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POLICY: Why covering the uninsured matters

So there’s been lots of back and forth in both THCB and Don Johnson’s BusinessWord about the uninsurance issue. Take a look at my comments alone to understand some of the issues involved.  And randomly enough it’s "Cover the Uninsured Week".  The irony of Orrin Hatch, a crypto-fascist from the wonderful state of Utah, being one of the Senators kicking off the week is just too delicious to forgo a mention. But the real issue and the reason to care is that, if you don’t have access to health insurance, your care and your health will be worse. In fact CDC data show that millions of uninsured adults forgo needed treatment for chronic health conditions. And of course who pays when they do show up for the treatment they need when these conditions have got worse? They do with their pain and those of us who are taxpayers or insured pay with our money.

Meanwhile Don fails to answer my question about what’s the difference between subsidies for the uninsured and more taxation, other than saying that universal insurance would not answer the question for the poor and the uninsured!!  That’s just ridiculous and is patently untrue.  If health care was free at the point of use, people wouldn’t not get it for cost reasons nor would they be beholden to huge debts because of it — those are by far the two worst symptoms of uninsurance. But he does raise the real politik situation when he says that:

What is the greater good here, take care of the 93% of Americans who
are insured today or the 7% who are uninsured for a year or more? I
think I know how the insured and their representatives in Congress will
vote.

And that’s the problem. So long as the majority (actually only 80%)
perceive their plight to be divorced from the minority, and no one
gives a tinkers cuss about the poorer 20%, we end up with what we
have.  Of course in reality we’re all mostly getting a worse deal than
we perceive and we’d be better off financially in a universal system that had built in cost constraints. So we are not seeing a "greater good". But then again hiding information from us is what the system’s all
about.

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  1. I live in a country that has cover for every man, woman and child.
    I have also lived in the USA under the system you have there.I can tell you that a socialised system works better.Our tax payers all pay 1.5% of their income toward mediare.A lot of people also choose to have private cover so that they can choose to have there own doctor and the hospital of their choice.
    My husband recently got cancer. He is getting the best of care and its all free.He is American and I know that if we were still in The USA this would have cost up to $500,000 for his treatment.
    The problem is you have never had a socialised system so you wouldnt know if its better or not.
    It is a basic right of all humans to be able to see a doctor. How can you call the USA the best country in the world when you when you have so many poor and sick people who can afford to go to the doctor.
    Oh and by the way Australia has no national debt.

  2. Sure Rick,
    State your “clear” and valid question.
    Hillary said, “No, No, NO tax free HSAs put to much money in the private sector.”
    Senator Ted Kennedy said, “I’m the HSAs biggest opponent.”
    President Bush said, “Get low cost HSA health insurance and combine that with a tax free HSA and you have yourself affordable healthcare.”
    No wonder President Bush has a mandate.

  3. Ron,
    You certainly are right about not understanding me. So much so, you dodged answering clear and valid questions by going after the minutiae. I’ll refrain from challenging what you’ve already accepted as gospel. It wastes both of our time.
    Single-payor, universal coverage isn’t Socialism as long as the delivery mechanism stays in the private sector. And it’s just common sense. It’s a scientific reality that the broadest pool is the cheapest solution, your lectures about realpolitik notwithstanding. I know you think you’ve found a bargain, but the potential is there for it to cost even less. If you really want to pay more for what Don Johnson and his ilk falsely call “markets,” or the latest gimmick (whatever acronym you want to hang on it), I guess that’s your privilege, but go really study the subject in an academic setting, not on the op-ed page of the medium of your choice, and then tell me you still feel the same way.

  4. Rick,
    You ask, “When you are getting $10,000 worth of medical care for $5,000 that the government didn’t collect any taxes on, where’d all that unspent money go?”
    You are deep thinker Rick. Then you continue, “You know as well as I do, it didn’t disappear. It’s a zero sum game….blah blah blah.”
    Sorry Rick I don’t understand your rantings. I do understand FSAs and MSAs. The FSA is an account that what you don’t spend by the end of the year you lose and it is illegal to get interest on your balance.
    The MSA is the original name for HSAs. My MSA automatically switched into a tax free HSA. You say that the MSA has been around a decade or more is wrong, sorry Rick. My MSA was dated the first day, 1/1/97.
    Don’t pay $1,000 a month for health insurance, that’s insane. Many families have HSA insurance for $150 a month then they grow their savings in a tax free HSA, with a mutual fund option. Of course when government buys insurance the cost will be over a $1,000 a month for family coverage.
    There are no politicians calling for Socialized medicine except Howard Dean and John Dingle. So good luck those of you who demand Socialism, you are the smallest minority in America.

  5. //system that tries to squeeze on the costs, or dodge the events. //
    I think I mentioned here before that a few months ago the CA legislature rejected reforms that would have improved access to retirement homes. The argument was that people would “come out of the woodwork” to claim the benefit. What astounds me is that “woodwork” is an argument *for* reform, not *against* it. Those people in the “woodwork” are the ones who are living who-knows-how while they are being denied affordable housing and help with their disabilities. It seems self-evident to me that aging is a universal condition: every public citizen should be interested in providing for eldercare. Instead, the CA legislature is hoping all the elderly people will remain quietly in the woodwork while they hobnob with lobbyists. I challenge our public representatives to think beyond the woodwork analogy and consider where and how these real people are currently living. I’m willing to bet the majority of them are burdens on their families being subtly urged to pursue a Kervorkian solution.

