insurance benefits.
"At the request of the Secretary of HHS, the IOM is undertaking a study that will make recommendations on the criteria and methods for determining and updating the essential health benefits package."
At first I misread this. At first I misunderstood that the Institute of Medicine was asked to define essential medical services. I am relieved to find out instead that IOM has been assigned to work on the design of insurance benefits.
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