The male body has long been considered the “standard” for health care coverage. Having a woman’s body is seen as an expensive anomaly, and women pay dearly for being different.

When they buy their own health insurance in the individual market, women must lay out an extra $1 billion a year, simply because they are women. Some argue that this is fair: after all, a woman could become pregnant, and labor and delivery are costly.

But the truth is that, even when maternity benefits are excluded, one-third of all health plans charge women at least 30 percent more, according to a report released just last month by the National Women’s Law Center.

In 36 states, “92 percent of best-selling plans charge 40-year-old women more than 40-year-old men,” the Center reports, and “only 3 percent of these plans cover maternity services … One plan in South Dakota charges a woman $1252.80 more a year than a 40-year-old man for the same coverage.”

Today, less than half of American women can obtain affordable insurance through a job, which explains why millions buy their own insurance in the individual market. In that market, just 14 states ban gender rating:  California, Colorado, Maine, Massachusetts, Minnesota, Montana, New Hampshire, New Mexico, New Jersey, New York, North Dakota, Oregon, Vermont, and Washington.

Pricing based on gender also plagues the small group market, where insurers frequently jack up premiums if a small or mid-size business employs too many women. This means that many of these employers just can not afford to offer insurance. Only 17 states address the problem.

Insurers explain that women cost them more, even if policies don’t cover maternity, because “they are more likely to visit doctors, get regular check-ups, take prescription drugs, and have certain chronic illnesses.”

In other words, women are penalized for taking care of themselves, As for those “female chronic ailments,” men also are more vulnerable to certain diseases – including many caused by smoking (23 percent percent smoke vs. 17 percent of women).

But insurers ignore male vulnerabilities. As Soraya Chemaly points out on BlogHer: “In most markets if you are a non-smoking female you will pay more than a smoking male of the same age because you possess ovaries and not testes.”

And that is if you can get insurance.

All too often, a woman is closed out of the individual health insurance market because her medical history reveals a pre-existing condition.

For example, if a woman lives in North Carolina, Oklahoma, North Dakota, or Mississippi, and has been the victim of domestic violence, it is perfectly legal for a company to refuse to sell her a policy.

In 45 states, insurers can reject her because she has had a C-section – even if it was medically mandated.

Insurers see “Caesareans or beatings as pre-existing conditions that are likely to be predictors of higher expenses in the future,” the New York Times explains, pointing to Peggy Robertson, a 41-year-old Colorado mother who was denied insurance in 2007. A broker advised the Robertson’s to switch their insurance to Golden Rule (owned by United HealthCare), where they would get a better rate. But when they applied, the company spotted a C-section on Robertson’s record, and sent her a letter, explaining that if she wanted insurance she would have to be sterilized.

If a woman is raped she, too, risks being shunned. When Christina Turner was attacked by strangers, doctors advised that she take HIV medication “just in case.” Insurers then refused to cover her because the HIV drugs “raise too many health questions.” They told her they would reconsider her in three years if she could prove she did not have AIDS.

Turner went without insurance for three years. Other rape victims report being denied because they suffered from post-traumatic stress syndrome.

These are the most shocking cases. Other rules discriminate against millions of women for a long list of commonplace reasons:

  • If a woman has survived breast cancer, this is a pre-existing condition.
  • If she is pregnant when she applies, this also is considered a pre-existing condition, just like cancer. Most likely, she will be turned down.
  • If she is of child-bearing age and has children, this may well viewed as a pre-existing condition, leading to higher premiums.
  • On the other hand, if she is infertile, this too, can be labeled a pre-existing condition.

Not long ago, House Minority Speaker Nancy Pelosi summed up the hurdles: “If you’re a woman, it’s a pre-existing condition.”

When Vice President Joe Biden told President Barack Obama that health reform is a BFD, he wasn’t kidding. The Affordable Care Act (ACA) represents a major victory for women across the nation. Today, state law decides what insurers have to cover. Under reform, federal law will call for equal benefits in all states.

Begin with maternity benefits. In the 41 states where they are not mandated, a 30-year-old woman will find that only 6 percent of plans in the individual market now offer coverage. Guess how expensive those plans are. Under the ACA, maternity care will be considered an “essential benefit” that all insurers selling policies to individuals and small businesses must cover, without charging extra, beginning in 2014.

Some argue that women who want maternity benefits should pay more. “I don’t need maternity care,” Senator Jon Kyl (R-Ariz.) groused when the Senate Finance Committee debated “essential benefits.” Sen. Debbie Stabenow (D-Mich.) didn’t miss a beat: “I think your mom probably did.”

Enough said. One way or another, all of us benefit from prenatal care.

But maternity benefits represent just one way that reform addresses women’s health. The Affordable Care Act (ACA) also calls for:

Preventive services with no co-pays or deductibles: New Policies (issued or renewed on or after September 23, 2010) are required to cover services that many women need – mammograms, Pap smears, at least one well-woman care visit a year, contraceptive products and counseling, and screening and counseling for interpersonal and domestic violence. In 2018, these requirements will apply to all plans.

Essential benefits: In 2014, both all plans sold inside the new state-run health insurance exchanges and all new plans sold outside of the exchanges will be required to cover a specific set of essential health benefits. For women, these include maternity and newborn care; mental health services (including counseling for post-partum depression); preventative and wellness services; contraception; chronic disease management; and pediatric services for her children, including dental and vision care.

At the same time, the legislation bans:

Gender rating: In 2014, charging women more because they don’t have a Y chromosome will be outlawed both in individual and small employer markets. After 2017, if a state lets large employers into its exchange (and many will), the rule will apply to all large-employer coverage in the state.

Charging more for pre-existing conditions: Starting in 2014, insurers can not charge higher premiums, or deny coverage due to a person’s pre-existing conditions.

The bottom line: Under the Affordable Care Act, women’s bodies will no longer be viewed as exotic, but costly, deviations from the norm that just don’t fit into a health care system designed by, and for, men.

