I had an interesting conversation with an insurance rep while I was on vacation. She and her husband both sold health insurance to mid-size corporations for one of the big insurance companies, and they were on an award trip because they had been so successful. I asked her what she thought of Obamacare, and she said she had taken special training to become expert in healthcare reform, but not because she expected to sell a lot of insurance. Instead, her reasoning was that she wanted to be positioned for the day that private insurers like her company stopped providing policies on the exchanges.
Her view was that the regulations accompanying Obamacare made it impossible for insurers to make a profit. (One example among many is mental health care – mandated coverage under Obamacare is far more generous than the average current insurance policy.) So, she expected that private insurers would pull out and be replaced by government-sponsored healthcare. At that point, she’d be positioned to sell the Medigap-style policies that would inevitably accompany Medicare for all.
She pointed out that her company was one of the leading sellers of insurance in Japan, which has government-sponsored healthcare. Most Japanese buy a policy to buy coverage the government doesn’t provide. She thought there would be the same kind of bonanza here, as soon as we shift to a more Japanese-style system. She didn’t understand why other agents in her company were shying away from learning about Obamacare, while she embraced it as a big opportunity.
I hadn’t heard this opinion before, but it does make sense. All the Medicare-eligible people I know have some form of Medigap insurance. With Medicare, the main risks (big operations like heart bypass and joint replacement, long, drawn-out fights with cancer) are shouldered by the government. The little risks, like paying the (capped) hospital deductible, or other uncovered services, are shouldered by insurance companies. For Medigap, the government specifies a half-dozen standard policies, each of which covers progressively more of what traditional Medicare doesn’t pay. If Obamagap were structured the same way, it would be a corporate dream come true, because unlike the free market fantasies entertained by Galt’s Gulch fabulists, what corporations really want is a highly structured market with low risk and and well-defined, predictable rewards.
Of course, the gap in her reasoning is her unwillingness to entertain the notion that insurers would cut costs to make providing Obamacare policies profitable. One of the first place to cut those costs would be the highly compensated direct sales force that is rewarded with trips to Caribbean resorts. Still, I was struck by her matter-of-fact acceptance of the inevitability of Medicare for all, given the current freakout over Obamacare.
Doesn’t really surprise me, such unvarnished takes by the rank and file in the health insurance business. They probably know better than most the unsuitability of providing health insurance as a free market entity. And they have sucked on that money tit of moral hazard in a completely unregulated business for decades now. Until the profiteering could no longer be contained, from providing a service that people cannot refuse.
Maybe the ACA will be a backdoor to medicare for all. I think most involved are counting their chickens one last time, and fucking all those they missed. To squeeze one more dime out of our death dealing private insurance industry. Unless, Jimmy Bob paying for insurance at 21, can pull them through the otherwise mandates for treatment for those on the downslope of life. I kinda of doubt it.
Well, as a frequent and vociferous critic of Obamacare – I will gladly eat tons of crow if eventually it becomes a more rational and sane healthcare program over time.
Teh Free Market solves everything.
Remember when health insurance was a non-profit endeavor due to fears of moral hazard?
That’s a really long post just to blag about going to the Caribbean in February.
I have a feeling you may not work in the corporate world, because the LAST place they cut is in the highly-compensated sales force. The sales force is what actually generates the revenue that comes into the company, so they’ll cut pretty much every other employee before they cut sales staff.
From everything I have seen and read about Obamacare, this is exactly what it’s designed to do — make it unprofitable for the for-profit insurance companies to provide primary care and steer them into areas where they can do better (like gap policies). There are other reforms that still need to be made (like getting rid of for-profit hospitals) but driving for-profit insurers out of the market is a great step.
I think that ended right around the time when hospitals realized that all of these sick people laying around were profit centers that just weren’t being exploited efficiently.
Ella in New Mexico
Exactly why ALL healthcare products, whether it’s insurance, hospitals, drugs and devices should be strictly non-profit enterprise.
We’re counting down the days to when our NM insurance exchange opens. Meanwhile, my son, a 28 year-old wildlife biologist who works for barely above minimum wage in a small non-profit is gambling with his health: he as no insurance at all right now. Hope she enjoyed her free trip!
@Mnemosyne: I think they always knew that, but it took a moron like Reagan to let it happen. Of all the bad things he did, that may be one of the worst as far as the daily lives of Americans.
Culture of Truth
Mind The Gap
@Mnemosyne: my impression was the reverse — that what Obamacare was designed to do was to make providing primary care profitable by dramatically expanding the number of paying customers. That way the profit per visit or per patient is low, but there’s some incentive to stay in the game. Like being a manufacturer of flu vaccines instead of boutique treatments.
@Mnemosyne: Excellent take! I do believe President Obama had this end product in mind. /obot
And let me grab this opportunity to say Thanks a big bunch. Your entertaining tales of the kitties enjoying their Stinky Sox has been great for us!
You will believe a cat can fly.
@FlipYrWhig: Could work both ways. Eleventy dimensional chess!
Ha! Some of us have known this all along-this is why we worked so hard to make sure the PPACA was passed.
As someone who works in the insurance field, companies are cutting costs by layoffs among the lower-end staff, keeping pay low for lower-end staff and by making staff do the work that used to be done by multiple people. What they aren’t doing is cutting any costs through CEO and upper management costs. Those people rake in obscene salaries + bonuses and by lowering them the insurance companies would be quite profitable.
I expect that more insurance companies are going to have problems with the customer satisfaction requirement of the exchanges than the profitability issue. With companies understaffed in the areas that customers have contact with, customer service, claims, etc. customers will grade insurance companies poorly. And if their score isn’t high enough, they get booted from the exchange.
@askew: That’s not confined to your field.
Wait? All our pure lefties have been telling us that single payer,educate for all was possible and that we don’t have it because Obama wanted to give the insurance companies even more profit. Were they lying? Tell me it isn’t so!
Definitely not but the impact to our field is that under Obamacare insurance companies have to deliver great customer satisfaction to stay in the exchanges. When they overwork and underpay the staffers who have contact with customers, I expect the customer satisfaction ratings will be quite low which will result in them getting kicked out of the exchanges.
Single payer, Medicare for all…fucking phone.
