My in-laws are looking to buy a new car soon as Rambling Red just ticked over at 250,000 miles and they aren’t sure if she’ll make it to 300,000. Their plan is simple. They have a list of requirements (multi-axle drive, big enough to put the grandkids in back, decent mileage, comfortable, good USB connection for Pandora and a better CD player as my father in law has way more indie cred with his music collection than I could ever wish for), and then they have a list of nice to have features that aren’t critical for the purchasing decision but would be nice to have. Heated seats are on the nice to have list. If they find a vehicle that meets their budget with their have to haves, and it has heated seats, that vehicle is preferable to a near identical vehicle without heated seats.
So why can’t we sell health insurance like that where breast cancer coverage is an option? This is a “conservative” idea on how to reduce costs by letting people buy the insurance to cover only what they think they need.
Breast cancer is expensive to treat. A simple case of breast cancer from diagnosis to remission will cost $20,000 or more, while a more complicated case requiring surgery and chemotherapy could cost $100,000 or more. Breast cancer is also very common:
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About 1 in 8 U.S. women (about 12%) will develop invasive breast cancer over the course of her lifetime.
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In 2014, an estimated 232,670 new cases of invasive breast cancer were expected to be diagnosed in women in the U.S., along with 62,570 new cases of non-invasive (in situ) breast cancer.
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About 2,360 new cases of invasive breast cancer were expected to be diagnosed in men in 2014. A man’s lifetime risk of breast cancer is about 1 in 1,000.
There are roughly 140,000,000 women under age 70, and 108 million women between 18-70. Prime breast cancer age is narrower than that band. In any given year, about 1 in 375 women between 18 and 70 will have a breast cancer diagnosis. Roughly one in 45,000 men will have a breast cancer diagnosis in the same year. Breast cancer payments work out to be about $3.15 per person in the country per month. We also know that there is a significant genetic component of breast cancer risk. So what would happen if breast cancer was only covered a la carte like heated seats?
If people had to buy a breast cancer rider, men would not buy coverage. The one guy in 45,000 is simply screwed. Men not paying for breast cancer treatment roughly doubles the acturially fair pricing of breast cancer coverage to $6.30 per person per month. Women under the age of 18 would not buy coverage either. That is roughly 23% of the population pool, so pricing goes up to $8.07 per woman ages 18-70 per month. Now since we know there is a genetic component, we know the risk pool knows that. Women with no relatives with breast cancer and who don’t have a bad copy of the BRCA-1/2 genes are reasonably unlikely to be diagnosised with breast cancer in any given year. Quite a few of these women will look at the list price and opt-out of buying breast cancer coverage until they get new information such as an older sister receiving a breast cancer diagnosis.
Now pricing for breast cancer coverage is $10.00 or more per potential buyer per month. The women who will buy breast cancer coverage are far more likely to have had a relative with a breast cancer diagnosis and far more likely to have a bad copy of the BRCA-1/2 genes than the general female population. The risk pool is extremely sick from an acturial point of view. Some of these women who could have afforded $3.15 per month in breast cancer coverage now can’t afford the $10.00/month in breast cancer coverage, so they’ll opt-out and we’ll have a social choice of treating these women at the public cost or telling them to shut up and die quietly in the corner as an illustration of responsibility in a liberterian paradise.
The same logic will apply to prostate cancer riders, the men who buy prostate cancer coverage riders will be far more likely to get a prostate cancer diagnosis than the general adult male population. The same applies to an even more extreme degree to pregnancy riders. All men will opt out, all pre-pubescent females will opt out, all post-menopausal women will opt-out, women who have long term birth control will opt-out, so the cost of pregnancy risk would fall on a very narrow, and comparatively poor population, so there will be quite a few uninsured babies being born or more likely massive cost shifting from private insurance to Medicaid.
Adverse selection is a bitch from purely a pricing point of view. Creating a menu of 2,000 disease clusters where people have to opt-in and opt-out of coverage riders is also a bitch that is designed to cause choice overload and piss-poor outcomes for the people who made an individually rational decision to not buy hit by a meteorite coverage but who got hit by a medical meteorite.
Jado
“So why can’t we sell health insurance like that where breast cancer coverage is an option?”
