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The Senate Finance Health Bill Has No Clothes

Capt8d18e54acb3f47b0b1e8a46ae61a1980health_care_overhaul_dchh103 Readers of this blog know that I have lots of concerns for the Senate
Finance health bill primarily because it does not so much represent
health care reform as just an expensive entitlement expansion.Readers also know the insurance lobby–AHP–is not one of my favorite organizations.But
I will tell you the report by Pricewaterhouse Coopers (PwC)
commissioned by the AHP and released this morning is accurate. The
Senate Finance bill would do nothing short of blowing up the insurance
market.You don't need to be Einstein or a PwC actuary to come to that conclusion. Common sense is all the credential you need.

Beginning
in 2013, the Senate Finance bill would make uninsured individuals
eligible for premium credits to buy a health policy. But those credits
would leave these people far short of being able to really afford a
health insurance policy. A family of four at 250% of poverty and making
$55,000 a year ($52,000 is the medium household income in the U.S.)
would have to pay about $4,000 toward their premiums and that for a
policy with a $1,000 deductible and a maximum of about $7,000 in
out-of-pocket costs each year.At 300% of poverty, $66,150, a family would be required to pay $8,000 in premium for a policy with a $3,000 deductible!How
many families making $55,000 a year or $66,000 a year do you know that
could add this kind of expense to their annual budgets?It is
really no better for a family making 400% of poverty, or $88,200 a
year. They would have to pay $10,600 a year in insurance premiums for
that policy with a $3,000 deductible!Senate Finance, knowing
they could not enforce this kind of individual mandate to buy health
insurance then set about to exempt many from paying a fine or just
gutting the fine if they did not buy the coverage.In 2013, for
example, there would be no fine for not having insurance. By 2014 the
penalty would be $200 per adult and it would rise to $400 in 2015, $600
in 2016, and $750 by 2017.But starting in 2013 the Senate
Finance bill says that the insurance companies have to get rid of
medical underwriting and pre-existing conditions provisions.So
in 2013, any consumer could simply go to the health insurance company
and demand to be covered under any one of the mandated benefit plans.
No medical underwriting before getting in and no pre-existing condition
limitations. Just sign the application and go to the doctor.In
one sense you can understand the political logic here–the Democrats
can't very well mandate middle class families to pony-up $4,000, or
$8,000, or $10,000 out of their already challenged budgets. So they
just found a way to exempt them or make the fine a tiny one.But they left the insurance reforms in place.Let me ask you a question. Why would any family buy health insurance under such a scheme?I
will suggest the answer is that they will buy it when they need it. No
sooner. Even in 2017, a family with two adults would pay no more than a
$1,500 annual fine against a premium that would be $4,000 to $10,000 a
year in these middle class income brackets.I'll give you another one. Why would any small employer provide health insurance?I
will suggest the answer to that one is the smart small employer will
just cash-out any benefits they do provide today and tell the employee
t0 pay the fine until they need it and then go to the exchange and get
it (there is also no small employer mandate in the bill to provide
coverage). The worker would likely be thousands of dollars ahead each
year!The problem the Democrats have here is that they are
trying to get a health bill to cost under $1 trillion. That has made
them back off on premium subsidies and policy benefits. They have had
to back so far off that proposals are not offering health insurance
policies anything close to being affordable for middle class families.The political response in Senate Finance has been to waive the individual mandates but keep the underwriting reforms.The
sum of it all is a health insurance market disaster in the making. In
the business we refer to it as a "death spiral." Simply, the higher the
premiums go the fewer that will buy, the sicker the pool, the higher
the premiums go once again, even fewer people are left in the pool, and
so on until all of the sick are in the pool and all of the healthy have
left it.The PWC report says that average family premiums of
$12,300 today will rise to $25,900 under the Senate Finance proposals
in 2019. They say premiums would be driven by these underwriting
reforms, cost shifting from Medicare cuts, and new insurance taxes
simply being passed through to consumers.I don't know if the PwC report is exactly correct.But common sense certainly takes one to the same conclusion.The
Senate Finance Democrats could not have created a bigger insurance pool
train wreck in the making than the one they have devised here.

What
is really amazing is how all of these Senators sitting around that
Senate Finance table have just sleep walked their way through all of
this as if they don't have the common sense to figure this out on their
own.

Robert Laszweski has been a fixture in Washington health policy
circles for the better part of three decades. He currently serves as
the president of Health Policy and Strategy Associates of Alexandria,
Virginia. Before forming HPSA in 1992, Robert served as the COO, Group
Markets, for the Liberty Mutual Insurance Company. You can read more of
his thoughtful analysis of healthcare industry trends at The Health
Policy and Marketplace Blog
, where this post first appeared.

