How do we spend less on insurance?
There are fundamentally two things that can be done. The first is to pay providers less. That means paying less per unit of service or buying fewer units of service. Narrow networks, pre-authorization, primary care gatekeepers, faceless bureaucrats who are asking you to turn in a form that you completed three times in the past month already are all ways that our current system tries to pay providers less. The entire push towards bundled payments, reference pricing, and accountable care organizations are more sophisticated attempts to shift services to lower cost locations and providers and improve quality and population health so fewer high cost care episodes occur.
The other method is to have skimpier benefit packages. This comes in two ways. The first is higher out of pockets which is the practical application of lower actuarial value plans. The patient pays more so they skip more care either wisely or unwisely as they operate at severe information asymmetry and known cognitive biases. The other is to cover fewer things and prioritize high value care. The entire Value Based Insurance Design (VBID) process is an attempt to do push people to use high value care and avoid pointless care.
The ACA deems ten things to be Essential Health Benefits (EHB). The EHB’s cover in-patient and outpatient care, drugs, mental health, maternity, prescription, and pediatric vision and dental care. The EHB’s are broadly defined by law and specified by regulation. Insurers have to offer these EHBs for non-grandfathered plans for a person to have qualified coverage.
Some insurers will add non-EHB benefits. My former employer (UPMC Health Plan) routinely covers acupuncture and chiropractic visits. These are not Essential Health Benefits. They add cost to a plan.
But realistically, they add minimal cost for two reasons. Very few people use them and the per unit cost are low. The benefit is added because it is a good marketing tool as well as a form of placebo care that may (or may not) divert some people who are achy but not injured from showing up at an orthopedist office.
Stripping down a health plan to just the EHB may save a few dollars per member per month but that is all. There is always money in the EHB but there is very little money outside of the EHB. Below is a bin chart of all of the ACA plans sold on Healthcare.gov this year. As you can see the overwhelming majority of plans have at least 99% of their projected claims dollars going to pay for EHB required services.
So if we want to reduce premiums there are two things that can be done. First is to pay providers less per service and have them do fewer services. That most likely means narrower networks and more pre-authorizations and denials. Secondly, cover less either by increasing cost sharing or eliminating categories of EHBs.
EHB’s are where the money is.
Wouldn’t letting the sick die quickly also lower insurance costs?
Thanks for the info Mayhew.
Would you consider doing a post on the ZEGK’s press conference from yesterday, outlining his lies about Obamacare and Trumpcare?
Outpatient care—the kind you get without being admitted to a hospital
Trips to the emergency room
Treatment in the hospital for inpatient care
Care before and after your baby is born
Mental health and substance use disorder services: This includes behavioral health treatment, counseling, and psychotherapy
Your prescription drugs
Services and devices to help you recover if you are injured, or have a disability or chronic condition. This includes physical and occupational therapy, speech-language pathology, psychiatric rehabilitation, and more.
Your lab tests
Preventive services including counseling, screenings, and vaccines to keep you healthy and care for managing a chronic disease.
Pediatric services: This includes dental care and vision care for kids
So apparently Trump is telling the House Freedom Caucus he doesn’t care what’s in the health bill as long as premiums come down. Problem is, he didn’t just promise people their premiums would come down, he also promised them they would get better coverage for those lower premiums. TrumpCare is a floor wax *and* a dessert topping. Now, it could be his voters will just eat this shit sandwich and say they like it rather than bring themselves to admit they were conned. Or Republicans are headed for an electoral buzzsaw the likes of which they’ve never seen.
@jonas: Yep, very few free trade-offs in healthcare
@Baud: “Wouldn’t letting the sick die quickly also lower insurance costs?”
Already covered in the article:
Zero comes under “less”.
