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Just Dropped In (To See What Condition My Pre-existing Condition Was In)

Obamacare has passed the Constitution sniff test and we now live in a socialist Worker's Paradise. What about all those dead-beats who chose not to have insurance because of their pre-existing conditions? If it is bad for people to only buy insurance when they are sick, won't Obamacare come tumbling down in 2014 when most of the uninsured sick people in America belly up to the trough at their local insurance exchanges to enroll? Is this going to bankrupt all ofus responsible Americans who chose not to have pre-existing conditions? Are we as doomed as the Right claims we are?Let's take a little peek inside the black box of Obamacare, shall we?

The principle (and yes, it is a principle) of the pre-existing condition is that no insurance system could survive if people only bought insurance when they were sick. Insurance is about spreading risk to a wider population. The larger that population the better it is. Risk can be spread effectively if the actuaries (professional risk analysts)have a good knowledge of what overall risk they are facing. Then they can predict (fairly well) future costs and what each person in the pool will have to contribute. This all falls apart if unaccounted for risky people enter the pool. And there is no one who is at a greater risk of being sick than someone who is already sick or was sick recently. It's not the case that there should be a few sick or risky people in a pool as possible. It's that the actuaries need to know what percentage of the pool is sick or in high risk of becoming sick and ending up with a lot of claims.Since our private insurance system had people cut up into different risk pools (one per company), the maintenance of predictability meant that many millions of people found themselves uninsurable. The solution to the problem of pre-existing conditions is to have a single pool with everyone in it and most advanced countries have done this via a "single payer" system. (One payer, one pool). We are now going to do what a few countries do, which is one pool, lots of payers. (The best example of this method is that other socialist Worker's Paradise Switzerland) How are we going to manage that?We think we have it licked with something in the ACA called "The Three R's". The Three R's are a means to have one big insurance pool with lots of separate insurance companies selling insurance in it. We don't really know what this one big pool is going to look like in terms of its riskiness, for the simple reason that we don't keep claims of people who don't use insurance. But we do know how things can go wrong and the Three R's address the three main possibilities and in a manner that does not require that a lot of taxes be thrown at the problem. It is a capitalist solution and if you want to impress your geeky friends with your inside knowledge of the ACA, by all means, read on.I am going to try to use the language the suspense novel to inject a bit of blood into this intrinsically dry subject. For the fact is, it's not that the Obamacare statutes are hard to understand. It's that they are a dry as a mummy's toes and even people in the business like me have to flog ourselves to pay attention. So I will lay out the Three R's in terms of the (insurance company executive's) horrors they are meant to address.Horror ONE - What if my company sells insurance on the exchange and all the sick people in the state buy only my product!?The first R is called "Risk Adjustment". Remember, right now each insurance company is its own little (or big) pool of well people and sick people. When the insurance exchanges are created, there will be lots of companies (we hope) selling on them; some large and some small. The large ones, having larger pools, are better able to dilute their risk. The small ones not so much. It is possible that some companies just by the luck of the draw will get a disproportionate amount of sick people and they may fail, while other companies get a disproportionate amount of healthy people and they make lots of money and have a stock split. How do we even this out?On the exchange, each person who buys insurance will be assigned a "risk score". If you are very healthy, your score will be low. If you are very sick, your score will be high. All of the scores for each company will be averaged. Those whose risk scores in aggregate are higher than average will receive compensating funds from those companies who aggregate risk score are lower than average. Is this socialism? Yes, if by socialism you mean that everyone in the race starts on the same starting line. What this does (and the Swiss have been doing this well for years) is transform the exchange into one big homogenous risk pool. No one is advantaged and no one is disadvantaged. And this is revenue neutral, in that it merely transfers funds to equal out all the insurance plans.Horror TWO- All those sick people coming aboard the exchanges in 2014-2016 have accumulated years of conditions that are now going to have to be treated, swamping us in claims and destroying America as we know it.The second R is called "Reinsurance". It is true that we expect that 2014 especially will be a big year for lots of sick people who could not get insurance before to get it now. I am not talking Zombie Apolcolypse here, but claims are expected to be higher than normal. Now it turns out that insurance companies are not so worried about the real big claims that, say, top $100 thousand or more. Insurance companies insure themselves (this kind of insurance is called "reinsurance") against the real big stuff, which tends to be rarer than you think. What insurance companies are more concerned about are mid-sized large claims, say between $30 thousand and $100 thousand. So for three years (2014-2016) the insurance companies and the government are going to set up the Second R - a reinsurance fund that kicks in at about $30 thousand or so in claims. This reinsurance fund will cover the gap between $30 thousand and the point where regular reinsurance kicks in. If you think about yourself or your friends with pre-existing conditions, something less than $100 thousand a year is probably more like their situation. This piece will be half tax and have assessment on all insured in the country (thus turning the entire population of the US into one big reinsurance pool for three years). This is the only one of the Three R's that has a tax component.Horror THREE - Even with the first Two R's, the picture is very unpredictable. There might be a guy in a ski mask hiding around the corner. He might have an axe. Or he might have a big bag of cash. What if through no fault of my own I run into the guy with the axe while my competitor runs into the guy with the bag of cash. In other words, what can I do about my unforeseen downside risk in this brand new market?The third R is "Risk Corridors". In a brand new market, even with safeguards like risk adjustment and reinsurance, there still could be a lot of downside risk. Risk Corridors will cap profits and put a floor under losses. Profits are to be had in the exchange market, but if profits go above a cap, the company profiting has to remit these to a fund that will be used to cover (that is, provide a floor) forinsurance companies that sustain a certain level of losses. This will continue for three years until everyone figures out how the market works.Interestingly, this last R is probably the only remotely socialist thing about Obamacare. Profit caps in America? How Bolshevik! But the capitalist companies know that if they want downside protection (and you don't want to pay for it with your taxes; after all, these are insurance companies, not banks) then there has to be an upside ceiling. We are tolerating this because the upside even with the caps is still pretty generous and we are more worried about the downside than the upside at this point. As we do our forecasting for the exchanges, the words "conservative", "cautious", and "prudent" come up a lot while the word "KA CHING!" never appears at all.The point is, we know that there is going to be (and should be) a rush of people with pre-existing conditions getting insurance and that there is pent up demand. We know that it is going to be a rocky ride for us insurance companies for a few years and we think that the Three R's is a conservative, cautious, and prudent way to make things more predictable and we finally find a way to cover most of the people in the United States (in a cost effective way).

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Horror 2 could also be handled by easing into the new system, for example by letting people in gradually: first the people in their fifties, then the ones in their forties, then those in their thirties, then everyone. Couldn't it?

This is truly an outstanding explanation - the kind of thing that deserves to be abundantly linked to. Thank you.I see that the 2nd and 3rd Rs are temporary measures. What about the 1st?I agree that this scheme isn't socialism, but it does sound kinda like a corporate means-tested entitlement - corporate Medicaid for sickly, uncompetitive insurance carriers.Virtually all markets, left to their own devices, evolve oligopolistically. The weak suppliers either die off or are devoured by their more vigorous competitors. (The oligopolistic tendency is mitigated if barriers to entry are low enough that new firms can also enter the marketplace). An argument could be made that this tendency toward oligopoly benefits consumers (and, in this case, taxpayers), because it ensures that the strong competitors are competing in the given marketplace. It does seem to me that the three Rs put an artificial brake on the movement toward oligopoly; relatively weak competitors are propped up rather than suffer the consequences of their ineptitude or bad luck or whatever it is that made them relatively weaker. And the more successful firms are artificially constrained from maximizing their profit. Possibly there will be some grumbling in the corporate suite at bonus time. I'm just analyzing - not really critiquing. I suppose we have to trade some diminished bonuses for a few years in order to insure the previously uninsured. That sounds like a preferential option, or something.

No doubt it could, Claire, if you think it will be possible next year to rewrite a law that half the people in Congress are intent on repealing. But surely it will be better to get everyone covered as soon as possible. Some illnesses are not willing to wait.

Link to NPR on Swiss Health Plan - could it work in USA?http://www.npr.org/templates/story/story.php?storyId=92106731

Republicans would have us believe Obamacare is bad for America. Is there any doubt that a Romney administration would favor the rich and increase the income gap in our country while leaving millions of our citizens uninsured and unprotected? Mitt is a pariah in Mormon Clothing and will stop at nothing to expand an empire of greed for the rich in this country. Can his sacred Mormon underwear gain him enough donations to buy this election? See for yourself as Mitt dons his tighty-whities sent from the Good Lord Himself at http://dregstudiosart.blogspot.com/2012/05/mitt-romneys-magic-mormon-und...

Thank you for the explanation, and thank you Bill deHaas for the story on Switzerland, which is often cited as the country whose mix of public and private insurance is most like ours. I gather that while the US is way out front of all the rest in terms of the percentage of GDP it spends on health care, Norway ranks a distant second, and Switzerland runs closely behind it. Canada is right up there too.I have another question, not so much for discussion as for a link that someone might provide me. We often hear that despite the masses of money we spend on health care in the US, our outcomes are nowhere near so good as those of other industrialized countries. Is this true (I imagine it is), but where's the evidence? (link appreciated).Now a couple of political points. a) why don't the Demos straighten out those who fear the interposition of a government bureaucrat between patient and doctor, deciding what treatments you can and can't have? Why is that any different from the interposition of a health insurance bureaucrat doing the same thing? Aren't they both in the rationing business?b) If it's true (as I suppose it is) that those of us who are insured pay roughly $1,000 more than we should each year to cover the costs of the uninsured who go to hospital ERs, and so forth, why is that $1,000 not simply a tax under another name? Or a charitable contribution under another name, for which we can't take a deduction? Why don't the Demos play that one up too?I have a daughter, married to an Italian, living near Florence, who has had two experiences in Italian hospitals, one when she got banged up in a motorcycle accident, and the second when she had a child (my Italian grandson). She tells me that everything about the Italian bureaucracy is hopeless, EXCEPT for medical care, which works like a charm (and Italy, incidentally, spends much less of its GDP on health care than Norway, Switzerland, or indeed most other European countries. Now that Italy has cleaned up Germany in Euro2012, she probably thinks that the Azzuri work pretty well too. We'll see if they can handle Spain on Sunday. But of course they're not bureaucrats.

I have spent 30 + years in the health insurance and benefits consulting industries. Below are my concerns, as well as the opinions of many experts.Before I begin, I want to address single payer systems. During the healthcare debates under Clinton (e.g., HillaryCare), I participated in a study of 10 country's Healthcare systems compared to the US system. If the Federal Government would have adobted any version of these single-payer plans, including the Swiss system, the US public would have rejected the restrictions versus the so-called benefits. The US public wants reform but not serious restrictions, long waiting times for procedures or the rationing of care which is common among single-payer systems. The other consideration is the tax system and the net take home pay of people under these single payer systems. They pay a significant percent of their income for social services, like healthcare etc. Single payer systems and statistics are often used to point to the need to reform the US system. I agree that the US Healthcare system needs reform. However, before you decide if ObamaCare is the answer, consider the following.1. The "doc fix" has not been resolved yet; it was simply postponed. This amounts to a staggering $276 Billion over 10 years. Where is this money going to come from? It was not part of the CBO's cost/savings estimates for ObamaCare.2. The CBO report says ObamaCare will reduce the deficit. In other words by new reimbursement schemas and taxes and fees (e.g., cuts in Medicare provider fees and increased taxes on dividends). This was estimated to cover the higher costs for insuring the uninsured. However, the CBO report assumes that the reduced payment rates to Medicare providers will have no effect on Medicare beneficaries or Medicare provider services. This is simply absurd. The projected 2019 Medicare payment rates (to providers) are estimated to be LESS than the payment rates in 2013!!! Does anyone really believe this will have 'no effect' on provider services or participation, or that access to care for Medicare beneficaries will not be impacted? Does anyone with a brain believe that these Medicare cuts will really work?3. There are 11 million uninsured that are eligble for Medicaid but are not enrolled. Starting in 2014, these individuals will automatically get covered but the cost for these individuals will not be covered by the special 100% subsidies that the government will offer for "expanding Medicaid". These 11 million will be subsidized at the current 50/50 cost sharing ratio. Given the dire financial condition of most states today, this will not be possible unless state revenues are increased...like increasing state taxes...something that state governors, legislators and citizens will consider unworkable.4. A big part of ObamaCare savings will come from new unproven cost management programs. Some of these programs are "capping payments on a treatment basis". Capping fees has always resulted in provider manipulation especially if the fees are consider unreasonable (significantly less than a provider's cost). Other methods include what amounts to rationing of care based on cost/benefit analysis. Can you envision what this would be like with aggressive cancer treatments? As I said, I am all for reforming healthcare. However, I am not convinced that ObamaCare is the answer.

