Holy mother of god, the catch-up care in the co-ops was worse than I thought, and I thought it was already really bad:
At Arches, only 200 people—or 0.3% of its 63,000 members—accounted for 50% of its claims. Oncology care and organ transplants, in particular, hit Arches and many co-ops hard. Green said there was a lot of pent-up demand from people who previously could not access affordable policies or pay for the care out of pocket.
“The risk was a lot worse than anybody had expected,” Greene said during the call.
Arches, a PPACA co-op start-up that closed this fall due to the lack of risk corridor money, was probably expecting between 2,500 and 3,300 people to drive 50% of their claims expense, not 200 people. This is why PPACA originally had the 3-Rs, specifically why it had the risk corridors as non-revenue neutral. No one knew how bad or how good the risk pool was. And the risk pool was far worse than projected. Part of that was the lack of Medicaid expansion as Medicaid would have picked up quite a few people, and part of it our cost control mechanism in the past was based on ability to pay. Services don’t cost a thing if they aren’t consumed because they are too expensive.
But holy mother of god, that is a hideous risk pool. And it is one hell of a good illustration of why consumer directed health care and high deductible plans are limited in their actual system transformation method. Those 200 people blew through any deductible limit by Valentine’s Day.
200 people accounting for 50% of claims out of 63K pool is crazy. And further evidence of why healthcare doesn’t work a a “product” or “service” or anything other than what the rest of the world knows: A necessary fact of life that we all share.
Preaching – poorly – to the choir, I know. But people figuring out a few thousand will save their life are going to go for it. How can they not?
And how much God Given Profit ™ has Arches been forced to sacrifice by not being able to pre-existing condition out these 200 wretched scum?
More pointedly, as these are individuals with some of the more serious health concerns, I wonder how many others in similar conditions have died before they could join?
@Corner Stone: A lot probably died or more likely were impoverished enough to get on Medicaid with disability
As for profit, Arches lost massive amounts of money
I agree with MazeDancer that this is crazy. While I feel for Arches, I wonder how many of the 200 people had been repeatedly denied coverage by another insurer for pre-existing conditions or forced by an employer into a useless medical plan.
I struggle (and fail) to wrap my mind around a mindset that believes that unlucky people in a society should die in support of cost control/lower taxes for that society. Does anybody have any friends/acquaintances who can explain this point of view?
(Writ large the same applies to the whole world; sticking to local here because it is more tractable.)
(Human Morality Made Simple.)
@Richard Mayhew: To have your condition treated via Medicaid means one has to spend down entire net worth or something?
Cathie from Canada
When Saskatchewan brought in Medicare in 1964, many doctors had been convinced that there was no real need for it — they thought that anyone who needed medical care had been able to get it as a charity case or by emergency rooms. In fact, the doctors here went on strike to protest Medicare and it wasn’t until a baby died that the public really turned against them.
So Medicare came into effect. And then hundreds of working-class people started coming into medical offices with serious, treatable chronic conditions — doctors were stunned at the backlog and how much people had been suffering.
I would imagine the same thing has been happening all over the United States in the last two years.
@Corner Stone: The link does not explicitly say so, but implies IMHO that Arches was one of the non-profit co-ops. Maybe RM can clarify.
@Cathie from Canada: Yep, these are the people who were coming into the offices with treatable conditions who could not have come in pre-PPACA so they were invisible.
@WereBear: Correct, but a couple of bouts of cancer will either kill you or impoverish you and your family
Yes, it’s me again. To complain again about South Carolina again. My son’s co-op ran screaming for the hills because the combination of no Medicaid expansion and the the inadequate risk corridor payments beggared them out of business. If they’d stayed, given his new rates and the difference between his old subsidy and his new subsidy, the co-op price would have been at LEAST $100 cheaper a month.
So what happens when the co-ops flee? We are left with an effective statewide Blue Cross Blue Shield monopoly on the Exchange, and the offerings are all high deductible plans. People like my son will have to pay thousands out of pocket for their labs and X-rays and so on before they get a dime’s worth of “coverage.” And you will have already have paid out thousands in premiums over the year.
