83 replies »

1. Very unfair system as I see it. I have my own insurance but am using my savings to pay it, yet I will not recieve a credit because my income is too low.
   So the gov wants to force people to depend on them, in order to get a health insurance credit. They would have me get on medicaid and take away from the young folks of today’s future. Does that make sense to anyone?

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6. This is disgusting. how could such a horrible health care system be forced on the american people? the hatred they have for the american people is palpable. who are they? read your history and you will know.

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8. Barry–

   I totally agree that we’ll have to see how the ACA plays out– and then make
   adjustments.
   As I’ve said in the past, I think we’ll have to make many adjustments over a period of years (just as we have with Medicare– and now we’ll be making many more adjustments to Medicare)
   This is a huge project, and many things that depend on how doctors and patients respond can’t be predicted ahead of time.
   Also, as you say, things will work differently in different regions. Some things that work well out West won’t work in Manhattan–or at least not without
   a great deal of effort.
   Everyone I know that is or was involved with the legislation totally understands that it will be a work in progress for years.
   But, ten years from now, if it’s working fairly smoothly, we’ve reined in health care inflation (so that health care costs are growing no faster than GDP– and I think we can actually do better than that) and virtually all Americans have
   access to good health care, it will have been worth it.
   Finally your points on the difference between Mass and the rest of the country are all true.,
   But I would have thought that better educated, wealthier people would be more likely to “game” the system by signing up for insurance, getting their hip replacement, and then drop the insurance. Because they’re better educated, they’re more confident about their ability to make savvy decisions.
   And, they’re not going to get the subsidies that lower-middle-class people in Florida will get. . .
   But we’ll have to see.
   You’re right that health care is very expensive i some parts of the South.–though there are things we can do about that. We’ve already put a stop to the construction of more physician-owned surgical centers (too much self-referral and over treatment at high prices) . Texas and Louisiana have more than any other place in the nation. CMS also will be putting more money into tackling fraud. And with more transparency in the Exchanges we’ll be able to get a better idea of what’s going on ., . . Since cost-of-living is lower in many places in the South, health care should not be as expensive as it is. . Red states are reluctant to regulate; but under the ACA we’ll have more oversight.

9. “Let me suggest that, rather than worrying about phantom free-loaders, you wait and see how things work out. We’ll soon see how many people buy insurance in the Exchanges”

   I’m perfectly willing to do that not that we have a choice in the matter in any case. As a taxpayer, though, if the subsidies turn out to cost significantly more than expected, I hope the issue is revisited rather than just tolerate higher deficits or reflexively call for still higher taxes mainly on high income people.

   As for Massachusetts, putting aside its liberal politics for the moment, the population has more education than average and the state’s major industries are education, medical and high technology along with state and local government all of which have many jobs with good wages and benefits including health insurance. By contrast, in Florida, the largest industries are tourism, agriculture and real estate. Wages and benefits are low in the tourism industry while both agriculture and real estate are highly cyclical

   Throughout the South, wages are generally lower than in the North on average. This is due to a combination of weak private sector unions and, more importantly, a much lower cost of living especially for housing and state and local taxes. Healthcare, especially hospital based care, is not significantly cheaper in the South though so the cost and affordability of health insurance with or without subsidies is a bigger deal to the average family there than in the North.

   I don’t think the health insurance experience in MA can be extrapolated to other states any more than the acceptance of HMO’s in Northern CA can be. There are a lot of regional differences in values and attitudes toward a lot of things. We’ll see how the ACA plays out and, hopefully, make appropriate adjustments as needed.

10. Zieg Heil, seems to sound the same to me at the end of the day!

11. Bob–

    Your suggestion makes one thing clear: you don’t have small children. (Actually, I figured that out when you suggested that after giving birth a woman would actually drop her insurance!)

    Imagine you are a median income family ($62,000) with three children ages 6 months to 10 years. They need a great deal of medical care–none of it catastrophic. They have ear aches and need prescription pain killers; they develop strep throat and need antibiotics; they fall off bicycles and out of trees and break bones, they need a tetanus shot, the six-month old needs well baby visits, the other children need eye exams and visits to the dentist (eye care and dental care is covered for all children the ACA), one is hit by a car and suffers a concussion . . .Another one has chicken pox. I could go on. All of these things happened to me as a child. (Once I fell at the ice-skating rink and another kid skated over my leg. That’s when I needed the tetanus shot.)
    All of these expenses add up to more than a median-income family has left over after housing, food, utilities, transportation, etc etc. And I didn’t mention the costs of child birth and pre-natal care. If a woman develops an infection after giving birth, she might wind up in the hospital for 7 days (this happened to my daughter) The bill was enormous. Since she had insurance, it cost her nothing.
    This is why people need more than “catastrophoic insurance.” Your average family needs both preventive care and medical care for all of the smaller medical expenses that are a regular part of life.

