Wouldn't it work the same as a group plan? The healthy over pay and the unhealthy get covered?
And when you consider what you said about healthy people, why would they want to pay more?
Originally Posted by retread
I think you and several other posters to this thread are missing the BIG POINT, that IF everyone was made to carry insurance, then the pool of insureds would be a known risk. As it stands now WITHOUT mandated coverage for everyone, of course GI is punitive to carriers--- due to adverse selection. The healthy tend not to insure if it costs more than they think they can get away with by not having to pay a monthly premium. The sickly will use up every benefit to the max. Right now, about 80% of health care is consumed by only 5% of the population (don't quote me on this statistic, I can't remember exactly the percentages, but I think I am close)... but spread the risk over the whole population, and the Law of Large Numbers (which actuaries know and love) will bring down the cost per person per month (pppm).
------------------------------------ "Without agents, you have no agency!"
I think you and several other posters to this thread are missing the BIG POINT, that IF everyone was made to carry insurance, then the pool of insureds would be a known risk. As it stands now WITHOUT mandated coverage for everyone, of course GI is punitive to carriers--- due to adverse selection. The healthy tend not to insure if it costs more than they think they can get away with by not having to pay a monthly premium. The sickly will use up every benefit to the max. Right now, about 80% of health care is consumed by only 5% of the population (don't quote me on this statistic, I can't remember exactly the percentages, but I think I am close)... but spread the risk over the whole population, and the Law of Large Numbers (which actuaries know and love) will bring down the cost per person per month (pppm).
Exactly. It is the mandate component that makes it work. Without the mandate of coverage, adverse selection creates chaos.
Auto is mandated. Everyone who drives is supposed to have it. Most do, a small portion do not. Those who do not face the penalty at the time of an accident. With health insurance, those who do not would face the penalty at the time they needed treatment (I think Mass has or tried to have tax penalty).
...but spread the risk over the whole population, and the Law of Large Numbers (which actuaries know and love) will bring down the cost per person per month (pppm).
Dang, Dave. Where are you prospecting? Under the bridges?
Nationally 16 - 17% of the population is uninsured . . . most by choice. About 5% of the population is uninsurable . . . but not without options.
36 states (believe that is the right count) have risk pools. About a dozen states or so have universal GI or mandated open enrollment.
If we have a problem, and I am not convinced we do, the issue is not underwriting. It is affordability.
Until someone comes up with a way to manage the cost of health CARE the cost of health INSURANCE will still be out of reach for some. No one, not here, not in other countries, have come up with a viable way to control the cost of health care.
Even the NHS has problems and are rationing care.
I got into the health insurance business right after Clinton did the GI in Kentucky. I wrote maybe 30 individuals that were moving out of KY into my state. On every one of them I reduced the premium by almost half. I look back and everyone was healthy or lied on the apps.
That was not a Clinton thing . . . it was a KY screw up. They mandated GI and then quickly repealed that law less than a year later.
Carriers pulled out of the state. Premiums rose to the point of absurdity. The KY legislatures had an epiphany and repealed the law.
Carriers seem to think that mandating coverage combined with GI will bring down rates.
Mandates don't work. If they did, why do I pay for uninsured motorist on my auto cover?
We all pay for uninsured health care patients. We pay higher taxes, we pay higher premiums, we pay higher prices for goods and services.
When we have mandated coverage and GI all you have done is rearrange the deck chairs.
about 80% of health care is consumed by only 5% of the population
More like the 20/80 rule.
80% of health care is consumed by 20% of the population. If you want a staggering statistic, look at the percent of health care that is consumed by people in the last 6 months of their life.
Estimates run as high as 50% of health care dollars are consumed by those in the last 6 months of life.
So if you want to really cut down on total health care expenditures, withdraw care from those who are terminal or have little likelihood of recovery.
