In all of the recent partisan bickering over the Senate and House health care bills, the Democrats have charged that the Republicans are cutting Medicaid spending.  From what I can determine from reading the texts, commentaries and Congressional Budget Office scorings, the measures reduce the rate of increase of Medicaid spending, ultimately reaching a point of zero growth–but they do not cut Medicaid.  There is a difference.  There is so much scare mongering around the domestic policy agendas of the two parties that it becomes almost impossible to conceive of any restoring of civility to our Federal political process.  One problem is the loose use of language, which fuels the deep divides and obscures the real issues that need to be debated with clarity.  This is but one noteworthy example.  This is not an endorsement of either of the Republican bills.  Obamacare was hopelessly broken, but I am not prepared to say that the GOP bills are the right fix.  I just wish that the Democrats challenging the efforts would speak truthfully.  The stakes are too high to demand anything less.  Harper

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  1. kao_hsien_chih says:

    This speaks to something central to the healthcare debate that very few politicians seemed to be speaking about even back in 2008: the biggest problem with healthcare is that it is too expensive and the costs have been growing too fast, without covering satisfactory benefits as measured by health outcomes, not just whose’s going to pay the bill. The biggest problem with Obamacare was that they pulled a bait and switch act without seriously addressing the cost question, making a crisis of some sort all but assured sooner or later. While I am skeptical about the current Republican bill (nothing specific about the Republicans–I was just skeptical about Obamacare, and a lot of Devilry will be in the details no matter who’s running the show), confronting the cost question one way or another is something that has to be done anyways and politicizing it, especially through misrepresentation as the Democrats are doing, seems despicable.

  2. The cuts are due to not taking into account the increased number of Americans who will become eligible for Medicaid, the increase in medical expenses and just inflation in general. The result is less medical care for less Americans. The situation is the same with the minimum wage. Granted the wage has risen over the years, but it has nor kept pace with inflation so the result is lower buying power. The question is a matter of priorities. Do we want to strive for good medical care for all or the top earners keeping more of what they earn. I personally think we should be striving for a base level of medical care available to all through a single payer system.

  3. The real issue is that both GOP bills throw millions of people out of coverage. On Obamacare, the CBO points out explicitly that Obamacare is not “hopelessly broken”. It is an easy fix.

  4. All I really have to say on this subject is: we need single-payer.

  5. Fred says:

    You mean millions of Americans no longer mandated by law to buy coverage will chose not to do so?

  6. Eric Newhill says:

    Lee A. Arnold,
    Sorry, but you’re wrong. The ACA was poorly designed and, as a result, it is hopelessly broken. There was way too much hopeful thinking and too little theory employed in it’s design. Actually, a lot of what the program was built on is directly contrary to proven microeconomic and actuarial principles.
    In 2018 there will be states in which no insurance carrier is offering the product. None. On other states, the product will be offered in only a few geographies – known as “rating areas”. So people seeking coverage will not be able to purchase it.
    That’s broken and that’s dying quickly.
    I do not know how the ACA could be fixed short of the federal government kicking $billions over to the insurance companies to cover their losses on bad – and increasingly worse – risk. That won’t happen. The Republicans won’t spend the money and the Democrats would get it all wrong and scream that the evil insurance companies were getting fat off the program. So not politically viable. What else? I sure can’t think of anything. If you can, you’re the only one.

  7. Eric Newhill says:

    You’re essentially correct, but so is KHC.
    Why are we going to have an increasing number of Americans on Medicaid? That is a sad thought. We should be addressing that issue instead of surrendering and bolstering the safety nets.
    KHC is right that the real problem is never ending increase in the cost of healthcare. Soon to be 20% of GDP. If we stop throwing money at the situation, perhaps someone will start working on the root cause. There is a lot of real cost reducing opportunity; much low hanging fruit. At some point we have to stop the cost increases. How much of GDP do you think is the red line in the sand? IMO, we’re there now.

  8. Dr. K. says:

    Harper are you on Obamacare? If your boss tells you your wage is guaranteed to be the same after 20 years is that a pay cut?

  9. The other OECD countries pay 40% less on healthcare than the U.S. — BUT healthcare costs for all are growing anyway. One way to cut costs in the U.S. is a single-payer to eliminate private insurer overhead (about 20% of your premium). That still would not touch the excessive cost in the U.S. on the healthcare provider side, including pharmaceuticals, etc. (although a single-payer should be able to bargain-down the prices on some of these things). Most people don’t know it, but Obamacare has a host of provisions to work on long-term cost reduction on the healthcare provider side, and some would take years. Some of these things (like rectification of all health records into the same system format, so information flows faster) goes unnoticed (except by doctors, who are made to pay the cost of that transition).

  10. Fredw says:

    This argument constitutes “bouncing the rubble”. The numbers on the margins relate to marginal issues.
    The problem with healthcare costs is simple to understand but politically difficult to address. Powerful institutions are making too much money off it to let it change. That statement is way more radical than I usually go, but it seems to be true. A sector that eats up 19% of GDP is too large to tolerate that kind of slop. This quote uses comparison with other countries that have comparable quality health care to clarify the whole issue. You don’t have to agree with the author’s detailed arguments to see that he has pointed at the elephant in the room:
    Per capita spending, health care, 2015
    United States: $9451
    Canada: $4608
    France: $4407
    Japan: $4150
    United Kingdom: $4003
    Miraculous Finland: $3984
    Those are among the world’s most remarkable data. According to those remarkable data, $5000 per person per year disappears into the maws of our “health care system.”
    Especially in a week like this, those are among the world’s most instructive data. But how strange! All this week, as in all other weeks, our big news orgs will refuse to present or discuss them!

  11. Jack says:

    The health care reform “debate” for decades is just distraction and political gamesmanship. The real issue, COSTS, are never addressed as it is politically unpalatable. The lobbies who are making a killing don’t want costs to be reduced. That’s why there are no questions asked why does the US spend double what Germany, France and Canada per capita. There’s no debate how do they provide Healthcare to all their citizens at half the cost of what we spend?
    While our politicians go around in circles, Healthcare expenditures double every 8 ywars.

  12. Jonathan House says:

    About half of the physicians in the US support single payer.
    Here is one of many sources for that assertion.
    I am one of those physicians who support single payer. In my opinion and experience, insurance companies intrude into medical care, government insurance, much less.
    Full disclosure so my views can be put into context:
    I don’t see Obamacare as hopelessly broken but as a potentially fixable compromise adopted by Obama et al either because he/they didn’t have the courage to fight for the better solution – i.e. single payer – or because he thought it was the best he could get.
    Back a few years, I thought of the health care policy H. Clinton proposed (she explained its limitation as the best that could get through congress) as a policy of “all power to the insurance companies.”

  13. Eric Newhill says:

    Lee A Arnold,
    You are quoting nonsense. For profit insurance companies run at 80% to 85% MLR and not-for-profits run at around 88% to 92%. How can they possibly be then be spending 20% of premium on “overhead” (whatever that is supposed to be? Do you imagine that the federal government doesn’t have “overhead” – assuming that means audits, claims processing, various other forms, network contracting, etc?
    The other OECD countries pay less for healthcare because they ration it. period. Fantasies like yours are one reason I oppose single payer. You think you’re going to get the Cadillac most Americans enjoy today when, in reality, you will get a Yugo. A single payer delivering a Cadillac would cost more than what we spend today.

  14. Eric Newhill says:

    Jonathan House,
    Sure. You want to be able to perform any procedure you want to and you think that the feds will allow that under a single payer system. Wrong. Apparently you do not see a lot of Medicare or Medicaid patients. If you would say what you do.
    Also, would you really be happy with Medicaid or Medicare reimbursement rates? I know a lot of physicians and facilities that gripe endlessly about govt reimbursement rates. Some won’t even see Medicaid patients. You must have an unusual practice.

