Why Are We Doing This?

Early moves by insurers suggest that another round of price hikes and limited choices will greet insurance shoppers around the country when they start searching for next year's coverage on the public markets established by the Affordable Care Act.
Before Obamacare, I had a policy I kept from 2003 until, years after it became a grandfathered plan I couldn't change in any way, I lost it because the company quit selling it. I was never in a position of having to go out each year and "search for next year's coverage." Now I am in exactly that position.

Before Obamacare, that plan that I had changed only in that the premiums went up slightly from year to year. After Obamacare, the cost tripled before the policy was discontinued.

Before Obamacare, that plan had a network I didn't even have to worry about because any doctor you happened upon would certainly be on it. If you got drug to the hospital for some reason, you didn't have to first check to see if everyone in that hospital (including the anesthesiologist) was on the plan. They would be on the plan. Now, you have to agree to pay charges without having any idea if your network includes anyone at that hospital.

Nor can you check, actually, as the ACA's website doesn't have fully updated information for this year. You can find out if they took the plan last year, but every year, networks narrow and prices increase.

Why are we doing this?


raven said...

Because the medical industry has bought an exemption to antitrust laws.
Most of the behavior they exhibit is illegal in other industries.

If you like your cartel, you can keep your cartel.

It will go on, as long as the responsible parties pay no personal penalties. Throw a couple of dozen top CEO's and politicians in the Federal prison and change will be swift.

Tom said...

Could you explain a bit more about that, raven? I haven't heard this particular explanation before.

Anonymous said...


Ticker agrees with Raven. I totally agree with Raven.

.....Most of the behavior they
exhibit is illegal in other industries......

Grim had a fit last time I linked to the Tickers heathcare post

Every thing the Federal Govt touches turns to crap.
Get the Federal Goverernment health care all together and for Gods sske stop them
from picking the winners and losers in healthcare



Anonymous said...

Tickers answer is the correct Answer

"There is one -- and only one -- answer: We must break the monopolies and enforce existing law."



Elise said...

We're doing this (Obamacare) because a lot of people thought the insurance companies were being deliberately mean and hateful to pump up profits when the companies could just as well be nicer about covering people and still stay in business.


We're doing this because the people who supported it (like my Left-leaning friends) don't get their health insurance on the individual market and therefore they were fine with people like me paying huge premiums ($1000 per month) in order to make health insurance available to people who are already sick.


We're doing this because we are not, as a society, willing to let people go without health care, regardless of their income level and regardless of whether they've been responsible enough to buy health insurance while they were well.


We're doing this because everyone involved in trying to "do something" about health care either isn't willing to face up to or isn't willing to talk honestly about, how much it will really cost to provide US-quality health care to everyone in the country.

Anonymous said...

....and congress is delivering another crap sandwich that the Majority of Americans do not want and shoving it down our throats like force feeding geese for Foie gras production all so the can enrich themselves..

Poll: Only 21% of American Voters Approve of Republican Healthcare Plan



Anonymous said...

Here is the problem:

.....The entire charade of "insurance" for pre-existing conditions, needs to be decoupled from discussions about insurance.

If you already wrecked your car, you con't get "insurance", if you house is on fire you cannot get insurance. That discussion is are we as taxpayers going to take on the cost of heath care for these people, it is not a question of insurance.

Insurance is for things that may happen, it is a shared risk, it is not for things that have already happened or for things that are maintenance. If only politicians and voters had dictionaries they could figure this out..........


Grim said...

Grim had a fit...

What I think I said was that he had two good arguments, but no one would hear them to be convinced by them because he led by calling sick people thieves and frauds. That was more a call to rethink emotionally heated rhetoric than an example of it.

Grim said...

...they were fine with people like me paying huge premiums ($1000 per month) in order to make health insurance available to people who are already sick.

How did you and me end up getting the short end of this stick? I understand the left's general proposition that the rich should pay for everything, but "self-employed" and "the rich" barely overlap.

Ymar Sakar said...

The Left is the rich. Notice how I never said that they would be paying the price themselves.

That wasn't part of the plan, as Congress themselves didn't pay into Obamacare or participate.

This is the pain that humans need to understand what evil is. It's also part of why Lucifer was meddling around in the garden of eden.

E Hines said...

How did you and me end up getting the short end of this stick? I understand the left's general proposition that the rich should pay for everything, but "self-employed" and "the rich" barely overlap.

Rich and self-employed aren't the categories on which the Left chooses to operate, for all their empty rhetoric of sticking it only to the 1%. You and Elise, and I, and others like us are in the true category on which the Left chooses to operate: possessors of OPM. And OPM grows on trees, until the roots rot away.