1 - I market mainly to HIPAA, so I tend to attract cases that are marginal for underwriting to begin with and,
2 - CA is a no rider, no restriction, no waiver, no exclusion state. It's all or nothing so we can only get rate ups on PPO, not any limitations on pre-ex.
The second one most certainly in a tight underwriting environment raises the number of declines.
You should know you are NEVER to wake a sleep-walker!
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Originally Posted by healthagent
If the gov't mandated that credit card companies extend credit to every citizen you'd see the interest rate for all cards around 25%.
How's the make people feel who pay their bills on time?
I paid my bills on time and still got a hike to over 30% when my promotional period expired! "Credit worthiness" is a scam!
This analogy breaks down from the get-go.
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Originally Posted by robliano
Wouldn't it work the same as a group plan? The healthy over pay and the unhealthy get covered?
And when you consider what you said about healthy people, why would they want to pay more?
Rob, you should know that small groups are subject to adverse selection more than large groups, and that's why their premiums are higher. Also why some small groups get declined. The larger the group, the more money the insurance company makes and the less exposure to adverse selection. The employees that use their benefits to the max are what drive up the premiums. That's why I thought HSAs would be the answer to halt this rise. The problem is that with the economy going down the toilet, very few people will now choose to pay large deductibles. More will be out of work and face COBRA, state risk pools, or go self-insured.
I'm not for increased unfunded liabilities... I think the country is in debt too deep as it is, but I don't see how we can let people suffer from lack of proper health care. Doctors don't make that much anymore, and many of them are leaving medical practice. I do note that hospitals are building every where I turn.....
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To be truly independent, an agent should not be dependent on a government bureaucrat for contracts or commissions.
Last edited by retread : 11-20-2008 at 07:18 PM.
Reason: Posts merged
small groups are subject to adverse selection more than large groups,
The only adverse selection is from those who opt out of group insurance via the waiver. Participation requirements eliminate a lot of that. The folks most likely to choose group over individual are mom & pop operations where mom and/or pop is uninsurable. All of my under 10 life groups have at least one owner/op who is uninsurable.
why some small groups get declined.
Maybe in your state, not in mine.
A carrier cannot refuse to quote a small group. If they apply, and meet participation, the carrier cannot refuse to issue coverage.
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It's a catch 22, if everyone has insurance the cost of insurance goes down with scale and information. However, until everyone is insured, too many people can't afford the coverage. Therefore, there has to be some sort of bridge to get everyone into the system so the system can become affordable for everyone. If it could be accomplished it would be a boon for health insurance agents just like mandatory auto insurance was a boon for P&C agents. Remember the days when auto insurance wasn't mandatory?
Personally, I think that anyone who has children should be required to insure them, and themselves, immediately (there are often state programs to help out with the kids insurance.) That would be a good place to start.
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Michael Levy
Chairman and Founder
MostChoice.com, Inc.
Search Engine Only Generated Insurance Leads
Speaking of which, and another reason to keep health insurance private....
CA has announced that it plans to close off new enrollments to the Healthy Families program in the near future. Wow!
Also, MRMIP (our high risk pool) is currently running at least a 4-6 month waiting period to get in and it could start going longer (in 2000 I remember it being 12-18 months).
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Originally Posted by MikeLevy
It's a catch 22, if everyone has insurance the cost of insurance goes down with scale and information. However, until everyone is insured, too many people can't afford the coverage. Therefore, there has to be some sort of bridge to get everyone into the system so the system can become affordable for everyone.
I think perhaps the short-term solution to affordability is to find a fair mix of HD versus preventative care. The premium can be worked to try and fit a budget as much as possible, however that may require a high deductible (say $5,000 2x for the family).
To some degree the carriers (at least in CA) have tried to mitigage this exposure with a comprehensive preventative care benefit (especially for children under 18). Sorry, let me say that differently, the BLUE carriers have.
Anthem BC has Lumenos both maternity and non-maternity versions with 100% covered preventative care up front at no cost. Shield has similar style but with copays (not the end of the world).