  15. Fredw says:

    Actually the comparison is worse than that. Government (federal, state, local) in the US spends as much per capita subsidizing our “free enterprise” health care system as those countries spend to cover everyone.

  16. steve says:

    No, it is not hopelessly broken. In the states where there are now very few or no insurance companies on the exchange, those are the same states that were dominated by one or two companies prior to the ACA. People will still be able to buy insurance, just not on the exchange. In this case Obamacare has mostly failed to fix a problem that existed before it did. Given barriers to entry, this is not terribly surprising, plus the current uncertainty.
    I have run the business side of a 100 person group for many years, Chair a department and have helped write policy for our Congressman (R). The ACA did not suffer from a lack of theory, but probably too much. It was aimed mostly at improving access. (I hope that you are at least acquainted with the idea of the iron triangle or there really is no point in trying to explain stuff.) It also did a number of things to address quality, which I spend a lot of my time on now. We offer services we never could have in the past, at least partially because of Obamacare.
    That said, you and others are correct that it poorly addressed costs. It did cater to the insurance companies. We don’t get nearly as good a ROI as we should on our health care dollars. Those could be addressed within the framework of the ACA, but I am not bonded to it. If the GOP can come up with something better I would be grateful. The Senate plan does look like that plan to me, but maybe they will modify it. (I don’t think single payer is the magic answer. It could cost a lot more if not done well. Many other countries have lower costs, quality just as good and they do not have single payer.)

  17. VietnamVet says:

    This is correct. American healthcare costs are unaffordable; $38,000 for a family of four when the median income is $52,000. It is also contrary to the basic rights of Americans to life, liberty and the pursuit of happiness.
    The sole purpose is graft. Moving money from the middle class and poor to the wealthy. Pay the fees, go in debt, or die. The only way to cut costs is; 1) restoring the public health service, 2) passing Medicare for All, 3) enforcing anti-trust and price gouging laws, 4) jailing the crooks, and 5) provide preventative health care for everyone.

  18. I am in favor of a single-payer system. But sorry you are wrong about Obamacare. Right now the total fix is small, $5-10 billion and some regulation changes. Read page 6 of the CBO score of the Senate bill, released yesterday.
    Social Security, Medicare, Medicaid — ALL of these needed start-up tweaks for years, and they still need the occasional adjustment. This is normal.
    Look, people in healthcare economics KNEW that the first few years of Obamacare would need occasional subsidies to stabilize the premiums until everybody was inside the system. This was written into the law, as the so-called “risk corridor” program.
    Two big things prevented the adjustments: 1. Many red states refused the Medicaid expansion. 2. The Dec 2014 omnibus bill restricted the risk corridor outlays. The Republicans’ intended purpose in both actions was to make Obamacare fail. They said so, at the time.
    It might help to step back, and look at the big picture. The Democrats wanted to start-up a single-payer in 2010, via the offering of the “public option” (a public insurer, available in the state markets).
    The Democrats had 60 votes in the Senate to pass the whole bill, but 4 of the Dem Senators would not vote for a public option — for the stated reason that it would lead to putting the private insurers out of the healthcare market (Joseph Lieberman, one of the 4, said this explicitly. Remember, his state capital is Hartford, once the insurance capital of the U.S.) And of course NOT ONE of the 40 Republicans would vote for Obamacare, even though it is structurally Romneycare.
    So, the Democrats opted to try to get healthcare for everybody, anyway. And let the chips fall where they may in the future, knowing that it would be very hard to take healthcare away from people, once they have it.
    Again, this approach was stated explicitly by healthcare policy wonks, at the time. Because most voters do not have the time nor inclination to follow the intellectual ins-and-outs of policy debates. But they understand facts in their lives, & in their neighbors’ lives. And Obama understands this tactic very well, much better than most. Future historians may treat Obama very well on this issue, because his strategy is probably going to lead to healthcare for everyone.
    Look at the GOP’s current dilemma: Everybody knows the Republicans want to take healthcare away from tens of millions of people, to give tax cuts to the richest. It is the starkest, plainest terms of the debate. (The canniest Congressional Republicans saw this disaster coming back in 2010; they said so at the time.) And whether the GOP passes its “Obamacare Lite” or not, the Democrats are finally going to be able to make the single-payer into a winning voter issue.

  19. That is the beginning reason for younger people, followed later on by the reason of less Medicaid than ACA, and less of other subsidies. Among older people, a big reason is because the premiums increase sharply. See the CBO score of the Senate bill, for example the analysis on p. 4, and Figure 3 on p. 16.

  20. Dr.Puck says:

    Thank you TTG.
    Let’s say you have a ten year old who is growing at some rate every year, and you decide to cap his growth at a future height/weight. You would need a surgical saw for the cutting.
    Price controls and fully socialized medicine and regulatory smarts and cheaper medical school would get it done, but, alas, in our cruel plutocracy, the 1% and select “makers” call the economic shots. I read today POTUS is back at the Trumpcare table, no doubt dialing the next attempted bill closer to his promised “lower premiums, lower deductibles, lower-co-pays and much better coverage.”
    Will we ever have a political party that advocates a Sanders domestic policy aimed at the working and middle class, joined with a ‘Buchanan’ foreign policy aimed at zero adventurism and zero magical thinking?

  21. Dr.Puck says:

    I wonder if Finland has better healthcare outcomes?

  22. Fredw says:

    WHO ranks Finland number 31. US is number 37. Rankings of individual criteria are pretty comparable, except that high costs cause the US to lose out on efficiency ratings.

  23. dilbert dogbert says:

    There is an old political saying that goes: “What Goes Around Comes Around”. The Democrats are paying some blowback over “Death Panels”. Politics is not Tiddly Winks.

  24. Sam Peralta says:

    What is there to wonder?
    Just compare the ratio of those suffering obesity and diabetes among the two populations.
    But…just like the Democrats who can’t accept responsibility for their election loss, many Americans don’t want to accept responsibility for their health.
    This is what the Nanny State has wrought.

  25. Sam Peralta says:

    If your boss tells you your wage is guaranteed to be the same after 20 years is that a pay cut?
    Yes it is. If your health care costs are rising 9% each and every year and your wages are not, then …

  26. eureka says:

    Look at the cost curve: medical insurance, both for doctors and patients in a high-overhead for profit industry, pharma unregulated pricing, etc. single payer with the addition of restored Hill Burton standards of medical services is the way to save needless overhead costs and assure adequate providers everywhere is one way to go. Majority of House Democrats are sponsors of Conyers’ single payer bill.

  27. Sam Peralta says:

    Medicare is a good example of single payer, as it covers all seniors. It has not done anything to curb costs. Medicare expenditures per capita keep rising, because healthcare costs keep rising. Single payer only works in Europe & Canada because healthcare is rationed. We’ll be back to death panels here!
    A third of federal spending is on healthcare. This percentage will keep rising as healthcare costs double every 8 years. Just do the math. How many more doubling periods when healthcare funding will be in serious crisis as it becomes an untenable percentage of federal spending?
    How is that battle gonna take place in DC? Those raking it in buy the politicians and those who are gonna be sacrificed, do they even vote? Do the politicians even care about their vote? Wouldn’t their attitude be, feed them more opiods and have the zombies die?

  28. Kathy says:

    The logical conclusion of SP’s argument is that If only people took more responsibility, no one would ever die. Or perhaps we should follow Peter Thiel’s example and hire young people to give us regular blood transfusions–the perfect metaphor for the Darwinian universe we now inhabit.

  29. Stephanie says:

    Sorry, but you’re wrong, and Lee A. Arnold is correct.
    The ACA needs adjustments, as any major piece of legislation of its size does. Under normal political circumstances, Congress would fix what needs fixing with follow-up legislation. Because Republicans were determined to see the ACA fail, that didn’t occur. Even so, the exchanges have survived and some are doing quite well, particularly in states that took charge of their own exchanges. What is doing the most damage at present is the uncertainty clouding the market because of the ongoing attempts to destroy the ACA. However, even with all these problems, Obamacare is not collapsing under its own weight.