Not surprising at all – and I thought this was one if the future benefits of the ACA with capping the medical loss ratio at something like 80-85% (meaning companies would have to spend more in care and less on admin). I don’t have the link at the moment, but shortly after ACA passed, a health company CEO said that the industry as for-profit only had about 15 years left.
Not lying. Mistaken.
The belief by many people on the left is that if an apocalyptic event occurs that wipes out the insurance companies, then the country will have “no choice” but to put a single payer system into place. Shoring up the insurance companies in the short term – which PPACA/”Obamacare” does – to them looks like an attempt to avoid the apocalypse.
Which it is. Our health care system in this country is unsustainable. Obamacare doesn’t actually change that in the long term, it’s just another step in the insanely long march that this country has taken towards single payer one generation at a time. What it does do is put a framework into place that will prevent an apocalyptic event and allow the health insurance industry to die slowly instead of all at once.
So yeah it props up the insurance industry for the short term. And in the longer term it prepares for the eventual scaling back of the industry to a “gap” system. It can do both at once.
Villago Delenda Est
They’re certainly not going to cut back for hookers and blow for CEO parasites, that’s for damn sure.
“Which she embraced as a big opportunity.” Jesus, a businessperson who realizes you can make money working with the government as against it. Amen! Not that that can’t produce its own set of problems, but at least we’re past the ideology-for-ideology’s-sake “no government ever because shut up that’s why” stage.
(With that one person, at least).
What my doctor had to say last week about insurance and Obamacare. I would love to have a system where private insurance is an option, a la Medigap. But I despair that anything will every change because, FEARdom.
As long as we can all agree that Obama sold us out under the veal pen and is history’s greatest monster.
Washington State is participating in the Exchange. I work for a not-for-profit insurance company, and my department spent most of last week finalizing and filing Exchange plans. The Office of the Insurance Commissioner will spend all of 2013 reviewing them, on top of all the other work it does. The Exchange is scheduled to go live January 1, 2014.
The Federal agencies in charge of PPACA established a set of ten “essential health benefits” – specific coverages all Exchange plans must include. Anything outside of those essential benefits are potential markets insurance companies can go after. Here’s the list:
Ambulatory patient services
Maternity and newborn care
Mental health and substance abuse disorder services
Rehabilitative and habilitative services and devices
Preventive and wellness services and chronic disease management
Pediatric services, including dental and vision care
Notice there’s no requirement for adult dental and vision care. People will have to get that on their own.
Each plan will come in “bronze,” “silver,””gold,” and “platinum” versions, the difference being the percentage the plan will pay, from 60% for bronze to 90% for platinum.
The companies offering plans on the Exchange will only administer them; the governmental entities will actually manage enrollment, eligibility issues, and premium and claim payments. (I think.)
It’s going to be incredibly complicated for families. People who don’t have insurance from their employers (employer-paid policies will still be around, for companies who want to continue providing them) will have to buy Exchange products, plus adult dental-vision, plus whatever other gap policies they can afford.
We are expecting 2014 to be one long, ongoing train wreck, since no one knows exactly how well any of this will work. We’re also expecting many changes going into 2015-2016, as we find out what does and doesn’t work.
I support PPACA, but implementing it is going to be a bitch.
That is certainly the usual corporate behavior. Followed, about a year later, by those highly-compensated salespeople whining about how they can’t sell anything because the clients can’t get any decent customer service and there are no new products to sell. You know, the things that would have been provided by all those people that were laid off.
Then comes the bankruptcy filing and the huge “retention bonuses” to make sure those salespeople (and executives) don’t leave until they’ve drained the last few pennies from the company.
Forgive me but how different is this from the MA model? That seems to have been implemented without too much horror and dislocation. I’m wondering–not snarking, wondering since you are on the front lines–why the roll out in your state sounds like it will be so fraught?
ObamaCare does NOT prop up the insurance system in the short term. The insurance companies were doing just fine before it. The fact is that the PPACA puts regulations in place that require the insurance companies to spend 80-85% on actual health care. If you look at the list, there really is no filler. So now the insurance companies can no longer spend 40 cents of every dollar on salaries, commissions, lobbying, marketing, etc.
ObamaCare is a way to responsibly unwind the out of control health insurance system. This is not something we would ever want to do suddenly. With so many people employed by and invested in the health insurance market (union pensions, etc) and with health care being almost 20% of our economy–this has to be done gradually and carefully.
It seems like the freak out on the left was all about the mandate to purchase health insurance. Yes, Republicans first introduced this and it was the basis for RomneyCare in Massachusetts but they did not include the Medical Loss Ratio which is the real cost cutting measure and the thing that insurance companies hate, hate, HATE! They spent about 2 million a day fighting the PPACA. Why would they do this if they think that ObamaCare was good for them?? The Republicans pretended that it was the mandate that outraged them (and some of the dumbest m*therf*c$ers like Jane Hamsher) bought it. What they really hated were the patient protections, expansion of mental health coverage, and the Medical Loss Ratio because they knew that this would end their party.
Alsotoo, I think people will be really pleased when they find out about the changes in Medicare reimbursement. Patient outcomes will improve and costs will go down. The President had one or two lines about this in his SOTU but it was based on a commission that Sebelius convened in 2009. The government is going to stop reimbursing per procedure (fee for service) and start reimbursing per condition with the expectation that providers will use best practices. Think along the lines of Atul Gawande’s piece in the New Yorker comparing health care costs and outcomes. Places like the Mayo Clinic spend less per patient but get better results. These best practices will really help to bring down costs.
Much more to say about this topic since it is so broad and complicated and emotional but I am really thrilled about what the PPACA is already doing, and will do to improve health care delivery in this country.
You’re welcome! I don’t mind touting products that work, and my kitties all love the Stinky Sock.
@NonyNony: I had a brief talk in IIRC summer 2009 with the insurance broker who was arranging the health coverage for the nonprofit where I then worked. I asked him what he thought the future looked like & he said, rather mildly, that he expected single-payer within a few years.
This is right out of Sun Tzu (no relation to my Cantonese lawyer, Su Mi): Always leave your enemy a line of retreat. Otherwise s/he/it has no reason not to throw everything including the kitchen sink at you, since the alternative is total annihilation anyway. In this case, “total annihilation” = Shazaam! Single payer, bitchez, & your business is now worthless!