Eric Hines

Tom said...

Wait, you mean they have an OPM addiction?

Texan99 said...

I agree with Elise, and especially on the question of the huge mistake we make in assuming that a profit motive is evidence of a problem.

We're afraid to face up to what it costs to provide elaborate medical care to everyone in the world. We're afraid to face up to how hard it is to get people to budget for unlikely but extremely expensive emergencies, and how hard it is for everyone else to turn a blind eye when a loved one or even an acquaintance lived for the moment and bought TVs instead of insurance before he got sick and expensive. We want to think of ourselves as generous enough to step in whenever that happens, but we don't want to budget a quarter of our own resources to accomplish the goal. We want to be caring people but we don't want to foot the bill ourselves.

Our public policy on healthcare has started to look like something cooked up by a starry-eyed kindergartner. It sounds so sweet! Puppies for everyone!

It's Venezuela all the way down.

Elise said...

How did you and me end up getting the short end of this stick?

There aren't a lot of us compared to all the people who get their health insurance through their employer (or via Medicare) so we were a good place to hide the actual cost of this. Add to that the fact that people who warned what would happen to us when Obamacare was being passed were dismissed as heartless Republicans who wanted poor people to die in the streets - and it was easy for people who aren't us to believe that, support Obamacare, and get points for being compassionate without incurring any of the costs. And add to that the fact that a lot of people who aren't us still don't believe in us. As Bob Laszewski puts it about Sarah Kliff:

Then there are all of the Obamacare supporters like Kliff. Apparently, the millions of middle class people who have no choice but to be in the Obamacare health insurance market are invisible to them and it's just fine that they have no choice but to get their health insurance from a safety net program "offering limited services to a predominantly low-income population."

Consumers who do not get a subsidy pay the full premium, absorb all of the big rate increases, as well as the full deductible and co-pay increases.

This isn't about "the rich should pay for everything". It's more about an intrinsic indifference to suffering on the part of those who support policies of this type. Policy is more important than people.

Anonymous said...

And let's not forget the "cram in every idea any of us have ever had about health-insurance-like-stuff going back to 1993's attempt!" by a swath of the then Congresscritters.

I was able to get a non-compliant, mutual-assurance policy with limited benefits for half what either of my O-care compliant options were. And it is good anywhere in the US. Of the others, one that was good outside the region was not accepted by anyone in the region other than the ERs, and the other one pretty much stopped once you needed to go anywhere besides Amarillo or Lubbock for medical care.

It's not what I want, and I still have to pay for routine stuff out of my own pocket, but it works. I shudder to think what is going to happen to people who depend on their employers, come this fall.


Eric Blair said...

I used to work in health insurance, and I'm getting a kick out these replies. The entire thing is a systemic problem left over from WW2 with employers offering 'benefits' to entice employees to stay. That coupled with the emergence of profit driven health care, which strangely took off in the 1960's after the passage of medicaid and medicare. And further the emergence of demographic rating, that is, you put people in actuarial pools based on demographics and charge accordingly. As opposed to commmunity rating where everybody is in one big pool.

I was in meetings where the discussion about subsidies took place, and the plan all along was to get at that subsidy money. There was a problem though, in that if a subsidy subscriber stopped paying, could they be cut off, as one would with any failure to pay, and the thinking was no, because then the subsidy money would have to be returned.

The whole thing was a steaming pile to begin with, and they could have done 3 simple things that wouls have brought costs down:
1) Make health care providers post their prices.
2) Let the insurance companies sell across state lines.
3) Put everybody back into one big rating pool.

jaed said...

The entire charade of "insurance" for pre-existing conditions

There are pre-existing conditions and pre-existing conditions. (Stop me if I've said this before...)

1. You were diagnosed with cancer a month ago. You have an immediate condition that will cost a lot to treat.

2. You have mild asthma since childhood, easily controllable with an inhaler. You have a chronic condition that's pretty cheap to treat.

3. You had cancer ten years ago. It was successfully treated, and you have been cancer-free for eight years. You have a statistically increased risk, but no current condition that needs treatment.

4. Your index values (blood pressure, BMI, total cholesterol, etc.) are outside the prescribed range. (The permissible ranges have been changing, and those ranges are increasingly encroaching on normal values.) You may have higher risk.

1 is what most people mean when they talk about how insuring pre-existing conditions doesn't make sense.

However, 2 through 4 were increasingly causes by insurance companies to deny coverage altogether. It used to be that with this sort of condition—indicating an increased risk or a slightly elevated expected cost of care—you'd have to pay a little more, or possibly they would exclude the condition for a certain time period. But you could still get insurance.