  30. Warpig says:

    Also, compare the environmental standards, food standards, work standards, access to preventative health, and wealth inequality between the two populations. So much for the Nanny State.

  31. wisedupearly says:

    Well there are two parts to the GOP
    Cap the number of people who get healthcare and cap the total amount paid by the government.
    Of course, as the number of claimants shrink the total payments should drop rapidly as the poor are generally the sickest. Most likely, however, hospitals and insurers will find creative ways to increase their per person charges.
    Bill Clinton kept his donors happy with “end welfare as we know it”
    GOP wants to keep their donors happy with “end public health as we know it”

  32. Jonathan House,
    One small idea I have is to offer full government liability coverage to those physicians and other medical professionals who accept Medicare/Medicaid payment for all or the majority of their patients. It like how the government does not pay for car insurance on any of its vehicles. Maybe even throw in coverage of medical school. This won’t fully solve the problem and it clearly smacks of a big government program, but I feel it would move in the right direction.
    As Eric Newhill said, any government program will require care rationing. I remember either Washington or Oregon talked about this back in the Reagan era. There was all kinds of huffy outrage about rationed care even then. That’s something we have to get over. Hell, there could still be private insurance coverage for all that medical care beyond basic government provided care. Anyone who can afford it can still get their special perks.

  33. Harper says:

    I personally believe that a combination of single payer (Medicare for all) combined with a reinstating of the Hill Burton Act, which dealt with physical health care delivery systems (doctors, nurses, hospital beds, specialists per geographic area) is the best option. A majority of House Democrats are co-sponsors on the Conyers bill, establishing the single payer system. So much of the costs of the U.S. health care system are linked to unregulated pharmaceutical prices, for-profit health insurance and malpractice insurance with high overheads and other factors that have little or anything to do with delivery of necessary medical services that some of the costs of single-payer are covered by the savings. Health care is one of the most vital “infrastructure” investments in a healthy, productive economy. We regulate public utilities in “hard” infrastructure, so we ought to regulate health care services. Regulation should reflect the general welfare and need not be onerous, excessive or irrational. We spend the most and get the least, so clearly something has been wrong with the system, dating back at least to the advent of the HMOs during Nixon. The problem did not start with Obama, but the Obama Administration shut off the possibility of single-payer from day one, and delegated Max Baucus to write the Administration’s bill–and he hired lawyers and lobbyists from United Healthcare to write the bill. Doomed to fail. Giving the GOP a chance to repeat that failure is not, IMHO, the way to solve the Obamacare problem. Unless there is a try at a bipartisan solution, there is no solution.

  34. readerOfTeaLeaves says:

    The issue of whether health care even belongs in a ‘market’ paradigm continues to receive too little discussion. To wit: If I buy a pair of shoes, none of my neighbors automatically get shoes. Ditto cars, bikes, or apple cider.
    However, if I have the flu, then my neighbors are also at higher risk for flu.
    Illness is contagious, which means it is not a commodity.
    It does not fit neatly into a market paradigm.
    It never has.
    It never will.
    Unfortunately, we continue to make policy boondoggles by talking about health as if it is a commodity like any other.
    This is the health care equivalent of our foreign policy stupidities: too much bluster by people who do not understand WTF they are talking about.
    The way that Americans think and talk about health care leads to great mischief. Talking about ‘health’ as if it is a commodity like any other, leads both the Congress and Trump to use it like a political bludgeon: the subtext of the current Senate health care conversation has devolved into a series of threats, belligerence, deceptions, misinformation, and political opportunism.
    The inability of public officials to rise above political expedience — and to repeatedly engage in what amounts to political extortion — is further degrading the legitimacy of US federal governance.

  35. Bill H says:

    Yes. Otherwise known as “rearranging the deck chairs on the Titanic.” The best that Obama could come up with was “bending the cost curve downward,” supposedly meaning that it would slow the rate of increase in health care costs, which it did not actually do.

  36. Cee says:

    Keep it simple. The public is entitled to the same health care as those supposed to be representing us.

  37. Eureka Springs says:

    What many in the U.S. don’t realize is other countries who long ago moved to single payer models cut costs by half at the time of the move. The rise in cost from that point on has been a challenge but still a slower rise than we in the U.S. have experienced all along with by far the highest costs in the world for the worst overall results.
    We need to cut costs by at least half. Instituting Single Payer (or tri-care, my preference) without doing so would be a horrible mistake.
    Also, sans the V.A., congress has made it impossible for medicare to negotiate on drug pricing. Small European countries negotiate far better prices. Imagine what we could do with 320 million in bargaining power if allowed to do so.
    The best single payer Bill on offer is H.R. 676. About thirty pages once printed.

  38. divadab says:

    Medicare for All is the Canadian-style solution that would reduce the administrative costs imposed by the bloated and parasitic insurance industry from 20% to less than 2% of costs. However, arrayed against this happening is the power of the vested interests, which control our legislators through the money required to buy them their sinecures as “representatives”. And in that 20% “Administrative” cost is an obscene level of compensation for bureaucratic functionaries, aka non-profit (except for me and my millions) CEO’s:

  39. Degringolade says:

    The site is kinda lefty.
    But the other side to Harper’s argument is laid out pretty effectively here.
    I tend to agree with Harper, but the truth, when used in politics, is a slippery thing.

  40. kao_hsien_chih says:

    I don’t think care rationing is, if done properly, a bad thing at all. A lot of expense goes into nice addenda that look better than do better. Now, the real trick is if the rationing can be done properly so that things that only look better get cut rather than do better. What I worry about schemes that supposedly look to trim costs is that they have a nasty tendency every now and then to throw the baby out and keep the bathwater.

  41. eureka says:

    At the time Obamacare was being legislated in 2009-2010, the White House explicitly rejected single-payer, whether for ideological or pragmatic reasons. At that time, James Galbraith, University of Texas economist and son of John Kenneth Galbraith, proposed a reasonable compromise. He proposed that the Medicare age be lowered from 65 to 55. This would remove the most costly bracket of citizens from the private insurance industry and would therefore make it possible to greatly reduce premiums, because the costs to the insurers would be significantly reduced. It was a middle ground compromise but would have taken just a few pages to modify the Medicare bill. It would have also made possible to expand the coverage for the poorest Americans through Medicaid. It was still too much for the private insurance sector and so it never got a fair hearing.
    Furthermore, the increase in people qualified for Medicaid is due to a larger problem, which is that the U.S. economy is still not generating middle class wage scale jobs at a sufficient rate. In May, the labor force participation rate was the lowest in 40 years–62.3 percent. So the unemployment rate being 4.3 percent is due, in part, to the now 95 million working age Americans who are not counted in the labor force because of chronic unemployment or never having found a job (young people mostly).

  42. Sam Peralta says:

    The logical conclusion of SP’s argument is that If only people took more responsibility, no one would ever die.
    This is your conclusion, Kathy, and not logical at all!
    Obesity and related diabetes is a huge driver in medical consumption in the US. This is not congenital disease. This is due to lifestyle choice. Are you arguing that those who make better lifestyle choices are obligated to pay for the medical consumption of those that don’t?

  43. Sam Peralta says:

    Wealth inequality is precisely due to the interventions by government, driven by politically well connected interests.
    What do you think happened after the credit crisis of 2008? Government intervened to bailout Wall St. They protected shareholders and bond holders of Wall St banks from taking their speculative losses in bankruptcy court.
    How effective have governments run by the duopoly been in enforcing the Sherman-Clayton Act in recent decades?

