Health Care Reform 2.0

[Jam Stunna]

So now that Joe Lieberman has successfully killed the public option and the Medicare buy-in (God I hate that man), what is it exactly that's getting passed? And why is there a 1,000+ page bill to do essentially nothing? Or am I just missing something?

 

[CRASHiC]

I have yet to do my research on this, but this '1000 page bill' is in large font double spaced. At least, the bill the republicans had on the floor was. There will still be the compromise between the house and the senate, so there is still a long way to go. This whole process makes me rethink if our process is really beneficial to our people. It can stall this out so much but pass blatantly unconstitutional bills such as a ban on flag burning?

Oh well, time to do some research on the bill.

 

[Jam Stunna]

I agree that the Senate filibuster is ridiculous. It sounds like a good idea until you realize it can be used to kill anything.

 

[Aesir]

We should abolish the senate. It's completely ridiculous to give a state like Wisconsin the same level of representation as California.

But yeah, if we think about it though the public option was a good scape goat, republicans spent most of their time trying to kill that and ignored everything else. So everything else is mostly unchanged.

 

[Jam Stunna]

We should abolish the senate. It's completely ridiculous to give a state like Wisconsin the same level of representation as California.

Well, it's pretty much the point of the Senate to give small and large states equal representation, otherwise national politics would be dominated by five states.

But yeah, if we think about it though the public option was a good scape goat, republicans spent most of their time trying to kill that and ignored everything else. So everything else is mostly unchanged.

What is "everything else?" I'm not really clear on that.

 

[blazedaces]

Agreed. If anyone has more information and would like to enlighten us (I'm not trying to be a wise guy, I really want to know) please do so. I know I can just wiki it, but I thought for the sake of the thread someone should provide some more of a foundation of information to start the discussion from.

-blazed

 

[Aesir]

Well, it's pretty much the point of the Senate to give small and large states equal representation, otherwise national politics would be dominated by five states.

And that's completely ridiculous. I understand the rational, but that rational contradicts the nature of a democratic republic. They should replace it with proportional representation.

If you want to get more into this, I'll make a thread?

What is "everything else?" I'm not really clear on that.

Regulations, Subsidies it wasn't just the public option. Granted they need to be more aggressive with the regulations and subsidies but at this point I don't think we have that luxury.

 

[Jam Stunna]

And that's completely ridiculous. I understand the rational, but that rational contradicts the nature of a democratic republic. They should replace it with proportional representation.

If you want to get more into this, I'll make a thread?

Yeah, that would make a good thread.

 

[Deleted member]

I find it really interesting that 2-3 years ago when health care reform was nigh impossible, my Canadian, modern, non-archaic ideals about health care were shot down almost instantly. Now that Obama has explained and outlined a viable government option, people are starting to wake up.

I don't think there will be much debate here, unless there are still a few knuckledraggers left who want to discuss the alternatives.

 

[Aesir]

I find it really interesting that 2-3 years ago when health care reform was nigh impossible, my Canadian, modern, non-archaic ideals about health care were shot down almost instantly. Now that Obama has explained and outlined a viable government option, people are starting to wake up.

I don't think there will be much debate here, unless there are still a few knuckledraggers left who want to discuss the alternatives.

I didn't, no liberal on this board was shooting it down.

If anything this bill could one day lead to a government insurance plan, which is something a majority of Americans would like to see.

 

[GoldShadow]

So based on a quick read of a CNN article on the new bill (based on what the House and Senate agree and disagree on), I can quite easily say it's 1000 pages of relatively poorly written changes, with little grounding in economics.
http://www.cnn.com/2009/POLITICS/12/21/health.care.faqs/index.html

My biggest gripes with it:

What if I have a pre-existing condition?

Both the House plan and the Senate bill would eventually limit total out-of-pocket expenses and prevent insurance companies from denying coverage for pre-existing conditions.

This just shows how little these lawmakers understand about economics and business.

The entire point of insurance is to pay a known, small amount to avoid having to pay a large, uncertain amount (ie, pay a little when healthy to avoid paying a lot when sick). It is based on the idea of risk and uncertainty; the entire purpose of insurance is to cover costs due to illness or injury that is uncertain. If insurance companies are paying for pre-existing conditions, it's no longer "insurance"; it defeats the purpose of having insurance. Rather, these pre-existing conditions should be covered by other social funds dedicated to chronic or pre-existing conditions. We already have similar systems in place; social security disability benefits, and Medicaid payments for chronic/long term conditions. By forcing insurers to cover pre-existing conditions, we will certainly see a rise in premiums.

