This NPR article has been sitting in my browser so long that the newly passed reform bill may have made it obsolete, but I am finally motivated to discuss it. Only one collective is described. Members pay a modest annual fee to cover administrative expenses, then write monthly checks to other members as directed by the administrators. There is what appears to be a co-pay or per-need deductible of $300 (for lack of more specific terminology), and it is waived after a household pays it three times within 12 months for the remainder of the 12-month period. Members can voluntarily choose to help people whose needs exceed $100,000, or who have been injured in motor vehicle accidents.
This is an interesting experiment. It frighteningly mimics only basic catastrophic coverage, and payments are not assured. Pre-existing conditions are generally not covered, including most pregnancy costs. Is this a good idea?
Advantages:
It's easy to understand. There are about 30 pages of straightforward rules and instructions. There is one deductible rule. There is only one type of plan (not counting the two optional add-ons for motor vehicles and >$100,000 needs). The organization is compassionate. Membership in the collective is not exclusive of having other insurance, so the collective may end up being helpful to someone who is "underinsured".
Disadvantages:
With about 14,000 households spread across the United States, the collective lacks strong negotiating leverage to demand lower prices from care providers. Members who rely on the collective are self-pay patients, so they will be charged much more money than a large insurance company would be charged, increasing the burden to members via premiums (the premium to need ratio is less efficient for a small collective than a large insurance company, which is also why single-payer systems are so good at keeping costs low).
Payments are not assured, and would become less likely as needs increase. Small groups are more likely than larger groups to experience significant variance in needs from time to time. Large companies tend to have reserves that they can tap if there is a spike in health care consumption, but the collective is set up rigidly. The NPR article mentions that a vote of the membership is needed to increase premiums, reducing flexibility and security.
Health economics studies have consistently shown that people tend to gravitate towards plans with the lowest premiums, despite their risks or needs. Neuroeconomics has shown us that most people are terrible at making decisions when there is a lot of confusing information and a lot of choices, and they tend to focus on select pieces of information to the exclusion of other important factors. Keep that in mind: more choice is not necessarily better, and is often very bad, especially for the more ignorant and less intelligent who are also at higher risk for other problems in their lives. When shopping for health insurance, with all the many complicated plans, people tend to focus on premiums to make the decision easier. The collective has such a low premium (2/3 of what I pay for my bare bones plan) that it may attract people for whom joining is a terrible decision, and who are more likely to incur greater costs for the collective.
Finally, what are the effects of only including devout Christians? Very generally, when you ignore factors like church attendance, self-identified Christians are more likely to have health problems and engage in dangerous or criminal behaviors than atheists. Samaritan Ministries seems to have some decent safeguards up to protect itself, though. Members' pastors are involved in their membership, and the collective simply does not cover many things (substance abuse, STDs may be difficult) that are out of line with their stated values. I wonder if there are also impacts due to changes in the age composition of devout church-attenders. I wonder if the collective attracts a disproportionate number of elderly who use it to supplement Medicare, and how that affects the risks.
Summary:
I like experimentation and innovation. I am curious to see how a project like this works over time. I also think it is very risky, and may need additional safeguards. Ideally, risk would be shared in a national plan that assures some basic levels of coverage to everyone, and collectives like this or private companies would sell supplemental plans.
Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts
Friday, March 26, 2010
Saturday, December 12, 2009
Small Businesses
I want to start a small business. I'll start out with a few employees, and try to grow. How is my business affected by the various plans proposed for health insurance in America?
Status Quo (most states): Since I'm small, I don't have to give my employees an insurance plan. They pay for their insurance out of pocket, if at all. Some will likely not get insurance so they can spend their money on other things, like bigger houses. Those with insurance will overpay for their coverage because they can't negotiate, and will probably be underinsured. I may have to pay slightly higher salaries to make up for the lack of benefits in order to attract good workers, but since people generally don't understand the values of employer insurance packages, I won't have to pay much more. My costs are kept low, and I am better able to function as a small business. Republicans and Libertarians like this arrangement because it helps small business development and entrepreneurship, even though it exploits workers a bit and sets up people for hardship and bankruptcy if they develop health problems. Half of US bankruptcies, largely the cause of our economic collapse, are due to inability to pay medical bills.
