Murphy's Law of Economics and Health Care [View article]
User 345297 - - -
Formyx gave a good response.
I would add the sinking boat analogy. Your end of the boat is not sinking, so you are content. But if you perceive that you might be affected, what is your plan? Saw off your end of the boat?
By the way, anyone who wants to cover their 10% of AGI healthcare cost plus catastrophic expense insurance responsibility with a comprehensive health care plan with very low deductibles (the so-called "Cadillac" plans) obviously has met all requirements of what I am discussing.
I just happen to think that many will prefer a "Chevrolet" that gets them to the same place at much lower cost. But, if you are a Cadillac guy, be my guest.
Murphy's Law of Economics and Health Care [View article]
Geoffster - - -
I may be in a small minority. I believe health care is a right and a responsibility. Let me elaborate:
Every individual has a responsibility to pay for their health care. They have a right to access, but they must pay. There are low income and no income people who should get government support, but in a way that they are clearly contributing payment. That is the basis of my attempts to generate ideas that I believe maximize access but produces individual financial involvement in order to control costs.
Let the poor go uncared for? If they were animals, it would be a crime called animal cruelty by reason of neglect.
This is where I'm coming from. It's from the left and from the right, but, as is so often the case, I can't support what any political viewpoint seems to be suggesting.
To summarize, everyone has a right to health care, but it is not an entitlement.
Murphy's Law of Economics and Health Care [View article]
Michael - - -
You touched on something that I was thinking about last night.
You mentioned how to deal with unused funds in the "HSA". I was thinking along the same lines as you - return some of the money to the owner each year it is not spent. But I came up with the following idea. I'll use a hypothetical. (I bet some readers are getting tired of my hypotheticals.)
Let's take an individual with an AGI of $50,000 per year. If his "self insured" deductible is 10% of AGI, then his HSA contribution would be $5,000 per year (pre-tax dollars, reducing his taxable income). Assume year 1 he has $2,000 in medical expenses paid out of his HSA. At the end of the year, there is $3,000 in the HSA. The individual then has the following options:
* Leave the money in the HSA and reduce the following year contribution to $2,000.
* Leave the money in the HSA and increase the deductible the next year to $8,000. This will reduce the catastrophic coverage premium.
* Transfer the $3,000 to a traditional IRA.
I agree that this creates a great motivation for the individual to evaluate cost/benefit relationships regarding health care. He's got skin in the game and will put more effort into becoming informed. Once the patient is informed and has a financial stake, you will see dramatic improvement in healthcare cost control.
On Oct 26 02:16 AM Michael Clark wrote:
> I had health-care insurance for thirty years at my workplace. I saw > a doctor three times in thirty years. My wife's asthma medication > was covered -- her medication, Pulmacort, costs $10 in Vietnam, and > costs $160 in America. $160 x 12 = $1920/year. My understanding as > to why I could not longer get a pay raise at work was that health > insurance ran about $15,000 a year for my wife and I. Clearly, my > wife and I would have been better off taking the pay raise and paying > for our own insurance. > > I am grateful that my wife and I have good health. I always said > that MOST Americans, if given a chance at a health rebate at the > end of the year, would not be so inclined to have to go see their > doctor every two weeks. > > Unspent money from a health-fund goes back 50-50 to the insured person > and to the insurance fund (government?). You'd probably be amazed > at how healthy Americans would keep themselves if it meant money > back at the end of the year. > > The REAL reason our health-care system is broken is because we've > INFLATED prices out of reach. If we deflate prices back to a reasonable > level, then this issue becomes muted. The Inflationists (Greenspan-Bernanke) > feel it is their duty to push up prices to the breaking point, so > they can take credit for a booming GDP. Prices can't keep going up > for ever. We need to discredit the Neo-Classical economics that have > been suffocating us now for two decades. > > The best health-care reform would be a couple decades of real price > deflation.
Murphy's Law of Economics and Health Care [View article]
Mark - - -
Thanks for the post about one of my favorite subjects. I endorse much of what you said. Better yet, I endorse everything of importance that you said. Even better yet, it was all good.