What happens if the Supreme Court overturns the individual mandate?

The Court might rule that if everyone is not forced to buy coverage, insurers shouldn’t be forced to cover everyone – especially if they are suffering from pre-existing conditions. (Without a mandate, the reasoning goes, many Americans will wait until they fall ill, and only then purchase coverage, secure in the knowledge that insurers will have to cover them, and can’t charge them more).

Even if you don’t like the mandate, you should consider what it would mean for women if insurers can charge patients suffering from a “pre-existing condition” whatever they like.

  • A recently divorced 62-year-old woman who is no longer covered by her husband’s insurance may find that she is closed out of the insurance market because she is a breast cancer survivor. Even if she can find an insurer who will take her, the penalty for having a pre-existing condition may well be more than she can afford.In insurance parlance, she will have to “go naked” until she is eligible for Medicare, keeping her fingers and toes crossed that her cancer does not recur or spread over the next three years. (If it does, she will have to spend down whatever savings she has, and perhaps sell her home, before she will be eligible for Medicaid.)
  • A young woman discovers that she is pregnant. She and her husband were not planning on having a child so soon. Suddenly, they find themselves facing thousands of dollars in medical bills. If the mother needs a C-section they may wind up owing as much as $24,400. (Five percent of U.S. hospitals actually charge more.) And that is if there are no serious complications.

Congress could vote to kill health reform

It is extremely unlikely that the Supreme Court will declare the entire Patient Protection and Affordable Care Act unconstitutional. Whatever the Court decides in June, women will retain protection against much of the sexual discrimination embedded in our current health care system – unless lawmakers set out to eviscerate the ACA.

As Soraya Chemaly points out on BlogHer: “The openly stated primary priority of the Republican Party is to overturn this law.” If that happens, “these discriminatory practices will continue and women will pay in complex ways.”

Even if President Obama is re-elected, Republicans and Democrats who oppose reform could constitute a majority in both houses, and might even have enough votes to overturn a veto on certain controversial issues – such as gender rating, or essential benefits. Many men believe that women should pay more. And they are not happy about covering maternity benefits, contraception, or post-partum depression.

Meanwhile, without the Affordable Care Act, we can not count on insurers to mend their misogynistic ways. Four years ago, the Women’s Law Center issued a national report titled “Still Nowhere to Turn: Insurance Companies Treat Women like a Pre-Existing Condition.”

Back then, the Center reached conclusions very similar to what it said in the report released last month. In 2008, “Some insurance executives “expressed surprise at the size and prevalence of the disparities,” Chemaly notes, but “apparently these executives weren’t surprised enough to do anything about it. . . By failing to rectify clearly discriminatory policies despite years of awareness, they continue to demonstrate their untrustworthiness.”

This is why, in the run-up to this fall’s election, voters should take a close look at their Senators’ and Representatives’ records when voting on major health legislation.

Not only women – but the many men who care deeply about their daughters, wives, mothers, and sisters – should think carefully about what repeal could mean for those they love.

Maggie Mahar is an author and financial journalist who has written extensively about the American health care system. Her book, Money-Driven Medicine: The Real Reason Health Care Costs So Much, was the inspiration for the documentary, Money Driven Medicine. She is a prolific blogger, writing most recently for TIME’s Moneyland. Previously she wrote and edited the Health Beat blog for the progressive think tank, The Century Foundation. Previous work for the Health Insurance Resource Center includes Will the Supreme Court strike down health reform? She also recently provided background on Congressional health care legislation for, a special project of the Health Insurance Resource Center. This post first appeared at

121 Responses for “Is the Fact that I Am a Woman Considered a Pre-Existing Condition?”

  1. Nate Ogden says:

    I read a great quote recently;

    “Love Of Theory Is The Root Of All Evil”

    All these clowns that have never worked a day in delivery/insurance claiming FFS is the problem are idiots. They are sitting back in their ivory towers with no exprience trying to interupt data they aren’t smart enough to grasp and comming up with these crazy theories. Doctors don’t dictate excessive care, patients demand it. The waste we do see from providers is referring patients to the hospital for an outpatient MRI instead of a free standing imaging center or prescribing an expensive brand instead of trying a generic.

    The American consumer is flush with money to spend, They are going to find someplace to spend it. From the data I generate, not what I read from others over the internet, the problem is the price we pay for the care people demand. Brand Rx and Hospital charges. Not elective hospital care but back surgery, transplant, etc.

    Kaiser can still get sued and members can still elect other plans, Kaiser is even more succible to individual selection as a lot of their members have plan choice at enrollment.

    In CA I think only emergency care goes outside the Kaiser network, in OH all but PCP now that they closed their hospitals. Not sure about GA, and I think there is on other State they have some lives.

    From an insurer perspective a patient that never gets care then dies of a heart attack is very profitable. A patient seeing their doctor quarterly to treat their heart condition is expensive. This is why its a mistake to say prevention saves money. It increases quality of life and prolongs it but it cost a fortune. Not many illnesses are cheaper treated vs ignored. This is amplified by the risk dropping off at 65 and going onto Medicare when I lot of these would manifest.

    Kaiser does take on sicker groups, so do I. Its hard to make money on $200 PMPM in premium. Give me $400 PMPM and some good claims management and I can make a fortune. Kaiser has much more ability to manage claims, especially in CA, the incremintal cost of treating a person in a hospital you own is minimial compared to paying a non affiliated hospital. FOr example if I owned Metro Health in clev

    plane boarding finish when i land

    • Peter1 says:

      “Doctors don’t dictate excessive care, patients demand it.”

      It rather seems to be a mutually beneficial death grip on expenditures.

      “The waste we do see from providers is referring patients to the hospital”

      Isn’t waste generated within the hospital for in-patient also a significant factor? Also, wouldn’t co-pays and deductibles manage that?

      “The American consumer is flush with money to spend”

      Not what you hear from Republicans. But if what you say is true it must be because of Obama policies. :>)

      “From an insurer perspective a patient that never gets care then dies of a heart attack is very profitable.”