Allowing the crowd with green in the game to withdraw in good order & move their investments to some other
crony-corpitalist scammore productive enterprise works to head off fights-to-the-death that can leave the winner crippled. I’m sure the Obama Administration took heed of the Clinton insurance reform fiasco of 1993, when the major US manufacturers (specifically the auto companies) were all for drastic reform (to get their health-care liabilities off the books) but were convinced by the Forces of Evil that by breaking the Administration on this issue they’d eventually do even better.
This is a consistent & central strategy of the Administration that progressives woefully underappreciate & need to understand for the sake of their own blood pressure.
Those sales people’s commissions will have to come out of the same 15-20% as all the other non health care costs the insurance companies can spend so I don’t think they are going to want to spend too much on their sales force. You also have the requirements that health care plans have to be standardized and readily understandable by consumers. A big need that brokers filled was to explain and help consumers and companies choose from ridiculously complicated and varying policies.
They will become unnecessary fast.
She’s probably right, too. The question is the timeframe. My guess is we’re looking at more like 20 years before that happens rather than 5, but it’s inevitable that we go to Part A for everyone, and Part B being reserved for the exchanges. She might be prepared for it, but she might miss that window.
The care provider constraints buy insurers time. What she’s failing to report is that we were going to hit a different crisis for health insurers which was that they would have such a low participation rate (the % of Americans with health insurance has been dropping for quite a long time now) that it’d go below critical mass needed to maintain the fixed costs of keeping all of those provider agreements in place, doing the actuarial work, and so on. Obamacare traded that huge problem (no revenue) for a smaller problem (no profits). Eventually, insurers will give in on hospitalization as a place where profits are impossible, agree to hand that back to Medicare in exchange for more flexibility on medical, and that’ll be a good deal for everyone.
Well, this post and many of the comments are making me feel positively happy right now, so Obamacare is working for me! I shall ignore the negative – it’s 83 degrees in Venice Beach and I haven’t felt this good in weeks. Think I’ll blame the POTUS.
that’s the deal in Australia, too. good universal care and affordable private policies for “luxuries.”
My sister-out-law and my niece are currently looking for coverage that doesn’t cost more than she makes. She just started being able to work more hours and of course that means she makes too much money for the health care assistance she was on.
When conservatives complain that people don’t want to work, maybe they should consider the fact that many people cannot make a living by working in today’s economy.
@Uncle Cosmo: there’s way too much longing for big fights that the liberal side wins decisively, which is certainly emotionally enticing, but doesn’t sufficiently weigh the downside risk, or the way one fight shapes and leads to another. This comes out in all the backseat driving about how Obama should fight harder on things even if he loses, even though every loss is inevitably deemed to be a sign of Insufficiently hard fighting, creating a cycle where there is no such thing as a hard-fought loss, only inadequate effort or will. How that squares with any other liberal or progressive attitude on anything is an exercise best left to philosophers.
It may come to pass that for-profit insurers are limited by profit margins to supplemental insurance markets. Those are big in countries like France and Germany, mostly because the government and non-profits handle basic care. They’re also actually competitive, unlike primary insurance markets, so Mrs. Aetna might have her work cut out for her.
The insurance reforms in PPACA were designed to shore up non-profit insurers at the expense of for-profit insurers. Pure lefties didn’t see that because they hold corporate interests to be monolith, which is chief among their dumbest beliefs. At least the right is smart enough to play organized labor against itself.
@Gex: I’ve always thought that the small business people that rely on low-wage labor should be the first to support single payer. But of course, many of them are radicalized Republicans that can’t see this at all.
The difference is that the MA model focused on access without cost cutting. So it included the individual mandate to purchase insurance and it provided subsidies but it did not adequately regulate the insurance industry or institute the Medical Loss Ratio-guaranteed expenditures on actual provision of health care.
Republicans loved mandates when they brought more consumers into the insurance market–but they hate them when they are accompanied by limits on insurance company profits and regulations on what constitutes health care expenditures.
I did just have an awesome thought – two systems, one regulated and public, one unregulated and private. In the private market, anybody can call himself a doctor, there’s no government supervision over treatment and zero price control. Wealthy people can rely on the Market(peace be unto It) to self regulate if they don’t want to participate in the evil socialist public system.
I am wondering if there is a way for a society this big and this diverse to give adequate medical care to all and still have room for corporate profit. I do not think so.
Profits occur by manipulating the margins, by being able to say no to the teenager with lupus, the senior with Alzheimer, or in my case, the middle aged man with AIDS. To the extent that all citizens like those listed must be given a chance to purchase a coverage plan, I am not sure there would be a way to get them service in a profit driven system that works – at least not the way American capitalism thinks of as profit.
Edit: BTW, If you have not read this, you really must. It’s a fantastic effort by Steven Brill.
No, they weren’t. They were in slow death spiral. They knew it too, which is why they signed on to support Obamacare. Sure, they had profits, but they maintained that profitability by eliminating customers. That’s a recipe for failure in the long term. It’s fine to cannibalize your customers with one product over another (kill your buggy industry by selling them cars instead, then kill your car industry by building mass transit, etc.), but eliminating them altogether is lethal. Executives were in a panic about the fact that cutting off their least profitable customers was the only sustainable formula they had – and as their customer bases shrank, they merged to keep fixed costs in check. They tried lowering prices with care providers but didn’t have the clout to do it (or authority in many cases as insurance commissioners are as captured by the providers as by the insurers – change was verboten).
They could have gone on that way for another decade or so, but eventually it was going to collapse. The thing the insurers needed most was customers – and now they have them. On to the next part of the problem…
@aimai: Eh. Could be my concerns are insider-y, based on how complicated the process has been from a provider point of view. Maybe the roll-out will go smoothly, and the information will be clear to the people signing up. One can but hope.
I went to a small business info session on the ACA (I am a small business, we have 2 employees) and it was not at all hostile. There were 3 Tea Party people who went to disrupt it, but other than them it was very nuts and bolts, good questions, etc.
I didn’t think they were opposed. More like “wary”. A lot of them were misinformed. They were told there was an employer mandate on small business, which is a lie. It was put on by an employee of HHS.
No they were not. The health insurance industry has been in a death spiral. There has been a lot of profit-taking at the top, but the overall picture for health insurance has been desolate for decades.
You are mistaking CEOs and high-level executives rewarding themselves with large salaries that suck the lifeblood out of a company with a “healthy industry”. If you would like to see a visible example of how disparate the health of a company is from the compensation of its top level executives, I invite you to look at the (former) Hostess corporation over the last decade. This is what the health industry is also going through, except in slower motion.