  44. Imagine says:

    Again, Michael Porter showed that increases in health care cost are systemic due to a trinary customer-provider-insurer structure. In a normal binary capitalist structure, producers and consumers push back at each other until the market finds a fair price, people don’t buy what they can’t afford, and the system is balanced. In a trinary system, the forces do not oppose each other but push around in a circle like a tornado. There is no perceived pushback against rising costs nor getting unnecessary medical attention, so the market is never balanced, but slowly spirals upwards. You’re always spending Someone Else’s Money.
    Current treatment experiences are like getting your car tuned in 1960. The mechanic/doctor is free to charge arbitrary charges after the fact. No signed estimate is provided, no prices are offered ahead of time as to treatment options. As a result there is no competition in prices even amongst doctors, let alone in the doctor-patient-insurer system.
    Until this systemic trinary capitalist structure is corrected, patients will always ask for extra care they don’t need. Doctors will raise prices and charge grey-market two sets of prices, lowballing innocent patients who have no insurance and highballing patients with insurance so doctors can cover their costs. And Insurance companies will gouge the patients to cover their rising costs, because Who’s not going to get insurance?.
    There are two solutions. The in-process A.I. revolution in health care, driven by Watson but pushed by other firms such as CollabRx, will soon cause strong efficiencies tending to lead to deflation, that is, cheaper costs with greater efficacy. And radical transparency, in other words posting on-line how much everyone is charging and making per person, will introduce fairness, pushback and responsibility along with competition in pricing. Until these hit, prices will continue to spiral, because it’s systemic.

  45. Eric Newhill says:

    ACA Defenders (Stephanie, Lee, Steve, etc),
    I actually work on the ACA for one of the big 5 insurance companies. I am an actuary and I earned a masters degree in healthcare economics. I have nearly 20 years experience in healthcare insurance working on cost driver identification (everything from demographics, to actual procedures and diagnoses to contracting issues and then some) in what is usually referred to as “healthcare economics” departments in both not-for-profit Blue Cross/Blue Shield plans and for profits.
    I don’t know where you get your information (probably some Obama loving left wing internet news), but you guys are just plain wrong and, with respect, you really do not know what you’re talking about.
    The bottom line is that insurance companies are losing a lot of money on the ACA. As a result, many have dropped out of offering ACA products. Next year, there will be even more dropping out. The few that remain in the game will be pulling out of unprofitable markets.
    How can the ACA be salvaged if the insurance companies are losing money and won’t play? How?
    It was poorly designed. Here is a really basic example of the kind of badness in the design; Why would young healthy people purchase insurance they are unklikely to use, that would cost them $6k/annum, when the penalty for not purchasing insurance is only a few $ hundred? The rational decision is to not purchase the insurance.
    However, if one knows that one is sick and is going to utilize insurance to make payments in excess of what one pay in premium, then one will purchase it. That is also the rational decision.
    So the ACA got flooded with a veru sick, high risk, pool of people. Obama’s big stumping on the thing included statements about how all the young healthy people forced to buy it would offset all the very sick people. Well, that was stupid and irrational. Got it?
    There are only 11.5 million people enrolled in an ACA product. About half of those had cheaper ihdividual or small group insurance before the ACA. they are angry that they must now pay more due to the law making a richer (therefore more costly) benefit structure mandatory.
    Now we’re looking at maybe 6 million people previously uninsured that have insurance because of the ACA. Not that many people. But wait….many of those are actually eligible for Medicaid, but don’t realize it for whatever reason.
    So this whole ACA/healthcare bill debate is over probably 4 million people. Like the silly bathroom law, it’s impacting around 1% of the population. Much to do over so little.
    My suggestion is to repeal the ACA and do not replace (it will die on it’s own after next year anyhow). Then create a provision in Medicare law that makes people with chronic and serious conditions, of any age, eligible (conditions like end stage renal disease, HIV, chronic congestive heart failure, MS). get those people out of the private insurance risk pool and you’d see individual policy offerings across a wide range of benefit structures and affordable premiums as well. It’s the risk of moral hazard and adverse selection due to the presence of such people in risk pools that are driving sharp premium increases in the ACA products. previously these people were denied coverage due to pre-existing serious conditions. Now they must be accepted.
    This is simple stuff, really. It gets muddied by those who wish for single payer socialized medicine. These people make a lot of noise over little or nothing to draw attention to their cause. They lie to garnish support. they’ll do anything because they are ideologues with a cause.

  46. ex-PFC Chuck says:

    EN, Your 88-92% figure is misleading because a significant amount of what is being reimbursed is the costs provider organizations incur in the struggle to get paid. I don’t have a current figure but some years back I read a study that determined that 23% of every health insurance premium paid by individuals, businesses and government entities went into the administrative costs of either trying to get paid or to avoid paying.
    With regard to outcomes, WHO supposedly develops an overall health index of countries but I’ve so far been unable to find it on their website. However the link below came up on my DDG search, which shows the USA 35th on the list. Most, and perhaps all, of the larger countries above us have some form of single payer for all, and I’d be surprised if any of them have a higher per-capita health care spending figure than the US, in spite of the fact that millions here have no health insurance at all.

  47. Eric Newhill says:

    Healthcare and associated insurance already is heavily regulated.
    These ideas in people’s heads about how it all works are really “interesting”. The amount of misinformation is both fascinating and appalling, especially since this is a hot political topic. You’d think the facts would be well know. They are anything but.
    No entity in this game is more motivated to control costs than the for profit insurance companies. Contrary to what some of our knee jerk anti-capitalists want to believe, the insurance companies are the only ones keeping costs down in he commercial market.
    Cost are kept down via contracting, via ensuring that only procedures, drugs, etc with a proven efficacy for the given condition AND a favorable cost/benefit compared to other available approaches are approved, via pay for performance arrangement with providers…..and much more.
    Yes, for profit insurance companies make a profit. That’s usually around 10% of what is paid in premium. Both government and insurance companies have “overhead”. Not for profits run at about the same premium rates as for profits, but their benefits might be slightly richer. That 10% doesn’t translate to very much in terms of what your premium costs. A $1000/month premium is $900 a month if profit removed. But, you also lose all the cost savings that insurance companies create (above). So, now your $1000/month premium is $1,500. Still want to get rid of insurance companies?
    The only way to get costs lower is to ration care. In the US, a woman develops breast cancer. She has her breasts removed and she also has them reconstructed per policy of every major carrier I am aware of (including the one I work for). The reconstruction portion of the work costs $15K to $20K. Same woman in the socialized system has her breasts removed. Full stop. If she wants reconstruction, she pays for it herself. get it? This cost comparison between the US and the other industrial countries is at such a high level that it misses what counts. The US delivers a Cadillac and the others a Yugo. That is just a fact and no amount of political grandstanding and propaganda is going to change it.
    Furthermore, I know for a fact that US insurance companies are not the ones fighting single payer. I know for a fact that at least one company is preparing (kind of like war gaming) for that possibility and is prepared to offer supplemental insurance to all those people who got conned into thinking single payer would deliver a free Cadillac and now want to be covered for the gaps between the Yugo they actually got and the Cadillac they used to have. I know this because I have been in the discussion with senior leadership.
    Healthcare costs will continue to increase sans rationing because technology is proliferating and most of that technology, while allowing more people to be treated and for more conditions, isn’t cost saving. So we are doing more for more people with more expensive technology. This is what no one wants to touch because it does sort of get us to “death panels”. What technology will be covered. Who will receive it? Who wont?

  48. Eric Newhill says:

    Medicare does a lot to curb costs. It contracts at very rigid rates that can be quite low. So there’s a big one right there.
    It also has a list of procedures that it covers and those it won’t. A lot of procedures are denied by Medicare.
    There is a lot more. Too much to list. But here’s an example. It analyzes data and has algorithms that identify hospital acquired conditions and, basically, hospital/physicians screw-ups. It won’t pay for the re-admission to treat those conditions. That saves a lot of $. I know this for a fact because, for one thing, I ripped off their algorithm a long time ago, so we could employ it. Also, I work with the feds quite a bit these days and am well aware of much of what they do.