    Bob–every other developed country in the world provides comprehensive insurance for all of its citizens. If simply raising taxes 2% to 3% and giving
    everyone catastrophic insurance was a practical solution, don’t you think someone else would have figured it out?

    Barry– You worry about people waiting until they get sick before buying insurance. But that is not what happened in Mass. (And the penalties for not buying insurance are lower than they are in the ACA.)

    Why do you think that is? What makes you think that there would be tens of thousands of free-loaders in other states?

    In fact, most people are sensible enough to want insurance–particularly women and people who have children.

    Let me suggest that, rather than worrying about phantom free-loaders, you wait and see how things work out. We’ll soon see how many people buy insurance in the Exchanges. I think things will work out much the way they did in Mass–with one exception– care will be less expensive (as it already is outside of Mass) because the ACA contains many provisions for cost control, including moving away from fee-for–service– something that Mass is just beginning to do. (See my post “Breakfast with Atul Gawande”)

    Finally, regarding people not declaring all of their income and getting subsidies.
    This already happens in the case of income tax fraud. But when the IRS catches up with someone– and eventually they do– life becomes very unpleasant. (At one time my husband owned a restaurant. He declared his income, and paid his taxes. But he knew other restaurant owners who didn’t–and who boasted about being in a “cash business.” Either the state sales tax people or the IRS caught up with them. Restaurants closed and people were wiped out. (This was just). But it’s not as easy to get away with as you might think.

    Finally, there is no reason to deny millions of people medical care because you worry about the minority who will cheat.

12. ” They’re scared and frightened and we’re supposed to come to their rescue and let them buy insurance at standard rates on a guaranteed issue basis?

    Yes. And Barry, if you were the person who decided these cases, and met the frightened family, I sincerely believe that you would want to help them -and would rule in favor of letting them have health insurance.

    Some folks forget that pelosi changed her tune 180 degrees from pushing obamacare to help the struggling uninsured victims with pre existing conditions to these selfish and deliberately uninsured people are freeloaders within a week of the legislation being past. Perhaps not everyone got the memo that the help the poor uninsured line had an expiration date on it that coincided with passage. I guess sometimes you have to pass it to find out what’s NOT in it.

    Pelosi suggests uninsured are freeloaders
    Nancy “SD” Pelosi says many of those without health insurance are “free riders.” Joel Pollak at Breitbart points out the irony of hearing this from Obama’s partner in crime when, prior to passage of “Obamacare” “Those who pointed to research that over 40 percent of the uninsured were ‘voluntary’ were dismissed as heartless corporate shills or racists.”

    We know that intellectual honesty and consistency are not character traits among committed leftists and progressives. The ends (more central government control and power to government/elites) justify the means.

    Suddenly Democrats like Pelosi and Obama care about people not sharing in the burden of living in this society. Funny since they fight to shift the tax burden to fewer and fewer people and they make ebt cards fall like rain.

13. Peter1 —

    Massachusetts also have the highest per capita spending on healthcare in the U.S. and has had for some time. Washington D.C. is in 2nd place.

14. “On costs in Mass– see Barry Carroll’s most recent comment.”

    Maggie and Barry, they don’t say the highest premiums, they say the highest “individual market” premiums. To me that says the Connector is attracting a disproportionate number of pre-exist, high risk and less young healthies.

    “Massachusetts has the highest individual market premiums in the country.”

    MA is also a high union membership state with better than most negotiated employer insurance with family coverage. It’ll be worse in the South and “right to work” states with poorer less healthy populations.

    I’ll sit on the sidelines to see how this “exchange” thing will pans out. My prediction is it WILL be a cruel joke, especially when BCBS is our state’s dominate insurer writing the health insurance policy.