This is not a healthy industry. When the way that you improve profits is by denying services to paying customers so that you can pay more to the guys at the top – and this is industry-wide practice – you do not have a healthy industry. You have a bunch of vampires who are doing the best they can to get as much as they can before the con inevitably ends and they have to move on to their next victim.
Obamacare puts a stopgap on that by putting some brakes onto how much companies have to pay to provide actual care for their customers rather than just pocketing it. This will actually help the industry overall as it will provide downward pressure on high-level executive salaries and force the con artists to move to other, greener pastures (like the banking industry perhaps) where CEO salaries have less constraint. That by itself would be a huge boon to the industry as it is something that every company will have to deal with and so it doesn’t force them into a situation where they think they have to pay more to be competitive for top-level talent or lose out to another company – everyone’s in the same boat.
(Salary caps for CEOs would improve our economy in so many ways that it isn’t even funny. That provision of Obamacare alone will probably extend the life of the private health insurance industry 5-10 years longer than it would have without it.)
ETA: Also what @? Martin said.
I think Obamacare’s going to be a fucking disaster. Hope I’m wrong.
@kc: Any reason for that?
We just got new health insurance at our 15 employee non-profit. I’m thinking because of Obamacare. From my point of view, this is a massive upgrade:
*They cover 100% past the deductible. I dunno about the rest of ya’ll, but paying 15% of curing non-complicated illness was a real strain. Paying 15% of a quarter mil? Might as well sell me for scientific experiments.
*My company ponied up for a chunk of meeting that deductible with a debit card thing. If the provider doesn’t take debit cards, I get reimbursed.
*I can afford actual dental coverage. In a normal year, I don’t break even, but if something goes wrong, I’m a financial genius. Fair enough.
*To meet the remainder of the deductible I can do a health care quiz and earn points, depending on how healthy my habits are. Time was, I wouldn’t have told them a thing, for fear they would use it to drop coverage or not cover something. Now, I don’t fear that.
If this is how Obamacare is making more people’s lives better, bring it on.
I think there are a lot of people who will be pissed off at, as Atrios succinctly put it, being forced to buy shitty insurance that they can’t afford.
@kc: And there are going to be a lot of people that are happy that they can buy insurance at all, like me, who are being denied it right now.
@kc: If they can’t afford it, there are grants and such, based on their income. If you have ever paid for anything more than a bad cold, I’ll be very surprised. :O
WereBear, I didn’t know about any grants; I do know there are tax credits, but it looks like they only go to people with REALLY low incomes. If you’re in the middle and don’t qualify for a credit, and yet still can’t shell out $300.00 – $500.00 (or way more!) extra per month on top of all of your other expenses, where does that leave you?
Plus, it’s just god-awful complicated. It seems to me that it’s going to put a huge burden on individuals just to figure it out. If you’re used to filing a 1040-EZ every year and getting a refund, but you don’t have health insurance and your employer doesn’t provide it, what now?
It could be just that I know too many people with little education and crappy jobs (I am in SC after all) but I can’t see this working out well for a lot of people.
Again, I do hope I’m wrong. I’ll be the first to admit it. Of course it’ll be a few years before we know how bad (or terrific) it’s going to be.
That IS a benefit and I’m glad of that. That is one positive thing.
@kc: I’m sorry I inadvertently impugned you; now that you have gone into detail you have fair concerns. I believe the grants are on a sliding scale; so many programs, as you point out, help ONLY the most desperate. I’m not sure how this is going to work in SC, for instance.
I can have my own comfort zone, perhaps, because I’m in New York? My mother happened to be up here, working for minimum wage, when she broke her leg; and it was covered.
I told her, “You know, if you were back in Florida, they would have just shot you like a horse.”
That’s wrong, though. its not shitty insurance. And that severely underestimates the number of people who *were* buying shitty insurance because that was all that was offered them, and then discovered how bad it was when things got catastrophic. I live in MA–98 percent of the MA population is now insured because of the exchanges and the supports and the mandate. People are happy. The idea that there is some vast reservoir of libertarian healthy young guys who don’t wanna and you can’t make ’em buy insurance is absurd. People are begging for health insurance. Under Obamacare it ought to be more or less affordable. If someone making a good salary doesn’t want to make the effort to insure himself (and us against his catastrophic health care failure) he can pay the fucking mandate/fine (which is EXTREMELY SMALL) and then sit himself the fuck down.
Apologies for my sharp tone. Like Werebear I see you have legitimate concerns but I think they are more idiosyncratic than you think.
@Mnemosyne: You do realize that a hospital and a health insurer are two separate entities with oftentimes conflicting interests, right?
WereBear, I would be crushed if you impugned me; I’m a huge fan of your Way of Cats and have used it for guidance many times. :D
South Carolina has, of course, opted out of the exchanges. No one seems to know yet how that’s going to work.
We have a friend in this situation until 2014. She wound up with an aggressive type of lung cancer; luckily she was diagnosed after the crash, when she and her husband were both unemployed. Medicaid put her on Tarceva, which saved her life. She will have to take it every day for the foreseeable future.
If she goes back to work, she loses Medicaid, and then has to pay $45,000 a year for the drug that keeps her alive. Because who’s going to cover a lady with lung cancer, even if she never smoked and never lived with someone who did?
Here is the information about insurance exchanges and subsidies. http://www.kff.org/healthreform/upload/7962-02.pdf
Aww, crap, that is bad. Too late now, perhaps, but while I was still young and strong I fled Florida for the s0cal!st paradise of NY. Subsequent events have made me look prescient.
Oh, thank you for the compliments! It is awesome, the feedback from the Cat Community. Always great to know I’m helping kitties and their people.
“How will premium subsidies be provided?
Premium tax credits would be refundable and advanceable. A refundable tax credit is one that is available to a person
even if he or she has no tax liability. An advanceable tax credit allows a person to receive assistance at the time that they purchase insurance rather than paying their premium out of pocket and waiting to be reimbursed when filing their annual income tax return.
PPACA requires exchanges to provide information to prospective enrollees about their eligibility for premium tax credits.
