On Gooznews last week, Merrill Goozner made a provocative argument:
“…the latest polls show the economy has eclipsed health care as the most important domestic issue among voters. Even the health care-oriented Kaiser Family Foundation’s latest poll shows the number of Americans who name health care as their primary concern fell to 30 percent in early December from 38 percent just two months earlier. When offered a list of possible issues the candidates ought to address, the economy had pulled even with health care.
“The escalating fear that the nation may be heading into a recession because of the sub-prime mortgage meltdown and sky-high gas prices has certainly played a role in the turnabout. In that sense, 2008 is beginning to look a lot like 1992. The year before that election, health care dominated the national discussion after Harrison Wofford used the issue to win a surprise victory in a special Senate election in Pennsylvania. But by the time Arkansas Gov. Bill Clinton stormed to victory in the primaries, ‘it’s the economy, stupid’ had become the Democratic standard bearer’s watchword.”
Merrill may be right: certainly health care didn’t seem to be the driving issue in Iowa, and I doubt it will determine the results in New Hampshire. (See my last post on Iowa and New Hampshire.)
And I agree that, by November, the economy may well be the paramount issue. We are heading into a recession.
But I would add that the health care issue is an economic issue, and
in a recession, middle-class Americans will become more and more aware
of just how quickly the cost of health care is spiraling. The
essential problem with U.S. health care is that it costs too much: we
spend far more on every health care product and service than any other
country in the world. And in the coming recession, as the price of
gasoline, food and heat (i.e. the necessities of life) rises, the
average family will find insurance premiums, co-pays for hospital
stays, and out-of-pocket expense for prescription drugs less and less
affordable. Meanwhile, employers are not going to be able to pick up
the slack. They, too, are feeling the squeeze. And this, I think, is
the way health care advocates should frame the issue: we must find a
way to put a brake on health care inflation. That has to be the center
of any health care reform plan.
Rather than focusing on the uninsured –or the fact that insurance
companies sometimes deny care to the insured— we should focus on those
who are insured, and remind them that as the economy slides (while the
nation’s health care bill continues to rise), their employers are going
to find it harder to continue paying such a hefty chunk of their health
care bill.
Many Americans don’t realize how much their employers shell
out—until those employers begin slicing their contributions. In 2007,
the average premium for family coverage was $12,106, but on average,
workers paid just $3,281 out of their paychecks to cover their share.
At large corporations, the Henry Kaiser Family Foundation reports that employer picked up 84 percent of the tab for single coverage and 73 percent of the cost of family premiums.
This is why 80 percent of Americans say that they are happy with
their health insurance—and fear being forced into a single payer
system. Some realize that under national health reform, upper-middle
class Americans would almost certainly have to pay more in order to
help subsidize low-income and lower-middle-income families. (That
subsidy might well come in the form of higher taxes rather than higher
premiums, but the effect on the family pocketbook would be the same.
And all three leading Democratic candidates are frank that, one way or
another, if we want universal coverage, we will have to raise
additional funds.)
But while many Americans may like what they have—it’s not likely
that we will be able to hang onto it for long. (I, too, enjoy a
magnanimous, employer-sponsored health care package.) We are speeding
toward a wall: in recent years the cost of health care has have been
rising two to three times faster than either wages or GDP, both because
prices are rising and because U.S. doctors and hospitals have been
prescribing more and more high cost, high-tech tests and treatments.
As a result, since 2001, premiums for family coverage have snowballed
by 78 percent while wages have climbed just 19 percent, and inflation
has risen 17 percent.
And it’s not just that premiums are rising in the private sector.
Since 2001, Medicare Part B premiums have doubled. In addition, a Nov/Dec 2007 article
in Health Affairs reveals that between 1997 and 2003, the average
Medicare beneficiary watched his out-of-pocket spending climb by 50
percent while median income for seniors rose by only 15 percent. By
2003 the average beneficiary was spending 15.5 percent of his or her
income on health care—and 25 percent of beneficiaries were forced to
lay out nearly 30 percent of their Social Security and other income to
pay health care bills.
