The Reform Bill & Cost Controls

[Mac1958]

OK, now I'm depressed.

As anyone who is paying attention knows, the biggest problem facing our health care system is the cost of health care delivery. Let's say my cost on a widget is $1.00 and I sell it for $1.03. If my cost drops to $.80, I'll be able to sell it for $.83. Market competition will force me to, because someone else is going to sell it for $.83. Kind of like the cost of computers over the years. The customer wins, I win, we're all happy. Econ 101.

So anyway, I did a Google search on "cost controls in health care reform."

The most prominent article I found was written by Ezra Klein, a darling of the lefties. Great. Since he's an Obamacare dittohead, I should be able to truly get the cream of the crop when it comes to cost controls in the new law.

In the article, Klein says that "creating a competitive insurance market" is "the bill's first, and most important, step." His point is that the insurance exchanges will force insurance companies to finally be competitive with each other. He says that, "as any free market conservative will tell you", this will bring premiums down.

I am not making this up.

Mr. Klein doesn't seem to understand that eliminating pre-existing conditions will significantly drive up the cost of paying for care. This will only serve to increase premiums, as I illustrate in the highly complex widget example above.

What I find depressing is that I cannot locate examples of how this new law is going to cut costs. If I'm wrong, please correct me -- provide some examples of the law that will specifically cut the costs of delivering care. You would be improving my outlook significantly. List them here and we can discuss. I absolutely admit that I don't know the bill word for word.

Thanks in advance.

.

 

[somarco]

Ezra Klein is an *** who, like most everyone else supporting Obamacare, has no freaking clue what they are talking about.

Eliminating pre-ex for health insurance is tantamount to eliminating loan underwriting for mortgages, allowing anyone who can fog a mirror to get a mortgage loan.

We all know how well that worked.

The only thing in the bill that might bring down the cost of health care is EMR and even that is negligible.

Over at InsureBlog some guy that is an employee benefit consultant swears by a CBO report that says there are 135 cost containment measures that can be eliminated that will cut the total expenditure for health care by 1/3.

I have asked for a link to the report which he promised to provide, but he does cite is the cost of Rx errors. He claims the report states prescribing errors add $3.5 billion to the cost of health care every year. Supposedly most if not all of these errors are human errors that can be eliminated by switching to electronic prescriptions.

Yes, computers never err which is why the stock market plunge of a few weeks ago could never be blamed on a computer.

Perhaps if we had electronic oil wells run by computers we wouldn't have the mess in the Gulf right now.

Utilization is the biggest challenge to controlling health care expenditures. Until utilization is brought under control everything else just pales.

 

[Crabcake Johnny]

Well written article:

MassCare is lesson for U.S. in wake of health care bill - Fort Worth Business Press

 

[Mac1958]

Well written article:

MassCare is lesson for U.S. in wake of health care bill - Fort Worth Business Press

Ugh. Not exactly hopeful.

"Instead of focusing his energy on rising provider costs – Gov. Patrick set aside the principle of financial prudence and directed the Commissioner of Insurance to reject any rate filings in the merged market that exceeded 4.8 percent. What the Governor doesn’t appear to understand is that capping premium rate increases is fiscally irresponsible because it ignores the underlying costs. It’s like asking an automaker to sell a car for $15,000 that costs $20,000 to make – how long would that automaker survive?"

Surely these people aren't stupid. Why don't they understand this?

So my question remains.

Anyone? Anyone? Bueller?

.

 

[Crabcake Johnny]

There are no cost controls nor can there be. Personal responsibility for our own health would go a long way towards driving down costs. Although ironically, in a perfect world were people did indeed take care of themselves, less utilization could actually drive up costs. Ponder that for a minute.

Beyond that we have a free market. We can cap drug costs and stunt drug research. We can cap doctor's fees and drive doctors out of business. We can impose any cost control measures we want and the net result will be less invested in medical technology and we'll stagnate.

The answer is there's no answer. No country has found an answer. Reading factual articles (not blogs) you'll see the systems in major European countries are stretched to the breaking point. Yes, you can get a hip replacement in Canada - you just need to wait 6 months to a year.

Between what we're going to enact in 2014 and universal health care, we're betting off going universal - which is where we're end up eventually anyway. Between subsidies and gaming the system the entire program will be a massive train wreck 3 to 4 years after implementation.

 

[Insphere]

Government run health care will be as officiant as the DMV and compassionate as the IRS...