It's not perfect, but a stop gap at least. Also, people need to learn about things like urgent care centers in their area that charge a fraction of the cost of emergency room services for many of the exact same services (and they are usually a par provider).
A real life example from one of my clients:
Broker arm, emergency room $2800, urgent care, same service $210.
Last edited by Dave020 : 11-20-2008 at 09:03 PM.
Reason: Posts merged
if everyone has insurance the cost of insurance goes down
Group insurance rating pretty much disputes this myth.
Everyone (in the group) is covered and the result is higher prices for the majority of the participants who are supporting the relatively small number of "sick" individuals.
until everyone is insured, too many people can't afford the coverage.
You haven't priced COBRA lately, have you?
the short-term solution to affordability is to find a fair mix of HD versus preventative care.
There are no short term solutions to a long term problem.
Most of the suggestions, higher deductibles, emphasis on preventive care, EMR, audits to reduce waste are quickly eaten up by health care inflation.
Until you control the cost of health care you have done nothing.
In the early days of managed care we would see rate reductions of 15 - 18%. Problem was the actual data following did not support such price reductions. Within 2 years any cost savings achieved with managed care was quickly dispersed by inflation.
Same will be true for anything short of DRASTIC reduction in total expenditures.
That means rationing care for those with terminal illness and those for whom treatment does little or nothing to extend life.
Estimates show that about 27% of Medicare's annual $327 billion budget goes to care for patients in their final year of life.
She and others say there's not enough money to give everyone a treatment with a one-in-a-million chance of success. "None of us wants to bankrupt our community on desperate, long-shot treatments," Lynn says. "The question is, how do we build a sustainable health system?"
I think price transparency is a good step in the right direction. Like any other product on the market, let's know all the prices upfront. Competition in the market will help drive prices down.
Question - when your car breaks down do you want an estimate or do they just fix it and you pay $6,800 for a fuel filter?
price transparency is a good step in the right direction. Like any other product on the market, let's know all the prices upfront. Competition in the market will help drive prices down.
Another sucker bet.
Sounds good, but what about quality of care? How do you develop metrics to compare cost with quality?
Control costs then the price of health insurance will come down.
Transparency only works on primary care. The human body is too complex to develop an accurate fee schedule for anything much beyond primary care.
When you have a heart attack or cancer are you going to go online and look for the lowest price?
Can we stop with the "auto ins. is mandated" argument? How is that at all similar? Should we mandate that people have health insurance that only pays someone else's bills if we get them sick? Thats whats mandated with auto ins. that you have liability, meaning that if you smash up someone else's car, you have ins. to pay for it. they don't care if you get your car fixed. That is comprehensive, and is optional. (unless you don't own your car, then the lender requires it, not the government).
So please, find a new argument, but let the auto insurance is mandated one go.
------------------------------------ The Salary Guard How much would you need each month if you suddenly lost your income? Cash benefits for involuntary unemployment and accidental disability are there for you when you need them.
Bob, I agree but how do you control costs? How do you force providers to level or even reduce rates for services?
Hospitals are absolutely the worst in this area, charging hundreds of dollars to dispense a simple Tylenol.
How do you control health care costs, even under a managed care system, without losing participation?
When providers feel that they are not getting a good rate for services, they drop contracts and make a big deal about it. Patients freak out because Provider A is no longer accepting carrier B.
I think John maybe on to something. Here in CA, any agent with experience knows that there is a huge difference between networks and NFRs in LA versus SF. The reason, there are a ton of providers in LA area, so many that they have to compete with each other to get patients. In NorCal, pretty much the opposite.
So in LA doctors and hospitals are usually contracted with just about any plan out there including the fly by night HMOs that Weiss give a D- or E to. Up here, not even PPO contracts all of the time and the NFR is much higher.
