This is the first in a series of posts that will try to pierce the myths and reveal the facts about the reform legislation. This first post focuses on the impact that reform will have on the private insurance industry–and on the industry’s customers.

MYTH # 1: Health Care Reform represents a “boon” for private insurers.

FACT It is true that, beginning in 2014, virtually all Americans will be required to buy insurance, or pay a fine. But while insurers will pick up a boatload of new customers, many will be refugees who have been battered by a health care system that rationed care according to ability to pay. Think of the boat as a life raft. These could be very expensive customers.

Moreover, between now and 2014, insurers will face some serious financial hits. These new rules will  make our health care system fairer and more affordable  But the rules also suggest that for-profit health insurance may not be a viable business unless insurers learn far more about what is best for patients.

Consider what will happen in the next three years:

1). This year, Washington sliced funding for private insurers who offer Medicare (a.k.a. Medicare Advantage) by 5%. Next year, payments will be frozen. In 2012, the serious cutting begins. Over ten years, Medicare will slash overpayments to Medicare Advantage insurers by $132 billion.

When the Medicare Advantage bill was passed in 2003, Congress agreed to pay Advantage insurers 12 percent more, per beneficiary, than it would cost Medicare to cover those patients itself.

Most agree that this is corporate welfare that our health care system cannot afford.

In recent years, insurers have become increasingly dependent on the windfall payments from Medicare Advantage. As unemployment rises, insurers have been losing customers in the employer-based insurance market, and Advantage has come to represent a larger share of their profits. Humana, for example, has been receiving 60% of its operating income from Medicare Advantage.

Meanwhile, insurers selling plans in the private sector have been scrambling to ratchet up premiums fast enough to keep up with the spiraling cost of healthcare.   For ten years private insurers’ payouts to doctors, hospitals and patients have been climbing by roughly 8% a year. Rising prices plus volume have driven reimbursements skyward. Each year, Americans are taking more medications and undergoing more surgeries and tests.And every year, virtually every product and service in our healthcare system costs more.

This is why, according to Morningstar Investment Research, the health insurance industry showed an average profit margin of just 3.4% in 2009, This  means that,  in terms of profitability, it ranked 87th out of 215 US industries.

As Henry Aaron, a highly-respected progressive reformer and senior fellow at the Brookings Institution observed last fall. Insurance company profits in the larger picture have very little to do with the overall rising cost of health care

Given the skimpy profits that the industry has seen in recent years, generous subsidies from Medicare Advantage have remained what  Carl McDonald, an analyst with CIBC World Markets in New York calls; a “bright spot” for companies such as industry leader UnitedHealth Group.

But under the reform legislation these fat Advantage subsidies will disappear, as they must, and Advantage insurers such as United Health Group will face tighter regulations. By 2014, insurance companies will be expected to pay out 85% of Advantage premiums for medical care, keeping no more than 15% of premiums to cover overhead and profits. Today, United Health Group keeps 19%. This is not unusual. The majority of Medicare Advantage plans pocket more than 15% of premiums according to a recent report released by the House Committee on Energy and Commerce.

Good-bye “bright spot.” Only those insurers that can show that they are providing excellent value for Medicare dollars will continue to receive Medicare payments, and their subsidies will be much lower. Most likely,many insurers will simply give up on the once-lucrative Advantage business.

2) Next year, the new rules regarding pay-outs will apply to private sector plans. Insurers selling in the individual and small group market will be required to spend 80 percent of premium dollars on medical services, and plans in the large group market will have to spend 85 percent. >Insurers that do not meet these pay-out thresholds will have to provide rebates to policyholders.

3) The new pay-outs rules will make premium hikes far less profitable for insurers. Even if an insurer raises its premiums by 10%–for example, lifting a $14,000 annual premium for a family plan to $15,400–the insurer must pay out 85% of the $1,400 increase, or an additional $1,190 to hospitals doctors and patients, keeping only $210  of the $1,400  to cover overhead and profits.Meanwhile, it will lose market share. It’s not clear that it will be worth it.