The process through which people apply for premium tax credits will likely be established by the Secretary of Treasury through regulation.”
aimai, I’m not talking about people with good salaries who don’t buy insurance, I’m talking about people who are living paycheck to paycheck and yet don’t qualify for the Obamacare tax credits. These people do not have an extra few hundred bucks a month to pay for health insurance, they can barely pay the bills they have. Don’t you know anyone like that?
As an aside, most people with good salaries already have employer-provided health insurance and will continue to have it after Obamacare is implemented. I’m talking about people with part-time jobs and so on.
I don’t know why anyone would think that sweeping regulation and just about a complete makeover of the for profit healthcare system, regulated nationally for the first time ever, would not have some very rough patches, and some people falling through cracks. Not to mention the hucksters testing the boundaries of how the feds are going to enforce the new provisions.
Might as well get ready for plenty of right wing demagoguing and monkey wrenching at every turn. Not to mention confusion and minor rebellions of those with current policies. The only thing that would be even more overwhelming would be a short term transition to single payer, and dealing with all the lost jobs from that. There is going to be corporate upheaval as well with the ACA, but not on the level of single payer, I wouldn’t think. It might could even cost dems an election or two before all the bullshit is wrung from the system.
We’ll see how it goes . . . might be better off not having South Carolina handle it anyway. This being the state that failed to secure the Department of Revenue’s servers thus allowing hackers to steal the SS numbers of every single person who filed an income tax return in the state in the past few years.
That disturbs me. We know how much damage the Republicans can do in just a couple of election cycles.
IOW;s . It is not the first time democrats have done big things with government, and that usually has had a short term political cost attached. Change is hard, and having it swirling around something so vital as health care in a massive way, will amp the emo up at times.
dance around in your bones
@Keith G: Thanks for the link to Bitter Pill. I am now completely depressed.
I remember when my teenager was hospitalized with an aneurysm and the bill came out to be like 30 pages long. Every single day a new charge for a toothbrush and tube of toothpaste, etc. And that was just the small stuff.
Luckily, I happened to have good insurance at the time, but I remember fighting with the gawd-damned insurance company + hospital for months.
I would like to nuke “chargemaster” from orbit. It’s the only way to be sure.
Tax credits available up to 400% poverty level, meaning individuals who make up to $43,560 and family of four that makes up to $89,000. Read the information at the Kaiser Foundation link for full explanation.
Yes, of course. My point was that for-profit insurance companies are the most easily tackled part of our current problem. For-profit care providers (like hospitals) are going to need to be the next part tackled if we want to get costs under control.
You guys in SC may also be screwed because (IIRC) your governor turned down the extra Medicaid money so people up to 125% of the poverty level would be covered. The Feds will set up federal exchanges in the states that don’t have their own, so that may not be as big of a problem as you think. It’s Medicaid where the people you know are going to get hosed, because they’re probably going to fall into a gap between Medicaid and getting a federal subsidy.
Think of the civil rights laws of the 60’s. As LBJ warned, it would cost the dem party the south vote, and it did, and helped the wingnuts. For a while, now it has bit them in the ass. Big Social change upsets a lot of people, usually, but the thing about our federal government. It is by and large made of reinforced concrete, that moves slowly, but as such is resistant to tampering with mandates so vital as health care, and moves slowly but steadily to fulfill whatever public law was plugged into it.
Sometimes there are unfunded mandates, but the republicans will likely think twice about defunding the ACA, because it has to do with peoples health care, and they would get the blame if they fully blew up the system. They will keep trying to repeal it, but I don’t think defunding is in the plans, except for the craziest motherfuckers, like tea partiers.
Also, not to harp on it, but it sounds as though you’re confusing the subsidies with the tax rebates. Those are two different programs. Most of the people you’re talking about will probably qualify for a subsidy.
Mnemosyne, I don’t doubt that I am confused. I’ve Googled around trying to learn more about this, and I haven’t found an objective, politics-free breakdown of how it’s going to work.
Not to harp on this myself, but how will people with little education know whether they qualify for a subsidy or a credit, etc? Or really, what they’re supposed to do?
Like I said, I live in MA. There are people living paycheck to paycheck here but I think they are covered under the MA law and they get subsidized health insurance. I feel horribly sorry for the people of SC that they are living in a state that doesn’t give a fuck about their situation and their human need for health insurance and health care (given that you can’t access regular health care without health insurance). But this is definitively not the fault of Obamacare. Definitionally you are no worse off than you were previously. Obamacare added to the choices you have, it did not subtract from them. If SC refuses to participate in the exchanges that is not Obamacare’s fault. AGainst stupidity the gods themselves contend in vain.
I guess what I’m saying is that if this goes very badly for poor people in SC then lay the blame at the feet of the people resopnsible for: the SC politicians who would rather see you die in a ditch than figure out a way to help all their citizens get health care.
Not necessarily true, you used to buy computers from a well paid person in a business suit, now you buy them from a kid at Best Buy, same for TVs and other home ekectronics.
How many people now get auto insurance from Progessive or GEICO instead of a highly paid agent?
I’d bet most MediGap plans are sold more like GEICO than State Farm
I’m confused about one key step in the process as outlined. So the insurance companies decide they can’t make a profit in the exchanges under the existing rules, an abandon the exchanges. I agree that leaves room for a public option, or government provided program or something.
But just because the need is there, don’t you still need a separate act of congress to create this alternative? Created, that is, by Boehner and his merry men? Who would rather cut their own throats?
Are the exchanges structured in such a way that, if the insurance companies refuse to participate, the government gets to automatically step in?
@Mnemosyne (iPhone): Ahh. I didn’t get that from your original post. Thanks for the clarification.
@kc: Try this for a start…
kc, here’s a calculator for how much subsidy someone is eligible for. See what you think.
@Lurking Canadian: If the state doesn’t want to participate, then their residents will be covered by the federal exchange. I think there was some talk about suing to prevent that, but I haven’t heard if anything came of that.
pseudonymous in nc
Most countries with a supplementary private insurance system, or even ones with a private primary insurance system, have a big regulatory structure to sandbox the areas where they think that competition has value. Often it’s just in terms of amenities — paying for a private room with cable TV and fresh flowers every morning. There’s a fundamental assumption that the libertarian bullshit about “skin in the game” might work for scrapes and sniffles, but it doesn’t work for cancer and diabetes.
Thanks, y’all; I’ll check those out.