Both plans also bar insurers from charging higher premiums based on a person's gender or medical history. Insurers can only vary rates based on three things: age, geography and family make-up/size.

This also irks me. This is essentially "community rated" premiums; in other words, all people in a certain plan (based usually on geography, age, etc) pay the same premium. Currently, insurers practice "experience rating", where premiums are determined by health history, etc.

At first glance, experience rating seems like it can be unfair and that community rating is the way to go. Unfortunately, neither of these is ideal, but experience rating is the lesser of two evils. I absolutely do not understand why they would bar insurers from practicing experience rating.

In fact, this has already happened in New York. What happens when you ban experience rating? It forces companies to practice cream skimming: trying to sell policies only to healthy individuals. This can be done in a number of ways: marketing tactics aimed away from sicker individuals; structuring coverage in ways that sick and healthy individuals will expose themselves; not contracting with physicians known to treat higher risk patients (such as the elderly, HIV, etc). This assumes that insurers can identify and avoid high risk patients. But if they're forced to practice community rating and cannot discern high risk patients, it may result in a death spiral.
In such a case, both high and low risk individuals join plans. But they all pay the same premium, so the low-risk cross subsidize the high risk. The low-risk individuals soon realize they could be paying less. They will opt out and purchase coverage elsewhere (or they will self-insure). This leaves more high risk people in the plan, driving premiums up further. Eventually the high-risk individuals will leave the plan too ('why pay $3000 for deductible, plus the cost of a premium and copay/coinsurance, when I can just pay $3000?'). The insurer has no choice but to exit the market.

Experience rating is also good because it can encourage lifestyle changes (smoking cessation, weight loss). Community rating is better for people that may have a bad draw of the cards, but you don't need community rating to cover people with pre-existing or chronic conditions. As I mentioned above, we already have some coverage for these things in the form of social security and Medicaid.

Will illegal immigrants be covered?

The House bill mandates insurance coverage for illegal immigrants and allows illegal immigrants to enroll in the public option and to buy private coverage in the national insurance exchange, but prohibits government subsidies for such private coverage.

The Senate plan exempts illegal immigrants from the health coverage mandate, and prohibits illegal immigrants from participating in the insurance exchanges.

Oh goody House, let's give criminals insurance coverage too! I do think children should receive coverage regardless of illegal/legal status, but we should not be encouraging the breaking of laws.

Some aspects of the bill(s) are good and bad:

What is a health insurance exchange?

"Health insurance exchange" refers to the marketplace of the health insurance options. Obama has defined the exchange as a "one-stop shopping marketplace where you can compare the benefits, cost and track records of a variety of plans -- including a public option to increase competition and keep insurance companies honest -- and choose what's best for your family."

The House bill creates a national health insurance exchange designed to make it easier for small businesses, self-employed and the unemployed to pool resources and purchase less expensive coverage.

The Senate bill creates state health insurance exchanges in all 50 states.

Good: By expanding the geographical market for health insurance, this will foster competition and lower prices.

Bad: When prices go down, insurers try to provide less coverage. Moreover, cutting prices means insurers will have to cut their costs. Guess who feels the squeeze? Hospitals and healthcare providers. How much do you value the people giving you your care? How much do you value lower quality care? Are lower prices worth it if the care you are receiving is worse? Lower reimbursement rates for providers also means that providers will be clustered in areas with higher reimbursement. In other words, there will be fewer healthcare providers in rural and underserved areas.


But there are some good things:

What is a health care co-op?

Nonprofit health cooperatives, or "co-ops," are being proposed as an option to compete with the private sector and as an alternative to a government-sponsored public health insurance option. Co-ops are owned and governed by the same people they insure.

The House and Senate plans both establish "co-ops" and strip insurance companies of an antitrust exemption that has been in place since the end of World War II.