*Technically* it actually comes under “fewer” rather than “less”, but that’s a level of grammar nazing that I take several good hot cups of tea to work up to.
more paperwork and legal work to process denials and pre-authorizations is why for profit plans cost 25-30% to administer. true or not?
the money is in the profits. If healthcare was not wildly profitable, there wouldn’t be so many people employed in the health care sector. There wouldn’t be so many robber barons lining up for their share of the grift. The GOP is as stupid with this as they are in their obsession to deprive the poor of even the sparest of comforts. Capitalism is not a good business model for services that involve life and death decisions. There was a reason that most hospitals in the 20th century got their starts as non profit/charitable organizations. It was to provide services to groups of people who were, because of racism and religious intolerance, blocked from receiving care at private institutions that routinely discriminated against different ethic groups and operated under class discrimination. When those charity hospitals started to become profitable; as more and more people could access care; the robber barons once again swooped in and started feeding. It is part of the non profit life cycle for an organization to fill a void in the market, figure out a way to make it work,build the infrastructure to make it work, and then get gutted by vultures who would never put in the work to build the infrastructure they now want to pillage.
there is plenty of money at the top of this Ponzi scheme.
Or we could go to Single Payer, aka Medicare for All. I went to a presentation by some folks who working to get CA to pass a Single Payer for California bill. It’s been tried elsewhere, notably Vermont and Colorado, but has been shot down each time: not passed by the voters or vetoed by the governor.
They claim that by negotiating drug prices and eliminating insurance companies, thus moving the medical loss ratio so that the money goes to care, not admin and CEO salaries, such a system would bring the costs down in a way that would not blow up the state budget. They pointed to Canada as an example. (And BTW, the population of CA is only about 3 million more people than the population of Canada.)
They make a persuasive case.
Villago Delenda Est
@jonas: Donald needs to be beaten to death with a fucking tire iron.
Or we could just shove all the insurance companies up against the wall.
OK. I’m sorry. That was harsh.
Off topic question, but this morning I posted from the Times this info-graphic on premium costs, and was promptly informed by a conservative friend on Facebook that this was a lie because his premiums are 1,800 dollars. Not sure why that makes this a lie, but if someone’s premium range is 1,800, what are the factors contributing?
Look, I’m no expert, and I am probably talking out of my ass. But having been both insured and un-insured, I have a fair amount of dumb confidence in the following observation: providers behave differently when they think a patient is paying directly for something than they do when they think an insurance company is paying for it.
I would not be surprised for a second if some investigation bore this out.
ETA: What I’m fumbling at here is: the problem of rising heath care costs is more psychological than economic.
FYI, and David, I’d appreciate your take on this… Stat News, Kaiser Health Network, ProPublica, and Vox are teaming up to fact-chack members of Congress about the ACA. Looks pretty good–those are reasonable organizations to do this, and there’s an online form to submit your questions.
Could be useful, if ever the more recalcitrant MoC have someone pick up the damn phone.
Also, an unusually disgusting poison pill: rolling back Obama’s protection against genetic discrimination and forcing employees to reveal genetic info to employers. There is no depth to which they will not ooze. “Wellness”… unbelievable.
@Hal: The only on-exchange Silver or Bronze single-individual plans with pre-subsidy premiums of $1800/month are for people aged 60 or older in Alaska.
Naturally, if he’s buying insurance for two people, he’ll pay more.
If you know your friend’s zip code and approximate age, you can use the KFF calculator to look up Silver and Bronze Premiums (and subsidy levels if you estimate his income).
@artem1s: I agree that this is an important part of the expenditure problem, which I didn’t see mentioned explicitly in DA’s post. More price transparency, better control of local health provider monopolies and oligopolies, better control of self-dealing and kick backs between labs, drugs and medical equipment and various providers would be a big help.
Princeton health economist Uwe Reinhardt has been talking about the price gouging aspect of the US health care problem for years. ‘Follow the money’ is regular buzzword that he uses.
Does the AHCA revise Obamacare’s essential benefits? I thought that wasn’t possible through reconciliation, but I keep reading conflicting stories.
Villago Delenda Est
Shove the Kochs, the Petersens, the Mercers up against the wall.
Well, the CEOs of the health insurance companies, too.
@altofront: No, the AHCA doesn’t revise or delete essential health benefits for qualified health plans, but it would delete the requirement that they be covered in Medicaid for people getting Medicaid under the expansion.