Bring Back the Public Option

Bring Back the Public Option

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The way health care is administered in the United States is unsustainable and in need of fundamental reengineering — right? During the 2008 presidential race, the country appeared to be in agreement on this point. But that all changed somewhere, somewhere after the election of a dark-skinned new president with a foreign-sounding name whom even proud Medicare card-carrying Americans were viscerally driven to deride as a socialist.

This was recently reported in The Hill: “The six largest investor-owned health insurance companies saw a 22 percent increase in combined net income in the third quarter, putting them on pace to break profit records for 2010.” The president was castigated by loud little crowds around the country for championing the overwhelmingly popular idea of a publicly funded, public health insurance alternative to challenge the partly publicly funded, private health insurance companies’ assertion that they simply cannot provide their services any cheaper. Rather than groundbreaking legislation, what we got was the president being caricatured on national television, in effigy, as The Joker — and health insurance executives laughed all the way to the bank.

According to a Kaiser Family Foundation paper, there are four recent occasions when private health spending per capita in the United States stopped its steady increasing and actually decreased: 1) The mid-1960s, with the passage of Medicare and Medicaid; 2) The early 1970s, with President Richard Nixon‘s wage and price controls; 3) The late 1970s, during the health insurance industry’s “voluntary effort” in response to President Jimmy Carter‘s threatened cost-controlling regulations; and 4) The mid-1990s, with the introduction of managed care and another presidential threat: Bill and Hillary Clinton‘s attempts at health reform. (The chart of private health expenditures is humorously dramatic in its seismic shifts, as if plotting the position of a mouse quickly darting toward and away from the cheese against the presence and absence of the family cat.)

The major arguments against a public health insurance alternative are: quality of care (rationing!), waste (the government can’t run anything!), and the American way of life (one huge step in the direction of an over-taxed, European-style welfare state!).

As economist Uwe E. Reinhardt points out, “rationing” is already a major problem in our current system, in the form of countless valid treatment requests that are routinely rejected by companies that simply do not wish to pay for them — not to mention all of the Americans who get little or no treatment because they have no insurance. The inevitable degree of rationing to be expected under a public health insurance program (shorter-than-desired hospital stays; reduced access to the latest, most expensive treatments; maybe waiting lists) is a reality of those unable to afford the more expensive insurers and the more luxuriant care they offer. This is precisely why it is ridiculous to assert that private insurers and their world-class coverage would disappear as a result of competition with a public program.

With regard to waste, according to KaiserEDU.org, at least 7 percent of health care expenditures in general are for administrative costs (e.g., marketing, billing), while this same percentage for Medicare is less than 2 percent. The evil bureaucracy, it seems, runs a more efficient ship.

What of the slippery slope toward a lethargic society rooted in expensive, unearned entitlements as opposed to accomplishment, kind of like what you now see in parts of Europe? This is a valid concern. But we already have universal public health care here in the United States. A summary of all the local and federal legislation defining this program reads something like: “Citizens without Medicare, Medicaid or private health insurance are afforded absolutely no benefits until they experience an acute medical crisis, in which case they shall be admitted to the nearest emergency room and lavished with the most expensive treatments for the most serious illnesses arising out of a lifetime of no cheap, preventative care.”

Access in the early adult years and regular interaction with health care professionals provided by a public insurance alternative would likely give people on the margins of society more awareness about their lives and their well-being — and more of a feeling of ownership and stewardship over their lives.

Americans have the right to a public defender when unable to afford flashy private defense attorneys, but we do not have the right to a public doctor. Thanks to the anti-“public option” hysteria of a very loud few that gravely wounded a great attempt at revolutionary health care reform, we are left with a huge increase, in the coming years, of public funds directed to the same profiteering, investor-owned companies. Maybe the anti-Obama forces have it exactly right by seeking to repeal “Obamacare” — so that it may be rewritten to finally include a public insurance alternative.

Scott Carroll is a writer in Baltimore. He is a frequent contributor to The Baltimore Sun, where this piece originally appeared.

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108 Comments on "Bring Back the Public Option"


Guest
jdrnppkku
Mar 13, 2013

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Guest
Jan 16, 2012

Nate, what does an insurance company actually pay when an academic hospital sends a bill that apparently amounts to $30,000 per day?

Also, and I think I know the answer, can an insurer simply refuse to cover anyone who goes to such a hospital?

So much of health care inflation comes down to incentives. Hospitals make more money when they raise their prices. In the normal economy, firms which raise their prices run the risk of losing business.

How can we get to this in health care?

Guest
Jan 16, 2012

Nate, I had thought that large insurers were paying hospitals on a per diem basis, rather than by itemized charges that are so often exaggerated and abused.. A million dollar claim would imply that the patient was in the hospital for about a full year. Could be, I guess, just curious.

But here is my main question.

Do the following ratios make sense? I first encountered them some years ago…………

For persons under 65, if you insure 100 souls with a moderate deductible of say $1,000………….

You will find that:

50 persons never exceed the deductible

40 persons run up claims of $2,000 to $3,000 each

9 persons run up claims of $30,000 each on average

1 person has a claim of $100,000

for a total claims incurred of $500,000, or $5,000 a person.

If this is true, it explains a lot. My actuarial training makes it easy to see how the necessary premiums are driven by large claims….and how little it takes for a shift in the employee pool to drive up premiums.

Thanks for your boots-on-the-ground honesty.