We figure my son’s plan will demand that he pays out more than 10% of his MGI income in premiums (which was not supposed to happen, right?), and that if he goes into the hospital, he will have to pay another 20% of it in deductibles before the policy will pay out, at which point it will, happily, pay “everything” — except the unexpected “out of network” doctor or facility expense over which he may have little control, as we’ve seen in other people’s sagas. So, 30% of his yearly income in medical expenses if he needs hospital care, and as much as 15-20% for the premiums, labs, X-rays, (routine) doctor visit and (generic) prescription co-pays if he doesn’t. Not sure that’s what the PPACA intended for a middle class guy who just got his first job making a 300%-poverty middle class job. But maybe it is. Was it ever thus? Maybe I just don’t know what it was like before.
He said to me the other day that given his monthly cash flow he really can’t afford to have insurance, and of course I had to go over the whole rationale again: covering a catastrophic event and keeping down the cost doctor visits and prescriptions, so he doesn’t have to pay ridiculous “uninsured patient” rates if he should need to see a physician or visit a pharmacy.
(Oh, and would you believe the world-class teaching hospital here in the city is not part of the Blue Cross network? None of those fancy oncologists or cardiac specialists will be available to the likes of my humble son. If he wants a specialty surgeon who is only available there, too bad. Shut up and be grateful that he has a $30/month premium subsidy from Uncle Sam.)
I’m sorry to be such an ACA Downer, and I’m sure nobody around this joint wants to hear it. But I’m upset. Sure, I blame Nikki Haley and the lack of Medicaid expansion fubbing everything up for this state, but damn, the whole thing is breaking bad down here, and she’s going to use the ensuing mess to say that Obamacare CAUSED the mess and….
I’m at the end of my commenting day, I guess.
Sorry again to keep repeating my tale of woe like this.
What this post and the previous (apparently inflammatory no-comments allowed) nerdwonk post shows is that PPACA allows considerable social inefficiencies to remain in the health care system through gaming of rules. From info in the link, these high cost-people were older adults, and those who survived would go into medicare in decade or so. Those who survived would be even more expensive to care for. And many of those who would have died by then, if they could not qualify for Medicaid, would be soaking up money limping along on disability.
I’ve been looking for details of the Clinton and Sanders healthcare plan and have not found much (though if anyone knows where to find them, please let me know). So, I do hope RM can find time to describe his view of the best way forward.
In the meantime, here is my go. Short summary is to Go Swiss, since I think that is the best way forward for incremental improvements in current system that prepare the way for some form of single payer finance.. First need to simplify the BS metal buffet of plans. Establish a single uniform basic benefit design for mandatory plan that everyone buys, and limit customization to different health status and risk preferences to choices of co-pays and deductibles. This would be minimum coverage and anyone wants more coverage would buy supplemental policies on a separate market. (Note: it is my understanding that this is part of Sanders plan, but I got this from news stories, nothing I could find on his website).
Second: battle axe regulation of networks, with aim to eventually get rid of them and allow very wide choice of providers. For certain kinds of managed care, where the business model requires in-house network, this will require gradually raising minimum standards for network design.
The no, or at least non-binding network rule won’t work unless there is more transparent pricing, and some mechanism for average cost price finding, and this is the tough one IMHO. Price finding is important since due to oligopolies common in both insurer and provider markets, and price discrimination, observed prices bear little relationship to average cost. Swiss, and many other Germanic countries have industry-wide stakeholder bargaining to establish uniform tariffs, and I’m not sure that will work in the US.
Establishment of much wider network of publicly financed community health care clinics where access to care is poor would help (and I understand this is part of Sanders plan, but what the details are, I sure cannot find out). Another would be to allow interstate competition in insurance markets. That has a bad reputation due to GOP version which is really a congame designed to encourage race-to-the-bottom competition to drive out all quality plans, but if you had a uniform mandatory policy with uniform benefit design and elimination of narrow networks, then it might work for good by increasing competition.
The final piece would be soft price regulation, maybe following the model of the long standing Maryland inpatient care price regulation RM mentioned in a recent psot. There would a regional system of price bands for policies and provider DRGs, based on current Medicare methodology. Anyone departing from these on the high side would have to explain why the deserve and exception, which the federal agency could adjudicate through open-book audits. And, insurers and providers could take there cottage industry of pissy fights over charges and reimbursements to the same agency.
