ObamaCare’s Predicted Effects Coming True

Major carriers are reporting massive losses and demanding major rate hikes to cover the costs imposed by PPACA.

health-costs-money-stethoscope

Insurance companies supporting the ObamaCare exchanges are losing money and raising rates.  AL.com:

Executives at Blue Cross Blue Shield of Alabama are predicting losses of $135 million in 2015, mostly due to the costs of insuring patients who gained coverage under Obamacare.

The insurance company has already tallied losses of $109 million through the end of October. The final results will be available at the beginning of March, according to a statement released by the company.

“Beginning in 2014, the ACA eliminated health underwriting and waiting periods for pre-existing conditions allowing individuals to buy healthcare coverage regardless of their health condition,” read a statement from spokeswoman Koko Mackin. “Company data indicates that many of our new individual ACA customers have used an extensive amount of medical services, which is causing total claims paid and their related operating expenses to exceed premiums.”

Customers who became insured through the Affordable Care Act have been older and sicker than average. According to Blue Cross, they have drug costs that are 25 percent higher than other customers, and costs that are 50 percent higher for outpatient surgeries and hospitalizations.

Blue Cross Blue Shield of Alabama joins several other Blue Cross plans across the country that have reported steep losses in the last two years. Blue Cross Blue Shield of North Carolina reported losses of $400 million in the first two years of the Affordable Care Act. That insurer has cut sales commissions and advertising for Obamacare plans. Blue Cross Blue Shield of New Mexico pulled individual plans from the health insurance exchange after regulators denied a 53 percent rate increase.

Blue Cross Blue Shield of Alabama is not taking similar steps. The company raised rates in 2016 by an average of 28 percent, and eliminated platinum and some gold-level plans. The company also shrunk its workforce slightly by not filling open positions, according to the statement.

The company’s financial problems suggest that all insurers offering plans on the Health Insurance Exchange may be struggling, which will affect costs for customers – and potentially reduce payments to providers, wrote Michelle La Vone, insurance analyst for Decision Resources Group, in an email.

“Blue Cross and Blue Shield of Alabama’s net losses could portend even higher rate increases in 2017 for all participating carriers both on and off the Health Insurance Exchange,” La Vone wrote. “BCBS of Alabama is king, and its losses suggest its closest competitors—if you can call them close—face similar challenges but lack the clout and influence to make self-serving amends.”

And, no, BCBS isn’t an outlier. Aetna, UnitedHealth, and other major companies are reporting similar results.

While I had multiple objections to the process that led to the passage of the Affordable Care Act, my primary objection was always that it was in many ways the worst of all worlds. By shoehorning itself into the existing insurance-based system, ObamaCare didn’t gain the cost-containing efficiencies of a single payer system while at the same time eliminating the cost-containing efficiencies of the free market by forcing companies to insure those too expensive to insure. The main offsetting cost-containing measure was the dubiously constitutional mandate to secure coverage. While that might help in the longer term, in the shorter term the results we’re now seeing were inevitable.

Make no mistake: extending the health coverage pool is an unalloyed good. Aside from humanitarian considerations, the societal externalities of having large segments of the population unable to get any but emergency care are considerable. But the economic fallout was not just predictable, it was predicted.

Aside from the issues already noted, the exchanges themselves seemed a rather obvious incentive to break the longstanding paradigm that drove the American healthcare system. Namely, that employers were expected to provide free or highly subsidized coverage to their employees. Given already-absurd pricing and ObamaCare’s pressures to continue that trend, why wouldn’t employers push all but their most valuable employees out of company-sponsored plans and into the exchanges?

Dave Schuler observes:

There seem to be two conflicting schools of thought on the PPACA: that it was incredibly stupid or that it was fiendishly clever. Both can’t be right. Those who believe it was stupid look at a structure that appears to have been designed to fail and think of it as a mistake. Those who believe it was fiendishly clever look at a structure that appears to have been designed to fail and assume it’s strategic.

This was a frequent topic of discussion on the old OTB Radio program. At the time, I was decidedly in the latter camp, figuring there was simply no way that Obama, Pelosi, and company could be that clueless about the operation of markets. Now, I’m not so sure.

FILED UNDER: Economics and Business, Health
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. john430 says:

    I wouldn’t dream of commenting on the intricacies of health finances and planning but have long considered what I thought was an easy solution. Extend Medicaid to all, (except Medicare recipients) but use a means test to establish co-pays. I would extend a co-pay requirement down to the lowest income levels, even if it was a dollar per person.

    Am looking for comments on my scheme.

  2. Petry says:

    This seems like a problem that could be exacerbated in the initial years of the exchange and will become less of an issue over time.
    2014 in particular seems like a year that would spike the data for a variety of reasons;

    1) The individual mandate was still very weak.

    2) Everyone who was sick and didn’t have insurance was signing up.

    3) There were fewer companies and fewer plans on the exchanges initially, so all the “sickey’s” were concentrated in a smaller number of plans.

    That’s not to say that the problems you mention aren’t real, but given 1)the measured annual premium increases that we’ve seen overall and 2) the increase in the number of plans and companies entering the marketplace over each of the first two years, I’m not sure it backs up the alarm.

  3. Pch101 says:

    A system that encourages multiple pools and provider networks will inevitably raise costs. When there are multiple pools, some pools will invariably be preferable to others — in effect, it creates a system of losers and winners by default.

    Obamacare was an improvement but it didn’t go nearly far enough. It’s possible to have a system with private providers and insurers, but it needs to be based upon one pool (that can be administered privately) and no networks.

  4. James Joyner says:

    @john430: Medicare for all would be my preferred outcome as well but it’s politically a non-starter and likely enormously expensive. But I don’t see how we avoid it.

  5. Mikey says:

    My most direct experience (through my German wife) is with Germany’s system, which while not perfect is light-years ahead of ours. It’s certainly among the best of the world’s universal coverage systems. Not “socialized medicine,” because nearly all care is provided by private practitioners and the insurers are private companies (although mandated non-profit). Wait times are short–in some instances shorter than America–and care is excellent. And it costs them about half what America pays, per capita.

    http://www.theatlantic.com/health/archive/2014/04/what-american-healthcare-can-learn-from-germany/360133/

    The ACA is actually something like Germany’s system, in the use of private practitioners and insurers, but lacks the coordination and standardization that help keep costs lower in Germany.

  6. bookdragon says:

    First, keep in mind that PPACA is largely the same as the Heritage Foundation plan that was developed to counter calls for single payer. So by your logic that would mean that a conservative think tank either deliberately put out a plan designed to fail for nefarious reasons or is clueless about how markets operate.

    Second, there is more going on. I don’t know if you ever read Balloon Juice (you should – their blogroll is what originally lead me to OTB), but one of their contributors works in the insurance industry and has written several interesting and enlightening articles about how insurers deal with risk and how PPACA affects things.

    The article this morning touches on what you’ve brought up here:

    https://www.balloon-juice.com/2016/02/03/the-hope-of-stabilization/

    One of the frequent calls of caution from health care wonks and insurance industry folks who are actually trying to inform people instead of lobby for favorable treatment is to wait. We knew that there was going to be a massive amount of catch-up care as people who either were uncovered, sporadically covered or had no usable insurance because the cost sharing was atrocious got coverage through either Medicaid expansion or the Exchanges….