This is a positive. The McCarran–Ferguson Act, to which the article alludes, has been a problem since its inception. There are things called rating bureaus, which insurance companies can basically go to to find out the industry's/other companies' average expected medical claims cost, and use it to set premiums. And they can do so without actually talking to one another. What has resulted is tacit collusion, in which many big insurers set premiums at approximately the same rate (the rule of thumb being ~1.25 times the average expected medical claims cost). In other words, HMOs can collude via rating bureaus (because rating bureaus and insurers are not subject to federal antitrust laws), but nobody else can. This artificially inflates insurers' market power.



There are other aspects of it, but I don't have time right now to go through them all. These are just my thoughts on a few parts of the bill(s).

 

[Deleted member]

The entire point of insurance is to pay a known, small amount...

You mean like taxes? Like how modern people pay for health care?

...to avoid having to pay a large, uncertain amount (ie, pay a little when healthy to avoid paying a lot when sick). It is based on the idea of risk and uncertainty; the entire purpose of insurance is to cover costs due to illness or injury that is uncertain. If insurance companies are paying for pre-existing conditions, it's no longer "insurance"; it defeats the purpose of having insurance.

The entire practice of insurance in the US has devolved into gouging and cutting corners to make sure people don't get the coverage they are paying for. Pre-existing conditions don't just mean you have diabetes while physically signing insurance forms. The insurance companies can decide that a pre-existing condition constitutes other things. You could be insured, fall ill to diabetes, request coverage, and they deny you because you failed to report the fact that your family has had a history of diabetes.

It doesn't defeat the purpose of having insurance, it just allows more people to GET insurance. It prevents the insurance companies from cutting corners and denies them the possibility of rejecting your insurance claims. The purpose of health care is to keep people healthy, not contribute to the wallets of insurance CEOs.

Rather, these pre-existing conditions should be covered by other social funds dedicated to chronic or pre-existing conditions. We already have similar systems in place; social security disability benefits, and Medicaid payments for chronic/long term conditions. By forcing insurers to cover pre-existing conditions, we will certainly see a rise in premiums.

You have similar systems, but not what you NEED, which is a system where insurance plans cover pre-existing conditions. Yes, PECs are essentially liabilities to insurance companies. Why should we care? These are lives we're talking about. Money should cease to become relevant.

This also irks me. This is essentially "community rated" premiums; in other words, all people in a certain plan (based usually on geography, age, etc) pay the same premium. Currently, insurers practice "experience rating", where premiums are determined by health history, etc.

At first glance, experience rating seems like it can be unfair and that community rating is the way to go. Unfortunately, neither of these is ideal, but experience rating is the lesser of two evils. I absolutely do not understand why they would bar insurers from practicing experience rating.

Again, this is being enacted to prevent insurance companies from denying you coverage. The idea of the bill is to OPEN up health care and get more people covered, and less people screwed. Yes, the government is regulating them, but health care is not and should not be associated with the free market.

The insurer has no choice but to exit the market.

Excellent.

Oh goody House, let's give criminals insurance coverage too! I do think children should receive coverage regardless of illegal/legal status, but we should not be encouraging the breaking of laws.

Nice slippery slope...

You realize that if illegal immigrants left America your economy would be ruined, right? RUINED. Americans love cheap labour - why boot out the people willing to do it? Why deny them health care? Lmao, you guys want to eat your cake and deny it health coverage too.

Bad: When prices go down, insurers try to provide less coverage.

You mean like how it is now? It honestly can't get much worse in terms of insurance companies and their heartless, callous, evil practices. I sound like a conspiracy theorist or something, but this is a reality. Dare I suggest you watch Michael Moore's Sicko?

 

[GoldShadow]

Delorted, you did not address any of the economics in my post.

Believe me, everything I've said is soundly supported. You ought to do a little more research into health economics and insurance.

 

[Deleted member]

Delorted, you did not address any of the economics in my post.

Believe me, everything I've said is soundly supported. You ought to do a little more research into health economics and insurance.

...? I don't see your "sound support". All I see is your knee-jerk reaction to a CNN web article.

And yes, I do believe my response is entirely legitimate. Why do you think I need to do more research? I'm not playing dumb here. I'm always looking to learn more about this subject. I come off as elitist on purpose, but also by nature. I want you to hate your system like everyone else does.

http://www.youtube.com/watch?v=N4MvjiiLbZM - Cut to 4:15 for what triggers a health claim denial.