  49. Eric Newhill says:

    Steve, “People will still be able to buy insurance, just not on the exchange.”
    Sigh……if you don’t buy ACA coverage on exchange, you cannot get a subsidy. The subsidy kind of being the whole point of the ACA…you know, help people that can’t afford coverage get it with the subsidy.
    So even if the non-subsidized people can still purchase ACA coverage, they are, on average, paying more than they would have pre-ACA due to ACA law’s mandated minimum benefits, etc.
    But you’re just plain wrong about even the non-exchange purchase-ability.

  50. Total spent by Social Security and Medicare on overhead — everything but payouts to recipients — is around 2%. For profit insurer MLR is 80-85% which means we can save a lot of money by putting the thing into a single payer. The free market system rations by prices. (In fact I think the best system would be two-tier: baseline single payer + voluntary concierge healthcare.) Rationing isn’t necessary at all because there is no real lack of physical resources to supply basic healthcare needs in toto.

  51. steve says:

    No. Transparency is not having much effect. I have long been an advocate but the literature to date shows us that knowing the prices is having little effect on pt or doctor spending. We are also nowhere near any tech revolution that will save costs. At his point innovations are just about as likely to increase costs.

  52. Eric Newhill says:

    Outside of academia, that model really isn’t true.
    Insurance companies and Medicare/Medicaid contract proactively with providers. In other words, it is arranged that physician X gets paid $Y for performing procedure P.
    So all that stuff you quoted really isn’t relevant unless a patient is paying out of pocket; and not many do that.
    On that note, if anyone ever takes the time to read their EOB (the insurance company usually sends them out explaining how a claim was paid) you’ll see there’s a quote of what the hospital charged and what the insurance company paid. This is often broken out by each procedure performed. You’ll notice, typically, that only a % of what was charged by the provider was paid by the insurance. Provider bills $1,000 and gets paid $600. That’s because of pre-contracted rates. The provider can bill a $million if they want. We (insurance) don’t care. You get paid what’s contracted. However, if you are uninsured, you get stuck with whatever the provider bills. As I was saying, for the 10% profit insurance companies take out of premium, they are creating far greater savings, which gets passed along to consumers in terms of lower premium. A lot of people mistaking their opinion (or someone’s they’ve read) for the reality of how this all works.

  53. Eric Newhill says:

    Also, Imagine,Porter is ignoring the whole volume increase issue. I think he’s full of it all the way around, but assuming, for a second, that he’s not, he is still not addressing the fact that technology development = more people getting treated for more conditions = greater overall costs……..all of which means that rationing is the ONLY way to lower costs in the long run.
    Some people will become mental contortionists to avoid the rationing discussion, which tells me that their either politicians or salesmen or both. They’re dishonest at any rate.

  54. kao_hsien_chih says:

    The diagnosis of the problem is spot on: no one is held responsible because there is always someone who will foot the bill indirectly, and because the costs are assigned indirectly (and taken out of one’s pocket discreetly), it is difficult to say “no,” if at all possible.
    I don’t buy at all into the idea that the AI revolution can somehow solve the market problem. Wall Street, in a far more limited sense, has had far more invested in using AI to somehow “master” the market to discover the perpetual cash stream. That hasn’t worked out well and it probably never will work. In the health care arena, we are dealing with a much more complex market and something much higher at stake–actual lives. AI will help, but, even more than technology, we need a social, political, even spiritual solution that people of all political and social stripes can trust, oh, and it’d better deliver results too.

  55. Jack says:

    I think there is merit to your analysis. There is no market in healthcare in any traditional sense. And yes, there is no transparency in pricing. Additionally cash buyers are penalized with exorbitant prices.
    I recall in the 60s that medical care was rather affordable and many paid doctors who did house visits in cash. I’ve never understood the rationale why Medicare can’t negotiate drug prices by law.

  56. Eric Newhill says:

    $38K for a family of four to do what?
    It certainly isn’t what a family of four pays in insurance premiums (way too high for that). Average annual medical costs? No way.
    It is becoming clearer to me all the time that we can’t have good healthcare legislation because people are believing all kinds of ridiculous myths and mistaking paranoid fantasy and BS for fact.
    Where do you guys get this stuff? Genuinely curious. Media? Blogs?

  57. Ulenspiegel says:

    “The other OECD countries pay less for healthcare because they ration it. period. ”
    Really? The patients get less than in the USA?
    Or could it be that the insurance “companies” /health funds are better negotiators. They get better prices by hospitals and pharmaceutical companies. It also helps when health funds run their own medicinal facilities.
    “You think you’re going to get the Cadillac most Americans enjoy today when, in reality, you will get a Yugo.”
    Again: Really? Or could it be that you US folks only pay 40% more for your Caddy or Yugo? 🙂

  58. Eric Newhill says:

    ex-PFC Chuck,
    That 23% figure is lunacy if used as a weapon against insurance companies. The fact is that hospitals and physicians have to code claims; meaning the doctor writes a note, using plain English, that he performed such and such a procedure for such and such a condition. Coders then translate that plain English into ICD or CPT codes to be placed on the claim which is sent to the insurance company for payment. Guess what? Medicare requires this too. If it wasn’t required, then you have all kinds of fraud with providers just saying, “You owe me a $gazillion. Trust me. I earned it”. The socialized systems also require this.
    There are only two claims forms – both created by CMS (the federal govt) – one for physicians claims and one for facility (i.e. hospital claims). The insurance companies use the same forms as the Medicare.
    Another office cost for providers is getting authorizations; i.e. “I have one of your members in my office as a patient and I want to perform procedure X on that member. May I do that?” This is a much smaller cost. Guess what? Medicare also requires this.
    If providers find they have to wrangle with insurers for getting claims paid, maybe they need to tighten up their processes. If they do above properly, there won’t be any wrangling.
    So this is a red herring. It is a cost that will be incurred single payer or not. C for effort at trying to stump me. I’ve been in the business a long time and I know just about everything there is to know in a quantified financial way. You must try harder 😉

  59. Eric Newhill says:

    Are you not aware that 1/3 of Medicare is administered by private insurers? Why? Because CMS found that the private companies are more efficient. The often quoted 2% figure you provide is not accurate. The true cost of Medicare administration is diffused through other budgets. Just for example; The IRS collects the beneficiaries premiums. HHS does the accounting, marketing, fraud investigations, auditing, etc.
    Then there is deceptive math being used. Medicare members are older and sicker and way more costly. The % admin fees is calculated as a % of total cost. I have two members, one is young and healthy with private insurance and costs $1,000 in medical claims and the other is old and sick and Medicare enrolled and costs $10,000 in medical claims and both cost $100 to administer. Then the young one is running at 10% admin costs and the other at only 1% admin costs. See the trick?
    Normalized, Medicare is actually running at the equivalent of 9% admins costs; which is right around where the private companies are. Except the private companies are working hard to reduce overall cost because they are incentivized to do so (i.e. their bottom line).
    You must have missed the part where I described at a high level how insurance companies save more that they cost. The insurance companies are saving around 35% to 40%.
    You really need to stop believing socialist propaganda, IMO. It’s not healthy.

  60. Eric Newhill says:

    Porter assumes that if a patient, who has insurance, knows what the insurance will be paying, that the patient will care about it. That the patient will say, “Gee, that seems really expensive and I don’t know if I really need this procedure. I’d sure hate to damage the other 50,000 people in my risk pool. So I’ll decline the treatment”. Do you really think anyone is going to adopt that attitude?
    Porter only makes sense if people are paying out of pocket. Then I begin to agree with him. So insurance sets high deductibles to get Porter-esque thinking stimulated. Eveyone gripes that deductibles are too high. How would a single payer system work to instill what Porter says? It wouldn’t. The opposite happens as soon as the patient no longer feels the pain in the wallet at the point of purchase.
    However, as far as I know, the providers will tell you what things cost if you ask; especially if they know you’re facing a high deductible. My wife had eye surgery last year. I have a high deductible plan. I sat down with the provider and got an itemized list of what each aspect of the treatment would cost. No problem.
    As an aside, many do not realize that if you have insurance and a high deductible, the provider is only getting reimbursed at the rate contracted by the insurance company. They can bill whatever they want, but they only get what is contracted. You still pay the deductible, though, of course, but it can be moderated by the contracted rate. So you have a $6,000 deductible. You go to a provider for a procedure. The provider says they charge $5,000 for the procedure, but they are contracted to only get $3,000. Since it’s all under your deductible limit, you are paying for the whole thing, but it’s only the $3,000.