This is no longer your grandmother’s Medicare; today’s beneficiaries
cannot just send in their bills and assume they will be paid. Yet
Medicare is being as generous as it can be: the Medicare trust fund is
running out of money. Annual pay-outs from the trust fund for hospital
care are already outstripping annual tax receipts. We won’t be able to
afford any form of Medicare-for-all unless Medicare begins taking a
closer look at the effectiveness of pills and procedures that it covers.
Today, both in the public sector and in the private sector, insurers
are passing on higher medical costs. (It should be noted that private insurers are keeping roughly the same share of
premiums that they always have kept in order to cover marketing, advertising,
sky-high executive salaries, other administrative costs and profits for their
shareholders.) Premiums have been levitating, not because private insurers are taking
a larger share, but because the cost of medicine is skyrocketing, and
private insurers are no longer trying to contain prices by “managing
care” as they did in the 1990s.)
Employers just can’t keep up. Looking ahead, it’s not likely that
they will continue to be as generous as they have been in the past.
Asked about their plans for 2008, many employers told Kaiser that they
expect to make “significant changes” to their health care benefits.
“Overall,” Kaiser reported, “21 percent of firms say they are ‘very
likely’ to raise workers’ premium contributions this year. Some firms
also say they are ‘very likely’ to increase office visit cost-sharing
(13 percent), increase deductibles (12 percent) and increase
prescription drug cost-sharing (11 percent).”
Meanwhile signs of the coming recession mount. Last month, the
unemployment rate rose sharply to 5 percent—its highest level in more
than two years. At the same time, the economy created only 18,000
non-farm jobs, its worst performance in four years. Private-sector
payrolls declined 13,000, the first decrease since July 2003. “That
was more than offset by hiring by state and local governments,” the Wall Street Journal reported,
“but many analysts think that government job growth isn’t likely to
continue, considering the increasing fiscal pressures on government
revenue.”
And when jobs disappear, so do health care packages that come gift-wrapped with a bow.
Maggie,
Today’s report shows that health care spending has grown at about the rate of GDP for two years running now. As happened in the early 1990s, the mere threat of health care reform succeeded in slowing the pace of spending. By the late 1990s, with the managed care backlash created by insurance industry mismanagement, those gains in holding down costs evaporated. According to today’s commentary by Paul Ginsburg in Health Affairs, the scene is being set for a similar turnaround within a few years when all the new construction in clinics comes on line. Scary.
Merrill–
Thanks for the comment.
If you compare the 2006 inflation-adjusted incrase in health care speding to real GDP growth, I think you’ll find that health care spending is still outpacing GDP (though GDP growth numbers are always manipulated).
But the more important, larger point we seem to agree: health care inflation will continue, and will continue to grow faster than both wages and the economy.
It’s interesting that Ginsberg sees the growth in hospital beds as a problem. In most places, we really don’t need them . . .
Merrill–
Thanks for the comment.
If you compare the 2006 inflation-adjusted incrase in health care speding to real GDP growth, I think you’ll find that health care spending is still outpacing GDP (though GDP growth numbers are always manipulated).
But the more important, larger point we seem to agree: health care inflation will continue, and will continue to grow faster than both wages and the economy.
It’s interesting that Ginsberg sees the growth in hospital beds as a problem. In most places, we really don’t need them . . .
I find it interesting that insurers are taking the same amounts *on a percentage basis* – it costs no more to process a $225 claim for a particular code than a $200 claim, but, in effect, they’re getting 12% more in real dollars to do it.
Every other sector of the economy has been able to realize overhead cost reductions through improved efficiency – the secretarial pool is a thing of the past, for example. Healthcare finance (and healthcare delivery, let’s be honest, but I’m concentrating on the overhead costs of the payment system) has been largely immune from that, based on the filings with the insurance commissioners that show a relatively constant percentage of premiums being paid out in claims. Part of the solution *MUST* come by bringing insurance administration into the modern era.