Because that would make things CLEAR for the customers. If things are clear, profits go down. Profits can never go down. Confusion=big bonuses.
Moolah Moolah Uber Alles
JPL
Paying for someone else’s pregnancy as part of my insurance package, doesn’t bother me. Of course, I’m a mother and a daughter. On one hand, we value life, on the other hand, we don’t want to share the costs of that life.
It amazes me that some try to equate health care choices with what channels to watch on TV. It’s okay to choose what cable packages to pay for or not, but rolling the dice on health care is different. I’m a firm believer that the market doesn’t work when accessing health care and costs.
richard mayhew
@Jado: no because it moves insurance away from an insurance product to pre-payment of probable expenses with significant adverse selection and quite a few preventable deaths and even more preventable financial crisii
constitutional mistermix
One of the fairly sensible conservatives who used to comment at my old blog was nuts on this topic when it came to mental illness. Nobody in his family was going to ever have a problem with that, so why should he be forced to pay for insurance coverage? I assume he thought mental illness was a choice.
Gene108
The interesting thing about right-wing healthcare policy is it sounds good, until you do a bit of analysis that any form of healthcare policy will be based upon spreading the cost out to healthy people, who do not use the services.
Even if you want to pay cash for your services providers base their pricing on the volume of people and the amount of services people use, i.e. spreading the cost out over healthy and sicker populations.
You cannot effectively cherry pick what to and what not to cover and have reasonable healthcare policy. It would break the whole system.
JPL
@Gene108: Privatizing medicare would work the same way. Only those who could not afford the higher costs or had a higher risk would stay on medicare and it would break the whole system.
Elmo
@constitutional mistermix:
More likely thought so-called “mental illness” was a form of either weakness or attention-seeking. People making excuses for their own failure of willpower.
The will should triumph, amirite?
jonas
@Jado: Did you read Richard’s post? It has nothing to do with profits and everything to do with adverse selection.
Barbara
Ahh, breast cancer — one of my few special areas of expertise. Have to make one correction.
While having one of the currently-identified BRCA genes raises one’s risk of breast cancer considerably (and also your risk of some other cancers, depending on your particular mutation and gender, e.g., ovarian, prostrate and pancreatic cancer), the large majority of women with breast cancer do NOT have these mutations (or any of the other lesser-known mutations that raise the risk of breast cancer). They have no known risk factor except being female and most likely, older.
I think it is also worth pointing out that federal law requires health insurance to pay for breast reconstruction. There must be a dozen different ways to reconstruct a breast and the most involved are called flap procedures, in which “extra” tissue, such as belly fat, is used to create a new “breast.” Breast is in quotations because the new breast doesn’t do anything the original one did except make your clothes hang nicely (that is, the new breast has no sensation and needless to say, cannot produce milk).
Flap surgeries can last 10-12 HOURS, I don’t have any idea how much that could cost but I imagine a pretty penny. The other ways of creating a new breast can take multiple surgeries and procedures.
Meanwhile, my $%%^& insurance company makes sure that my foob (aka prosthesis) and pocketed bras, AND my lymphedema garments are all only available from out-of-network providers, and that has a separate deductible that I never can meet. SO — if I wanted to have an extremely expensive surgery, they will pay for that, my much cheaper choices, are all out of my pocket.
What this all says about American culture, I leave to the reader. Finally, for anyone who wants to know more about breast cancer, I recommend breastcancer.org.
P.S. Love your posts Richard, have learned so much from them, and have recommended them to many.
Elizabelle
I would be proud to pay for my sister’s or my neighbor’s or even Michelle Malkin’s breast cancer therapy.
It is the humane thing to do.
ETA: If I end up paying for zillionaire Rush Limbaugh’s prostate or mental health care, that’s fine by me too. Shared humanity, peeps.
richard mayhew
@Barbara: Completely agree with everything you said, and Breastcancer.ORG was my resource for incidence rates…
The one thing is that I think that we agree on is that most women don’t have obvious risk flags besides being female and over the age of 30. I’m making a relative risk argument that if we have a pool of 100 women with BRCA1/2 mutations and a relative with breast cancer AND another pool of 100 women with neither, the first pool will have far more diagnosises than the second pool. The total pool of breast cancer diagnosises will have more women with no obvious risk factors than super-obvious risk factors due to the proportional size of the two risk pools, but the relative risk is that it is far more likely for a non-risky individual to be fine in any given year than a woman with both indicated risk factors.
