Revisiting those high-risk pools—briefly
First let me say that this post will be much, much quicker and briefer than my usual. I have a very busy day today and I’m behind in my schedule. So I’ll just say that I’ve noticed, with the debates over how (and if) the GOP should (or will) repeal/replace Obamacare, the subject of high-risk pools has come up again.
Of course. That’s because it’s a knotty problem that’s built into the whole concept of health insurance for all: how to insure the sick, who will incur higher costs?
I’ve discussed it several times in the past, and plan another looong post or two on the subject. This is not that long post, but now I’ll just say that I’ve seen an enormous amount of misrepresentation about how the pre-existing condition coverage used to operate before Obamacare. This was especially true when Obamacare was first being discussed and passed, and it’s still true today.
A very quick summary version is that, prior to Obamacare, most states either had mandatory coverage (including those at high risk) or, much more commonly, a high risk pool for those with pre-existing conditions, and that the high-risk pools were usually partially subsidized by the state to help defray the cost to the consumer who was strapped for funds.
That doesn’t mean high-risk pools were cheap to most people. They were not. But they were a lot cheaper than individual underwriting (which was the other option commonly open to people with pre-existing conditions). I know, because I was in a high risk pool for many years, and I did research on how it worked on a state-by-state basis.
@Neo – saw your comment on the other thread too.
Generally agree with your assessment.
You should know I am not arguing about that.
What I am referring to is how I believe the trump supporters, particularly in the rust belt who put trump over the top by a thin margin, are likely to be the most interested in the outcome on this particular aspect.
“That doesn’t mean high-risk pools were cheap to most people. They were not. But they were a lot cheaper than individual underwriting “
One way or another, I’d bet that they hear this and feel like they haven’t been “taken care of”.
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If it were me, I’d take all the public sector funds spent on “healthcare” and just do a straight transfer to every citizen. We spend more public sector funds per capita on this than most western nations do on their single payer systems.
http://theincidentaleconomist.com/wordpress/public-vs-private-health-spending-in-oecd-countries/ (note: it shows % of GDP, but remember that US GDP per capita is higher)
IOW, we are already there (and beyond) with the government spending. So, why not let people use that money (e.g. as a coupon) against catastrophic insurance (or probably much better, since other countries seem to be able to cover a wide gamut of services well beyond catastrophic at that price, and the money is not being filtered by the bureaucracy administering it)?
There are other things I’d like to see to go along with this (re: medical service price transparency, drug pricing and importation, FDA approval simplification, etc.), but this would go a LONG way to bringing that sector back to where it ought to be.
However, there are many in that industry and the bureaucracy who would much prefer the complex legislation as it gives each their own advantage.
It seems to me the opposite extreme from high-risk coverage is the practice many of us (myself included) engage in: passing even the most common medical expenses to insurers — in my case, Medicare and a secondary insurer.
There really is no reason “normal” medical expenses should be covered by medicare. And when I say “normal,” I’m referring to annual checkups, annual lab tests, etc. The analogy I like is that they are similar to oil changes in your car — not something your auto insurance covers.
One of the results of such a system is that lab costs have skyrocketed. I had a blood test not too long ago, a lipid panel, and it cost several hundred dollars. That does not, in my limited experience, reflect the actual cost of the procedure. Instead, it represents an artificially high price that hospitals and labs ask, knowing that the reimbursement will be reduced significantly.
Look at itemized hospital bills for greater examples. One bandaid for $8, a box of generic kleenex for $15. These are just not realistic prices. If consumers knew they were going to bear those costs, they would either do without the service or product, or they would demand a more realistic price.
I think we need to move in that direction.
Another chart, showing $US per capita, 2015
https://data.oecd.org/healthres/health-spending.htm
Only Switzerland, Luxembourg, and Norway spend more public sector funds. We ought to compare effective tax rates with them too.
When I first came across this fact (that US public funds are as high as most western nations), I was astounded.
To hear the left, one would think we are woefully behind all these other nations in public spending.
What they really seem to want is to bring that private funding under their control in the public sector.
@F – great points.