Individual Mandate: My employees will be required by law to buy their own insurance. They are likely to buy catastrophic coverage with the lowest premium and least coverage. They will probably be underinsured. The minimum wage is the same, and my competition could consider ending employer-provided insurance, so I won't have to worry about paying much more in salaries, if any more at all, to make up for my employees' health insurance costs. Insurance companies love this arrangement because the government is forcing people to give these companies money, and the government will probably pitch in for people who need help paying. Free money for insurance companies, cheaper labor for businesses. Real Republicans and Libertarians don't like the government interference (most Rs are bought off by insurance lobbyists and have no values), and liberals don't like the poor quality of insurance and the burden on the working poor who may not qualify for enough subsidies.
Employer Mandate: This is my nightmare. The government would force me to pay for my employees' insurance. Since I have a small business, I don't have leverage to negotiate a good price. There are some small business collectives, though, that can negotiate together, depending on my state. I sure wish there was a national insurance market so the collectives could negotiate more freely. I have to deal with the local insurance monopoly. Combined with minimum wage laws and competition with larger businesses that can negotiate better, paying for health insurance plans for my employees may inhibit my small business's growth, or even make it unsustainable. My business may not last long, or even get started. It's a shame because consumers would really benefit from my business's existence, but not enough to justify paying the prices I would have to charge to stay in business if I have to pay for health plans. This plan also leaves unemployed people in the lurch, and when my business fails my employees will have nothing. Maybe my business can survive if I fire some people and work the others harder. Big businesses like the employer mandate because they already give their employees well-negotiated health plans, and this would make it harder for new competition to sprout up.
Public Plan: Ah, I could relax. Everyone has basic health coverage. They can buy fancier private plans if they want, but the basics are covered, and are better than the old private catastrophic plans. I am more likely to be able to pay competitive salaries or reinvest profits. My employees are secure. Real Liberals (not the bought-off ones), unions, health economists, and the poor favor this idea because it provides security and needed health care to all Americans, and improves the stability of our nation's economy while setting a stage that fosters small business innovation. Republicans and Libertarians hate the plan because it is government control (they blindly hold on to a belief and a value despite all the harm their decisions cause), and insurance companies hate it because they love the profits they get from our current horrible system.
Status Quo (most states): Since I'm small, I don't have to give my employees an insurance plan. They pay for their insurance out of pocket, if at all. Some will likely not get insurance so they can spend their money on other things, like bigger houses. Those with insurance will overpay for their coverage because they can't negotiate, and will probably be underinsured. I may have to pay slightly higher salaries to make up for the lack of benefits in order to attract good workers, but since people generally don't understand the values of employer insurance packages, I won't have to pay much more. My costs are kept low, and I am better able to function as a small business. Republicans and Libertarians like this arrangement because it helps small business development and entrepreneurship, even though it exploits workers a bit and sets up people for hardship and bankruptcy if they develop health problems. Half of US bankruptcies, largely the cause of our economic collapse, are due to inability to pay medical bills.
Individual Mandate: My employees will be required by law to buy their own insurance. They are likely to buy catastrophic coverage with the lowest premium and least coverage. They will probably be underinsured. The minimum wage is the same, and my competition could consider ending employer-provided insurance, so I won't have to worry about paying much more in salaries, if any more at all, to make up for my employees' health insurance costs. Insurance companies love this arrangement because the government is forcing people to give these companies money, and the government will probably pitch in for people who need help paying. Free money for insurance companies, cheaper labor for businesses. Real Republicans and Libertarians don't like the government interference (most Rs are bought off by insurance lobbyists and have no values), and liberals don't like the poor quality of insurance and the burden on the working poor who may not qualify for enough subsidies.
Employer Mandate: This is my nightmare. The government would force me to pay for my employees' insurance. Since I have a small business, I don't have leverage to negotiate a good price. There are some small business collectives, though, that can negotiate together, depending on my state. I sure wish there was a national insurance market so the collectives could negotiate more freely. I have to deal with the local insurance monopoly. Combined with minimum wage laws and competition with larger businesses that can negotiate better, paying for health insurance plans for my employees may inhibit my small business's growth, or even make it unsustainable. My business may not last long, or even get started. It's a shame because consumers would really benefit from my business's existence, but not enough to justify paying the prices I would have to charge to stay in business if I have to pay for health plans. This plan also leaves unemployed people in the lurch, and when my business fails my employees will have nothing. Maybe my business can survive if I fire some people and work the others harder. Big businesses like the employer mandate because they already give their employees well-negotiated health plans, and this would make it harder for new competition to sprout up.