How Will Risk Adjustment Work Under the Health Care Reform? [View article]
James - - -
You are not missing much. There is a lot missing in what is being proposed that could focus on (1) coverage for everyone and (2) reducing costs. I have written several pieces on this topic. My surprising conclusion is that one very credible solution involves more direct government involvement AND more individual responsibility for each paying directly for their own health care expenses.
The health care system we have today, and the one that is apparently being perpetuated, is not an insurance system. It is a pre-paid health care process. Real insurance protects against unusual events, not everyday visits to the doctor. If we had an insurance system, insurance benefits would pay for medical expenses only above customary and usual annual expenses, say 10% or 15% of AGI. Up to that point, individuals would pay out of pocket.
This would produce a dramatic reduction in health care expenses. Much of the 30-35% of health care dollars that today go to administrative costs and unnecessary tests and treatments would be saved.
There are a lot of details like how to subsidize those in or near poverty, and how to subsidize insurance premiums for the same group. But going back to doctor/patient decisions determining everyday medical procedures is something that is fundamentally needed, in my opinion.
Finally, if doctors were compensated based on results rather than procedures, a lot of unnecessary expense could be eliminated. We would have to guard against adverse selection by doctors (cherry picking healthy patients and rejecting those with complicated conditions), just like we have to deal with insurance companies with similar practices today. I think this would be a more manageable problem with doctors than insurance companies.
These are just more thoughts related to risk-adjustment.
Healthcare: The Myth of Consumer Choice [View article]
Good comments here.
The numbers I have collected:
30% of Medicare payments go for unnecessary treatments. 10-15% of Medicare payments go to fraudulent claims. Medicare has a 3-5% administrative burden.
33% of insurance premiums go to administration (includes profits) I don't have estimates for fraud and unnecessary treatments.
So up to half of "health care" costs have nothing to do with necessary health care. Eliminate that and our health care costs are in line with the rest of the developed world.
The ideas of making the patient responsible for his own health care decisions and costs (something I have argued for in articles here on SA and at TheStreet.com) suffers from the liklihood that people will not be competent to make good cost/benefit analysis, even with a doctor's advice.
I have advocated the idea of a doctor's compensation being based on the outcomes and not on the number and variety of procedures. This runs the risk that doctors might screen patients and accept only the healthy ones. The doctors could start practicing the adverse risk determinations that insurance companies do today.
We have hard choices to make and we are not making them. A one payer system will disadvantage some. A government regulated private insurance system will disadvantage some. A hybrid will disadvantage some.
Doing nothing will disadvantage many.
And no one is going after the wasted 50%.
I'm frustrated.
By the way, James, good article. It is diappointing that there is not a longer comment stream. I think people are just getting worn out on the subject.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
I just listened to President Obama's on line healthcare "forum". I heard a couple of interesting things.
1. Questions and discussion on the role of diet in health care costs. Several commenters here have mentioned the importance of this in trying to control health care costs.
2. I heard Obama say that everyone should be required to have a basic catastrophic health care policy. He said that should be the minimum coverage (mandatory, like auto liabilty insurance) and more comprehensive coverage would be optional. I do not recall hearing this before (except in my articles).
I think the comment stream has addressed some of the objections we will hear to these two items. I think these are credible ideas and, to those who object to them based on their freedom being curtailed, I say: I will give you no freedom that takes money out of my pocket to benefit your bad behavior.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
jay brebner - - -
You suggested that there are some who do not want to be interfered with. You wrote: "I think that is part of the backlash that is out there - nobody wants to be told what to do - we want to be free to kill ourselves as we see fit."
See my previous comment. My answer is that anyone who wants the freedom to abuse themselves is welcome to do just that - but not on my dime.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
mikebrah - - -
Unfortunately you are right. I have suggested that the catastrophic health insurance premiums could be discounted for those who met specific healthy lifestyle parameters OR were making documented progress in changing. Ultimately, I believe the best health care system for cost efficiency and health outcomes will be one that has the patient invested both from the perspective of personal health and personal finances.
I know someone will protest discrimination because they can't get a discount if they are obese, or if they smoke, abuse drugs or alcohol. My answer is that not to make them recognize the extra cost risk they present for their health care will make me pay for it and that is discrimination against me.
