Obama's New HC Plan

[aliantha]

Btw, what is the profit margin of health insurance companies? Oh yea, it's like 3-4%. Those bastards....soaking their clients. In looking that up, I found one you might be interested in: The Book Publishing Industry has a 7% profit margin. If health insurers are "soaking their clients" then what would you call what the book publishing industry is doing with nearly double the profit margin of health insurers?

I'd call that double-soaking their clients. Those rat bastiges!

[sindatur]

Hi Ki, nice to see you weigh in. I rely upon your input to discuss with my own Insurance contact, and I find your information generally seems to be in line with that/those opnion(s)

[Avatar]

Nice to see you around Ki.

If the profit margin is so low, why is the price so (apparently) high? Who is the insurance company being chraged by?

--A

[Zarathustra]

Av, the price is high for many reasons. For instance, healthy people have to make up the difference for all the fat, unhealthy, smoking people.

And there is also the disconnect between the consumer and the price of the services they are consuming, which naturally drives up price because people don't shop for price.

And there are government regulations which add to the price, including forcing insurance companies to cover stuff that's not proven scientifically to work, simply becuase of lobbyists and cronie capitalism.

And there is the extremely lengthy and costly FDA approval process, which forces drug companies to spend 100s of millions of dollars and decades of research on new drugs before they can get approved. That cost has to be made up by the consumer.

And doctors are continuously pushing against the insurance companies to get procedures and lab work covered that aren't medically necessary. Like an MRI when an X-ray will do. When the consumer doesn't care how much it costs, they often try to make as much as possible.

And there is a sense of entitlement in our spoiled, irresponsible society that contributes to people thinking they can live unhealthy lives for decades, and then their neighbors must pick up the bill for squeezing every last second out of their lives with costly procedures and drugs.

The insurance companies provide an invaluable service to 100s of millions of people for a tiny sliver of profit ... any yet they still bear the brunt of the criticism for a system which is not their fault, and which every person can control if they simply exercised sound judgment and willpower. In most markets, anyone is free to live a healthier life and purchase a much cheaper CDHC plan. But it's easier to sit, eat, smoke, and ask the government to do something about it.

[Avatar]

Av, the price is high for many reasons. For instance, healthy people have to make up the difference for all the fat, unhealthy, smoking people.

But don't those people have to pay higher premiums? Making up their own difference in other words?

Anyway, I meant why is the insurance companies profit margin so low. What is the overhead they are covering?

[quore]And there are government regulations which add to the price, including forcing insurance companies to cover stuff that's not proven scientifically to work, simply becuase of lobbyists and cronie capitalism.

And there is the extremely lengthy and costly FDA approval process, which forces drug companies to spend 100s of millions of dollars and decades of research on new drugs before they can get approved. That cost has to be made up by the consumer.

And doctors are continuously pushing against the insurance companies to get procedures and lab work covered that aren't medically necessary. Like an MRI when an X-ray will do. When the consumer doesn't care how much it costs, they often try to make as much as possible. [/quote]

Which you sorta address here...so it's because the charges they have to pay are inflated.

The insurance companies provide an invaluable service to 100s of millions of people for a tiny sliver of profit ... any yet they still bear the brunt of the criticism for a system which is not their fault...

So, if the government forced all those other costs to be lowered, would the premiums go down?

--A

[Zarathustra]

Av, no, people don't pay higher insurance for being unhealthy.

If the government forced prices to come down, most likely this would produce a shortage of doctors, especially those closer to retirement and new doctors entering the field. (Those stuck still paying off their massive student loans would likely put up with it for a while.) This shortage would necessitate rationing. So while prices would theoretically be lower, it would lead directly to fewer people being able to gain access to health care. So it wouldn't matter how cheap it was if you died waiting to get care.

The government has already tried this with Medicare/Medicaid. They mandate lower reimbursement to doctors and hospitals, which has led to fewer doctors accepting Medicare patients.

Price controls always backfire. You can't force a top-down solution to a free market problem.

[Avatar]

Av, no, people don't pay higher insurance for being unhealthy.

Wow. Over here, you pay more if you smoke, if you're obese, if you participate in a dangerous sport, anything that increases the risk of you needing treatment.

(Oh, and based on what I've seen y'all say, health insurance appears to be more expensive here. Based on memory, a hospital plan, (just a hospital plan, not everyday stuff, and just for me, not including a dependant), would cost me the equivalent of around US$240 a month.)