But for some reason—I don't know why—increasingly since 2000 or so, the insurance companies would decline everyone in these categories. They wouldn't charge an extra premium, they just wouldn't write you a policy at all. (And with the index values getting less tolerant, more and more people were affected. Probably a majority if you add it all up.)

It's why I and many others were so careful to maintain continuous coverage. (And why people were so badly harmed when they lost their good coverage and were offered nothing to replace it with but the horrible Obamacare plans.) And I think it was driving panic pre-ACA.

jaed said...

As for why we're doing this:

- It's cheap to virtue-signal on the backs of the Unprotected.

- The virtue signalers tend to be so uncharitable toward the victims of Obamacare that they won't even acknowledge they exist. (Example of something someone said to me a week or so ago: "The ACA imposes no burdens on working class people. It is either neutral or a boon to them. The only burdens are on upper income people whose taxes are paying for it.")

This analysis concludes that when you break down the premium increases for the unsubsidized individual market plus the cost of the explicit subsidies, 5% of taxpayers are paying 37% of the total cost of the ACA.

This was from 2014. The premiums have been going up so fast that I'm sure it's much, much worse now. So that's another reason why: it's politically easier to stack most of the cost on a small minority whose pain can be ignored. Or simply denied.

Texan99 said...

Jaed is describing exactly what so panicked and enraged me when the ACA caused our long-standing insurance to be canceled. I had meticulously maintained continuous coverage for our entire adult lives for just those reasons. Suddenly my old policy was gone, to be replaced by garbage with a contemptible network. No matter what happens with repealing or replacing Obamacare, the chances are negligible that I'll regain anything like my old coverage. The market would eventually recover if by some miracle we passed a sensible bill, but it will be too late for me.

I didn't see this one coming. I always feared that stupid legislation would drive my decent insurance off the market some day, or that some idiot bureaucrat would start fining me for my inexplicable choice of insurance that didn't tick off a pinheaded box. I knew one day I'd be forced onto the Medicare, to deal with a slowly degrading network as doctors increasingly declined to pretend that Medicare rates were worth working for. What I didn't expect was that Congress would simply make it illegal for my insurer to keep offering me the insurance we'd relied on for years. Insufferable jerks.

Elise said...

The entire thing is a systemic problem left over from WW2

Plus all the other "concrete" (to use McArdle's term) that's accumulated in the health care landscape. There were many things that could have been done to actually "fix" health care/insurance but they weren't politically feasible; there were too many interest groups (medical care providers, insurance companies, employers, employees, unions, old people, States) invested in the existing structures and no willingness to deal with the cost of rationalizing the landscape. Off-loading the problem/cost onto non-poor people who buy individual health insurance was politically feasible and the costs were hidden by tricky accounting and by shoving them off onto people like Grim and T99 and me:

By the time Obamacare came on the scene, America already had government programs that were propping up health care for almost everyone in the country: tax-subsidized employer-sponsored health insurance, Medicare, Medicaid, the VA. No one was willing to shoulder the cost of knocking those things down and designing a rational, well-built structure to take their place, so instead the administration threw up an annex next to the Medicaid edifice, and tore down the little remaining patch of ground that wasn’t government-subsidized, and threw up a new tower to hold its residents.

The planning was haphazard, the work shoddily done, and the result kept threatening to collapse.

Tom said...

So, is there any consensus here about what needs to be done? What should we be advocating for?

Grim said...

Yes, that's the real question.

Eric B had three proposals.

1) Make health care providers post their prices.
2) Let the insurance companies sell across state lines.
3) Put everybody back into one big rating pool.

Shall we start with those, and add to them as we debate them?

Elise said...

1) Does having health care providers post their prices imply everyone pays the same price? If so, this seems to mean the end of networks of providers agreeing to an insurer's level of payment. This in turn seems to mean insurers must post their payment levels. That is, my doctor must tell me she charges $120 and my insurance company must tell me they will pay $80. Thus I know seeing my doctor will cost me $40. I also know when looking at those numbers that I might do better to buy my next policy from an insurance company that will pay $90. (To me, these are all good things.)

2) I don't understand what selling across state lines does.

3) Does putting everyone back in one big rating pool include those who currently get their insurance through their employers? Through Medicaid? Through Medicare? Through the VA?

4) I would like to see insurance companies sell true catastrophic plans (very high deductible, deductible=max out of pocket, insurer pays nothing until deductible is met).