(4) Another new cost for insurers: beginning in 6 months, all new group health plans as well as new plans in the individual market will have to provide coverage for preventive services at no charge strong. Co-pays and deductibles will not apply to recommended services.

(5) Beginning this year, if you become seriously ill,  insurers won’t be able to drop your coverage on the grounds that you forgot some detail of your medical history when you applied for insurance. They will be able to rescind your policy only if they can prove fraud, or that you intentionally set out to deceive them. This won’t be easy.

6) In 2011, insurers will no longer be allowed to cap how much they pay out to an individual over the course of his or her life. If a customer suffers from a serious illness that requires multiple hospitalizations and high-tech treatments over many years, the insurer faces an open-ended bill. Starting in 2014 , insurers will no longer be able to limit how much they pay out annually.

Make no mistake: patients need this protection. Parents should not have to worry that the insurance covering a child suffering from cancer is going to “run out” if her care costs too much in any one year—or if she survives too long. But while the new rule is welcome, it will make the insurance business riskier: Actuaries will have a hard time guesstimating just how high those bills could mount, especially over 10 or 15 years. This is another reason why reform is far from a sweetheart deal for insurers.

(7) In 2011 it will become more difficult to raise premiums. Given falling Advantage reimbursements, coupled with rising expenses, one might assume that insurers would simply lift premiums to make up the difference. But it won’t be quite that easy. Reform legislation helps states insist that insurance companies submit justification for requested premium increases. Any company with excessive or unjustified premium increases may not be able to participate in the new health insurance exchanges. /

Already, some state regulators are getting tougher. In March, the Providence Journal reported that Rhode Island’s state health insurance commissioner slashed proposed premiums increases, keeping rate increases in the single digits, while calling Blue Cross’s proposed 14.6-percent hike “just not affordable.

And in April the Massachusetts insurance commissioner rejected nearly 9 out of 10 rate increases—ranging from 7% to 34%–that  the state’s health insurers had requested for individual and small group plans.

Still, many argue that long-term, insurers will emerge as big winners.

MYTH #2 In 2014 , when the mandate requiring that everyone must purchase  insurance kicks in, insurers will capture millions of new customers, government subsidies in hand, and their profits will, at last, soar.

FACT: In 2014, insurers will find that many of those new customers will be coming from low-income households. These are families who are not poor enough to qualify for Medicaid, but too poor to purchase insurance without the government subsidies that will become available in 2014.

Today about one-third, or nearly 15 million of the 47 million uninsured live in households earning between $25,000 and $50,000. These are the families who will be receiving good subsidies—and they are likely to sign up for insurance.

But they will be expensive customers. According to a 2009 report issued by the Kaiser Family Foundation, the uninsured are twice as likely as those with private insurance to be in “fair “or “poor” health.  About half of all uninsured adults suffer from a chronic condition.  About 75% have gone with insurance for more than one year; 55% have not had insurance for more than 3 years. Some haven’t seen a doctor in a great may years. Others have seen doctors, but have not been able to afford the medications doctors prescribe. These patients are likely to need more tests, treatments and surgeries than the average customer.

Keep in mind that, under the new reform law, insurance companies will not be able to charge these new customers more than they charge others in their community,. Moreover, insurers will have to offer all patients comprehensive insurance that meets a high bar defining basic benefits. No more “Swiss cheese” policies filled with holes. This is all fair. But it does mean that insurers will be operating in an unfamiliar marketplace— a market that aims to put patients first.

Of course, not all of today’s uninsured are poor:  9.7 million live in households earning over $75,000 a year. Why don’t they have insurance? Some suffer from pre-existing conditions that have made it impossible for them  to secure insurance. Most likely, they will join the new insurance pool, adding to the number of sick patents in their insurers’ pool.

Many others in this income bracket are healthy, and haven’t bought insurance because they just don’t think it’s a good value. Under reform rules, most earn too much to receive government subsidies. Unless premiums are significantly lower than they are today, many may well decide to pay the penalty rather than buy insurance.