Not all women who would buy breast cancer insurance riders would have both risk factors, just as a proportion of the buying pool, they would be much more prevelant than the general population.
Barbara
Here is a break-out of breast cancer risk factors. Genetics accounts for only 5-10% of all cases:
http://www.breastcancer.org/risk/factors
As for @Jado: not everything in life is a consumer choice. As others have pointed out (Richard for one, in just about every.single.one of his posts), health insurance can’t work that way.
One of the great sadnesses of our era is that we are being reduced to mere “customers.” I’m sorry, but when I’m at the doctor’s, I’m a patient, when I call a government office, I’m a citizen.
I’m reminded of a worksheet my kid brought home from his second grade social studies class. It was titled “I am a consumer,” and the kids had to draw pictures of goods and services they consume (my kid drew very cute pictures of ice cream and computer games). We have a talk about all the OTHER things he is also: son, grandson, nephew, cousin, friend, neighbor, Jew, student, CITIZEN…
Every time we reduce understanding EVERTHING we do as “purchasing” something, the libertarians and neo-liberals gain more ground.
TriassicSands
For a party of idiots the GOP seems able to come up with a virtually unlimited number of terrible ideas. If they want to save money, there is a good model — there are good models — out there showing us how to do it. It’s called universal health care. I don’t say single payer for two reasons. First, a universal health care system doesn’t have to be single payer to work. Germany, I believe, is an example of that. Second, we already have a single payer health care system in this country and it seems to be a mess. It’s called the VA health care system. Last year the government did an audit and concluded that the VA system was short 28,000 doctors, nurses, and other personnel. Where I live, if you call for an initial appointment, the wait is 9-1/2 weeks. A poorly funded,
understaffed single payer health care system is not going to do what any country needs a health care system to do — provide high quality, affordable, timely care to everyone regardless of income.
Having people order coverage a la carte may not be the worst idea the Republicans have every had, but surely it’s in the running. This is just another way to ration health care coverage, because people will be forced to forgo specific coverage whose price tag is too high. Many will be forced to choose between covering their children or the adults.
It won’t matter that the woman tests positive for the BRCA 1 or 2 mutation (assuming she could afford the test) or if the man’s father and uncle both died of prostate cancer. Like leather upholstery in the car, if coverage for a specific disease is too expensive, the person just has to wait until he or she is diagnosed and then either die quietly (the GOP’s preference) or find a way to pay out of pocket for treatment.
(Note: when I wrote “die quietly” I hadn’t finished Richard’s post, i.e., I hadn’t gotten to the part where he uses the exact same wording. Coincidence? Of course not. That’s who the Republicans are plain and simple.)
Lee Rudolph
@Elizabelle:
I’m fairly sure that Rush’s mental processes (such as they are) take place fairly close to his prostate, anyway.
Kylroy
@jonas: No, I think he got to the first sentence of the second paragraph and just saw red. I find lots of people hate health insurance companies so much that they think anything that benefits them must, by default, be evil. Not that these companies haven’t done a lot to deserve it, but for these folks sticking it to insurance companies is a good all on it’s own – the idea of revoking the individual mandate is met with glee, and telling them it would fatally break the market doesn’t register over the thought of Humana going bankrupt.
Barbara
Hi Richard, I see our comments crossed in the ether. Yes, certainly, women with those genes are going to have a very high rate of breast cancer, and there are also a few risk factors I suppose could be counted as within an individual’s control, mainly weight, smoking and alcohol consumption.
The weight is because there is some mechanism by which fat cells produce estrogen (or maybe it’s a precursor hormone that another part of your body turns into estrogen), and the most frequently occurring type of breast cancer is “fed” and encouraged by high levels of estrogen.
Anyway, I don’t think we disagree. I just want to warn anyone that just because they can’t think of anyone in their family tree who had breast cancer, that their risk level is negligible. A very new study out of Johns Hopkins proposes that 2/3 of all cancers are caused by random bad luck and not genetics or environmental causes. Anyone who thinks they don’t need any sort of cancer included in their health insurance coverage is deluded.
