Uncategorized

An issue, guaranteed

I don’t mean this in a partisan way, but it is really distressing to read this New York Times article about Republican plans to dismantle parts of the recent health care bill by using the appropriation powers of the House of Representatives. I say this because of the unintended consequences that will result if they are successful in this approach. Let me give an example.

I think one of the most important aspects of the law is “guaranteed issue” of health insurance: Insurance companies will no longer be permitted to use pre-existing medical conditions as a bar to coverage. A concomitant of guaranteed issue is the individual mandate, the requirement that all people purchase health insurance. Why?

Left to their own, insurers will impose pre-exisiting conditions types of restrictions because they understand the moral hazard aspect of insurance. Healthy people provide an actuarial balance to sick people. If people only buy insurance when they need care, the risk profile of the insured population rapidly swings, upsetting the actuarial calculations used to establish premiums. So, if these restrictions are outlawed, everybody needs to be in the risk pool. Accordingly, you have to ban optional insurance.

But look at this quote from the article cited above:

Republican lawmakers said, for example, that they would propose limiting the money and personnel available to the Internal Revenue Service, so the agency could not aggressively enforce provisions that require people to obtain health insurance and employers to help pay for it.

I think the Republicans know that guaranteed issue is popular with Americans, and so they do not directly want to repeal that provision of the new law. But what will happen if healthy people start to opt out of getting insurance, only to return when they get sick? The system will quickly get out of balance. Ironically, this will only cause premiums to rise. I don’t understand why the Republicans would want that to happen, and I fail to see a strategic political advantage arising from that result.

This makes me wonder if they have thought this through completely and whether they understand the unintended consequences of their proposed actions.

Paul Levy is the President and CEO of Beth Israel Deconess Medical Center in Boston. Paul recently became the focus of much media attention when he decided to publish infection rates at his hospital, despite the fact that under Massachusetts law he is not yet required to do so. For the past three years he has blogged about his experiences in an online journal, Running a Hospital, one of the few blogs we know of maintained by a senior hospital executive.

Livongo’s Post Ad Banner 728*90
Spread the love

16 replies »

  1. “Kaiser is relying on the data from MA, which was shown to be incorrect”
    By who? Just trying to discredit information by making making your own assumptions is not credible.
    “Simply ascribing an increase in premiums to someone not purchasing health insurance represents an incredibly superficial understanding of insurance”
    Having guarantee issue with no mandate doesn’t take much understanding to see insured premiums will rise. It also doesn’t take much to understand that having a higher percentage of well people contributing to insurance lowers the risk and cost for insurance or any healthcare system.
    “Cutting taxes, whether it is for the wealthy or otherwise, has always shown to help, not hurt the overall economy.”
    Show me when cutting taxes was not also followed by increasing government deficit spending – which also churns the economy (Reagan-Bush).

  2. Yeah, but you don’t get fined if you don’t buy the “right” car. What is going to happen to McDonalds if they don’t comply? And who the hell is the government to tell them how to run their business if it is not outwardly hurting the public?
    Last I checked, didn’t see any muzzle prints on the foreheads of customers in fast food restaurants! They will regret making it a daily dining experience, but, isn’t that what this country is supposed to be about? Choice, and freedom to make it?
    All this rationalizing and minimizing of what this monstrosity called health care legislation is beyond disgusting. Especially to hear it from health care professionals’ mouths!!!

  3. if goverment taxes everyone then only returns a portion to people that buy the car they want you to, i.e. the volt, i think they already tell us what car to buy. The mileage requirements do the same thing.

  4. Hmm, yesterday it was everyone has to buy health care insurance, now today we read how the government is telling businesses what foods they can serve and what is deemed vegetables or not.
    What is tomorrow, you lemmings? What car you can drive? What beverages you can drink?
    Start thinking about these intrusions people. All these movies that show the future, you think they are all so outlandish? Think again!