  61. Eric Newhill says:

    Just got informed intra-office that voting on the bill will be postponed until around the 10th of July.
    What we are seeing as significant in the Bill:
    1. repeals individual and employer (small group) mandate penalties
    2. ends enhanced funding for Medicaid expansion
    3. repeals most ACA fees and taxes and delays the “Cadillac tax” until 2026
    4. incentivizes continuous coverage
    5. adds age and geography-adjusted components to current income based subsidies (makes sense to me)
    6. maintains protections for pre-existing condition coverage ( a bad thing for insurance companies)
    7.establishes some vague (at this point) thing called small business health plans)
    8. state waivers for defining essential health benefits (rationing?)
    Just not seeing the piles of corpses in the street as a result of this bill.

  62. Eric Newhill says:

    The WHO rankings are frequently quoted by those seeking single payer/socialized medicine in the US. However, the WHO rankings are highly questionable in their methodology and include a lot of biases. Here are the overall categories and weights used to create the rankings. Clearly some of these have nothing to do with actual healthcare. There are biases in subcategories as well. Health Level is only 25%, but the rankings get quoted as if the whole thing is based on health level/outcomes.
    1. Health Level: 25 percent
    2. Health Distribution: 25 percent
    3. Responsiveness: 12.5 percent
    4. Responsiveness Distribution: 12.5 percent
    5. Financial Fairness: 25 percent

  63. Before the ACA some of those plans had low coverage, high deductibles. There would be a lot more people “enrolled in ACA product” if more states had taken the Medicaid expansion.
    But you’re right, the current system is indefensible. The question is what value-added to healthcare do private healthcare insurers provide, for the money they take out of the system. Because if it isn’t worth it, then single-payer will save enough money overall to make a simple system, with universal coverage + community issue + and no preconditions, for everybody. Then, rates for the young and old will be cheaper, and most people will pay in, for the same reasons they pay into Social Security: peace of mind, because it is easy, because it is the safety net.

  64. Take out the insurance companies for a moment. That leaves you with the “binary”: supply and demand, which together determine prices. On both sides, healthcare is not a standard market product, it won’t work that way.
    On the supply side, healthcare providers will never be numerous enough for effective price discovery, & even a medium-size metropolitan areas doesn’t need more than a handful of hospitals. There is no real “competition” in situations with a small number of producers. Another supply-side glitch is that innovation in healthcare technology has not led to reduced costs (so far), unlike most technological industries, where innovation leads to price reductions (computers, toasters, etc.) But this may change, because after millennia of hit-or-miss innovations, we finally have the right tools for the job (biotech + nanotech + genomics + imaging + mass computation).
    The demand side is even stranger. Patients are mostly unable to shop around at the moment of need, unable to understand the technical information, and are often in dire emotional condition. At the same time, oddly, the demand for basic healthcare is finite and predictable: most people don’t want anything more than to be healthy again, and to get out of the doctor’s office or out of the hospital as soon as possible. (We have to write “basic” healthcare, because this is not true of elective and cosmetic procedures, of course, and they should not be covered by a single-payer.) So there is really no problem with anticipating “volume”. And for another thing, at the same time, we feel a moral obligation to give everybody the same care — if a little kid whose parents are in poverty needs open heart surgery and lots of care, we want to say, “Do it.”
    For these reasons, healthcare is not a market good. Insurers cannot make it into one.

  65. Eric Newhill – It’s a difficult question to ask because the cost structure is different here, but might I ask about the admin costs incurred within the hospitals or groups of hospitals? In the States these internal admin costs will presumably be lumped in with the medical costs and will automatically go on the invoices submitted to the Insurance Companies.
    It is such admin costs that in England are most often the target of criticism, whether fairly or unfairly I don’t know. They are equivalent to the internal admin costs of Universities, that again are the target of criticism and in this case probably fairly so, both in the States and here.
    Is it your view that these “on the other side of the invoice” admin costs are too high? That is, do the hospitals themselves generate excessive admin costs?

  66. Eric Newhill says:

    Up above I mention some of the ways insurance companies are creating savings. Worth reiterating, though. Briefly, 1. contracting + crafted networks = net savings of +/- 30%. 2. Pay for Performance arrangements, accountable care arrangements, and similar insurer/provider partnership arrangements = net savings (where applicable) of +/- 12%. 3. Care management programs, IMO, very tiny ROI 4. Fraud and abuse detection = net savings of 15% (though this is disputable. very difficult to accurately capture the value of events that did not happen, but would have if not for the program. This is like predicting what crime rates would be without police and jails). 4. Utilization management = net savings of +/- 10%. Those are the big ones, but there are others. However, should give you a reasonably good perspective into savings generated by insurers who are motivated to keep costs down.
    As to your other point;
    The young, arguably, should not be forced to buy insurance they don’t need. From an actuarial perspective, most people are better off without insurance. Take me for example. My pay-ins to premium over my entire adult life (includes what my employer pays in because, logically, that is money my employer would have put in my pay check if not diverted to insurance) are around $300K (includes the years when my coverage was for a family of four). Over the course of my adult life time I have been pretty healthy. My wife had an expense set of claims around and accident she had about ten years ago in which several bones were broken. Then there was recent eye surgery. Otherwise, just little stuff. Children were quite healthy too. So I have cost my insurance companies around $30K.
    If I had had a high deductible policy the whole time with an HSA component, I would have paid more like $100K in premium and could have saved the balance of $200K in the HSA account (or simply enjoyed whatever I wanted to purchase with it). let’s say that I got hit with a $20K deductible when my wife had her accident. That would hurt at the time, but I would simply reach into my HSA and pay it. The eye surgery I did pay for because I now have a high deductible HSA policy. Still way ahead of the game. I would have $180K that I don’t have today. Even if something catastrophic happens to me now, I have more than enough to cover the $20K deductible.
    That is what young people should be doing. High deductible with HSA. By the time they’re 40, the time when health issues start creeping in, they have saved more than enough to cover the deductible. And they have a lot left over. If they’re like most people and experience only minor health issues up to Medicare coverage time, then have a nice nest egg for their golden years.
    In any commercial (read employer group) based risk pool it’s only 1% that incur costs in excess of what they pay in for premium year after year. These are the chronically ill. another 3.5% +/- will have a year when they cost more than they pay in. But that’s a one off. With high deductible + HSA these people still end up way ahead of the game by age 65. Most people who are insured will never incur costs that exceed what they pay in. One exception is women in child bearing years. Usually a pregnancy with hospital delivery, but healthy baby costs = one year premium. So they’re break even.
    This whole debate is over the 1% who are chronically ill and the 3.5% who don’t save money or just can’t do basic math.
    Mostly. There are instances in which a member of the 3.5% has a single catastrophic issue that is so expensive that it could wipe out any past and future savings. However, that is rare.
    For those who are too poor to be included in the above analysis, there is Medicaid and other safety net programs. Hospitals will regularly do pro bono work for very sick children in need of expensive care for continuation of life. Many charities support that care. There are other ways for some in the notch group that the ACA seeks to target. But, as I said somewhere above, we are really only talking about a few (4?) million people that have received coverage in the ACA that they would not have otherwise had.