In addition roughly 40% or about 19 million of the 47 million uninsured are 18-to-34-years old. Most in this group are healthy and just don’t believe that they need protection. Under the reform legislation, some under the age of 26 will sign up for their parents’ insurance– though their parents will have to pay a higher premium to cover them. But many of these invincible youngsters are likely to shrug their shoulders, and pay the puny penalty.

As a result, analysts at Fitch, the bond rating agency, observe: It is not unreasonable to envision that too many new sick customers will overwhelm the individual segment of the market, driving many health plans from it altogether.” In other words, these Fitch analysts are suggesting that a fair number oy insurers may not even try to compete for the new but unprofitable  business in the Exchange.

“This could become most acute under a scenario in which healthy, younger individuals decide to pay the penalty as opposed to purchasing coverage,” the Fitch analysts write, “and older individuals let policies lapse during periods when they do not need medical services, and purchase coverage only when they face a pending medical need, such as a surgery or expensive sets of tests or treatments.”

I agree. This is why I predict that sometime between now and 2014, Congress will recognize that the penalties are too weak and amend reform legislation to strengthen them. We need young, healthy people in the pool or insurance will become unaffordable for everyone. But, even so, I doubt the penalties will be draconian.

Make no mistake, there  are many unknowns. We don’t yet know whether premiums will be high enough to guarantee that insurers will recover the dollars they spend on new customers. But industry analysts predict that rate increases will be held in check by the new rules on [the percentage  of premiums’ that insurers must pay out, and by heightened competition for customers, who will have more choice of plans than they currently do in the individual market. Insurers “will be free to price themselves into oblivion if they choose to do so,” Sheryl Skolnick, an industry analyst with CRT Capital Group, told the Washington Post.

When all is said and done,it strikes me that the cuts and regs that go into effect in  the next four years could easily lead to an industry shake-out. My guess is that some for-profit insurance companies won’t make it to 2014

On Wall Street , analysts vary in how they assess the net effect of reform legislation on insurers, but no one is jubilant. Keep in mind that Wall Street analysts would prefer to be optimistic. Most of their companies are in the business of selling stocks. It is not good for business to be gloomy.

But everyone on the Street knows that while insurers will have more customers, profit margins are likely to be even lower than they are now. At best, this could prove to be a wash.

Offering a moderate assessment of the damge, Ana Gupte, an analyst with Sanford Bernstein, suggests that “insurers come out a net negative, but not severely net negative.”

What Will This Mean For You?

If for-profit insurers are going to survive and thrive, they will be compelled to be more creative and efficient than they are today. Competing in the Exchanges where they will be offering comparable policies that promise  the same essential benefits with few hidden holes, they will  be far more transparent, making it much; easier for customers to make head-to-head comparisons. This should mean that if you are buying your own insurance, or work for a small company, you will find insurers are offering products which provide better value for your health-care dollars.

This will not mean that premiums for employer-based insurance will climb. If insurance companies selling to large corporations try to jack up premiums, many corporations will simply switch to another insurance company. In the new, more regulated  environment, buyers will have more leverage.

Meanwhile, the best of not-for-profit insurers are likely to do well in a regulated market. Some already have pioneered using comparative effectiveness research to learn how to keep customers well. Kaiser Permanente, for example has been honored for its work in preventing heart disease.

Some for-profits also have been trying to create provider networks that do a better job of managing chronic disease. But too many-profit companies have relied on various gimmicks to stay in the black: cherry-picking, Swiss cheese policies, canceling policies when patients become ill, and caps on annual and lifetime pay-outs . . . Others have stayed afloat thanks to floated forward on Medicare Advantage’s generosity.

Now, they are going to find themselves operating in a very different environment. Some of these companies just don’t know how to make money unless they are able to do it the old-fashioned, predatory way. I suspect that more than a few will go under.