 

[AltF4]

The pre-existing condition thing matters quite a bit to me. My fiancee had gallbladder surgery a year or two ago, and since she was abnormally young for such a thing she's labeled as having a "pre-existing condition".

Her employer is too small to afford insurance for employees so she has a private plan. (Which, btw, is stupidly expensive.)

But she's stuck. Her rates have more than doubled since the operation, but there's no way to switch. She recently went around getting quotes and not a single company would even give her an offer. And her current company knows this. They can keep charging whatever they want without any risk of her switching. Soon it will be beyond her ability to pay monthly payments and she'll have to go uninsured. (Like me)

How does this make sense? How is this not defeating the entire purpose of health care?

 

[Deleted member]

The pre-existing condition thing matters quite a bit to me. My fiancee had gallbladder surgery a year or two ago, and since she was abnormally young for such a thing she's labeled as having a "pre-existing condition".

Her employer is too small to afford insurance for employees so she has a private plan. (Which, btw, is stupidly expensive.)

But she's stuck. Her rates have more than doubled since the operation, but there's no way to switch. She recently went around getting quotes and not a single company would even give her an offer. And her current company knows this. They can keep charging whatever they want without any risk of her switching. Soon it will be beyond her ability to pay monthly payments and she'll have to go uninsured. (Like me)

How does this make sense? How is this not defeating the entire purpose of health care?

Man for some reason this really hits home. I'm really sorry to hear that, dude. Makes me really angry to hear health care horror stories from someone I know. :/

On a lighter note, I didn't know you were engaged...congratulations

By the way.. you're always welcome in Canada. <3

 

[CRASHiC]

Insurance should be non-profit anyway. Hell, it USE TO BE. When trying to pull a profit out of the system, insurers are going to not cover the maximum amount possible. Its one thing to not one a government run option but to promote insurance (be it health, automobile, or any kind of legally required insurance which this bill has a mandate last time I checked up on it) that runs for profit is like privatizing taxes. There is NO economic sense to having such a thing be a profit business.

 

[Jam Stunna]

The purpose of health care is to keep people healthy, not contribute to the wallets of insurance CEOs.

I think this is where the crux of the problem lies. Are we talking about "health care" or "health insurance," because they are two different things. Health care is seeing a doctor; health insurance is paying for it.

I read a great article which compared health insurance to car insurance. The basic point was that one of the reasons that health insurance is so expensive is because people expect it to do everything (like keep you healthy, which it definitely is not meant to do), instead of just cover catastrophes. It goes on to state that if car insurance was forced to cover maintenance costs like oil changes, new tires and other minor repairs, its cost would be sky-high as well.

 

[Aesir]

I think this is where the crux of the problem lies. Are we talking about "health care" or "health insurance," because they are two different things. Health care is seeing a doctor; health insurance is paying for it.

It really comes down to the questions, is health care a right? or a privilege? If you think health care is a right than the Economics shouldn't matter, everyone should be included. If it's a privilege than the house bill pisses you off. (this isn't directed at GoldShadow at all.)

I read a great article which compared health insurance to car insurance. The basic point was that one of the reasons that health insurance is so expensive is because people expect it to do everything (like keep you healthy, which it definitely is not meant to do), instead of just cover catastrophes. It goes on to state that if car insurance was forced to cover maintenance costs like oil changes, new tires and other minor repairs, its cost would be sky-high as well.

The reason I don't buy into that argument is because if we only had insurance for the "big" things. Health insurance would still be unusually high because no ones practicing preventative care. Because expenses are out of control even for simple routine doctor visits. In Canada and France it costs 30 dollars to see a doctor for a routine visit. In the US? it can cost between 50 and 150 dollars. If you're in the 90 percentile more often it will cost 150 dollars.

What's the difference between the US and France? or any other western nation with universal health care? Simple The Government sets the rates like in those countries. That's why costs are so low. Why do you think people on Medicare pay less than private insurers? It's the prices.

So I'm sure there's something to be said about insurers covering things they shouldn't be covering but the reason things are so expensive is because we have an out of control environment in health care. We simple pay more for everything when we really don't have to.

And before someone says Government insurance systems lack innovation I want to remind everyone that the two biggest innovators int he U.S are National Institute of Health, and Universities. Both just so happen to receive funding from the Federal Government.

I would also like to point out that France is pretty good at innovation too.