    I’m an engineer, not a health care wonk, but it makes sense to me that the first people to sign on were those most in need who previously could not get insurance. This impacts current costs to insurers, but will eventually level out and as preventive care and treatment for chronic conditions becomes attainable for more and more people the longer term cost of care for the overall population will decrease.

    Also, while you and I may be in professions where we can expect our employers to provide health care, the vast majority of workers are not and were not even well before PPACA. Even those with employer subsidized health insurance often found the subsidy the employer provided was decreasing and/or even at a fixed percentage the premiums were increasing so much that they could no longer afford to buy in. For instance, at one point my after-subsidy portion of covering my family was over 20% of monthly pay. Since my husband is a cancer survivor, I had no choice but to pay it – and no choice but to stay where I was no matter what other opportunities were out there.

  7. humanoid.panda says:

    @john430: The basic problem with that scheme is that Medicaid pays little to providers.

  8. bookdragon says:

    @john430: I like that solution except for one thing: govt single payer in the US would mean that health care – particularly women’s health care – would become even more of a political football.

    Make all health care come from Medicaid and every single year, if not every single month, some bunch of wingnuts will try to set up Hobby Lobby rules for covered care.

  9. C. Clavin says:

    First – Alabama hasn’t expanded medicaid coverage so it is NOT an actual example of Obamacare operating as designed.
    Second – I’d be very careful about listening to company spin when they are looking for rate increases.
    Also – BCBS of Alabama has $Billions in assets…trust me, they are not destitute.
    Nationwide the change from last year in a benchmarked policy ranged from -10.6% in Seattle, Washington to 38.4% in Nashville, TN. The average was 10.1%.
    http://kff.org/health-reform/fact-sheet/analysis-of-2016-premium-changes-in-the-affordable-care-acts-health-insurance-marketplaces/
    Here in Connecticut the price of that same policy went down. Before the PPACA our firm regularly saw rate increases in the 30% range.

  10. C. Clavin says:

    @James Joyner:
    Perhaps you should stop supporting a political party that would prefer people not have insurance?

  11. Grewgills says:

    Had Alabama accepted the mostly free (to them) Medicare expansion the insurance companies there wouldn’t be having this problem. In short the biggest problems facing the PPACA is active sabotage by republicans.

  12. gVOR08 says:

    @bookdragon:

    …a conservative think tank … is clueless about how markets operate.

    Not the first time I’ve had to consider that possibility.

  13. gVOR08 says:

    Isn’t this Alabama BCBS story pretty much the same story Cruz told about Texas BCBS, that proved to be largely BC BS? (Sorry, no willpower.)

  14. Rob Prather says:

    @James Joyner: One thing that has turned me off the Medicare-for-all business is the realization that with health care as expensive as it is in this country, we would end up with total government (federal, state, local) the size of a Scandinavian country. Without all of the benefits they have.

  15. gVOR08 says:

    @john430: Pretty much everyone on the left would prefer medicare for all. Do you have a suggested plan for getting such a thing through a Republican congress?

    Also, given other recent threads, I should point out that this would be SOCIALISM!! Boo, scary, boo!

  16. David M says:

    It is worth noting that lack of a Medicaid expansion drives up the losses for the exchange, and that the GOP in Congress sabotaged the risk corridor payments that were meant to help the exchange markets stabilize. So these were predicted effects in that the Democrats implemented policies meant to avoid these problems, but the GOP ignored the warnings in their nihilistic quest to kill off poor Americans.

  17. grumpy realist says:

    I’m one of the very few people in the US who has experience with both the US systems, the British NHS, and the Japanese National Health Service.

    The US health care system sucks. Those of you moaning about How Wonderful It Used To Be should look up “murder by spreadsheet”, what happened to those of us with prior conditions, or those of us who had hit the $1M cap.

    May we return to the prior system, and may you all get cancer and have your health carrier bail out on you.

  18. Yet some companies are making money on exchange. Anthem made money in 2015, Cigna believes it will turn a profit in the QHP individual market in 2016.

    There was significant learning by doing as a brand new market with a very different needed core competency (population health management) introduced in 2014. Prior to that the core competency of many individual policy insurers was avoiding risk by denying coverage or denying claims. 2014-2015 were learning by doing years.

    And United Healthcare just fucked up their strategy by offering broad network minimally restrictive plans priced massively over the subsidy point so they only picked up the healthy but since their provider payment rates were so high, net risk adjustment inflows were not enough to cover costs.

    https://www.balloon-juice.com/2016/02/03/competition-and-self-inflicted-wounds-on-exchange/

  19. Scott says:

    cost-containing efficiencies of the free market by forcing companies to insure those too expensive to insure.

    One of the questions this country has not settled is the question of whether healthcare (or at least a minimum floor of healthcare) is a right or not? One side says yes, the other basically says that the healthcare right is based on an ability to pay. The answer is somewhere in between, a limited right. The free market cost containment is the ability to pay. Clearly, there are limited resources and choices have to be made. However, when a Sarah Palin rails against “death panels” she is essentially arguing for unlimited access to the public treasury. And all treatments are not equally effective (medically and costwise), so some decision making mechanism has to be made.

  20. Blue Galangal says:

    @Petry: I think Richard Mayhew addressed this very point recently on Balloon Juice. the hope of stabilization.

  21. David M says:

    @john430:

    I wouldn’t dream of commenting on the intricacies of health finances and planning but have long considered what I thought was an easy solution. Extend Medicaid to all, (except Medicare recipients) but use a means test to establish co-pays. I would extend a co-pay requirement down to the lowest income levels, even if it was a dollar per person.

    Am looking for comments on my scheme.

    I’m not sure why anyone is disagreeing with this, as Medicaid for all, even with minimal co-pays and deductibles would be a significant improvement. Sure, it may not be politically feasible in the near future, but neither are most health care proposals right now.

    This could be sold to the GOP in that it doesn’t penalize working, like the subsidy cliffs can in Obamacare. It also will help control health care costs, as Medicaid reimbursement rates are lower.

  22. Moosebreath says:

    @Grewgills:

    “Had Alabama accepted the mostly free (to them) Medicare expansion the insurance companies there wouldn’t be having this problem. In short the biggest problems facing the PPACA is active sabotage by republicans.”

    Exactly right, except it’s Medicaid, not Medicare. Because of the state’s refusal to accept the Medicaid expansion, one of the primary benefits from the insurer’s POV (avoiding paying for uninsured people) was frustrated. In states which accepted the free money the Feds were providing for Medicaid expansion, this is not happening.

  23. SenyorDave says:

    @David M: This could be sold to the GOP in that it doesn’t penalize working, like the subsidy cliffs can in Obamacare

    I needed a mid-afternoon laugh. The idea that anything improving coverage for lower income people could ever be endorsed by the current GOP is one of the funniest things I’ve read on the internet in a long time.

  24. David M says:

    @SenyorDave:

    Medicaid already covers lower income people, this expansion would be for the middle class. Sure the GOP is going to oppose most proposals, but I don’t think there’s any reason they would be more opposed to this than anything Sanders is proposing or Medicare for all.

  25. @David M: Medicaid rates are probably too low (65% of Medicare), probably need closer to Medicare rates. Commercial insurance pays between 150% and 200% Medicare depending on region on average, and some specialties get way more than 200% Medicare

  26. James Joyner says:

    @Rob Prather: But Medicare cuts costs not only be eliminating a lot of the administrative overhead and paying for prevention but also by capping reimbursement rates. The insurance-based system subsidizes absurd overcharging because the patients have no incentive to care about anything but what comes out of their own pocket.