JAmes Lindley
I’d say to have them look at a good late model used Ford Flex SEL or better with EcoBoost, except that the gas mileage I’m getting is about 23MPG. But you can’t beat the car for safety and comfort and conveniences.
JPL
@Barbara: My ex had colon cancer and fortunately, is okay. His mother and sister had breast cancer. His sister chose not to have the test because she didn’t have children. It was suggested that my sons have their first colonoscopy when they are forty. The cancer specialists felt there was a link and I’m curious if your studies have showed a link.
Ruckus
@TriassicSands:
The problem with the VA is congress. The system works pretty good. Having said that there are problems in some areas, seemingly to me some places where Drs are less likely to want to live. The system works great for me. Yes I do have to wait for some procedures for things that are caused by aging and are less than serious. I’ve had one serious problem and that was handled very rapidly and very well. Things are prioritized and they are prioritized around availability and that comes from money issues(vast majority of the issues) which is back to congress. I’m expecting this congress to make this far worse along with SS/SSDI, Medicare/Medicaid, whenever they can.
OzarkHillbilly
Many people have the mistaken idea that health insurance = health care. It doesn’t. Health insurance = health care security.
Barbara
@JPL: Yes, apparently there is a link. According to breastcancer.org:
You are substantially more likely to have an abnormal breast cancer gene if:
•You have blood relatives (grandmothers, mother, sisters, aunts) on either your mother’s or father’s side of the family who had breast cancer diagnosed before age 50.
•There is both breast and ovarian cancer in your family, particularly in a single individual.
•There are other gland-related cancers in your family such as pancreatic, *colon*, and thyroid cancers (emphasis added)
•Women in your family have had cancer in both breasts.
•You are of Ashkenazi Jewish (Eastern European) heritage.
•You are African American and have been diagnosed with breast cancer at age 35 or younger.
•A man in your family has had breast cancer.
That said, a genetics counselor is probably your sons’ best bet for really understanding their genetic risk level. If their insurance would pay for that consult…
d58826
It seems to me that we are making this entire healthcare debate more complicated than it has to be. The conservatives/libertarians come up with all kinds of plans and proposals to make them selves look reasonable when it comes to medical care. Whereas, in reality they don’t want ANY kind of public/universal healthcare in this country So it is a simple choice we have universal coverage or it is every person for themselves and dog eat dog system. Obviously how you implement universal coverage will be complicated but the intial decision is simple – yes or no. Other western countries have answered the question with a yes and then figured out a way to implement that decision. .In the 2012 GOP debates Ron Paul let the cat out of the bag – no universal coverage period. If you can’t afford to buy insurance than the best plan is die quickly and most importantly Quietly
JPL
@Barbara: The genetics test is a good idea and I’ll mention that. My husband’s sister was convinced the environment caused her cancer, which is another reason she refused testing.
OzarkHillbilly
@Barbara:
A buddy of mine has a bumper sticker that says: “I AM NOT A CONSUMER”. I want one.
Ruckus
Of course Richard’s point was that medical meteorites are relatively unpredictable. People without genetic markers get cancer, skinny people have heart attacks, fortunately most of us get old, a lot of us drive cars, some of us do more risky jobs that can leave unseen scars/breakdowns for later. If we want to have an effective health care system, we have to include everyone because the price is actually cheaper to do so. Not everyone will be able to afford this of course so the cost has to be spread out, and picked up by everyone. Because it is such a need and everyone needs to play, profits should be either well controlled or non existent. Every other system around that works, does this. Some do it better but in a decent society everyone paying their share and getting good health care would be first priority.
JPL
@Ruckus: Richard’s posts are so good, I wish he had a larger forum. Of course, BJ has a large audience but it would be great if he wrote on a column on the NY Times health page.
Barbara
@JPL: If it makes you feel any better, there is a family in our circle where there was a lot of breast cancer in the grandmother’s family. One of the adult daughters (who went to HS with my husband) was dxed with breast cancer and was found to have one of the BRCA genes.
She was furious at her mother for not ever having been tested; her mother replied that the daughter could have been tested herself if she cared so much. The daughter died, and a year or so later her mother died of pancreatic cancer.