  6. Ron,
    Lighten up. You’re a little too full of yourself. The fact that gadfly has worked in the insurance industry and doesn’t understand HSAs just goes to prove they aren’t the panacea you’re trying to sell everyone on. All you’re doing is proving HER point by poking fun at her ignorance. HSAs are, after all, just the latest spin on MSAs and FSAs, which have been around for a decade or more. By now, if people don’t understand them, or trust them, or have the time/energy/inclination to try, the whole concept is a loser, no matter how well it works.
    Someone further up this thread made the entirely valid point that money is still money, and what it buys still costs what it costs. I know it’s a salesman’s job to tell you that, yes, there is such thing as a free lunch, but the deeper thinkers know that somewhere over the next hill someone WILL pay for it. So you tell me, Ron: When you’re getting $10,000 worth of medical care for $5,000 that the government didn’t collect any taxes on, where’d all that unspent money go? You know as well as I do, it didn’t disappear. It’s a zero sum game, so tell me who lost? Not your problem, right?
    Unfortunately, the not-my-problem attitude is counter to the basic concept of social insurance, which is to spread the risk of a low-probability, high-cost event across the broadest pool of people. That’s why single-payor, universal coverage would be the best solution: because all 290 million or so of us would be in the same pool. But instead of accepting that scientific certainty, we have accepted as system that tries to squeeze on the costs, or dodge the events. Well, I’ll make the point again: it’s a zero-sum game, so who’s getting squeezed, and who’s being dodged? Go ahead and keep selling the end of the rainbow, and just hope it’s enough that you’re not the one someday being squeezed or dodged.

  7. //don’t know anything about HSAs.//
    I do now know *something* about HSAs since you have been kind enough to explain them to me. I also welcome corrections of fact.
    //You have made many incorrect statements about HSAs.//
    Which I’ve corrected in response to your remarks. Feel free to correct further instead of just discounting me as a know-nothing.
    //43% of HSAs had no previous insurance. You call these uninsured people rich, you’re a hoot.//
    You said people had to buy insurance to qualify for an HSA, and those people needed money to do that. This makes it sound like those 43% were not excluded because of poverty – they were people who could have afforded insurance and they were holding out for a better deal.
    Now, you have the choice just to stand there and laugh at me or explain what I’m misunderstanding here.

  8. Remember Gadfly you don’t know anything about HSAs.
    You have made many incorrect statements about HSAs.
    43% of HSAs had no previous insurance. You call these uninsured people rich, you’re a hoot.

  9. //cost less after it become part of the Government domain? //
    Universal doesn’t mean run by government, though it would probably have to be in some respect. Universal means the health plan covers everyone. Non-universal health plans are cheaper because people are excluded. If this country continues to deny universal health care, my hope is that those excluded people, suffering and in pain, will go stand in front of the house of the privileged covered person and make them watch the atrocities they’ve shrugged off.
    Another thing to consider is that when health care will only be offered to some, people will make conformist decisions on a lot of issues because they will be afraid of heing kicked out of the health care club.
    //pay out-of-pocket to have your wisdome teeth pulled?//
    Because as a grad student, I didn’t have the money. I made an average of $6000.00 a year. One month I had to live on a bag of baby carrots and free popcorn from the student lounge. It’s naive to expect people just have money. Education and skills do not magically transform into money.
    //simply shift label of cost from “premiums” to “taxes”.//
    Taxes will share the costs instead of randomly dooming families to catastrophic debt, and it will allow for the coverage of the poor. Premiums only work for people who have the personal resources to pay them.
    //saftey net developed for those who had the misfortune to be uninsured and get real sick//
    Currently uninsured people + insured people = everyone. That’s universal.
    //Medicare has deductibles and premiums.//
    One of the AARP’s complaints is that these deductibles and premiums increase faster than the payouts for Social Security – which has resulted in a support cut for the elderly. The situation is worse because of the way the government has hidden inflation. This keeps social security increases low. Meanwhile where I live, the cost of food and housing *doubled* over the last few years, and it was an expensive urban area in the firest place. One of the food staples I normally buy (chicken) went up by a *dollar* this year – at all the grocery stores in the area at the same time! The dishonesty about inflation is an effective support cut for people on a fixed income, too.
    //me-me-me society//
    Yes, it’s just so selfish to need food, water, shelter, and basic health maintenance so a person can remain in good enough condition to contribute to society. Rich people using HSAs to divert money from the general tax base – that’s “me-me-me.”