Bob Hertz

Guest
Nate Ogden
Jan 16, 2012

depends on locatoin but far fewer per diems then there use to be and the contracts that do have per diems have stop loss provisions that revert back to % off anyways.

Million dollar claim is under 30 days inpatient in most markets. You get in an academic facility you can hit a million in 3 weeks.

35 people wont have any claims at all.

25 have under the deductible

30 will have 1K to 5K

8 will have 5K to 20K(this range of claims has jumped big time. All of your pregancies and even one trip to the ER are now 10K claims)

1 around 50K

1 around 150K

One thing employer based coverage does very well, far better then exchanges would ever be able to, is spread the risk. They keep those healthy 30-40% with no claims in the system,. Groups we see fall into the death spiral is those that start losing that bottom layer. When that goes it falls apart real fast.

Guest
Jan 15, 2012

I am a babe in the woods as far as claims go, so let me ask an innocent question………….

if the large payers have deep discounts, then why are their premiums still going up 10% or more a year?

I suppose the answer is actuarial death spiral….i.e. as companies lay off younger employees and don’t hire anyone new. the remaining insured work forces are getting older and older.

Also the insurance companies do need to buld reserves………in some cases their capital cushion is tiny.

Still………….

between Medicare paying low fees and private insurers paying discounted fees, why does the total dollar volume of claims paid still keep going up?

Even if every senior citizen had three diagnostic tests a year at $900 in total reimbursement a year, that would be just $40 billiion in Part B claims.

Part B is 4 times larger than that and Part A is another $180 billion.
Where is the money going?

Maybe the providers are crowding into the areas where the insurers still do pay high fees, like cardiac care and cancer?

I know there is no simple answer. Some actuaries must have the answers though. But the answers are not getting through, even to a relatively well-informed group such as those who reads The Health Care Blog.

Guest
Nate Ogden
Jan 15, 2012

deep discounts were a suckers bet that had everyone fulled. Charge masters went up every year and the deep discounts stayed the same. What use to be 60% off a $100,000 claim is now 60% off a $150,000 claim.

I routinly see claims where the medicare allowable is 20% of billed charges.

No death spiral going on private insurance is very healthy. In fact it would be almost acturially impossible for private insurance as a whole to even enter a death spiral. Contracts are for 12 month periods generally and rerate every year. a couple companies could have a bad two years but the market as a whole is indeffently sustainable.

In addition to payments to providers increasing for the same service members still consume more and more expensive services as well. That abated a little last year or two but not enough to overcome the other inflationary drivers.

I assume your talking about the 2.6 trillion annual spend? Remember our population grows every year as well. And we age another year.

If you look at the reinsurance market which is driven by large claims those are still increasing double digits every year. Cancer and all your major illnesses are growing double digits. We just had a million dollar cfardiac claim that wouldn’t have been 500,000 a couple years ago

Guest
Jan 15, 2012

Non Facility $68.47
Facillity $49.22

Nate, are you really looking at claims all day? This is the professional portion for provider-based outpatient clinics (i.e. hospital owned), expenses are not included in the physician RVU and are billed separately, either as a revenue code or a CPT, based on point systems.

Guest
Nate Ogden
Jan 15, 2012

most of the clinics dont bill seperate facility fees and when they do we and most payors deny them, i.e. Cleveland Clinics $50 facility fee. Your not going to take people out of the ER and move them to PCP. Your going to take people out of the clinic or urgent care and they dont have facility components.

You caught me I don’t look at claims all day, I like to surf the internet bidding on beanie babies to

Guest
Jan 15, 2012

Switch to Starbucks bears…. beanies are so not cool….

Provider Based clinics do bill facility fees and they have contractual agreements through their owner (hospital) on what those should be and how they are billed. If not, then the negotiated contractuals are certainly not Medicare fees. Medicare does pay facility fees.
Community clinics get about $165 for a 99213 from CMS.

Any way you look at it, there is no better bargain than the small private practice and for some perverse reason, everybody seems out to destroy it.

Guest
Jan 15, 2012

Thanks for the insight.

This does raise a question that has troubled me for some time…………

Why do so many payers (both public and private) become so passive when reviewing bills from any enterprise that is hospital connected?

For example — I have been getting annual tests from a cardiologist every year since I had a heart attack in 2006.

This doctor recently became affiliated with a hosptial based clinic.

My little blood test used to cost $60 done in his office.

This year’s test was still in his office, but it was billed atm

Thanks for the insight.

This does raise a question that has bothered me for some time.

Why do so many payers (public and private) behave so passively when any billing is ‘hospital based’?

I suppose this is a heritage from the cost-plus days of Medicare up to 1984, but honestly that was almost 30 years ago.

Also, for persons under 65, if the insurer rejects a hospital bill or cuts it down by 2/3, the hospital can pursue the patient. We need much stronger consumer protection (Medicare does protect its patients against balance billing already.)

My own doctor recently joined a hospital based clinic. I went in for a blood draw, and the bill was $240 for 15 minutes work. (last year it was $60 when he was just a doctor.)

I have a a high deductible so I am contesting the bill.

But this is a tiny version of what goes on all the time. For years, Medicare paid too much for outpatient care done in a hospital.

We need a national fee schedule, and let the hospitals start to economize like everyone else in the economy.

Guest
Nate Ogden
Jan 15, 2012

its usually contractual. The agreement that grants them discounts is conditional on them not auditing bills or questioning the charges.

Payors think they are further ahead taking the discounts then trying to fight over every bill.