Implementation of any of these four items means telling insurance companies, health care providers, employers/employees/unions, and States what they much do. Given what people now expect regarding health care/insurance, I don't think we have much choice about that anyhow but this may not appeal to those who prefer no Federal government involvement in this area.

jaed said...

Actually, my answer would be along the lines of "Stop hurting us", first of all. (For example: just this year, the regulations were changed on short-term medical insurance. You can no longer buy it for more than three months, which means one of the escapes that people were using is no longer available.)

Elise, selling across state lines means getting rid of the Federal regulation that says you can't buy insurance from a company in another state. The limitation is problematic for a couple of reasons:
- You can't move to another state without losing your insurance.
- If your state's insurance commissioners insist on expensive requirements for all policies, or other regulatory limits you'd prefer to avoid, you have no choice because you're restricted to your own state.

E Hines said...

3) Put everybody back into one big rating pool.

This isn't insurance. Insurance is the agreed transfer of a risk in return for an agreed fee. I decline to pay for the risk that I'll get pregnant, or that my wife will, so I decline to pay the fee for it. I don't have a heart problem, so I decline to transfer the risk that I'll have a heart attack, so I decline to pay the fee for it.

Risk pools need to be related to the risks being transferred, else it's not really insurance. But risk isn't certainty: even pre-existing conditions aren't certainties, and insurance--true insurance--would be available, albeit at high fees (the risk is high): not everyone with a pre-existing heart condition, for instance, will have their heart attacks at the same time; the risk is easily amortized across time.

And yes, some pools will have higher fees associated because the risks are higher. It's foolish, to put it mildly, to try to force equal outcomes on us in any milieu.

I don't understand what selling across state lines does.

It facilitates interstate commerce, which increases market sizes, which both increases product availability/variability and strengthens competitive pressures. It also would put sale of health coverage plans more under one set of rules rather than 50, which would reduce compliance costs markedly.

Does having health care providers post their prices imply everyone pays the same price?

Competition certainly will drive prices to a nearly common level. Look at gasoline prices at the four stations that are on the four corners of a city street intersection.

The surgical hospital in Oklahoma with its procedure pricing on its Web site that I've cited before doesn't appear to be part of any insurer's network. They have no need of it; their cash prices are lower than what nearly any health coverage provider-associated hospital charges.

This in turn seems to mean insurers must post their payment levels. That is, my doctor must tell me she charges $120 and my insurance company must tell me they will pay $80. Thus I know seeing my doctor will cost me $40.

This sort of information is part of every bill I get from my doctor and dentist and hospital. My bills also tell me (by simple arithmetic; it's not a line item) what part of her charge she eats--and by inference, by how much she has to inflate her formal charge in order to be able to treat her uninsured patients that don't pay her.

Eric Hines

jaed said...

Modest proposal (part 1):

Repeal the ACA:
Completely. Sunset the Medicaid expansion, under-26, and subsidy provisions for two years so no one gets blindsided and there's time to do the rest.

HSA reform:
Lift the caps on HSA amounts. Anyone can open an HSA; you don't need a special kind of insurance policy to open one, or indeed any insurance policy at all. HSAs can be used for any medical expense, including medical-insurance premiums.

All money placed in an HSA is tax-free. If you put money in, it's tax-free. If your employer puts money in, it's tax-free to you and to them. If you as a parent put money in a 20-something child's HSA so you can be sure they have insurance, it's tax-free to you both. If we need to subsidize poor people and/or old people, the government does it by putting money in their HSA. If someone has a pre-existing condition and we decide to subsidize some of the cost of their medical insurance so they can afford it, into the HSA the money goes.

Everything is equally tax-free, so there's no incentive to tie insurance to your employer, and people's medical care doesn't get disrupted every time they change jobs. At the same time, there's no disruption: employers can provide insurance but give you the option to put the money in the HSA instead. You use the money in your HSA however works best for you: for direct payment, for insurance of whatever sort, for a combination. It also equalizes tax treatment of insurance and out-of-pocket payment, which means there is no longer pressure to have all medical care go through an insurance company (with its accompanying administrative costs—both from the insurance company and from the provider's coders and other personnel).

Pricing reform:
Providers can charge whatever they see fit, but must offer the same price to all comers for the same procedure or service. No sweetheart deals where insurance companies get 70% off the price they charge to self-pay patients. No demands that Medicaid get 50% off the lowest price they charge to anyone else. (In fact, no Medicaid: see point 1 about subsidizing.) Providers can offer special deals such as bundling or a discount if you're willing to wait a month, but those deals must be available to everyone. Prices must be available prior to any procedure or service, and contingencies must be accounted for in the price or price range given.