Finally, if for-profit insures have difficulty designing affordable plans that meet the new rules, my guess is that Congress will revive the public option.

So readers, my advice: – Buy the Insurance, but stay away from the  stocks.

Maggie Mahar is an award winning journalist and author. A frequent contributor to THCB, her work has appeared in the New York Times, Barron’s and Institutional Investor. She is the author of “Money-Driven Medicine: The Real Reason Why Healthcare Costs So Much,” an examination of the economic forces driving the health care system. A fellow at the Century Foundation, Maggie is also the author the increasingly influential HealthBeat blog, one of our favorite health care reads, where this piece first appeared.

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79 Responses for “Myths and Facts About Health Reform”

  1. The nonsense from Karl above is of course beyond the Pale and all too typical of his ilk. I always wonder where such people come from and why they even bother writing this. A waste of precious electrons on the hard-disk that stores commentary for this weblog.

  2. maggiemahar says:

    Barry ,Margait,, Wendell & Everyone–
    Barry- For-profit insurers have added very little value to our health care system (compared to the cost they have added) and, as Margait says, they have done many things for which they deserve to be hated.
    In some ways the worst thing they did was to fail to do their job and serve as honest middle-men, trying to keep costs down while ensuring that all medically needed care is covered. Instead they got into bed with drug-makers and made deals: “we’ll cover your over-priced and perhaps dangerous new block-buster drug as long as you give as a dealon these other drugs so that we can afford to way over-pay for the block-buster and take market share from a competitor by offering the block-buster.”
    They acceded to the demands for over-payment by brand-name hospitals and physicians–becaue they wanted larger market share.
    For-profit insurers destroyed managed care. Manage care was supposed to mean that insurers would compete on quality-not price. That was Ellwood’s vision. And many non-profit HMOS were trying to do just that–until for-profits took over the business. At about the same time, Wall Street became increasingly short-sighted: investors wanted earnings growth NOW–quarter after quarter. CEOs who tried to plan long term were punished.
    In the 1990s, for-profit insurerers began refusing to cover care if it was expensive–whether or not it was evidence-based or needed. The backlash was inevitable.
    If for-profits had not abdicated their responsibilites–if they had tried to act as honest brokers– they could have afforded to cover children with pre-existing conditions.
    Barry– Do you understand that insuers refuse to cover newborns who are born sick because they have a “pre-existing condition?” (They are not “insured” until after they are born.)
    Compared to that type of immorality, what the administration has done is small potatoes: they let the American public continue to believe what it wants to believe because,in fact, there was no way to get through to the majority of Americans with facts or ratoinal argument.
    We refuse to properly fund public education. We accept classes of 28 children, underpay teachers and expect that we will be able to attract talented, well-educated teachers willing to work in buildings infested with mice, cock-roaches and some rats where the windows don’t open (haven’t opened for years) and there is no air-conditioner in the room.
    And then we wonder why so many Americans are incapable of responding to facts and rational argument.
    Compare public education k-12 in the U.S. to public education in other developed countries. (Canada, France, Germany . . . )
    This is not about the ends justifying the means or win at any cost, or “we know best.” It is simply about allowing the public to think that “it knows best”– because there was no way to persaude Americans that the problem lies with their health care providers who are over-treating them and with hospitals that are running up costs by ignoring patient safety.
    Over a period of years, I hope that reformers will get through to the public . But we don’t have years: we have to address health care inflation now, or watch it wreck the economy. I think you agree about this, Barry.