  10. I can’t understand why someone would support universal coverage on the basis that health insurance costs too much (or doesn’t cover dental).
    Do you honestly believe through some sort of magical economic theory that it will cost less after it become part of the Government domain? Look at my earlier analogy, that’s like thinking a Mercedes Benz will cost less if the government buys than if I buy it. The universal coverage theory is flawed because of this. It will simply shift label of cost from “premiums” to “taxes”. Why do you think no career-minded politician supports this idea.
    If you want examples of how government healthcare works look at the existing models, Medicare, Medicaid, CHAMPUS, and military health care. They are all huge drains on budgets. Remember the furor over adding prescription drug coverage to Medicare? Other than being grandstanding by the left to thrwart a republican president, one of the loudest arguments was costs…and that was just Rx!
    Do you honestly think that with a completely mandated government plan you will have the dental coverage you need? (PS why didn’t you just pay out-of-pocket to have your wisdome teeth pulled?) The process will become politicized. What’s covered, what’s not? Provider groups spending millions of dollars lobbying politicians just to increase their share. The idea is naive.
    If the argument for universal health care is helping the poor well…that is already here. Its called Medicaid. Now, there is a social stigma attached but it is government sponsored health care for the poor. Now, I believe it should be expanded by increasing the poverty level required to be eligible , or some kind of means-testing for determing buy-in by those above a income level.
    If the argument for universal health care is helping the sick and uninsured, then I agree with you…that is a major problem. There needs to be a saftey net developed for those who had the misfortune to be uninsured and get real sick at the same time. But there are other ways to do this other than claiming the whole system sucks lets get rid of it.
    Don’t forget traditional FFS Medicare has deductibles and premiums. Don’t think that will not continue to increase as the pay-as-you go sytem loses more laborers. It is not the answer.
    My sense about this whole universal health care debate is that there are some well-minded, and respected thought leaders who support for the right reasons. However, the practical application of this concept in me-me-me society like America is difficult to implement.

  11. DMC – Matt also floated someone else’s proposal that the VA eventually be extended in the same way.
    I’m pulling this out of thin air, but I think part of the political problem is that everyone thinks of Medicare as a bloated moneysuck, so extending it might be perceived as fostering an even bigger bloated moneysuck…
    Or, someone could get Medicare a better press agent. 🙂

  12. I’d like to address a point NOT about HSAs…
    Matthew wrote …And that’s the problem. So long as the majority (actually only 80%) perceive their plight to be divorced from the minority, and no one gives a tinkers cuss about the poorer 20%, we end up with what we have…
    Anecdotally, I think this may be changing. My politically-conservative parents are rethinking their political philosophies _because_ of their health insurance woes. My mom’s employer, a medical practice, provides the insurance, which is very expensive.
    I’ve often argued to my parents about the need for single-payor system in this country, including during the past two years while I’ve been employed by one of the country’s largest health insurers. My arguments seem to be working, as the comments they make vis a’ vis single-payor vs. the status quo are becoming quite positive.
    Another point of interest for me is that we already have the model for a single-payor system: Medicare. Has a proposal ever been floated that would (gradually?) open Medicare to every citizen of this country? Seems like the logical way to do it: the infrastructure is already in place, the provider network is almost all-inclusive, etc.

  13. //you are a blogger at the Health Care Blog//
    I’m a big fan of Matthew’s, but I consider myself an interested learner at the Health Care Blog. I’m not a fellow blogger as far as the analysis of the health care system is concerned.
    I’m glad I’m starting to understand the issues around HSAs. It sounds like public awareness should be raised on this topic.
    Abby – with the amount of people being furloughed from the workforce in school, you’d think there would be some sort of transitional health care plan to cover any gap between school and work. Also, my grad school plan did not include dental. I wasn’t able to get my wisdom teeth pulled in time, and I’ve been living with consequences ever since. More than anything else the last five years of my life have been a struggle for dental insurance, lol. I would like to see universal health care to get health care out of the hands of universities as well as employers. :-p

  14. Let me be clear, that I’m talking about a chronic condition. Group is the only thing that works.

  15. Correct Gadfly,
    HSAs are the best tax dodge for the rich or anybody but media censorship is in full swing.
    President Bush has discussed HSAs in every speech for the last two years but the media refuses to report and people like you don’t have a clue even though you are a blogger at the Health Care Blog.
    Matthew will do a better job in the future on reporting legislation, I hope.
    Matthew these bloggers need basic knowledge, please help them.

  16. //You do have opinions, mostly wrong.//
    Feel free to correct any factual misunderstanding. My opinion is evolving on HSAs.
    //Fortis Insurance Company reported that 43% of HSAs had no previous insurance.//
    The point about insurance is confusing me greatly. Are you saying that HSAs are an incentive for previously uninsured people to buy insurance? It still sounds like we are paying off the affluent, and the price is coming of the general tax base.
    //Unless the uninsured are the rich Gadfly, do you think?//
    This seems to be the claim you are making. You are talking about people who are able to shell out for insurance plus sock money away in an HSA. The benefits magnify with greater contributions, and it’s a tax shelter, so HSAs should be attractive to the rich…

  17. Gadfly;
    You do have opinions, mostly wrong.
    Fortis Insurance Company reported that 43% of HSAs had no previous insurance.
    So your assumptions are wrong again.
    Unless the uninsured are the rich Gadfly, do you think?

  18. //How can you argue when you are so ill informed about health care reform with HSAs?//
    I’ve said upfront I know virtually nothing about HSAs. Does that prevent me from asking questions? After all, I may be called to vote on this at some point.
    //Roths are taxed at deposit, HSAs are not, see the difference?//
    This is just turning into a bigger and bigger tax shelter. It sounds like HSA money is just tax free. No tax on the contribution at desposit or withdrawal. No tax on the interest. My understanding is there’s not much oversight on whether the withdrawals are even applied to health care – that’s self-reported.
    So far it sounds to me like HSAs are intended to hide health care problems from wealthier people, i.e. those with political pull. Plus it gives them an opportunity to get richer. Welcome to welfare for the rich. That untaxed money is being diverted from the public chest.