  5. Peter, we can disagree about whether the decline in insurance coverage for citizens was significant. Taking into consideration the amount of increased spending and costs, I do not find that a decrease from about 15% uninsured to 5%. Kaiser is relying on the data from MA, which was shown to be incorrect because they calculated uninsured rates by assuming insurance coverage of non-responders. Once the law was enacted and there was a penalty for not purchasing insurance, reporting rates went down at a significant rate, which the Kaiser handout does not address.
    You also assume a relationship between someone not purchasing health insurance due to their constitutional rights and the increasing of premiums for the rest of the public. This relationship is due to a flawed healthcare system with Medicare at its corrupt and inefficient center. Private insurance companies mitigate risk within the legal framework allowed to it. Simply ascribing an increase in premiums to someone not purchasing health insurance represents an incredibly superficial understanding of insurance and only lends itself to the illogical conclusion that health insurance is so unique that it requires just patchwork solutions such as PPACA. There is no incentive for the private market to innovate because it is stifled by regulation and current monopolies.
    Orion, I can easily argue the other way and say that Democrats have created pain through a single party push of ARRA and PPACA. If you want to drink the Kool-Aid (the administrations data) and apply no skepticism to it, that is fine. There just is no evidence to suggest that we are better off than if we had not passed ARRA or PPACA. Any Senator can block activity with a filibuster. The filibuster is a good thing, as it was designed to prevent hastily crafted legislation from the House from being passed too quickly. I can tell you from intimate knowledge that PPACA was passed without being scrutinized and cleaned up through conference.
    You can fault the media all you want for the message, but ultimately politicians are elected for different reasons. The polling suggests it wasn’t the message, it was the actual legislation. From my conversations with both patients and physicians, I can tell you that misunderstanding comes from both groups. For example, many people did not realize that just like taxes, you can be placed in jail for not purchasing health insurance. Comparative effectiveness research, or “death panels”, may have seemed effective, but polling suggests this was not a major concern among people that disagreed with PPACA. It was the health insurance mandate and the overreach of government power.
    I am not a Republican, and I do not consider it a talking point at all. This is why you see a large buildup of cash among many of these larger companies, and they are even the ones less likely to do away with healthcare coverage for their employees because it is an attractive benefit to lure talent. Cutting taxes, whether it is for the wealthy or otherwise, has always shown to help, not hurt the overall economy. A Democratic talking point would be to say that the Bush tax cuts helped lead to the recession. There is absolutely no data to suggest this is true.
    “Businesses will hire when there is demand.” If you fail to see the connection between personal and corporate income tax rates, unemployment, and Federal Reserve policy on top of outcomes of unpredictable cost and demand-adding legislation, then I highly suggest you attend MBA school again.
    And for the record, public worker unions outspent larger businesses this time around. Approximately 90% of donations from public worker unions (taxpayer funded) goes to the Democratic party. The money will follow the strength of the message, not the other way around. Otherwise you admit to wanting to stifle free speech. If that is the case, I recommend you find a more accommodating country, perhaps Cuba or Venezuela.

  6. Joshua,
    You and I are in agreement about the basics of the HCR law. I agree it does little to reduce costs and I think it is an incredibly flawed law. It has good things in it, however it is watered down and doesn’t affect the true structural things which are at the core of health care expenses rising at the high level they have been (too many unnecessary tests, incentives for the health care industry to be paid for the process rather than the outcome and more). I wasn’t arguing that point, simply the observation that the Republican party has been and will continue to create pain for Americans so they can regain power. If you were paying attention you would have seen how much power the Republicans have wielded these past couple of years while in the minority of both houses. They can block almost anything in the Senate with the filibuster. They have a well oiled media machine which can easily put their message into the public consciousness (ie death panels): Fox News, think tanks, deep pocketed benefactors and a disciplined message network.
    I disagree that business is not hiring because of “uncertainty.” That is a Republican talking point meant to push their agenda: cut taxes, especially for the wealthy. That is the answer for every problem. Businesses will hire when there is demand. I am a small business owner who deals with many small businesses in my work. What they are worried about is demand.