 

[GoldShadow]

Most of the conceptual stuff and stuff from the first part of my post are from the following (though they are general principles of insurance/economics).
Health Economics : Theories, Insights, and Industry Studies. 2000
(http://www.amazon.com/Health-Economics-Theories-Insights-Industry/dp/0030256291/)

You mean like taxes? Like how modern people pay for health care?

No, this is a very important distinction. Premiums are not the same as taxes. As Santerre and Neun explain it:
"Premiums and taxes differ in the way risk is treated and the voluntary nature of the payment. Premiums are paid voluntarily and often depend on the risk category of the buyer of health insurance. Tax payments are mandatory and represent a single fee without reference to risk category." (Santerre and Neun, 76-77)

Also, most healthcare coverage in the US is employer sponsored, which is tax-exempt.

The entire practice of insurance in the US has devolved into gouging and cutting corners to make sure people don't get the coverage they are paying for. Pre-existing conditions don't just mean you have diabetes while physically signing insurance forms. The insurance companies can decide that a pre-existing condition constitutes other things. You could be insured, fall ill to diabetes, request coverage, and they deny you because you failed to report the fact that your family has had a history of diabetes.

Not denying that this happens. I agree that a lot of insurance companies use underhanded tactics. Make no mistake, I am not some defender of insurers. I think we need overhaul and new rules, but some of the sweeping bans and changes made in this new bill do not efficiently target the problems.

It doesn't defeat the purpose of having insurance, it just allows more people to GET insurance. It prevents the insurance companies from cutting corners and denies them the possibility of rejecting your insurance claims. The purpose of health care is to keep people healthy, not contribute to the wallets of insurance CEOs.

Agreed, but the purpose of insurance is:
"Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss." (Wikipedia)

The purpose of insurance is to manage risk. Pre-existing conditions are the opposite of risk; they are certainties. It does not make economic sense to pay for certainties in a risk pool. Doing so simply drives up premiums.

I do believe that pre-existing conditions should be covered by something, but it does not make sense to force private insurers to disregard them. That's defeating the purpose of having a risk pool in the first place:
to spread the risk of uncertain losses over a large group or population of people so that their average expected loss is less than if they were not in that pool.

Look at it this way:

Suppose we have two people, John and Bob. Let's say that the probability of falling ill is 0.10 (ie 10%), and that the cost of treating when ill is $100. So if John is all alone, his expected cost is 0.10 x $100 = $10. Same with Bob. The standard deviation of this individual risk is sqrt[(0.90 chance of remaining healthy)*($0 cost of remaining healthy - $10 average expected cost)^2 + (0.10 chance of getting sick)*($100 cost of becoming sick - $10 average expected cost)^2] = $30 SD

Now let's say they decide to pool together to spread the risk:

There are four different outcomes here.
1) Neither John nor Bob falls ill (probability = 0.90 x 0.90 = 0.81; expected cost = 0.81 x $0 = $0); cost for each individual if it does happen is $0
2) John falls ill but Bob does not (probability = 0.10 x 0.90 = 0.09; expected cost = 0.09 x $100 = $9); cost for each individual if it does happen is $50
3) Bob falls ill but John does not (probability = 0.90 x 0.10 = 0.09; expected cost = 0.09 x $100 = $9) cost for each individual if it does happen is $50
4) Both John and Bob fall ill (probability = 0.10 x 0.10 = 0.01; expected cost = 0.01 x $200 = $2) cost for each individual if it does happen is $100

We add up the expected costs and find that it is $20, divided by two people to give us $10. So the average expected cost per person is the same. The reason this setup is beneficial, though, is because it decreases the variance of the risk. The standard deviation for this two person risk pool is sqrt[(0.81 chance of both staying healthy)($0 - $10)^2 + (0.18 chance of one becoming sick)($50 - $10)^2 + (0.01 chance of both becoming sick)($100 - $10)^2] = $21.2 SD

Now what if we have the same two person pool, but Bob is guaranteed to be sick (p=1); John still has a 0.9 chance of staying healthy and 0.1 of being sick. There are two outcomes:

1) Bob is sick. John remains healthy. (1 x 0.9 = 0.9; expected cost = 0.9 x $100 = $9); cost for each individual if it does happen is $50
2) Bob is sick. John gets sick too. (1 x 0.1 = 0.1; expected cost = 0.1 x $200 = $20); cost for each individual if it does happen is $100.