15. “Everyone without insurance pays an extra 2-3% in income taxes every single year for a catastrophic version of Medicare.
    The deductible could be based on assets at the time of claim.
    Even if you make as little as $30,000 a year, a tax hit of 2% is $600 or $50 a month.”

    I’m in Bob, where do I sign up!!

16. Bob –

    I don’t think your approach is practical for a variety of reasons. Medicare is going broke. Where do you draw the line on income? How do you define income? Lots of people earn a significant portion of their income from tips and don’t report some or all of that income. Small businesses that are more likely than large firms to accommodate off the books work arrangements account for a larger share of total employment than they did a generation ago. It would be extremely difficult to administer. You get the picture.

    I do think that our subsidy dollars would stretch a lot further if we just helped the uninsured and underinsured buy a catastrophic health insurance plan instead of the comprehensive plan under the ACA. Primary care could be supplied to low income people through the expansion of free or very low cost (to the patient) community clinics and health centers.

    Maggie’s willingness to sell insurance to people who failed to buy it when it was first offered and then got sick would eventually convey the message to all the responsible people who did buy insurance that they’re chumps. Why not pay the modest penalty, put those health insurance premium dollars in the bank or spend it on other things and then, if you or a family member gets sick come back and buy insurance on a guaranteed issue basis? Of course, then the pool would consist overwhelmingly or completely of sick people and nobody but the very wealthy could afford to buy coverage. When the insurance industry talks about an adverse selection death spiral, that’s the extreme example of what it would look like.

17. Barry and Maggie, you are both getting twisted like pretzels trying to solve a problem that occurs when health insurance is voluntary.

    There is a much simpler solution. Everyone without insurance pays an extra 2-3% in income taxes every single year for a catastrophic version of Medicare.
    The deductible could be based on assets at the time of claim.

    Even if you make as little as $30,000 a year, a tax hit of 2% is $600 or $50 a month. This is still painful, but far cheaper than insurance and about the same as the penalties under the ACA, I think. And unlike the ACA penalties, you get something for your payment.

    This does nothing for prevention. It will not even stop all bankruptcies, since you can go bankrupt with a $5,000 deductible if you have many other debts and no jobs.

    But it would be a very decent partial solution, and could be implemented tomorrow. Some persons who work for cash are going to skate by, but that is true under almost any system unless we have a national sales tax.

18. Maggie –

    I can see it now. Someone has insurance but then loses his job, or moves from full time work to part time or gets divorced and claims he can no longer afford insurance. Maybe most or all of his income is off the books and his income is impossible to verify or maybe he doesn’t even file a tax return. Then he or a family member gets sick and lo and behold, he comes up with the money to buy health insurance. While your compassion is admirable, it just sends the wrong message that you can be irresponsible and society will always be there to bail you out of your bad choices. By contrast, open enrollment periods are explicit and easy to enforce. I consider myself as compassionate as the next person, but I think your approach is likely to have an unintended and potentially significant adverse impact on the cost of health insurance.

    If you really can’t afford insurance even with subsidies both when you were healthy and after you got sick, that’s a different matter. There should be enough flexibility in the system to accommodate some uncompensated care. There is also a role for private charity to play in these situations especially for providing care to children. However, people who can afford insurance either with subsidies or without should buy it and the penalty for not buying it should be much closer to the cost of the lowest cost policy than under current law.

19. Barry–
    ]
    Most families don’t have the cash on hand (or anywhere) to pay premiums covering the years since they first became eligible for insurance.

    The average American family has roughly $65,000 income (joint, before taxes) and very little in savings(because they earn relatively little, they can’t save very much.)

    Subsidized health insurance premiums help them save an amount that they can afford to save.

    Regarding a family involved in a horrific car accident or have child diagnosed with cancer, you write:

    ” They’re scared and frightened and we’re supposed to come to their rescue and let them buy insurance at standard rates on a guaranteed issue basis?

    Yes., And Barry, if you were the person who decided these cases, and met the frightened family, I sincerely believe that you would want to help them -and would rule in favor of letting them have health insurance.

    At the same time if my plan prevailed, and people realized that they couldn’t move in and out of the health insurance pool (but had had to stick with insurance once they signed up), I truly believe that the vast majority would sign up for insurance when they were still healthy. The notion that you should wait until you were sick wouldn’t seem nearly as attractive.