DIGRESSIONNicholas C. ==I have a question whose answer I couldn't find on the net. Do you know the answer? I saw a sign on somebody's lawn this week that said 'HONK IF YOU'RE FOR BERLIN'. Was that about the playoff? If so -- and this is my question --. does each nation have only one team or do cities have teams that compete?

Michael J. Barberi, wouldn't the "doc fix" problem exist even if ObamaCare didn't exist?

The requirements for Doctor of Medicine have varied widely historically. See the Wikipedia article on the degree "Doctor of Medicine". "According to Douglas Guthrie,[4] . . . the Emperor Frederick II [Aquinas' cousin] decreed in 1221 that no one should practice medicine until he had been publicly examined and approved by the masters of Salerno. The course lasted 5 years, and to start one had to be 21 years old and show proof of legitimacy and of three years study of logic. The course was followed by a year of supervised practice. After the laureation ceremony the practitioners could call themselves "magister" or "doctor.""In the U. S. it used to be that you didn't need a B.S. or B.A. to be admitted to medical cshool, thus shortening preparation in half. It also seems to me that the introduction of advanced nursing degrees is helping to lift some of the burden of routine care from M. D.s. Also, the introduction of neighborhood clinics also seems to be an effort to lessen the need for full=fledged hospitals staffed by highly trained specialists. But it's for the doctors to tell us how these innovations might work best. (I would recommend a year of logic, though :-)

Unagidon, Thanks. (Thanks, too, for the Irish coffee suggestion, but my wife shot that down before the "co.") The remaining question is why the party of the brain dead has not been able to explain that, in simplified form, to the public during the almost three years in which it has not exactly been an undiscussable topic on talk TV and radio. Yea, verily, even with the Supremes on board, sort of, most of the Ds are talking as if the ACA just turned up on their doorsteps one morning.

Claire said:

Horror 2 could also be handled by easing into the new system, for example by letting people in gradually: first the people in their fifties, then the ones in their forties, then those in their thirties, then everyone. Couldnt it?

It could. There are lots of way to "leg" into the ACA. But I don't think that something like this would pass politically. Also, even though I am speaking as a businessman, it is better sometimes to just pull the tooth with a good yank.

Jim said:

I see that the 2nd and 3rd Rs are temporary measures. What about the 1st?

The first is permanent. But again, the principle is to create one risk pool for multiple players.

I agree that this scheme isnt socialism, but it does sound kinda like a corporate means-tested entitlement corporate Medicaid for sickly, uncompetitive insurance carriers.

When the possibility of exchanges was first discussed, even before ACA had a hope of passing, we in the business expected that there would be only one or two companies in each state exchange; the very largest ones in the market. As you can imagine, what with reserve rules and such the entry costs for health insurance are very large.But I think that the idea is to encourage small insurance companies and even new insurance companies to also enter the exchanges and compete. There has been a great deal of consolidation with insurance companies and this is an opportunity to promote some competition. Also (in the case of risk corridors) the mechanism may neutralize the advantage that the largest players intrinsically have with the kinds of discounts they have with the providers. In general, of course, the larger the company, the deeper the discount. This should have a leveling affect on the field.

Brandt, not nice. In the Third Order (Secular) Franciscans, our dead are allowed to be buried (if they choose) in a Franciscan monk's habit. Shall we call this clothing magic too? Hindu Brahmans wear a sacred thread or string to indicate their status. Is this magic too.I am no fan of Romney's. But a man's underwear is his own concern in my opinion.

Unagidon- So are you going to opt for the habit on the big day?

Nicholas said:

a) why dont the Demos straighten out those who fear the interposition of a government bureaucrat between patient and doctor, deciding what treatments you can and cant have? Why is that any different from the interposition of a health insurance bureaucrat doing the same thing? Arent they both in the rationing business?

Good question. I think that part of the answer is that people think that government bureaucrats are politicized and that private sector bureaucrats are not. We don't as a nation trust the civil service any more. There is also the question of "rationing". What the public calls rationing the public (Medicare) and private bureaucrats call "promoting cost effective successful outcomes". The principle here is that we see the claims, so we know what tends to work in most cases (and what doesn't). It looks like rationing, but it's not, in the sense that gasoline was rationed during the War.

b) If its true (as I suppose it is) that those of us who are insured pay roughly $1,000 more than we should each year to cover the costs of the uninsured who go to hospital ERs, and so forth, why is that $1,000 not simply a tax under another name? Or a charitable contribution under another name, for which we cant take a deduction? Why dont the Demos play that one up too?

They don't play it up because although this charge will go away, it won't go away instantly. And you know how politics is. If it doesn't happen like yesterday, it isn't happening at all.

Michael said:

1. The doc fix has not been resolved yet; it was simply postponed. This amounts to a staggering $276 Billion over 10 years. Where is this money going to come from? It was not part of the CBOs cost/savings estimates for ObamaCare.

Please elaborate. I'm afraid that I have heard "doc fix" used in two contexts. First, referring to doctors and second referring to documents.

2. The CBO report says ObamaCare will reduce the deficit. In other words by new reimbursement schemas and taxes and fees (e.g., cuts in Medicare provider fees and increased taxes on dividends). This was estimated to cover the higher costs for insuring the uninsured. However, the CBO report assumes that the reduced payment rates to Medicare providers will have no effect on Medicare beneficiaries or Medicare provider services. This is simply absurd. The projected 2019 Medicare payment rates (to providers) are estimated to be LESS than the payment rates in 2013!!! Does anyone really believe this will have no effect on provider services or participation, or that access to care for Medicare beneficiaries will not be impacted? Does anyone with a brain believe that these Medicare cuts will really work?

This is complicated plus I am an insurance guy so I'm biased. Medicare reimbursements even now are less than 100 percent (probably by one or two percent). Why? Because this is how the government creates incentives for providers to cut their own costs. It's a rough way to do it, but it (sort of) works. So it all depends on whether one thinks that costs will be cut to a measurable degree by 2019 or not (via this and other methods). The movement to pay everything by case rates (take the (getting geeky here) APC case rates for outpatient surgery) should have the effect of lowering costs in the long run. But we'll see, won't we.

3. There are 11 million uninsured that are eligible for Medicaid but are not enrolled. Starting in 2014, these individuals will automatically get covered but the cost for these individuals will not be covered by the special 100% subsidies that the government will offer for expanding Medicaid. These 11 million will be subsidized at the current 50/50 cost sharing ratio. Given the dire financial condition of most states today, this will not be possible unless state revenues are increasedlike increasing state taxessomething that state governors, legislators and citizens will consider unworkable.

This is true. And it is quite possible that Obamacare will end up screwing the most needy people in the country because of it. On the other hand, the states have been knocking people off the Medicaid rolls for years. So this is going to be a problem anyway in any situation that tries to create universal coverage.

4. A big part of ObamaCare savings will come from new unproven cost management programs. Some of these programs are capping payments on a treatment basis. Capping fees has always resulted in provider manipulation especially if the fees are consider unreasonable (significantly less than a providers cost). Other methods include what amounts to rationing of care based on cost/benefit analysis. Can you envision what this would be like with aggressive cancer treatments?

We already have a good idea of what a provider's costs are and we have a good idea of what is and is not a cost effective treatment. (You can look up the former for hospitals at http://www.ahd.com/ which posts hospital's own reported costs/charges for treatments, for example). The insurance companies are not interested in rationing; they are interested in outcomes. They want good outcomes because bad outcomes are more expensive than good outcomes. We don't mind aggressive cancer treatments as long as they have a good chance of working. The criteria for telling whether they work is scientific (i.e. are they already working in other cases). Denying experimental treatments and such looks like "rationing" to people who want to try them, but these sorts of things are going to be "rationed" in any health care system single payer or not.Regarding provider manipulation of claims (things like "un-bundling" where they take charges that should be part of a total case rate and bill for them separately at a higher rate) is already an issue and both the private sector and Medicare knows how to deal with it.

Irene asked:

Unagidon- So are you going to opt for the habit on the big day?

My wife has already told me that she would rather wake me naked than in a habit, so the answer is probably "no". You're just going to have to stand in the back and watch the reaction of the first person who approaches the coffin.

Tom said:

Unagidon, Thanks. (Thanks, too, for the Irish coffee suggestion, but my wife shot that down before the co.)

Ah, God Bless the people who love us who are always trying to watch out for our own good.

The remaining question is why the party of the brain dead has not been able to explain that, in simplified form, to the public during the almost three years in which it has not exactly been an undiscussable topic on talk TV and radio. Yea, verily, even with the Supremes on board, sort of, most of the Ds are talking as if the ACA just turned up on their doorsteps one morning.

I don't know the answer to this. Obamacare seem clear to me (but I'm in the business). Much of what is going to happen when push comes to shove is unknown. I work on the corporate team that is planning for Obamacare, putting together forecasts through 2017 and we fight like cats and dogs (friendly cats and dogs) about what the likely results of each action will be. I can tell you how it's supposed to work and even how I think it will work, but if you look at the good questions that have been posted here so far, the ACA will by its nature generate a lot of controversy and maybe it's controversy as such that the pols are trying to avoid.

Can you clarify:1. ACA mandates a "marketplace" where individuals can purchase insurance. One of the problems in the current system is that individuals are limited to those companies that can sell in their particular state. Will this still be the case under ACA? Or will there be a national marketplace?2. Recently my employer offered a limited medical plan for contract employees. These plans typically pay a portion of your annual check-up and give you a rake-off on your drugs, but do not pay hospitalization, diagnostics, catastrophic care, etc. These plans are probably good for healthy young people (though my own cost analysis showed that the premiums cost more than paying out of pocket; moreover, few doctors participate in these plans, so you have to find a doc who'll accept it). Will these types of policies be sufficient to avoid the penalty/tax for not having insurance?

The solution to the problem of pre-existing conditions is to have a single poolNot at all. A single pool is at best a solution (I would even argue that) but it is certainly not the solution. Much more effective, in my opinion, is to de-link the tax benefit to employers who purchase health insurance on behalf of their employees. Give the tax benefit directly to the consumer, so that heath insurance is not dependent upon employment. The market will be happy to offer non-cancellable policies, if theres a profit to be made. Wed still have the sunk cost of those currently with pre-existing conditions and no health insurance, but we can deal with that separately, and it will eventually run off.

Jean said:

1. ACA mandates a marketplace where individuals can purchase insurance. One of the problems in the current system is that individuals are limited to those companies that can sell in their particular state. Will this still be the case under ACA? Or will there be a national marketplace?

The reason that there is not really a national market is that insurance companies are in the business of (among other things) selling provider discounts to the insured. These discounts are contractual and are almost always local. This business of being able to sell across state lines is (in the absence of an insurer having these contracts in a particular state) is like saying that real estate prices would go down in NYC if we could buy from Arkansas realtors.As for the state exchanges, the exchange will set the parameters for the insurance (the benefit levels). These are called "metal levels" by the way, in the sense that there will be a bronze, silver, gold, etc. Each company will be selling basically the same product with only minor differences. They will be allowed to compete in the exchange based on their ability to offer a standard product at the right price.

2. Recently my employer offered a limited medical plan for contract employees. These plans typically pay a portion of your annual check-up and give you a rake-off on your drugs, but do not pay hospitalization, diagnostics, catastrophic care, etc. These plans are probably good for healthy young people (though my own cost analysis showed that the premiums cost more than paying out of pocket; moreover, few doctors participate in these plans, so you have to find a doc wholl accept it). Will these types of policies be sufficient to avoid the penalty/tax for not having insurance?

No, these will not be sufficient. One of the things about ACA is that it sets minimum standards specifically to keep people from gaming things by offering crappy "insurance" to get around the mandate.

"de-link the tax benefit to employers who purchase health insurance on behalf of their employees. Give the tax benefit directly to the consumer, so that heath insurance is not dependent upon employment."I don't think this would have been a bad idea 10 or 15 years ago as part of an incremental plan that could have lead to health insurance relief for many Americans. In addition, after the debacle of HillaryCare, there was some bi-partisan support for a measure that would give some or all Americans a dollar-for-dollar tax rebate on out-of-pocket health care expenses. But congressional conservatives did not have the will to push forward and pass modest health insurance reform measures. And now they'll have to live with ACA like the rest of us. Typical reactionary m.o.: Do nothing to help anybody, and then gripe about what DOES get passed and promise to save everyone from it by going back to doing nothing.

@Mark: How will shifting the tax subsidy from employers to individuals help those who are currently uninsured? Will the tax subsidy be sufficient to allow those who cannot afford insurance to buy a decent policy? I assume the tax subsidy will have to be a refundable credit, meaning that even if you don't pay Federal Income tax you still get the money? And why would an an individual have more leverage to negotiate a policy than a corporation negotiating a large group?I don't think making modeling medical insurance after the available individual dental insurance is necessarily a good way to go, but that's what it sounds like.