  27. Just 'nutha ig'rant cracker says:

    @bookdragon:

    is clueless about how markets operate.

    I’ll go with that, not because conservatives are clueless about how markets work (although they are sometimes deliberately ignorant about it) but because the current system isn’t a true market situation in that the persons buying the actual product (health services) aren’t paying for them (the insurer does that) nor are they buying the insurance (their employers are controlling their choices on that part). The people who are paying out of pocket are impacted by the perverse incentives provided by the fact that most of the customers do not shop for any of their services and pay only a small portion of the total cost.

    On the other hand, if it weren’t for insurance, there would probably be no oncologists anywhere–most patients would be priced out of the service and the few who could afford to pay would find no doctors who could labor in a field with few (actual paying) customers.

  28. David M says:

    @James Joyner:

    The insurance-based system subsidizes absurd overcharging because the patients have no incentive to care about anything but what comes out of their own pocket.

    I don’t know that it’s the insurance-based system that causes that, as much as the complete lack of pricing transparency. Even if someone wants to compare costs for a non-urgent procedure, it’s near impossible to do so.

  29. Just 'nutha ig'rant cracker says:

    @grumpy realist: Your cap was a million? My last US employer’s lifetime cap was $100,000. But he did explain that the cap was reduced because that was the best policy that he could get for under $150/month for single insured and $230/month for family coverage.

    Personally, I was amazed that he did that well on his pricing, and I got used to the $50 copays for doctor visits and 50% coverage for lab work and imaging services.

  30. JKB says:

    @Grewgills: is active sabotage by republicans.

    You reveal yourself.

    Apparently, you see the problem being people who support a form of government “having the supreme power lying in the body of citizens entitled to vote for officers and representatives responsible to ”

    Yes, I suppose this form would be more to your liking:

    It purposes to introduce new forces into society and industry; to put a stop to the idleness, the waste of resources, the misdirection of force, inseparable, in some large proportion of instances, from individual initiative; and to drive the whole mass forward in the direction determined by the intelligence of its better half.

    Feel the Bern…

  31. Pch101 says:

    @James Joyner:

    The usual free market rules don’t apply to healthcare.

    Let’s suppose that you would like to get a car. You would really like to get a new Ferrari. One minor problem: You can’t afford a Ferrari.

    The free market has a solution for you: Tough s**t. You can get something else, such as a new BMW or a used Toyota or a bicycle or a bus pass or a new pair of walking shoes or an Uber account in order to address your transportation needs, and there is no real tragedy that you can’t have your Ferrari. The free market won’t produce a cheap Ferrari, but it will provide many tolerable substitutes.

    If you need open-heart surgery, then you don’t have those options. You can’t go to a drugstore and buy an over-the-counter elixir to substitute for your need for open-heart surgery. Your alternative is not to buy a tube of ointment for $3.99 but to die.

    There are few mechanisms available to the individual consumer to address this — your business as an individual customer generally doesn’t count for much. Even when you pay a large share of the costs, there isn’t much that you can do about the price.* (*If you have cash and know how to work the system, you may be able to do some haggling after the fact, but the services will still be pricey.)

    The problem lies with the pools. When there is one pool, the doctor, hospital, lab, etc. has the choice of having either a plethora of patients or else almost none; their negotiation power is limited. When there are multiple pools, the providers can and will play those pools against each other and negotiate a higher price.

    True healthcare reform would get rid of these pools while creating alternative forms of supply where possible (more nurse practitioners, pharmacists who can prescribe drugs for simple problems, etc.) so that the buyers are able to buy in bulk and have some viable alternatives to the most expensive professionals. Most countries buy healthcare as Costco buys its products, while the United States behaves more like a corner market or liquor store with minimal negotiating power. In a country with 300+ million consumers, this is as stupid as it gets.

  32. JKB says:

    @David M: as Medicaid for all, even with minimal co-pays and deductibles would be a significant improvement.

    The flaw in your plan is most providers won’t take Medicaid patients. So do we enslave the doctors and nurses or do they retain the liberty to function in their chosen profession?

    What if the nurses and doctors decide a few patients paying cash/retail, as many concierge doctors have chosen, is better than a lot of patients reimbursed below cost?

  33. David M says:

    @JKB:

    Obviously Medicaid reimbursement rates are permanently frozen and can never be changed.

  34. Just 'nutha ig'rant cracker says:

    @David M: In the past, Medicaid paying for people with low incomes was not true in all cases, possibly because a lot of the funding was controlled by the states in the form of block grants. In Washington State, where I live, when I was working as a part-time college instructor making under $13,000/year, when the hospital that had treated me sent me to State DSHS, the agency told me that since I was single, earning income, and had no children, I did not meet the qualifications for receiving any assistance from the State.

  35. JKB says:

    @David M: Obviously Medicaid reimbursement rates are permanently frozen and can never be changed.

    So now you’ve changed your argument to permit the single payer to increase their payments, i.e., costs?

    So essentially, you are promoting a system where the government sets a price and forces medical professionals to take that price.

    Question. How did wage and price controls work out in the early 1970s? Was there a boon or a busted economy?

    Also, how will you entice more doctors and nurses to settle for lower pay than they could earn as say a researcher or a Wall Street banker? How will you stop current doctors from retiring from medicine and instead going into acting or blogging?

  36. David M says:

    @Just ‘nutha ig’rant cracker:

    Yes, but with the Obamacare Medicaid Expansion, Apple Health covers single people without dependents up to incomes of $16,000 or so. I’m a fan of just raising that cap as a means of working towards universal health care. Other states are still where Washington State was before the expansion, but the remaining holdout states are moving to slowly accept the Medicaid expansion.

  37. David M says:

    @JKB:

    None of those are questions worth addressing or caring about in the real world. You have nothing to contribute to discussions of public policy.

  38. Petry says:

    @Blue Galangal:

    Thanks.
    Basically made the points concisely that I had been tilting around for a while.

  39. JKB says:

    @David M: None of those are questions worth addressing or caring about in the real world. You have nothing to contribute to discussions of public policy.

    So where are you going to get the people who will, you know, actually provide the healthcare services?

    For instance, it is a primary principle that an English free man of full age, under no disability, may control his person and his personal activities. He can work six, or four, or eight, or ten, or twelve, or twenty-four, or no hours a day if he choose, and any attempt to control him is impossible under the simplest principle of Anglo-Saxon liberty.

    Yet there is possibly a majority of the members of the labor unions who would wish to control him in this particular today; and will take for an example that under the police power the state has been permitted to control him in matters affecting the public health or safety, as, for instance, in the running of railway trains, or, in Utah, in labor in the mines. But freedom of contract in this connection results generally from personal liberty itself; although it results also from the right to property; that is to say, a man’s wages (or his trade, for matter of that) is his property, and the right of property is of no practical use if you cannot have the right to make contracts concerning it.

    The only matter more important doubtless in the laborer’s eye than the length of time he shall work is the amount of wages he shall receive. …. But of late years in these socialistic days (using again socialistic in its proper sense of that which controls personal liberty for the interest of the community or state) it is surprisingly showing its head once more.

  40. Rob Prather says:

    @James Joyner: I hope you’re correct. I’ve got a feeling we’re headed that way, though not right away.