  7. The health industry is a business like any other. Its sad that in our country which is so great that we have these issues with people not being able to have health care. We live in the most abundant nation in the world this is sad. The American dream for the average and middle class people are really dreams.

  8. “The healthcare legislation that was passed will not greatly increase access, just as the bill passed in Massachusetts did not greatly bring down the numbers of uninsured.”
    Uh? Bill does increase access through subsidies. MA “reform” did increase access(insured), just did not lower costs.
    http://www.kff.org/uninsured/upload/7777-02.pdf
    “The only things hurting the economy now are wasteful government spending and an unpredictable market for business. There will be no change in unemployment as long as the status of the expiring tax cuts and healthcare legislation remain in the balance.”
    Yup, all that demand out there and business is not fulfilling it because of tax cuts and heatlthcare.
    Joshua, I’m glad you’ll defend my decision (using the constitution) to wait til I get sick before buying insurance. Hope you enjoy your increases in your own coverage cost.
    Paul, I agree with purchase mandate but not when nothing in this bill (save subsidies) reduces the cost of hospital care. We are being forced to continue lavish lifestyle of hospital CEOs and docs in the most expensive system in the world.

  9. Orion, your reasoning is incredibly flawed. The Republicans are not able to make any measurable impact upon the US economy without control of the Senate and the Presidency. The healthcare legislation that was passed will not greatly increase access, just as the bill passed in Massachusetts did not greatly bring down the numbers of uninsured. And besides, some people want to be uninsured because it doesn’t make sense economically for them to pay for health insurance.
    The legislation, if you read it, does absolutely nothing to help reduce the cost of healthcare in the the US. It strictly deals with access and quality issues, although there are legitimate arguments with even those provisions. If the government requires certain products and services be provided by Medicare and private insurance companies, then yes, it will get more expensive. How the hell else are they going to get paid for? Take a minute and think before you speak. You cannot blame a company for trying to accurately project their future costs. It would be unethical NOT to do so, especially if you are a publicly traded company and must be honest with your investors.
    The only things hurting the economy now are wasteful government spending and an unpredictable market for business. There will be no change in unemployment as long as the status of the expiring tax cuts and healthcare legislation remain in the balance. If you know any small business owners, then you know that these are two HUGE future liabilities that impact hiring decisions and budget decisions.
    This legislation, if kept, will ultimately result in consolidation in the marketplace. If the Dems in the previous House wanted single payer healthcare, it would have been easier and less costly if they just would have legislated it rather than putting the country through a complicated and inefficient 75/25 mix of government/private spending on healthcare in this country like we already do.

  10. “I don’t understand why the Republicans would want that to happen, and I fail to see a strategic political advantage arising from that result.”
    Paul, you were just given an example of the Republican political mindset which gives us a clue as to why they would want this to happen. I make a distinction from the Republican political machine and a private citizen Republican, they often have very different long term goals. Right now and until Nov. 2012, the Republican political machine is interested in destroying the economy, keeping as many people unemployed as long as possible and making sure that health insurance gets as expensive as possible. All bad things can be blamed on Democrats, even if Republican obstructionism caused things to be worse. The media will nod their heads in agreement and snap up any scooby snacks that are tossed their way.
    Having health care get worse and more expensive while Obama is president is not an unpleasant side effect of Republican plans, it is the desired goal.

  11. “I don’t understand why the Republicans would want that to happen, and I fail to see a strategic political advantage arising from that result.”
    Paul – I agree with this assessment. Making health care inaccessible to large numbers of people is not going to favor GOP prospects in the long run. Not only will the newly uninsured be less likely to vote Republican, they will be less likely to support market-friendly solutions.