Mark said:

Not at all. A single pool is at best a solution (I would even argue that) but it is certainly not the solution. Much more effective, in my opinion, is to de-link the tax benefit to employers who purchase health insurance on behalf of their employees. Give the tax benefit directly to the consumer, so that heath insurance is not dependent upon employment. The market will be happy to offer non-cancellable policies, if theres a profit to be made. Wed still have the sunk cost of those currently with pre-existing conditions and no health insurance, but we can deal with that separately, and it will eventually run off.

I disagree. The tax benefit would not come close to offsetting the costs that business would be passing on to the worker. Don't get me wrong, I think that business should get out of the insurance business for good business reasons. The current system is a serious drag on our competitiveness (as foreign businessmen never fail to rib me about over drinks). But insurance benefits are part of compensation. It's the ever rising costs that business wants to get out from under and this tax break business is a fake carrot. We need either single payer where both business and the user pay into the system (let them both get the tax break) or we need to control costs so that business can give workers some sort of COLA to cover this part of their compensation.

(Digressions)Ann Olivier: little as I understand Euro2012, these are national teams, not city teams. The Italo Spanish final is on ESPN Sunday at 2.45 PM, I think. HONK if you like Berlin is thus a bit confusing. It's either pro-the German team in its match against Italy; or perhaps it's a Republican financier egging Angela Merkel to hang tough on her austerity measures and not give into Greece, Italy, and Spain. (Max Weber at work). Anyway, the Italians defeated Germany, and Mario Monti and his merry men sound as if they've defeated Merkel, at least for the nonce.

"One of the things about ACA is that it sets minimum standards specifically to keep people from gaming things by offering crappy 'insurance' to get around the mandate."una, many thanks for this thread and your explanations! (As someone who has been trying to get insured for the last several years, I don't find them geeky at all; many of us have been forced to become geeky about Medicaid, and the ins and outs of health insurance.)I found this site helpful in understanding what essential coverage might look like and generally how ACA works: http://101.communitycatalyst.org/aca_provisions/essential_benefit_package

The ACA is far from perfect. It would have been less imperfect, however, if the Republicans had actually participated in an effort to craft a bi-partisan bill. There were some, particularly in the Senate, who would have worked with the Democrats to fashion a Bill with Republican support, but the Republican leadership thwarted that effort. Instead we have the very flawed Bill that has not garnered the support of the American people. The Republican alternative is a mix of helpful, but inadequate solutions (tort reform), and trojans -- selling cut-rate insurance policies across state lines. I credit the Democrats for at least getting something passed (and remember that Pres. Obama was willing to give up on it). I fully understand the limits of our system, but lament that the richest and arguably the most advanced country in the world cannot come up with a better plan.So we are left to try to build on and amend what we have, or throw it all out and go back to the 'every man for himself' libertarian solution.

jbruns"How will shifting the tax subsidy from employers to individuals help those who are currently uninsured?"It won't. That will need to be dealt with separately, but that's the case with any true reform. What it will do is ensure that no more people are added to the ranks of those unable to purchase insurance because they a pre-existing condition--and that's no mean accomplishment!"Will the tax subsidy be sufficient to allow those who cannot afford insurance to buy a decent policy?" If someone cannot afford a decent policy, that's not a healthcare problem, that's a welfare problem, and should be treated as such."And why would an an individual have more leverage to negotiate a policy than a corporation negotiating a large group?"In 2012, with the efficient distribution systems available through the internet, affinity groups, social media, etc., there are numerous forms of buyer leverage outside the traditional employer leverage.

Holy Cowas a state insurance regulator who has responsibility for implementing the Three R's, I have to wonder what on earth is this level of earnestness on such a dry topic doing in a magazine of Catholic Commentary - good show by all. una's comments and concersns are dead on. The Three R's draw heavily from the experience of some European Countries with heavily regulated but private health isnurance markets on what has to be in place for a well functioning market. And what does "well functioning mean"? - one where insurers compete for customers REGARDLESS OF THEIR HEALTH STATUS. Absent these sorts of provisions, the way to succeed in health insuranced is find healthy people and avoid sick peopel. (Pricing sick people more is a distant second). As an implementer, I have the following concerns- making this work in a 50 state federalist system. Every state has the option to do this themselves are default to feds. That means lots of rules and lostof potential for variation or messing up. As a state guy with a state based market, I want to these levers and tools myself - we are close to the consumers, the employers, the brokers and the providers. And as we insurance poeple like to remind banking types - 50 sets of eyes are better than one. But this comes at the cossts of duplication. The three R-'s- thier technical detail, thieir iomportance - underscore the fundamental reality of the ACA. It is built on our current pluralistic, choice- obsessed, disintgerated system of financing and care. This reform is complicated and technical but at least imaginable politically in a way that even more sweeping reform is not. Finally a word on individual purchase of insurance. I think in any privately financved sustem it must be a policy goal. Employer based insurance creates moral hazard (playing with house money - "I got it, I might as well use it"). You can create market oversight to prevent consumers from making dumb decisions or getting ripped off. but there are significant tax barriers to implementing it. European insurance markets with individual purchase and well-administered risk sharing programs have insurers that specialize in attracting people with chronic conditions. Just imagine that in the US.

Unagidon--The falsity of your assertion that "The tax benefit would not come close to offsetting the costs that business would be passing on to the worker."Is seen in your keen observation that "insurance benefits are part of compensation."The employee's salary/benefits are determined by the supply and demand for labor. Any benefits that the employer Is currently providing to the employee, through subsidization or absorption of health care costs, will simply be passed on to the employee. There are no net costs that business passes on to the worker.

Mark, if what you say is true (and it's not) then business wouldn't care if they provide benefits or if the whole thing is passed on to the worker. But business cares very much indeed and the reason is that they want to get out of the cycle of paying double digit increases each year for insurance benefits. They even have a built in excuse for not paying these increases once the workers become totally responsible for the costs. "The employee's salary/benefits are determined by supply and demand for labor." Sorry, labor, but supply and demand requires us to cut your benefits.

unagedon,1. The doc-fix refers to the money needed to make up for the required cuts in Medicare provider reimbursement rates that has not gone into effect because the Congress keeps "kicking the problem down the road". Congress keeps extending it one year at a time. The cuts amount to about 27% of current Medicare reimbursement fees and cost about $300 Billion over 10 years to eliminate. These costs are not part of ObamaCare cost projections and the costs will have to come from somewhere....like reducing entitlement program spending. Republicans will not allow Democrats to play budget games but demand that any cost be offset by spending cuts.Medicare reimbursement rates under ObamaCare are already to be reduced significantly (on top of the cuts that have been postponed). This will cause provider participation rates and access to care to significantly decrease.2. Rationing of care is what the government will be doing, not the insurance companies under ObamaCare. In order to cuts costs, improve quality of care and eliminate fraud and abuse, a "best practices" system will have to be established. This means that the entire healthcare system will have to be electronically linked (wired up). Procedures and treatment plans will have to be approved preferably a priori. If retrospectively, the appeals system will get overloaded like nothing anyone has seen to date. This does not mean that such a system is not feasible, but at the moment the 'capped rates per treatment' approach will get manipulated just like case rates. Thus, it is questionable if this new reimbursement schema will work without causing costs to increase from projected.Medicare has NOT solved the bundling unbundling problem. It has not solved the extra tests and extra visits problem either. Organizations sell the government software to detect unbundling, while other organizations sell the hospitals software to get around it. If the current system was working, there would be no reason to change to ObamaCare. There are good ideas in ObamaCare, but the problems I have listed, and there are more of them, will cause costs to skyrocket and the hoped for savings will not be realized. In my 30+ years of experience, most government programs have under-estimated costs and overestimated savings. I hope I am wrong about ObamaCare.

Unagidon--Rather than just saying you are wrong, let me explain why I think that. You are confusing 2 separate, but related concepts. Yes, business would like to relieve itself of the impact of medical cost inflation and its impact on future costs--who wouldn't? But that doesn't mean the employee would have a net increase in costs if the buying decision were transferred to him. If healthcare costs increase, ultimately the employee bears the freight in any system, either in reduced benefits or reduced salary. Many employers are using high deductible programs (and associated HSA) accounts, to reduce overall costs (importantly, for both employer and employee). With these programs, the employee has more skin in the game, so the price mechanism is allowed to works its waste-eliminating magic. Transferring the buying decision to the employee is simply a better way to do this, as it does not increase the net costs to the employee, and the efficiencies that come with it will serve to reduce the inflationary impact. It's a win-win.

Michael said:

Medicare reimbursement rates under ObamaCare are already to be reduced significantly (on top of the cuts that have been postponed). This will cause provider participation rates and access to care to significantly decrease.

Fair enough. But this mode of cost cutting (which has indeed been kicked down the road over and over again) has failed and will continue to fail whether Obamacare survives or not. I agree that insofar as this has been priced into the equation in the future it will not materialize. But would it have ever?

Rationing of care is what the government will be doing, not the insurance companies under ObamaCare. In order to cuts costs, improve quality of care and eliminate fraud and abuse, a best practices system will have to be established.

But this is what commercial insurers are doing now. Why don't you call it rationing when we do it?

Medicare has NOT solved the bundling unbundling problem. It has not solved the extra tests and extra visits problem either. Organizations sell the government software to detect unbundling, while other organizations sell the hospitals software to get around it. If the current system was working, there would be no reason to change to ObamaCare.

Well. welcome to my world. I think that we (the commercial sector) is getting more sophisticated in dealing with this. But it is true that this will be a problem no matter what. It's part of the business.

There are good ideas in ObamaCare, but the problems I have listed, and there are more of them, will cause costs to skyrocket and the hoped for savings will not be realized. In my 30+ years of experience, most government programs have under-estimated costs and overestimated savings. I hope I am wrong about ObamaCare.

Costs are already skyrocketing. What interests me is what will happen when providers can't require commercial insurers/insured to subsidize the system as they do now. I am not seeing that addressed in the ACA. If I were on the hospital side of things, I would be very optimistic about the near future.

Mark, I agree with you that a system in which the consumer is spending his own money will yield a more engaged consumer, but not necessarily a wiser or healthier consumer. But you grant too much efficiency to the market. The whole point of transferring the health care insurance to the consumer is to cause the consumer financial pain -- "skin in the game." There really is no such thing as a free lunch. If you want efficiency, go single payer.

Mark said:

But that doesnt mean the employee would have a net increase in costs if the buying decision were transferred to him. If healthcare costs increase, ultimately the employee bears the freight in any system, either in reduced benefits or reduced salary.

Why won't it mean this? Companies are rather locked in to the need to provide health benefits. They do all kinds of things to pass costs on to the consumer, certainly. But in the end the provision of health care benefits by business in the United States is basically an all or nothing thing. They would love to get out of this.If they did get out of this, and the "market" ruled, it would be the power of business against the power of the individual worker. I think that you could completely bet that net average health reimbursements would fall for everyone.

Many employers are using high deductible programs (and associated HSA) accounts, to reduce overall costs (importantly, for both employer and employee). With these programs, the employee has more skin in the game, so the price mechanism is allowed to works its waste-eliminating magic. Transferring the buying decision to the employee is simply a better way to do this, as it does not increase the net costs to the employee, and the efficiencies that come with it will serve to reduce the inflationary impact. Its a win-win.

You talk about skin in the game. There is still no market transparency for medical costs in this country (even though we are seeing the very beginnings of this now). No market transparency, no market. Skin in the game means that people will curtail seeing health care (as they have these past three years since the Depression put all this skin in the game). If business, which is relatively strong, can't control costs in the way that you say, how are consumers who, individually, are relatively weak going to do it?

"But in the end the provision of health care benefits by business in the United States is basically an all or nothing thing."I think my previous comment, that is, the move towards high deductible policies, already showed that this is not the case."If they did get out of this, and the market ruled, it would be the power of business against the power of the individual worker."What I think you are missing is that there are, what, 100 million of these individual workers? That's an awesome amount of power."There is still no market transparency for medical costs in this country (even though we are seeing the very beginnings of this now). No market transparency, no market."Eureka! You are making my point now! We are seeing the very beginnings of it, as consumers get some skin in the game. As the buying decisions are transferred more and more to the individual employee/consumer, the market has a chance to work its magic. The reason we are in this mess now is that it's take so long to see this. I don't see Obamacare doing anything but thwarting this felicitous transformation.

