Health insurance premiums are supposed to be set to be actuarial sound to cover the claims that are reasonably expected during the contract period. Previous losses or gains can inform the projection of what “reasonably expected” claims will look like but actuaries are not supposed to balance out one good year with lower premiums or one bad with higher premiums in the next year.
This matters as Q1 GDP estimates came out this morning and healthcare spending cratered:
This is stunning: Nearly half of the Q1 decline in GDP can be attributed to healthcare, which is presumably delaying of elective procedures.
It's a strange reality that in the midst of a pandemic, we have a healthcare-led recession. pic.twitter.com/G3IezQkEzX
— Justin Wolfers (@JustinWolfers) April 29, 2020
The other thing that we need to note, is that some (unknown) proportion of procedures, services and prescriptions that were never used in March as everyone began to minimize interaction with the US healthcare system either due to fear of infection or clearing the decks for the anticipated surge, will show up again at some point. My mother will never double-up on her physical therapy appointments that she missed. Someone who had a hip replacement scheduled for March 28 before it was cancelled is likely to still get a joint replacement sooner or later. There is a lot of uncertainty as to when the “catch-up” care will occur and how much is out there (that is a grant application I am working on right now), so insurers will price 2021 differently depending on how optimistic or pessimistic they are about the bolus of warehoused care needs remains unfilled for the 2021 policy year.
CarolDuhart2
A lot of it is more minor stuff like new eyeglasses, hearing aides, teeth whitening, and purely cosmetic stuff like bigger boobs. But other people are weighing without info whether or not that particular discomfort is worth a trip to the emergency room or not.
I fell about 2 weeks ago (fortunately no sprains, hitting my head, whatever). Normally I would go to the emergency room, but resorted to bacitracin, band-aids, and after some telemedicine, Aleve for the swelling). Nervous, but I wasn’t going to call 911 for this, and taking the bus to the hospital and then calling a cab (my other option ) was out. But the emergency room physician and other helpers were certainly out of any insurance payments they could have received.
Wag
At my primary care Internal Medicine practice our visit volume is down 50%. We are seeing some patients for face to face visits, but most of our physicians are doing virtual visits.
the virtual visits are a tough mix. When you have a tech savvy patient with a decent phone or computer, they go really well for many visit types. That is about 60% of the visits. The other 40% are more challenging. Between poor tech and poor tech literacy, the visit time doubles for half the return. And converting to a phone only visit instead of a telehealth visit where we can see each other cuts reimbursement by 70%
Challenging times in medicine.
WaterGirl
I wish they would distinguish between types of elective procedures.
Electing to get a nose job is one thing, but getting that surgery for your knee injury shouldn’t be considered “elective” surgery. I imagine there are a ton of people out there who are in an immense amount of pain because their surgeries have had to be postponed.
Jerry
How would this scenario have changed if we were under an M4All system? Or would answering that question require a whole book to answer?
Sab
@CarolDuhart2: Thanks. that’s good to know. I have a flip phone. My husband has an i phone. So for my doctor’s sake I should borrow his phone if I have a virtual consultation?
Oops. Meant to respond to Wag.
JAFD
Made New Year’s resolutions; get eye exam, new glasses, teeth checked, maybe bridges, and hearing checked. Also, cardiologist want to slice me open, add pacemaker. All on pause.
Got email this week, please come in for checkup, end of June. So maybe docs expect things settled down by then ? Planned trip to hobby gathering, July, is still so far up in air you need F-15 to find it…
Was up late last night, at 11:45 PM logged int ShopRite.com, got my order together, at 12:02 clicked ‘Select Timeslot’ and picked one on coming Wednesday as date opened up. Clicked ‘Checkout’ and window went to ‘Maintainance – Site Temporarily Unavailable’. Clicked ‘refresh’ every four minutes until 2, then rolled over, went to sleep.
Woke up at 9, did batroom stuf, picked up laptop, found that slot for Wednesday still available, checked out ! So FOOD ! Yay!
Hope all you jackals staying healthy, happy and hydrated !
Nicole
@WaterGirl: One of my neighbors is in desperate need of a hip replacement, but will have to wait until NYC hospitals can take elective surgeries again. She worked in health care herself, and has a friend who is currently an ICU nurse who stressed to her NOT to come to the hospital for anything short of life-or-death because they’re still majority Covid 19 patients. But it sucks in the meantime, because she’s in pain. Not life threatening pain, but pain nonetheless.
WereBear
Mr WereBear had a visit (he has chronic illness) scheduled a week from now, but I’ve been keeping him sealed in a vault. I’m the one who goes out and takes all the precautions (wiped down fresh goods, shower, new clothes) before joining him again.
He’s set up for an iPad visit now, and I’m thinking this might be the way forward. Parking him in the usual waiting room was never a good idea. If we can dispense with that, all the better.