Covering people with pre-existing conditions is not insurance but charity. Insurance is to protect you from an unpredictable catastrophic economic loss. When you buy insurance you are making a bet with the insurance company. As an example, when you buy car insurance you are betting that you will wreck your car and the insurance company will have to pay lots of money and the insurance company is betting you won’t wreck your car and they don’t have to pay a cent. Now suppose you wreck your car and then try to buy insurance and you discover the insurance company will not insure pre wrecked cars. Suppose the politicians think the insurance company is being greedy and unfair and force the insurance company to issue insurance on pre wrecked cars. Well, that’s not a bet, the insurance company is going to take a sure loss on pre wrecked cars. When the politicians force insurance companies to cover pre=existing conditions they are forcing the insurance companies to take a sure loss and engage in charity.
Outstanding analogy Ray! You evil, rich, uncaring fascist! 😉
“Reason is poor propaganda when opposed by the yammering, unceasing lies of shrewd, self-serving men.” R.A. Heinlein
A problem with preexisting condition coverage is healthy people can avoid signing up and paying for insurance until after they they get sick or injured. Would it be possible to have some kind of waiting period, say 60 or 90 days after purchasing insurance for preexisting coverage kicking in?
The way pre-ex coverage works these days is that there is a “look back” period covering the period prior to when the insurance was purchased. This look back period varies by policy, but 90 days is pretty common. This is to protect the insurer from taking a sure loss, as Ray noted in his post.
In Michigan, BC/BS was required to take anybody who applied for individual coverage. The look back was six months.
The exception is when you were coming from group coverage in which case the look back was waived.
It varied by carrier, but once a minimum number of employees were to be covered by a group plan, there was no underwriting and coverage was guaranteed. For some companies, it was ten full-time employees to be covered. There was a gray area at the lower end of the minimum number of employees where a look back might apply, but that was rare.
Keep in mind that every poster child for dem policies back to Hillarycare has been a fraud.
“Covering people with pre-existing conditions is not insurance but charity.”
There’s an interesting series of articles on that theme over at PJM. The bottom line is that the insurance company has to make money while being able to pay out, so the inevitable outcome is that costs that are guaranteed to happen, cost more if you “insure” them because the insurer has to cover the actual costs plus a small but necessary profit.
It literally is not insurance anymore when you have “insurance” for routine checkups, immunizations and other doctor visits that are 100% going to happen during any and every coverage period. It becomes a sort of group subsidy scheme.
Personally, I believe this is the point of when health care set out on the road to being unaffordable. I am actually old enough to remember when a lower-middle-class working mom, like mine, paid for a routine doctor’s visit for me the kid while walking out the door. It’s not “insurance” when a responsible parent takes a child for a routine immunization or a checkup; it’s a guaranteed expense. And before insurance had to cover it, it cost less. Insurance was meant to be there for huge expenses that were not likely to happen in any given year, or even necessarily a given person’s lifetime.
I’m not sure how, at this point, if it’s even possible to get people to see the benefit of individuals paying less for their own everyday needs than paying more than what a service is worth for the perception of that service being provided to them.
A lot of interesting commentary here, but it doesn’t address the fundamental issue that trump and the GOP in Congress have.
What should the policy be?
And, importantly, how do you sell it to these dem swing voters who are in economic hard times, and who helped trump win? (And, surely, the voice trump claims to represent)
When trump says “Pre-Existing Conditions are Covered”, that hardly sounds like he is advocating what folks here are talking about.
Big. I think the first step would be to make sure the public is informed correctly.
“I am actually old enough to remember when a lower-middle-class working mom, like mine, paid for a routine doctor’s visit for me the kid while walking out the door. It’s not “insurance” when a responsible parent takes a child for a routine immunization or a checkup; it’s a guaranteed expense.” Kyndyll G [my emphasis]
And, therein lies the heart of why we are moving toward socialized medicine. Fewer and fewer parents are responsible parents. And excuses are made for the irresponsible parents, along with an attitude of “how dare you judge them!”
When a society abandons moral standards, there are consequences.
Evidenced by the skyrocketing unwed, single mother syndrome. 75% of black mothers and a rising percentage of white mothers are unwed with an absent father.
If insurance were not tied to employment there would be a much smaller issue of preexisting conditions. If you left or lost your job the insurance group you belong to would not change so the risk pool would not change. Perhaps a public reinsurance pool to pay premiums of people who could not maintain their payments would be required
The problem is people would not trust that their pay would go up if the employer no longer provides insurance. A bribe would be required until a market is stable
Instead of either forcing people to buy insurance or letting them do as they please, why not try to offer something in between?
You want healthy people to join a pool, but they don’t want to.