  19. Gladfly,
    1st — You can’t have an HSA unless you have HSA health insurance, period.
    So if a family had $10,000 HSA balance and then a family member got cancer they could use their HSA funds to pay the $5,000 deductible. They would still have $5000 in their HSA and insurance would pay 100% after the deductible. Plus, all other family members will have met their deductible too.
    2nd — How can you argue when you are so ill informed about health care reform with HSAs?
    3rd — Roths are taxed at deposit, HSAs are not, see the difference?

  20. //Are you saying the family needs more in their HSA Gladfly?//
    I’m saying that if a poor family saves up $10,000.00 in their HSA, it’s not going to do them a heckuva lot of good in case of a catastrophic medical condition. That’s two nights in the hospital, before physician’s fees.
    //President Bush wants all Americans to be able to deduct the cost of their health insurance.//
    Deductions don’t matter if you don’t have the income.
    //tax free HSA has tax free deposits, growth and withdrawals.//
    Like a Roth IRA, with much larger contributions allowed, right?
    //Some crazy people think that if they were in control of all American health care spending they would do a better job.//
    I have to agree that the person most likely to be put in charge probably won’t solve the country’s problems: for one thing, cynical me believes that people get to those sorts of positions through the connections formed through a privileged position in society and all sorts of corrupt decisions on the way to the top. My theory is the more powerful a person is, the less likely it is that they were actually the right person for the job.
    I think I stated my position before that some sort of expert mediation is a necessary evil, and this country will not be able to deal with the complexities of health care situation as a chaotic heap of individual decisions. Sorry if I just made a demeaning comment about the Ideal of the Rugged Individual, but that’s just the way things are. Individuals can only cope with so much. Did you see the latest obesity study attributed part of the problem to longer working hours and commutes. People just do not have an infinite capacity for either thought or activity. They need to delegate, but they also need a way of preventing the people they delegate to from becoming tyrants or the mafia.
    Therefore the only thing to do is figure out how to cultivate more trustworthy and socially progressive advocates/negotiators. And these people should be crafting a workable plan that people will pay into because they perceive it to be fair and successful.

  21. Yes it’s pretty nice that a multi millionaire, President Bush, will go tax free with an HSA and set a wonderful example for the rest of America. Thank you President Bush. Yes the best tax cut is no taxes.
    IRAs and 401Ks are old taxed accounts. The tax free HSA has tax free deposits, growth and withdrawals. Plus, HSAs are not restricted to only 5 government investment options. HSAs have the freedom to be invested into your choice of mutual funds or FDIC insured at the bank.
    President Bush at the first debate in Ames said, “I believe in more options, more choices, more FREEDOM in Medicare, including Medical Savings Accounts (MSA).
    Some crazy people think that if they were in control of all American health care spending they would do a better job. Trust me, nobody is going to appoint anybody to be health care czar anytime soon.

  22. Gladfly,
    You say, “The problem with credits is they are based on income. For the poor, this isn’t going to be enough money to fund care. Plus I think the IRS then taxes credits as income…?”
    The example I used was a poor family of 4 (30 year old parents) in Lansing, MI were the credit is greater than the cost of HSA health insurance ($2,000 Credit is grater than $1,800 cost). Plus, the Feds will deposit $1,000, tax free, in the families HSA.
    Are you saying the family needs more in their HSA Gladfly?
    President Bush wants all Americans to be able to deduct the cost of their health insurance. John Kerry was against this idea even though he pays no taxes on his own health insurance. His concern is that group health employee plans would lose market share.

  23. //Have you never read of people who suffer medical conditions//
    Not to mention how many are secretly fired *because* they have a medical condition. Even if the medical condition doesn’t affect work performance, if an employee just discloses it, then the employer will still be afraid of future legal hassle (or just HR hassle), and will fabricate a reason to fire the employee. It’s incredibly hard for the employee to prove the real reason, so even available law doesn’t protect them.
    //The White House and both Houses of Congress are Republican controlled and it wasn’t in their platform, sorry.//
    I’m counting the days until the next election. Maybe people will be able to figure out who is really benefitting from the Republican platform by then.