    Exactly how do you think the administration could have built public support for cutting back on health care spending–by telling the public that their hospitals and doctors are putting them at risk by overtreating them?
    My response to everyone who questions whether we can afford covering all Americans without caps on annual or lifetime payouts.
    Countries in Europe cover everyone without caps on annual or lifetime payouts. And many of them don’t have the wealth that we have.
    How do they do it? They refuse to over-pay for services and products. Their hospitals do not spend hundreds of millions on “amentiites.’ Their hospital CEOs are not paid outrageous salaries. Their hospitals do not try to look like luxury resorts.
    Their citizens understand that if medical evidence says that a test or treatment is not effective, they won’t get it. Their citizens don’t expect a private room when they go to the hospital, unless it is medically necessary. Their citizens understand that if they want an organ transplant they may have to go to a large hospital that specializes in organ transplants and is located some distance from home to get it. They don’t expect an organ transplant to be available within a 30- mile radius of their home. Their citizens understand that, at some point, we all die–and that many diseases are not curable. Many are not terrified of dying (as so many Ameircans are.) When their time comes, they accept death.
    At the same time, no one pulls the plug on them or tells them, “sorry, no more treament.” Palliative care teams give them choices. Their doctors and nurses believe that all patients deserve death with dignity–which means having a say in how end-of-life treatment is handled–and as little pain as possible. They do not worry about dying patients becoming “addicted” to a drug.
    Their specialists don’t expect to make $400,000 a year–or more. Their doctors understand that it is in the patient’s interest to follow evidence-based guidelines most of the time.
    They do not see medicine as a for-profit enterprise designed to enrich GE and its shareholders (more diagnosic tests and equipment), Pharma and device-makers (these days often one and the same), for-profit hospitals or entrepreneurial docs chasing profits.
    They understand that we don’t want healthcare to be a “growth” industry and that it is simply unacceptable for anyone to hope to make large profits on the suffering of others.
    As a result, these countries are able to provide all medically necessary and effective treatments to all patients–without annual or lifetime caps–while spending far less than we do.
    If they can do it, we can too. Don Berwick, who is about to become head of Medicare, understands this–as do a great many other physicians, health care professionals, public health experts and reform leaders. This is why I have great faith that we can reform the system.
    Wendell & Everyone– I am sorry that a few people on this thread spend so much time obsessing about me. Part of this seems to stem from conservative rage that conservatives have lost power, and that progressives are beginning to take the country in a different direction.
    Wendell– thank you very much for your support. It’s not fun to be the object of these attacks, and always good to be reminded that THCB has many intelligent civilized readers. When a thread turns ugly, I suspect that they are silent because they don’t want to get involved in the fray. There seems so little point . .They are not going to change the minds of attackers.
    Another part of the odd, obsessive focus on me (I’m just not that important) may be misogyny.(I almost never run into women who get so worked up when they disagree with me.
    Intelligent women do get some men riled up. Other men really like intelligent women. In my experience, it all depends on how confident the man is –not so much about his intelligence, but about other things.
    I think it’s fine that Matthew welcomes diverse opinions on the blog –even if that means allowing a certain number of very rude and ignorant personal attacks. (Free speech and all)
    But that doesn’t mean that I have to spend my time going toe to toe with every attacker.
    I don’t blog because I get off on fighting with people. I blog because I enjoy providing information and stimulating thought. I’m a teacher.
    Some people will find my posts and comments useful; some won’t.