"Every state has the option to do this themselves are default to feds. That means lots of rules and lots of potential for variation or messing up."Christopher, do you mean every state has the option to do this OR default to the feds? Perhaps you or unagidon would care to comment on the points below.1. My sense is that the ACA is going to very quite a lot by state because:a) Each state has the right to administer Medicaid funding with many variations.b) Insurance premium rates will be determined by the health of the pool as determined by the actuaries. E.g., residents in "fat" states or states with higher morbidity rates will pay higher for premiums (though a new thing with some insurance companies is to give discounts to policy holders who lose weight or address other medical concerns; last year my doctor's office is cluttered with people who have to have their weight verfied by the nurse to report to the insurance company in order to get premium reductions, which strikes me as an extremely poor use of her time).2. I also assume that ACA (assuming it withstands GOP promises to make overturning it their very first priority) is going to spark periodic wrangles over the years because HHS determines what "essential care" is. Catholics arguing that contraception is not "essential care" or that they should have to pay it on religious grounds might be only the first of many wrangles over the definition of "essential care"--or who is exempt from paying for certain elements of "essential care."

Sorry, I'm not sure I was clear. In #2 above, I mean that if HHS determines the definition of "essential care," won't it be possible for this definition to be tweaked and changed, depending on which party is running HHS and as new medical advancements prove efficacious--or not?

"If you want efficiency, go single payer."Jbruns--Given the time of year, I will quote the inimitable John McEnroe: You can NOT be serious!

I think my previous comment, that is, the move towards high deductible policies, already showed that this is not the case.

Yes, it is the case. What would prove your case is if there was a significant increase and development in the individual market, which there has not been.

What I think you are missing is that there are, what, 100 million of these individual workers? Thats an awesome amount of power.

It would be if they were organized. Now let's look at who is organized and what they are getting done. The insurance companies are organized yet they have been unable to keep costs down. The businesses are far more organized than the consumers are (they are, after all, the current consumers of insurance) and with their massive and organized economic power they can't keep costs down. One hundred million unorganized consumers are one hundred million individuals. They have a chance to be organized with the ACA. That's part of what it's about.

The reason we are in this mess now is that its take so long to see this. I dont see Obamacare doing anything but thwarting this felicitous transformation.

The market has up to now failed and will fail by itself to insure millions of people. These people nonetheless need medical services and constitute a massive drag on our economic system. There is no miraculous transformation going on right now.

Unagidon--"It would be if they were organized."I think you have a stunningly fundamental misconception as to how the market works. Take any good or service for which there is a competitive market, say the purchase of an automobile. Are the consumers "organized"? Of course not. Does that mean GM, Honda, Toyota, Fordetc control the market, can charge what they want? Of course not.

Unagidon@ 3:42 pm"There is still no market transparency for medical costs in this country (even though we are seeing the very beginnings of this now). No market transparency, no market."Unagidon@ 4:23pm"The market has up to now failed and will fail by itself to insure millions of people."Ok, so if the market has never been tried, how can it have failed?

Unagidon,I think you are not grasping the real issues. You seem to be agreeing with me on many of my points, so I don't understand your point. 1. The doc-fix issue is a major problem and ObamaCare does not address it. Thus, we have $300 billion of costs unaccounted for and no solution.2. Medicare provider rates will fail as proposed under ObamaCare. Yes, the current rates are a problem as well, as my point #1 addresses. Therefore, ObamaCare provides not real solution to cost control without sacrificing provider participation and access to care.3. Commercial insurers are NOT rationing care. If you are referring to fully insured plans, then raising the premium or cutting benefits is not rationing care. For self-funded plans, that cover the majority of US citizens, the insurance company is only the "administrator" of the plan. They don't make coverage decisions that are not part of the plan document which is the legal instrument that governs the benefits. An example of rationing of care is: people over age 65 or 70 cannot get a hip replacement or a heart transplant because the cost/benefit analysis does not measure up to a government imposed standard. Rationing occurs as part of a government mandated control mechanism (by law...like in the UK or Canadian system). Rationing is caused by providers that are not accepting new patients or don't participate in Medicare anymore....this causes a certain type of rationing of care because other providers cannot offer immediate care because they are over-burdened with patients and you have to wait a year or two for an appointment for a special procedure. 4. I fail to understand your last comments. Yes, costs are skyrocketing and employers and the government have a big problem. What else is new? My point is that ObamaCare is serious flawed for the reasons I stated, and some that I have not, and ObamaCare is far from the solution. Yes, we have to do something. However, given the state of our economy and the world, we cannot afford to implement a huge, complicated and costly experiment. The good news is that because of ObamaCare, this country has started on a road to fix the problem because if the Republicans control the White House and Senate next year, then they will be forced to replace ObamaCare with something with teeth, even if it is not a full set. If Obama wins the election, we are in big trouble. When things get out of hand, something will be done, but we may be paying a big price to unravel the mess.

I think you have a stunningly fundamental misconception as to how the market works. Take any good or service for which there is a competitive market, say the purchase of an automobile. Are the consumers organized? Of course not. Does that mean GM, Honda, Toyota, Fordetc control the market, can charge what they want? Of course not.

Can you value shop to have your appendix out? Find out who the best "dealers" (doctors) are? Of course not. Why do you suppose that is?

Ok, so if the market has never been tried, how can it have failed?

The market has already failed. Who on earth is ever going to supply medical benefits to people with pre-existing conditions. Where would the profit be in this?

Mark, are you talking about a market for health insurance or a market for medical services...just asking because they are two different things.

1. The doc-fix issue is a major problem and ObamaCare does not address it. Thus, we have $300 billion of costs unaccounted for and no solution.

As we will without Obamacare. I agree with you that Obamacare doesn't address this. In fact, it is weak altogether on the question of costs.

2. Medicare provider rates will fail as proposed under ObamaCare. Yes, the current rates are a problem as well, as my point #1 addresses. Therefore, ObamaCare provides not real solution to cost control without sacrificing provider participation and access to care.

Not exactly. It means that costs will not be as low as the government forecasts, a point you already made. But if you think that at some point the government (even a Republican one) will play catch up and drop reimbursement rates by double digits, well, that's never going to happen.

3. Commercial insurers are NOT rationing care. If you are referring to fully insured plans, then raising the premium or cutting benefits is not rationing care. For self-funded plans, that cover the majority of US citizens, the insurance company is only the administrator of the plan. They dont make coverage decisions that are not part of the plan document which is the legal instrument that governs the benefits. An example of rationing of care is: people over age 65 or 70 cannot get a hip replacement or a heart transplant because the cost/benefit analysis does not measure up to a government imposed standard. Rationing occurs as part of a government mandated control mechanism (by lawlike in the UK or Canadian system). Rationing is caused by providers that are not accepting new patients or dont participate in Medicare anymore.this causes a certain type of rationing of care because other providers cannot offer immediate care because they are over-burdened with patients and you have to wait a year or two for an appointment for a special procedure.

But you referred, I think, a best practices system. Some types of care are denied as not conforming to best practice. This is at the heart of how HMO care is delivered. Regarding the outright rationing of medical care to the elderly, this isn't happening now. Why especially should it happen in the future?

4. I fail to understand your last comments. Yes, costs are skyrocketing and employers and the government have a big problem. What else is new? My point is that ObamaCare is serious flawed for the reasons I stated, and some that I have not, and ObamaCare is far from the solution. Yes, we have to do something. However, given the state of our economy and the world, we cannot afford to implement a huge, complicated and costly experiment. The good news is that because of ObamaCare, this country has started on a road to fix the problem because if the Republicans control the White House and Senate next year, then they will be forced to replace ObamaCare with something with teeth, even if it is not a full set. If Obama wins the election, we are in big trouble. When things get out of hand, something will be done, but we may be paying a big price to unravel the mess.

Here we have to agree to disagree. The Three R's above is a reasonable start of a solution. I don't know what you mean about Republican solutions with teeth, unless you are talking about curtailments of current benefits, which would be rationing indeed. I can't imagine that you are talking about price controls.What Obamacare does is consolidate individual and small business populations. The pure redistribution of actuarial risk is alone a good idea. And while we insurance companies were originally very worried about Obamacare, we now believe that we can work with it. (I don't think I'd want to be a small business broker in two years, however. Or a small business underwriter for that matter.) Obamacare is a start. It leaves the commercial market for insurance, including much of the current market mechanisms that my friend Mark Proska believes in so much, relatively intact.When you say it woudl be expensive to unwind, I am assuming that you mean that should Obamacare be eliminated at some point in the more distanct future, it would be politically hard to bring back pre-existing condition policies and to cancel insurance for the millions who will now be insured. I agree that it would be hard. But the richest country in history has to ask itself why it can't seem to do what other countries can do. Maybe we are putting many of our resources in the wrong place?

1. My sense is that the ACA is going to very quite a lot by state because:

a) Each state has the right to administer Medicaid funding with many variationsb) Insurance premium rates will be determined by the health of the pool as determined by the actuaries. E.g., residents in fat states or states with higher morbidity rates will pay higher for premiums (though a new thing with some insurance companies is to give discounts to policy holders who lose weight or address other medical concerns; last year my doctors office is cluttered with people who have to have their weight verified by the nurse to report to the insurance company in order to get premium reductions, which strikes me as an extremely poor use of her time).

Sort of true. There will be differences between states. The states, for example, can determine the ultimate reinsurance levels ("R number two"). And you would think that states with more fat people would have higher premiums. But this will also depend on the relative cost of living in the state. A more rural state will have a lower cost of living even if it has more sick people.Regarding the nurse taking the weights, she has to do it so it's "official".

2. I also assume that ACA (assuming it withstands GOP promises to make overturning it their very first priority) is going to spark periodic wrangles over the years because HHS determines what essential care is. Catholics arguing that contraception is not essential care or that they should have to pay it on religious grounds might be only the first of many wrangles over the definition of essential careor who is exempt from paying for certain elements of essential care.

True. But essential care will probably boil down to a minimum of preventative care although everyone and his mother will be trying to load it all down with fashionable mandates like contraception.

1. The doc-fix issue is a major problem and ObamaCare does not address it. Thus, we have $300 billion of costs unaccounted for and no solution.That problem started in 1997, not with ObamaCare. Back then Congress capped Medicare spending in future years to not increase faster than the growth of GDP. Of course, it has increased faster than GDP and Congress votes each year or two to ignore the theoretcal cap set in 1997. They do it because the mechanism created in 1997 would require cutting payments to doctors to fit within the cap. If ObamaCare didn't exist, the doc-fix problem would still be there. It's not a cost created by ObamaCare.

Unagidon,1. You said to my comment on Medicare reimbursement rates under ObamaCare: Not exactly. It means that costs will not be as low as the government forecasts, a point you already made. But if you think that at some point the government (even a Republican one) will play catch up and drop reimbursement rates by double digits, well, thats never going to happen.Medicare rates under ObamaCare will fail because they are too low. It is projected that the rates in 2019 will be lower than in 2013. This is part of the $500 billion in Medicare and Medicaid cuts ObamaCare is expected to make. I never said that Republican solutions will entail dropping rates to double digits Perhaps they will, but not as deep as what is proposed under ObamaCare. I offered no solution other than some general comments about what might work. We seem to be agreeing on the cost issues and that is my major argument, as well as the over-estimate and rosy projections of savings. Hence, I don't understand your point. MY point is that ObamaCare is not the solution.2. We agree on rationing of care. I assumed you thought it is happening today, which it is not. HMOs do deny some care, but this is not the type of draconian rationing we see in European systems. However, while it is not completely clear that under ObamaCare this type of severe rationing will happen, many experts believe that it is very possible given how Obama is setting up the new system. This will likely happen especially when costs skyrocket beyond projections and savings fail to materialize as expected. If rationing will not happen, while costs skyrocket, then ObamaCare will be revamped.3. I was not referring to price controls when I mentioned the Republican solution. I was referring to the things they have already proposed and some that will likely follow...not price controls other than modest reductions in reimbursement rates and other cost management programs. I have no illusions that the Republicans have the answer!! My point all along is that ObamaCare is not the solution but a major problem. I never implied that the Republicans had the "right solution"....but it will be better than ObamaCare and the problems that it will cause. At some point, all parties in the US healthcare system will have to make compromises. The issue is how many and what types can we implement. If I had the answers, I would not be writing blog comments in Commonweal Magazine.4. As for best practices, this means the procedures and treatment plans that are both cost effective and produce the best quality of care outcomes. Any care that is not a best practice is denied but the care that is approved is superior care. This is NOT rationing care.5. The idea of large risk pools have been around for more than 50 years. Most insurance companies risk pool small size employers. These risk pools will not change significantly because insurance companies will be competing with other insurance companies for new business like they were before. There may be more consolidation in the insurance industry and this might help lower costs. However, I would have to be convinced of large savings. At the end of the day, the insurance companies have to make a profit and there will always be a limit to how low the premium will be and/or administrative costs. I can envision a more efficient system of insurance pooling. The cost of healthcare is not based on the most efficient administrative costs or the largest risk pool. The drivers of price and utilization of care is the issue. Either you have cost management and quality of care programs in place that will work, or you don't. Right now, I don't see how costs and savings will materialize as projected under ObamaCare. It frightens me and the studies that Mercer Consulting and McKinsey have put out about ObamaCare should be alarming to political policymakers.5. I was not referring to replacing ObamaCare with the same type of plan and problems that plague our system today...like pre-existing conditions et al. I meant that if ObamaCare is implemented and it has to change because is not working....it is becoming too costly...then the so-called solution pill may be hard to swallow. We may end up scraping the system and redesigning a new one. This issue is so complicated that the only thing one can say now is that there are more foreseeable problems than foreseeable solutions. I agree with you on one point: we are putting too many of our resources in one place....meaning we are putting all of our money one one number called ObamaCare

Thanks, una.Minor point: I understand WHY the nurse has to verify weights, but she's essentially assisting in a business transaction between the insurance carrier and its customers, not providing health care services. These types of things should be the responsibility of those who benefit; let the insurance companies set up scales at their regional offices and monitor weights there.Another minor point: I don't think "essential care" will ever "boil down" to anything; my guess is that certain things will remain stable--well-baby checks, for example--but things like vaccinations for HPV, contraception, frequency of mammography, mental health care for poorly understood conditions like autism, certain dental procedures--will constantly slide around over time. I hasten to add that neither of these points is a bigger problem than having NO health care insurance.