The kicker to this story: The grandfather is a retired radiologist, the grandmother was a retired RN, the daughter with breast cancer was a nurse who worked in women’s health, and another one of the daughters is a breast cancer researcher! Denial is a powerful force.
Barbara
@JPL: Want to add: my experience was that I had to meet with a genetics counselor before the BRCA test could be ordered. The counselor’s role is in part to look at your family tree and assess the likelihood of a positive result; if it is extremely unlikely that there is a genetic pattern, money is saved by not having that expensive test. Though I think the counselors generally err on the side of caution in endorsing the test.
Barbara
@OzarkHillbilly: I want one of those bumper stickers too!
Kylroy
@d58826: In order for our healthcare system to be economically viable, we can either have universal coverage (which we’d be pretty close to if not for the Roberts court and asshole Republican governors), or we can let people die. If you don’t support universal coverage, your first priority should be freeing hospitals to deny emergency care to people who can’t pay.
Morley Bolero
Why not go the whole route… universal health care. Works for most of the rest of the developed world.
D58826
@Kylroy:
otherwise known as the Ron Paul plan
JPL
@Barbara: The concern is not only for the sons but for their children, if they choose to bless me with grand children. Thank you for your information.
CONGRATULATIONS!
Hey wow that’s a bad fucking idea. Why not let me opt out of cardiac coverage? I had a chest CAT scan (long story) and show zero plaque coverage at age 45. I will, statistically, probably never have a heart attack. I’m sure that’ll bring my rates down a lot, right?
Well, then the unlikely happens and everyone gets stuck with my bill when I show up to the ER with a heart attack, and I get shitty care because I’m not insured for it, and no post-op care, and go on to have another heart attack, which everyone pays for… Why can’t we just do this the right, easy way? Jesus. Progress should not have to involve dragging half of society kicking, wailing and screaming into the last century, never mind this one.
Military has it too. Not VA. Tricare. And it seems pretty fucking good to me.
richard mayhew
@JPL: Thank you for the kind words. I don’t know if I would want to write for a national publication for a couple of reasons:
1) I would have to write under my actual name
2) I can’t say fuck as often I would like to
3) My editors would actually want choice/control over my subjects instead of floating fairly freely
I do know that I have a decent amount of influence at several national and international level publications via back-end e-mails and conversations plus seeing my name and arguments pop up in several places that I’ve never talked with, so I’ll take that as a good outcome out of an enjoyable hobby.
pseudonymous in nc
Richard: I’ve asked this before, but anyway….
What would be required, from an actuarial standpoint, for Super Special Snowflake Personalized Health Insurance that covers just the things that an individual says affects him (it’s usually a him) and nothing else?
Basically: what kind of premium range do you get into when there’s a risk pool of one? And let’s put aside the inevitable consequences when something happens to Special Snowflake that’s not on the à la carte plan.
Mnemosyne (iPad Mini)
My cousin’s ex-husband was diagnosed with (I think) multiple sclerosis after she had their two sons. They apparently had no idea that MS was anywhere in his family. So how were they supposed to insure against something that shows up in your 30s without warning?
richard mayhew
@pseudonymous in nc: The first thing needed to calculate the cost of Super Snowflake insurance is new actuaries as the incumbent actuaries will throw coffee in the face of their boss when given this task. Insurance breaks down at this point.
Realistically, if a 40 year old male comes in and says he only wants coverage for orthopedic, endocrinology and PCP visits, the underwriters are going to assume that he is a helicopter-skiing diabetic who does not get vaccinated, and most likely charge him 3 to 5 times the base rate as the revealed preferences and revealed risk are nasty and expensive.
Kylroy
@richard mayhew: In health or any other insurance field, if you’re only getting coverage for the things that you know you need then IT’S NOT INSURANCE.
Dental insurance actually hews pretty close to that, being more of a way to prepay for dental care and create bargaining blocks than spread risk.
hoodie
Would you agree that, in general, conservatives are incapable of multivariate analysis? If true, it is more than a bit ironic, considering that they’re such big advocates of choice, i.e., hard to make choices if you don’t have an accurate model. BTW, what would you say is the dominant political orientation of actuaries? The only one I know is pretty lefty.