    Given that about 50% of health care spending comes from all levels of government now, I suppose it won’t be that big of a deal either way if the reductions you mention actually materialize.

  41. gVOR08 says:

    @James Joyner: Any reference I’ve seen to actual studies says this Moral Hazard issue doesn’t really happen at the patient level.

  42. Petry says:

    @Pch101:

    The problem lies with the pools. When there is one pool, the doctor, hospital, lab, etc. has the choice of having either a plethora of patients or else almost none; their negotiation power is limited. When there are multiple pools, the providers can and will play those pools against each other and negotiate a higher price.

    That negotiation theoretically should work both ways though.
    Whether one pool or multiple pools, the doctors have to keep their charges to a level that the pools will find attractive. Let’s say there are 10 “pools”, a doctor’s not going to want to freeze out more than 1 or 2 pools. The pools only ability to gain market share is through their combination of access(lots of docs), and low premium.

    Ultimately one factor that will help drive some leverage away from doctors is greater price transparency.
    Previously, if you were referred for a procedure, there really wasn’t any easy way to compare and contrast prices and/or quality. Basically you could contact as many physicians as you could stand, get an estimate that would in no ways be binding, and then went ahead.

    In this situation, most people basically went with whatever specialist was referred. Maybe with an extra call or two to make sure the specialist was in their network.

  43. Tyrell says:

    Massive rate hikes ? It is already too high. Just what does someone do if they can’t afford the payments,
    yet they do not qualify for a subsidy ?
    This ramshackle, thrown together program needs to be put back in the shop and overhauled. I don’t care if it was copied from Romney, or John C. Calhoun. Fix it, or drop it. Why won’t Congress get involved ? They passed this Byzantine foolishness.

  44. anjin-san says:

    @ James

    Republican sabatoge of Obama Care’s ObamaCare’s Predicted Effects Coming True

    FTFY

    This is a bit like the GOP purposely breaking the post office budget, then telling us we need to privatize mail deliver because the post office is broken…

  45. Ron Beasley says:

    I have never seen any reason for private insurers to be involved in the health care system. The for profit insurers have an overhead of 20+% whereas medicare has an overhead of 3%. Medicare for all is the solution.

  46. gVOR08 says:

    @Tyrell: Dr. Krugman did a good post on why Republicans always promise to come up with a replacement for Obamacare and never do.

    Specifically, if you want to propose some other, less-intrusive system that won’t cause 10 or 15 or 20 million people to lose health insurance, it can’t be done. The Affordable Care Act looks the way it does because it has to.

    The fact is that if you want to cover most Americans, and you start from where we are, and you aren’t willing to do Medicare for all, the logic of the situation drives you to something pretty much exactly like Obamacare.

    That’s why Obamacare opponents really had to stop it before it happened. As long as it was just a plan, they could insist that it was unworkable — that it would not, in fact, cover the uninsured, that costs would soar, that it would cripple the economy. And the official GOP position is indeed that the law has failed; who you gonna believe, us or your lying eyes? But none of the bad things that were supposed to happen, did. And the repeal-and-replace crowd cannot come up with an alternative, because there isn’t one.

  47. anjin-san says:

    @gVOR08:

    How can the GOP possibly create any alternative? Their position – true if unstated – is that if you are too poor to afford health insurance, we don’t really give a crap if you get sick and die (just please don’t cause us any inconvienience or uncomfortable moments in the process)

  48. Dave Schuler says:

    @Rob Prather:

    The open question is whether our healthcare is expensive because of Medicare or despite Medicare. I’m on the “because of Medicare” side. From 1965 through the 1970s the cost of healthcare increased enormously in the United States and I see no credible explanation for that other than Medicare. Since 1980 healthcare costs have, roughly kept up with the general rate of inflation but since the general rate of inflation includes healthcare costs, that’s a positive feedback loop. Of course healthcare has become 17% of the economy. Under the circumstances it could hardly have done anything else.

    There have been tweaks through the years that could have prevented the rise in healthcare costs but there’s never been any follow through. The most promising was Sustainable Growth Rates. The upshot of that was that every year we got a “doc fix” suspending the SGRs.

  49. Pch101 says:

    @Petry:

    It doesn’t cut both ways. In the US, providers can afford to pick and choose their customers. Most of the patients don’t have the money to pay for anything; if they were stuck with the cost burden, they would go without and suffer or die.

    In the rest of the world where prices are lower, consumers don’t know what things cost, either. It makes no difference whether you know the price — medical costs are naturally high because it is labor-intensive and dependent upon highly-trained providers.

    The negotiation power comes from the ability to deny access to substantial numbers of customers so that the provider doesn’t have the option to reject those who pay less. If an “insurer” was just a customer service operation that didn’t offer higher payments than a rival, then there would be less opportunity to push prices up. (The payouts obviously have to be high enough to encourage providers to join and stay in, but they don’t need to be paid like investment bankers, either.)

  50. C. Clavin says:

    @JKB:

    most providers won’t take Medicaid patients

    Got a link?
    Oh, wait…I do…and it says…

    About 69 percent of doctors nationally accept new Medicaid patients

    http://khn.org/news/third-of-medicaid-doctors-say-no-new-patients/
    That means most do take Medicaid patients.
    Try learning something about the topic and then come back.

  51. Taiko drum says:

    I worked for my states’ Medicaid program for 7 years. We had a few access issues, especially in mental health, but my experience is that providers generally wanted to be Medicaid providers because not being one excluded yourself from the business of a large segment of the population. Were they always happy with the reimbursement rates? No. But I never experienced a provider dropping out. I also would verify their fiscal statements. A major part of my job was going over their financials and calculating reimbursement rates. They come up with some crazy accounting schemes to make it seem like they’really losing money. We even had providers ask for their Financials back because they gave us the wrong set of books! After my experiences in that job, I don’t put too much stock in what they claim. They’really all about the money. I primarily dealt with the fiscal people though, the docs/nurses I dealt with really did seem to care about the patient.

  52. gVOR08 says:

    @C. Clavin: There was some discussion above @gVOR08: about conservative think tanks not understanding markets. @JKB: seems to believe that if a large share of the medical market is Medicaid, the suppliers won’t somehow adjust.

    Why do conservatives hate free markets?

  53. Ron Beasley says:

    @C. Clavin: Here in Oregon that’s not true. When my brother move here from Texas and signed up for Oregon’s Medicade expansion it took him several weeks to find a doctor that would accept it. When I turned 65 and signed up for Medicare I had to purchase a Medicare advantage policy because none of the doctors would accept straight Medicare.

  54. Grewgills says:
  55. David M says:

    @C. Clavin:

    It’s safe to ignore JKB, but Mayhew did have a valid point earlier that Medicaid does underpay right now, especially after the temporary rate increase ended in 2015. However, making sure there are enough providers for Medicaid (or Medicare) patients is quite possibly the easiest public policy challenge of all time. Simply pay them more, and they will accept more patients.

  56. Grewgills says:

    @Moosebreath:
    Oops, I didn’t notice I had typed Medicare rather than Medicaid until I saw your comment. That’s what I get for commenting before morning coffee. Thanks for the correction.

  57. Richard Mayhew says:

    @Grewgills: yep but Kaiser and any other integrated payer/provider financials are always a little tricky to tease out market segment effects as there are a lot of semi-arbitrary internal transfer pricing assumptions. Kaiser in California as a complete walled garden is all internal transfers, elsewhere some % is external transfers but yes they are doing well but untangling their exchange business status is a challenge.