20. Maggie –

    Suppose someone doesn’t buy health insurance for three or four or five years after the ACA takes effect and pays the penalty instead. Then, in 2018, they or a family member is diagnosed with cancer or is in a serious accident. They’re scared and frightened and we’re supposed to come to their rescue and let them buy insurance at standard rates on a guaranteed issue basis? I don’t think that’s fair to the responsible rest of society.

    Even Medicare requires beneficiaries to pay a surcharge of 1% for each month that they delay buying Part B or Part D coverage after they first become eligible unless they meet one of the exceptions like retirement or losing employer retiree coverage. Again, if it’s good enough for Medicare beneficiaries, why the heck isn’t it good enough for the rest of us?

    One alternative for the situation in my example would be to require the person or family to pay premiums for all the time since they first became eligible for coverage but didn’t buy it up to a maximum of three years. They could pay the accumulated premium over time but they would still owe the money.

21. Peter 1–

    On costs in Mass– see Barry Carroll’s most recent comment.

    He’s right. High-cost academic meidcal centers have the clout to force insurers to over-pay them. This raises premiums.

    Long before health care reform, Mass. had the highest health care costs in the coutry. This has nothign to do with Obamacare

    Finally, as the KFF article says, Mass is just beginnign to tacklet high health car costs. It hasn’t solved the problem . But it is addressing it. (Orignally, the Mass plan didn’t set out to control costs–just to increase coverage. That was my point. Gov. Romney was not about to try to reduce payments to
    hospitals, drug-makers, device-makers.

    Now, Mass. is addressing overpayments to hospitals and has created a state-wide cap on total heath care spending.

    See the “Breakfast with Atual Gawande” link that I included in my last reply.

    (I hope I’m not wasting my time sending you links– I sincerely hope you actually read them.)

    Barry–

    What’s wrong with saying that once people buy insurance, they have made a coomitment to an insurance pool and, while they can switch insurers, they cannot drop out for a period of time ?

    I would much rather “lock in” relatively healthy people (who have had their hip replaced) rather than “lock out” sick, frightened people (who have just been in a car accident or diagnosed with cancer) –even for six weeks.

22. Maggie –

    As I’m sure you well know, Medicare uses annual open enrollment periods lasting approximately six weeks with exceptions for situations like age-ins, retirement or losing employer provided retiree coverage. If it’s good enough for Medicare beneficiaries, why isn’t it good enough for the rest of the population? How many irresponsible people who don’t buy insurance when they first become eligible under the ACA are we supposed to help pay for when they opt to pay the penalty and then try to buy insurance after they or a family member gets sick? I think the open enrollment period approach is reasonable once the ACA is implemented in 2014 or at least starting in 2015.

    Peter1 –

    I think health insurance premiums in Massachusetts are the highest in the country for two reasons. First, medical input costs are high. Second and more important, there are an usually large number of academic medical centers that provide lots of routine care that community hospitals could handle perfectly well and, in the case of the Partners Healthcare System which owns Massachusetts General and Brigham and Women’s, they command much higher reimbursement rates from commercial insurers than their competitors due to their market power, not their care quality.

    Massachusetts, to its credit, now requires every insurer to offer at least one tiered network or narrow network insurance product. In my opinion, though, there is a heck of a lot more that regulators could be doing in the area of price and quality transparency. The availability of actual contract reimbursement rates to both patients and referring doctors would make it a lot easier to identify the most cost-effective high quality providers at least for care that is scheduled well in advance. I’ve said before that there should be special rules limiting the price hospitals can charge for care that must be delivered under emergency conditions.

23. Maggie, you’re cherry picking. Below is also a quote in your referenced KFF.

    “The state continues to struggle with rising health care costs. State health reform in 2006 purposefully focused on expanding coverage to residents while leaving the thornier task of cost containment for future years. As a result, affordability continues to be an issue. Per capita health spending is 15% higher than the national average and although premium growth has slowed in recent years, Massachusetts has the highest individual market premiums in the country. Legislation focused on comprehensive provider payment reform and endorsed by the Governor is currently pending in the state’s legislature.”

    Do you see the part about MA having the highest individual market premiums in the country.

    THAT’S BEEN THE FOCUS OF OUR DISCUSSION HERE. Getting insurance with a subsidy is a lot different than being forced to get insurance without one.

    Why do you think the individual market premiums are the highest in the country?