--A

[Rawedge Rim]

Av, no, people don't pay higher insurance for being unhealthy.

Wow. Over here, you pay more if you smoke, if you're obese, if you participate in a dangerous sport, anything that increases the risk of you needing treatment.

(Oh, and based on what I've seen y'all say, health insurance appears to be more expensive here. Based on memory, a hospital plan, (just a hospital plan, not everyday stuff, and just for me, not including a dependant), would cost me the equivalent of around US$240 a month.)

--A

You do here also. Smokers pay higher premiums in most plans. Obesity should rate the same measures, but I think that so far it's not happening. And of course if you have pre-existing conditions, your rates can be significantly higher than that of a "cypher"

[Orlion]

Av, no, people don't pay higher insurance for being unhealthy.

Wow. Over here, you pay more if you smoke, if you're obese, if you participate in a dangerous sport, anything that increases the risk of you needing treatment.

(Oh, and based on what I've seen y'all say, health insurance appears to be more expensive here. Based on memory, a hospital plan, (just a hospital plan, not everyday stuff, and just for me, not including a dependant), would cost me the equivalent of around US$240 a month.)

--A

You do here also. Smokers pay higher premiums in most plans. Obesity should rate the same measures, but I think that so far it's not happening. And of course if you have pre-existing conditions, your rates can be significantly higher than that of a "cypher"

Not including extra costs due to "sin taxes" by the government...grrrr...

[aliantha]

Av, I tried briefly to figure out what a comparable plan to yours would cost here in the US, but nobody would give me a quote without also putting me on their mailing list.

[sindatur]

I'm not sure about "Hospital only", but, the average for Corporate Insurance, last time I examined it, is between $5000 and $10,000 a year, per person depending upon coverage and the pool size. This is generally a full coverage plan (Medical, prescripton, vision, dental), which is gerally in the middle of the range ($7500).

Some things that affect the cost:

Pool size
Deductible amount
Specific procedures/coverages, included/excluded

[Avatar]

Av, I tried briefly to figure out what a comparable plan to yours...

Hahaha, it's not mine. I don't have any health insurance at all. Keep meaning to do something about it, but can't really afford it right now.

--A

[Ki]

Thanks Sin and Av. I just needed a break, but I've missed the healthcare discussion.

I did make a point this week of finding out a couple of things about the health reform bill in regard to limits on health premium increases. I found out that the government has the right to review increases and there is a new requirement that insurers spend at least 80% of premiums on care.

[Avatar]

..there is a new requirement that insurers spend at least 80% of premiums on care.

That sounds like a good thing.

--A

[Farsailer]

The insurance companies could get around that one by transferring some personnel into a hospital or clinic as contractors...

[Zarathustra]

No surprise here ... the government is already having trouble implimenting the new health care law. Some of that good ol' fashion goverment incompetance is already rearing its ugly head. This is going to be a nightmare.

The Department of Health and Human Services (HHS) has already missed as many as four deadlines under the law – not on any major regulations — but still a worrying trend, critics say.

Congressional staff and industry representatives have also been asking HHS for a timeline specifying when it will issue the numerous regulations required by the law. They were shocked to find the agency has not produced such a document, one aide said.

The issue is important because vast industry sectors are trying to plan their own implementations of the health-care law and most of the details remain in bureaucrats’ hands, leaving a vacuum of uncertainty about the final burdens the law will impose.

...

“Now it looks like the simplest job assigned to the Obama administration – outlining its own new authorities and responsibilities — was so daunting that HHS decided just to reprint the table of contents from the new law until they can sort things out,” said Lisa Miller, a spokeswoman for Rep. Joe Barton of Texas, a key Republican on health-care issues. “It’s troubling because, if they can’t even explain what they are supposed to do, how do we expect them to actually manage a sixth of the economy?”

link

[Avatar]

Wonder if this is gonna end up dead in the water, and a huge waste of time and effort and political capital...

--A

[Zarathustra]

ObamaCare could wipe out health insurance for 1 million low-income workers. 10:12 am on June 8, 2010 by Ed Morrissey

Well, Nancy Pelosi did tell us that we wouldn’t know what was in the ObamaCare bill until it became law. However, this development really isn’t a surprise, but actually part of the plan. Politico notes that as many as a million low-income workers currently covered under “mini-med” health plans will find themselves with no coverage at all, thanks to a ban on hard-cap plans offered at low cost:

Part of the health care overhaul due to kick in this September could strip more than 1 million people of their insurance coverage, violating a key goal of President Barack Obama’s reforms.