Public Plan: Ah, I could relax. Everyone has basic health coverage. They can buy fancier private plans if they want, but the basics are covered, and are better than the old private catastrophic plans. I am more likely to be able to pay competitive salaries or reinvest profits. My employees are secure. Real Liberals (not the bought-off ones), unions, health economists, and the poor favor this idea because it provides security and needed health care to all Americans, and improves the stability of our nation's economy while setting a stage that fosters small business innovation. Republicans and Libertarians hate the plan because it is government control (they blindly hold on to a belief and a value despite all the harm their decisions cause), and insurance companies hate it because they love the profits they get from our current horrible system.
Tuesday, October 27, 2009
Insurance Monopolies/Oligopolies
I feel sometimes that I fell asleep and woke up in an alternate universe. The Republicans are trying to protect Medicare Advantage, which is wasteful of taxpayers' money. The Republicans are blocking efforts to establish a public health insurance marketplace that would foster free competition. It is the Democrats that are trying to facilitate free market competition by de-exempting insurance companies from anti-trust laws.
The Republicans violently oppose a public health insurance option on the grounds that it would unfairly compete with private companies. If they care so much about fair competition, will they follow the Democrats' lead and fight the unfair private insurance monopolies? I doubt it. The Republicans have abandoned their values and all reason, and act now only to cripple the current administration and regain power. They don't care about the citizens or economy of this country. They care about themselves.
Competition among insurance providers will reduce the prices of insurance. Let us see that competition. Start by stripping insurance companies of protection from anti-trust laws. A public marketplace would be another great step towards increasing competition and providing the American citizens more insurance options at lower prices.
The Republicans violently oppose a public health insurance option on the grounds that it would unfairly compete with private companies. If they care so much about fair competition, will they follow the Democrats' lead and fight the unfair private insurance monopolies? I doubt it. The Republicans have abandoned their values and all reason, and act now only to cripple the current administration and regain power. They don't care about the citizens or economy of this country. They care about themselves.
Competition among insurance providers will reduce the prices of insurance. Let us see that competition. Start by stripping insurance companies of protection from anti-trust laws. A public marketplace would be another great step towards increasing competition and providing the American citizens more insurance options at lower prices.
Tuesday, May 5, 2009
Single-Payer Health Care
I am sure this is only the first of many times I will write about single-payer health care. I will try to keep this to a brief overview.
Ideologies:
Free-market Capitalism or Libertarianism generally support the idea that outcomes are best when companies are free to do whatever they want, and consumers are free to do whatever they want. Demand from consumers will control what companies offer and at what prices. Companies succeed that satisfy consumers the best.
Socialism generally supports the idea that consumers are best served when the government applies more control to companies to sell what the government thinks is good for the consumers.
The Current US System: We have many different private insurance companies, plus Medicare for the elderly (and ESRD), plus Medicaid for the very poor, plus S-CHIP for kids in not-rich families. The many private companies compete with each other for customers by advertising and offering different insurance packages at different prices. The US private insurance system is mostly free-market capitalist, but also has various regulations at the state and federal levels. The private insurance industry heavily lobbies congressmen and makes substantial campaign contributions to ensure that legislation is not passed that would hurt its profits. People who cannot afford insurance also cannot afford lobbyists. Politicians are not required to understand economics, ethics, or health care systems, and most don't. They often end up voting how they are told, which gives us things like Medicare Part D that explicitly prohibits Medicare from negotiating for lower drug prices.
Foreign Systems: The other industrialized nations that we usually compare the US to (European countries, Japan, Canada, Australia) are far more socialized. They can all be said to have single-payer systems, though their systems vary, because citizens have the right to most health care treatments and the government pays. The government is the single payer (a couple countries involve the government distributing funds to a handful of insurance companies based on citizen-chosen enrollment). As a single-payer, the government has great leverage that it uses to demand quality and efficiency from service providers.