State and Federal law also impacts this, in a number of situtions you have 30 days to pay a bill. Providers have no requirements they bill timely. A hospital could send all their bills one day at the end of the month and the payor has 30 days to get them all paid, hard to do any auditing which is labor intensive.

Image if you started to audit so they started sitting on 2-3 months worth of claims and sending at once.

See CA v Multiplan)PHCS & Sutter health for the way providers and PPOs abuse the contracting process to avoid their bills being questioned.

Guest
Jan 15, 2012

According to AHIP, in 2009, 78% of all claims (paper included) were received within 30 days with the bulk received in 2 weeks. I am certain the trend continued upwards in 2010 and 2011.
BTW, you can also see the percent of paper dropping precipitously to 82% in 2009. I would guess it is around the 90% today.
Before you quote the auto-adjudication numbers from that report, please note that the numbers are for “clean” claims.
http://www.ahipresearch.org/pdfs/SurveyHealthCareJan252010.pdf

Guest
Jan 15, 2012

Sorry, percent of 82% and 90% is electronic (not paper)

Guest
Jan 15, 2012

“We need a national fee schedule, and let the hospitals start to economize like everyone else in the economy.”

Amen to that.

Guest
Jan 15, 2012

Some of the uninsured are hard-working, struggling people who pay all their bills, but work in a benefit-less job and just do not have an extra
$200-$800-$1200 a month (depending on age and family size) to buy any health insurance policy.(even a public option plan)

Some of the uninsured are completely disorganized and living hour to hour, not just day to day, and they do not sign up for health insurance even when it is free, because they don’t sign up for anything. (in some cases they want to stay under the radar of immigration enforcement or child support enforcement.).

However — I favor some partial solutions that do not involve massive, expensive insurance reform…………such as:

– spend a relatively tiny amount of public money to have free or low priced urgent care clinics connected to each hospital emergency rooms.

Yes they will be crowded and yes they will not offer continuous care……..but they will be an advance in public health, without the ludicrous overhead charges of hospital ER’s.

The doctors in each community could give a few hours each week and get a tax deduction.

and

Let all states adopt the hospital billing limits now in force in Illinois, Cal, Minnesota and maybe a few other states.

The uninsured cannot be billed more than Blue Cross, and all aspects of charity care must be reviewed before any debt collection can begin.

Steps like these would let people stay uninsured but not brutalize them when they are sick. I think that ‘public option’ should grow to mean ‘public health facilties..’

Michael Cannon of Heritage is kind of a hatchet man for the right wing, but even he was in favor of these steps.

Bob Hertz, The Health Care Crusade

Guest
Jan 15, 2012

Actually, Bob, hospitals have figured out how to make money from exactly what you are suggesting, diverting uninsured and other poor folks showing up at the ER to nearby community health clinics or their own hospital owned clinics.
It looks good on the surface, until you explore the unintended consequences. Private practice in those areas are all but not existent now and everybody uses the community clinic or the hospital clinic, both of which bill the tax payer at much higher rates than a private practice does.
The general insanity of herding everybody into expensive facilities, tax payer funded for free care, is beyond my understanding. Why can’t we pay private practices for uncompensated care at half the price we are paying to community centers and hospital outpatient clinics?

I believe in universal health care insurance and I believe that a single payer system will save us money, but I do not believe in government or corporate run health care delivery. It is more expensive and lacks checks and balances in favor of the patient. Putting the “mom and pop” practices out of business is extremely shortsighted and will increase costs while reducing quality of care.

Guest
Nate Ogden
Jan 15, 2012

“Why can’t we pay private practices for uncompensated care at half the price we are paying to community centers and hospital outpatient clinics?”

Because slavery is illegal. If you where a doctor in Private pratice why would you want an office full of section 8 patients? Your good paying privately insured patients aren’t going to wait in an office full of people demanding their free care.

How do you ration care in your private pratice model? Right now we ration care by wait time. If you were willing to open up the primary care market to them at no cost they would use it out of existance.

“Putting the “mom and pop” practices out of business is extremely shortsighted and will increase costs while reducing quality of care.”

What other industry has this ever happened in? Eliminating the mom and pop medical provider would cut cost with all the efficency gained. Medical malpratice is substantially cheaper, fixed cost like rent is spread over a larger base as is staffing. Staff is more speciailized which is far more efficient. Technology is adapted quicker.

Guest
Jan 15, 2012

Nate, this has nothing to do with slavery and it shouldn’t have anything to do with the unwashed sharing a waiting room with Rockefeller types.

If the government agreed to pay private practices for uncompensated care at about half the rate they now pay community clinics and hospital “facilities”, many private practitioners would accept some uninsured folks. I don’t understand how you can argue with arithmetic.

Other industries are not a good model. If other industries were able to provide goods and services in a “mom and pop” model for less money, there would have been no consolidation. Only in health care it is possible to push consolidation into entities that provide more expensive and crappier services.

BTW, staffing is at a lower ratio in small practice than it is in large groups. MGMA has the average staff in all sizes of practice at about 4.5 per physician. I have yet to see a solo practice with with 4.5 full FTEs.
The economies of scale notion is just a myth in health care and it is being very successfully used by those who want to control doctors and make tons of money in this field, as well as by those well meaning academic experts who are averse to diversity in general.

Guest
Nate Ogden
Jan 15, 2012

CO a few years back paid 99213 at 87% of Medicare, so your really asking why wont doctors treat uninsured patients for $20.