The price is the same to everyone, so there's no incentive to have every minor thing go through the insurance company with its overhead. The price is also knowable, so you understand how much you will be liable for. This makes using your HSA for direct costs much more practical, and it also makes having non-"network" insurance more practical, since cash customers will no longer be providing a hidden subsidy to insurance customers.

jaed said...

Modest proposal (part 2):

Insurance reform:
People may buy any sort of medical insurance from any company that offers it, regardless of their state's regulations on insurance companies within that state. Any group with a specific identifiable membership may seek a group insurance policy on behalf of its members, not just "employees of a single employer".

Restoration of the ability to buy insurance from anywhere makes it harder for states to screw their citizens with coverage mandates and higher prices. (Part of the problem is that too many clueless wonks take it for granted that all medical coverage should be first-dollar comprehensive. Letting people buy across state lines would enable them to escape from their local clueless wonks.) It would also mean less personal disruption when you move to another state.

Ultimately, I think a healthy medical-insurance market would function more like life insurance: most people would carry coverage through their lives, but it wouldn't kick in in an average year, and you wouldn't have to think about it unless you had a major medical event. Meanwhile, it wouldn't control which doctors you saw and which clinic you went to for minor things; your deductible should apply to all medical services received from licensed medical professionals, not just those within the "network", to whom you have to currently have to pay full price with no cash discount until you meet the deductible. The HSA provision makes it easier to track and prove these expenses.

(I might take a sip of the community rating kool-aid. (I'd actually rather see nationwide rating, if we're going to go there—the pool consisting of all insurance customers—because I'm not at all sure how much sense it makes to charge wildly different rates to similar people depending on what county they live in.) But I'd like to see some actual data first on various scenarios. If going that way causes premiums to rise to the level where half the population needs subsidies, it might be simpler to target the subsidies just to the smaller group whose expected yearly medical costs are high. (Is there an actuary in the house?))

Subsidy reform:
All subsidies are done directly by putting money in the subsidized person's HSA. Subsidies might be for any or all of the reasons we currently subsidize: low income, age, existing medical risk that makes insurance more expensive. All of it is done directly. As with your own fiunds, you can use it for any combination of medical services and medical insurance you see fit.

This does a number of things. It increases transparency. It ensures subsidies are paid out of the general fund, instead of loading "hidden" subsidies on providers, insurance customers, and cash patients as now, with low reimbursement rates and mandated discounts and required insurance. It also makes subsidized people part of the medical market and gives them choices, which means their use of medical services helps drive costs down and quality up via market discipline. Currently, people on Medicaid, Medicare Advantage, and insurance generally don't have the choices that would enable market discipline, and this would change that by letting people pick providers and allowing them to take price and quality into account when they do so. And it gives subsidized people more access than they have currently, when many providers simply won't accept Medicaid and Medicare because the aggravation isn't worth the low reimbursements.

E Hines said...

Providers can charge whatever they see fit, but must offer the same price to all comers for the same procedure or service.

A free market will take care of this just fine. Government does not need to be dictating to a private business what its decision must be.

No sweetheart deals where insurance companies get 70% off the price they charge to self-pay patients.

And no retailer can be allowed to charge cash customers differently than their credit/debit card customers?

I'll tack on an additional part. None of this can be done, effectively, in a vacuum. This needs to be done in conjunction with serious tax and welfare reform. Trump wasn't far wrong in his preferred order of events between repeal and replace and tax reform.

Our tax code needs to be vastly simplified, with very few, if any, subsidies, credits, carve-outs, etc, and with vastly lowered rates: no taxes for businesses (we end-consumers pay most of those taxes anyway in higher prices); one low flat rate on personal income regardless of source; privatized Social Security and Medicare, and block granting Medicaid subsidies to the States on a declining balance basis to the final (in 10 years, I say) level of zero dollars transferred.

With taxes properly low, the tax advantages of this or that savings scheme get a whole lot less valuable or important, and associated special interests get a whole lot less influential.

Aside from that, tax advantaging/disadvantaging shouldn't be a criterion influencing whether we do or don't do a thing. We should be doing or not solely on the basis of whether it makes economic sense to us individuals or business (economic) sense to the businesses we own.

I've mentioned the tax bit a time or two before.

Eric Hines

Ymar Sakar said...

The first problem as was the case before O care, was how to get rid of the Leftist alliance. So long as the Leftist alliance is here, none of EB's proposals will even get off the pad.