      That’s why insurers should never be given exclusive control of care decisions – or I guess, they would be accused of being a death panel.

      “This is amplified by the risk dropping off at 65 and going onto Medicare when I lot of these would manifest.”

      So, would that be a major factor in the cost of Medicare which would also support it’s existence?

  2. Barry Carol says:

    “In a hypothetical free market, one would think that insurance companies would pick the cheapest decent provider. That would help the insurer make more profits. It would also support price competition.”

    Bob –

    In the employer market, the individual member is not the customer. The employer is. Employees want the big well known academic medical centers in their network and employers want to keep employees happy to the extent that they can. So, in Boston, for example, at least until recently, employers felt that they had to have Massachusetts General and Brigham & Women’s in their network. Partners Healthcare knew that and exploited it accordingly. With lots of local and regional market power, they command higher prices than competitors for the same work even when their quality is no better. In NYC, the same dynamic goes for Columbia-Presbyterian, NYU-Langone, Weill-Cornell, Hospital for Special Surgery, Memorial Sloan Kettering, and a couple of others.

    This is why we need tiered networks and limited or narrow networks along with tiered drug formularies which we already had. Patients need to be exposed to some adverse financial consequences for unreasonable demands and irrational choices. Tiering also helps to create some countervailing power for insurers to push back against the powerful hospital systems.

    I also think that disclosure of actual contract reimbursement rates would help to open the eyes of both patients and referring doctors regarding cost differences among hospitals for care of similar quality and type. If lower paid hospitals clamor for the higher reimbursement rates paid to their more powerful competitors, insurers could argue that the expensive hospitals are in the non-preferred tier, patient out-of-pocket cost is higher, and we’re doing everything we can to steer patients away from them and toward the more cost-effective providers like you.

    I also agree with Nate’s point about preventive care. It improves quality of life and extends it which are obviously good things but it doesn’t save money.

  3. bob hertz says:

    Just to expand on what Barry says………

    Insurance companies have found out that it is easier to just raise premiums than to fight every hospital over every price.

    Plus, when an insurance company pays less than the hospital has billed, the patient is liable for the difference (in the private sector). Because we have so few laws against balance billing, the patient has been the kamikaze of cost control.

    This I assume is why Porter and Teisberg want to see strict rules against balance billing.

    • Nate Ogden says:

      It is very hard to fight hospitals, it was impossible but now that premiums finally got to the point people are uncomfortable they are willing to stand up to them. A payor can’t stand up to a hospital when the patient is crying to HR or threatening to sue. Hospitals know this and use it to their advantage, don’t pay what they want, they balance bill and threaten to destroy patients credit and take their house. Once that balance bill threat shows up its over.

      Just last week I had to go back and reimburse a hospital additional amounts over what our cost audits said was fair. We have strong case and would have prevailed but the administrator of the plan was tired of employees complaining about the threats from the hospital.

      When people argue healthcare is unaffordable I have to disagree, I see people waste money and WILLFULLY overspend every day. If it was unaffordable why do people keep doing the same thing and paying the high bills.

      Employers that have said enough are seeing huge savings, so there are solutions people just need to want to pay less.

  4. Maggie Mahar says:

    As of yesterday THCB editors were deleting all personal attacks on this thread as well as comments derailing the thread–comments which had nothing to do with the topic of the post–discimriantion against women in the health care market, and how reform addresses these programs.

    At this point, there seems to have been a technical glitch, and virtually all comments (including many good ones that were on point) have been deleted.

    I assume the editors will restore them.(I’ve gotten in touch with them) .

    At the same time, I appreciate the fact that THCB editors are moderating the thread.

    • DeterminedMD says:

      If that is the case, while I have no argument to vicious or cruel comments being deleted, who are you to insist on censorship just because people like me find your posts and thread comments to be over the top partisan commentary?

      I see my last comment still in place as the end of the thread. Wierd, but appreciated if kept on. You have had some valid points in your role at this site, but as I have asked before and now, tell us otherwise you are not as blue a Democrat supporter as one comes, and to me to a point where you do dismiss valid concerns by health care providers, like me.

      PPACA is not a good legislative effort, and while I firmly agree that some political intervention is needed, not just a democrat deluge without bipartisan drafting. If this is considered harsh commenting, this site will become irrelevant by the mid summer.

      And by the way, Nate, you are a bit harsh in some comments, can’t you find a more neutral way of saying “you’re off base or just cherry picking facts/opinions”?

    • Nate Ogden says:

      Just read through the history of comments to see what was deleted and it was pretty bad. All of Maggie’s responses are left, unchallenged, making it appear she is correct and the retorts, facts and “abusive” flare, gone. Its one thing to maybe delete a sentence or two here and there but to delete entire post filled with facts because they disprove Maggie’s arguments smack of HealthBeat.

      I’m Not in any way saying they are not 100% within their right to do so, but people should realize what it is and dissent is not allowed. Pull the party line or else. People need to learn the difference for themselves between propaganda and discussion.

      No thanks.

      Been fun. Good luck and health to all.

  5. Maggie Mahar says:

    Determined M.D.

    This post is not meant as a platfrom for you to vent your objections to the PPACA in general. It is intended to provide a platform for civil discussion of wheter discrimation against women under the current insurance system–if it is, indeed, discrimation or in fact fair.

    Should reform ask men to pay as much as women for insurance?
    If so why?
    If not why?

    If you would like to discuss other issues on THCB, you should submit a post to the editors focusing on whatever issue you choose. If they decide it would be of interest to THCB’s audience, they will publish it, and the thread will (or at least should) focus on the that topic.

    But when people join a thread and change the topic that de-rails the discussion. This means that potential commenters interested in the question at hand simply give up and go away.

    (For instance, one would have expected a number of women to have commented on this thread. In fact I can recall only two comments– one from a women who said she was not sure she wanted to ask men to support her
    health care needs, one from Bev M.D.