  58. Pch101 says:

    @Dave Schuler:

    Per the BLS, December 2010 price indices (based upon 1982-4 = 100)

    Medical care: 390
    All items: 238

    So no, healthcare costs are were outpacing inflation.

    I’ve explained why those costs are increasing at a faster rate in the US than elsewhere. If people are going to bellyache about the cost of blue-collar labor, then we ought to figure out that we can’t afford to pay doctors as if they are investment bankers.

  59. the Q says:

    Lets just see how horrific the poor HMOs have been destroyed by the ACA. Lets go to the videotape:

    Obamacare passes in 3/2010. Aetna stock price at 30, at that time….Today 103. A 300% increase. United health group. Stock at 31 then, now 114….320% increase. Anthem 51 then, now 126. 247% increase. Cigna 32 then, now 132… 422% increase. In the same period DJIA up 147%.

    So basically in a bull market, the HMOs have outperformed the Dow by double. Maybe all that shareholder profit adds to the overhead just a little?

    And what they are really saying is “we can keep our rates low, but then our profit margin and stock price will decline, therefore, we MUST raise rates to keep the bottom line flowing.”

    Obamacare, as others have mentioned, great intentions, seriously flawed execution as Obama basically sold out to big pharma and big HMOs.

    And as with most Dem policies these days, awarded the lion share of the benefits to big corporations, while giving birth control pills to anti Catholic feminists to make the base feel good about itself.

  60. gVOR08 says:

    @Richard Mayhew: I’ve found your posts at Balloon Juice very informative. Thanks for coming over here. You bring facts to the internet. Have you no respect for tradition? And can you get Cole to provide MOAR Steve?

  61. dazedandconfused says:

    “…depend on Americans to do the right thing when they have exhausted every other possibility.”

    Usually attributed to Churchill but there is apparently no actual record of him saying it.

  62. MarkedMan says:

    Random (but germane) thoughts:
    1) Talking about Medicaid as if the health care system can’t make money off of it is ludicrous. More than 50% of hospital income nationwide comes from Medicare/Medicaid and in places like Arizona and Florida have providers that get 70% or more. Providers are breaking new ground every day on facilities to service that market.
    2) Alabama has actively tried to crush Obamacare even if it means literally denying healthcare to the desperate poor so using them as an example is tenuous
    3) Rate providers going before state boards to negotiate rate hikes are always “losing money”. It is miraculous that a few months later when they present to their shareholders they are doing well.
    4) The fact that this comes from James makes me take it more seriously. But I still would like to see confirmation from reliable sources. After all the Republicans have been lying about this stuff since long before day 1. Almost nothing they say has proved true, which is amazing since you would think that they would be right by accident at least once in a while.
    5) And this whole discussion just reinforces this reality: Current day Republicans are incapable of actually accomplishing anything. If you want to move something forward, vote Democratic.

  63. Rafer Janders says:

    @grumpy realist:

    I’m one of the very few people in the US who has experience with both the US systems, the British NHS, and the Japanese National Health Service.

    I’ve had experience with the US, British, German, French, Canadian, Singaporean and Japanese systems, as well as several Third World countries.

    Hands-down, the US is the worst among the developed world.

  64. Dave Schuler says:

    @Pch101:

    Yes, that’s what I wrote. And note that “All Items” is inclusive of healthcare which means that increasing costs in healthcare outstripped non-healthcare costs even more than the BLS figures would suggest.

  65. Richard Mayhew says:

    @James Joyner: Medicare does not change the 3rd party payer problem that you are identifying. Medicare Fee For Service (FFS/Traditional Medicare) has a 20% co-insurance after a small deductible, so the vast majority of the cost is borne by some entity other than the patient. Medicare Advantage will cap total out of pocket exposure with a deductible limit.

    What Medicare has is massive quantity. They offer medical providers 50+ million patients and a decent but not great payment rate. They buy in bulk and get a good deal. That is why Medicare is cheaper than employer sponsored coverage, the rate that they pay is much lower, not utilization control.

  66. dazedandconfused says:

    If we adopted a Canadian style HC system we could do away with the VA system. Heck of a lot of bureaucratic overhead in that. The stall in the records transfer, which has been widely reported of late, is in no small part due to a need to assess the legal liability of each file. Takes experts in the medical field, most of whom hardly trained for that career with that thankless and largely heartbreaking task in mind. They are hard to get and keep.

    All the legal squabbling over which ailment is from service and which isn’t disappears. It’s an ultimately pointless but very expensive legal case to determine which part of government will pick up the tab in a lot of the cases anyway.

  67. Grumpy Realist says:

    @James Joyner: part of the problem is the total opacity of costs.

    One thing I think should be required is that all medical service fees should be made visible to the public. Second, all fees for service X at health provider A should be the same–none of this “discount for people coming on BC BS but charging people without insurance the full price.”

  68. DrDaveT says:

    @JKB:

    The flaw in your plan is most providers won’t take Medicaid patients. So do we enslave the doctors and nurses or do they retain the liberty to function in their chosen profession?

    Doctors and nurses are entitled to every bit as much professional liberty as, say, air traffic controllers.

  69. humanoid.panda says:

    @Rafer Janders: Hell, a poor country like Israel is head and shoulders above the US re: the functioning of its health system.

  70. Scott F. says:

    @James Joyner:

    We’ll avoid Medicare for all by having half the political class yell “Socialism!” whenever the subject comes up. It’s worked for 25 years and it will continue to work for the foreseeable future.

  71. Tony W says:

    @dazedandconfused: That’s indeed the entire US Healthcare System (TM). The insurance model means that the bet is that when you get sick, you’ll be on somebody else’s system.

    If there is only one system, risk is gone.

    My Medicare For All system gives basic health care to all US Citizens, and legal guests to the country (similar to the UK). Employers are free to offer supplemental policies if they wish to.

    I don’t know why insurers wouldn’t like this plan. They get to eliminate nearly all of their risk, and keep the most profitable customers (working-age folks).

  72. Pch101 says:

    @Grumpy Realist:

    The US has the highest healthcare costs in the world. None of the other first world countries, all of which have lower costs than the US, rely upon price transparency to the consumer as a key driver for reducing costs.

    All of those nations rely upon some variation of bulk buying/pricing for getting lower prices. The solution to this is pretty straightforward — the only people who are oblivious to this are Americans.

  73. dazedandconfused says:

    @Tony W:

    Aside from the obvious, that they be replaced by the government entirely someday, IMO they deeply fear winding up like the German insurance companies. They have practically no room to compete with scams and that leaves administrative efficiency as the only arena. Tedious stuff, easily copied by the competition once you’ve proven any innovation. The ability to amass huge profits is all but nil.

  74. David M says:

    @Pch101:

    Pricing transparency also doesn’t matter much because most health care costs are due to relatively few people:

    Twenty percent of the population accounts for 80 percent of total [health care] expenditures…just 5 percent of the population accounts for 50 percent

    Posting how much individual procedures cost isn’t going to have any impact on that portion of the costs. Now in principle, I actually support the idea of transparent pricing, simply to put pressure on bad actors who are overpriced, and because I oppose the idea of negotiated pricing. I just don’t think it’ll make much of a difference for medical costs.