Maybe creating competition amongst providers is a good idea, let them fight it out rate-wise for services. Kind of like the corner with 3 gas stations. And price transparency goes a long way in promoting that.
The carriers already rate hospitals and facilities, why not use that or a third party guide to access quality of care.
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Originally Posted by Salary_Guard
can we stop with the "auto ins. is mandated" argument? How is that at all similar? Should we mandate that people have health insurance that only pays someone else's bills if we get them sick? Thats whats mandated with auto ins. that you have liability, meaning that if you smash up someone else's car, you have ins. to pay for it. they don't care if you get your car fixed. That is comprehensive, and is optional. (unless you don't own your car, then the lender requires it, not the government).
So please, find a new argument, but let the auto insurance is mandated one go.
We do now, it is called premium increases. Premiums increase to negate NFR increases which are used to make up shortfalls from those who do not pay for medical services.
Ok, forget auto, let's take it more direct. Group health insurance is mandated....75% minimum participation of all eligible employees.
Last edited by Dave020 : 11-20-2008 at 11:07 PM.
Reason: Posts merged
how do you control costs? How do you force providers to level or even reduce rates for services?
You can't, without further rationing services.
Health care is a high demand, inelastic service.
When you restrict the cost of services (what is paid to providers) the number of providers shrink. This creates a bigger problem than we have now.
Other nations have tried and failed. Exceptions are the oil rich nations who can do anything they want in the way of free services since they are spending our money, not theirs.
Almost all medical providers here are squeezed. They fight back by limiting the number of Medicare/Medicaid patients they will see, moving to concierge services and accepting cash only, and (for new grads at least) opting for specialties at a time when demand for primary care is increasing.
The providers who are not squeezed are those operating on the fringe where their services are in high demand which allows them to enter the hidden provider network. Another class of provider are those offering services not normally covered by insurance. Providers who specialize in cosmetic services can deal on a cash basis and, like hidden providers, demand market price.
The carriers already rate hospitals and facilities, why not use that or a third party guide to access quality of care.
Nice, but imperfect.
My post on IB drew an interesting comment from an "insider".
I worked for Med*Corp (not the real name) and developed a sophisticated software product for reviewing medical treatment histories. The aim was to find cases where drugs or therapies were performed that were not indicated for the diagnosis, or were inconsistent or duplicate, or where there was too little or too much referral to specialists, too soon or too late. The business plan was to sell this review to insurance companies, who would advise their participating doctors about how they were being inefficient, if they were, and save lots of money. The software would review millions of cases.
The data was not ideal, and not guaranteed complete, as it was the record of reimbursement claims for office visits, drugs, and procedures. Patients often had more than one illness and diagnosis, a big complication to deciding what treatments were indicated or contraindicated. Eventually, the doctors would have to provide much more detail about their patients in order for this type of review to become very good.
Part of the challenge was to pick apart the treatment histories and match them to guidelines developed by the Med*Corp staff of consulting doctors, with no guarantees of exact matches. It was an interesting and challenging problem.
The software eventually became "smarter" than the consulting doctors, flagging patterns of treatment that were valid but hard to justify at first, or invalid and found to be correct upon further thought. These cases usually caused the consulting doctors to edit the treatment guidelines to be more forgiving, as the ambiguities of treatment were revealed. Med*Corp had to avoid creating too many false red flags, because practicing doctors do not appreciate being informed of false inefficiencies in letters from insurance companies.
You may want to know the name and success of this breakthrough product. Unfortunately, the initial tests didn't work out. We processed 900,000 cases from one insurer. The average cost of treating each case was about $1000, and the average savings that could be found by the software was $1.50. Even that might be questionable, given the fuzziness of the data.
I don't want to imagine the waste and confusion of this process being carried out by government-quality software, or a building full of human reviewers, given the inherent complications of individual medical treatment. Clearly, the treatments would be made to fit the bureaucracy, and not the patients.
Re: Is this good news ?
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