  24. //”Hopefully, when I’m an old guy my HSA will be bulging with money.”//
    Yeah, a rich guy like Bush would be happy to sock away a lot of money in his tax shelter.
    //government-guaranteed health coverage insures they’ll never need to touch their HSA.//
    People are allowed to have HSAs on top of govt. insurance. What a scam!!!
    //Socialism just costs too much. //
    I don’t understand this. Money is money. HSAs just say that individuals get to accumlate it on an unequal basis. If everyone somehow gets covered, this costs the same as socialism. All HSAs, or other individual profit plans are, is a new privilege heaped on privilege, exacerbating inequality and leaving a significant number of people to suffer and die as an “act of God”.
    // middle-aged consumer. Insurance companies don’t want them. //
    Kaiser is certainly scheming to dump the old sick people and attract the young healthy people who will just pay in to the system.
    //manufacturing is a cost for them that they prefer to buy from other companies.//
    I think businesses have discovered a machine that puts out more energy than you put in, creating infinite residual income. Manufacturing requires labor. You just suck knowledge out of the air (or of the Internet) and resell it for its Just In Time value. IBM consultants invented the free lunch.
    // that forces them into low paying unrelated jobs//
    Or just keeps them out to pasture, with productive skills going to waste…
    //Medicare/medacaid funds)to use when a catastrophe occurs.//
    But…part of the problem is getting the catastrophe diagnosed so it can be treated. Diagnosis is an entry-level event: the result of an encounter between a physician and patient. If medical care is contingent on “catastrophe”, then that diagnosis never occurs.
    And perhaps this whole debate is being skewed by the frivolous tone of the word “mean”. How about something more like Monster of an Inhuman Being Promoting an Acceptable Level of Atrocity?
    //many people do you think are staying underemployed just for the health benefit? //
    And how many people were tricked into taking that employment by a vague promise of “health benefits” that turned out to be high deductible, high contribution plans that effectively cut their promised salary? There should be laws that demand more transparency in this regard.
    //the folks at the bottom.//
    For the right wingers on deck, I would like to point out that churches (even major denominations) often provide no health insurance for their staff. That’s your fundamentalist “base” that you’re being “mean” to.
    //they are poor because they are mentally or medically incompetent and/or illiterate and unemployable (thanks to our terrible eductional system), //
    I beg to differ. Employment isn’t allocated. Employees have to be chosen by employers who often have an agenda beyond simple “skills”. There are a lot of highly skilled people who are unemployed because they haven’t been chosen as a “good fit” yet.
    //qualify for Medicaid and other safety net programs, //
    Not if they’re single and able to work.
    //It’s their choice to be uninsured.//
    The question is whether this is a reasonable choice under the circumstances. Society benefits from making this a *reasonable* choice.
    //why we’re the super power //
    Some would argue that’s an illusion being kept up by phony statistics at this point.
    //just like 401Ks prepared us to take care of our retirement planning//
    I hope someone notices that people are using these 401ks to survive unemployment (and losing the eartly withdrawal penalties), and they will have nothing for retirement. Another common use is to take a loan off of it to pay for a house of college tuition.
    //complain about malcontents who can’t hold jobs while the pool of available jobs continues to shrink, or are we going to redefine our economy in ways that continue to attract and generate wealth in new ways.//
    Thank you. 🙂
    //Maybe I should run for Congress-//
    Well, the “Mom in Tennis Shoes” did that. Why not? 🙂

  25. Abby,
    If someone is diagnosed at 19 they need individual coverage that they can’t be singled out for cancellation.
    Last year I had a young child of a client spend 3 months in the brain trauma center because of bull riding. On Jan 1 of this year he is back in the brain trauma center because of an auto accident. Here again his parents were smart and choose insurance with a “Dependent Conversion Priviledge.” What you say your employer’s coverage doesn’t have that? You have to be smarter about health insurance Abby. I’m glad your here and learning.
    I say get insurance before you get sick or hurt. Don’t wait till you are too sick to work and get dropped from your employee insurance and then expect us to cover you, that’s insane.
    Sick people love paying their deductibles with tax free funds as well. That’s why sick people love HSAs.
    Don’t hold your breath for Socialised Medicine anytime soon. Only Howard Dean wants a single payer system. The White House and both Houses of Congress are Republican controlled and it wasn’t in their platform, sorry.

  26. Donald E.L. Johnson says, “The poor have less access to care because they’re poor. No, they are poor because they are mentally or medically incompetent and/or illiterate and unemployable (thanks to our terrible eductional system), which is why they’re poor and don’t have access to private health insurance.”
    That’s a sentiment worthy of Little Green Footballs’ readers.
    Have you never read of people who suffer medical conditions which put them into poverty? Have you never watched massive layoffs of good productive workers in manufacturing plants? Have you never watched entire industries disappear (see textiles, some agriculture, the whole dot-com business in the early 2000s)?
    Your generalization is outrageous.

  27. //refundable tax credit for the poor to purchase HSA insurance.//
    The problem with tax credits is they are based on income. For the poor, this isn’t going to be enough money to fund health care. Plus I think the IRS then taxes tax credits as income…?