Nicole
@JAFD:
Yeah, I’m annoyed that I didn’t get my eyes checked at the beginning of the year (likewise my son’s) when they were due for the yearly exam. Ah well. Summer, I guess.
While having cancer is never lucky, I feel very fortunate I completed post-surgery radiation the Friday before everything was shut down here. A friend of a friend is (was) going through chemo and the doctors cancelled her final 2 months of treatments, deciding 10 months would have to be good enough, due to fears of her getting infected with Covid-19.
taumaturgo
The one painful wound the coronavid19 has exposed is the boarding on criminal neglect healthcare access inequality in the richest country in the world. It exposes the lie behind the greatest healthcare in the world meme, only for those who can afford it. While the providers like any other profit business are feeling the drop in
customers’patients, the middle man insurers are not moving a finger to come to their rescue with a bailout. The insurers and the big consortium hospitals understand that their politicalbriberycontributions dollars will buy them a juicy bailout with no strings attached. This legalize bribery will ensure their business model with more than enough future taxpayers money and subsequent profits to continue fueling the opposition to any system that will offer equal access for all while continuing to pay themselves extravagant wages and bonuses. Pure corporate socialism that they love and enjoy while literally squeezing the life out of the working class. We could not have it any other way.Barbara
I don’t find it strange at all. There is a wide range of procedures or visits that can be viewed as “elective,” and some really are not elective because they are intended to prevent greater deterioration. However, the U.S. spends many more resources on health care than any other country does — by a wide absolute margin, and especially relative to other social needs, such as housing or food security. With a GDP ratio that approaches 18-20%, taking away 30-50% of “health care spend” is going to leave a big hole.
Cheryl from Maryland
We are trying telemedicine for some dermatology problems my husband is having. So far, not impressed with the quality of directions– the overarching group to which the doctor belongs has a proprietorial app we have to use instead of Facetime, What’s App, etc. Being proprietorial, it won’t work without a passcode, so we have no way to test it. Furthermore, the office assistant is sending the information via phone text rather than email as we asked. Not to mention leaving out such pertinent information as who calls in — the doctor or us. So we are prepared to waste time during the session for IT troubleshooting. If it works, great, as my husband has autoimmune issues and renal failure, so he only goes out for dialysis.
David Anderson
@Jerry: Good question — and it really would depend on how providers got paid under a M4All arrangement (just like it matters now).
If clinicians got paid on a fee for service basis (they get paid for each visit/widget/procedure), nothing would be fundamentally different as visits/procedures would have crashed and revenue would have crashed too.
If clinicians were paid on a global budget basis with emergency outlier payments like in some of the alternative payment models and Accountable Care Organizations (ACOs), revenue would be protected even as volume crashed.
The question is how is payment rendered, not who is paying.
Barbara
@Cheryl from Maryland: They aren’t supposed to use FaceTime, though regulators are making exceptions for the emergency period. FaceTime isn’t sufficiently secure. Ditto with Skype and most other common applications.
EmbraceYourInnerCrone
@WaterGirl: that would be me. I have almost no cartilage left In either knee and the right one likes to partially pop out of alignment too. I was supposed to have my pre-op physical April 2nd. But knee replacement is considered elective surgery so no PreOp and no surgery scheduled. But I still have to go into work So NSAIDs, ice and occasional elevation are keeping me going for now.
Humdog
Might people receive an insurance refund if the insurance companies are not needing to spend the correct percentage of premiums on health care?
WereBear
@Humdog:
Ha! You slay me.
WaterGirl
@Nicole: @EmbraceYourInnerCrone:
It’s absolutely the right thing to delay because of COVID.
But I think it would be absolutely enraging to have the surgery called “elective” surgery, when having to endure so much pain.
You have to wait for a tummy tuck? My heart bleeds for you. (not) But I feel bad for people who are suffering because real medical needs can’t be met. So many terrible choices are having to be made.
Just Chuck
@WaterGirl: Most nose jobs aren’t purely cosmetic either. Most “elective” procedures are still done out of some necessity to the patient. I’m not sure that the level of necessity is something that gets recorded.
David Anderson
@Humdog: Yes — MLR rebates are very likely
WaterGirl
@Just Chuck: Yeah, I thought better of it after I used that term. My niece has breathing issues – maybe a deviated septum, I’m not sure – which they could fix but can’t guarantee results.
But I suspect you know what I was getting at, in any case. I should be more precise!
JaneE
How is this going to work for all the people who had surgeries scheduled but have now lost their insurance? Besides very badly. Do we know what percentage of employers managed to keep paying health insurance premiums?
David Anderson
@JaneE: We don’t have good data on that yet. I agree. This will not end well.
Brachiator
@Humdog:
Haven’t there been some rebates of auto insurance premiums?
May not happen with health insurance, but a reasonable question.
David Anderson
@Brachiator: There have been auto-insurance refunds.
I am expecting significant Medical Loss Ratio rebates to be paid out in the summer of 2021 for over-charging in 2018-2020 for individual market health insurance.