The goal is not to fix the system. The goal is to break the system and then blame it on somebody, and use it as leverage. This leverage exists to increase totalitarian centralization in the US. Kill the Left, and most of the problems will go away. Because people can't kill the Left, both sides and many thousands of factions are mobilizing. And new factions like the Alt Right are rising.

There's no point arguing about the solution when people already know what the solution is. The plan wasn't to solve the system. The plan was to break the system. Which they did. Mission accomplished there.

I get a kick out of this as well, although for me, it goes in the opposite space time direction.

Texan99 said...

Jaed's ideas appeal to me. I understand that the ideal state insurance commission is there to protect citizens, and I understand the importance of some protection to consumers for a bet that in essence is waged now but may not be paid off for decades. Nevertheless, the most a commission can safely do is grant or withhold some kind of gold-ribbon approval of an insurance company's financial practices. If I want to insure myself through Lloyd's instead, relying on their long-term reputation instead of the Texas Insurance Commissioners' judgment, that should be up to me. No one should be able to prevent me from entering into a contract with any insurance company on earth.

ColoComment said...

I like Jaed's proposals, for the most part. Routine & pre-schedule-able services should be paid out-of-pocket; if tax rates are lowered, sheltering might not even be necessary or desirable. As so many have said time and again, insurance is for the financially-devastating and/or unexpected & unforeseen event.

Re: selling across state borders. I likely have mentioned this before, but in 1996, in the national securities markets, the feds (in cooperation with the National Association of State Securities Administrators) pre-empted regulation of intERstate sales of certain securities (mutual funds are what I'm familiar with). A fairly simple-multiple choice form & sample documents are filed with the SEC for review & registration. The states subsequently passed exemptions from state-level registration for those offerings (a state might require filing of notice & fee, but does not give such an offering merit review.)

Nothing in that federal law prohibited states from issuing their own regulations for inTRAstate offerings, or for fraudulent or illegal offers or sales made within their borders. And the states are able to prioritize resources toward enforcement, rather than time-consuming merit review of no-brainer, standard securities offerings.

Why couldn't something similar, with adaptation as required, work for health insurance policies?

Elise said...


Selling across state lines. Not clear this accomplishes anything good (see this and this for example. Plus, the first article indicates that this is already possible.

If you leave the State regulations regarding insurance in place, there’s no reason to think an insurance company from, say, Iowa will be able to sell health insurance in, say, New Jersey any more cheaply than a New Jersey company (absent the kind of cherry-picking the articles describe).

If you don’t leave the State regulations alone then all regulations of this sort will have to come from the Feds: Force hospital stays for mastectomies? Require no-copay coverage of mammograms? Require insurers to cover PSA tests for men under 60? Well-baby care? In other words, the ObamaCare requirements again. Or you do no regulation whatsoever - your choice.

If we want the Federal government to force a State to set aside its regulations regarding the health insurance that is sold inside that State so State residents can get cheaper health insurance, we are not upholding Dual Federalism. That’s fine but then we can’t really claim to be staunch supporters of the Tenth Amendment and we have little standing to argue that the Feds shouldn’t tell the States how to regulate everything else. I'm quite guilty of this myself since I'd like the Feds to force States to allow the sale of catastrophic polices but that doesn't change the fact that I'm letting outcome trump process. A slippery slope.

Elise said...

E Hines:

I was unclear when I asked if everyone would pay the same if providers posted their prices. I did not mean that all providers would tend to the same price; I was asking if this meant that every patient would pay the same to a particular doctor for a particular procedure. That is, regardless of whether I had BCBS, UHC, Aetna, or no insurance, my doctor would bill me $120.

And, yes, a doctor’s charge and how much the insurance company allowed and what part of that I have to pay are on my claim forms. But that is not quite the same as being able to see beforehand that a CBC at my doctor’s office will cost $200; at the hospital out-patient lab will cost $190; at Quest Labs will cost $150; and at the local Doc-In-The-Box will cost $225.

Elise said...

And apologies for saying I didn't know what selling across state lines did and then answering my own question. I should have made my points in my initial comment but I didn't take the time to do the research beforehand.

E Hines said...

From jaed's Bloomberg article: One reason is that it is already allowed –- and yet basically doesn't happen. States possess the authority to sanction sales across their borders, and to define the conditions for such sales.

This leaves each State in control of the insurance products it will allow within it--that's not interstate sale of a product; it's just allowing a national level purveyor to sell a State-specific product within that State. Further, the claim that insurance companies aren't joining Obamacare-permitted State compacts isn't surprising, either, and is irrelevant to interstate sale. Insurance companies are leaving the Obamacare environment, not joining it.