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Akumulator BLM-1mang joseMassachusetts Nursing DegreeStreamlight E-Flood Liteboxacai berry cleanse Recent comment authors
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Akumulator BLM-1
Guest

I think the admin of this site is in fact working hard for his website, because
here every material is quality based information.

mang jose
Guest

nice articles… thanks for sharing…

Massachusetts Nursing Degree
Guest

i have tried gnucash in past but not a big fan [for tracking personal finance records ]. There are several online websites which offer excellent alternatives. I use buxfer.com and works great for my needs. There are other good options like quicken, mint, wesabee, etc. [buxfer worked out best for me so haven’t digged into them much]

Streamlight E-Flood Litebox
Guest

i have tried gnucash in past but not a big fan [for tracking personal finance records ]. There are several online websites which offer excellent alternatives. I use buxfer.com and works great for my needs. There are other good options like quicken, mint, wesabee, etc. [buxfer worked out best for me so haven’t digged into them much]

acai berry cleanse
Guest

Great list and very interesting – how about B2B based social media initiatives? – much of the financial services efforts are based on attracting interest and business from other financial institutions rather than consumers and I am yet to come across a bank using social media to acheive this ?
anyoen got any ideas thoughts ?

online appointment scheduling
Guest

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hope west
Guest

wow

Carla
Guest
Carla

You need to read this guy’s blog. He’s living this daily. http://hypoandhelpless.blogspot.com/

AG, M.D., J.D.
Guest

You’re right!
Reid, Baucus and Pelosi sit around all day behind closed doors chanting: “La, la, la, la, la, la . . . .” It can’t be anything else because no person, much less our legislators could do so much harm in so short a time and be so ignorant of the future.
For more details please check out my blog at http://www.lawdocblog.com
AG, M.D,J.D

Tasha
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Tasha

Hey can anyone help me? For my class I have to write a paper about why im “for” premium subsides and arguements people would have against it then I have to write what id say back to support why im still for it. Please help.

Doc99
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Doc99

Received in my Inbox: * The U.S. Post Service was established in 1775 You have had 234 years to get it right and it is broke. * Social Security was established in 1935. You have had 74 years to get it right and it is broke. * Fannie Mae was established in 1938. You have had 71 years to get it right and it is broke. * War on Poverty started in 1964. You have had 45 years to get it right; $1 trillion of our money is confiscated each year and transferred to “the poor” and they only want… Read more »

dyck dewid
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dyck dewid

Insurance is the fox guarding the hen house. Take insurance out of my healthcare decisions. They interfere. They don’t reduce cost at all. They cause a lot of bickering about what they should and don’t cover. Paperwork is horrendous. It’s a mess hardly any lay person understands and it ends up costing us all more. How can we expect someone (Insurance) to cut costs that they are creating by their existence and for which they stand to gain? This is just stupid. (I know they employ a lot of people who would lose their jobs, and that would need attention,… Read more »

spike
Guest
spike

Nate, are you actually arguing that commercial insurers keep costs down? Come on, you know that’s ridiculous.
I personally have zero choice in my insurance company, other than quitting my job. Nice try though.
And… why didn’t insurance companies stop covering never events a long time ago? Why did they have to wait for Medicare’s lead to do it?
Because they don’t care about adding value or lowering costs, they only care about profits. And it’s easier to maintain profits by manipulating the political system than by actually adding value.

healthcareDev
Guest
healthcareDev

Hey there, Nate. You seem to think that I’m actually interested in debating a bigot. I am not, despite your fantastic self-assessment of your mental “capacities” (such as they are). And as others have already pointed out the deficiencies in the PcW report, which you continue to ignore, what’s the point? Patterns are interesting. Indeed, the pattern in your comments is clearly discernible. Not only based on a debilitating and tedious prejudice, it is also premised on a fundamental lie – that government has ever attempted to “reform” health care – and a denial that reform cannot happen when the… Read more »

Nate
Guest
Nate

Ya I get the pattern Peter, 44 years of failed government reform has lead to us having the most expensive health insurance systems in the world. The question is do you get the pattern? Do you not see every time government “reforms” healthcare it fails to deliver what they promise and increases cost? healthcaredev what is wrong about the study? I can and have pointed out numerous specific peices of 3200 that are wrong or wont work, all the left can do is attack the study authors and financiers but aren’t mentally capable of offering even a single substative argument… Read more »