Sure, claim volume has gone up along with per-claim costs increasing, but it’s obvious that efficiencies are being neglected.
I’m an employer who covers just over 100 lives with astonishing coverage (first dollar, traditional indemnity with PPO options, Rx coverage with $40 max cost-share). I’m now forced to find a new carrier because the current weasels got fined $110,000 over rescission and have decided to take their ball and go back to Minnesota. The waste and inefficiency in just the marketing and underwriting process is disgusting. I’ve bought vastly more complex products (insurance is easy – the benefits are defined in the contract, the cost in our state for the first year is based on geographic averages, it doesn’t come with a team of consultants like enterprise software, a new building, etc) with vastly less BS. It’s one reason I *oppose* single-payer; if there’s no competition, there’s no incentive to improve the process. In looking at innovative organizations in other states, I see some smart organizations that have made the plan pricing and administration point-and-click simple – and almost universally, they’re smaller non-profit cooperatives. Why can’t large for-profit insurers do the same thing?
I know darned well why many of the 47 million uninsured are people who work for small employers. Many of the factors that provoke my frustration (high costs, inefficiency in administration, outdated business process (even the *phone company* sends better bills than insurers)) gang up on small business owners who throw up their hands and say “it’s too complicated” to offer small group health products to employees – even if the products were available at an affordable price, the admin burdens imposed by the BS make it too much of a distraction from the real work of an organization. If employers have the option of opting out scot-free (ie, no Play or Pay provision) and have only their consciences to call them on it, many will take the moral low road and simply not offer coverage. Make it easy (basic human decency demands it), make it affordable (our payroll burden from health works out to almost $5/hr) but make it mandatory.
Eric, you said
“It’s one reason I *oppose* single-payer; if there’s no competition, there’s no incentive to improve the process” I dont get you, you just defined how the insurance companies dont even bother to try and improve the process, despite the fact that we have allowed a business model to prevail for over sixty years. Competition and the business model have done nothing to bring down the cost or improve the quality or accessability of health care, they had thier chance. Let me prelude the usual “this really isnt a business model because the govt is so involved” retort with; Every single government involvement in our health care system has been to fill the gaps not covered by the “business model”. i.e, medicare (insurance didnt want them because they are a higher risk pool), Medicaid (insurance didnt want them because they dont have money), Hippa (insurance companies wouldn’t let you stay insured with them when you changed jobs), EMTALA (no profit in treating emergencies for people without money), Critcal access (funding the creation of hospitals where there was otherwise no profit in it, thus no interest). Think about it, we have had private competative health care with a multiple govt bandaid approach and it has failed, let’s calll a dead horse dead and move on.
Matt:
Point well taken; I’ll agree that the current competitive environment hasn’t created an ideal situation, but I shudder to think how it could be worse if everything is driven to the lowest common denominator.
I’ve called 1-800-Medicare, and as crappy as the customer service is at our current for-profit insurer, I can’t say it’s as bad as Medicare’s call center. That’s an area of differentiation where having multiple providers of processing services in the market makes some sense; if management feels they can attract more business by marketing (and delivering on) better phone contact, it’s one way to make the system less onerous for all. If insurers can’t cherry-pick the healthy people out (because they’re compelled to use community rating) and “healthy” people can’t opt out of the system entirely because they don’t think they need a healthcare finance plan, the competition comes down to products and services, not “who has the best predictive models to figure out if a given group will be a moneymaker”, as it stands now. Even out the playing field on the Big Stuff like access and underwriting and the soft stuff like service and coverage can rise to the fore as competitive advantage.
If, among my employees, there’s a demand for a carrier that covers therapy X, beyond what should be mandated in a universal coverage system, I should be able to choose a carrier that covers X, perhaps at the exclusion of Y, which my group doesn’t value. Single-payer reduces that market choice to the detriment of developers of therapy X, people who need therapy X and the providers who are trained in therapy X, and as we’ve seen with things like the Bexxar/Zevalin kerfluffle, these decisions are too important to be left to one entity like CMMS.