  75. Tyrell says:

    Let me say from the start that I have long favored an expansion of Medicare to those who needed it, and for those who wanted to buy supplemental coverages. This would have brought a huge number of people in, and would have probably reduced a lot of costs. It would also have saved a lot of money that was wasted on a faulty, disastrous website that still has problems ( one of the most confusing and time consuming applications ever; a literal Byzantine maze ). What we have seen is a plan that depended heavily on young, healthy, working people to sign up and provide the cash flow. That, for various reasons, has not happened. Many young people are living with their parents and staying on their plans, or no plan at all. Others have good plans at work. When I was young, the last thing I thought about was health insurance. I wasn’t about to spend money on that when had my mind on fast cars and movies. So you have a lot of older people signing up. I would like to see the figures on that. So it stands to reason that the plan is losing money like it is going out of style. And it does not look like Congress or the President seem interested in fixing the many flaws of this plan.
    So, since they don’t have any bright ideas, I have some big ones. Let the people who need health insurance figure out what they can afford and have a broad spectrum of coverages to pick from: dental, accident, a range of deductibles and co- payments, maternity, prescription coverages, doctor visits, and procedure coverages. Why see a doctor once a year when experts agree that is not necessary. Too often specialists order overlapping, repetitive tests. As one doctor said: “Americans are over doctored, over diagnosed, over tested, and over medicated”. Patients are told to come in for a pre-op chat, a post op chat, and all kinds of other unnecessary visits. Doctors are loaded down filling in reams of data and personal information on laptop computers. These plans should start at $100 and go up from there. A lot of people just can’t afford $200 + a month for coverage for one person. And a lot of people do not qualify for subsidies for various reasons. One person wrote in the local paper that their plan was going up from $1100 a month to $1700 a month. Outrageous !
    Those are my ideas.
    See: “The unaffordable care act”
    http://www.forbes.com/sites/nextavenue/2015/07/05/for-many-obamacare-is-becoming-the-unaffordable-care-act/#6e6a43404c69

    “Obama Care true costs:” http://www.forbes.com/sites/sallypipes/2015/06/29/obamacares-true-costs-are-finally-coming-to-light/#619bfbca7355

    “Three Reasons Obama Care Premiums Rising” http://www.fool.com/investing/general/2015/10/31/the-3-real-reasons-why-obamacare-premiums-are-risi.aspx

    “Prices for popular Obama Care plans rising sharply” : http://www.politico.com/story/2015/10/obamacare-cost-increase-215409

  76. Pch101 says:

    @David M:

    To clarify that, most healthcare costs are high enough that many of those services have to be paid for by somebody else (i.e. an insurer).

    And from that standpoint, we already have transparency via our insurers, who have a very good idea of what things cost and what prices have to be paid in order to attract providers to their networks. They do this day in and day out.

    In effect, one of the functions of an insurer in the US “system” is to know what things are supposed to cost and what to haggle. Obviously, all of this doesn’t do us a damn bit of good compared to the bulk buying model — we still have the highest prices in the world, even though we have professionals with reams of data about pricing, supply and demand, etc., because providers have enough leverage to negotiate their prices upward.

  77. Just 'nutha ig'rant cracker says:

    @David M: I would certainly be amenable to raising that cap and moving to single payer health care. I was living in Korea for the past 8 years and found its single payer system (which they call health insurance because Koreans apparently like the idea of “buying” health insurance from the government [on a percentage of income fee scale] better than admitting that they have socialized medicine) worked well.

    The unintended consequence for this country is fallout for the insurance industry when the product goes from full blown health care coverage to gap payment for things not covered (in Korea, these include CT scans and MRIs). While I have no particular sympathy for United Health or Aetna, I will feel some remorse about the people who lose jobs when the companies downsize to match their new business model.

  78. Tyrell says:

    @Pch101: “Highest health care costs”: And some of the reasons are overlapping, repetitive tests, unnecessary procedures and test, unnecessary visits, pharmaceutical corporations that often rig the pricing (generic not always available), and, of course, people going to the doctor for ailments that are best treated at home.
    The age of specialization: no one doctor sees the whole picture.
    Unnecessary tests: a person in the hospital with terminal cancer should not suffer through repeated tests and procedures.
    One of my parents was in great health and on no medication, yet the doctor called him in 3-4 times a year to check blood pressure and pulse. Why ? Medicare pays ! ( I put a stop to it after a year )
    A healthy adult, young or middle aged, need not see a doctor every year. At the most would be every three years unless there is some unusual or serious ailment; but not just a cold, sore throat, hang nail, or stubbed toe.
    Pricing competitive with private companies and stores. The hospital charges hundreds for a “cast” (brace) that can be purchased at a local drug chain for $45. They will charge $80 for a $10 water pitcher.

  79. Just 'nutha ig'rant cracker says:

    @Pch101: Not knowing what things cost isn’t necessarily the rule in other countries. In Korea, my receipt showed: how much of my charge was paid by me, how much was paid by the government, and how much was disallowed except in cases of service to people who were not covered–tourists, some foreign students, and US military and government personnel, for example.

  80. Pch101 says:

    @Just ‘nutha ig’rant cracker:

    In Korea, my receipt showed: how much of my charge was paid by me, how much was paid by the government, and how much was disallowed except in cases of service to people who were not covered–tourists, some foreign students, and US military and government personnel, for example.

    We do the same thing here — it’s called an EOB (Explanation of Benefits.)

    And yet we have the most bloated costs in the world.

  81. Matt says:

    @David M: No it doesn’t. I’m in Texas and I make too much money to get medicaid. I don’t make enough money to qualify for any subsidies to get a plan off the exchange either (according to the official site itself). I’m clearly not even close to middle class as my income is well below $20K a year. Part of my problem is that I am male with no kids. My income is so low because I am taking college classes while supporting myself. The whole suffer now so that my future might be somewhat brighter thing…

    @Just ‘nutha ig’rant cracker: Yup I had exactly the same thing happen when I tried to get treatment for a medical issue.

  82. David M says:

    @Matt:

    Sure, as I also said, there are States controlled by the GOP that haven’t expanded Medicaid yet, but I expect more to signup after 2016. It’s a crappy deal for the residents stuck in those states, but it’s appearing that the Medicaid expansions are permanent, even when the GOP takes over the state governments after it’s been adopted. So the GOP will continue to damage things for a while, but eventually their temper tantrums will end.

  83. SC_Birdflyte says:

    @David M: Precisely on target. For all the talk about “market-based” health care solutions, any measure requiring public disclosure of rates for hospital stays, surgical procedures, etc. would be hotly resisted. At the very least, many providers would be adamantly against disclosing their list prices, as this would show how completely they screw those who don’t have insurance.

  84. Tyrell says:

    Enrollment is far below expected. Major companies are losing money and are pulling out of the exchanges. Others are raising rates to unaffordable levels.

  85. Tony W says:

    Obamacare has been a godsend to early retirees everywhere. It has encouraged people to quit their terrible jobs and start up businesses of their own. It has increased competition in the marketplace.

    This is why the establishment hates it, and why Tyrell, et. al. above have been told by their media overlords (Rush, Fox News, etc.) to blather on about high costs and government inefficiency. As if health care costs in America weren’t out of control before this?

    We all would be better off with a single payer. We would all be better off if Republicans didn’t block progress at every turn. That doesn’t mean we rail against whatever progress is possible.