Discrimination against someone because of their behavior is called underwriting. Discrimination against someone because of someone else's behavior is called turpitude.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
Tiny Tim - - -
I read the New Yorker article. The primary cost driver described in McAllen is called physician self-referral. I mentioned it in my article, but didn't explain it. The author of the New Yorker article dismisses the value of patient "audit" in controlling costs. He gives an example of a multiple bypass surgery. Is such a patient in a position to bargain for the best deal? I agree. But for the small things that can add up to several thousand dollars some years, I think the patient is in a good position to "get a good deal" and avoid fraud and unnecessary drugs, tests and treatments. The multiple by-pass would be covered by the catastrophic insurance, and the insurance company (or Medicare, or Medicaid) would have a cost control responsibility there.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
Jay - - -
I tried to keep the article tightly focussed. There were some new points developed here that were not well covered in the article on TheStreet.com and some things that were discussed in that earlier article were not included here.
Among the things not included here was the idea of premium discounts (for catastrophic coverage) for those who (1) have a healthy lifestyle or (2) make progress toward lifestyle improvement under a doctor's supervision. For those in the lower 50% of the income distribution, the government could provide partial payment for the preventive program, with those near or below the poverty line getting full payment.
I have outlined what I think would be a full discussion of all the ideas I have been mulling over. I think it would be between 6,000 and 8,000 words, too long for Seeking Alpha or TheStreet.com formats. Maybe I can do it for a print magazine or a dedicated website.
On Aug 19 04:24 PM jay brebner wrote:
> john - > > How does catastrophic care address the need for prevention? > > I am assuming that you see individuals taking care of themselves > because they will be disciplined by out of pocket expenses. I'm not > sure that would be the case and that it might actually become a barrier > to good care. > > While the debate going on now is centered on the economics of HC, > it should not be forgotten that HC reform is also a public health > issue. Getting people into and keeping them in contact with a system > of care is the best way to do prevention, from flu shots to cancer > screenings, etc. > > I have not been swayed from my single-payer/HMO plan, as I see it > as the best way to align interests, but the meaningful dialogue is > again appreciated.
Health Insurance Industry's Profit Margins Rank #86 [View article]
Obama is missing the point when he talks about profits. Why should nearly 30% of health care expense be administrative? Lack of efficiency is the number one defect.
Murphy's Law of Economics and Health Care [View article]
Murphy's Law of Economics and Health Care [View article]
Murphy's Law of Economics and Health Care [View article]
Formyx gave a good response.
I would add the sinking boat analogy. Your end of the boat is not sinking, so you are content. But if you perceive that you might be affected, what is your plan? Saw off your end of the boat?
By the way, anyone who wants to cover their 10% of AGI healthcare cost plus catastrophic expense insurance responsibility with a comprehensive health care plan with very low deductibles (the so-called "Cadillac" plans) obviously has met all requirements of what I am discussing.
I just happen to think that many will prefer a "Chevrolet" that gets them to the same place at much lower cost. But, if you are a Cadillac guy, be my guest.
Murphy's Law of Economics and Health Care [View article]
I may be in a small minority. I believe health care is a right and a responsibility. Let me elaborate:
Every individual has a responsibility to pay for their health care. They have a right to access, but they must pay. There are low income and no income people who should get government support, but in a way that they are clearly contributing payment. That is the basis of my attempts to generate ideas that I believe maximize access but produces individual financial involvement in order to control costs.
Let the poor go uncared for? If they were animals, it would be a crime called animal cruelty by reason of neglect.
This is where I'm coming from. It's from the left and from the right, but, as is so often the case, I can't support what any political viewpoint seems to be suggesting.
To summarize, everyone has a right to health care, but it is not an entitlement.
Murphy's Law of Economics and Health Care [View article]
You touched on something that I was thinking about last night.
You mentioned how to deal with unused funds in the "HSA". I was thinking along the same lines as you - return some of the money to the owner each year it is not spent. But I came up with the following idea. I'll use a hypothetical. (I bet some readers are getting tired of my hypotheticals.)
Let's take an individual with an AGI of $50,000 per year. If his "self insured" deductible is 10% of AGI, then his HSA contribution would be $5,000 per year (pre-tax dollars, reducing his taxable income). Assume year 1 he has $2,000 in medical expenses paid out of his HSA. At the end of the year, there is $3,000 in the HSA. The individual then has the following options:
* Leave the money in the HSA and reduce the following year contribution to $2,000.