I simply can’t agree that it’s better to have a one-size-fits-nobody approach when, by eliminating the ways that people and organizations can opt out of participating in healthcare finance, we can fully fund the system that delivers care that those who get it are incredibly satisfied with. Yes, spending at 16% of GDP is high. Yes, we need to consider things like how we finance end-of-life care in the face of overwhelming evidence of futility (for example, the disparities between end-of-life ICU days in South Florida vs. Oregon). Yes, we need to eliminate the patchwork of government mandates that complicate care delivery and finance. I don’t support expanding SCHIP and/or Medicare to everyone because they’re flawed programs deep down. I support ensuring access to competitive products and services, delivered by organizations that are mandated to provide them to anybody who will pay. I support ways to make sure that everybody can afford their (mandated) coverage. I think it’s possible to do these things without stifling the spirit of innovation, through simultaneously unifying the government mandates *and* compelling participation from both consumers *and* the financing entities (employers, the government, individuals, the whole lot – everybody’s gotta pay somehow).
E
It is so refreshing to get intelligent response. I am by right a single payer advocate, only because I believe (based on study and experience) that this is the best answer (not to be confused with the perfect solution, there is no such thing). However, this should not be mistaken for closed mindedness, I am open to innovation/ideas if they serve the purpose. I kind of like the swiss model, where they have insurance for health but they are not for profit (most of them) and heavily mandated. So there is competition but medical decisions are not driven by business interests. In my version of single payer, there is a one basic health plan for all, I believe that my parents, my children, and my contrymen deserve at least basic health care. However, this is not to say that the insurance companies can’t continue to operate and provide things that people want above and beyond basic health care, I think it would be a robust market infact. The insurance companies would have to compete a bit with basic health care and they could fill a niche. But nobody would go without, and we would no longer have to eat a bill for people who weren’t covered. In this case, if you wanted to provide insurance to your employees for prodcut Y vs X you could, and it would be much cheaper because the Ins co. would not have to pay out for basic health. The insurance companies would also be forced to streamline, because what medical facility would be willing to deal with all of thier reimbursement hurdles when payments from the single payer sysetm would come so easily. Sort of like education, private schools have not faltered or disappeared in the face of a “social” education system.
Eric and Dr. Matt– thanks for commenting.
Eric– You note that if insurers are keeping the same percentage of premiums as they have in the past–while health care costs rise–that suggests that they are charging the same amount to process a $250 claim as they charged to process a $200 claim–where prices were cheaper.
That would be true if the rise in health care spending was only about prices rising for the same good or service.
But the rise is our nation’s health care bill is closely tied the fact that we’re taking more drugs, while underoing more procedures– and more complicated procedures.
As a result, insurers are processing more claims–not just more expensive claims.
Are insurers making more while both volume and prices rise? Hard to say.
Insofar as the claims are for more complex, high-tech procedures, the claims are more complicated (and more likely to involve back and forth between doctor or hospital and insurer.)
On the other hand, insurers are definitely making a nice profit on the Medicare Part D program . . .
You’re right that our health care system is sadly behind when it comes to administrative costs. This is largely because, unlike virtually every other large industry in the U.S., the heatlh care industry is still doing things with pencil and paper.
Imagine how much easier it would be for docs and hopsitals to file claims–and insurers to reimburse claims if all medical records were electronic?
The software could even have warnings, pointing out that the person filing was making a mistake while filing . . .
You write: “I see some smart organizations that have made the plan pricing and administration point-and-click simple – and almost universally, they’re smaller non-profit cooperatives. Why can’t large for-profit insurers do the same thing?”
The answer, I’m afraid is that the for-profits want to keep things complicated–making it harder for the provider or patient to get reimbursed.
Back in the day when most HMOS were not-for-profits (before the 1980s) they tended to run much cleaner, user-friendly operations.
It sounds as if you offer excellent coverage (or at least did, until your insurer left the state.)
And I’m willing to buy the argument that competition could lead to better service, more user-friendly claim processes, etc. But I think I’d be most comfortable with competition between not-for-profit insurers and a public sector insurer.