“how you can argue with arithmetic.”

Besides DeterminedMD, who would do it in a heartbeat, do any of the doctors on here want a pratice full on uninsured patients for $20 per visit?

Guest
Nate Ogden
Jan 15, 2012

“I don’t understand how you can argue with arithmetic.”

Maybe becuase I know the actual arithmetic and your making things up the way you wish they were? If you had even the slightest idea what your talking about you would know how silly your argument is. Have you seen what Medicare pays for an office visit done at a doctors office or outpatient clinic?

2012 fee schedule, Ohio CPT 99213 Participating Reimbursement

Non Facility $68.47
Facillity $49.22

So your question Margalit is why won’t private doctors jump at the chance to treat patients for $24.61? That’s Medicare, Medicaid is even cheaper.

“MGMA has the average staff in all sizes of practice at about 4.5 per physician. I have yet to see a solo practice with with 4.5 full FTEs.”

This is a meaningless argument and doesn’t say anything. I could run a doctors office with no FTEs, don’t treat anyone. Unless you factor in revenue or patients treated you haven’t said anything of any value. If a solo doctor can generate the same revenue as a multi physician pratice with less staff then you have an argument, but we both know that doesn’t happen.

Guest
Cwells
Jan 14, 2012

@Nate Ogden: all you ever do on this site is argue with people obviously more knoweledgable than you regarding Health Policy and Health economics. Unless you plan to provide your own proof, stop insulting every one else.

Guest
Nate Ogden
Jan 14, 2012

see those blue sentenaces in my post, they look like this;

http://www.cahi.org/cahi_contents/resources/pdf/CAHIMedicareTechnicalPaper.pdf

those are called proof….I don’t see any of those in your post Cwells…

Guest
steve
Jan 15, 2012

From your proof.

“Administrative costs are lower under Medicare than for private health insurance, although Medicare costs are higher than reported in the Federal budget and private costs are not dramatically higher than Medicare once non-comparable costs (commissions, premium tax and profit) are removed. Our best estimates indicate Medicare at slightly above 5% of total Medicare cost in 2003, whereas the government currently reports about 2%.”

Private costs, including profits, commissions, etc. (how can you really leave these out) run about 17% according to your proof.

Steve

Guest
Nate Ogden
Jan 15, 2012

% of what? When your insurer bills you is it expressed as a %?

Convert to actual $ then lets talk. Rent isn’t based on the amount of medical claims, nor is labor, postage, or anything else.

Medicare doesn’t include the advertising it does in its budget. Nor IRS cost to collect premium. Notice you left premium taxes off.

Guest
Nate Ogden
Jan 15, 2012

I’m not following these percents your throwing around Steve, I don’t pay any of my bills with a percentage of claims. Why don’t you talk actual dollars then maybe I can follow along.

Medicare is 5% so that would be $385 per member per year correct?

Fraud is $770 per year.

That would be $1,155 per member per year, what did you want to compare that to?

17% of private insurance at $3500 a year would be $595. So Medicare is roughly $560 more expensive per member per year.

What was the point you wanted to make?

Guest
steve
Jan 15, 2012

Percent of total costs. If an insurer takes in $100 for the year, and pays out $83, leaving the rest for expenses, profits, commissions, etc., then it is spending 17% on admin costs.

“Medicare doesn’t include the advertising it does in its budget. Nor IRS cost to collect premium. Notice you left premium taxes off.”

I am using the article you cited, so I assume you think it is pretty accurate. Medicare usually claims about 2% in admin costs. The authors claim that when you include everything, including advertising, etc., they come up with 5%. Is your cited source incorrect?

Steve

Guest
Nate Ogden
Jan 14, 2012

who are these more knowledgeable people? 99% of these people have never worked a day in the field

Guest
Cwells
Jan 15, 2012

Now you just sound like a tea party windbag.

Guest
Nate Ogden
Jan 15, 2012

all you do is call names and provide nothing of value, not even a worthless opinion. At least when I point out your an idiot I tell you why and provide back up. You just run your mouth.

Guest
Frank
Jan 14, 2012

Very important piece–well-argued and spot on. Don’t worry about the haters–they have no constructive solutions. They’d probably allow “mini med” for everyone outside the charmed circle of crony capitalists.

Guest
Nate Ogden
Jan 14, 2012

Only people allowed mini meds is Obama’s Union buddies and a scattering of small businesses from Pelosi’s district. The rest of us are required to suffer PPACA

Guest
Nate Ogden
Jan 14, 2012

http://www.cahi.org/cahi_contents/resources/pdf/CAHIMedicareTechnicalPaper.pdf

Notice how Medicare’s expense ratio dropped from 17% to 3.3%. Its not that Medicare became more efficient at administration its the fact their average spending skyrocketed.

Very little cost corresponds to claims cost, % of premium is a terrible way to express it. Any accurate analysis would do it on PEPM, the same way its sold.

Guest
Nate Ogden
Jan 14, 2012

“The six largest investor-owned health insurance companies saw a 22 percent increase in combined net income in the third quarter,”

Why the largest 6 and not the entire industry? Sounds a little fishy and dishonest when people start picking numbers in arbitrary ways like this. Why not top 5 or top 7? Maybe consolidation accounted for the majority of the increase? If the other 99% of insurers had a 50% decline in combined income and the top 6 only picked up 22% they could have saved billions overall.