    Why didn’t more women comment, pro or con? )
    I believe that THCB editors have discussed this with you.

    • DeterminedMD says:

      Respectfully, expecting people just to spout off endless statistics and partisan echoes of post writers is not what this debate is about. Your post is interpreted as just trying to promote women are only fairly represented by Democrats and this legislation is a near cure all for their struggles.

      Why should that go unchallenged if it has merit? I’ll also offer this opinion, as a man, but agreed to by women I’ve discussed with in past moments: feminism had not truly aided women’s efforts at equality when the agenda becomes women want to be as controlling as men, and, men have little to no place at the table of gynecological matters like abortion and contraception.

      Frankly, I don’t understand why women haven’t figured out neither party of entrenched incumbents really care for their needs, just their votes. But that is for them as a gender to resolve. Shame on you for fostering that democrat agenda. As I always note, in the end reasonable and fair readers will see through the faux agenda of pretending to help the public when it is moreso about political party gain.

      That is fair for me to right as an interpretation.

  6. bob hertz says:

    Maggie, you are steadfast as always and I admire you a lot.

    Per Joseph White in his still-marvelous book Competing Solutions, from 1995………..

    People should pay for health care approximately according to their income.

    The PPACA does stunble toward that outcome, albeit with a million detours.
    I might not have done any better.

    Bob Hertz, The Health Care Crusade

  7. Maggie Mahar says:

    Determined M.D.

    You write: “expecting people just to spout off endless statistics and partisan echoes of post writers is not what this debate is about. Your post is interpreted as just trying to promote women are only fairly represented by Democrats and this legislation is a near cure all for their struggles. Why should that go unchallenged . . . ”

    Perhaps you didn’t read my last comment. I said that the post was meant as a platform for people to agree or disagree that women were being discriminated against–and agree or disagree as to whether reform should
    ask others to help subsidize their care.

    Too many of your comments on thisi thread have nothing to do with that issue. Too many are simply about me, like the last one: “Remember, the themes she writes for are enslave and entitle.” In the larger scheme of things (the healtlhcare debate) I’m just not that important.

    You are interested in Obama, and whether politics should be part of the heatlhcare debate.

    So why not write a post about that? You are articulate, and “determined”–
    no reason you couldn’t.

    It’s easier, I realize to hi-jack someone else’s post, using the comments section to take off on your own toot.

    Writing a post is hard work. But I mean it when I say that you could.

    • DeterminedMD says:

      Writing a post here is a waste of time, most of the commenters have their fixed position and find commenters like me who are independent and moderate truly frightening and unable to manipulate. I appreciate the recommendation, but blogs are a double edged sword in the end. And, I did not read any comment I could interpret as an effort of transparency to what your agenda is by forwarding posts here.

      And if you think my comments are hijacking your thread, I honestly do not know what else to say but you give me too much credit. Refute me with statement of fact to your mission statement and I will be ignored. It seems to happen at other threads. And that is the way it is.

      Tell the blog authors to get rid of the anchor of mine at the end of this thread currently, even I am tired of seeing it.

  8. Maggie Mahar says:

    Bob Hertz–

    Thank you.

    I haven’t read “Competing Solutions” but I’ll check it out on Amazon. ,

    I totally agree that “People should pay for health care approximately according to their income” rather than according to their gender, height, nationality, etc. etc. etc.

    “Approximately” is, of course, a key word. (Earlier Barry suggested that we shoudn’t demand that a billionaire contribute hundreds of millions to a heatlh care fund. No, we shouldn’t. That’s why there’s a dollar limit on how much of your salary is subject to the Social Security tax.

    These days, there is no limit on how much of earned income is subject to the Medicare tax– because health care in the U,.S. has become unreasonably expensive. But investment income (which typically represents the bulk of a very wealthy person’s income) is not subject to the Medicare payroll tax.

    Going forward, as you have said, we have to put a brake on the rise in health care spending (reducing waste, unnecessaery treatments, preventable errors),. At the same time, as more Americans turn 65, we may have to raise Medicare taxes as a % of income by, say 1%, and , I would suggest, perhaps begin taxing some small portion of investment income. Or, as Zeke Emanuel & Victor Fuchs have suggested in “Heatlhcare Guaranteed” we might institute a VAT and dedictte it to healthcare. (If you haven’t read the book, it’s brilliant. A VAT sounds regressive, but Emanuel & Fuchs explain why it isn’t.)

    Finally, you write “The PPACA does stumble toward that outcome” (paying for healthcare approximately according to income) “albeit with a million detours.” Though you add, ” I might not have done any better.”

    I agree that the PPACA is deeply flawed. But compared to major legislation of the past, it is at least as good. When the Social Secruity Act passed, it
    didn’t include African-Americans. Many in the Roosevelt administration were not happy about this (including Eleanor). But they wanted to pass the legislation, and over time, had faith that it would be improved—as it was.

    In order to pass Medicare legislation, LBJ agreed to let doctors and hospitals
    write their own checks, “charging whatever they want.” I write about this in
    “Money-Driven Medicine.: Johnson thought that because more and more specialists were graduating from med schools, market competition would quite naturally bring down their fees. He was wrong. As you note, when it comes to healthcare, market competition doesn’t work very well.

    Ultimatley I think it’s impossible to pass a major piece of legislation that is not deeply flawed–not when several hundred legislators are involved in the process. Inevitably, there will be “many detours.” Everyone has a special interest. Some of these are very valid special interests. (For example, autistic children) Others are not. But if you want to get the thing passed, you have to compromise.

    Over time the PPACA will need revision.

    But I find it extraordinarily that in these divided times, under a sitting president who was not elected by a landslide (as LBJ was ), we actually managed to pass a health care reform act that represents a decent start.

    • Nate Ogden says:

      “As you note, when it comes to healthcare, market competition doesn’t work very well.”

      Care to provide an example, competition works great when there is actually competition, i.e. the low dose CT scan for $99. Or elective surgery. The problem is competition has been regulated out of healthcare.