  67. Eric Newhill says:

    Lee, I missed that part about Medicaid expansion. What does that have to do with being enrolled in an ACA product? I am not following you there.
    The ACA is a set of products offered, for individuals and small groups, through private insurance companies with basic benefits set by law. There is some choice for purchasers in benefit structure, also prescribed by law. These are known as “metal levels” (bronze, silver, gold, platinum).
    If purchased on exchange, the purchaser has an opportunity to qualify for subsidies. If purchased off exchange through a broker, there is no opportunity for subsidy. Roughly 40% of the members enrolled in products offered by the company I work, have subsidies. The subsidies are on a sliding scale based on income. Most of the members I look at have relatively small subsidies (meaning it aint helping too much).
    At any rate, these are policies that individuals and small groups purchase just as they always have, only pre-existing conditions cannot exclude anyone from being able to enroll and the premiums are typically much higher than pre-ACA, which is damaging to a lot of individuals and small groups who are relatively healthy and only sought coverage in the event of something catastrophic happening to them.
    This has nothing to do with Medicaid, which is for people who have an income that falls below a determination level, set by each state, that is deemed low enough to qualify for free healthcare insurance. Medicaid is paid for by the states, but with some federal dollars kicked in to help out.
    Most Medicaid is administered through private insurance companies.
    So not understanding your point at all.

  68. Here is a study showing that a simplified financing system can save $350 billion in billing and insurance costs, which amounts to 15% of total healthcare spending:

  69. Tarheel says:

    Your entire argument is …well…wrong…to put it kindly.
    Administration Cost means *total* operating cost…..i.e ‘all services necessary to operate.
    Suggest you use —The Center for Economic and Policy Research (CEPR) for the correct information –to educate yourself.
    Overhead for private insurers 12-13%
    Overhead for Medicare 2%—–which includes any ‘outside’ contracting with other agencies.

  70. Eric Newhill says:

    “Another supply-side glitch is that innovation in healthcare technology has not led to reduced costs (so far), unlike most technological industries, where innovation leads to price reductions (computers, toasters, etc.) ”
    Bingo! We agree on something. Until that is dealt with, costs will increase no matter what you do. You might do this or that to bend the trend, but then it will resume its inexorable increase. That is why I say rationing is the key. But that leads to “death panels”
    Maybe people should get used to the idea that they’re gonna die.

  71. Eric Newhill says:

    I honestly don’t know the details on this.
    I can tell you that there is no line on a healthcare claim submitted to insurers labeled “admin costs”.
    In the US, providers (that’s the doctors and hospitals, etc) contract to pay a certain price for certain procedures. I always assumed the providers calculate their admin costs into the negotiated price. In fact I am sure that is how it happens.
    It’s the free market model at work. Here’s what we will pay you. If your admin costs are too high then you will be an unprofitable provider. If you wish to maximize profits, you will reduce your admin costs. That’s as much as I know about that aspect of the business.
    Personally, I think that providers are very much overpaid in the US. It is my intuition – but I have no data to back it up – that admin costs are way too high. I think there is a lot of waste on the provider side. We see big hospitals building all kinds of new facilities, purchasing all kinds of wiz bang gizmos. The greed and inefficiency and just plain spoiled rotten nature of the providers in the US is a huge factor in overall healthcare costs, IMO. Since it is not my area of work, I do not have the solid data. Again, just my intuition around the thing and my intuition is usually right on such matters.
    Doctors could code their own claims and get rid of the overhead involved in hiring coders. This is made easier by all kinds of aps and gizmos. But they don’t so it because they’re prima donnas. Hospitals purchase the latest special air flow mattresses for the beds with all kinds of doohickies that go beep and adjust the contour automatically, etc, etc all at great cost. That cost is passed on in the form of higher contracted rates. The list of expensive technology that clearly adds little value, but is purchased constantly is long. Like I say, it is the Cadillac here.
    Why do we keep contracting with such providers? Well, they have us over a barrel. We can’t be an insurance company if we don’t offer a network with all the right types of providers. Regulations insist we get that right or our right to sell insurance will be yanked. It is the individual states and the feds that impose the regulations.
    The providers are driving the cost by purchasing and promoting and utilizing the new technology. If we say “no”, they complain and get the PR in action and suddenly there are stories about evil insurance companies killing people by denying essential care in all of the relevant media outlets. I was once personally named in one of these stories as I was involved in a study that resulted in certain spinal surgeries not being covered for certain conditions. The data showed that members were far worse off for having had the surgeries. Our medical directors agreed that the members who were made worse off didn’t meet the best medical appropriateness criteria. We wrote new policy. And then were publicly attacked by the physician community who performed the surgeries. providers can be real bastards. Most went into medicine to get rich, not to help people.

  72. There is very little about networks, managed care, etc. that are more efficient just because private insurers are handling them.
    The assertion that, arguably, no one should be forced to buy insurance is, as you state, arguable.

  73. You seem to be distinguishing “ACA products”, as an insurance industry definition, from the Medicaid expansion. Most people take it that ACA included the Medicaid expansion.

  74. No, people should not get used to the idea that they are gonna die, just to preserve the system of finance. I feel that is completely backwards. What matters is human happiness, or consumer utility, as the economists say. The increase in healthcare costs really does NOT matter, so long as people are being covered. Demand for basic healthcare is finite and predictable; there are actuarial tables as you know. Rationing is not really necessary because planet Earth has enough metals and plastic to make all the REAL healthcare technology we need, and enough unemployed labor and new machines to put ’em to work making it. Rationing is made to APPEAR necessary because the financial system makes money scarce to make a profit on it. People think that the real resources for healthcare should be connected to money, and are therefore limited and need to be rationed. This is nonsense. The thing to do, short of a total revolution, is to expand the healthcare sector by putting money into it, either by taxing the rich or printing the money. This is a stupid political-economic question. It is NOT the spiritual reality that people should get used to the fact that they are gonna die.

  75. Swami Bhut Jolokia says:

    This post is misleading. The GOP bill cuts the growth in spending on Medicaid in nominal dollars. On an inflation-adjusted basis, spending on Medicaid will drop by 18% in 2026 (over 2017).
    You can verify this for yourself by going to the CMMS website.

  76. Eric Newhill says:

    Now you’re really out there.
    “The increase in healthcare costs really does NOT matter, so long as people are being covered. ”
    So how much of GDP do we spend? What do we sacrifice?
    “Rationing is not really necessary because planet Earth has enough metals and plastic to make all the REAL healthcare technology we need, and enough unemployed labor and new machines to put ’em to work making it. ”
    Come on. Seriously? The best and brightest come up with laser surgery and laparoscopic technology and the computer stuff that goes with. So the best and brightest are just going to invent this stuff for free? BTW, why aren’t doctors providing healthcare for free when people can’t afford it? Why are they all members of country clubs driving expensive automobiles, etc? Could it be that the best and brightest feel like they should get paid commiserate with the value they produce?
    “The thing to do, short of a total revolution, is to expand the healthcare sector by putting money into it, either by taxing the rich or printing the money.”
    Ok then….that’s your solution. Print money and throw it at the problem because it is the spiritually correct thing to do? It’s been educational talking to you, but I’m done now. It’s always good to know where people are really from once all their alleged “facts” and assorted “convincing” arguments have fallen apart on examination.

  77. Decameron says:

    Obamacare Didn’t Really Take Care of the Poor After All — and bled the middle class. Affordable Care Act was always a bailout and welfare plan for the insurance companies. Hysterics from the liberals aside, a couple of real life examples show the hypocrisy and callous disregard of the Obamacare propagandists. Middle class working people cannot afford the premiums.  Case in point:  in 2017, a married working man in his late 40s, who had purchased health insurance under Obamacare, was hit with a 60+ percent increase in premium for no reason (i.e., he had no major health issues at all).  He could not afford the premium that went up to about $500 a month.  He no longer has insurance — he can’t afford it, and he will be fined under Obamacare law.  
    Another case in point:  In 2014, 25 states opted out of the Medicaid expansion–these states rejected the ACA’s definition of who qualifies and therefore didn’t get expanded federal funds. So millions of poor people in these states never got Medicaid under the ACA anyway.
    Trump and company are right — Obamacare is falling apart. The single payer plan (one national insurance company for everyone, and expanding Medicare to the general population, even if some premiums have to be paid in)is the fix that is urgent.