John Hayes,You are correct. However, my point is that these costs are not accounted for in the ObamaCare cost projections. These costs are healthcare costs and the issue is accounting for them. Where is the money coming from? If we have to cut healthcare entitlement spending (Medicare and Medicaid), to offset the cost, then this should be factored into the cost projections. The Republicans, righty, will insist on this. ObamaCare did not create the problem, but if you are changing the healthcare system and projecting costs and saving, these costs must be included. Obama wants to say that a reduction in future War expenses will offset the cost. This is like offsetting a real cost with an expense that is not expected to materialize. For that matter, why don't we say that the savings that will not materialize under ObamaCare will be offset by savings in future War expenses. This does not give us a true picture of cost, savings and the effectiveness of ObamaCare.

Minor point: I understand WHY the nurse has to verify weights, but shes essentially assisting in a business transaction between the insurance carrier and its customers, not providing health care services. These types of things should be the responsibility of those who benefit; let the insurance companies set up scales at their regional offices and monitor weights there.

There is an actual sort of psychological reason why we want the nurse to do it. Nurses are connected to doctors and serious healthcare in the minds of patients. It's not so much that they do an "official" measurement for us. It's that they do it in the mind of the patient. I don't know if this works or not, but that is the thinking behind it. And given the amount of morbid obesity in the US, if a nurse can get people to knock off the pounds, then I think it's money well spent.

Another minor point: I dont think essential care will ever boil down to anything; my guess is that certain things will remain stablewell-baby checks, for examplebut things like vaccinations for HPV, contraception, frequency of mammography, mental health care for poorly understood conditions like autism, certain dental procedureswill constantly slide around over time.

I would be more optimistic. First of all, insurance companies are competing (and not collaborating) on figuring out what essential care should be. Second, the states are using third party non-insurers to also study what is needed and what the prices should be. Also, essential care is meant to be cost effective. That is, cost will be lower with it than without it. Short of the mandates, I expect (and we expect at the company) that essential benefits will be rather rich.

So I gather from this post that it's suddenly ok to use the formerly-partisan right-wing term "Obamacare"?Also wonder if unagidon agrees with the President and Rep. Pelosi that that PPACA can be improved and amended, and if so, in what ways?

"I would be more optimistic."I've kept things running here along worst-case scenario lines for so long, you'll have to forgive my cynicism. For me, and perhaps others here, this is not a philosophical issue or an interesting social experiment. I have more than just skin in this game. My entire family's carcasses are in it.I do appreciate questions, issues, answers people have raised. If nothing else, I think they portend the challenges ACA will be up against in the next few years, even if Obama is re-elected.

So I gather from this post that its suddenly ok to use the formerly-partisan right-wing term Obamacare?

It's been okay for a while. You seem to be out of touch.

Also wonder if unagidon agrees with the President and Rep. Pelosi that that PPACA can be improved and amended, and if so, in what ways?

The American health care system has an access problem (too many uninsured) and a cost control problem. Two problems. Obamacare addresses the first pretty well and the second only indirectly. There are many who think that the cost control problem should have been addressed first, especially if they happen to have insurance already.But the point of Obamacare is to address the problem of the uninsured while somehow leaving the overall market intact, since right now it is the market that is addressing the problem of cost. There are many who think that the market itself will eventually fix both problems and there are those who don't think the market can fix either and that we need a single payer system with fixed reimbursement (pricing) to providers (doctors and hospitals).You have to understand that the insurance industry is very conservative, so Obamacare seems very radical to us. Insurance is about predicting the future. Obamacare interjects a lot of strange new things into the future. It's been very hard to deal with. But the ACA is sensitive to the major problems that might arise FROM THE ACA even though as Michael and Mark point out above it leaves a lot of current (cost) problems unaddressed.We were very afraid of the ACA when it first came out, but we in the business think we can do business with it. Some groups of people are going to be hurt. Brokers are going to have a bad time and so are underwriters. Both of these groups will to a great extent become redundant under the ACA. But insurance companies, doctors and hospitals think that we can make a go in it and so does the stock market apparently.Can the legislation be improved? Do you know of any legislation that can't be improved? I think that it is a good enough start. It is going to be a rocky road. On the down side, we don't really know what costs will do. I could quote you from a number of different studies (Kaiser Family; Urban Institute; Lewin Group; Oliver Wyman; Milliman (via AHIP); American Action Forum; American Enterprise Institute) that contradict each other on the details of cost. On the up side, a lot of people who have no insurance through no fault of their own will now have it and the United States will become more of a modern country for it. But remember; capitalism is resiliant. ACA is a challenge. Everyone is spending a great deal of time and talent on preparing for it and we shall be prepared.

"Its been okay for a while. You seem to be out of touch."- Actually, no. Some commenters here cheered and echoed a couple weeks ago when Bishop Jaime Soto rose at the USCCB meeting to chide the use of the term "Obamacare" as partisan."On the down side, we dont really know what costs will do. I could quote you from a number of different studies (Kaiser Family; Urban Institute; Lewin Group; Oliver Wyman; Milliman (via AHIP); American Action Forum; American Enterprise Institute) that contradict each other on the details of cost."- I am happy to see you admit this, as in one of your earlier responses re: the market has "already failed" with respect to lowering costs seemed to imply that you thought the ACA (as is) would lower costs, which of course very few people believe now. I do agree with you on the overall tone: there is good in the bill, even if I don't think it will prove successful in the long-run. But extending coverage (which attempting to keep as much of the current system in place) to many is a good thing, even if the mechanism for doing so is flawed.

I meant to add, if there is one thing in the bill that should be addressed is the continued employer-deduction for health care. I think removing that distorter would be a big improvement to the current system.

Jean, come on: "Ive kept things running here along worst-case scenario lines for so long, youll have to forgive my cynicism. For me, and perhaps others here, this is not a philosophical issue or an interesting social experiment. I have more than just skin in this game. My entire familys carcasses are in it."Perhaps? Do you really think you're one of the few people here who have skin in this game? That's right, we're all so rich we've used our wealth to develop a brie that cures cancer.

I am happy to see you admit this, as in one of your earlier responses re: the market has already failed with respect to lowering costs seemed to imply that you thought the ACA (as is) would lower costs, which of course very few people believe now. I do agree with you on the overall tone: there is good in the bill, even if I dont think it will prove successful in the long-run. But extending coverage (which attempting to keep as much of the current system in place) to many is a good thing, even if the mechanism for doing so is flawed.

I don't think the market has failed to lower costs as much as it has utterly failed to solve the problem of the uninsured, especially those with pre-existing conditions. Obamacare brings them into the market. I'm a bit of an optimist about the market now, not because of the forecasts partisans have made but because I am in the business itself and I know what we are doing to try to lower costs. To be honest, it seems to me that those people who dismiss Obamacare out of hand lack faith in our capitalist system.

Grant, I'm sorry that you interpret any remarks I might make about ACA, my concerns with it, or how it affects me as some sort of slam against Commonweal readers or posters. This isn't my intention, and I have tried to be mindful of how I worded my posts since your response on a previous post.But clearly this isn't working for you, and I confess I take your comments as a warning that I have worn out my welcome at the blog. So my apologies once again, and I'm off.

Unagidon, a fine thread, and a bravura (and patient) performance on your part. Many thanks.

Grant Gallicho:browbeattransitive verb : to depress or bear down with haughty stern looks or with arrogant speech : abash or disconcert by impudence or abuse : BULLY {browbeat witnesses}intransitive verb : to act in an overbearing manner : BULLY {they fought, bribed, and browbeat in order to achieve their goal}synonym see INTIMIDATE You owe Jean Raber (and a number of other people) an apology.

David, Grant has been relentlessly rigorous and dangerously thorough in his analyses of the contraception mandate. He has to be feeling the heat as a consequence of his amazing work ... So what if he appears a bit short tempered these days? Give him a break.

"Mark, are you talking about a market for health insurance or a market for medical servicesjust asking because they are two different things."jbruns--I meant that a market would work for both, though we have a very limited one for the former, and virtually none for that latter.No wonder we have so many uninsured with pre-existing conditions. Ever notice you don't often hear people claim that they can't get life insurance because they have pre-existing conditions? That's because the individual usually purchases life insurance, not the employer. If we did the same thing with health insurance, there'd be no uninsured people, except those who chose to be (or deserve to be).

Who "deserves" to be uninsured?

Unagidon--"Can you value shop to have your appendix out? Find out who the best dealers (doctors) are? Of course not. Why do you suppose that is?"Because we only have "the beginnings" of a market for healthcare. Haven't we already agreed that's the problem? Or do you think it's a good thing we don't have a market?"The market has already failed. Who on earth is ever going to supply medical benefits to people with pre-existing conditions. Where would the profit be in this?"First, please see my opening comment on this thread. Second, have you shown where the market's been tried? I thought we already agreed we only have the beginnings of a market?

As has been noted: ACA is insurance industry reform--not health care reform. Before reading unagidons very insightful comments, I did not understand the full truth of that statement. ACA is based on the expectation that the private insurance industry--prodded by government incentives, subsidized premium payments, and stricter regulationswill (a) provide insurance to more Americans and (b) become a more efficient conduit for funneling payments to health care providers. ACA deals with Health Care Reform as a derivative issue. It is hoped that a reformed insurance industry may induce health care providers to bend the curve of health care costs by adopting new efficiencies. And the ACA provision expanding Medicaid enrollment focuses on access, not health care reform.President Obama has a tough sales job. First, as unagidon has explained, the mechanisms of the insurance industry are innately complexand sometimes counter-intuitive.Second, most Americans operate on the premise that the market is an autonomous, self-regulating, machine that best produces efficient outcomes. All government interventions, therefore, are inherently evil.This Manichean framework undermines any public conversation about the wisdom (and effectiveness) of the National and State governments attempting to correct market imbalances through the use of: tax credits and tax incentives, tax expenditures and tax exemptions; tax penalties and subsidized market purchases, direct regulation and government contracts, etc If we were a nation whose public discourse accurately described economic realities, we would re-label the ACA as: The Private Insurance Industry Re-adjustment Act. But that would be guaranteed to anger everyone!

Mark,I would be glad to talk your ear off about how hard it is to get life insurance if you have a serious medical problem. You must know only extraordinarily healthy people, or people who get life insurance through their employers.

Jim--My point was that it is usually purchased before one has a serious medical problem, and because it not purchased by the employer (though often through the employer) it's portable--you don't lose your life insurance if you lose your job.If one doesn't purchase life insurance until one has a serious medical problem, one doesn't deserve to be able to purchase it for a premium incommensurate with the risk.

DigressionUEFA, the union of European football associations, is made up of the national associations from 50+ countries. Each association fields a team of players from its country; these national teams have been playing in EURO 2012.In addition, the national associations run leagues in their countries for clubs that often are identified by city. These clubs can hire talent from anywhere. Croatian players can play for Madrid, English for Milan, Nigerians for Budapest, etc. Teammates may not understand each other, but they play together as a team all year. UEFA runs a tournament of the winners of these many leagues, and runs a super league of the previous year's champions.So, city named clubs are teams of the best they can buy, while national teams are the best playersfrom a given country. Clubs occasionally play nations in exhibitions, but never in tournaments. Or so I think.

Jim McK --Thanks. I just turned on the Tv. Those fans look serious! Now if only Ahmadinejad could field a winning team we might avoid a nuclear war. Of course, if he lost, . . .