    Human progress is neither automatic nor inevitable… Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals.
    – Martin Luther King Jr

  86. Tony W says:

    As to the subject of the article – if insurers are losing money based on the plans they offer, then that’s just bad business management. They’ll raise rates incrementally or figure out how to reduce their cost model, and will move forward. Some companies won’t be strong enough to compete in the new world. Such is the way of life.

    If you’re looking for somebody to blame, this is much more of an indictment of capitalism than it is of Obamacare.

  87. Mikey says:

    @Matt: That is a crappy situation, but it is solely the fault of Texas Republicans who refused the Medicaid expansion that would have covered you.

    “Republicans to Matt: Drop Dead!”

  88. C. Clavin says:

    @Matt:
    The problem is that you live in a Banana Republic, the leaders of which would prefer you don’t have insurance, and tangentially, that women specifically do not have access to proper health care. Terrible air and water pollution. Awful education. It is, however, a good example of Republican leadership, and the havoc that wreaks.

  89. Scott says:

    @David M: That brings up another subject.. How do we justify that the healthcare that people receive is dependent on the state they live in. This is flat out illogical and stupid. If there is an argument for a federal system, this is it.

  90. Matt says:

    @Mikey:
    @C. Clavin:
    I’m well aware of the reason and there’s nothing I can do about it currently.

    I’ve been posting here randomly since the early days.

  91. C. Clavin says:

    An excellent counter to James original post:
    http://talkingpointsmemo.com/dc/obamacare-insurers-complaints-threats
    Key take-away.

    “In general, insurers are looking to exercise more control over how insurers market [coverage] and how consumers buy it,” Levitt said.
    But companies’ griping should not be taken as a sign that the industry is preparing to jump ship on the ACA — a law insurance companies helped create that has brought them millions of new consumers.
    “You can bet those insurers will make sure that they’re at the table and have as much leverage as possible,” Larry Levitt, vice president at the Kaiser Family Foundation, said in an interview with TPM. “Creating an environment where people are worried about insurers losing money and whether they’ll participate in the marketplaces or not increases their leverage.”

    I think we are all aware of the suffering that James and Doug experience due to their ODS.

  92. grumpy realist says:

    If I had my druthers to create my perfect system in the US, it would be the following:

    Low-cost coverage for pregnant women and children up to age 21. Mandatory coverage.

    At 21, you make a choice. Either you stay on the government NHS, or you decide to strike out on your own. If you’re on the government NHS, they get to nag you about your eating habits and carry out triage when it looks like a treatment isn’t cost effective. You can buy further insurance if you want to, but it isn’t mandated.

    If you’re not on the government NHS, you’re on your own. Hospitals aren’t mandated to provide emergency treatment for you, by the way.

    You can move on and off government NHS, but before you move on, you have to prove that you are at least as healthy as the average person of your age on NHS. (This gets rid of free riders)

    No Medicare.

    Government pays tuition for medical students who are willing to work for the NHS. Salaries are lower than in private practice, but you have no student loans.

    No regulation of private insurance providers aside from standard business requirements (i.e. no fraud.)

    This puts a European-style health care system up against a US capitalist type system. Which one will be more effective?

  93. Sherparick says:

    For a slightly different take, Richard Mayhew, an actual actuary for an insurance company, has a less apocalyptic view of the Affordable Care Act.

    https://www.balloon-juice.com/2016/02/03/the-hope-of-stabilization/

  94. bookdragon says:

    @grumpy realist: That might be workable.

    I think a simpler solution would be to require all health insurers to be non-profits. Pit shareholder interests against sick kids and the kids lose every time. That goes double for adults and elderly.

    Of course, we could never have that in our current political climate.

  95. Mikey says:

    @Matt: I’m sorry, man. It must be intensely frustrating.

  96. Pch101 says:

    @bookdragon:

    Many major insurers are already non-profits.

    Non-profit does not mean “a bunch of do-gooders who will sacrifice for the common good.”

    Non-profits are organizations that do not produce income for tax purposes. Those that are run to fill the pockets of those who lead them pay themselves high salaries and perks.

    When someone tells you that non-profits are groups of bleeding hearts, remind them that the NFL is a non-profit, as are other trade organizations/ lobbies.

    In any case, the US healthcare system has the highest costs in the world because we overpay providers. It’s really that simple. As is the case with other goods, expanding the supply and increasing buying power for the consumer is the key to lowering prices. And given the nature of the product, buyer power is most readily achieved by consolidating buyers into a single bloc of purchasers so that providers can’t play divide-and-conquer.

  97. Tyrell says:

    @grumpy realist: I appreciate your ideas. I think that they could come up with another level of coverage, below the “bronze” plan: a higher deductible, and less coverage of basics. Most people can pay for a basic doctor’s visit ($60 around here), and some other simple procedures. If this plan could come on at $100 or so a month, their enrollment would skyrocket.
    As it stands now, millions are left out in the cold, between a rock and a hard place, and hung out to dry. They can’t afford to go to a private carrier, they do not get coverage at work, they can’t afford the AHA plans, and they do not qualify for subsidies. Suddenly having to pay $500 + a month is out of the picture for most people. In this country, a person should not see 30% of their earnings go for health care. The Congress and President don’t seem to be interested in fixing this.
    I totally agree that this should not vary by states. If a state does not extend medicare help, then they should give supplements to help those who can’t afford the AHA. Or cover them for free on the state government employee plans !

  98. C. Clavin says:

    @Tyrell:

    The Congress and President don’t seem to be interested in fixing this.

    Where the fwck have you been?
    The President and Democrats in Congress did the best that was politically possible to fix this.
    They were obstructed at every turn by the party whose policies you repeatedly support.
    And most Red States have refused to expand Medicare…which only makes it worse.
    I don’t know what state Crazytown is located in…but maybe you should move?

  99. Skooks says:

    What is missing from the cost discussion are the self-interests of the third-party administrators to whom claim processing, benefit administration, coordination of benefits, referrals, etc are out-sourced by insurance companies.

    Each has its own infrastructure–technology, digitized business knowledge, and employee expertise.

    The value of the latter two–digitized knowledge and employee expertise–is where back-office processors have there competitive advantage and, thus, have zero interest in the standardization that would reduce system costs overall. These third-party administrators were laggards in implementing electronic data interchange (EDI), and only did so, reluctantly, when it was mandated by HIPAA.

    If we want to reduce healthcare costs, we have to standardize the back-office processing. That’s the only reason I see merit in the single-payer approach. These “hidden” costs are rarely exposed and discussed as part of the equation. The flip-side: The inefficiencies of this approach creates a lot of jobs that would be lost if the system was streamlined.

    One final note: Before we beat up ACA for not being perfect on launch, we must acknowledge that the intersection of advanced medicine, complex insurance business rules, and a diverse social-economic population is one helluva complex problem. Organizational learning typically requires two failed attempts of a new endeavor before the knowledge necessary to succeed is acquired. We are learning, but can’t take advantage of that learning to improve the ACA because of the political gridlock in our country.

  100. WR says:

    @grumpy realist: What a lovely system. It’s basically applying the upper class morality of Victorian England to American lives — if you’re rich, you can do whatever you want, but if you’re not then you must be constantly subjected to preaching and intrusive meddling in your lives from your betters because the poor are a bunch of children who must be controlled by their betters.

    “I’m sorry, sir, but if you want medical help, you must first live up to a set of arbitrary standards designed to humiliate you and make your life miserable, because that way you will be a better person.”

  101. gVOR08 says:

    @WR: Whatever modern conservatives say their ideology is about, it’s really all about feeling morally superior.

