While the medical insurance companies seemed to be on board for health care reform, they recently commissioned and released a study that seems to be a shot at this reform. This study alleges that there will be a 111% increase in premiums from 2009 to 2016 if the Baucus plan passes. Of course, insurance premiums somehow always seem to increase, so the projected increase without the plan is 79%. The folks in the Congressional Budget Office take issue with the numbers presented by the industry study.
One obvious problem is that both the folks in industry and the folks at the CBO are interested parties in this matter. This does not entail that they are mistaken (though at least one of them must be), but it does provide reasonable grounds for being suspicious of their claims. While some experts have taken issue with the industry numbers, all of the speculation is just that-speculation. While some intelligent estimates can be made about future premiums and how they will be impacted by this or that, such predictions must be taken for what they are.
Of course, the industry claim that rates will increase can be seen not just as a prediction but also as something of a threat. I’ll run through the logic. As noted above, the industry seemed to have been on board with the plan, but dropped this bomb at the last minute. I suspect that the industry was on board with the part of the plan that required everyone to have insurance. After all, what industry would be against a plan that mandated by law that people would have to buy their product? Of course, the plan also required that insurance companies insure folks that have pre-existing conditions. Currently, insurance companies do not generally do that-after all, you don’t make much profit on insurance selling it to folks who will almost certainly need to use it. As far as I can tell, they were willing to make a trade-off: they would insure those with pre-existing conditions in return for the guarantee of all those new, legally mandated customers. Presumably a little number crunching revealed that the loses from insuring those with pre-existing conditions would be nicely offset by these new customers.
Of course, while people would be legally required to buy insurance, the current plan allows a way out. If someone does not buy insurance, then she must pay a penalty to the federal government. While this penalty is significant, apparently it is not harsh enough to ensure that enough people (from the standpoint of the insurance folks) will purchase insurance rather than pay the penalty. After all, some people chose to go without insurance now and presumably some of these folks would make the same choice if the penalty was sufficiently less than the cost of insurance.
If enough people elect to take the penalty rather than get health insurance, then the industry will not (as they see it) have enough new income to offset the loss of insuring those with pre-existing conditions. As such, the reason for the last minute dissent is evident.
As a final point, I find it interesting that they are effectively telling us this: “If we don’t get what we want, we’ll jack up your rates 111%. If we get what we want, the jacking will only be 79%. You get jacked no matter what, but you should be used to that by now.”
T. J. Babson says
There are lots of people who live “off the grid.” They don’t pay income tax, and may not have any visible means of support. They pay cash for everything and may not even have a SSN.
How are these people going to fit into the new system?
Michael LaBossiere says
Presumably they will not, unless there is a new effort to locate them and make them comply.
The bill will still have 20 something percent uninsured by what 2019? This will be another huge money pit for sure.
Michael LaBossiere says
But 33.3% of those will be illegal aliens. Interesting how 1) that is factored in and 2) they confidently give that estimate about folks who will be here illegally.
Still havent proven the costs will go down.
Thinking about this, I honestly can’t believe I’m in an America hat s going to force me to have health coverage.
This is just weird.
Funny too, that John Mackey was threatened with boycotts by progressive groups, of his Whole Foods Co., for writing this poignant article is the WSJ:
Progressives don’t want any other solution than government run health care– a very debatable solution. Why not, as Mackey suggests, reward people for doing things we know lessens the burden on the system: Stop smoking, exercise, eat right.
Oh and by the way, it’s politicians that have pushed insurance costs through the roof by mandating that every policy cover things that many people who are covered don’t use, like infertility, alcoholism treatment and much, much more.
How about more flexibility in my choice of coverage?
“Stop smoking, exercise, eat right.”
For one thing, I doubt that whatever progress we’ve made on the smoking front through government actions would have been equaled by “reward[ing] people”. I’m still trying to figure out how you get motorcyclists to wear helmets without making it a law. Any rewards come to mind?
I’m sure there have been studies (perhaps not) where a random sampling of 500 people have been gathered together and told to stop smoking, eat right , and exercise. Perhaps 250 of them were incentivized and 250 were left on their own with nothing but a suggestion hanging over their heads. The results might be telling. Might say something about the human condition (or lack of conditioning). Might parallel the results of “The Biggest Loser”?
Total cost transparency is an interesting idea but it has a cost in time and materials. And it’s certainly debatable whether the more detailed billing statements Mackey suggests would be read by more people than read the more general statements now. I imagine one would quickly tire of reading the cost of each cotton swab and pair of disposable nitrile gloves and hypodermic needle and mask for every doctor’s visit. Not even James Earl Jones could make it sound interesting. I currently wait 20-45 minutes to see my GP for a 10 minute visit. Let’s make that a one hour wait if the good doctor has to record each blob of lubricant, etc. for the 20 or so patients before me.
“Repeal all state laws which prevent insurance companies from competing across state lines.” Great idea. Don’t conservatives believe in state’s rights anymore? 🙁
“Enact Medicare reform.” I would certainly consider “reforming” (not eliminating) Medicare D–that money-sucking monstrosity that Bush and a Republican Congress spewed out in 2003.(Graham and Hagel and one or two others voted against their Republican colleagues). The bill and the process it was passed by stunk. Big Pharma loved it. Let’s make it so government can negotiate drug prices.
Tort reform: Fine as long as I have legal options when/if an incompetent physician or a staff member or a hospital is responsible for death/serious bodily harm to me or a loved one. Oh, and I want a panel of my peers (not insurance industry and medical establishment reps) to determine what the limits of my just compensation would be. Let’s always keep in mind the conservative battlecry: Responsibility. The incompetent–especially the ‘professional’ dangerously incompetent– must be held responsible for their failures.
In the end, you can be a a non-smoker who exercises faithfully and eats sensibly for decades
yet within a two year span you may be diagnosed with two or three or more conditions that will require vast expenditures over decades. Good luck, Michael. . .
The best plan with the current system –and with any system that’s likely to escape the greasy clutches of Congress: Don’t get sick; if you do get sick, get well quickly; if you can’t get well quickly, die–and do it fast.
You can also be as healthy as you can be and still die in many other ways totally unrelated to lifestyle. Of course statistically you still have a better chance.
My BC/BS rates have gone up about 35% this year alone.I’m not sure what the health care industry’s point is with the 111% over 7 years.
They may have been claiming that 111% represented a reduction in the rate of increase.
Michael LaBossiere says
My rates have also gone up over the years, although my salary has not. Faculty got a tiny cost of living increase a while back, but I recall that inflation and higher insurance actually left us with less real money.
Health care costs may have still been lagging behind and adjusting to the cost of doing business. You cannot directly correlate this with your pay.