The profit motive always seems to create this conflict of interest. In some industires, that’s okay, the consumer can fight back by saying, I’ll wait six months, and buy it when prices come down.
But health care insurers, like utility companies, are selling a necessity. That’s why I think they should be regulated (the way old-fashioned utilities were regulated.)
In the health insurance industry, as you have found, it is very difficult to demand quality at a low price–and get it.
A very, very large corporation might be able to do that, but these days, most of them self-insure. They don’t want to be part of a pool with smaller companies that typically have somewhat poorer, less healthy employees.
Dr. Matt: You write: “Competition and the business model have done nothing to bring down the cost or improve the quality or accessability of health care, they had thier chance.”
I couldn’t agree more. An unregulated insurance industry has had every opportunity to improve the business model and better serve the customer. But they haven’t.
However, a tightly regulated private-sector insurance industry that was forced to compete with a public sector insurer on a level playing field might inspire some creativity on both sides.
I don’t know, but I’d be willing to try it–as long as the regulation is there defining what the insurer must offer everyone (a very comprehensive package, no high deductibles, nothing to deter the person from using the insurance) at the same price for everyone in the community, etc.
IF private insurers aren’t willing to compete on these terms, they’ll just have to go out of business.
Even then, I would prefer it if the private sector alternatives were not-for-profit.
But it’s important to realize that European countires that have very good universal coverage that is far more affordable than ours all have a combination private/sector- public/sector model.
Canada and the U.K. are the only countries with pure “single payor.” And their healthcare is no better than care in Switzerland, France, Germany . . .
Eric–While 1-800- Medicare may be less than prefect, on the whole Medicare is pretty user friendly. Docs like its forms better than private insurers’ (fewer traps that encourage mistakes), and seniors have had a pretty easy time using Medicare (at least until the introduction of Medicare Advantage which offers a mind-boggling number of choices).
I can see that different groups of people might want different services included in their plan, and be willing to give up other services.
But the public-sector plan. could offer more than one flavor. Though I’d suggest keeping the choices to somewhere between 4 and 7– not 47. Most people just don’t want to make a life’s work out of picking their insurance. (And most employers are not as adept as you are in navigating the subject.)
Finally, I agree that Medicare and SCHIP are flawed. Before (or while) offering Medicare for all as the public-sector insurance alternative, Medicare needs to be reformed.
The waste needs to be eliminated (overpaying for unproven drugs devices and procedures) and more preventive care needs to be included–along with higher fees to primary care physicians. Also, it needs to move away from fee-for-service.
But MedPac (the Medicare Payment ADvisory Commission) that advises Congres on Medicare spending knows this, and is already moving in that direction.
The Federal Employee Health Benefit program is my favorite model; insurers are free to set their rates so long as they meet a few requirements:
A) Minimum coverage as defined by the FEHB rules
B) No more than two options to choose from, plus a high-deductible health plan (as used with an HRA or HSA)
C) Anybody who signs up is covered, regardless of pre-existing conditions
In Washington state, Federal employees have about 20 plans to choose from, from some pretty tight HMOs to some very Cadillac fee-for-service products (obesity surgery, vision, dental – things some small employer groups couldn’t even buy if they wanted to). The most expensive plans are up to 50% cheaper (employer + employee), and the rates don’t even vary by age, compared to small group. I believe that part of the reason the FEHB premiums are as low as they are is due, in part, to competition – they can’t cherrypick during underwriting, so it’s not that one company has sicker patients than another. I think the government is a large enough purchaser that, in aggregate, the risk profile approximates America as a whole, and if there were mandates that everybody had to participate in healthcare finance, the resuling pools would look about the same. FEHB, to me, is the best example of why we don’t have to have a one-size-fits-all solution – we just have to get everybody in the game.
Eric
From year to year there are variations in the growth of health care spending. Over enough time, the trend is unmistakably towards health care outstripping GDP.
