I received the explanation of benefits for my son’s post-Christmas double ear infection visit and prescriptions last night. That was the last medical incident for my family for 2014. We were lucky, my wife had one minor thing that needed to be checked out with a visit and advanced imagining plus her annual Ob/Gyn and PCP visits, I had my annual PCP visit and one urgent care visit for some funky crud, my daughter had no ear infections and no day care crud, so she just had her annual visit, and my son mainly had his early childhood screening visits, vaccines and one week of feeling like crap with a double ear infection. We had it lucky last year, and I hope 2015 is the same. We paid only about a third of our family deductible, and the insurance company paid out roughly 12% of our premiums for non-cost shared services.
For my family, we were losers in the health insurance game in 2014. We paid way more into the system then we got out.
And guess what, I am more than happy to continue to be a loser as that means my family is generally healthy and no one has been hit by a bus during the course of a year. I look at my co-workers who were health insurance “winners”; Carol with her four month old who spent two weeks in the NICU, Bob with diabetes, acid reflux, and an ability to out-klutz John Cole, Cassandra whose foot literally got run over by a bus, Hasim who has had three surgeries this year for GI issues. The surplus from my family took care of the deficit created by Bob. The surplus from the rest of my team probably covered Cassandra’s expenses. The surplus from the 8th and 9th floors covered Carol and her baby.
Health insurance is a distribution of resources from the healthy and the lucky to the unhealthy and unlucky. Most people in most years will be in the healthy and lucky bucket. It is the only way insurance works as an insurance model.
And that provides a problem. The problem is more apparent on the Exchanges than in the employer sponsored coverage world. Most employer sponsored coverage has most of the cost of the premiums hidden. My employer picks up 82% of the total premium as a non-payroll deduction. I pay 18%. This year, I am still a “loser” on the 18% that I visibly paid, but not by much. Most years in the past five, I would have been a “winner” compared to my payroll deduction. People on Exchange who make more than 250% of Federal Poverty Line are in most cases paying a significantly higher percentage of the total premium. Most of those people will be reasonably healthy and reasonably lucky. Their personal medical costs will be less than the premiums that they pay out of pocket. The value proposition of transferring resources to cover the sick and unlucky is a tough and counter-intuitive one to make as most people aren’t sick and aren’t too unlucky at any given time.
SP
Since our national attitude is that the only thing that matters is money, and that maybe the “wrong” people are getting some of yours, I strongly encourage any conservatives who feel they aren’t getting a good bargain from being forced to carry health insurance to go step in front of a bus. You’ll come out way ahead financially!
RepubAnon
This is why one only buys insurance for catastrophic losses. The model I was taught in economics for the insurance market was that some percentage of people in a given group will suffer a catastrophic loss – but we don’t know who they are in advance. So, like poker, each member of the group makes a bet that you’ll be the one suffering the big loss this year – the insurance company (i.e. the casino running the gambling enterprise) bets that you will not suffer the loss.
Most people in the group “lose” that bet, and do not suffer a catastrophic loss. For the “lucky” winner, they suffer the loss and “win” enough money to mitigate the otherwise catastrophic loss.
In casinos, the house is motivated to offer free drinks to the gamblers, to impair the gamblers’ judgement and increase the house’s profits. For health insurance companies, the motivation is to keep the insured as healthy as possible to lower potential losses, so they are inclined to offer free physicals, discounted preventative care options, etc.
It isn’t “income redistribution” – that’s Republican talk. It’s gambling – similar to the hedge funds so loved by the financial industry.
MomSense
Let’s say someone spends their entire career in the lucky category and is a health insurance “loser”. By that I mean that this person will pay for insurance without subsidies because of their earnings and not need to access it. Isn’t that person going to get their money back from the system simply because that person will likely live longer and use their Medicare benefit longer than someone who has low earnings and health problems such that they are a health insurance “winner”?
Kylroy
@MomSense: Not if they don’t have expensive conditions later in life and then die in an inexpensive fashion.
If you are a health “winner”, you are by definition a health insurance “loser”. The majority of people are going to be health insurance losers, and that’s the only way the system can possibly function when 10% of patients account for 90% of costs.
Eric S.
Can I be both?