I think it's quite amusing to propose that people "shop" for health insurance coverage. Even pros in the field have to really work at understanding differences between plans, relative costs, and the arcane small print that subtly but definitely posits differences that may not be apparent to the novice.Ask anyone who has helped seniors navigate the intricacies of the Medicare D plans available on the market and you'll get an idea of the troubles to be expected.Not all users of health insurance have MBAs, nor undergraduate degrees, nor English as a primary language, nor access to someone who has. Single payer appears to be the only viable plan for an industrialized country the size of the US and which contains such a woefully undereducated population as does the US.

I can attest to Jim McCrea's insightful remarks, except I am not convinced a single payer system will work in the U.S. The Federal Government has not administered any program, much less an entire healthcare delivery system, effectively or efficiently. What Obama has done is maintain a role for the insurance industry, while giving the government a deeper and broader role in the management and regulation of the products, services, cost management and quality of care mechanisms (that attempts to keep price and utilization within specific guidelines). The insurance industry will become mostly an administrator, as it is today. For example, today Medicare and Medicaid programs are "administered by third party payers...like Blue Cross/Blue Shied Organizations and Insurance Companies. Most private plans are self-funded by plan sponsors who direct how their plans will be administrated, save for the small case market which is dominated by "insured products". In the mid to large case private market, no plan sponsor directs the insurance company or TPA to implement the type of cost management and quality of care programs necessary to significantly control cost, utilization and quality. They balance employee retention, attraction and satisfaction against their cost and quality of care objectives. That is reality. Under ObamaCare, or the PPACA, this will change. While specifics are not well known (except for those professionals who have read the 2500 pages of legislation and have been in contact with government officials writing the regulations) there will likely be "triggers" that will call for draconian changes if costs and savings significantly deviate from projections. There are many cost problems with ObamaCare....per my previous blog comments. In the early 1990s, I participated in a 10 country study of foreign healthcare systems versus the U.S. This is a very complicated subject, but you need to recognized that the tax system in these countries are significantly different than the U.S. system. So, the tax system and the healthcare system go hand in hand along with the other social service programs (inclusive of unemployment benefits that in some countries provide salary continuance as long as you are unemployed). In the end, the U.S. will never implement a single-payer system without a dramatic change in tax policy and the acceptance of the rationing of care including long wait times for specialists and surgeries.

"I think its quite amusing to propose that people shop for health insurance coverage. Even pros in the field have to really work at understanding differences between plans, relative costs, and the arcane small print that subtly but definitely posits differences that may not be apparent to the novice."Jimmy Mac, I agree. I think that comment applies to consumer financial products in general - not just health care, but consumer-targeted products like life insurance and mutual funds. They're very complex and untransparent. Just being more intelligent than the average consumer is not much of a protection against making bad purchase decisions or getting flim-flammed. There is a real asymmetry in expertise between the suppliers and the consumers - in my opinion, more so than in some other costly transactions like buying a car or a house that also often involve some asymmetry of expertise between consumers and industry professionals. In general, I do believe that market-oriented solutions work better than government fiat, but in the case of health care insurance, the American consumer culture is not very market sophisticated. We are accustomed to paternalistic arrangements: our parents provide our coverage for us; then our employer provides coverage for us, or the government does, or our union does; then the government or our union does. We're very much in the habit of just taking what's given to us.One thing I've learned from this discussion is that, in the insurance exchanges (which, my conservative friends, is a market-oriented arrangement, even if the government has mandated it), the health care insurance offerings will be pretty standardized - there will be a lot of commonality from Company A to Company B to Company C's offers. (Is that correct?) That's probably going to be helpful, for the cultural reason I'm discussing here. I hope the appropriate balance can be struck between a regulatory minimum standard of content, and the freedom of providers to innovate.

"The Federal Government has not administered any program, much less an entire healthcare delivery system, effectively or efficiently.|That is an odd thing to say considering the Erie Canal, Social Security for more than 70 years with the goofy burdens Congress occasionally adds to the bureaucrats' backs, World War I, World War II, the Manhattan Project and the Cold War, not to mention its success with the mail service for more than 100 years. landing on the moon, and construction of the interstate highway system. And we are still on the top of my head.

Tom Blackburn,I was referring to healthcare and related programs. I thought that was obvious but I apologize if I mislead you. Perhaps I should have been more careful about the choice of words.As for Social Security, I doubt you will get much agreement from the American public about effectiveness given the historical horror stories about the administration of disability benefits. They do a good job of paying a fixed monthly pension income but that is hardly comparable to healthcare benefits and the control of costs, utilization and the quality of care.

TANGENTWhy universal coverage? Here's a reminder. Andrew Sullivan linked to these portraits of homeless people by Lee Jeffries. You won't forget Latoria.http://500px.com/blog/123/portrait-lee-jeffries

Tom B. --You mean to tell me you actually believe all those stories about government services? Those highways are REAL?? We WON WWII ??????? We went to the MOON????? Come off it, dude.AND Medicare actually pays my medical bills paying 3% for administrative costs as compared with 20% administrative costs for insurance companies??????????? C'mon.

Michael B: "As for Social Security, I doubt you will get much agreement from the American public about effectiveness given the historical horror stories about the administration of disability benefits. They do a good job of paying a fixed monthly pension income but that is hardly comparable to healthcare benefits and the control of costs, utilization and the quality of care."Are you talking about Medicare? From the standpoint of a consumer, I have to say it's the BEST health insurance I've ever had, and over the years, I've had almost every kind, from HMOs to PPOs to EPOs to a plan that denied all OBGyn claims on the grounds they dealt with a pre-existing condition (femaleness?). Medicare statements are the icing on the cake, keeping track in at-a-glance, easy-to-read fashion what Medicare pays (OMG, what it SHOULD cost!) vs. what providers charge (the Moon). Thank God I lived to see it.

Mark said:

Second, have you shown where the markets been tried [to provide insurance for people with pre-existing conditions]? I thought we already agreed we only have the beginnings of a market?

When I talk about "the beginnings of a market", I am, as you know, referring to price and quality transparency for medical services. Healthcare in the United States has neither of these, so it has been ineffective (although it has not failed) to keep prices down (and quality as high as it could be for that matter).This lack of price and quality transparency has nothing to do with the uninsured and the market has and always will fail them. It is true that the uninsured can shop (to an extent) for price and quality. It is also true that a savvy uninsured can negotiate a "discount" for services sometimes. But as I have mentioned elsewhere, doctors mark up their prices by 120 to 140 percent or more. Hospitals mark up their prices by 200 to 1,000 percent. Insurance in the United States is about selling discounted medical services (so that the average profit margin of a hospital is probably closer to 2 to 5 percent). The uninsured in effect compete with the insurance company for discounted services (if they are smart and bold enough to get a discount). Since they do not have the clout of even the smallest worst run insurance company, the uninsured pay more for everything; a lot more. And since their lack of insurance means that they have no defense against serious illness, sometimes they have to pay everything they have and go deeply into debt as well.The American health care system has created a second class of citizen who operates in a second class health care market. It's not that there is no "free market" for them. It's that they have their own "free market" where they pay more for less than we do. That is how they market has "served" the uninsured. And it will only be government intervention (alas) that will break this second market up and put everyone on an equal free market footing.

No wonder we have so many uninsured with pre-existing conditions. Ever notice you dont often hear people claim that they cant get life insurance because they have pre-existing conditions? Thats because the individual usually purchases life insurance, not the employer. If we did the same thing with health insurance, thered be no uninsured people, except those who chose to be (or deserve to be).

This is simply incorrect. There are millions of individually insured people in the United States who purchase their own insurance. THIS is the insurance that is impossible for people with pre-existing conditions to get. In the business, we say that individual insurance is "heavily underwritten". This means that a person applying for an individual policy is HEAVILY vetted precisely to make sure that they have no pre-existing conditions. I would say that far more than half the work I am doing in trying to forecast the market under Obamacare is looking at the price and utilization effects on the individual market, which will be quite radical given how skewed the "market" is today.

Jeff said:

I meant to add, if there is one thing in the bill that should be addressed is the continued employer-deduction for health care. I think removing that distorter would be a big improvement to the current system.

It would be good for business but bad for the worker. It would expose the worker to the full brunt of medical cost increases in an environment where they are not under control. Business would NEVER increase their compensation to the worker year by year to cover this.

"The American health care system has created a second class of citizen who operates in a second class health care market. Its not that there is no free market for them. Its that they have their own free market where they pay more for less than we do. That is how they market has served the uninsured. And it will only be government intervention (alas) that will break this second market up and put everyone on an equal free market footing."Is it your expectation that the individual policies under Obamacare - presumably the ones that will be available via the insurance exchanges? - will be feature-competitive and cost-competitive with traditional employer group coverage? Will there still be a differential in cost and quality but the gap between the two classes will be much smaller than is currently the case? Or will the individual policies be the equal of, or even better than, the employer group insurance plans?

Regarding the employer deduction: I understand the amount to be fined for employers with more than 50 employees who fail to offer employee group coverage is $2000 per employee? That employer also can not take advantage of a tax break, correct? So what is the overall financial penalty to the employer for dropping health insurance?

Jim said:

Is it your expectation that the individual policies under Obamacare presumably the ones that will be available via the insurance exchanges? will be feature-competitive and cost-competitive with traditional employer group coverage? Will there still be a differential in cost and quality but the gap between the two classes will be much smaller than is currently the case? Or will the individual policies be the equal of, or even better than, the employer group insurance plans?

People that like their current individual and small group (2-99 employees) plans will be allowed to grandfather them, even if they switch insurance companies. New plans will have to conform to "metal levels". That is, there will be a "bronze plan", a "silver plan" etc. The benefit levels will be approved by the states and will be similar (although not identical) between insurance companies. They will contain a set of minimum benefits.The amount of total claims that an insurance policy pays is called its "Net Actuarial Value". So if you have a policy that (including co-pays and such) pays 60 percent of everything, the net actuarial value of that policy is 60 percent.The metal levels will share certain basic benefits (including, I expect, certain dental and vision benefits) and then the main difference between them will be the net actuarial values. Bronze (I expect) will come in at 60 percent, silver at 70 percent etc. While I would expect that there would be some differences between states, quality will be uniform within the states.Will it be cost competitive? Small business rates will stay bout the same in general. Individual rates will go way up (compared to what they mostly are now), because there will be a significant increase in benefits (to the level of what small business typically has now). But again, people can be grandfathered into their current individual plan forever, basically, if they don't want to pay for and get the extra benefits.

Jim said:

Regarding the employer deduction: I understand the amount to be fined for employers with more than 50 employees who fail to offer employee group coverage is $2000 per employee? That employer also can not take advantage of a tax break, correct? So what is the overall financial penalty to the employer for dropping health insurance?

This is, for insurance companies, THE big question. The disincentives for not providing coverage are as you say. But what we don't know is how businesses will view the incentives. So we don't really know how much "dumping" will go on. (And large businesses may also dump their employees into the exchange.) The variables in our dumping calculation include the fines, but also include different pricing levels (which will also change for the groups because the "metal levels" will change the benefit structures for some groups), the propensity for a group to even pay a premium just to get out of the health benefits business, etc. We just don't know how the incentive structures will end up working, nor do we know how they will "leg in", meaning will there be mass movement in 2014 or are people going to be conservative and wait a year or two to see how the exchanges work?

As a manager of a medium size (200 employee) not-for-profit, we do not benefit from the tax advantages of employer provided health insurance. We provide health insurance in order to be competitive in the labor market in our large urban area. We are closely looking at whether it still makes sense to continue once the law is fully implemented, or whether it would be better to pay the $2000 penalty and employees could buy their insurance through the State exchange. Obviously, a lot will depend on how good a deal the exchange provides. (We want a healthy and happy workplace) Our health insurance costs have gone up about 8% compounded over the past eight years. We have to balance our budget, so salary increases have been held down in order to keep the insurance, while negotiating hard and going to higher deductible policies. Whether Obamacare turns out to be good, bad, or modified, the old system system is not sustainable, and we would eventually be forced to provide less beneficial insurance -- meaning higher deductibles, greater cost-share -- just to keep at the same cost level. In other words, it costs us more money every year to provide less insurance, so there are no cost offsets to be passed on to employees.

jbruns said:

In other words, it costs us more money every year to provide less insurance, so there are no cost offsets to be passed on to employees.

Although if you think about it, you are passing costs on to the employees (I know you don't want to) since the less insurance they have the more they have to pay out of pocket.

though my own cost analysis showed that the premiums cost more than paying out of pocketIMHO, this statement highlights one of the fundamental problems with our current 'health insurance' system. Insurance is designed to protect against large, unpredictable expenses. No one determines whether their auto or home insurance is a good deal by comparing the premium they pay to the checks they will receive from the insurance company during the policy. Yet that is just the analysis shown by the above statement. The resulting problems are many, but primary revolve around who needs insurance and who actually needs welfare benefits to cover their medical issues. Pre-existing conditions are more akin to a welfare problem, ie the person cannot afford proper care, than they are an insurance problem, ie I need protection from large, unpredictable expenses.