” there are four recent occasions when private health spending per capita in the United States stopped its steady increasing and actually decreased:”

According to this chart its been 5 times, couldn’t you find a political event to explain the 5th one? Did PPACA decrease spending before it was actually passed, is Obama that powerful?

http://facts.kff.org/chart.aspx?ch=167

How exactly did Medicare passed in 1965 decrease healthcare spending?

“The major arguments against a public health insurance alternative are:”

Why do you ignore the biggest argument, cost? We can’t afford more debt and anther over budget failed government program.

““rationing” is already a major problem in our current system, in the form of countless valid treatment requests that are routinely rejected by companies that simply do not wish to pay for them”

Medicare denies a high percentage of claims then any other insurer, how does a public plan that denies more then everyone else solve this problem?

“not to mention all of the Americans who get little or no treatment because they have no insurance.”

Most of the uninsured are already eligible for public insurance and choose not to enroll. How does another public option they don’t sign up for improve this problem?

“The inevitable degree of rationing to be expected under a public health insurance program (shorter-than-desired hospital stays; reduced access to the latest, most expensive treatments; maybe waiting lists) is a reality of those unable to afford the more expensive insurers and the more luxuriant care they offer. This is precisely why it is ridiculous to assert that private insurers and their world-class coverage would disappear as a result of competition with a public program.”

Your complete ignorance in this matter will be excused because your a jornalist and don’t know anything about insurance and how it works. Our private insurance is guarantee issue in most cases. No matter how sick you are once you start a job with benefits your eligibile or you can sign up at open enrollment. If there is a cheap public option, “thrifty” buyers would take the lower cost public plan then if anything ever happened to them they would sign up for the more expensive private insurance to take advantage of the richer benefits. Being an uninfomred journalist we can’t expect you to actually research what you write about but I would strongly suggest you google “adverse selection” before making any more uninformed claims like above.

“With regard to waste, according to KaiserEDU.org, at least 7 percent of health care expenditures in general are for administrative costs (e.g., marketing, billing), while this same percentage for Medicare is less than 2 percent. The evil bureaucracy, it seems, runs a more efficient ship.”

Lazy journalism is the bain of an educated society, since your ignorance seems to spand not only health insurance but math let me explain why your once again wrong.

FIrst the 2% is about half of Medicare’s cost, that number is only direct cost. When you add the cost of CMS, Congress, and other departments its twice as high. Now to your failure of math. 4% of $7000 is $280. 7% of $3000 is $210. Medicare admin is so low because its average spending per member is so high. Hardly a sign of efficency. Finally when you add the 10% fraud which is $700 that totally destroys any claims of Medicare efficency.

Sad to think garbage like this actually gets published. Then again when did facts matter in liberal media.

Guest
Cal
Jan 14, 2012

“Medicare admin is so low because its average spending per member is so high. ”

Uh, yeah, that’s because they’re disproportionately old and sick and private insurers would not cover them. Learn some history.

Guest
Nate Ogden
Jan 14, 2012

“disproportionately old and sick and private insurers would not cover them. Learn some history.”

How is private insurance suppose to cover 70 year old non working individuals who already paid for Medicare which would take away their social security if they bought private insurance instead of Medicare?

Medicare is disproportionately old….wow never would have expected that from a program that has being 65 as a requirement. Wonder if that has anything to do with their average age being so high? What do you think Cal?

Learn some logic Cal

Guest
steve
Jan 15, 2012

Or just understand that it is not an apples and oranges comparison. Yes, admin costs are really low when there is nothing to administer.

Probably the best way to look at it is to look at systems where all ages are covered by the same system. I choose Taiwan.

Steve

Guest
Jan 14, 2012

Note to Marguerite……….the public option would not be cheaper just by saving on administration and profits.

If a health plan is filled with people who are 55 years old, or people who are facing high prices due to medical conditions, it will be expensive
no matter how streamlined it operates.

Paying for a lot of heart attacks and cancer will quickly overcome any savings from not having commissions, advertising, or profits.

To put in another way…….there are ultimately two kinds of insurance:

private insurance……….priced by demographics and claims experience

and

social insurance…………funded by taxes and income-based premiums.

I am skeptical that anything else really works. My criticism of the ACA is that it is too timid to expand Medicare …..
so it tries to create a kind of “private sector socialism” which may not work.

Guest
Jan 14, 2012

Bob, isn’t this a bit like the chicken and the egg?
If a public option opens up for business without all that overhead and with good contracts, thus offering equivalent plans at a lower premium, why would only 55 and older sick people sign up?
Wouldn’t employers flock to such savings and everybody on the individual market as well?

Guest
Cwells
Jan 14, 2012

Yes, it was Nixon who saw the financial beneft of the managed care approach, but that benefit was mainly in terms of profits, not necessarily on how people would benefit. Anyone in Healthcare in the ’80’s and ’90’s could tell you how well Managed Care worked at its onset, it didn’t. People who badly needed care were denied access as cost measures. Many people died because tgey were denied access to health services. Janet Brewer, Gov. Of AZ, put restrictions on Medicaid as a reflex action to the Health Reform bill. Those restrictions were fundamentally those “death panels” the GOP were yelling about. People who had been approved for organ transplants were then denied due to cost. They died.