  28. In Texas there is a limit on pre-existing condition exclusions of one year. If you don’t keep HIPPA protection through group coverage (the reason I keep my expensive association plan), insurance companies can refuse to insure you entirely. Texas has a high risk pool. If you are ineligible for group protections and turned down by three insurance companies for full coverage you can join the high risk pool. But the process of documenting the turn-downs takes several months and several hundred dollars in premium deposits since you have to go through the full underwriting process with three companies and your premiums reflect the cost of being in a pool with cancer survivors and the chronically ill. If an insurance company wants to exclude my hiatal hernia I don’t have a problem because it’s never cost a dime in health care and if I look at what my mother is experiencing with hers, is unlikely to be a major expense provided I maintain good weight and diet. But an exclusionary rider that covers my entire gastro-intestinal tract pretty much eliminates just about anything I could get hospitalized for if the insurer wants to interpret it to the fullest extent. It’s like not having insurance and yet paying a full premium. My insurance agent was originally as enthusiastic as you were because he had seen my life insurance physical results and they were great (height, weight, blood work all beautiful). He was shocked by my rating but not really prepared with alternatives. I kept COBRA for 18 months and transitioned to rapidly increasing premium association plan when that ran out. I actually believed when I did my middle age screening tests that I was making myself more insurable by proving out that I was fairly healthy. Instead I documented a health condition that I had had all my life which has cost insurers nothing, but will cost me from now on. That is why I am an advocate of more, not less insurance regulation because the overall concept of insurance protection should be that dollars I pay over time should help protect me against future medical expense. The idea that insurance companies should be able to completely avoid claims by disqualifying any risk regardless of what deductible or percentage of out of pocket costs I’m willing to sign up to isn’t right. I notice you aren’t singing the praises of HSAs anymore. As I said before, if President Bush actually went through an underwriting process, I think he’d sing a different tune too. For those with no documentable risk factors, they are great but if you answer one health question wrong you are headed down a path of uninsurability. We need to fix that. Maybe I should run for Congress–one day as a member of the House of Representatives and I’m guaranteed government-paid medical coverage for myself and my spouse for the rest of my life. As long as politicians don’t have to experience the issues related to insurance underwriting that we middle-aged folks are going through they aren’t going to see an issue and as long as insurance brokers are using teaser rate examples instead the more detailed discussion we’ve had here most insured people won’t understand how ugly things are until they leave a corporate umbrella and actually go through underwriting. Ron, I do appreciate the fact that you’ve confirmed some of the issues I’ve raised through your examples.

  29. Okay, so what happens to the person who gets a chronic condition at age 19? Screwed in the individual insurance market, that’s what.
    Stupid, stupid system

  30. Sue,
    Michigan state law will not allow exclusionary riders either. This is a very dangerous state law. I tried to enroll a family that saw a Business Week article called, “It’s enough to make you sick,” which is the insurance they had. The Mother was just diagnosed with non-cancerious uterine cysts. In most states we would simply rider that condition and she could get coverage. With that state law with no riders she was a decline. The state should let their citizens have the choice of a rider instead of making their citizens automatically uninsurable. So Texas is that way too?
    Iowa makes their overweight citizens uninsurable that can be insured in other states, go figure.

  31. Ron,
    I had an endoscopy and colonscopy the last year of my corporate job (plus several other screening tests like mammograms, etc. that I had put off over the years just to make sure I didn’t have any health risks before I went independent). None of these test revealed chronic conditions requiring treatment or any unusual cancer risk. The endoscopy confirmed the hiatal hernia even though I’ve never been treated for it. I acknowledged it on my questionnaire because I had to list every doctor visit I’d had over the last five years. With my current plan I was also “rated”. I appealed. The letter I got back ties the rating to the hernia.

  32. Sue,
    I have never heard of an exclusionary rider because of a “Family History” of hiatal hernia.
    You were rated for some reason, what was it?
    Insurance premiums go up about 3% a year because of age attainment.
    I don’t use Golden Rule instead I use the first company with MSAs.

  33. Ron,
    Funny you should mention Golden Rule. My insurance agent quoted me on them 3 years ago. The initial estimate was about $220 a month with a reasonable deductible. My insurance agent had done my life insurance underwriting about 3 years before and was convinced that I would get the lowest rate based on the physical done for my life insurance policy. So I paid the premium and went through the process. The underwritten rate was closer to $300 a month and they wanted to exclude my entire gastro-intestinal tract as a pre-existing condition indefinitely (now Texas limits that to one year), because I have a family history of hiatal hernia. It took me two months to get my initial premium payment refunded when I said no that option. I’m in El Paso, not Austin. My current plan qualifies as group insurance through an association and therefore I don’t have to live with pre-exisiting condition exclusions. One of the big myths of current insurance theory is that you get underwritten at the published low risk rates. Cross the mid-40 line and insurers go to great lengths to take your money because they don’t underwrite at those rates and if you truthfully answer the questionnaire everyone looks 104.

  34. Wake up and smell the coffee Don. HSAs are a transition program to get Americans trained to not expect employers/insurers to pay for health care anymore, just like 401Ks prepared us to take care of our retirement planning and privatization of social security will gradually make us responsible for our government-sponsored retirement benefits. I’m not going give up $150K annually in consulting fees and take a job at Home Depot just to get health insurance. Most service companies aren’t looking for executives with 20 years of manufacturing-related expertise, so just assuming that a manufacturing person can switch equivalent management or technical positions in banking or healthcare isn’t valid. They can hire younger people who don’t know their industries much cheaper than older workers with a lot of unrelated expertise. At the same time I realize that spending $6500 a year on insurance premiums for a policy with a $5K deductible is stupid and note that my current premiums have been increasing about $300 every six months for the last 18 months so I can assume that at some point I’ll have to switch policies because the $6500 will jump about $600 a year. That’s not comprehensive health insurance, yet I do so that I am protected from the possibility of catrostrophic medical expense. I’d love a policy that cost me $3600 or less a year with a $5K deductible. That would be reasonable for my age and incidence rate and I really don’t mind paying for my day-to-day health care. If you do the math, the difference in tax payments driven by a salary in a Home Depot job vs. my market value as a management consultant in manufacturing markets, legislation that drives affordable health insurance that keeps me in maximum earning range pays for itself. And when I look at some my industry friends who have gotten in the same boat, they are also finding that consulting is an acceptable transition career that keeps them in maximum earning range. The society and job structure you brag about existing in the 70s – 90s–it’s not there now and many middle-aged workers who have done everything right in terms of acquiring job skills and remaining productive, are finding themselves at a career deadend because their industries have shifted their job tracks to Asia or India. And in 20 years now that we’ve given away the economic engine represented by the employment/innovation structure provided in manufacturing you can bet we won’t be a superpower. The writing is on the wall. The question is are we going to bury our heads in the sand and complain about malcontents who can’t hold jobs while the pool of available jobs continues to shrink, or are we going to redefine our economy in ways that continue to attract and generate wealth in new ways. The American way has been change and redefinition–we are the guys who unleashed the industrial revolution and the technology revolution. Don, you are the guy who locked in the past if you don’t recognize that those “revolutions” are now passing our economy by. The “service” revolution only works if we create innovative ways of delivering services, because traditional service businesses are just as vulnerable to outsourcing as manufacturing was. The model of large organizations employing large numbers of highly paid individuals with comprehensive benefits is dying. However, technology enables creative individuals to remain productive in niche pursuits. We need to find a way to feed that, vs. milking it with outrageous insurance premiums tied to zero benefits.