@unagidon: That is absolutely correct. We try to balance out salaries and our fairly generous benefits package, but 'real income' in total is losing ground to inflation slowly.

Bruce said:

Pre-existing conditions are more akin to a welfare problem, ie the person cannot afford proper care, than they are an insurance problem, ie I need protection from large, unpredictable expenses.

It is true that there is a difference between insurance benefits (which guard against unforeseen although not necessarily catastrophic illness) and health benefits (which are a subsidized discount for health care). It is also the case, since Americans on the whole tend to be less than responsible in their health lifestyle choices, that there is now a class of health benefits that are preventative in their nature and subsidizing these leads to healthier and lower (medical) cost populations. So there is an argument to be made that what is wanted with health care reform in the United States is catastrophic insurance to limit absolute risk plus preventive care insurance to promote good health. The rest could be an out of pocket expense like anything else.A problem is that the way health services are charged in the United States, unless one has the discounts that "insurance" brings, relatively minor conditions, especially if they are chronic, become very expensive over time. In an economic environment where salaries have stayed flat for thirty years, medical costs can quickly run up to be a major proportion of what people are paying from their disposable income. There are free marketeers that say, so what? Health care is a consumer expense like anything else. The thing is, it isn't a consumer expense like anything else. Elective procedures are, but most everything else isn't.There is a meme going around the Right now that implies that 1) Obamacare is going to create the biggest tax hike in American history; 2) only fifty percent of Americans pay taxes so 3) the fifty percent who pay taxes are going to be providing free insurance to the fifty percent that don't. None of this is true (but one has to admire this argument is constructed), but part of it depends on the myth that people with pre-existing conditions can't afford (or won't afford) to buy insurance. The fact is, most of them can afford to and most of them have had insurance in the past. It's just that if they lose their employer covered insurance they are then, in effect, chased out of the market. One of the real aggravating things is that a person with a pre-existing condition can be perfectly healthy right now and if they bought insurance they should be eligible for the lowest available rate. But they can't get that rate because they have a pre-existing condition.I know that when you say it's more of a welfare problem, you are saying that the uninsured will need a subsidy to have insurance. And this is the case for people who already are a welfare problem. But for the rest of them (and I would say for most of the uninsured looking at the studies that I use to try to see how many categories of uninsured there are) the problem is simple access to the market, which they will get with the exchanges and their community ratings. Again, as I mentioned somewhere above, we do anticipate a sharp rise in claim activity in the first year or two as the system "digests" people who have had to put things off because they were uninsured. But we are forecasting that after that short term spike, costs are going to look as they did in the small business insurance market (with individual insurance also looking like the small business market) as though there was no Obamacare in the first place.

Jim Pauwels said: in the insurance exchanges (which, my conservative friends, is a market-oriented arrangement, even if the government has mandated it), the health care insurance offerings will be pretty standardized there will be a lot of commonality from Company A to Company B to Company Cs offers. (Is that correct?) Thats probably going to be helpful, for the cultural reason Im discussing here. I hope the appropriate balance can be struck between a regulatory minimum standard of content, and the freedom of providers to innovate.Yes, you can see this by going to the Massachsetts health exchange, which has existed for several years. There are three basic benefit packages (Bronze, Silver, Gold). Each insurance company has to provide the minimum benefits for a package but can add other benefits to make it more attractive and competitive. https://www.mahealthconnector.org/The only infomation you need to give to use the site is your birthdate and a zip code (use 02138)As an example, for a family of three with a parent born in 1970, the least expensive (Bronze Low Benefits) plan is available from 8 insurance companies at prices from $605 to $798 monthYou can then look to see what extras you get at the different prices.Those are the unsubsidized plans. Once you enter that you want insurance for a family of three, the website will tell you that if your income is less than $57,276 per year, you are entitled to a subsidized plan and you can go to that part of the website. The subsidized plans cost between zero and $182 per month per adult depending on how much you earn and which plan you choose (there are three plans but they are not the same as the unsubsidized plans)

I asked unagidon, "Is it your expectation that the individual policies under Obamacare presumably the ones that will be available via the insurance exchanges? will be feature-competitive and cost-competitive with traditional employer group coverage? Will there still be a differential in cost and quality but the gap between the two classes will be much smaller than is currently the case?"He replied, "People that like their current individual and small group (2-99 employees) plans will be allowed to grandfather them, even if they switch insurance companies. New plans will have to conform to metal levels. That is, there will be a bronze plan, a silver plan etc. The benefit levels will be approved by the states and will be similar (although not identical) between insurance companies. They will contain a set of minimum benefits."That is interesting. I suppose there is no such thing as a "typical" corporate group policy, but how do those compare to the "metal levels"? I'm wondering if employees who currently have coverage through their employer (which may not be a 2-99 employee company) would find a comparable or better deal on the state exchanges.

"Will it be cost competitive? Small business rates will stay bout the same in general. Individual rates will go way up (compared to what they mostly are now), because there will be a significant increase in benefits (to the level of what small business typically has now). But again, people can be grandfathered into their current individual plan forever, basically, if they dont want to pay for and get the extra benefits."So it's probably a win for employees of small businesses, because much better coverage will be available at roughly the same rates? It's disconcerting and disappointing that premiums will go way up for individuals. But I understand that quite a few individuals will be eligible for government subsidies - isn't it something along the lines of a family of four whose family income is $90K/year or lower?

Jim said:

Its disconcerting and disappointing that premiums will go way up for individuals. But I understand that quite a few individuals will be eligible for government subsidies isnt it something along the lines of a family of four whose family income is $90K/year or lower?

It won't go up for individuals who don't want to pay more. They will be grandfathered into their current plans (and we expect that a lot will want to do this). The ones who don't want to be grandfathered are the ones who want (much) more benefits than they are getting now, so it is probably just that they pay more for these.

Jim said:

That is interesting. I suppose there is no such thing as a typical corporate group policy, but how do those compare to the metal levels? Im wondering if employees who currently have coverage through their employer (which may not be a 2-99 employee company) would find a comparable or better deal on the state exchanges.

As a rule, the larger the group the better the benefits and the cheaper it costs. But we aren't sure if large groups will be "dumping" workers into the exchanges, not so much to save money in the short term but to get out of the benefits business in the long term.

"It wont go up for individuals who dont want to pay more. They will be grandfathered into their current plans (and we expect that a lot will want to do this). The ones who dont want to be grandfathered are the ones who want (much) more benefits than they are getting now, so it is probably just that they pay more for these."In asking about this, I'm thinking about those who are currently uninsured. For folks in that situation, the law will insist they buy insurance, and will fine them if they don't; and the insurance itself will not be cheaper; but the government will subsidize it if they don't meet the family income threshold. Is that about the size of it?

Is that about the size of it?Pretty much. In our corporate modeling we don't see a lot of people using the subsidy (which remember will only be a partial subsidy in many cases). And we would be the ones getting the money, so we are very interested in how much it might be.

"Yes, you can see this by going to the Massachsetts health exchange, which has existed for several years. There are three basic benefit packages (Bronze, Silver, Gold). Each insurance company has to provide the minimum benefits for a package but can add other benefits to make it more attractive and competitive. https://www.mahealthconnector.org/ The only infomation you need to give to use the site is your birthdate and a zip code (use 02138)"Thanks, John Hayes, for that suggestion and the link. I just spent a few minutes getting a quote for my family from the Massachusetts exchange (the site is *really* easy to use) and comparing it to my family's current actual level of benefits from my employer (I work for a large company). For anyone interested, here are the results of my little experiment:* The level of benefits my company offers is comparable to a "silver" (or, in some respects, high-bronze) plan on the Massachusetts exchange* However, the price tag charged both to me and my employer in my current plan is substantially below what I'd have to pay for a roughly comparable plan on the exchange - in the neighborhood of 50% lower.* There are several dozen variables that a consumer would have to take into account if she really wants to do a detailed comparison and analysis - deductibles for primary care physicians, hospital stays, prescription drug copays, mental health benefits, and many, many others. It's kind of a crap shoot - e.g I'd need to make a best guess as to whether there would be any hospital stays.* Massachusetts offers a lot of choices: not only bronze/silver/gold, but there is a high, medium and low at the bronze level, a high and low at the silver level (I don't have the link up anymore, but I think I was offered just one gold level). And within each of those levels and sublevels, there are seven or eight different insurance companies, each with its own plan that is different from the others at that level/sublevel.Here is one thought that this has triggered: the trend with my employer's health insurance has been what a couple of other folks here have reported: the price goes up and the benefits go down a little more (sometimes more than a little) every year. My thought is that when the insurance marketplaces are up and running, they will provide a new floor for corporate group plans: as long as they keep their expense a little lower, and their level of benefits a little higher, than what is offered on the exchanges, they will be able to make the case that working for them delivers a health care perk. Unless any cost curve-bending actually happens, I predict that we will see corporate health care benefits slouch downward toward this floor.

"Just being more intelligent than the average consumer is not much of a protection against making bad purchase decisions or getting flim-flammed."More than one person who thinks (s)he has made a wide choice in his/her company's 401K plan offerings have discovered this to their ultimate financial dismay.

@Jim: Your company is getting a great deal. We have about the equivalent of a 'silver plan' which looks to cost typically around $1200 a month for a family of 4, if I am reading the site correctly. This is substantially less than the combined company and employee cost for similar coverage here, about $1700.

This blog stream represents the kind of moaning and passive aggressive whining that folks heard back during the New Deal days about Social Security, bank holidays, WPA, CCC. And, back in the 60s about the Civil Rights Act and Voting Rights Act, and Medicare, and women's rights."It will never work!" Blah, Blah Blah. Yada, Yada, Yada.In case you haven't noticed, thanks to visionaries like Franklin and Eleanor Roosevelt and Lyndon Johnson, American society has essentially wiped-out dehumanizing poverty and destitution due to illness among the elderly. African Americans have a chance at equality after centuries of slavery. [A man of Barack Obama's color is now President!!!] Women have never been as educated or had such economic power as they do today.The Affordable Care Act does not mean that Americans have ARRIVED when it comes to affordable healthcare. It means the journey is just beginning!It will take decades of trial and error experimentation and implementation until we get it right for the greatest number of people. Social Security still needs tweeking after all these years - AS IT SHOULD. [How about income earners over $100,000 paying FICA at the same percentage of their income as most Americans??? This would make Social Security solvent well into the 22nd century!!!]One the major revolutions yet to take place is a total remaking and redesign of how we educate and train physicians from a "fee-for-service" model (where doctors treat symptoms and disease, focused on pathologies) to a "primary care" model of doing medicine (where doctors are compensated for keeping patients "well," focused on prevention). It will not be easy to change more than a century of medical training and practice. But it will have to happen if we are ever to achieve reasonable, affordable healthcare cost. [Cuba, with little resources, has a healthcare delivery system that far exceeds US health outcomes - even if it is "socialized medicine."]Get over it! Middle class people now have the RIGHT to affordable healthcare. We will always have to fight to attain its best iteration for the vast majority of Americans. Life is a never-ending journey! [Didn't you read that storybook to your child?]It's called living the American Dream!

While I was lazily whiling away the days on a beach, has it occurred to anyone else how PUNY the so-called "religious liberty" objections of Catholic hierarchs to women's access to reproductive healthcare seems, now that SCOTUS says that Obama's ACA is all constitutional?Doesn't it make them seem even sillier, and more peculiar?

jbruns - you're right, we do get a great deal, and I should offer thanks for it more than I do. My employer's profile is quite a bit different than the one you manage - we're for-profit, and have thousands of employees. Presumably we benefit from the sort of actuarial math that unagidon mentioned in a comment above.I know you and your organization have been thinking about your options once Obamacare is rolled out. Based on the information we're kicking around here, I can see that paying the fines and sending your employees to the exchange may be a genuine option for you, and one that could allow you to still look at yourself in the shaving mirror every morning. Or maybe it won't make sense for your org - I certainly don't presume to make the decision for you. I'm sure it will be very difficult to call.

A problem is that the way health services are charged in the United States, unless one has the discounts that insurance bringsI agree that this is a big problem. In addition to preventing price discovery, it makes insurance a requirement even for those wealthy enough self-insure. I'd like to see all providers be required to offer any service at only one price, which they must charge everyone. Then we wouldnt need 'insurance' for its supposed discounts.