Guest
Nate Ogden
Jan 14, 2012

FYI Cwells everyone dies, with or without healthcare and far more people die after wasting money on non effective care then died becuase they were denied care. Everyone can’t have everything regardless what your magic liberal wand promises you

Guest
Jan 14, 2012

I’m sure the dead people would appreciate your statistical approach to the problem, and take great comfort in the fact that rich people are free to throw money down the drain, which pales by comparison to the much greater freedom of poor people to go down same drain.

Guest
steve
Jan 15, 2012

“Medicare almost doubled senior poverty,”

Factually wrong. Citation please.

Steve

Guest
Nate Ogden
Jan 15, 2012

yes it was sloppy wording. Its a point I have made on here numerous times and when stated in proper context is an accurate point, Medicare failed to prevent or even lower healthcare poverty amoung seniors

Guest
steve
Jan 15, 2012

What you said is 19% are living in poverty, not receiving Medicaid. What I showed above is that the percentage of elderly in poverty has dropped, a lot, since the institution of Medicare. You are moving the goalposts. Since most long term care is financed by Medicaid, and it helps with people who may not be in poverty but face unusually high medical expenses, your assertion is misleading. We would need to know the percentage of elderly on Medicare before and after the institution of Medicare to look at that effect, which is impossible.

Steve

Guest
Nate Ogden
Jan 15, 2012

Factually correct, maybe could have been worded better. I don’t make factual errors.

http://www.statehealthfacts.org/comparemaptable.jsp?yr=18&typ=1&ind=303&cat=6&sub=76&sortc=3&o=a

roughly 19% of Medicare enrollees are also covered by Medicaid.

The pro-Medicare pitch was that this presumptively deserving and financially precarious group should receive medical benefits without regard to need in order to protect elderly persons from the indignity of a means test. However, data submitted for the record from a 1960 University of Michigan study showed that “87 percent of all spending units headed by persons aged 65 or older” had assets whose median value matched asset ownership of people aged 45-64 and exceeded the asset ownership of people under age 45 (U.S. House Hearings 1963-64: 242-43). While HEW Secretary Celebrezze waxed eloquent about the necessity to furnish protection “as a right and in a way which fully safeguards the dignity and independence of our older people,” Rep. Curtis questioned whether it was appropriate to “change the basic system” when 80 to 85 percent of the aged were able to take care of themselves under the existing system, recommending instead that we “direct our attention to the problems of the 15 percent, rather than this compulsory program that would cover everybody” (U.S. House Hearings 1963-64: 31, 392).

Some in Congress clearly recognized that one effect of the proposed program was to require the working poor to subsidize the retired rich, as when Senator Long (D., La.) asked, “Why should we pay the medical bill of a man who has an income of $100,000 a year or a million dollars a year of income?” (U.S. Cong. Rec.-Senate 9 July 1965: 16096). Nonetheless, the predominant political motif was misleading allusion to the financial plight of the elderly, what Rep. James B. Utt (R., Calif.) called the false assumption “that everyone over 65 is a pauper and everyone under 65 is rolling in wealth” (U.S. Cong. Rec.-House 8 April 1965: 7389).

85% of seniors or more needed no assistance to pay any of the medical bills from the government. Now 99% have the majority of their medical bills paid by government and 19% need additional assistance beyound that.

Medicare has clearly and without question failed to accomplish what it was supposedly passed to do. And it racked up 40 trillion in debt while failing. Margalit you asked why I was afraid of a test to see what might happen….we can’t afford any more liberal 40 trilion dollar failures.

If we had skipped the entire Medicare debacle and instead concentrated on the 15% we would be much further ahead today. And 40 trillion less in debt.

Guest
Nate Ogden
Jan 14, 2012

without rich people throwing money down the drain hospitals would not be able to provide all that free care to poor people.

Medicare almost doubled senior poverty, we as a nation can’t afford anymore liberal solutions. You would think after the generations you murdered with public housing you would stop trying to “save” people. How many millions do you need to kill before you admit you don’t know what your doing?

Watched an interesting documentary on Jim Jones today, the only thing more surprising then how liberals like Jim Jones manipulate and murder people is how so many more liberalsn willing follow.

Guest
Nate Ogden
Jan 14, 2012

How is a tax emeption the public paying for something? If it was exempted then it was never income and thus never tax payor money. Or have you gone full on socialist and everything belongs to the public and thus anything we are allowed to keep is a gift from the all generous government?

“Seeing that the richer you are, the less tax burden you seem to carry,”

“In 2006, the latest available year from CBO, the top 20 percent of income earners paid 86.3 percent of all federal income taxes, an all-time high.”

If by less you mean most ever then you would be right.

” Without Medicare, seniors would have probably been much worse off.”

No, without Medicare we all would have been much better off. We would have 60 trillion back, no distortion of our health care system, cost would be a fraction of what it is today. No CMS regualtion. I can’t think of any scenerio where we would be worse off had medicare never passed.

Guest
Jan 14, 2012

I thought tax payers are paying for “free” care through tax exemptions and disproportionate share payments and other state and local appropriations, with a bunch of that money probably not going where it is supposed to go.
Seeing that the richer you are, the less tax burden you seem to carry, I would say that no poor person owes anything to the CEO of GE.

Just because poverty is increasing for everybody, not just seniors, while Medicare and perhaps also space travel are occurring simultaneously, it doesn’t mean that these things are even remotely connected. Without Medicare, seniors would have probably been much worse off.

