Category Archives: Insurers

Do We Really Have to Cut Back On How Much We Spend on Health Care?

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After all, we’re the wealthiest nation in the world. And what is more important than the health of our citizens?

Nevertheless, even in the U.S. resources are finite. And in 2007, Congressional Budget Office director Petter Orzag warns, “The central fiscal challenge facing the nation involves rising health care costs.” In a recent letter to the House Subcommittee on Health chairman Pete Stark, Orzag frames the problem in a way that no one can ignore by comparing how much faster healthcare spending is growing than income per capita. “The rate at which health care costs grow relative to income is the most important determinant of the nation’s long-term fiscal balance,” he explains. “It exerts a significantly larger influence on the budget over the long term than other commonly cited factors such as the aging of the population.”

Let’s cut to the bottom line: If health care inflation continues to outstrip income growth over the next forty years at the same rate that it has over the past 40 years, spending on Medicare and Medicaid alone will rise to 20 percent of GDP in 2050. (To give you a sense of how big a slice of the pie that is: today, the entire federal budget equals roughly 20 percent of GDP).

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Replying to Comment on “Should 21-year olds pay less,”

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Barry—

Thanks for your comment on “Should 21-Year Olds Pay Less . . .” While we’re in agreement on many points, I have to disagree with your first sentence—that “in theory the Massachusetts approach of charging older people up to twice as much as younger people for health insurance is more reasonable, in my opinion, than pure community rating because younger people, as a group, incur far lower healthcare costs.”

I believe that insurance, by definition, is supposed to get everyone into one pool so that those who need less care can help those who need more care.  You are, of course, right that younger people incur far lower costs—until they get older. At that point, another generation of young people will help pay for their care. That’s how insurance is supposed to work.

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If We Mandate Insurance, Should 20-Somethings Pay Less?

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Should insurers be able to offer less expensive policies to the young and healthy? Or should they be required to offer the same benefits to everyone at the same price?

In states where insurance is mandated, should twenty-somethings get a break? In a post on Health Care Policy and Marketplace Blog Robert Laszewski addresses these questions. He begins by focusing on a report  just released by the health insurance trade association (AHIP). The study looks at state health insurance reforms of the 1990s that tried to eliminate discrimination by insisting that insurers must sell “individual” policies to people who are not covered by an employer or another group without discriminating on the basis of health, age or gender. According to the AHIP, these reforms have had some “unintended consequences.”

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Should People Who Don’t Take Good Care of Themselves Pay More for Health Insurance?

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When healthcare reformers talk about making health insurance fair, some suggest that people who don’t take care of themselves really shouldn’t expect the rest of us to pay for their folly. They point to a study published in 2002 showing that, each year, the average smoker needs an extra $230 worth of inpatient and ambulatory care. “Problem drinkers” require an additional $150; obesity adds $395 to the annual bill, while simply being overweight costs an average of $125 a year. (According to researchers about one in three Americans are overweight while in one in five is obese).

Asking those who puruse less-than-healthy lifestyles to pay higher healthcare premiums seems, on the face of it, a simple matter of equity. But one needs to ask: what will be the effect? And where do we draw the  line?

 

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Jacob Hacker on “Sicko” –and Employer-Based Insurance

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You know that Michael Moore’s “Sicko” is being taken seriously by the medical community when you see it reviewed in The New England Journal of Medicine. The issue that came online last week contains Jacob Hacker’s take on the film—as well as his prescription for national health care reform.

Hacker calls the first half of the film “ruthlessly efficient,” declaring that, “along with Al Gore’s global-warming warning, An Inconvenient Truth, Sicko may well be remembered as our generation’s Silent Spring or The Jungle — propaganda, in the best sense of the word, that pricks our collective conscience about problems that are hidden in plain sight.”

But as a political scientist (Yale) and New America Foundation fellow, Hacker is dissatisfied that, in the second half, Moore doesn’t offer a better solution to the crisis. This may be asking a bit much of Moore. My theory is that a film-maker, like any other artist, need only raise the right questions, (however abstractly), spurring his audience to think—and to imagine.

That said, Hacker’s point that Moore ignores the best model for reform by never mentioning Medicare is a good one: “He talks about the post office, the fire department, public education — but not the one public program that most resembles the ‘free universal health care’ he extols.

“That’s too bad,” says Hacker, “because the Medicare model is the not-so-secret weapon in the campaign for affordable health care for all. Today, many advocates of national health insurance have wisely started calling for Medicare for All’ rather than their old rallying cry, ‘Single Payer.’”

Hacker’s right. To many Americans, “single payer” evokes images of long lines—not to mention the Specter of Socialism. Medicare, on the other hand, represents the Promised Land –that point in time when you no longer have to worry about whether or not you have health insurance, or whether it will cover what you need. Medicare is hardly perfect, but not a few seniors breathe a huge sigh of relief when they finally find themselves in the warm embrace of the second-most-popular federal program in the U.S. (Social Security comes first.)

But Hacker doesn’t think we’re ready for “Medicare for All.” Instead, he suggests that “For now, the best step may be to require employers either to provide their workers with good private coverage or to enroll them, at a modest cost, in a new public program modeled after Medicare. Workers enrolled in this new public framework could be asked to pay a modest premium on top of employers’ contributions, based on their income, and they could be allowed to enroll in qualified private plans — as people with Medicare coverage can today. No doubt many employers would seize the opportunity to obtain inexpensive coverage for their workers, which would give the new public insurance plan a large, diverse enrollment and a great deal of leverage to contain costs and improve care.”

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