* Leave the money in the HSA and increase the deductible the next year to $8,000. This will reduce the catastrophic coverage premium.
* Transfer the $3,000 to a traditional IRA.
I agree that this creates a great motivation for the individual to evaluate cost/benefit relationships regarding health care. He's got skin in the game and will put more effort into becoming informed. Once the patient is informed and has a financial stake, you will see dramatic improvement in healthcare cost control.
On Oct 26 02:16 AM Michael Clark wrote:
> I had health-care insurance for thirty years at my workplace. I saw
> a doctor three times in thirty years. My wife's asthma medication
> was covered -- her medication, Pulmacort, costs $10 in Vietnam, and
> costs $160 in America. $160 x 12 = $1920/year. My understanding as
> to why I could not longer get a pay raise at work was that health
> insurance ran about $15,000 a year for my wife and I. Clearly, my
> wife and I would have been better off taking the pay raise and paying
> for our own insurance.
>
> I am grateful that my wife and I have good health. I always said
> that MOST Americans, if given a chance at a health rebate at the
> end of the year, would not be so inclined to have to go see their
> doctor every two weeks.
>
> Unspent money from a health-fund goes back 50-50 to the insured person
> and to the insurance fund (government?). You'd probably be amazed
> at how healthy Americans would keep themselves if it meant money
> back at the end of the year.
>
> The REAL reason our health-care system is broken is because we've
> INFLATED prices out of reach. If we deflate prices back to a reasonable
> level, then this issue becomes muted. The Inflationists (Greenspan-Bernanke)
> feel it is their duty to push up prices to the breaking point, so
> they can take credit for a booming GDP. Prices can't keep going up
> for ever. We need to discredit the Neo-Classical economics that have
> been suffocating us now for two decades.
>
> The best health-care reform would be a couple decades of real price
> deflation.
Murphy's Law of Economics and Health Care [View article]
Thanks for the post about one of my favorite subjects. I endorse much of what you said. Better yet, I endorse everything of importance that you said. Even better yet, it was all good.
How Will Risk Adjustment Work Under the Health Care Reform? [View article]
You are not missing much. There is a lot missing in what is being proposed that could focus on (1) coverage for everyone and (2) reducing costs. I have written several pieces on this topic. My surprising conclusion is that one very credible solution involves more direct government involvement AND more individual responsibility for each paying directly for their own health care expenses.
The health care system we have today, and the one that is apparently being perpetuated, is not an insurance system. It is a pre-paid health care process. Real insurance protects against unusual events, not everyday visits to the doctor. If we had an insurance system, insurance benefits would pay for medical expenses only above customary and usual annual expenses, say 10% or 15% of AGI. Up to that point, individuals would pay out of pocket.
This would produce a dramatic reduction in health care expenses. Much of the 30-35% of health care dollars that today go to administrative costs and unnecessary tests and treatments would be saved.
There are a lot of details like how to subsidize those in or near poverty, and how to subsidize insurance premiums for the same group. But going back to doctor/patient decisions determining everyday medical procedures is something that is fundamentally needed, in my opinion.
Finally, if doctors were compensated based on results rather than procedures, a lot of unnecessary expense could be eliminated. We would have to guard against adverse selection by doctors (cherry picking healthy patients and rejecting those with complicated conditions), just like we have to deal with insurance companies with similar practices today. I think this would be a more manageable problem with doctors than insurance companies.
These are just more thoughts related to risk-adjustment.
Healthcare: The Myth of Consumer Choice [View article]
The numbers I have collected:
30% of Medicare payments go for unnecessary treatments.
10-15% of Medicare payments go to fraudulent claims.
Medicare has a 3-5% administrative burden.
33% of insurance premiums go to administration (includes profits)
I don't have estimates for fraud and unnecessary treatments.
So up to half of "health care" costs have nothing to do with necessary health care. Eliminate that and our health care costs are in line with the rest of the developed world.
The ideas of making the patient responsible for his own health care decisions and costs (something I have argued for in articles here on SA and at TheStreet.com) suffers from the liklihood that people will not be competent to make good cost/benefit analysis, even with a doctor's advice.