Guest
Cwells
Jan 14, 2012

I don’t know why anyone would think the public option os dead. I don’t see that at all. The sickest are already using phblic funds through charity care, which is already a drain on hospitals and state reimbursement. States tgat are fighting expansion of Medicaid are foolish, because those who cannot use a managed care approach, will end up in charity care. Additionally, those who wait until they are Medicare eligible, due to forced early retirement (unemployment) are already the sickest. This has been an issue for years. And years before the health reform bill was put into action. If people had health coverage, the cost of caring for them when they enroll in Medicare or Medicaid or both, would not be so high.
The Republicans cry foul on the Health Care bill as a political ploy, obviously still using the people as tools. If they really gave a crap about public good, we’d have had Medicare for all in the 1990’s when Clinton was in office.

Guest
Nate Ogden
Jan 14, 2012

“The sickest are already using phblic funds through charity care”

No the sickest are covered by private insurance in far greater number then uninsured. And charity care is provided by providers who charge private insurance more in order to afford to offer charity. WIthout private insurance reimbursement rates there is no charity care.

Anyone advocating medicare for all hasn’t passed 5th grade math.

Guest
paul
Jan 14, 2012

It would have been great if Clinton had proposed Medicare for all (Nixon was a lot closer to Medicare for all with his health care reform proposal in the 1970s). Alas, what the Clintons offered was managed care for many, though not all.

And the Republicans didn’t block his plan — the Democratic-controlled Congress never took a vote on Clinton’s bill.

Guest
Jan 14, 2012

Of course the public option wouldn’t be free. It should be cheaper though, because those 4% to 5% would be eliminated, and so would the other XX% that are supposedly for administration in the private sector. Not that public administration is cost free, but it should be (is?) a lot cheaper. So if it were just another “option”, why would it attract the sickest citizens? I would enroll just for the heck of it.

Anyway, as I said above, I think it’s too late for that, although it would be interesting to see how much can be saved compared to same plan design as a private one. I guess “the industry” doesn’t want that type of experiment. Wonder why….

tcoyote, as to Medicare for all (and, I think Medicaid should go away, Bob), I doubt, that Steve Jobs is needed. All the government needs to do is collect taxes and allocate to private administrators that are not allowed to profit from the basic package. The savings would materialize exactly because those billions in paying claims would be vastly reduced: one fee schedule, one form, one set of rules, no gaming.

Guest
tcoyote
Jan 15, 2012

Margalit, at the risk of sounding a little like brother Ogden, are we on the same planet? Read the regs for ACO, value based purchasing, what’s involved in ICD-10 conversion for providers, meaningful use, STAR ratings for health plans, etc. Read the regs, and you tell me that savings would materialize.

CMS is specifying in stupefyingly minute detail exactly how we want providers to behave, and requiring them to hire tens of thousands of new staff (IT staff, coders, medical secretaries, consultants- a veritable army) to comply with all of them. It’s the secret reason why healthcare has added a million workers (and pushed up those premiums) in the last four years- to cope with largely federal reporting requirements and mandates.

Sure we have absurd variation in business rules, private insurance contracts, but those have been in the system for years- and will be markedly reduced by ACA’s administrative simplification provisions. We are getting useful systems like Availity and athenahealth to help harmonize them,and automate provider claims management.

It’s the federal part- the “core measures” mania- that’s out of control. (And I’m a Democrat,not one of those tea party people). There is no Steve Jobs here, only legions of well-meaning “minders” of the doctor-patient relationship.

Guest
Jan 15, 2012

tcoyote, I agree with most of what you write. HHS is on a binge of regulations right now in an attempt to fit this square peg in the round hole. It will of course not work, and we run the risk of damaging health care delivery beyond repair. I am not defending CMS here. I take issue with almost everything going on now. However, if we changed the nature of the hole, perhaps it would be easier to fit that peg in.

As to EDI, it’s been around for many years and those companies you mention exist only because it is a nightmare to bill and get paid, both due to multiplicity of rules and the nature of the private beast trying to squeeze out yet another nickel and dime, and those companies (and many others) are in the game for their piece of the health care dollar. We can’t continue to shoot people in the head and praise the genius of the surgeons saving their lives. Putting the guns down is better and cheaper.

I do appreciate the fact that we have a system in place and that we are trying to resolve the problem within said system, but I think it’s high time to admit that we need to scrap the whole mess and start fresh.

Guest
Nate Ogden
Jan 15, 2012

“As to EDI, it’s been around for many years and those companies you mention exist only because it is a nightmare to bill and get paid, both due to multiplicity of rules and the nature of the private beast trying to squeeze out yet another nickel and dime, ”

What are you talking about? Most of your large payors autoadjudicate 50%+ or more of their claims. The biggest problem in getting paid is small doctors that don’t use EDI or standard forms that can be ran through OCR.

There is no problem getting paid by large providers that use EDI.

Guest
Nate Ogden
Jan 15, 2012

How can you miss a rule change, you have one carrier to follow.

Highmark if your in the West and BCBS in the East. How can a private insurer hose you? They are obligated to pay you either way, its not like you lose money.

Medicare you miss a rule you don’t get paid at all or you go to jail.

I think there is a little perception bias going on.

Guest
steve
Jan 15, 2012

President of my corporation and in charge of billing for years. All of our problems have occurred with billing in the private sector. Miss one rule change and you are hosed. Maybe things are better outside of PA.

Steve

Guest
Nate Ogden
Jan 15, 2012

“I have no idea where you are getting your claims from,”

Mailman and PO Box, they are sent there by thousands of doctors that rather print a claim, pay postage and mail it then send me the claim electronically.