We add up expected costs to get $29, divided by two people to give $14.50 per person. In other words, the expected cost per person has gone up.
Let's also look at the standard deviation. It is sqrt[(0.9)($50 - $14.50)^2 + (0.1)($100 - $14.50)^2] = $43.19 SD

Because of Bob's pre-existing condition, the pool is worse off. The overall expected cost and variance are higher. Soon, John will realize he is better off on his own rather than in this pool because his expected cost and variance of costs (risk) is lower if he is on his own. Bob will be left to shoulder the full cost of his illness as a result.

You have similar systems, but not what you NEED, which is a system where insurance plans cover pre-existing conditions. Yes, PECs are essentially liabilities to insurance companies. Why should we care? These are lives we're talking about. Money should cease to become relevant.


Again, this is being enacted to prevent insurance companies from denying you coverage. The idea of the bill is to OPEN up health care and get more people covered, and less people screwed. Yes, the government is regulating them, but health care is not and should not be associated with the free market.

Alternately, consider that the pool is much larger. The entire purpose of insurance is to manage risk, NOT certainty. It quickly becomes unprofitable forcing the insurer to exit the market, or declare bankruptcy, etc. We're not just talking CEOs having to take pay cuts from their ridiculously high salaries (I'm against CEOs taking more than is necessary too). We're talking unsustainable business model. Soon, no one has insurance because there are no more insurance companies left. Low risk individuals will switch to plans with other low risk individuals; this will drive up the premiums for the plans they left (which are now full of high risk individuals); the high risk individuals will leave the plan as well (this is known as a death spiral) because the premiums are too high. Since companies cannot practice experience rating, high risk individuals will just join the other plans with low premiums, drive up premiums, low risks leave, premiums go up further, high risk leave, company exits the market, repeat.

Obviously, it would not play out so dramatically in real life. But it would follow the same general model.

I can see why people might think all this math is irrelevant and that it has little to do with the bill or health insurance coverage or healthcare, but all that math is the basis of the concept of insurance. It absolutely explains the basic principle of health insurance and premiums, and why people choose to buy insurance in the first place. If you want to discuss pre-existing conditions, you have to consider these basic principles.

We should care about PECs because if insurers are forced to ignore them, the very purpose of insurance is moot. That's why I think PECs and the like should be covered by alternate sources of funding, not insurance. Again, I've already mentioned that social security and Medicaid already do this for certain long term and chronic conditions. That way, insurance companies wouldn't have to try and practice cream skimming or denying coverage for PECs, since those conditions would already be covered by another source.

Again, I don't want to seem like I'm trying to defend insurance companies or something. Definitely not. I hate many of the disgusting practices that insurance companies are associated with, and I'm not a fan of insurance companies in general. Unfortunately, due to inevitable rises in the cost of healtchare, insurance is here to stay. We should, therefore, come up with appropriate, economically viable solutions that actually and accurately target the problems; sweeping bans are not the way to go about this. They rarely ever are.

Nice slippery slope...

You realize that if illegal immigrants left America your economy would be ruined, right? RUINED. Americans love cheap labour - why boot out the people willing to do it? Why deny them health care? Lmao, you guys want to eat your cake and deny it health coverage too.

If you want to discuss illegal immigration, please make another topic on it. I don't want to derail this topic, but you'll find that illegal immigrants are actually quite a major burden on the US healthcare system due to overutilization of free care such as emergency departments in hospitals:
"Under the Emergency Medical Treatment and Active Labor Act of 1985 (EMTALA), all American hospitals must provide emergency medical treatment to any who may come to their facility (Cosman). This includes those who are uninsured, are not citizens, and cannot pay. While the government obliges the hospitals to treat these patients, no refunding of their unpaid services must ever occur under the bill�s duties. In other words, hospitals must give unpaid services to their communities, without any guarantee of repayment by a government facility that made it do so. Although a very sensible idea (it is unethical for hospitals to deny care to an uninsured gunshot victim), certain areas of the nation have become overwhelmed by an abuse of this system. As a prime example, between 1993 and present day, over 60 hospitals have closed down in the state of California due to the surge in critical care given to those without insurance, mainly illegal immigrants (WND). While some may blame this simply on business fluctuations, since hospitals are usually run by private firms, one cannot deny a problem in the system when many of these closed hospitals reported no payment for over 50% of their services."
http://ww2.jhu.edu/hurj/issue7/focus-draoua.html
(The Effect of Illegal Immigration on the US Healthcare System, Mehdi Draoua)