Doesn’t mean you couldn’t offer them a fee base service whereas the earlier they start paying into it, their future insurance rates are guaranteed to be lower on some sort of sliding scale. People might be willing to pay into something like that at a much lower cost to gain an advantage later. It’s not a total win on either side, but it could add more money to a pool.
I don’t know why there only has to be option A or option b.
I had a good friend who had polycystic kidney disease, a serious genetic condition. She was diagnosed in her thirties. Her father and uncle died of it in their forties.
Initially she freaked out. Then she calmed down and devoted herself to alternative therapies and became a healer herself. Her PKD never went away, but she made it to the age of 66 without any conventional treatment.
Anyway, she paid $700/month for catastrophic insurance back in the nineties. I know she was glad never to need it.
What should the policy be?
Big Maq: Aye, there’s the rub!
Healthcare is a wickedly complex problem in itself, which no nation has handled with stunning success. Then there’s backing out of the bizarre, convoluted, Rube Goldberg contraption of Obamacare, which has been set in concrete. Finally, there’s the matter of coming up with a politically pragmatic replacement which can make it through Congress into law.
Repealing Obamacare sounds great until you have to replace it…with something.
The other problem, which is hardly discussed at all, is that medicine is getting better every year. Which is great, of course, except it makes healthcare relentlessly more expensive.
Even if Obamacare had not passed, healthcare would still be more expensive in 2017 than 2010.
If all we wanted to do was provide 1950s medical treatment, we could pay for it out of the general fund, barely blinking.
real. I suspect most medical practitioners would ot want to live on the current version of their Fifties income.
“Finally, there’s the matter of coming up with a politically pragmatic replacement which can make it through Congress into law.” – Huxley
Right. Congress is (in large part) moved by the people they serve at home.
I hear a lot of folks here talk about the problems, which is okay, but insufficient. If they were to put forward a proposal it has to be sellable to people like commenter Brian E.
I may not agree with his proposed solutions to problems, but he does articulate reasonably well some of the concerns of that segment of trump supporters.
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“Even if Obamacare had not passed, healthcare would still be more expensive in 2017 than 2010….
If all we wanted to do was provide 1950s medical treatment, we could pay for it out of the general fund, barely blinking …
I suspect most medical practitioners would ot want to live on the current version of their Fifties income.”
Great points.
There’s a lot of life saving / extending innovations since then that folks would surely not want to give up.
Also, the cost to even become a medical practitioner has risen significantly. Would that level of income suffice to cover that?
Yes, there is no going back.
Oh. The last point was from richardaubrey.
Well, it fits well with Huxley’s comments. Great point.
My old eyes need fixing, evidently.
“I think the first step would be to make sure the public is informed correctly.” – richard aubrey
That is indeed a problem. It is a very big question on how to do this effectively.
It’s an ongoing battle, really, as with much of the gamut of governing, the facts and ideas get quickly colored and filtered by political biases.
That is even assuming people have the time, inclination, and interest in learning as much as they need to know to be “well informed”.
Here’s a relevant point that I’ve not heard discussed. What is a pre-existing condition? A hang-nail, recovery from stage 3 cancer, or something in-between?
I have a low platelet count, just like my mother had. She made it to 85 without major problems, before she needed major but non-emergency surgery. So she was prescribed steroids for two weeks prior to surgery, which fixed her platelet risk.
Furthermore, my platelet count was occasionally below 100 which was the lower threshold of normal. In recent years it has been a bit above 100, but now the lower threshold is 120.
I think it is reasonable to believe that a binary pre-existing/not pre-existing segregation is nonsense. So either you have perfect health, or you are a train-wreck waiting to happen?
I could say this is stupid, but I believe it is an inevitability when so-called insurance companies are placed at the top of the health care industry’s power structure.
Realhuxley：
If healthcare is truly improving year after year the cost should be decreasing not the other way around according to the most basic economic laws. Computers today being millions times more powerful at a fraction of the cost of PCs in the 80s is an example. Something has gone horribly wrong with our healthcare，and it cant be fixed until the root problems are understood
Dave said:
“If healthcare is truly improving year after year the cost should be decreasing not the other way around according to the most basic economic laws. Computers today being millions times more powerful at a fraction of the cost of PCs in the 80s is an example.”
MDs ain’t PCs. The phenomenon you are asking about is ‘Baumol’s cost disease’:
https://en.wikipedia.org/wiki/Baumol%27s_cost_disease
Directly relevant is the comment about Beethoven string quartets.