I did not mean that all providers would tend to the same price; I was asking if this meant that every patient would pay the same to a particular doctor for a particular procedure.

That's how I took your question. I stand by my price pressure claim. It certainly would be useful for medical providers to provide their prices a priori--just like the Surgery Center of Oklahoma does. And that would drive differing providers to relatively similar prices. Patients can shop around just like car buyers and grocery shoppers.

Eric Hines

jaed said...

A couple of points in quick response to Elise:

If we want the Federal government to force a State to set aside its regulations regarding the health insurance that is sold inside that State so State residents can get cheaper health insurance, we are not upholding Dual Federalism

That's not quite the legal situation. In general, the Interstate Commerce Clause forbids states from making it illegal to buy lawful products from other states; the power to regulate interstate commerce is reserved to the federal government. There is federal law (the McCarran-Ferguson Act) that permits states to do this.

The proposal is not to force states to set aside their regulations. Each state can go on regulating insurance as it sees fit. But a state could not prevent its residents from purchasing insurance from a company in another state—possibly under different regulations, possibly not.

This might allow people to buy cheaper insurance—if their state regulations have the effect of making it more expensive, they could buy from a less-regulated state, at least theoretically.

But the main benefit is in permitting policies that are effective in more than one state.

If you have insurance already, and want to move to another state, the insurance walls around states are a problem. Maintaining continuous coverage means you can continue to have insurance even if you are diagnosed with some illness, but it also means you're trapped in your own state and can't move elsewhere. There's also a problem if you customarily reside in more than one state, or if you have business that regularly takes you to different states. (Emergency care is generally covered out-of-area, but not all medical needs are emergencies. Urgent care, followup care, and ongoing care aren't covered.)

This used to be more flexible pre-ACA. Policies generally offered coverage in a wider geographic area, and I've heard from people who had (for example) a vacation home in another state that they had coverage that accommodated them. I'm not sure whether this results from an actual regulatory change or is a response to the constraints of the ACA that's not directly regulated... but the networks have gotten narrower not only in the sense of having only the cheapest providers, but in the geographic sense. Out of network coverage is also scantier: the usual is for a separate, double deductible and out of pocket maximum. (For example, in-network deductible of $5000 means out-of-network deductible of $10,000, and they are additive—your total deductible is potentially $15,000.) And this last year, I didn't see anything on the exchanges that offered any out-of-network coverage at all.

The articles you link seem to take as their starting assumption the "gatekeeper/network" model of insurance—where the insurance company contracts with selected providers, and hence determines what providers you may see and what prices you pay for care—rather than other available models. Since this model originated in the desire to control spending on medical care by making it harder to get (via requiring insurance company permission for care), and since I think we are now, in the narrowing networks of the ACA exchanges, witnessing the final breakdown and failure of the model, this argument doesn't persuade me.

jaed said...

(And sorry—I promised a "quick response" and then wrote another novella....)

Grim said...

No apologies are necessary. We are fortunate to have you, and Elise both, as commenting members of our community.

Elise said...

Thanks, jaed. After I wrote I realized that if we are going back to basics the whole network idea might/could/should go by the board which would change much of the argument about selling across State lines.

jaed and Eric - I see your points and they make sense to me. But I still think we're left with the danger of cherry-picking. Let's say that I live in NJ which has very strict regulations, including ones that say insurance companies which sell to everyone who has maintained health insurance regardless of their current health. Let's say I've got some serious pre-existing conditions but because I've faithfully bought health insurance for the last 25 years I can get insurance in NJ.

Now a company from Alabama starts selling in NJ. Alabama has no such requirement - insurance companies can turn anyone down for any reason. The Alabama company will charge much lower rates, pick off everyone in NJ in good health, and leave only people like me buying from NJ companies. My rates will skyrocket, my insurance company will go out of business, and I won't be able to get health insurance.

I realize this is the market working as expected but it seems not quite right to me. (I went looking for something I'd written about snowboarding and found a whole post on selling across States line - which I'd forgotten I'd ever written. I'm not sure it adds anything to the discussion - I was apparently feeling quite cranky when I wrote it - but I include a link for reference. In re-reading this I realize that my problem is that I want a free-market health insurance/care system but don't want people to be without care through financial or health bad luck. Can't really have both but that's evolution for you:

We are evolved ... to provide costly forms of care to members of our community when they get sick, not just in the interests of making them better, but to demonstrate loyalty.)

Eric - Apparently I misunderstood your response about paying the same rates.

Grim - Thank you.

E Hines said...

I want a free-market health insurance/care system but don't want people to be without care through financial or health bad luck.