  78. Eric Newhill says:

    How is the ACA a “bailout” for insurance companies? People keep saying this stuff – these biased opinions – as if its truth with factds and data to back it all up. There isn’t any backup.
    The insurance have been losing money on the ACA. We were pretty sure we would lose money on it before we got involved. The company I work for elected to just put a foot in the water as opposed to diving in because we could see how it was going to be a loser. We got involved a little because we try to be good partners with the feds.
    So insurance loses money year after year to the extent that most are washing their hands of the ACA. How can you defend your statement that the ACA was a gift to insurance?

  79. Eric Newhill says:

    Ah, I get it. You think because premiums went up, the insurance companies are reaping profits. Not true. Premiums went up to cover the cost – what insurance pays out to providers – not to up what they keep for themselves. What they keep is negative when it comes to the ACA. Costs went up because the ACA was poorly designed. It attracted only bad risk (i.e. the sickest people). The more premiums go up, the more only the sickest sign up for the ACA, That is the “death spiral”.
    Again, the amount of disinformation and general ignorance on this topic being stated as truth is appalling. I fear, as a result, we will never have a viable solution.

  80. “Printing” money is what we already do. Private banks print money. We have been printing money for about 2500 years. It calls forth investment. When you are looking to provide an absolute necessity, such as healthcare, then it doesn’t matter whether you do it through the supply side or the demand side. In the first quarter of this year, about 1/3 of the jobs growth was in healthcare — courtesy of funding through Obamacare! These jobs create further opportunities, & the workers spend the money on other things like food and clothing and shelter. Doing it to expand a needed sector creates jobs & GDP, and then other people invent stuff and get further earnings from the cycle of money. It’s called “the economy”.
    On your other point: Actually the best and the brightest do a lot of things because it is creative and fun, and only secondarily to make a profit. You can see that especially in the history of invention in basic sciences and in medicine. But now we kill that impulse early on in our kids, for reasons of money. In fact our corporations don’t do basic R&D particularly well, largely because it is difficult to justify the budgeting for a spate of null results when you don’t know where things will lead, which is an unavoidable condition of basic invention and research.

  81. Eric Newhill says:

    And your background in all of this is what exactly beyond the ability to google and find some garbage that supports your bias?
    What I am saying is not original to me. It is known among those who actually work deeply in the field:
    Additionally, you have the mathematical reality that I described above.
    Sometimes, even on the internet, you meet people that actually know the business under discussion. Which is why I like SST.

  82. Eric Newhill says:

    I totally agree, but you have the problem of the AMA and other profiteers on the provider side launching a media campaign against the rationing, no matter how wise and judicious. Then the politicians seize the opportunity to promise “fixes”.

  83. Stephanie says:

    If I may speak for Kathy – no, that isn’t what she’s saying. As of the present writing, the death rate is holding steady at 100%. At some point, you will fall ill and die.Prior to that inevitable end, your failing body will likely require additional medical care and attention. Most of your individual lifetime health care costs will accumulate during this period of decline.
    Insurance is about the pooling of risk. Perhaps you have never been in a car crash. This is likely through a combination of good management and good luck. You may resent the fact that your auto insurance premiums help to subsidize the insurance company’s payouts for those who have not driven so carefully/been as fortunate. Such is life, or insurance.

  84. VietnamVet says:

    I googled it. I just did the search again and the figure from PBS of $10,245 per person was first listing:
    That is what we are saying. American healthcare is unaffordable. Single payer will cut this by half. But, further steps are necessary to create a healthy population. A person who has a good job, healthcare and a family lives longer. They add value to our society not costs. “About 5 percent of the population — those most frail or ill — accounts for nearly half the spending in a given year.” All together this averages to $40,980 for a family of four. Also, when youth real unemployment reaches 25% revolts happen. Rather than five men hording half of the world’s wealth, money must be spent at home to secure the basic rights of American citizens.

  85. Swami Bhut Jolokia says:

    And now the CBO is out with their analysis: https://www.cbo.gov/publication/52859
    Projects a 26% cut in real spending. And this does not include any analysis of per capita spending–one can assume the population is going to grow so per capita real spending will drop even more.

  86. Eric Newhill says:

    That $10K figure is an average. Basically looking at all categories of cost and dividing by the number of citizens. I don’t know the details behind or whether or not it is correct, but it feels about right; albeit a little high. Depends on what got counted as costs. The figure could be made to be more shocking if some questionable goods and services were included. One point that definitely is misleading is that the average is based on a total cost that includes senior citizens and Medicare expenditures. Medicare members cost significantly more than younger members. That figure should at least be broken out into Medicare versus non-Medicare to be meaningful. OTOH, I guess we’re all members of this society and we are all paying in for the healthcare of everyone else one way or another.
    The overwhelming majority of individuals are not costing that much. The typical healthcare outlays for a family of 4 per year is more like $3k. But that’s an average too. Many people incur between $0 – $1000.
    This is what I have been saying. Most people are better off without insurance (or a high deductible + HSA plan) because when you have insurance, you are paying for some very sick people; especially for chronically sick people.
    I know I have been a bit of a jerk here on this thread, but it is hard to stay cool when people keep making the assertion that single payer will save money based on misapplied data or completely fabricated nonsense.
    My larger point is that all of the reason people think single payer will save money are illusory. IMO, single payer in the US will end up costing much more. I have already made my case that insurance companies are saving as much money as they can for the system because they are the only ones incentivized to do so.
    The figure about Medicare administering insurance for less are, as I have shown, a lie. If you look at what real Medicare admin costs are *per covered life* (that means including all costs that are farmed out to other government agencies and to the private companies) it is just as costly as the private companies and maybe more so. I will repeat that Medicare itself realized this and that is why they started Medicare Advantage, which passes 1/3 of Medicare to private companies and why private companies do things like process Medicare claims. Look up Medicare Advantage.
    When I see such misleading info passed around as fact, I become more certain that should we ever go single payer/socialized, that we’d all be paying a lot more.
    The socialized systems ration. That is how they save money. I agree with those who say that a lot of that rationing is a good thing. But what happens when those impacted by rationed care start to complain? The politicians respond by upping the benefits. Pretty soon we’re back to where we are + all the graft and inefficiency that always comes with government.
    Somewhere up thread I offered a basic overview of what my plan would like. It’s based on actuarial data. It’s simple. And it would work. Seriously, it’s all that is needed.

  87. Eric Newhill says:

    “And on an absolute basis, based on Table II.B.1 and IV.C.1 of the 2016 Medicare Trustees report, in 2015 the Medicare Trustees spent 4% less on Medicare Advantage and other Part C beneficiaries per person than they did per person on Medicare beneficiaries under FFS Medicare. In 2014 the difference in parity on an absolute basis was 2% less per person on Part C of Medicare based on the Medicare Trustees report in 2015. It appears that after using a formula that was too restrictive in 1997 when Part C was formalized and too generous in 2006 when Medicare +Choice became Medicare Advantage, the Trustees have now found a formula that delivers on the original cost-saving promise of Managed Medicare.”
    The private insurance companies are delivering Medicare cheaper than the govt.
    Once you remove the misplaced faith that the govt can administer cheaper than private, get past the mistaken belief that because insurance companies take profits they are causing cost increases, there is no rational for single payer other than egalitarian arguments. That’s a whole separate debate. 1. ethically, should it be done? 2. is there another option to make things more egalitarian without going socialist?
    But hinging the demand for single payer of imagined cost reduction is just a misinformation campaign that I can understand sounds appealing if you don’t understand the business. And the refusal to face the necessary rationing really scares me from a cost increase potential perspective.

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