  3. Mao Bama says:

    The truth hurts, doesn’t Wendell? Yesterday, three more states joined the 14 others taking this to SCOTUS — duh. See you in court.
    And playing the sexism card. When the reality of accounting and finance undermines the theory of Socialist Utopia. Just like on NPR. Lame and obvious.
    Thanks to the most-inexperienced president in U.S. history, medical research has slowed for the last year. (And the U.S. job market, which is another story.)
    Now — what is Europe and Asia going to do for medical research? Given they have been free-loading off USA medical research for decades? Given the USA has the majority of Nobels in medicine? Who can they steal from?
    More than 40% of USA medical costs are due to SMOKING, dope, booze, over-eating and “extreme living.”
    That would pay for 10 (ten) ‘reforms.’ Self-inflicted problems.
    All those “victims of capitalism” going to stop smoking, dope, booze, gorging, and unsafe sex? Sure — and Obama is qualified to be president.
    And how does the accidental president lead on the smoking issue?
    By smoking. Of course.
    That is what is wrong with the USA — no leadership.
    Keep playing the victims of sexism and racism. It might actually work in today’s mentally-limp USA.
    Until the USA goes bankrupt, like L.A. and the state of California.

  4. Nate says:

    “Barry– Do you understand that insuers refuse to cover newborns who are born sick because they have a “pre-existing condition?”
    Maggie how can you be sol clueless? Your past just getting your facts wrong to just outright making things up. Every single group health plan sold in America will cover a new born from the moment of conception as long as the parents add them within 30 days after birth. Most polices don’t even require that if you already have dependent coverage. And the reason you are required to fill out a form us IRS requires employees to approve money being taken from their paychecks. An employer can’t just add a dependent to your policy and charge you for it. Your complete dishonesty is disgusting.

  5. Nate says:

    “Their citizens understand that if medical evidence says that a test or treatment is not effective, they won’t get it.”
    More outright lies from Maggie, this one took all of three seconds on google to disprove, isn’t that what you told readers to do Maggie, look online and see who is telling the truth?
    A nurse with breast cancer prepares to sue the NHS for refusing to prescribe her a life-saving drug.
    Cancer sufferers forced to buy their own drugs are planning to sue the NHS for compensation
    hundreds of these. Just another clear example of outright lies from you. You don’t even pretend to be honest anymore, you just make up what ever you need to support your argument.

  6. Nate says:

    “At the same time, no one pulls the plug on them or tells them, “sorry, no more treament.” Palliative care teams give them choices.”
    Outright lie number three
    “The audit also found that in only 72 percent of cases was the pathway – that is, the withdrawal of life-supporting treatment – explained to carers and relatives. In only 68 percent of cases did relatives express an understanding of what was about to be done.”
    Contrary to your claim a study showed they did in fact pull the plug 28% of the time without telling them. In 32% of the cases family didn’t know what they were doing. My facts come from a study where do yours come from?

  7. Maggie –
    Blaming insurers for trying to maximize their profits is like blaming hyenas for eating meat.
    I’m more inclined to blame the government regulators who — for the past fifty years — have allowed for-profit insurers to cherry pick and selectively rate groups and individuals. (We had a pretty good health insurance system dominated by non-profit community rating Blues Plans, until the for-profits moved in.)
    I’m also inclined to blame the hospitals and physician groups who use their reputations to dictate their prices to insurers. (Hmmm, maybe some of these fall in the hyena category, too.)
    In any case, we’re stuck with our present insurance structure, so the questions are (1) What will be the impact of reform on insurers? (2) What changes are needed to reform to make it more effective?
    The original THCB piece addressed the first question. The present reform legislation is likely to result in higher premiums in the small group and individual markets (bad); insurer consolidation (good — take a look at comparative costs in Honolulu and Miami to see the implications of fewer insurers); Medicare Advantage cost reduction (good, except for insurers who will lose part of their current 6.6 percent MA profit, and the CBO who got conned into counting this as a reform saving rather than a lengthening of the time until the Medicare trust funds run out of money).
    On the second question (making reform more effective), it’s clear that the individual mandate penalty provision will have to changed. Also, there need to be more effective provisions to discourage insurer cherry picking among small groups. Finally, there need to be disincentives for overutilization — which may mean giving insurers more legal power to limit their networks.

  8. Nate says:

    “Another part of the odd, obsessive focus on me (I’m just not that important) may be misogyny.”
    Never would have expected to see this coming from a liberal. It has nothing to do with your liberal bias, making things up, or attacks on conservatives it must be because you’re a women. What does my misogyny make Peter and Matt, both of them have got my attention far worse then you. When you can’t answer for your lies and misinformation then ignore him he’s a misogynist, see how long that keeps working for you.
    “ignorant personal attacks.”
    it all depends on how confident the man is
    not so much about his intelligence, but about other things.
    “I blog because I enjoy providing information”
    Lies and propaganda and illustrated by the three corrections so far today.