Outcome comparisons: No one should ever make decisions based on belief in ideology when there is data from measured outcomes that demonstrates which system works best. The US system results in generally comparable health outcomes for the people who get health care to those in our socialized counterparts. Unfortunately, we pay about twice as much money for those comparable outcomes, and tens of millions of our citizens don't get any basic health care at all because they can't afford insurance or care. In the absence of affordable basic care, our uninsured and underinsured citizens wait until they have acute problems that cost devastating amounts of money, often causing bankruptcies and home foreclosures. Nearly half of the home foreclosures that precipitated our economic collapse were due to medical bills. This simply does not happen in single-payer systems. Money is wasted in our system on advertising and bureaucracy. If Medicare were offered to all Americans, the overhead savings would pay for the health care of our currently uninsured. With this health care, acute health problems would be reduced, and our nation's productivity and economy strengthened. America currently has the worst infant mortality rates among industrialized nations because uninsured and underinsured women cannot get effective prenatal care.
Each system does what it is designed to do. The US system is designed to make money for insurance companies that in turn give money to lobbyists and campaigns, and deny basic health care to tens of millions of people, increasing infant deaths, weakening our whole economy and bringing down quality of life. Single-payer, socialized systems are designed to give everyone adequate health care, resulting in stronger, healthier, more productive and functional nations.
Ideologies:
Free-market Capitalism or Libertarianism generally support the idea that outcomes are best when companies are free to do whatever they want, and consumers are free to do whatever they want. Demand from consumers will control what companies offer and at what prices. Companies succeed that satisfy consumers the best.
Socialism generally supports the idea that consumers are best served when the government applies more control to companies to sell what the government thinks is good for the consumers.
The Current US System: We have many different private insurance companies, plus Medicare for the elderly (and ESRD), plus Medicaid for the very poor, plus S-CHIP for kids in not-rich families. The many private companies compete with each other for customers by advertising and offering different insurance packages at different prices. The US private insurance system is mostly free-market capitalist, but also has various regulations at the state and federal levels. The private insurance industry heavily lobbies congressmen and makes substantial campaign contributions to ensure that legislation is not passed that would hurt its profits. People who cannot afford insurance also cannot afford lobbyists. Politicians are not required to understand economics, ethics, or health care systems, and most don't. They often end up voting how they are told, which gives us things like Medicare Part D that explicitly prohibits Medicare from negotiating for lower drug prices.
Foreign Systems: The other industrialized nations that we usually compare the US to (European countries, Japan, Canada, Australia) are far more socialized. They can all be said to have single-payer systems, though their systems vary, because citizens have the right to most health care treatments and the government pays. The government is the single payer (a couple countries involve the government distributing funds to a handful of insurance companies based on citizen-chosen enrollment). As a single-payer, the government has great leverage that it uses to demand quality and efficiency from service providers.
Outcome comparisons: No one should ever make decisions based on belief in ideology when there is data from measured outcomes that demonstrates which system works best. The US system results in generally comparable health outcomes for the people who get health care to those in our socialized counterparts. Unfortunately, we pay about twice as much money for those comparable outcomes, and tens of millions of our citizens don't get any basic health care at all because they can't afford insurance or care. In the absence of affordable basic care, our uninsured and underinsured citizens wait until they have acute problems that cost devastating amounts of money, often causing bankruptcies and home foreclosures. Nearly half of the home foreclosures that precipitated our economic collapse were due to medical bills. This simply does not happen in single-payer systems. Money is wasted in our system on advertising and bureaucracy. If Medicare were offered to all Americans, the overhead savings would pay for the health care of our currently uninsured. With this health care, acute health problems would be reduced, and our nation's productivity and economy strengthened. America currently has the worst infant mortality rates among industrialized nations because uninsured and underinsured women cannot get effective prenatal care.
Each system does what it is designed to do. The US system is designed to make money for insurance companies that in turn give money to lobbyists and campaigns, and deny basic health care to tens of millions of people, increasing infant deaths, weakening our whole economy and bringing down quality of life. Single-payer, socialized systems are designed to give everyone adequate health care, resulting in stronger, healthier, more productive and functional nations.
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