Your gripes of denials are an urban myth, unless your talking Medicare under 6% of claims are denied once you remove terminated coverage and wrong insurer. Biggest reason for denial is sloppy submittal by physicians. We still get claims for groups that terminated 5+ years ago.

The other 50% of claims which are the majority of revenue don’t effecft the doctors your talking about. Not many solo doctors are billing 100K inpatient stays, Hospital bills are much harder to auto adjudicate unless you rely only on % off contracts and do no review at all.

Guest
Jan 15, 2012

I have no idea where you are getting your claims from, Nate, but you would be hard pressed to find a small provider without an electronic billing system, or at the very least access to a clearinghouse upload interface.
Auto-adjudication is based on algorithms and from what I see, they are constructed in a way that generates denials for the smallest things. Then of course, there is the other 50% of claims, which is much larger than 50% of revenue.

Guest
Nate Ogden
Jan 15, 2012

Under PPACA are providers still allowed to dress themselves in the morning or is that dictated now to?

Hopefully the State of CA kills the PPO model and that problem is solved. As EDI advances and the clearing houses get more experience billing various carriers will be no less complex then writing a check from one bank and someone cashing it at another. Rx accomplished this years ago, dental and vision aren’t far away. Rx is just as complex as medical if not more.

Guest
Nate Ogden
Jan 14, 2012

” I guess “the industry” doesn’t want that type of experiment. Wonder why….”

Thats a real head scratcher…..let me go out on a limb and say the government doesn’t compete it takes what it wants. Where is the option for people over 65? Oh thats right the government whiped them all out. You want your social security check….better sign up for Medicare.

What about those doctors that were promised Medicare would pay market prices like private insurance, 7 years, promise broken Medicare dictates reimbursement.

Please Margalit explain how private insurance can compete with that.

Private insurance taxed up to 5%, public plans, 0%….you still wondering Margalit?

Guest
Nate Ogden
Jan 14, 2012

” It should be cheaper though, because those 4% to 5% would be eliminated, ”

Really Margalit do I need to point out that 10 is higher then 4 or 5? Hint it’s more then twice as much Margalit.

You eliminate 4 to 5 % profit and replace it with 10% fraud and expect to save money. Why have all liberals not had their voting rights revoked and been locked away for their own protection?

Or is the 10% fraud Medicare has had for decades going to magically disappear when the liberals pass a no more fraud bill to go with their affordable health insurance bill?

Guest
steve
Jan 15, 2012

Because Medicare costs less even with the fraud.

Steve

Guest
Jan 14, 2012

You shouldn’t truncate sentences incorrectly.

“those 4% to 5% would be eliminated, and so would the other XX% that are supposedly for administration in the private sector”

And addressing the fraud should be an immediate priority, but I don’t see why doing that would cost as much as you think.

Guest
Nate Ogden
Jan 14, 2012

the fraud is already there, if you moved everyone to Medicare the amount lost to fraud would increase current spending on those in private insurance 10%. That is without any spending to reduce that fraud.

If you move everyone in Medicare to private insurance cost would drop 2-5% from day one. This is with all the evil profit. Private insurance already administers medicare benefits cheaper then medicare does and thats with all their arcane requirements.

Its not a question of Medicare should save money, we already know it does not, this isn’t an open question.

Guest
Nate Ogden
Jan 14, 2012

How can you ignore the additional benefits, its those very benefits that cause it to cost more. I could sell a plan 99% cheaper then medicare, it just wont cover anything. Arguing premium rates and saying ignore the benefits is as pointless as arguing the best scorer and saying ignore the sport they play. Or lets argue fuel efficency and not worry if the vehicle even uses gas.

“So why not try it out on a limited scale (i.e. public option) to find out which one of us is correct? Worried about the results?”

Sure, its not like the government would just eliminate the competition even if they prove less effective right? And we all know how well the government is at killing programs that don’t measure up.

Why don’t you open up competition to Medicare and lets see how that goes, worried about the results?

Guest
Jan 14, 2012

I agree that it is not an open question. We just disagree on the answer.
Medicare insures people over 65. The only comparison you have is the private MA plans that cost about 14% more, (please don’t tell me about “additional benefits”), and I would suspect that it is quite a bit more than 14% seeing how the HCCs can be manipulated to make your population look sicker.

So why not try it out on a limited scale (i.e. public option) to find out which one of us is correct? Worried about the results?

.

Guest
Peter1
Jan 14, 2012

“It should be cheaper though”

Yes it should, but so should the privately run system. How do you sell the idea to a tribal minded congress to make it cheaper and so attract business away from private investor health industry? Who will be your target market that will be able to sustain at least a financially balanced system and how will you attract providers to offer their services?

“why would it attract the sickest citizens?”

Because the private system would price those people out of their premium mix.

Guest
Jan 14, 2012

That’s why I am not too excited about a public option any more. They are going to stack everything up against it so it is doomed to fail. But in a perfect world, the congress would just need to let it be competitive. Pay the same as Medicare to providers, calculate premiums based on that and I bet they will be way lower than the private sector for those under 65, and private system cannot price those people out if the PPACA remains mostly unchanged.
My target market would be everybody, including employers. Medicare is not as bad a payer as people make it sound. For this younger and healthier crowd, they could even pay a bit more than Medicare and still come in cheaper than the private premiums.

If people want competition, then why not let the government compete too? Think of it as a co-op arrangement.