  9. Nate says:

    “Also, there need to be more effective provisions to discourage insurer cherry picking among small groups.”
    Roger in what states can they Cherry pick? Every state I work in if a group applies for coverage and are under 50 lives the carrier muct take them. You can argue 70%, 55% or 10% is to much of a rate up for a sick group but where is the cherry picking?

  10. Deb says:

    Still do not understand how a person who only makes 700 a month and has 2 children can afford health insurance. When there are no jobs in their area to find

  11. Karl says:

    MESS-iah claimed “global warming” was proven science.
    OOPS! LYING e-mails found! OOPS!
    When you have NON-SCIENTISTS WITHOUT KNOWLEDGE of STATISTICS BLATHERING about “evidence” — start praying to God. You are in trouble.

  12. “insurer consolidation (good — take a look at comparative costs in Honolulu and Miami to see the implications of fewer insurers)”
    I can see how insurer consolidation can counteract hospital and physician group consolidation, but is it really good for consumers, or is it just two wrongs making a right?

  13. Mao Bama says:

    How good is it to hire 14,000 more IRS agents?
    Capable of spilling your medical records into the public domain?
    Government, incompetence is thy name.
    I can see how insurer consolidation can counteract hospital and physician group consolidation, but is it really good for consumers, or is it just two wrongs making a right?

  14. Nate says:

    In our current market further insurer consolidation would be bad for everyone. When you only have 1-3 insurers in a market instead of gaining strength you lose it. When you have a number of carriers competing they will actually put more pressure on providers becuase they try to get a leg up on the others. If the carrier isn’t fighting for its life it has no motivation to be aggressive. If your top dog why get in a bruising fight with hospitals, even if you win your not going to get more business or revenue.
    Size of the insurer has no relation to their ability to negiotate with providers once they hit a decent size. If your hospital has a monopoly in an area who cares how big the insurer is they can’t leave you anyways. Only thing they could do would be to open their own hospital and most states wouldn’t allow that.

  15. Peter says:
    “They raised £80,000, but Adam, who lived in Twickenham, took the drug for two months before he died in December last year.”
    So, is it good financial stewardship of public (or any other) money to pay 160k to extend one person’s life 2 months?
    And here in the U.S. there seems to be a similar discussion.
    Nate, when your insureds reach their max, who pays from then on?

  16. Nate says:

    Never had it happen, nor should it happen. We have had people reach their annual max but never a lifetime max. If you manage the plan properly 1 million should be more then enough. The important thing is to not allow the hospital to think they have 1 million to spend.
    If you let hospitals spend thousands as they please then they start to spend tens of thousands and hundreds of thousands with no regard for cost. Soon blowing a million here or there is no big deal.
    If you look at hospitals cost to deliver care as reported to the government I don’t think it is possible to receive a million in care, it is very possible to spend that much but that means your overpaying.
    That Oregon case is the reality people need to accept. If your poor, choose to smoke, and get cancer your not entitled to unlimited funding of your treatment. You made bad decisions and need to accept the consiquences not the public.
    Little aside here, notice the $4000 monthly tab, $48,000 a year, if she was in my health plan we would be ordering that from Candada for $968-$3200 per month depending on dosage. I just saved one of my clients $38,000 a year by sending one of their employees to Canada for Rebif. Million dollars is a lot of money when you don’t waste it.

  17. Lisa Lindell says:

    I don’t know about others but I don’t jump in the fray because Nate’s doing just fine on his own. Scoring a lot of credibility points on this thread, Nate.
    But wait, I have no credibility because my entire state hates poor people.
    Does anybody know if the Berwick nomination has been “officially” announced? Or is it still officially still a rumor? Do we know if Berwick will accept?
    Re: Facts and Myths on HC reform, bottom line is I don’t think anybody knows fact from myth and we’ll be chasing a moving target with healthcare for years.

  18. Peter says:

    “I just saved one of my clients $38,000 a year by sending one of their employees to Canada for Rebif.”
    You mean that “socialist” system that Republicans ajnd you love to bash? I’d say that’s cheating Nate, one the one hand spitting venom on government then using a “liberal” government with single-pay to off load your healthcare costs. You might want to duck as those words of hatred you spit out for liberals come back at you.