24. Bob, Peter 1, Barry

    Bob,

    First– trust me, I’ve never met a mother who would cancel her health insurance after she gave birth. A f mother probably takes her child to a pediatrician 12 times during his first year, (Babies frequently run high temperatures, ear-aches, teething. . . Any mother wants to have someone to call . . .

    One reason so many 20-somethings and 30-somethings will sign up for insurance (now that subsidies are available) are because they have kids. Many young adults would go without insurance for themselves, but not for their children.

    The $800 billion paid by employers is important –but it’s not “the ballast” of the system. Government now pays more than half of the nation’s health care bill.
    Employers pay about 1/3.

    I agree that Americans are not willing to pay higher taxes to divorce health care from employment. Many don’t realize that their wages are lower because their employers pay for health benefits. And, unlike Europeans they are not accustomed to the idea of pooling their resources to pay for health care so that everyone is protected.

    This is one reason why we can’t divorce health care from employment at this time.

    Meanwhile, employers who offer good benefits do get a return on their money–employees retention and employee loyalty ..(This is why the majority of large corporations continue to provide health benefits, despite the cost. Even at a time when unemployment is high, they know that they need to do this if they want to hold onto their best employees. Constant turn-over and training new employees is very expensive.)

    I stayed at Dow Jones for more than six years after my excellent editor was replaced largely because I was a divorced single mother with two kids and needed the generous health insurance that Dow Jones offered. I wasn’t willing to risk not having that protection for my children.

    Peter1–

    The piece you cite by Collier is more than two years old. (and he is a business consultant who had an ax to grind.)

    Over time, the Mass. plan has become more and more successful. See this
    May 2012 piece from the Kaiser Family Foundation: (Note the Kaiser Family Foundation (KFF) is not part of the insurance company, Kaiser Permanent. KFF is a non-profit that focuses on improving health care for American families.

    (Peter, If you want up-to d-ate accurate information on healthcare, I urge you to Google Kaiser Family Foundation and the subject you are interested in. )

    Here’s the piece from KFF:
    :
    MASSACHUSETTS HEALTH CARE REFORM: SIX YEARS LATER

    “In 2006, Massachusetts passed comprehensive health reform designed to provide near universal health insurance coverage for state residents. Building on a long history of health reform efforts, the state embarked on an ambitious plan to promote shared individual, employer, and government responsibility. This brief examines Massachusetts’ implementation efforts over the last six years and looks to what lies ahead under federal health reform.
    Massachusetts succeeded in expanding
    coverage to nearly all state residents.
    Within a year of implementation the
    state experienced an unprecedented
    drop in the number of uninsured and,
    despite the economic recession,
    continues to retain the lowest rate of
    uninsured residents in the country.
    While Massachusetts has sustained gains
    in coverage, the rate of uninsured has
    continued to climb nationally

    Peter1 and Joe Says

    As KFF notes “The state continues to struggle with rising health care costs. State health reform in 2006
    purposefully focused on expanding coverage to residents while leaving the thornier task of cost
    containment for future years”

    Now however, Mass. is putting a global cap on increases in health care costs

    Barry– Rather than limiting the enrollment period (which would close the door to someone who desperately needs access to healthcare because he or his child has been diagnosed with cancer) I would rather see a law which says that once you sign up for health care you are signed up for, say, four or five years. You can switch insurers. But you can’t jump out of the pool once you have gotten the treatment you want.

25. “Your silence on the issues I raise is hurting the great respect I have for your willingness to engage on your opinions.”

    Bingo, ride on the head. Oh, watch out, she tried having me fully censored from the site, but for awhile it was just at her posts. I am surprised I have had comments stay in place for more than a couple of hours, maybe I am sealing my doom writing this now. She is the epitome of what defines the Democrat machine agenda behind PPACA. Truth and sincere intent for the public good, be damned, full speed ahead partisan agendas!!!

    I just don’t pontificate with baseless stats and endless quotes of choir echoes to justify being debated. Nah, I’m just a grunt doc on the front lines, seeing the masses being decimated while the “leaders” and their ilk protected cronies try to profit and stay sheltered behind the public shields. Ugly and pathetic, eh?

26. Maggie- saying that Mass did not set out to lower costs is blatantly untrue- everyone on both sides of the aisle- including Gov Romney at the time in the WSJ in April 2006 PROMISED lower costs.