  12. What is wrong with the people here who just espouse a principle without looking at the overall consequences? Making everybody buy health care insurance is not a good decision. Because it opens the door to other universal expectations that just stomps on what this country is about, freedom of choice and independence.
    Maybe there are those of you, who do not directly benefit from this really dumbass legislative intrusion, who are just hopelessly naive and wishful, but, in the end, one has the right to not get health insurance. And, you run the sizeable risk for regretting it later. What I have no issue with is the notion that children are covered, because they are unfortunate dependents of an equally sizeable stupid and reckless adult population that does not think preemptively about childrens’ welfare. That is a portion of this legislation I have never argued.
    Hey, too many of my colleagues are either out of touch with reality or in terminal state of denial of what is the truth about life, not just in this country, but across the planet: we can’t save everyone, everyone should not be saved, and in the end, the needs of the many outweigh the needs of the few.
    As someone said at another thread, no one chooses to be poor or indigent; but, no one is entitled to be saved from the choice to not pursue change for the better and responsible. This is not a comment about genocide, it is about returning to the reality that will either save, or hasten the demise of this planet. We as doctors help people the best we can with the resources we have at our disposal, but, some people won’t make it. This is not abandonment, this, is reality!!!
    And I do not want politicians telling me what to do! Wasn’t managed care enough to piss you off, colleagues? Now you want managed care being dictated by clueless and reckless people in D.C.? Does history have to hit you all in the back of the head with a 2×4 to remind you of how intrusive this agenda is!?!?!?!?!

  13. “This makes me wonder if they have thought this through completely and whether they understand the unintended consequences of their proposed actions.”
    Very disappointing Paul, someone that runs a hospital should be able to do basic math. Or can you just hire accountants for that? How does a $700 fine to not buy a $3000 to $10,000+ service equal a meaningful mandate? Common sense would tell you guarantee issue with a bogus mandate is no better then guarantee issue with no mandate.
    Your post is nothing but partisan smoke and mirror. Have a real discussion about the facts and lets see how it turns out. When people are guaranteed the right to buy coverage when they need it why would they pay premium when they don’t?
    one of many examples of how terribly written this bill was and how little liberals understand insurance and business.

  14. I couldn’t agree with you more Paul. While the cost of health care treatment can be attributed to many issues, all but a few (rich) Americans need insurance to afford any serious medical issue.
    While media focuses on the emotionally and intellectually(read seniors wanting the Government out of their healthcare)challenged, they ignore the opportunity to explain even the simplest principle of insurance. That your yearly rate will be their total expenses including the cost of care for the insured, plus the cost of administering the claims, plus a risk assessment for the cost outlook over the next year, plus 25% profit, all divided by the total number of people paying for insurance.
    So obviously if there are only people that need care in the pool, the costs are going to be pretty darn high (read unaffordable). Unfortunately unlike car (Required!) insurance where one can opt-out by electing not to drive, there is no current way to electively not get sick or have an accident.
    As we all are required to pay for Medicare and Medicaid insurance for seniors and the poor today. It seems a simple extension in logic to say that medical insurance should be required of all for all thus lowering the overall rate through the largest possible pool.
    Of course this does nothing to address the other issues of why insurance has to be provided by an employer, why the Government (us) subsidize employer insurance and not individual insurance, why insurance companies don’t have to pay (not even the same amount) if a doctors not on their list, why insurance with a Health Savings Account is more expensive than one without, or why insurance companies can’t compete across state lines… And what was that 25% profit for again?

  15. If you fail to even question the given reasons why the lack of an unconstitutional mandate to punish economic inactivity would lead to increased premiums, then you fail to understand the reasons behind our broken healthcare system.
    Glen, you may look at it as a “tactic”, but you will most likely see the unconstitutional mandate on punishing economic inactivity struck down by the US Supreme Court in a 5-4 decision. You may think it is “common sense” that the healthcare system is unique, but this thinking requires again, a failure to consider the regulatory interference that has caused the costs of healthcare to become nearly incomprehensible.

  16. This is an age-old tactic.
    For example, the HIPAA law includes a universal patient ID. While this would simplify health IT and reduce systemic costs, it has explicitly been de-funded by every budget since the law was passed.
    My guess is that the ACA passed with most legislators’ full knowledge that selective funding would occur.

Leave a Reply

Your email address will not be published. Required fields are marked *