  102. Pch101 says:

    @gVOR08:

    There is also a noteworthy reluctance to take note of how the rest of the world handles this.

    There is no shortage of case studies that can provide lessons for what does and doesn’t work. This should not be difficult to figure out. Even the Swiss approach, which isn’t particularly cheap, would provide a better alternative.

  103. Mikey says:

    @Pch101:

    There is also a noteworthy reluctance to take note of how the rest of the world handles this.

    Of course there is. We’re America, we don’t need to listen to those grubby Europeans with their crazy taxes and funny-sounding languages and infrequent bathing and soccer hooliganism. If it wasn’t invented in the good old USA, it’s just not worth doing!

  104. grumpy realist says:

    @Tyrell: When I remember I could go to a clinic in Tokyo for 7 bucks….

    I don’t care if the place dates from the 1950s and has grey walls and fluorescent light bulbs. I’d rather take that over the mega-million hotel room decor with corresponding prices.

  105. al-Ameda says:

    @Pch101:

    There is no shortage of case studies that can provide lessons for what does and doesn’t work. This should not be difficult to figure out. Even the Swiss approach, which isn’t particularly cheap, would provide a better alternative.

    Switzerland is expensive, yet their per capita spending on health care is, according to OECD statistics, about 33% less than the United States.

    In Switzerland, there is national tax (8% ?) that goes to health insurance, and everyone gets a voucher to purchase the basic comprehensive legislated national plan though private insurance companies, and I believe the profit to the insurance companies on the national plans is limited to 4 or 5 percent. if people choose they can purchase additional insurance on the market too. It is a blended system – the health insurance is socialized, the delivery of health care is is not.

  106. raoul says:

    JJ should talk to Mayhew before posting his opinions. One of the reasons the CBO original estimate of customers in the exchanges was cut by nearly half was because there was no hemorrhaging from the private companies so JJ thesis is wrong, so far. As to some companies incurring loses-guess what- that’s how it is supposed to work. I for one am amazed how well the AHCA has worked. Yes, we all can theorize of better systems but so far, apart from the current law, no one has developed a plan that could be enacted to law.

  107. Pch101 says:

    @al-Ameda:

    It (Switzerland) is a blended system – the health insurance is socialized, the delivery of health care is is not.

    The thing is that it’s the norm for “socialized” healthcare systems to rely upon private doctors and insurers, while many others also have private facilities.

    The UK’s NHS is an exception to the rule, but even in the UK, doctors also have patients who use private insurance, which provides private patients with nicer stuff and a bit faster service while still serving those who don’t have supplemental coverage. This notion that “socialized” medicine = Soviet-style bureaucracy is a joke with no basis in reality.

  108. Richard Mayhew says:

    @Sherparick: BTW, I am not an actuary, I can actually talk to people while looking at them… I am a data/plumbing geek for an insurance company

  109. Richard Mayhew says:

    @Sherparick: BTW, I am not an actuary, I can actually talk to people while looking at them… I am a data/plumbing geek for an insurance company@Tyrell: You do know that the individual mandate is limited to individuals who can find a Bronze plan for less than 9.5% of their income… if there is nothing affordable, people can skip out.

  110. Deserttrek says:

    @gVOR08: bigotry on parade … grow up

  111. An Interested Party says:

    bigotry on parade … grow up

    Tell that to the members of the GOP…if they were worried more about governing and less about throwing temper tantrums this entire problem would have already been solved…

  112. Joecu says:

    My hearth does not bleed for the health insurance co executives

  113. Joecu says:

    They need to lay off those unneeded executives, then the losses will stop.

  114. As a practicing physician, I believe I can shine some light on this phenomenon and reveal a bit of what is behind the curtain from the management side. First, a disclaimer. I won’t reveal my employer, and everything I say is strictly my own opinion.

    Obamacare’s effects on my own state of California have been profound. The competing HMOs and insurers bet in different ways how to approach the new patient population. We knew well the cohorts we were covering now, from individual buyers pre-ACA to employer pools that we contract with. There were many unknowns about the new patient signing up for insurance, many of them for the first time.

    In the end, some insurers charged a high price with high levels of service, hoping to generate enough revenue to offset expected higher utilization rates. Others charged a lower price hoping to entice more young people to sign up. Most of us expected to bite the bullet for a few years, adjust to the increased volume, and sort out some chronic diseases. New patients are a heck of a lot more expensive, but if they manage to be stabilized, start to use fewer resources over time and we can at least break even with them.

    The end result was that no one won. Young people opted to pay the penalties rather than sign up, at least for the first few years. The people who did sign up (at least in California) were overwhelmingly poor (subsidized Medicaid), previously uninsured, often immigrants, with poor health literacy, bad medication compliance, and low follow-up rates. In short, the sickest of the sick. Everyone lost money from ACA signups. How much that affected balance sheets depended on our prior payer mix. Those with more private employer pools (or out of pocket payers) did better than those more reliant on Medicare or Medicaid patients.

    Excuse me for a moment while I comment purely on the financial side of matters, as opposed to ethics. Higher overall costs, at least up front, were always expected with the ACA. We may save some money down the road by preventing onset of chronic diseases by catching things and intervening early, but that has yet to be seen. We’ll know in 20 years if we’ve successfully bent the curve. The reality is that it’s cheaper for the system someone with many chronic illnesses to be denied care and die early than to be maintained chugging along with meds, machines, long-term care facilities, and caregivers at the state’s expense. That’s an undeniable truth. Whether and to what extent society chooses to allow or limit care is a debate we ought to have. Don’t call it death panels. The UK does evidence-based and QALY-based analysis to decide whether to approve or deny certain treatment options. Their population has adjusted to the reality of scarcity. Why can’t Americans?

  115. MarkedMan says:

    @Millennial Lifehacker: Thanks for the input. Really interesting. My perspective is from a different direction. I work for a company that is developing systems and technology that reduce re-admission rates, early alert so people don’t end up in the ER, etc. So basically, stuff that didn’t matter to providers 20 years ago as they would only reduce their business in fee for service. But Obama-care provides big incentives and penalies to keep people healthy and stable.

    What’s fascinating is that although most people think of this as starting with Obamacare, it was acutally a few big provider networks that really moved the needle on this. Mayo, Cleveland Clinic, the Boston group of hospitals have been working with payers (Private and the Medis) to deal with patient populations as a whole and actually get paid to keep, for instance, diabetics out of the hospital whereas in the past any money spent on keeping them out was a double loss: no reimbursement and no revenue from ER visits.

    About 5 years ago when this was really picking up and Obamacare made it very real for the non-cutting edge groups, we met with some consultants that had interviewed dozens of hospital CEOs and CFOs. They said that in the most progressive hospitals the CEOs were excited and saying that over the next decade they could really change the whole world of health care. While the CFOs sitting next to them were saying that in the next five years if they didn’t get it exactly right they would be looking for the highest window in the hospital so they could jump out.

  116. al-Ameda says:

    @Millennial Lifehacker:
    Thank you for your comprehensive observations on ACA.

    An interesting result of the Affordable Care Act is that it provided an additional impetus for many healthcare organizations, as well as employers and other providers, to examine the feasibility of redesigning some healthcare delivery systems toward providing better care at lower costs. Many are involved in programs that may reduce the costs of providing care to medically complex patients. There is a lot going on in the the business of health care and health policy research.