  9. Barry Carol says:

    “At the same time, as more Americans turn 65, we may have to raise Medicare taxes as a % of income by, say 1%, and, I would suggest, perhaps begin taxing some small portion of investment income…”

    Maggie –

    Starting in 2013, the employee share of the Medicare tax will increase by 0.9 percentage point for individuals earning more than $200K and for couples earning more than $250K. In addition, investment and other non-wage income above those thresholds will be subject to a new 3.8% tax which is equivalent to the increased combined Medicare tax on wages of high income people, again above the $200K and $250K thresholds for single and joint tax filers, respectively.

    You can read more at:

    • Nate Ogden says:

      Isn’t that what CA has been doing the past 15 years or so. Every time they need to pay for something just tax the rich one more percent.

      “California collects a state income tax at a maximum marginal tax rate of 10.30%”

      And they are still broke, the rich are leaving, and they are broke.

      How many times do we increase the tax 1% to pay for Medicare? And what happens when the rich leave and stop paying, then what?

      • DeterminedMD says:

        Then they tax the middle class more overtly than they already do covertly with fees and other “non tax” designations.

        The Republicans are a failure as representatives because they do not represent, just resent there are others in society that do not kiss that party’s butts. The Democrats are a failure because they want dependency and entitlement to justify enslavement.

        Independence and moderation, those words as much as terms not only scare what these 2 parties are about, but now empower them both to want to crush anyone who does not fully comply with their agenda. And both want to reenslave women, different tactics but same endpoint.

        Wow, listening to the rhetoric at sites like these the past few weeks since the Court heard arguments, Democrats are frightened. Hence the post above that now wants censorship.

  10. Barry Carol says:

    Nate –

    I agree with your comment on CA. Even I may move out of NJ in a few years, in part because of high state and local taxes.

    At the federal level, I’ve argued for some time that the capital gains tax rate is too low relative to the top ordinary income tax rate – 15% for capital gains (and qualified dividends) vs. 35% for ordinary income. If we’re going to maintain the current tax structure, I think the capital gains rate should either go back to 28% where it was under the Reagan reforms or included in the base for calculating the Alternative Minimum Tax which it was from 1969-1985. Republicans, by contrast, want to drive the tax rate on investment income to zero while it’s more or less OK to tax wages every which way to Sunday. I don’t buy it. I’m not a fan of the VAT either mainly because it’s a potential money machine that will likely increase the size of government beyond what we already have.

    My objection to singling out high income people for what I call further soaking is that it attempts to convey to the rest of the population that they can have something for nothing. We already have a population that wants more services than they’re willing to pay for. They want someone else (the rich) to pay. At the end of the day, the broad middle class has to pay for the broad middle class. The rich can help to pay for the poor within reason.

    Maggie –

    Threads veer off topic all the time. When they do, a lot of useful, at least to me, information often comes out or is exchanged. I’ve learned lots of valuable information about healthcare and health insurance from off topic comments.

    As for Nate, while he probably wouldn’t be able to get a job as a diplomat, he has many years of real world experience in the health insurance business and is a virtual encyclopedia about the industry’s inner workings and history. I for one appreciate his comments even when he disagrees with me which he does from time to time and I’ve learned a lot from him. I don’t think off topic comments push people away from commenting, at least on THCB. At the same time, personal attacks should be edited out or, preferably, not made in the first place.

  11. bob hertz says:

    Actually when I propose that Medicare taxes go up 1%, which brings in about $70 billion a year, I want that money to help subsidize a variety of non-PPACA programs for those under 65 (such as lending money to the uninsured at zero interest rates to help them pay for emergency operations, or helping the unemployed and self-employed pay for catastrophic health premiums.)

    My reason for using a Medicare tax is that it is very collectible. Most employers even small ones use a payroll service that would just make a click in their computer programs.

    I definitely do NOT believe that a 1% increase will be enough to pay for traditional Medicare in the future, unfortunately.

    The sheer demography of baby boomers turning 65, plus Medicare inflation even if it is contained, will drive Medicare costs for seniors from $500 billion in 2010 to about $1 trillion in 2020. That is a rough number but let’s work with it for now.

    Medicare has three sources of revenue — the payroll tax that is now set at 2.9%, monthly premiums paid by seniors, and general revenues that amount to about 3% of taxable income from those who do pay income taxes.

    So you have total national income today of about $8 trillion, and $500 billion or 6% pays for Medicare.

    If Medicare costs double in 10 years, I promise you that American incomes will not double. Say that total national income climbs to $10 trillion.

    $1 trillion for Medicare thus means a higher payroll tax, higher monthly premiums, and higher income taxes

    The only way to avoid this, budget-wise, would be to reduce the defense budget by 80%. If we want a Danish welfare state, or something like it,
    then we have to have Danish budget priorities.

    I am not sure that would be a bad thing, but in any event, we should be ready for higher taxes.

  12. Barry Carol says:

    Bob –

    Healthcare cost growth has finally started to slow in the last couple of years for both the commercial sector and the public programs. While the conventional wisdom attributes much of the reason for the slowing growth to the recession, we’ve seen slowing on the commercial side in areas not seriously impacted by the recession. People with Medicare don’t lose their health insurance either because of the recession yet cost growth remains low this fiscal year following less than 4% cost growth last year despite a growing number of beneficiaries.

    We’re just starting to get serious about attacking fraud more aggressively and systematically. More intensive case management is being applied to the high cost cases including the expensive dual eligible population. Better discharge planning is starting to reduce hospital readmission rates. Accountable care organizations have the potential to do a better job of coordinating care and steering necessary and appropriate care to the most cost-effective high quality providers. Reasonable tort reform and a more sensible approach to end of life care, especially for patients with Alzheimer’s, dementia and cancer could rein in cost growth as well. Gradually moving away from fee for service payment in favor of bundled payments and capitation should be helpful as well. In short, I’m optimistic about our ultimate ability to get our arms around medical cost growth over the intermediate to longer term without significant new taxes.