  35. Hi Sue,
    First, the HSA plan I quoted in Michigan is also in Texas. Golden Rule Insurance is also in Texas.
    Second, you need a new insurance agent, quick. Your present insurance company must have you in the computer as 147 years old. You say you have Non HSA insurance paying over $500 a month or $6,500 a year (Currently you have a $5000 deductible then owe 20% coinsurance there after). I don’t know your exact zip code so I used Austin (President’s home) Zip Code 78799 and a 47 year old female to run a quote.
    HSA insurance must pay 100% with a $5,000 deductible on a single and your cost is under $200 a month. If you switched to HSA coverage your coverage switches from 80% to 100% and you save enough money to buy a new Honda Accord!!!! Plus, now you can pay your medical expenses (medical, vision and dental) with tax free funds from your HSA.
    Like President Bush says, “Become empowered with a tax free HSA.”
    My software for quoting is not online but our competitor’s is at goldenrulehealth.com
    Golden Rule Quote: 47 female preferred in the 78799 Zip Code with HSA $5,000 deductible is $145.75/month.
    People always ask me, “Why didn’t my insurance agent tell me about HSAs?”

  36. Matthew claims: “But the real issue and the reason to care is that, if you don’t have access to health insurance, your care and your health will be worse. ”
    Big assumption. The poor have less access to care because they’re poor. No, they are poor because they are mentally or medically incompetent and/or illiterate and unemployable (thanks to our terrible eductional system), which is why they’re poor and don’t have access to private health insurance. But even then, these people are likely to qualify for Medicaid and other safety net programs, so they have access to care. The people who don’t have access to care are the ones who game the system, not saving money so they can afford insurance when they’re unemployed, deciding not to buy insurance through their employers, not buying individual insurance when they can afford it. For them, the taxpayer has no obligations and should have none. What about those who work for companies that don’t offer insurance? It is their job to buy insurance in the individual market. It’s their choice to be uninsured. They can’t afford it, you say. Then they should get educations that will enable them to get better jobs, and they should look for employers who offer health insurance. This is not a simple issue that can solved with ideological slogans. Our health care system gives people incentives to become educated, find decent jobs, hold their jobs and manage their resources, and that’s how it should be. Some people don’t live in 6,000-square-foot houses, eat at expensive steak joints, drive expensive cars or send their kids to boarding schools, and some can’t afford the most comprehensive health insurance. That’s the American way, and it’s why we’re the super power and Europe is constantly trying to catch up.

  37. Amen, Sue. There are plenty of people over 35 with skills that could best be utilized by “freelancing,” but in this climate, with the cost of individual insurance, who would be willing to spend 20-25 percent of their take-home on insurance? For a person with a chronic condition it would be too high of a risk, and for a person who’s relatively healthy, it would be too galling to spend all that money on insurance when your real medical expenses, if you paid cash, would be far less than the premiums you paid out.
    And Ron, maybe Bush really does want to offer something better, but he’s not willing to tax anyone to pay for it, so don’t delude yourself into thinking this is a serious offer. Consider this for a second: how many people do you think are staying underemployed just for the health benefit? How many spouses are staying underemployed so they can hold the job with health benefits that carries the family’s insurance, so the other spouse can be an independent contractor or entrepreneur? With universal health coverage and a 100 percent wellness benefit, you’d remove this risk factor from the backs of middle class families and individuals that would eventually have a transformative effect on our economy. Lots of people would move into higher tax brackets. The only question is whether that would generate enough tax revenue to pay for the government to run the part of it for the folks at the bottom. The rest of us could stay with private plans, which would become cheaper because no one would be subsidizing the charitable and uncompensated care for the uninsured.

  38. I guess I’m going to be really “mean” here and propose a fee for service plan. No insurance! You go to the the doctor, you pay for it. No laws where you HAVE to be seen. If docs want to do charity, let them or not. No paperwork for the MD to fill out, no forms to file, etc. Then a national catastrophic health care fund (use Medicare/medacaid funds)to use when a catastrophe occurs. Cancer, MI, hip replacement. Use a diagnosis or a money trigger. Get the patient invested in his health care and the costs thereof. You want to smoke, be obese, not exercise, you pay for it!