@Lurking Canadian: My understanding is that each exchange is required to carry at least one plan that’s non-profit. The last I heard, the feds were considering using the plan they offer their own employees for that. At least, I think that’s what I heard.
In any rational world, they would be. Goldwater’s insurgent campaign was originally powered in large part by small businessmen who were being squeezed by unions pushing for employers to provide the decent pay and benefits that the still-incomplete welfare state didn’t (large corporations could easily afford it; small businesses, not so much).
The intelligent response for the small businessmen would’ve been to push for an expansion of the welfare state so that it could do the same thing as its equivalents in most industrialized countries already did. Instead, they drank Goldwater’s kool aid, ate up his bullshit and rallied to his campaign, becoming one of the original building blocs of the modern conservative movement that’s continued to make life worse and worse for them.
If it pans out, Obamacare will save small businesses from themselves much the same way the reforms of the Progressive Era and New Deal saved capitalism from itself. And as with those reforms, they’ll probably never recognize it and attribute their survival to Free Market Jesus and their own rugged individual awesomeness.
This is reddit explaining the various aspects of Obamacare is really accessible language. I found it enormously helpful.
Well, amen if people are leaning. Maybe all these years of doing everything for Wall Street and nothing for the “small businessmen” they pretend to idolize finally did get noticed.
I’m one of those lefties everyone around here hates (y’know, because we support values and ideas instead of politicians), and kc brings up the point that concerned me most about the ACA. I see the ACA as such:
–Poor folks: big benefit, because insurance will essentially be provided for free
–Pre-existing condition folks: big benefit, because no more denials
–Lower-middle income folks: screwed into bankruptcy because they don’t qualify for the assistance, and now have to pay hundreds a month they literally don’t have to insurance companies (either that, or pay a somewhat lesser tax penalty and not have any insurance)
I don’t know how many of the 30 million added people that last bullet represents, but it’s probably a lot of ’em. Lots of people potentially angry at democrats . . .
Isn’t this pretty much what capitalism all across the board has become in this country? When you can crash the entire global economy and still get off with nothing but a slap on the wrist (if even that) and often make off with a golden parachute, you have absolutely no incentive to worry about the health of your market or even your company. IGMFY works at the top too.
mistermix @ top:
Does it though? My understanding is that it makes it impossible to make a 35% profit, but that insurance companies can still churn out a 15%-20% profit.
We all know that the ACA doesn’t start out anywhere near perfect. I agree that’s a problem, and I hope it’s one of the first things they fix after the ACA goes into effect.
@JGabriel: That 15-20% isn’t profit. It’s all the dollars spent on something other than medical care. So an agent’s commission has to come out of there as does advertising, office work, etc.
@JGabriel: Those are the people who should be able to get on the expanded Medicaid, but some of the states don’t want that. It’s not Obamacare that is leaving them out – it’s their state.
That is the miracle of big money crony capitalism!
BTW, Martin and Nony Nony are correct, health insurance industry has been in a slow death spiral for years. The problem of adverse selection dwarfs that of moral hazard in health insurance. Cherry picking of customers by insurance companies works over time to destroy any stable competitive equilibrium.
Insurers were cutting costs in other ways that destroyed the function of insurance. Besides cold denying care, they were skimping on care for older adults, letting their health deteriorate at just the right rate to dump them off onto Medicare without a large risk of a disaster for the private company. Several medical officers and risk managers explained to me how this was handled years ago.
So, insurance execs have been thinking carefully about how to handle the end game of their industry for years.
The big problem with the GOP and free market medical care, besides the information problem, and mismatch of bargaining power when a regular person needs medical care, is that, at least in this world, a competitive equilibrium probably does not exist, as Joe Stiglitz and Michael Rothschild explain nearly 40 years ago. Trying to build a system based on a something that does not exist usually doesn’t end well. And it hasn’t.
In the long run any insurance will have limitations. Medicare has them, SS has them, auto/home/flood/ insurance has them. Insurance does not and never was intended to make you whole nor especially, rich. Because if it does the cost would be too much no matter what.
But to think that insurance companies would get out of the business unless there was no business is silly. They are used to exploiting people/systems for money, why would they stop that? What else are they going to do, sell insurance against having fish stink when it gets old? They may fight against change or against having the balance tilt towards consumers but get out of the insurance business? NFW. If there is still even a semi-viable way to make money at it they will do it.
@JGabriel: She has misidentitified the problem. Regulations are just the newest factor squeezing profits to come along. It’s like buying house with monthly payments you can’t afford, and then blaming your financial problems on the fact that suddenly you need the brakes replaced on your car. If it had not been new regulations from health care reform, something else would have squeeze profits, and that would have gotten the blame.
The health insurance industry is not a stable system without strong regulation. Just like the life insurance industry is not a stable system without strong regulation. And life insurance was in fact a sketchy industry with a bad reputation of crises that bankrupted customers periodically until our communist forefathers regulated it strongly in the first half of the nineteenth century. But big money, corruption and crony capitalism, and the development of conveniently (for rich people) incompetent economic analysis that influences policy have all prevented necessary reforms for the health insurance industry.
Survival of any kind of a stable health insurance industry in the US reguires that we move to a Swiss or Dutch style system: everyone offers a uniform benefit basic comprehensive policy to all comers at no or highly regulated profit, and they make money off of supplemental policies on a separate market.
Including multimillion dollar executive compensation that does nothing for the product or even the bottom line.
I used own a mfg corp, what people called metalworking and making a 5% profit was great. Making a 20-35% profit would have been considered obscene(and in fact I still consider it so) and was unimaginable. No one could charge a level of pricing that would afford that level of profit.
The amount of apologetics in this discussion is hilarious.
Free clue: Forcing everyone in America to buy a company’s (shitty) product is not the way to drive that company out of business. It’s the exact opposite.
@NR: It sure is when doing so comes part and parcel with a set of rule changes that make that business’ model impossible to sustain.
Sorry, but your proposal that “insurers would cut costs” betrays your fundamental lack of awareness of the reason for high medical costs in America.
Medical care costs in America are high not because of insurers, but because of bribery and corruption and anti-competitive cartels and price-gouging and rent extraction by means of monopolies and nondisclosure agreements sweetheart contracts between medical devicemakers and hospitals and doctors and imaging/testing clinics and big pharmaceutical companies.