  13. Maggie Mahar says:

    Bob & Barry

    Barry is correct. I’ve wirtten about the slow-down. More to the point, Peter Orszag , the former Congressional Budget Driector has written about it. (just Google Orszag and Medicare spending.)

    Both the growth in health care spending in private sector and growth in Medicare spending has slowed. Medicare spending is now rising by roughly 2% a year. That’s more or less in tandem with GDP, which means that Medicare spending, ,as a % of GDP is not growing. And our Medicare bill will not double in 10 years. (The baby boomers will be joining Medicare ranks over a period of about 30 years. And when they first join, many will be significantly healthier than 65-year-olds of the past. These are the more affluent, better-educated boomers who began jogging, gave up smoking & red meat years ago. Meanwhile, older, less healthy boomers wil be dying off. Of course some of the boomers will live long enough to develop
    Alzheimer’s –and that will be extremely expensive.)

    Much of the slower growth in health care spending among the under 65 population in the private sector could be due to the recession–it’s hard to be sure. Certainly some people are putting off going to the doctor, not filling prescriptions and putting off elective surgeries because a) they have lost their jobs and their insurance b) they can no longer afford their deductible (as premiums rise and employers shift more costs to employees) or c) their incomes just haven’t kept up with their basic expenses .,

    But the fact that spending has slowed in the Medicare sector is telling.
    As you say most people over 65 are retired, and so not suffering from the growth in unemployement.

    Moreover,while answering one of Barry’s first comments on this thread, I discovered that while real average after-tax income has dropped significantly for all age groups under 65 over the past 12 years, over the same span people over 65 have enjoyed signifcant growth in income.
    (This is because unlike earned income in a market where there are so many layoffs and job losses, Social Security is stable, and many retirees who are now over 65 have old-fashioned defined benefit pensions.

    Yet health care spending among Medicare recipients is slowing. This suggests that reform is beginning to have an effect. In part this is due to the fact that hospitals are anticipating the ffects of reform which it is fully implemented in 2014, and are cutting their costs now.

    I suspect that reform is also part of the story accounting for slower private sector spending on health care. In any case, going foward, if Medicare is
    forcing hospitals to cut expenses, and causing doctors to think about
    prescribing fewer tests, etc,, private insurers will follow Medicare’s lead in refusing to pay for unnecessary care, penalizing preventable errors in hospitals, etc. Many doctors also are becoming more cost-conscious. A recent poll shows that about 25% say they plan to follow new gudellines on testing because “this woud be best for their patients.”

    There are a great many provisions in the ACA that aim at breaking the inflation curve, and some will work. Over time (5-10 years), I expect that
    health care spending will be growing no faster than GDP. Then we might focus on trying to elminate enough waste & fraud so that health care
    spending actually represnts a lower percentage of GDP.

    Bringing the discussion back to the original topic, this is one of the reasons why we will be able to afford first-dollar coverage for the preventive care that women need.

  14. Pat 1 says:

    Why not have a highly rationed national healthcare plan for all, paid thru taxes – then people who are not smart enough to continually share the high cost of healthcare risk, will be forced to pay regualarly and continuously for healthcare, and continuously have RATIONED healthcare, instead of blaming everyone else for becoming ill at the wrong time – namely when they CHOSE not to have health insurance.
    We have a serious problem in the US, that students aren’t taught financial basics like a checkbook, credit cards, wills, insurance – health, disability, auto, renters/home, long term care, life, etc?? We’ve raised several generations of basic financial illiterates.

    • DeterminedMD says:

      Mandating everyone buy health care is just wrong. We have raised several generations, starting with the boomers, who overall as a group think accountability and resonsibility went way of the DoeDoe. As I have said over and over here at THCB, I have no interest paying for health care for smokers who refuse to quit, and will add people with poor lifestyle choices who become morbidly obese and will not make efforts to learn weight loss lifestyles.

      Let all the PPACA stallwarts call me Hitler, fake MD, and other clueless terms. People who make poor choices in wants and goals do not get free rides in cultures that practice accountability and responbility. Let Obama and the incumbents of more than 15 years from both parties stay around another 4 or more years, and this country is doomed from within and outside.

  15. Ammon says:

    I agree with your view. It’s the same (but in reverse) with auto insurance. Single males pay much more than single women.

  16. Bob Hertz says:

    Note to Barry and Maggie –

    You are correct that Medicare has seen a slowdown in the cost per enrollee.

    However, the number of enrollees is still going to grow from 45 million to about 70 million in the next decade. You just take the number of baby boomers who will turn 65, subtract those baby boomers who will die before they get to 65, subtract the current seniors who will die, and add back in the disabled who will qualify for Medicare…….. and you get to 70 million in 2022.

    70 million times $13,000 per person, which would be a 2% growth factor that we would be lucky to achieve, yields a Medicare budget of $900 billion a year. Add to that the cost to Medicaid for dual eligibles and nursing home patients, and I think you will see real strain on the federal budget no matter what.

  17. Maggie Mahar says:


    Thanks for your detailed reply.

    Can you give me your source for calculating how many will die before they turn 65, how many now on Medicare will die, etc. (Not questioning the numbers, but would be interested in reading the analysis and using the source in the future.)

    Just a few easons why the situation may not be as dire as it seems:

    1) There is now a fair consensus (based on the Dartmouth research, as well as other reserach that 1/3 of Medicare dollars are now squandered on unncessary treatments that provide no benefit; preventable errors, etc.

    I’m not suggest ing that we will be able to cut Medicare spending by 1/3 or anything close. But as we eliminate waste it is quite possible that, over a decade, we would cut Medicare spending by 10% or even 15%.