Remember health care is clearly an important contributor to GDP and is responsible for a significant proportion of job growth, although I am not sure the impact on productivity is as clear. Increasing productivity is important because it makes business more willing to bear the burden of high health care costs.
Now we are faced with a convergence of negative forces: reduced or flat production (recession), a slowing of the pace of productivity growth, a currency crisis, increased inflationary forces especially with energy, an irresponsible federal deficit and the growing belief that deficits don’t matter.
Business may very well be convinced to support shifting the burden of health care costs to the government. I am still not clear if advocates (such as myself) have clearly articulated a set of objectives in economic terms.
http://executivephysician.blogspot.com/2007/12/is-universal-health-care-right-thing-to.html
Zagreus and Eric–
Good to hear from you both.
Zagreus writes: “Now we are faced with a convergence of negative forces: reduced or flat production (recession), a slowing of the pace of productivity growth, a currency crisis, increased inflationary forces especially with energy, an irresponsible federal deficit and the growing belief that deficits don’t matter. . . Business may very well be convinced to support shifting the burden of health care costs to the government”
You’ve summed it up very well. Now we have to figure out how to contain costs without cutting quality so that govt (i.e taxpayers) can afford high quality health care for everyone.
I’m convinced it can be done. Other countires do it spending maybe 60 percent or 70 percent of what we spend (per person). But it will require cutting some waste here, some waste there. There is no single villaim (drug-makers, insurers, hospitals that charge too much, specialists that do too much, patients with unrealistic expectations . . )
Together, we’ve created an affordable for-profit.
health care system.
This is what I will be writing about in coming days and weeks as I analyze where our health care dollars are going (Health Care Spending: The Basics).
Eric–
I’m very interested in FEHB. I think you are right: the fact that insurers can’t cherry-pick is key, and the fact the federal govt is such a large purchaser gives it leverage.
Yet I have read some complaints about FEHB. Nor surprisingly, not all of the plans are equal. In other words, not all employees have coverage as good as members of Congress. (Yet politicians too often describe it to the public by suggesting that, if we follow the FEHB model, everyone will have the same quality of health care that their
Senator has . .. )
I’m also troubled by the high-deductible HSA model.
For the very wealthy, this is a terrific tax shelter. You can put money into the HSA, and let it compound, tax-free while you use other money to pay your medical bills. As a tax shelter that allows the very rich to get richer, it can’t be beat.
But tax shelters and health insurance don’t belong together. Health insurance is about getting everyone into one pool so that those who are lucky and are healthy for most of their lives can help pay for the unlucky (those who suffer from serious chronic illnesses like cancer, diabetes, asthma, etc.)
High-deductible plans tied to HSAs are cheaper than other insurance plans, which means that the wealthy people who sign up for these plans (and the plans only make sense for the wealthy) wind up putting less money into the common pool than the rest of us.
But I haven’t really done a thorough investigation of the pros and cons of the federal plan yet. IT’s something I need to do.
REmind me to post this question: Is there anyone reading this blog who is on the Federal Employee Plan?
I’m healthcare proxy for a federal annuitant who isn’t part of Medicare Part A (he retired before the magic date), so he buys FEHB coverage just like an active employee.
So, once a year, we sit down and evaluate staying vs going. FEHB publishes customer satisfaction surveys comparing the plans to plans of similar design, and the contracts and prices are easy to review. FEHB also mandates an easy-to-understand “changes this year” section. You can get anything from an 80’s-style HMO to pretty state-of-the-art HDHP designs where the *carrier* makes a monthly contribution to an HSA on your behalf.
I took a few minutes tonight to look at http://www.opm.gov/insure/health/08rates/index.asp I examined pricing for plans available to participants in Washington state. Monthly total premiums range (one insured, govt + employee contributions) range from 268 (HDHP from Aetna) to $549 (SAMBA Fee-for-Service plan). The rate changes for 2008 range from a reduction of 18% (Group Health Cooperative Standard Option) to an increase of 31% (United Healthcare HDHP). The average premium change for plans classified as “Health Management Organizations” (HMO and PPOs) was an increase of 3%. The average premium increase for fee-for-service options was 1%. In our small group, premium increases are more like 20%/year, every year.