Moreover, the US economy would hardly be ruined:
"The CIS finds that in 2002 illegal immigrants on net received $10 billion more in government benefits than they paid in taxes, a value equal to 0.1 percent of U.S. GDP in that year.44 With unauthorized immigrants accounting for 5 percent of the U.S. labor force, U.S. residents would receive a surplus from illegal immigration of about 0.03 percent of GDP. Combining these two numbers, it appears that as of 2002 illegal immigration caused an annual income loss of 0.07 percent of U.S. GDP. Again, given the uncertainties surrounding this sort of calculation, one could not say with much confidence that this impact is statistically distinguishable from zero."

"States pay most of the costs of providing public services to immigrants, which include public education to immigrant children and Medicaid to poor immigrant households (whose U.S.-born children and naturalized members are eligible to receive such assistance)."
http://irps.ucsd.edu/assets/022/8797.pdf (The Economic Logic of Illegal Immigration, Gordon H. Hanson)

You mean like how it is now? It honestly can't get much worse in terms of insurance companies and their heartless, callous, evil practices.

Again, I don't want to sound like I'm defending some of the terrible things that insurance companies do. I'm with you on this. But I think that wide bans on things like the use of PECs and experience rating are not the right solution. What Alt described is a terrible situation that highlights some major problems in our current healthcare system. If we want to stop insurance companies from misusing PECs, or considering certain things to be PECs that are not really PECs, and generally mistreating people, then yes, we should absolutely target those things specifically. That would be more efficient than an industry wide ban on the very thing that insurance depends on: consideration of risk. I want to change how healthcare works too, but it should be done in the right way. This bill does not amount to that.

Insurance should be non-profit anyway. Hell, it USE TO BE. When trying to pull a profit out of the system, insurers are going to not cover the maximum amount possible. Its one thing to not one a government run option but to promote insurance (be it health, automobile, or any kind of legally required insurance which this bill has a mandate last time I checked up on it) that runs for profit is like privatizing taxes. There is NO economic sense to having such a thing be a profit business.

Keep in mind that no system is perfect. Government insurance can improve access (due to taxation), but government and not-for-profits do not tend to minimize costs (because there is no profit margin incentive), whereas for-profits do result in lower costs.

In addition, keep in mind that insuring everybody comes with its own costs Note: I am not suggesting that insuring everybody is a bad thing! That would be heartless! I'm just saying that with everything, there is a cost to consider. Having a government run, everybody insured option would not be all ponies and rainbows, as many people tend to suggest. Everybody should have healthcare coverage, but we should tailor the approach to ensure that the negatives are minimized:

"As mentioned in the introduction, moral hazard theory suggests that insured status may influence the growth of medical prices because individuals with insurance are no longer responsible for the full cost of medical care consumed. Moreover, rising medical prices may create an incentive for individuals to attain insured status because medical losses become more severe, as suggested by insurance demand theory. As a result, an inverse relation should exist between the uninsurance and excess medical price inflation rates."

"In support of the moral hazard but not the insurance demand theory, the results of the Granger-Causality indicate that the causation likely runs from the uninsurance rate to excess medical price inflation rather than the reverse."
http://www.business.uconn.edu/healt... and Inflation in the U.S. Health Economy.pdf
(Tracking Uninsurance and Inflation in the U.S. Health Economy)

"A strength of the Canadian NHI is comprehensive coverage of the population. A major weakness of the system is that, with respect to economic efficiency, the hospital, the physician, and the patient have no incentive to be economical in the use of health care resources. The dependency on central control and lack of incentives at the individual level result in inefficient use of health resources. Patients consider medical care as free public goods or services. They have no incentive to choose cost-effective forms of care. There is no incentive for a patient to use community health centers rather than rush directly to the emergency department when he or she is in need of urgent care. Waiting replaces financial cost as a regulator of demand."

ECONOMIC ASPECT OF HEALTH CARE SYSTEMS: Advantage and Disadvantage Incentives in Different Systems
(Chen, Feldman)

 

[Aesir]

Keep in mind that no system is perfect. Government insurance can improve access (due to taxation), but government and not-for-profits do not tend to minimize costs (because there is no profit margin incentive), whereas for-profits do result in lower costs.