    For one, doctors will be paid bonsues if they keep their patients out of the hospital. (Hospital care is,a s you know one of the most expensive componeents of health care) Never before have they had an incentive to avoid hospitalization.( In many ways, it is often easier for a doctor to hospitalize the patient. )

    Palliative care is growing– more and more patients will be discharged from the hospital and allowed to die at home–with palliative care– rather than in an ICU. Aetna has figured out that it’s worth paying for pallilative and hosptice care because, evven if patients live longer (and often they do) the costs of dying at home rather than in an ICU or even a regular hospital bed are so much lower.

    Officials at Medicare know this, and I’m pretty sure that HHS secretary Sebelius will use her new power to raise payment for “undervalued servcies” by raising payment for palliative and hospice care. (Meanwhile she will lower payments for some surgeries for patients who medical evidnece shows will not benefit.)

    Greater use of palliative and hospice care will have a major impact on the cost of end-of-life care.

    In a recent poll about 25% of doctors say they plan to follow new guildelines on testing (which means less screening and testeing.)
    75% still resist, but 25% is a good beginning.

    As “shared decision-making” spreads, patieints whoreceive full information about risks, benefits, and side effects are likelly to elect fewer elective surgeries. (Research shows that when they have all of the informaiton, this is what happens.) Knee & hip replacements are just two examples. (Recovery is painful and after 10% of knee replacements, patients are still in great pain. When they have this information, some patients will say “Actually, it doesn’t hurt that much. Maybe I’ll try physical thearpy. . . Hip & knee replacements are God-sends for patients who have been immobilized by pain, but recovery is no picnic. It may not be worth undergoing the operation just so that you can continue playing a competitive game of tennis . . .

    Nurse practitioners are going to be doing more and more primary care and chronic disease management. The chronic disease management will help patients stay out of the hospital, and nurse practioners are
    significantly less expensive than PCPs.

    I expect that Medicare will begin negotiating with drug-makers and device makers on prices within the next few years. Medicare will institute a formulary, and there is no reason that it couldn’t save as much as the VA has.

    Finally, as I mentioned a great many boomers will be in much better health when they turn 65 than 65-year olds who entered the Medicare system 20
    years ago. Of course this means that they will live longer, but over the next 10 years, that won’t be adding to costs. (We could expect that many who make it to 65 will live another 10 years.)

    Of course boomers over 65 wilil suffer from chronic diseaes, but becuase they are in better overall health, I think we’ll stand a much better chance of keeping them out of the hospital. (That is key to costs.)

    As to Medicaid patients: Medicaid needs an overhaul. Utlimately, it probably should be merged with Medicare. But over the next 10 years, community heatlh centers will play a larger role in providing continuous, affordable care for these patients who, today, often have a hard time
    fnding a specialist (or even a primary care doc) will to see them in the
    private practice fee-for-service system.

    The Affordable Care Act provides funding to expand community health centers capacity by 50 percent.

    It’s impossible to “mark up” just how much savings will be achieved as a resullt of a particuarl provision in the legislation, but there are so many
    provisiions that aim at savings . . Cumulatively, they are likelly to have
    a major effect.

    I would add that we have no choice. We don’t have the resources to
    double Medicare spending over 10 years, and as they say on Wall Street
    “What can’t happen, won’t.”

  18. Barry Carol says:

    Bob –

    I agree with your estimate of 70 million Medicare beneficiaries by 2022. There are 47.6 million as of the end of 2011 according to There were roundly 40 million births in the U.S. between 1947 and 1957. Of the 2.4 million people who die in the U.S. each year, roughly 75% are 65 and older but, as of the end of 2011, 15% of Medicare beneficiaries were less than 65 years old – presumably those on social security disability for at least two years and dialysis patients. There will probably also be some upward creep in the number of people collecting social security disability benefits over time.

    The interesting part, to me at least, is that Medicare spending per beneficiary increased by 6.3% per year from 1991 to 2009 from $3,435 to $10,365 according to About 46% of that is for hospital care excluding care performed by physicians in a hospital setting. Without the addition of the prescription drug benefit in 2006, per capita spending still would have grown by 5% per year over that 18 year span.

    In the fiscal year ended on September 30, 2011, total Medicare spending rose less than 4% and for the first seven months of this fiscal year, it’s only up 2.5% adjusted for differences in the timing of payments from one year to the next and that includes the increase in the number of beneficiaries. So, per beneficiary spending has been very well controlled recently.

    As Maggie noted, there is also lots of opportunity to treat patients in a more cost-effective way. We still have a long way to go there. There is also a lot of potential to combat fraud more intelligently and aggressively. Assuming the economy gets back on a reasonable growth path, I think we could see stabilization in Medicare spending as a percentage of GDP and I wouldn’t even be surprised if it’s a bit lower in 2022 than it is now. As I said in my last post, I’m pretty optimistic about this issue.

    • DeterminedMD says:

      “For one, doctors will be paid bonsues if they keep their patients out of the hospital.”, as said by Ms Mahar above. I am a physician, and that comment really bothers me, as it smacks of the past efforts of capitation by private insurers that did not help quality of care in any fashion.

      And the fact that she asks for Bob Hertz to provide his source for his comments about growth of Medicare patient population size, what is that about? Oh, if it is only 65 million, then that supports a possible counter proposal of her’s?

      This morning’s CNN show at around 7:45AM showed that obesity, sorry for the pun ahead, as it grows as anticipated will end up increasing health care costs by almost a trillion dollars, by 2018, I think was the target date, and they were clear to note it did NOT include child/adolescent populations.

      Does that figure into medicare numbers as they stand now!?

  19. Bob Hertz says:

    To Maggie and Barry:

    I get my Medicare statistics from The Statistical Abstract of US — their health care section is about 25 pages and iit is terrific.

    The Abstract has some statistics on utilization that are fascinating and depressing. I don’t have my notes handy tonite so i am going from memory, but here are the basic numbers from 1990 to 2010 for Medicare Part A.

    The number of people on Medicare went from 34 million to 47 million during that period.

    The number of hospital admissions for seniors went from 12 million a year to 15 million a year.

    Medicare Part A spending went from $60 billion a year to $180 billion a year.