That's also easily handled in a properly lightly regulated free market. Such a market would drive competition, improve the variety and quality of product, and drive premiums to their natural value, just as any competitive market drives prices to their natural value--the cost of producing the good or service plus what profit competition will permit. With true insurance, the natural price flows to the Expectation of the payout for the risk (plus what profit the market will bear).

Here's where the lightly regulated free market works for those who might otherwise be without insurance (which is not the same as being without care): cash only care markets would develop, with low prices, insurance premiums would be low and commensurate with the coverage actually desired by the customer--and churches and charity, and family, friends, local community would have access to more money. That lets them do more of what they do now--fill in most of those gaps.

The 14 or so who still can't get coverage or care now become legitimate targets of government welfare--with the government as last resort, not first by default--and at lower cost since there are fewer who need government welfare.

Eric Hines

Tom said...

Now a company from Alabama starts selling in NJ. Alabama has no such requirement - insurance companies can turn anyone down for any reason.

Well, if that company starts selling in NJ, they would have to follow NJ laws when they did so, wouldn't they?

I tend to favor the free market, but it doesn't always work as predicted. We have a relatively free market in internet providers, but in my state we're basically down to two companies, both of which are crappy.

Elise said...

Well, if that company starts selling in NJ, they would have to follow NJ laws when they did so, wouldn't they?

Not as proposed above (see jaed at 1:44pm).

Eric: I think your points are generally right but from my vantage point they are overly optimistic. To me, the crucial point about a lot of medical care is that once upon a time, people got sick and they either got well or they died quickly - and even if they didn't do either of those, there wasn't a lot that could be done for them so it didn't cost a lot for them to linger. Now, not so much. So I'm not convinced there would be only 14 (allowing for poetic license) people who can't afford very expensive treatment for cancer, MS, ALS, cystic fibrosis, heart conditions, etc.

Health insurance isn't like other insurance. Perhaps it was back in the "get better fast or die" era but not now. Life insurance: you die, you're dead, finished. Car insurance: you wreck your car, insurance buys you another one, finished. House insurance: your house burns down, insurance buys you another one, finished. Health insurance: you get sick, you stay sick, you get sicker, all this takes years, policy is only for a year at a time, you've bought health insurance for 25 years but with 8 different insurers, why should current insurer pick up the tab, this isn't really insurance because the risk is 100%, etc. It's a mess.

E Hines said...

I am optimistic, Elise. But it's optimism, not surrendering to the fates, that yields, no produces, better possibilities. In the event, the fates work for us, anyway, not the other way around.

Also, there's health insurance, and there's health insurance (I'm eliding the present system of Federally mandated, private/federal funded health coverage welfare). My own empirical experience, from the period before Obamacare: my family had no health insurance (health insurance and health insurance: we did have dental insurance), by our choice. Then my wife was diagnosed with precancerous cells in her breasts, courtesy of a mammogram and subsequent biopsy for which we paid cash. The treatment offered was annual biopsies (and annual costs--ours or any insurance we might pick up) until the answer came back "cancer, cut off the breasts." We opted to skip the middle steps, and she had a bilateral simple mastectomy (guaranteed simple: we didn't give the inevitable cancer an option to spread to her lymph glands before an annual biopsy detected cancer). We paid for that, too, with cash. In those days, the available insurance would have cost us more in accumulated premiums than the surgeon's bills totaled. And then, there was the deductible that would have been cash out of our pocket before the coverage began, and then there would have been the 20% we still would have had to pay cash for after the coverage did kick in. She got sick, we treated, done. Still done, 20 years later.

I envision, in a properly free market, that sort of coverage still being available, but with competition-driven lower premiums. I envision policies that only cover particular risks: breast cancer, heart disease (specific ones), and so on, as well as policies that cover broader ranges of health risks, perhaps targeted clusters of related health problems. All at lower premiums, all with (probably--certainly lower than under the present system) lower deductibles, all with (probably) lower out of pocket shares once coverage begins.

The range of policies available, I expect, would include policies tailored for lingering illnesses, including truly long-term: the various forms of dementia, the long-term problems you suggested, others.

Free markets and their competitive nature don't only drive down costs, though. They drive innovation, too, which also drives costs down. Thus, I also envision that free market hastening actual medical innovation, not only coverage ideas, with treatment regimes cheaper than today. Who envisioned, for instance, sending emails, much less text messages, via cell phone before Ma Bell was broken up, and free market competition in communications reared its ugly head? And at far lower rates than Ma Bell charged. And with that competition, even though Ma Bell has been reconstituted, innovation continues today, and prices continue to fall.

Eric Hines