  19. Nate says:

    “You mean that “socialist” system that Republicans ajnd you love to bash?”
    We don’t order Rx from socialist we order from Wal Mart and other companies. These companies have no ties to the government and aren’t part of any government program.

  20. Mao Bama says:

    Anyone who knows anything about pharm research knows, the USA pays at least 50% of GLOBAL pharm-research costs.
    In other words — Canada, Europe and Asia FREE-LOAD off the USA’s efforts.
    WHY DOESN’T OBAMA tell them, PAY UP?
    Why do USA taxpayers have to?
    Sick, ridiculous, and capable of causing regime change.

  21. Peter says:

    “The reason that prescription medications are cheaper in Canada is complex and there are several factors that contribute to the lower costs.
    The Canadian government puts a cap, or ceiling, on the amount that drug companies can charge pharmacies and other distributors of drugs. This reduces the wholesale cost of medication for most organizations throughout Canada by about five percent. The prices are determined by Canada’s Patented Medicine Prices Review Board. Since drugstores pay less for many medications, they can sell them for less.
    Each of the Canadian provinces, like Quebec and Ontario, has a drug formulary that puts restrictions on the use of new and expensive medications. Since the provinces provide the bulk of drugs to higher users of medication, (seniors), they have the power to negotiate directly with pharmaceutical companies to lower prices for a medication to get on the formulary. In Ontario, for example, the formulary includes less than 35 percent of new medications.”
    So why do you think Walmart can sell them for less? Nate, aren’t you undercutting the profit system in the U.S. that supposedly brings us all these drugs through research and which you support? Or is cozying up to socialists ok when it’ll save you a buck?

  22. Mao Bama says:

    “The Canadian government puts a cap, or ceiling, on the amount that drug companies can charge pharmacies and other distributors of drugs.”
    Second time — Canada, Europe and Asia are FREE-LOADING off USA pharm-research. USA taxpayers are SUBSIDIZING their FREE-LOADING.
    What the heck has MESS-iah done about that?
    NOTHING! He’s too busy, bowing-down to dictators! A weakling!

  23. Nate says:

    Peter you know better then to speak for me and what I support. I have long advocated against the pricing structure of Pharma in the US, unlike most of you I actually do something about it. Debate works much better when you make your argument and leave me to make mine.
    R&D requires profit, where they make that profit and in which manner is up to debate. I have no problem paying so pharma can invest in new drugs. Paying hot chicks 6 figure salaries so doctors can get laid I do take issue with, doctors can afford to buy it themselves. They could leave their R&D budgest alone, cut marketing, and push other in efficiencies out to make their shareholder bucks.

  24. Alan P. says:

    Private equity underwriters (PEU’s) clearly expect a boon, 30% annual returns on their healthcare investments.
    Catholic heatlh system Caritas Christi was the first to fall post-Obama signing. Two years of improved coverage under Massachusetts health reform could not save Caritas.
    They will sell their six nonprofit community hospitals and 13,000 employees to Cerberus Capital Management, the firm that drove Chrysler into the ground with poor quality and a lack of innovation. Six new taxpaying for-profit hospitals are on order. Is that the number of heads on the Cerberus monster?

  25. Alan P. says:

    Peter Orzag pandered to Carlyle co-founder at the Economic Club of Washington last week. On paying for quality, Orszag said the would throw a bunch of stuff against the wall to see what sticks.
    Carlyle has two cost management divisions, MulitPlan and Viant (just acquired from Welsh, Carson, Anderson & Stowe). The Economic Club is yet to post the video, but one newspaper noted Orzag’s pandering to Rubenstein on capital gains.

  26. Alan P. says:

    For more on Martha Coakley’s role regarding angelic Caritas Christi health system and its sale to Cerberus Capital Management, symbolized by a hell hound.

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