    While I realize that Medicare Part A has some home health expenses and medical education subsidies and DSP subsidies for the uninsured, still and all the “answer” to medical inflation is this:


    Hospitals have gotten steadily better at reporting the DRG’s that pay the best.

    Medicare could solve this in 30 days if it had the guts to pay hospitals on what I call a ratcheted per diem basis.

    Medicare would come up with a number like $2000 a day that will fit into a national budget.

    The patient diagnosis would mean nothing. DRG;s would be history.
    6 days for a bypass would pay $12,000 and 6 days for pneumonia would pay $12,000.

    If hospitals exceeded their budgeted days i, say, the 12th month of the fiscal year, then all days over budget would be reimbursed at $300 a day.
    Some doctors and hosptial staff might take a month off, as they do in Canada.

    This is approximately the formula that Germany used throughout the 1990′s to control hospital costs.

    It would lead to longer waiting times for hip surgery and cataracts and outpatient testing.

    Well, if we want to control expenses I think that is part of the bargain.

    I may be wrong and I welcome any corrections.

    But where I am not wrong is that Upcoding will kill us financially/

  20. Barry Carol says:

    Bob –

    Americans are nowhere near ready for anything that looks like overt rationing. Refusing to pay for services, tests, procedures and drugs that either don’t work or cost more than they’re worth is not rationing though. Fixed budgets for hospitals would probably result in rationing. With over 5,000 hospitals in the U.S. from large urban teaching hospitals to small rural community hospitals with very different cost structures, I don’t know how such a budgeting approach would work. Some areas are growing in population while others are stable or falling. It would be a nightmare in such a large, diverse and complex country like the U.S. Besides, we have lots of other strategies that we can try first and that have a lot of potential to mitigate cost growth. We should try them and I’m pretty sure we will. We do have overt rationing for organ transplants but that’s because there aren’t enough organs for every patient that could benefit from one and we’ve developed elaborate protocols to determine who gets them and who doesn’t. That’s acceptable because there is no viable alternative.

    I attended a conference a couple of years ago at which a healthcare expert from Germany made a presentation about the German healthcare system. If I remember correctly, she noted that when hospitals were paid on a per diem basis, they liked to admit patients on a Friday so they could spend the weekend not receiving much care which made those days quite profitable for the hospital. Patients often were in the hospital longer than they needed to be in order to maximize payments. My understanding is that Germany moved toward the DRG system for hospital based care after that.

    It’s no easy task to get the incentives right. I think bundled payments make sense for surgical procedures. Capitation probably makes sense for primary care and maybe for managing chronic diseases like asthma and diabetes. We need good price and quality transparency tools so both patients and referring doctors can easily find out what services, tests, procedures and drugs cost at contract rates and patients need to be exposed to higher coinsurance amounts if they insist on going to a more expensive hospital when its quality is not better or even worse but it has a recognized brand name.

  21. Maggie Mahar says:


    Thank much for the source. I’ve put it in my file.

    On Medicare spending on hostpials, you write: “Medicare could solve this in 30 days if it had the guts to pay hospitals on what I call a ratcheted per diem basis.Medicare would come up with a number like $2000 a day that will fit into a national budget.
    The patient diagnosis would mean nothing
    Medicare would come up with a number like $2000 a day that will fit into a national budget.

    . DRG;s would be history.
    6 days for a bypass would pay $12,000 and 6 days for pneumonia would pay $12,000.”

    Here, I have to disagree. Health care is not a commodity. Six days in the hospital for one patiient will require far more care than six days for another.
    And we cannot assume that these will “balance out.” (Some hospitals see far more difficult cases. Some hospitals see much poorer patients, who are less healthy overall.; Other (often small surburban hospitals) see easier cases.

    I firmly believe that we need to cut health care spending, but we must use
    a scalpel, not an axe.

    The patient diagnosis does mean something; it means everything.

    But we have have enough reserach to set prices as to how much it should cost an hospital (on average) to care for a healthy patient who has had a hip replacement, per day, vs. what is should cost to take care of a 80-year-old burn victim per day, or what it should cost to care for a preemie baby in an ICU per day.

    Those are the standards that can be used when paying “Accountable Care
    Organizations” a bundled reimbursement to pay for all of the care that
    a particuarl patient (who fits a particular medical profile) needs when suffering from a particular condtion. If the providers are able to achieve a good outcome (again compared to an average for that particualr situation)
    at a lower cost , they receive a bonus that they share. If they don’t they’
    receive no bonus, and in some cases, are paid less than average.

    This will encrouage hospitals and doctors to work together (either they all
    win or they all lose) and to recognize that “doing more” doesn’t necessarily lead to better outcomes.

    But I do agree that patients can wait somewhat
    longer for catract operation, hip operations and outpatient testing.

    We have too many small hospitals in this country that are not used at maxiumu capacity. This is one reason why hospital care is more expensive in the U.S. than in Europe. (You can Google this, or I could, and
    provide the reference.)
    Some of these hospitals shoudl be closed– zeroing in on the hosptials that are providing sub-par care because they are just not that safe.
    Some could be turned into community heatlh centers or long-term heatlh

    Fewer hospital beds would mean somewhat longer waits for non-emergency elective surgeries but this would not hurt the health of the nation.

  22. “We have too many small hospitals in this country that are not used at maxiumu capacity. This is one reason why hospital care is more expensive in the U.S. than in Europe. (You can Google this, or I could, and
    provide the reference.).Some of these hospitals shoudl be closed– zeroing in on the hosptials that are providing sub-par care because they are just not that safe.Some could be turned into community heatlh centers or long-term health centers.Fewer hospital beds would mean somewhat longer waits for non-emergency elective surgeries but this would not hurt the health of the nation”


    Dr. Rick Lippin

  23. sz says:

    Where *are* the women? At the risk of sounding shrill, vasectomies are covered. Birth control often is not. So we’re not even supposed to make the decision to avoid pregnancy ourselves? No wonder our premiums are higher.

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