    President Obama PROMISED $2500 IN SAVINGS for families by now — they are up by $3000.

    And, again -why will you answer everyone else but me in your comments?

    Your silence on the issues I raise is hurting the great respect I have for your willingness to engage on your opinions.

27. Bob –

    Former Harvard Pilgrim CEO, Charlie Baker, commented once that people buying insurance just before they needed an expensive procedure and than dropping it after they got their care cost insurers six times as much as they expected. Such gaming can be largely stopped by limiting the ability to sign up for insurance to a relatively brief annual open enrollment period. Medicare Advantage early on allowed this sort of switching back and forth between MA and standard Medicare but that was eliminated a number of years ago with an exception for moving out of the region you lived in when you first bought the insurance.

    Regarding large employers subsidizing small ones, for 25 years my wife was able to decline her employer’s insurance because she was on my employer’s family coverage. The wrinkle though is that her employer, which had between 25 and 35 employees depending on business conditions, paid her the amount it would have spent for her insurance in additional taxable salary. New employees were told when they were hired that if they didn’t need the health insurance, they would be paid what it would have cost in higher salary. If they needed it later, the cost would be rolled back out of their salary but they would at least be able to pay the premium in pretax dollars. Not every employer, including small ones, is a greedy profit monger.

    For large employers who would like to drop health insurance but raise pay by an equivalent amount, there is a little discussed issue of how to allocate the cost of insurance down to the individual employee level if the increase in wages would be fully subject to income and payroll taxes. At the population level, a twenty something with family coverage cost the employer a lot less than an employee in his late 50’s or early 60’s. Presumably, the most equitable way to handle this issue would be to allocate the dollars based on pure age rating so the imputed value of the insurance for the older employee would be 5-7 times what it would be for the younger ones which are consistent with expected medical claims costs, again at the population level.

28. “1. Maggie’s description of the subsidies newly available to a younger person is very moving and true. I wish that the sponsors of the ACA had used more examples like this.”

    Bob, there is no argument about the intent of the law, the question is will those young people use it. To be direct on this the entire cost of premiums in the exchanges hinges on young(er) healthies signing on. If they don’t then the ACA exchanges will follow the fate of those in MA and CT.

29. “The Mass bill didn’t set out to reduce the cost of health care. It focused on
    unriversal coverage. It succeeded in what it set out to do. Tthe vast majority of people in Mass. now have health care.)”

    Maggie, prior to the MA bill a majority of people were already insured. The bill was designed to cover the uninsured. Are you deliberately trying to mislead us or is Roger Collier incorrect in his following assertion based on his investigation?

    “2. HAS THE CONNECTOR INCREASED THE NUMBER OF INSURED?
    Only marginally, at best.”

30. 1. Maggie’s description of the subsidies newly available to a younger person is very moving and true. I wish that the sponsors of the ACA had used more examples like this.

    The only fly in the ointment is that some women will decide to buy insurance when they become pregnant, and then drop the insurance after the birth.
    This kind of thing has happened in Mass. for surgeries in general. It is a factor in driving up premiums, though I do not know how big a factor.

    2. Barry’s post just highlights an uncomfortable fact about the financing of American health care.

    The $800 billion paid by employers in premiums is to some extent the ballast of the whole system. These plans tend to pay doctors and hospitals either at or above their costs, even while Medicare and Medicaid cut back.

    In fact the large employers who provide family coverage are subsidizing small employers as well. Millions of spouses are able to take jobs without health insurance because the other spouse has family coverage. I worked for a company that had 12 employees, and 10 of them were on family coverage due to a spouse. My company breathed a huge sign of relief every payday.

    The American people are not ready to pay in taxes what the big employers now pay in premiums. Jeff Goldsmith has commented on this also.

    The big risk of the ACA is that it will offer some employers a way to get out of providing health insurance. This sounds progressive in the sense that health care should in fact be divorced from employment.

    But if big employers can get out of insurance, and Americans refuse to pay higher taxes, the entire edifice of doctors and clinics could be in big financial trouble.

31. Barry and Peter 1

    The Mass bill didn’t set out to reduce the cost of health care. It focused on
    unriversal coverage.

    It succeeded in what it set out to do. Tthe vast majority of people in Mass. now have health care.) But it didn’t attempt to tackle ovrpayment to drugmakers, devicemakerse & hospials–or overtretament. (Romney was governor–this was his health care bill.) Nor did it ask drugmakers, hospitals etc. to pay new fees to fund universal coverage.