WereBear
If we had a professional guild of crystal ball gazers who could wave their hands and say what we’re going to need, great! The Republican plan could have a point.
If not, then we just don’t know what’s going to happen. People who are unlikely to “get” something show up in the doctor’s office all the time, and then have trouble getting diagnosed with something obvious because the doctor’s not trained to look for it in “someone like them.”
Professional athletes develop diabetes, teens come down with arthritis, and men get breast cancer. You can’t plan for these things. It’s impossible.
texasdem
@Barbara: Just a slight correction on that last study result you mentioned–the bad luck is genetic, but not inherited genetic mutations. They blame most cancer on random new mutations in somatic cells occurring during cell growth and division during an individual’s lifetime. That is in contrast to inherited mutations (such as BRCA1 and BRCA2) in the germline cells.
texasdem
@Barbara: The daughter who developed breast cancer was right to be mad that her mother didn’t have the test. Once you know you’re at risk for carrying BRCA1/2, you can be tested, meet with a genetic counselor if you are a carrier, and decide on the appropriate preventive strategy. Bilateral mastectomies (a la Angelina Jolie) can reduce the risk of breast cancer by >95%. Once you’ve had your family, you can have bilateral oophorectomies to prevent ovarian cancer (a disease that is very hard to find at an early stage, even with close monitoring),
Barbara
@texasdem: I think they were/are all nuts for not being tested, considering that they were much better informed that most of us, being health care professionals; I have no way of knowing if the two surviving adult sisters, and the adult grandchildren children, have been tested. I hope so…
But this all goes back to the original post in a way. You may think you know what ailments await you, and you may fervently believe you should only pay for insurance for what you think you are going to come down with. But there’s no accounting for all our blind spots. That’s the thing, by definition you can’t know your own blind spots.
Barbara
@texasdem: You said it better than I did. The other thing to know is that all of us probably have random cancer cells pop up here and there but our immune system destroys them in plenty of time.
john fremont
@JPL: Just to add to your comment, my dad, my grandmother and my uncles had colon cancer. It was recommended to me to start going every five years when turned forty. I did go at forty and at forty five. At forty five, I was diagnosed with rectal cancer.Robotic Surgery removed the cancer in time and I was spared chemotherapy and a permanent colostomy in my forties. Early detection made it very treatable. My uncles weren’t so lucky.
Prescott Cactus
Richard,
Love your work here at BJ.
Chrysler 200. AWD, heated and vented seats.
Following the car analogy, Most everyone get 36,000 miles and 3 years on a new car off the lot. Power train gets a few more years / miles. Roadside assistance on some models now that because the donut mini spare tire is being phased out in lower end car models (yes, you get a tire fix kit).
The paperwork department of the dealer will push you to buy the super duper extended package. I do want my human body covered for all risks, but my ailing car can be sold to Carmax and I can always get a new one. The “fractioning” of insurance is a bad bet and a money maker for the takers.
pseudonymous in nc
@richard mayhew:
Perfect.
What the Snowflake brigade really want, of course, is not “risk pool of one” but instead all the benefits of risk pooling for, say, prostate cancer or type-2 diabetes but to be excluded from the risk pool for all the other stuff.
Ruckus
@CONGRATULATIONS!:
I believe that over time the VA will cease to exist as the old farts like myself die off. I believe that the majority of vets from about the 90s on use Tricare, I see very very few people under 40-45ish at the VA and I go to a large clinic and a major hospital center. Although one thing the VA does that your private Dr or local hospital does very little of is prosthetic usage and rehab for same. And they do research on how to live with wounds that few ever see outside of the military so maybe it will be there for a long while.
pseudonymous in nc
The VA also has a shitload of institutional experience and expertise on PTSD and other mental health issues associated with sending out people to fight wars then expecting them to come back and live normal lives, and that’s going to be needed for a long while.
Frosty
Love my Ford CMAX really roomy good acceleration great gas mileage
get the skyroof .
Prescott Cactus
@Frosty: Does it have a spare tire or a tire fix it kit? This question is being posed is sign that auto companies are about to take another step down in reliability due to cost cutting. A bean counter has determined the chance to experience a severely blowout is low and that most all roadside emergencies don’t need a spare.
Back up cameras, radar assist parking and a can of fix-a-flat. Doom