Under the provision, insurance companies will no longer be able to apply broad annual caps on the amount of money they pay out on health policies. Employer groups say the ban could essentially wipe out a niche insurance market that many part-time workers and retail and restaurant employees have come to rely on.

This market’s limited-benefit plans, also called mini-med plans, are priced low because they can, among other things, restrict the number of covered doctor visits or impose a maximum on insurance payouts in a year. The plans are commonly offered by retail or restaurant companies to low-wage workers who cannot afford more expensive, comprehensive coverage.

Depending on how strictly the administration implements the provision, the ban could in effect outlaw the plans or make them so restrictive that insurance companies would raise rates to the point they become unaffordable.

This is entirely deliberate, although Congress apparently never considered the timing. Barack Obama and Pelosi continually harped about the “underinsured,” and the mini-med plans are what they had in mind. They wanted to put an end to such cost-efficient plans and force employers to either provide comprehensive insurance or kick their employees into the state-run exchanges, where the newly-uninsured would get welfare payments to buy their own plans in the individual market.

Democrats will get their wish — but the employees won’t get their coverage. The law imposes the penalties for mini-med plans in three months, but the exchanges won’t start until 2014. That means more than three years of having no insurance at all for low-income workers who previously had it, even if Obama and Pelosi sniffed at the worth of the plans.

Why did they impose the mandates first? This was part of the “front-load” strategy of the Democrats, who wanted to implement what they thought would be the most popular components of ObamaCare immediately, in order to build support for its continuance. Instead, the mandates will mean that mini-med plans will either cost so much that the employees can’t afford it, or more likely, the insurers will drop the plans as money-losers. It’s a big indicator that the people who drafted the law had very little understanding of the insurance industry, or of the private sector.

It’s also worth noting the irony of the timing. The mandates kick in in September, which is probably when the insurers will terminate the coverage. That means up to a million people will get the first-hand impact of ObamaCare just nine weeks before going to the polls in the midterm elections. That certainly qualifies as an unintended consequence.

Update: Bruce Kesler says that the Cadillac-plan tax will force Americans into Yugo-like coverage, but not if the government outlaws Yugos.

link

It's clear that Obama and the Dems in Congress were never concerned about lowering the cost of health care--otherwise, they wouldn't target these low-cost plans. They would rather force people into welfare than allow them to provide for themselves in whatever limited manner they can. That's an easy decision when you consider the American tax payer an unlimited resource for your personal view of "social justice."

But this is just a boondoggle. Right before the midterm elections, a million people will lose their coverage--the exact people who can least afford to lose their coverage. And it will be a direct result of the health care bill which forces insurance companies to lose money on these low-cost plans. Of course, Obama and the Dems will try to paint the insurance companies as the bad guys for cancelling these plans, but what are the insurance companies supposed to do? Lose money? They already operate on a razor-thin profit margin, as we've pointed out over and over. You can't provide a million people with unlimited coverage and still charge them reduced rates. Make no mistake, this is Obama's fault. It is the Dems' fault. A million of our working poor are going to go three years without coverage that they could previously afford because of this bill.

What ever happened to, "If you like your coverage, you can keep it"??? This is how Obama will get around that little lie: blame the insurance companies for the Dems' legislation. This is how they intended to do it all along ... play politics with people's lives, make the insurance companies seem even worse than before, so that even more people will clamor for a government solution (to a problem the government created).

[Cybrweez]

At first, I was imagining the holes that could be poked in the article, but when I got to the gap part, I don't know how you defend that bit.

I'm not sure anyone is defending this bill anyway.

[Ki]

..there is a new requirement that insurers spend at least 80% of premiums on care.

That sounds like a good thing.

--A

Of course it does. That's why the Dems legislated it. Because it sounds good and it makes everyone feel good to hear it. It puts those nasty insurance companies in their place, as if they don't spend billions of dollars on medical claims anyway. But please, Citizens, ignore the fact that our fine representatives have not yet defined what this means and without the proper definitions, the legislation will either cause the system to collapse or this part of the legislation will be rendered meaningless.