But in all seriousness, everyone in the insurance industry knows that all its going to do is drive costs higher, not lower, a lot of people think there going to be getting something for nothing, there wrong.. We all pay taxes, though we wish we didn't but the point is either the taxes will go up or the cost of premiums will go up. With promises that taxes wont it'll have to be the premiums. In honesty what this bill is doing is forcing the young without health insurance to purchase or pay a fee to cover the people either without health insurance or to cover the older people with pre-existing conditions. Is it fair, hell no! Should a 20 year old have to pay for his neighbor 12 miles away in a ghetto to be able to cover their medical expenses? No, they shouldn't. Should they want to? Honestly I'll feel sorry for them, just like I do when talking to them in person or on the phone, but in reality do I want to fork over my money to pay for their insurance, not really. Most people I believe will start taking the penalties and only insuraning themselves when they get sick. Insurance was supposed to be an in case something happens, not a "oh shoot now I'm sick, lets buy insurance."

How about instead of trying to mass mobilize people to government standards of health care we open up the state boarders and let companies compete nation wide, not state wide. Kaiser wouldn't be Kaiser of Southern California it would just be Kaiser. No territory restrictions, then let them compete. Prices would go down as people tried to find not only what was cheapest but also what was best for them in their area. I'm fine with prices dropping, I'm not fine being told what to sell, what to do and how to do it.

 

[Post Quartermaster]

How about instead of trying to mass mobilize people to government standards of health care we open up the state boarders and let companies compete nation wide, not state wide. Kaiser wouldn't be Kaiser of Southern California it would just be Kaiser. No territory restrictions, then let them compete. Prices would go down as people tried to find not only what was cheapest but also what was best for them in their area. I'm fine with prices dropping, I'm not fine being told what to sell, what to do and how to do it.

I agreed with most of your points except what I quoted above.

Frankly, I think that the "selling across state lines" argument is fairly disingenuous at best, and plain stupid at worst....

I have always maintained that health care is a commodity that is best delivered locally. In my state/market (and I have seen this in others as well), the most competitive IHP carriers have almost always been the local or regional carriers. Think about the costs to a small 1 to 3 state carrier trying to set up PPO's in 50 states. IT would be a competitive disadvantage to smaller companies that IMO would lead to monopolization of the IHP market by 3-5 carriers in very short order.

No matter how you spin it, you cannot ignore the fact that a doctor's cost of business (think mortgage on an office, for example) varies widely between places like downtown New York and rural W. Virginia, therefore reimbursements should be different.....and in my experience, carriers positioned locally are in a better position to take competitive advantage of these cost differences versus the big nationwide carriers....

of course there are always exceptions, but....

 

[somarco]

Selling across states lines does nothing to lower premiums or introduce competition except in the minds of those who do not understand the game.

You know the type. They voted for Obama.

 

[jiminfla]

" In honesty what this bill is doing is forcing the young without health insurance to purchase or pay a fee to cover the people either without health insurance or to cover the older people with pre-existing conditions. Is it fair, hell no! Should a 20 year old have to pay for his neighbor 12 miles away in a ghetto to be able to cover their medical expenses? No, they shouldn't. Should they want to? Honestly I'll feel sorry for them, just like I do when talking to them in person or on the phone, but in reality do I want to fork over my money to pay for their insurance, not really. Most people I believe will start taking the penalties and only insuraning themselves when they get sick. Insurance was supposed to be an in case something happens, not a "oh shoot now I'm sick, lets buy insurance."

Isn't that the definition of insurance, it is taking the risks, good and bad, and pooling them together hoping that the people who aren't sick pay for those who are.

I haven't used my health insurance for 10 years, I have it, but haven't used it. I have been extremely profitable for the company. As long as there are enough people costing the insurance company less than they pay in premiums to make up for the people who cost the company more than they pay in premiums, the company is profitable.

Pulling a number out of the air of 1 million healthy uninsured people who "pay the penalty" and choose not to buy coverage adds $2 billion to the "pool" to cover those who have coverage and cost the company more than they pay in premiums.

 

[somarco]

Pulling a number out of the air of 1 million healthy uninsured people who "pay the penalty" and choose not to buy coverage adds $2 billion to the "pool" to cover those who have coverage and cost the company more than they pay in premiums.

The penalty, if upheld by the courts, is actually a tax that will go to the IRS. If so, it won't help the carriers one bit when the guy that just got shot in the hood want's to buy health insurance.

How much do you think your homeowners insurance would cost if no one bought the coverage until the house was on fire? Or the only ones who bought life insurance were the ones signing the app while the priest is administering last rites?