It’s possible that benefit changes are reflected in the rates; for example, the Group Health option with the 18% reduction now requires a $15 copay and 10% co-insurance for outpatient office visits. It’s too late to do a complete review, but change documents for all the plans are available.
This means that someone living in western Washington has roughly 28 choices in healthcare finance. If anyone’s *not* happy with their carrier, they get to change once a year, and there’s no plan that is limited just to members of Congress; they play in FEHB same as everyone else. I think Dick Cheney is covered by Blue Cross Blue Shield Service Benefit Plan – all that cardiac care running up costs …. wait, I digress.
Here’s the latest national survey data across six dimensions. (sorry for the formatting)
Metric/Plan Type HMO FFS HDHP CDHP
Overall Satisfaction 63.7% 78.4% 56.8% 56.3%
Getting Needed Care 83.9% 91.6% 84.2% 84.7%
Getting Care Quickly 85.5% 91.6% 86.3% 86.6%
How Well Doctors Communicate 92.4% 84.6% 93.9% 91.7%
Customer Service 81.5% 87.5% 81.2% 80.3%
Claims Processing 85.5% 93.0% 86.2% 79.4%
I’m not sure why people only claim 64% satisfaction when they’re in the 80s to 90s on the various subscales, but people are wacky. I think the low overall satisfaction with HDHP and CDHP plans comes from consumer confusion over how best to utilize them – on the rest of the numbers, they seem pretty comparable to more conventional plan designs, so the dissatisfaction may have a lot to do with the cost-share provisions.
Speaking as proxy for the user of the system, I’d say I’m exceptionally happy. My only gripes have been with the contracted pharmaceutical benefit managers who have been known to change formularies in the middle of the year and can be somewhat strict on coverage only for FDA-approved indications. The pragmatist in me sees why it’s necessary to restrict use of expensive agents, but the caregiver in me says “c’mon, my loved one needs this and the doctors think so, too”, and cost containment goes right out the window. ;0)
If health insurance administration was this simple for small employers, and rate increases were this manageable, more would offer (and pay for) coverage. If individuals could buy this way, more people would ditch their dead-end gigs and go start something cool. As someone young and relatively healthy, the only suggestion *I* have is to make the rates vary by age and gender, because there are differences in utilization, and if you’re going to expect everybody to be in the pool, I’d expect some equity in the pricing.
Overall, I’d write the check tomorrow for any of the plans offered here. Heck, I’d even pay 5% more for the cost of processing my payment. Just tell me where to send it. I’ll take the amount above, multiply by the number of covered lives, and use the *hundreds of thousands* in annual savings to our firm to do something productive – like expand the business.
One thing I’m not able to easily find is demographics of FEHB participants. I’m assuming they’re slightly older than the private sector workforce as a whole, but that may not be entirely accurate.
Structurally, there’s only one thing I can’t figure out. FEHB covers people who are well enough to work (and their families, made up of people of unknown health status). If we expand the program to the highest-utilization users (those too sick to work 40 hours/week), I worry that things start to break down. I don’t know if the right approach is to move people to Medicare like we do for the disabled or those with end-stage renal disease, or if it’s to directly subsidize the carriers. I see the merits to some “stop loss” structure for the carriers so that people can stay in the plans they used before they got really sick, with the providers they prefer, etc, without bankrupting the insurer “unlucky” enough to get them.
I’m not arguing for the HSA/HRA, btw – I’d love one, but I’m hamstrung by the 2% ownership rule. It’s just that one of the FEHB rules is that carriers can only offer two plan designs of either traditional indemnity or managed care, *plus* an HDHP/CDHP.
Eric,
Thank you very much for your last post.
I’m sorry I haven’t responded–I need to do some research in order to reply in a meangingful way.
What you say makes me want to write a post about this–but first, I need to learn more.
Thank you for the giving me a huge headstart.