The experience in Massachusetts has been that the percentage of employers who povide health inurance has gone up, not down:".5 Since health reform, more employers are offering coverage to their employees, bucking the national trend. In 2010, 77% of Massachusetts employers offered health insurance, up from 69% in 2001. In contrast [to] the national trend which has seen employer offerings remain flat from 68% in 2001 to 69% in 2010."https://www.mahealthconnector.org/portal/binary/com.epicentric.contentma... Pauwels, the price you got on the MassConnector is for an individual policy. You would have to compare it to what you would have to pay where you are if you were self-employed (or unemployed) and buying your own insurance rather than getting it from a group plan. Based on the Massachusetts experience, most people will continue to get their health insurance from their employer at group plan rates.

Bruce said:

Id like to see all providers be required to offer any service at only one price, which they must charge everyone. Then we wouldn't need insurance for its supposed discounts.

Well, there's the matter of paying for services, which health benefits also do.

unagidon -What about the deadheads who still refuse to buy insurance or pay the tax -- when they become very sick who will pay for their hospital care?Thank you so much for all the time you've taken to educate us. It's been a definite public service on your part. And so clearly expressed! Ever think of doing a book on the subject?And thanks too to all the other businessmen and lawyers who helped clarify this stuff.

What about the deadheads who still refuse to buy insurance or pay the tax when they become very sick who will pay for their hospital care?

I'm afraid this is a risk that we (the rest of us) will all have to take.

Ann: "What about the deadheads who still refuse to buy insurance or pay the tax when they become very sick who will pay for their hospital care?"unagidon: "Im afraid this is a risk that we (the rest of us) will all have to take."I've never been able to get treatment at a hospital without first signing a form acknowledging that I'm responsible for paying for treatment. And my experience as a patient disputing hospital charges is that hospitals go after their debtors as though they mean it. They will turn it over to collection agencies and make my life hell unless I'm willing to settle. So presumably the hospital and the patient are bearing a good deal of the risk. Would the hospital be able to be reimbursed by the government under Obamacare if a patient isn't insured? This isn't like Medicare or Medicaid where the government is serving as the insurer, is it?As for the tax itself - it is already a punitive measure - a fine assessed against those who didn't pay for the insurance. It's the same sort of thing as a moving violation ticket written out against someone who is driving without a license. Failure to pay the fine, istm, is roughly equivalent to failing to pay a parking ticket or failing to report to prison for one's sentence. I assume the government has remedies it can escalate to in order to collect the tax/fine, although I don't know what they are. But I don't see that the hospital would know whether or not the patient has paid the tax/fine. All the hospital would know, or care about, is that the patient isn't insured. Is that right?

Jim P. --Your last sentence raises yet another question: what about the people who DO pay the fine and have no insurance? Will they and the person who didn't pay the fine be treated alike?As I see it, the consequence for both is harassment, unlike the government decides to fine the non-fine payer a lot when it finds out. Somehow I think there will be a noticeable number in this group. Once a deadbeat always a deadbeat ?How minor a problem will this be?

I am all for "affordable healthcare for all Americans". The issue has always been can we afford the PPACA especially when there are many major issues that have not been adequately addressed, as I have mentioned as well as others on this blog. We have a broken healthcare system. However, you don't want to start with an "experiment" that has too many flaws from the get go. I don't have an answer, and I don't proclaim that the Republicans have one either. The PPACA has too many risks (costs) that don't match the claimed rewards (savings and access). We are better off to start with modest reforms and tackle modest or larger issues as they arise. We don't want to tackle significant problems that would result because of this law and require a total re-thinking of the ACA and a total revamping of the proposed system. The disruption is not worth it. We are smarter than that...I hope. This law was rammed through Congress. No one read the legislation and few understand the ramifications.

"It would be good for business but bad for the worker. It would expose the worker to the full brunt of medical cost increases in an environment where they are not under control. Business would NEVER increase their compensation to the worker year by year to cover this."You seem to be in a distinct minority in believing this.

Beverly Bailey,Medicare is not cost effective because it does not have adequate cost management, and quality of care programs. This does not mean that the administration of Medicare is bad. Frankly, it is not significantly dissimilar to many large private plans. The answer to our healthcare problems is not for lack of cost management ideas, it is about employee satisfaction, attraction and retention in public and private plans balanced against the costs. Costs are not affordable to public and private employers. What they do today is simply increase deductibles, co-pays, and employee contributions. Some small and mid size employers only cover the employee and make dependent coverage fully contributory. Others, drop coverage or make the employee pay most of the cost. Yes, we have a problem with healthcare costs in both public and private plans. Most are administered well from the standpoint of efficiently paying claims, administering benefits provisions and doing a reasonable, but very inadequate job in cost management. I applaud Obama for tackling the problem, but I disagree with his approach. I am not convinced that costs or cost increases will be lower without significant burdens on workers, retirees, the unemployed and employers. Any problem can be fixed if you spend trillions of dollars and have billions more to cover the increases in cost. The issue is whether we can afford ObamaCare, will it work or become a disaster. My vote is for reform, but not ObamaCare. However, I will keep an open mind but I don't expect the current administration to address the many problems that have been discussed on this blog before the election. Maybe ObamaCare will work, but my 30 years of experience tells me there are too many red flags.

It would be good for business but bad for the worker. It would expose the worker to the full brunt of medical cost increases in an environment where they are not under control. Business would NEVER increase their compensation to the worker year by year to cover this.

You seem to be in a distinct minority in believing this.

You still have not told me what the incentive would be for a company to get out of the health care business and transfer all of it directly to the employees. Businesses try to decrease their contributions now when they themselves provide healthcare. You think it will be different when they're not?

"You still have not told me what the incentive would be for a company to get out of the health care business and transfer all of it directly to the employees."I confess I'm not understanding this conversation. Wouldn't employers just cut employees loose without giving them raises that match the rising cost of healthcare? Kind of the same way that employees nowadays have to face their childrens', or their own, rising cost of college tuition without matching raises?

Wouldnt employers just cut employees loose without giving them raises that match the rising cost of healthcare?

That's my argument. Jeff Landry thinks that businesses would just give double digit raises to their workers each year to keep up with medical inflation.Regarding college tuition, it would be the same thing only if tuition savings were already part of a standard compensation package.

"Thats my argument. Jeff Landry thinks that businesses would just give double digit raises to their workers each year to keep up with medical inflation."That's not my argument at all.Maybe David Brooks can help: http://www.nytimes.com/2012/07/03/opinion/brooks-a-choice-not-a-whine.ht...

"it would be the same thing only if tuition savings were already part of a standard compensation package."Post-cutting-loose, it would then be the same thing: neither health care nor tuition would be part of a standard compensation package.

Here is a Republican plan for healthcare. This is taken from the David Brooks article that Jeff linked to a couple of comments above this one.-------------------------"First, patients should have skin in the game. If they are going to request endless tests or elaborate procedures, they should bear a real share of the cost. Instead of relying on the current tax exemption that hides costs, the Republican plans would offer people a tax credit for use to purchase the insurance plan that suits their needs. The tax credit could phase out for the wealthy. Employees of small business who arent covered now would see an immediate benefit, which they could take from job to job."Second, Americans should be strongly encouraged to buy continuous coverage over their adulthood. Then insurance companies would not be permitted to jack up their premiums if a member of their family develops a costly condition."Third, the Republican approach would encourage experimentation in the states instead of restricting state flexibility."Fourth, instead of locking Medicaid recipients into a substandard system, the Republicans would welcome them into the same private insurance health markets as their fellow citizens. This would give them greater access to care, while reducing the incentives that encourage them to remain eligible for the program."Fifth, this approach would replace Medicares open-ended cost burden with a defined contribution structure. Beneficiaries could choose from a menu of approved plans. If they wanted a more expensive plan, they could pay for it on top of the fixed premium."Finally, under this approach, any new spending would be offset with cuts so that health care costs do not continue to devour more and more of the federal budget. This could be done, for example, by gradually raising the retirement age."

Other than extending the tax exemption of corporate healthcare contribution to individuals, or a tax credit, how are costs, utilization and the quality of care being controlled?Allowing insurance companies and other healthcare organizations to sell products and services across state lines does not really cut the underlying causes of healthcare cost increases. Giving Medicare beneficiaries a defined contribution to purchase private health plans in the marketplace, even an open one, does not control cost, utilization or quality.Employers will not increase salary compensation to a fixed amount so that employees can purchase a healthcare plan according to their needs. Employers, large ones at least, are concerned about employee attraction, retention and satisfaction. They much compete for talent in the global marketplace and a fixed contribution does not cut it. They will be forced to increase such compensation each year to keep pace with healthcare inflection. This type of strategy does not give the employer any control over its healthcare expenditures, whether they pay directly for it or subsidize it if the individual has to purchase it. While some employers may experiment with this type of strategy, most are too smart (they employee professional consultants) to take such unreasonable risks.The government cannot rely on cutting spending in healthcare or other aresas to offset unexpected cost increases in a national healthcare program. This does not solve the problem. All of this amounts to a circular argument that has been going on for more than 30 years. There are not easy solutions. The problem started by insuring the uninsured....all of them, while proposing a comprehensive healthcare plan and eliminating pre-existing conditions, expanding the age restriction of dependent coverage to 26 and not allowing insurance companies to base rates on health status or gender. Ok, that these things are good ideas, but it cost Trillions of dollars and there are no cost and quality management programs that have not been proven to work. Nor does the PPACP adequately address the host of other significant cost issues already explicated on this blog.

There are millions of individually insured people in the United States who purchase their own insurance. THIS is the insurance that is impossible for people with pre-existing conditions to get.Unagidon--I think you are making my point (again?). The market has served millions of people well--people who purchased health insurance individually without having it tied to their employment status. More, more!

David Brooks, like so many, lives in his own little dream world. To think that the majority of people in this country are intellectually and linguistically capable of making all of those intelligent choices that he posits is sheer hubris.

Jim Mc--I think you need to hang around with a more intellectually advanced crowd--ever think of befriending some conservatives? ;-)

The market has served millions of people wellpeople who purchased health insurance individually without having it tied to their employment status. More, more!

As I mentioned somewhere above, individual insurance in the US is the most heavily underwritten product there is and hard to get unless one has the health of a champion. I say more, more too, except that it is at the core of the pre-existing condition problem. It has taken massive and complicated federal legislation to even address this problem. (The market already has and declared that there is no problem.)

But you said millions have it, no? They can't all be champions. Insurers price for risk, I think, so the healthier you are, the less you pay. That only seems fair.

the healthier you are, the less you pay. That only seems fair.Or: in other words, the more of the health risk you are, the more you pay. "That only seems fair".So pregnant women and babies should pay a lot (because of the risk of perinatal problems).After that, you should pay more as you get older.If you start being sick, you should pay more.If you start being seriously ill, you should pay much more.If you have Down's syndrome, say, you should pay a lot more.I understand that it enables insurers to put much of the burden of the risk on the individual, but in what sense is that "fair"? It seems that by "fair" you mean that what one person pays over a lifetime approximates what they cost in healthcare as closely as possible, so that overall no one pays for anyone else once averaged over a long period of time. "Fair" seems a very odd characterization for such a system.

Claire--Fair seems a very, well, fair characterization for such a system. Keep in mind, insurance have devised plans for consumers who want to transfer risk. Think of a whole life insuranc policy: You pay the same amount each year, it doesn't go up with age or sickness. You pay more than your "fair share" early in your life, less than your "fair share" later in life. But this way the consumer knows the costs and can budget for them. I see absolutely no problem with that.

I see. Ideally you would be told, on the day of your birth, the life-time cost of your health care, and then "insurance" would just be a way of budgeting for it, spreading the cost over the years. I think of it as not fair because I think that it is not fair that one person may, say, have some birth defect that would make their health care very expensive, while another might stay in perfect health their entire life until they suddenly drop dead, with near-zero health care costs.If I understand your thought, taking it to the extreme, if you consider an orphan who has some health problem preventing him from ever earning money and requiring expensive health care: since he cannot pay for it over his lifetime, he would simply get no health care. That would be "fair" in your sense of the term and you would have no problem with that: no payment, no service.

Well, I think the number of orphans who are born with serious health problems is relatively low. I think the best way to deal with such cases is not to dismantle the health system, but rather have the commonweal, either through private charity or some type of welfare program, pay the freight. Non-orphans would be covered under their parents' policy, unless the parents were too selfish/stupid not to purchase health insurance in the first place.

Non-orphans would be covered under their parents policy, unless the parents were too selfish/stupid not to purchase health insurance in the first place.Too poor?"punishing the children for the sin of the fathers to the third and fourth generation"

" --- through private charity or some type of welfare program, pay the freight ---"That's a good way to treat citizens? To let them know early on that, because of their loss of parents, they are now subject to charity or welfare for their healthcare?Cruel, Mark --- cruel.

"subject to"?

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