    Massachusetts now realizes that it has to bring down the cost of care and has begun to focus on that goal.

    Barry– I agree that it will take time for many of the ACA’s cost-saving stratgies to achieve major cost savings. But the point of health care reform is not to achieve short-term savings, but to “break the curve” of health care inflation long term.

    Once we do that, my guess is that we will be able to actuallyl ower the cost of health care as a percentage of GDP. That is the long-term goal–and a very impt. goal.

    You write: ” On its most recent earnings conference call, UnitedHealth Group management stated that 18% of it hospital contracts are already performance based and that percentage is likely to grow quickly,”

    Yes, I agree that private insurers can–and will– follow Medicare in moving away from fee-for service. See what Atual Gawande has to say in this post:http://www.healthbeatblog.com/2012/10/breakfast-with-atul-gawande/
    Most of his hospital’s contracts now reward the hospital for better outcomes-for less. If the hospital fails to meet these target it loses millions.

    The more creative insurers will follow this model–paying providers for value, and some of those insurers will survive.

32. Barry, I assume your calculations on tax rates to support single pay accept our present cost system. Simply trading coverage systems without cost controls would accomplish nothing. Single pay offers better cost control mechanisms and more stable revenue support.

    I generally support a mandate and felt Obamacare offered something better but the actual working of it I believe will turn out like MA and CT due to the small pool size of the exchanges and humane nature – regardless of the fact that Maggie just can’t think outside reading the text of the bill to assure us it will work. If it was going to work why has MA and CT had such low success?

    I won’t buy into the most expensive system in the world and will sit on the sidelines with my good health and put my premiums into my own bank account.

33. Maggie –

    I’m not questioning that some of the ACA’s cost reduction strategies will work. Indeed, I hope most of them do work. However, I don’t think they will have a significant impact in the short term – first year or two. At the same time, private insurers are also moving ahead with promising approaches that are gaining traction like tiered networks and risk based contracting with hospitals. On its most recent earnings conference call, UnitedHealth Group management stated that 18% of it hospital contracts are already performance based and that percentage is likely to grow quickly. Moreover, there is an article in the most recent issue of Health Affairs which discusses the success Medicare Advantage plans are having in reducing utilization, especially of hospital based services, vs. standard FFS Medicare.

    I am questioning the likelihood that health insurance will be considerably less expensive on the exchanges than comparable coverage is now. As Peter1 noted, the Massachusetts experience in this area is far from compelling to say the least.

    With respect to employers raising wages by the amount that they already pay for health insurance, I wasn’t talking about whether they would be willing to do it or not. I was talking about how employees would think about both the process of purchasing health insurance and its cost if they had to do it with money from wages or pay an equivalent amount in taxes as opposed to the current employer provided benefit approach.

    I think if the cost of health insurance as a percentage of income were more transparent and visible, they wouldn’t be willing to pay nearly as much as they implicitly do now. Currently, lots of employees either think their employer health insurance coverage is free or almost free and most don’t have a clue as to exactly how much the employer is paying for it on their behalf. Once that number starts to appear on W-2 forms to make the cost more transparent, many employees are likely to be shocked.

34. Barry–

    You write: “Now, suppose the law was changed to make health insurance purchased by the individual fully deductible from wages that determine both income and payroll tax liability. The employer stops offering health insurance but increases the wage by $20,000 and tells the employee to go buy insurance in the private market”

    Employers would never raise wage by $20,000 to match what he pays for benfits.

    Look at what happened in the 1990s: with increased productivity, employers
    profits soared–but they did not share that gain with employees. Employees wages remained flat to down–and rose only a bit in the late 1990s.
    Employers only raise wages if they must–in a tight job market where they
    can’t find enough employees.

    In the 1990s, Wall Street’s analyst Steve Roach wrote about all of this.

    As you know, I don’t suppport a single-payer system, in part because it would be based on Medicare, and Medicare is terribly wateful (30% of Medicare dollars are wasted on ineffective treatments and overpriced products and services).

    But the ACA has already begun to slow the growth of Medicare spending as hopsitals squeeze some of hte waste out of their systems.
    Beginning in 2014,
    the ACA’s financial carrots and sticks will really begin to motivat