I’ve been through this over and over and over and over, and the evidence is overwhelming. Ezra Klein keeps repeating it over and over and over and over, and no one listens.
There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.
That may sound obvious. But it is, in fact, key to understanding one of the most pressing problems facing our economy. In 2009, Americans spent $7,960 per person on health care. Our neighbors in Canada spent $4,808. The Germans spent $4,218. The French, $3,978. If we had the per-person costs of any of those countries, America’s deficits would vanish. Workers would have much more money in their pockets. Our economy would grow more quickly, as our exports would be more competitive.
Source: “Why an MRI costs $1,080 in America and $280 in France,” Ezra Klein, Wonkblog, 3 March 2012.
In America, a CT scan that costs $950 (average; the high end is $1800) costs $179 in the UK using the exact same machine. This has nothing to do with insurers, it’s driven by the greed of U.S. doctors and hospitals and medical devicemakers and big pharma companies.
In America, a routine doctor’s visit costs on average $190, compared to $15 in Spain. This has nothing to do with insurers, it’s driven by the greed of U.S. doctors and hospitals and medical devicemakers and big pharma companies.
In America, a dose of the drug Lipitor costs (average) $125 (the high end is $334). The exact same dose of the exact same drug costs $33 in Canada. This has nothing to do with insurers, it’s driven by the greed of U.S. doctors and hospitals and medical devicemakers and big pharma companies.
“Greg Mankiw features the chart below on physicians’ salaries in the U.S. vs. various European countries and Canada, showing that MDs in the U.S. make about $200,000, which is between 2 and 5 times as much as doctors make in other countries. How do we explain the significantly higher physician salaries in the U.S.?
“One explanation is the restriction on the number of medical schools, and the subsequent restriction on the number of medical students, and ultimately the number of physicians. Consider the difference between law schools and medical schools.
“In 1963, there were only 135 law schools in the U.S. (data here), and now there are 200, which is almost a 50% increase over the last 45 years in the number of U.S. law schools. Unfortunately, we’ve witnessed exactly the opposite trend in the number of medical schools. There are 130 medical schools in the U.S. (data here), which is 22% fewer than the number of medical schools 100 years ago (166 medical schools, source), even though the U.S. population has increased by 300%. Consider also that the number of medical students in the U.S. has remained constant at 67,000 for at least the period between 1994 and 2005, according to this report, and perhaps much longer.”
Source: “The Medical Cartel: Why are MD Salaries So High?” By Mark J. Perry, 24 June, 2009.
Once again, this has nothing to do with insurers. Nothing. Nothing whatsoever. It’s driven by the greed of U.S. doctors.
Peruse the following articles and you’ll get a clear picture of just how corrupt and pervaded by monopolistic cartels, price-gouging, crony capitalism, anti-competitive self-dealing, and outright bribery the American medical system is. It’s so bad that the Journal of the American Medical Asssociation recently published an editorial pleading with U.S. to stop taking bribes from giant pharmaceutical companies:
“JAMA says doctors should stop accepting bribes from drug companies,” 1 March 2006.
The Journal of the American Medical Association is rocking the boat in conventional medicine. An article in JAMA has come up with the suggestion — aghast! — that doctors should stop accepting bribes from drug companies. Most people didn’t know that doctors routinely accept bribes (including hundreds of thousands of dollars in “contractor’s fees” for signing patients up for drug trials), so this news may come as a bit of a shock to some.”
“The Fix Is In: the hidden public-private cartel that sets health care prices,” 2 September 2009, Slate magazine online.
“An insurance industry CEO explains why American health care costs so much,” Ezra Klein, The Washington Post, November 2009.
“Experts warn of medical industry cartels’ power,” The San Francisco Examiner, 21 February 2010.
…Each sector of the health industry points fingers at the other for driving up prices, and all are raking in money.
Insurers blame hospitals and doctors, doctors blame insurers, and hospitals blame doctors and medical devicemakers in what academics call an inscrutable medical-industrial complex that rivals anything the defense industry ever invented. All these groups are combining into what many experts describe as cartels.
Many industry insiders are afraid to speak on the record for fear of antagonizing the medical groups they rely on for their survival. Contracting practices are draped in secrecy. Prices are almost impossible to obtain because of `confidentiality agreements’ among hospitals, physician groups, insurers and devicemakers who do not want their markups exposed to competition or public scrutiny.
Christina Bernstein, a medical-device engineer and independent sales representative based in San Francisco, sells disposable surgical tools made mostly out of plastic that she estimates are manufactured for about $40 each. These are marked up and sold to hospitals for as much as $350, she said, for a single use in a surgery on a patient.
`But if you were to get a detailed bill of what the hospital was charging the insurance company for the insured patient, those things get marked up to something like $1,200,’ Bernstein said. `It’s ridiculous. There’s no open competition.’
Insurers are not the primary problem, or even a significant problem in driving American medical costs. The underlying problem is that the entire system is a for-profit system and as a result it’s riddled with exactly the same kind of bribery and price-gouging and corrupt crony capitalism we find in Wall Street or the defense industry or any of America’s other hopelessly corrupt bribe-addicted sociopathically greedy failing industries.
America doesn’t use privatized unregulated nationwide K-12 for-profit schools to educate their kids: instead, we use a government-regulated government-funded system of mass public education. America doesn’t use a system of private nationwide toll highways to travel across the U.S.: instead, we use a government-regulated government-funded system of interstate highways. America doesn’t use a system of private for-profit inspectors to make sure our food is untainted: instead, we use a government-regulated and government-funded system of nationwide food inspectors at the FDA.
Why of earth would it make sense to use an unregulated privatized for-profit system to deliver medical care? Especially when no other advanced nation on earth does this?
That’s the problem. Not the goddamn insurers.
Well, the clueless often thinks what they don’t understand is funny; see creationists and evolution.
@Gwangung: Years from now when we have moved from the intermediate step of Obamacare to Medicare for all, NR will still be complaining about it.
No profit? But, but, but the vaunted know-it-all blogosphere told us Obamacare was a give away to the insurance and that we should “kill the bill!”. You mean they were wrong?! I’m Shocked! I’m shocked!
>> When the way that you improve profits is by
>> denying services to paying customers so that you
>> can pay more to the guys at the top – and this is
>> industry-wide practice – you do not have a healthy
>> industry. You have a bunch of vampires who are doing
>> the best they can to get as much as they can before
>> the con inevitably ends and they have to move on
>> to their next victim.