I have a silver plan on the exchange. I have had a couple of sports related injuries one of which is leading to shoulder surgery in early February. Last year I did not reach my deductible so the insurance company did not have to pay out anything. On the other hand the procedures and therapy were deeply discounted because I had insurance. The difference between the billed cost and what I actually paid exceeded the amount of premiums I paid last year. I’m going to come out with a couple thousand more in my bank acccount than if I did not have insurance.
richard mayhew
@MomSense: Not neccessarily… the 66 year old who drops dead from a sudden heart attack while shoveling snow and is dead before the ambulance arrives is dirt cheap from the Medicare POV. On average, the average senior citizen gets more out of Medicare than they ever put in, but there are plenty of people in a pool of tens of millions who either died quickly and with minimal medical intervention or are still very healthy who got far less out of Medicare than they put in.
Halcyan
I am a loser every year on my auto insurance.
I’m happy you’re healthy!
dww44
Well, I’m an example of a pretty darn healthy working person who, upon getting into the medicare years, developed some of those problems that go with aging: diverticular disease that resulted in an abscess resulting in surgical removal of a part of my colon in December 2013. Prior to that hospitalized twice with severe diverticulitis.
The only time in those prior 40 plus working years I’d ever been previously hospitalized was for the birth of my only child. Now, it seems I’ve got spinal stenosis (never diagnosed in any of my family) and have had an MRI, now scheduled for a myelogram, and finally corrective surgery, which the surgeon says is quite common .
So, obviously I’m an example of a person who is getting way more from Medicare than I ever got from the private health insurance coverage my employer and I paid for for many years.
RepubAnon
I really dislike the Republican framing of someone paying money for insurance and not having a claim as a “loser.” I buy insurance to hedge against catastrophic losses.
The difference between poker and health insurance is that one doesn’t have to sit down at the poker table, so you can’t lose if you don’t play. With health insurance – you’re gambling with the possibility of a catastrophic health event whether or not you buy into the insurance pool. The difference is whether or not you end up bankrupt or dead – and whether there are enough players to cover everyone’s catastrophic health-related losses. Nobody’s going to sell health insurance if the only people buying are already in the hospital’s emergency room.
It’s all yet another Republican attempt to kill as many folks in the 99% as they can, by making health care unaffordable.
Gindy51
I’m an insurance loser on every form possible: life, health, dental, house and car. I don’t care. I hope it continues forever, in fact.
TG Chicago
I guess with enough PCP, you end up with some highly advanced imagining.
(that was supposed to be “imaging”, right? :-) )
greenergood
A bit O/T, but not that O/T:
http://www.independent.co.uk/news/uk/politics/is-there-no-limit-to-what-this-government-will-privatise-uk-plasma-supplier-sold-to-us-private-equity-firm-bain-capital-8718029.html
Mitt Romney’s stole our bloods!!! Thanks Prime Minister Cameron!!
Arclite
But, but, but… WHAT ABOUT FREEDOM???!
Alabama Blue Dot
My husband retired a few months ago, and we get our employee policy but pay full price for it. He won’t be eligible for Medicare for two more years, and our younger daughter is on our policy for a few more months until her job insurance kicks in. Our policies biw have a hefty ($6K annual) deductible. But, we pay the insurance amount, not the private pay amount, so our daughter’s PT cost us $600 instead of $1,200. Also, of course, we have no co-pay for wellness care, which helps the cash flow. I was unprepared for the deductible payment; it’s a new thing to us. We have the means to pay it, and I’ve started putting funds aside for future expenses. I’m curious how it works for Exchange plans, for people who might not have $6,000 lying around.
Bob
The winner/loser calculus is ridiculous – you’re going to lose every year, but then if you’re really (un) lucky one of these years between now and your 65th year you’re going to win big – major surgery, cancer, transplant, etc. and rack up 100K or 200K or 500K of expenses and the hospitals and doctors are going to get paid instead of you just going bankrupt and stiffing them for the expenses. That’s why you lose every year, you’re helping to pay up for that big win coming around the bend.
I like to say that your classic middle class American family these days has to pay off three mortgages at the same time – one on their house, one on their education, and one on their health. No wonder there’s no more middle class.