I have advocated the idea of a doctor's compensation being based on the outcomes and not on the number and variety of procedures. This runs the risk that doctors might screen patients and accept only the healthy ones. The doctors could start practicing the adverse risk determinations that insurance companies do today.
We have hard choices to make and we are not making them. A one payer system will disadvantage some. A government regulated private insurance system will disadvantage some. A hybrid will disadvantage some.
Doing nothing will disadvantage many.
And no one is going after the wasted 50%.
I'm frustrated.
By the way, James, good article. It is diappointing that there is not a longer comment stream. I think people are just getting worn out on the subject.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
Very clever connecting Grassely, corn and death panels.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
1. Questions and discussion on the role of diet in health care costs. Several commenters here have mentioned the importance of this in trying to control health care costs.
2. I heard Obama say that everyone should be required to have a basic catastrophic health care policy. He said that should be the minimum coverage (mandatory, like auto liabilty insurance) and more comprehensive coverage would be optional. I do not recall hearing this before (except in my articles).
I think the comment stream has addressed some of the objections we will hear to these two items. I think these are credible ideas and, to those who object to them based on their freedom being curtailed, I say: I will give you no freedom that takes money out of my pocket to benefit your bad behavior.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
You suggested that there are some who do not want to be interfered with. You wrote: "I think that is part of the backlash that is out there - nobody wants to be told what to do - we want to be free to kill ourselves as we see fit."
See my previous comment. My answer is that anyone who wants the freedom to abuse themselves is welcome to do just that - but not on my dime.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
Unfortunately you are right. I have suggested that the catastrophic health insurance premiums could be discounted for those who met specific healthy lifestyle parameters OR were making documented progress in changing. Ultimately, I believe the best health care system for cost efficiency and health outcomes will be one that has the patient invested both from the perspective of personal health and personal finances.
I know someone will protest discrimination because they can't get a discount if they are obese, or if they smoke, abuse drugs or alcohol. My answer is that not to make them recognize the extra cost risk they present for their health care will make me pay for it and that is discrimination against me.
Discrimination against someone because of their behavior is called underwriting. Discrimination against someone because of someone else's behavior is called turpitude.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
I read the New Yorker article. The primary cost driver described in McAllen is called physician self-referral. I mentioned it in my article, but didn't explain it. The author of the New Yorker article dismisses the value of patient "audit" in controlling costs. He gives an example of a multiple bypass surgery. Is such a patient in a position to bargain for the best deal? I agree. But for the small things that can add up to several thousand dollars some years, I think the patient is in a good position to "get a good deal" and avoid fraud and unnecessary drugs, tests and treatments. The multiple by-pass would be covered by the catastrophic insurance, and the insurance company (or Medicare, or Medicaid) would have a cost control responsibility there.
Healthcare 'Debate' Dominated by Shouting and Lobbies [View article]
I tried to keep the article tightly focussed. There were some new points developed here that were not well covered in the article on TheStreet.com and some things that were discussed in that earlier article were not included here.
Among the things not included here was the idea of premium discounts (for catastrophic coverage) for those who (1) have a healthy lifestyle or (2) make progress toward lifestyle improvement under a doctor's supervision. For those in the lower 50% of the income distribution, the government could provide partial payment for the preventive program, with those near or below the poverty line getting full payment.
I have outlined what I think would be a full discussion of all the ideas I have been mulling over. I think it would be between 6,000 and 8,000 words, too long for Seeking Alpha or TheStreet.com formats. Maybe I can do it for a print magazine or a dedicated website.
On Aug 19 04:24 PM jay brebner wrote:
> john -
>
> How does catastrophic care address the need for prevention?
>
> I am assuming that you see individuals taking care of themselves
> because they will be disciplined by out of pocket expenses. I'm not
> sure that would be the case and that it might actually become a barrier
> to good care.
>
> While the debate going on now is centered on the economics of HC,
> it should not be forgotten that HC reform is also a public health
> issue. Getting people into and keeping them in contact with a system
> of care is the best way to do prevention, from flu shots to cancer
> screenings, etc.
>
> I have not been swayed from my single-payer/HMO plan, as I see it
> as the best way to align interests, but the meaningful dialogue is
> again appreciated.
Health Insurance Industry's Profit Margins Rank #86 [View article]