And there’s even a phrase to describe this way of doing business: control fraud.
American capitalism has turned into a giant pathological case of control fraud. It’s where the people running a company systematically loot it into receivership, and then move on (like vampires) to another company in another industry to loot. Most vividly demonstrated by that classic Goodfellas sequence
“And then it was time for the bust-out.”
@Mnemosyne: “sick people laying around were profit centers that just weren’t being exploited efficiently. ”
Cancer Centers of America has heard their pleas for help.
I’m so glad to see Steven Brill again. I had lost track of him after Brill’s Content folded.
I was a charter subscriber to BC and when it went tits-up, I owned a complete run of issues. Finally tossed them in a fit of Throwing Things Out a few years ago. Now, of course, I regret doing that.
@mclaren: Several commenters above mentioned that aspect of the problem, which is a separate issue from the main topic of the post. But thanks for sharing.
Nah, the reason for the obscene profiteering is much simpler than all those scams, which are only made possible due to the fundamental fact that people cannot forgo medical treatment, when they need it, because they will die. That simple fact blows apart any rational competitive market based profit model over time for health care. forest/trees
Roberta in MN
From all the information I have read the government will have a policy on the exchange also, those states that op out of the exchanges, Sebilius already said the government would put up the policies from what they offer government employees and they get to choose from around 1o different plans & companies. That would cover every state in the Union because the government has employees in every state.
Some of you may recall that I spent 24 hours in the hospital a few weeks ago, including ER care, an emergency cardiac catheterization, and specially-requested Xrays and pain killers for the foot injury the hospital’s defective wheelchair caused. Not to mention a slew of blood tests and other monitoring.
Although I am eligible for Medicare because I am Old, I’m still employed and proffered my Cigna card when asked. Here’s what’s weird: so far, I haven’t seen one single piece of paper from the hospital or my insurance company. Years ago, when I had quad bypass (and other stuff at different times), I was inundated within a few days by bills and non-bills (THIS IS NOT A BILL, DO NOT PAY) and statements and for-your-convenience explanatory printouts which often ran 15-20 pages a whack.
It’s not that I particularly want to be billed for services rendered, but I’m curious as to why I’ve seen absolutely nothing in the three weeks since I checked myself into the ER. May I blame/thank Obamacare?
That is correct.
@Ella in New Mexico: Except that mutuals don’t really do any better on rates than for profits do. Medicare for all is really the only good answer.
FWIW this was the first time ever that our company rate for medigap insurance didn’t go up (it’s a retirement benefit).
@Ella in New Mexico: Except that mutuals don’t really do any better on rates than for profits do. Medicare for all is really the only good answer.
FWIW this was the first time ever that our company rate for medigap insurance didn’t go up (it’s a retirement benefit).
Roberta in MN
The bills will come. I waited a month or more for my surgical bills and still haven’t seen all the paper work from the insurance company telling me everything they paid to match up with the bills. I’ve caught double billing and extra charges I called the hospital for and so on. If you haven’t received anything in a another couple of weeks, I would call and find out why. It sometimes just takes a month or more for the billing process. Good luck and hope you are doing OK.
@CaseyL: the Rushtards’ new theory is the Pbamaare will be such a disaster that it will bring on the GOP millennium at last.
@MomSense: if reimbursement is for condition and not procedure what’s the disincentive to, say, indertreat the poor?
@aimai: I work for a non-profit health insurer, also. If you look at the rules in the abstract, there is no reason the ACA should not work to improve health insurance. I think most of our concerns are these:
1. We are also concerned about a trainwreck in 2014. This is almost entirely an issue of timing. The exchanges are an enormous IT project, and the federal and state governments are nowhere near where they need to be to get this done by October 2013. Massachusetts did it over a much longer time period, and for only one state, as the folks at the Massachusetts exchange pointed out very vividly at one presentation I attended in 2011. It is even worse because the federal government has greatly delayed issuing rules, and we are just now getting rules we should have gotten more than a year ago, and delayed implementing the federal exchanges because they were hoping more states would do them.
2. Price shock – Rates in the individual insurance market are likely to increase 50% on average across the country. I know everybody likes to think that insurance companies “want” to raise rates, but our rates are driven by medical costs. As noted in the comments above, with medical loss ratio restrictions, all expenses other than medical costs take up 20% or less of the rates. Today’s rates in the individual insurance market are based on a medically underwritten population – they start out healthy when they buy the product. The +50% estimates that I have seen are based entirely on expected additional medical costs, assuming that enrollees who previously were locked out of the market are between 1.7 and 2 times as sick as current insureds.
3. Long term medical costs – The ACA does not address the driver of long term care costs in a meaningful way. Giving everyone preventive services will help, but our health system has to change how it handles the sickest patients, and we have to address the huge dollars going to hospitals and specialists. That is driving the cost increases in Medicare as well as the private market.
@ChesapeakeBlue: I should add (since I lurk but rarely comment, and “Blue” is a common color in health insurance) that my name has nothing to do with insurance! It refers to a certain tasty crustacean and a certain political party.
First of all, big thanks to Mclaren for the effort needed to get so much information into a blog comment; well done.
As for where the insurance companies are going to cut to keep the CEO salaries nice and fat, I heard from an independent insurance agent while standing in a USPS line that their compensation rates for selling policies were getting hit hard. He was bitching to the point of saying he’d be quitting early to retire because of it; my comment was something along the lines of “how nice for you that you can afford to retire early, so your job must have paid well at some point”.
He then tried to quote some industry-sponsored bullshit about ACA horrors, apparently unaware that I was more than willing to hit back, hard, with the facts I like to carry around in my head (CEO salaries, compensation ratios, profit margins, etc). Frustrated the shit out of the old country club salesguy coot; suffice it to say he left annoyed, and everyone around us got to eavesdrop on what was probably an edifying conversation with regard to insurance companies, CEO salaries in the multi-millions, and the art of manufacturing specious statistics. I usually let this shit lie when it comes up, but I’ve apparently reached the point where I am tired of ceding the floor to RW bullshit narratives and corporate sponsored crap in the public sphere.
@Gwangung: The “clueless” around here are the ones who think that forcing everyone in America to give money to insurance companies will somehow magically make them go bankrupt. It’s hard to get more clueless than that.