  39. If President Bush really wants to understand HSAs, he needs to drop his government-provided access to health care and then shop insurance in Texas. He’ll find at his age rate with an accurately answered health questionnaire that his access to the backend HSA compatible insurance is either very expensive or non-existant. He’ll also find his current income makes him ineligible for access to lower cost insurance programs. I find it personally insulting when politicians talk about how their HSAs are a great solution, because their government-guaranteed health coverage insures they’ll never need to touch their HSA. Right now I have a high deductible insurance policy. My deductible is $5,000 and my premiums (one person, not family) are $6500 a year. I’m 47 and don’t have any chronic conditions. I haven’t found an HSA backend policy that would cover expenses over $5,000 at 100%–mine is 80/20 after I make the deductible. Policies as affordable as the Michigan plan for my age category start at about a $25,000 deductible. My neighbor has a $10,000 deductible.
    The real issue is that the changes our economy is going through is causing a lot of middle class, middle-aged Americans to have to shop for insurance in the individual market. These families were traditionally covered by group plans through their employers in middle age and the insurance market doesn’t have good products for individuals in this age category. There is nothing being done to create an affordable system for the middle class, middle-aged consumer. Insurance companies don’t want them. The HSA works for younger consumers because their expenses are likely to be low and supplemental insurance premiums are also low. Insurance companies love that segment because they rarely actually need the coverage provided by the supplemental health insurance. They are in fact paying cash for health care (with pre-tax dollars) and paying a premium for insurance they don’t use. It is a perfect equation for a financial services company.
    I was at a conference in Singapore last year where an executive from IBM was talking about the changes his company has gone through. One of the comments he made was that when he started at IBM 20 years ago, manufacturing was considered a core competency and one of the career tracks that guaranteed long-term employment. Today, manufacturing is a cost for them that they prefer to buy from other companies. Engineers and executives who chose the manufacturing career jobs have found they are in a dead-end career track. He mentioned that when he started there the current lack of interest in “owning” manufacturing would have been inconceivable.
    Older companies like IBM have early retirement options and provide access to health care for their long-term employees, but newer generation companies who grew up in the age of 401Ks and avoidance of long-term commitment to employees don’t have these transition programs. They are also finding that yesterday’s perceived core competencies are today’s outsourcing options, but they don’t have a transition program beyond 18 months of COBRA for laid off employees. Someone who is 20 or 30 and gets laid off has a range of options relative to career changes, but as people progress in corporate environments into the 40-50 range, their compensation and market “value” is often based on very specific skills combinations and industry or company expertise. For many of those employees, self-employment is a viable option because they have skills sets that can still be applied and today’s technology makes it easy to run a small business. But lack of affordable health care is a barrier to transitioning “employees” who want to remain productive in their fields of expertise. The reason this is a problem isn’t be the rich are hurting, it is because people with the ability and the resources to remain productive elements of society are in risk of losing that opportunity. We need to transform as an economy because a lot of our past core competencies are more economically performed elsewhere, but as we go through that transition we need to bridge the gap for the employees who have value tied to skills that are still in demand by ensuring that out-of-control health insurance premiums are not the spoiler that forces them into low paying unrelated jobs vs. finding new ways to sell the skills they’ve spent 20 years acquiring. HSA solve this transition issue for the younger generation of workers, just as 401Ks were a bridge for a generation of workers being taught not to expect to stay with a single employer or have employer provided retirement. We now need access to reasonable cost health care for the middle-aged workers who went into a system expecting that commitment to a career field and continuing acquisition of relevant skills would keep them employable for 30 years. They don’t want a handout, just access to a reasonable premium cost structure. If the Michigan program were available nationwide across this age category, I’d be doing handsprings because the stated benefit combination still would be appealing to me because it would provide much greater cost planning visibility than my current plan and keep more money in my reserves, vs. my insurance company’s profit bucket.

  40. President Bush wants a refundable tax credit for the poor to purchase HSA insurance. As I mentioned yesterday a 30-year-old couple with two children can get HSA qualifying insurance for $150 a month in Lansing, Michigan. The President wants to pay $2,000 a year for the insurance (this would pay 100% of this poor families premiums) plus deposit $1,000 in their HSA, tax free, to pay for 1st dollar medical, vision and dental expenses.
    Millions of Americans will get health insurance if the President’s plan is passed. The President is saying to the above poor family, “Will you let the Federal Government pay 100% of your health insurance IF they pay you $1,000 per year, tax free?” The media and some others suggest that no one will enroll, get real.
    When John Kerry (D-MA) said, “I have a plan to reduce health insurance 10% or $1,000 a year per family,” the media response suggested that tens of millions of Americans would get insurance. With simple math we can determine that John Kerry was suggesting $9,000 a year costs per family for health insurance ($10,000 X 10% = $9,000). Socialism just costs too much. In order to get this $1,000 savings per family, per year, the Federal tax payer would pay claims on Group Health Plans above $30,000, sounds crazy huh? Blue Cross would have loved that.
    The media should educate the American public on President Bush’s health care reforms. President Bush said, “Hopefully, when I’m an old guy my HSA will be bulging with money.”

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