There of course would have to be the current system of risk adjustment to take care of what would be substantial room for gaming and cherry picking.
So, that is my way forward, which should suit both Dem candidates just fine, since I think it resolves all the major issues needed for a better private system or a move to single payer that is not unpredictable and potentially very disruptive.
I was disappointed by the debate questions on health care. I have also been disappointed that Clinton IMHO demagogued the issue at the last debate by saying that single payer was a ‘government take over’ of health care. But if Sanders cannot be bothered to prominently feature the details of one of his signature issues on his website, he really only has himself to blame. And hundred buck Sanders megadonor, who can make that old coot snap to, I just wrote his campaign demanding that he get on it or quit griping about not getting fair treatment. I am very sure (snark) that I will hear from the campaign aa soon as I finish this comment.
I def have sympathy for u Zander. Louisiana def may have dodged a bullet with the election of Bel Edwards
@jl: Forgot to mention, that I think also need some rationalization of rules for estimating cost of coverage as function of risk pools. One problem with Swiss system is that the regulations force rather narrow risk pools for pricing. With tightly regulated interstate competition, could have broader risk pools, though this is getting into technical area where RM can probably give me considerable guidance as to how much can be done on that front.
Final blast, is that Go Swiss is just next steps. Go Swiss would result in a rather expensive system, and not sure it would work over long term in an economy with a lot more income inequality. Go Swiss may just be preparing the way for Go Australia (classic Medicare of All system), or Go Swede (regionally decentralized single payer) or Go French, so some custom combo best suited for the US.
But, at any rate, I am very disappointed in the quality of debate in the Dem campaign. And of course the GOP campaign too, but what did I ever expect there other than con, BS and slogans? Nothing, is what.
@jl: Not quite sure why comments are being suppressed in the previous post. I thought that even for me, it was ubernerdy so I was not expecting a lot of comments but I did not realize it was shut down. Oh well
As for what’s next, I need to get some time to put thoughts together. I see the question in a couple of different veins. First what is probable (mostly a political judgement) and secondly, and this is the question that I think JL is actually advancing, what is desirable and plausible within loosened constraints of the American political system.
I think the probable answer is more first dollar deductible plans and push back against cost control measures (see the late 90s push back against HMOs for a template)
@Richard Mayhew: Looking forward to your thoughts. Yes, I am trying to figure our a desirable and plausible way forward within the constraints of of US system. I think the issue of ‘Single Payer’ versus ‘Private Payer’ is kind of red herring. They are merely financing mechanisms once the decision to provide social insurance for health care is made. For all practical purposes, once you trace the funds, the Netherlands has a single payer system (sometimes it is called a ‘hidden single payer system”), and is very high cost by European standards, and may just be as subject to socially inefficient gaming as the PPACA.
Once advantage to Go Swiss is the free market fanatics and GOP health care hacks were touting it as a true free market system that we should adopt some time ago. That was a failed bait and switch operation, but we could say “Hey, you know, that is a great idea. Thank you so much! Yes, we will go very free market Swiss and we will live in health care paradise, just like you say. We will follow your advice religiously and copy the damn thing.” It would be lovely to hear them yowl about the very ruthlessly and highly regulated results.
I also forgot to mention Swiss or UK style federal program cost-effectiveness rating of interventions, some kind of league-table or ranking, which monitoring and reports. I think the common cost-effectiveness tests for reimbursement would be politically impossible in the US, so would start with creating a system to wrangle over proper protocols for population based health care prevention and intervention, and public shaming of those who flout it unreasonably.
Of course, cries of ‘Death Panels!!!’ would fly regardless. However, in time, if we did establish a uniform mandatory minimum policy with relatively generous rules for reimbursement, and a separate market for supplemental coverage, regulated perhaps along lines of current dog’s breakfast of metals, then people may understand they could get less cost-effective care through supplemental coverage. Then some federal cost-effectiveness test for reimbursement, along with very widely understood and comprehensible compassionate care exception policy, would eventually become politically acceptable.
@Julia Grey: That sounds like why people in other non-expansion states are getting frustrated with too. There is a reason why people in non-expansion states do not like the ACA. It is not functioning for them.