Unless I'm misunderstanding here, but in Government run/funded systems the Government sets the costs. That's why going to the doctor in the US could cost you up to 150 dollars just for a routine visit. But in France it could only cost you 30 dollars. It's because the French Government sets the rates.

Unless I'm mistaking your actual point, if I'm not and you're saying this isn't the case than I'm going to ask you to explain this.

 

[CRASHiC]

I believe Goldshadow isn't referring to the cost of seeing a doctor by cutting cost within the insurance agency itself. But personally, I never got that claim. As a non-profit, wouldn't you want to cut cost as to make sure the maximum amount of money was being spent on your customers and to keep the business a float? Even in non-profit, efficiency is still very important

 

[GoldShadow]

Yeah, I was referring to what Crashic said.

As for cost containment in not-for-profit and for-profit firms, in an ideal world, NFPs would be just as concerned about efficiency and cost control as FPs. Keeping the business afloat is not generally an issue; NFPs make a profit, but are limited by non distribution constraints; they're generally making enough to stay afloat. The issue is with residual profits. Since these residual profits can't go back to investors or owners (since there are no investors/residual claimants), it has to go back into the business.

But we do not live in an ideal world and the fact is that people (and companies/hospitals) respond to incentives and economic pressure. A number of sources agree:

A 2001 paper entitled Patients, populations and policy: patient outcomes in chronic kidney disease. mentions FP's "Efforts to maintain income by cutting costs and increasing volume..."
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC219441/pdf/tacca00004-0293.pdf

Another paper said that "Results of the study indicate that for-profit ownership does enhance the power (or the need) of management to offer effective rewards for parsimonious use of health care resources. "
http://www.jstor.org/pss/3765214

A study in the Journal of Palliative Medicine found that "The ratio of skilled to total nursing visits was 11 percentage points lower for for-profit hospices compared to not-for-profit hospices in reduced models (7 in complete models)." Employing people to perform skilled care costs more than unskilled tasks, of course. This reflects that.
http://www.liebertonline.com/doi/abs/10.1089/109662102760269742?journalCode=jpm

The same study said that "In reduced models, for-profit hospices reported 17 percentage points more discharges with noncancer diagnoses, 15 percentage points more long-term care referrals, and 8 percentage points more patients with government payers. Average LOS did not differ by profit status. In reduced models, for-profit hospices delivered 0.20 more daily nursing visits on average".
This is reflective of the idea that FPs tend to try and increase efficiency (ie, control costs) so that they can provide more services (ie, increase volume and quantity to make more profit).

Another article from the same journal stated that "For-profit hospices, being more focused on the "bottom line," are "selecting" patients who, because of the nature of their terminal illnesses (non-cancer) and where they reside (nursing homes), are more likely to have a length of stay exceeding 90 days, and require a lower percentage of skilled nursing services, and hence, cost less to care for."
http://www.liebertonline.com/doi/abs/10.1089/109662102760269715

Another article says that "Nonprofit hospitals tend to attract workers with higher levels of skill as measured by schooling and potential experience. This could be explained in part by worker sorting and lower cost containment incentives in nonprofit hospitals."
http://www.springerlink.com/content/b3v51gp3l213u234/

It is important to keep all the pros and cons in mind, though. The complete quote from first article I mentioned in this post is "Efforts to maintain income by cutting costs and increasing volume could eventually compromise the quality of care."

This is also a common theme; outcomes in FP vs NFP institutions. For certain treatments or conditions, outcomes tend to be better in NFPs. This may partly be explained by the above study that cites NFPs attracting workers with higher levels of skill. It's also because NFPs put more money back into patient care than FPs tend to.

This is why the best system (and the one we mostly have right now) is a mixture between for-profit and not-for-profit and government. For-profits appear to be best for lower costs and higher volume of services. FPs should be used more for conditions or illnesses that require less skill (relatively speaking) to treat or things that are needed in higher volumes. NFPs appear to be best for better outcomes with things that require more skill to treat/handle, but not necessarily for cost containment. Perhaps an improved system would give incentives for FPs to focus on what they're best at and NFPs to focus on what they're best at.