One thing I find ironic in the current controversy over problems with the healthcare.gov insurance sign-up web site is that the people complaining don’t really mean what they are saying. Not only do they have have little to no context for their arguments, they don’t even want the improvements they are demanding. This is not to say nothing is wrong with the site, but few big web projects have perfectly smooth launches. From all the bitching and moaning in the press you’d think this experience is a rarity. But as those who regularly read this column know, more than half of big IT projects don’t work at all. So I’m not surprised that there’s another month of work to be done to meet a deadline 5.5 months in the future.
Yes, the Obama Administration was overly optimistic and didn’t provide enough oversight. Yes, they demanded fundamental changes long after the system design should have been frozen. But a year from now these issues will have been forgotten.
The most important lesson here for government, I’d say, is to be more humble. At the heart of the federal problems you’ll find arrogance. California and Kentucky, after all, are offering identical services that are reportedly going well: why didn’t the Feds learn from them? I’d guess it’s because they felt they had nothing to learn from the provinces.
“Not all smart people work at Sun Microsystems,” Bill Joy used to say. And not all smart people work for the U.S. Government, either.
I’d especially keep in mind that the people who are most upset about site performance issues are those who oppose its very existence. They are glad the problems are happening — happy to complain. It’s not like they want the site to actually be more usable. I’d venture to say that these critics, while demanding specific improvements, would really be happier if those improvements didn’t happen. They are hypocrites.
Meanwhile there’s another vastly bigger and more serious point being missed here, I think, and that’s the role of Big Data in this whole U.S. healthcare fiasco. This was explained to me recently by Jaron Lanier, by the way, so I don’t claim having thought of it.
Jaron is my hero.
His point is that Big Data has changed the U.S. health insurance system and not for the better. There was a time when actuaries at insurance companies studied morbidity and mortality statistics in order to set insurance rates. This involved metadata — data about data — because for the most part the actuaries weren’t able to drill down far enough to reach past broad groups of policyholders to individuals. In that system, insurance company profitability increased linearly with scale so health insurance companies wanted as many policyholders as possible, making a profit on most of them.
Then in the 1990s something happened: the cost of computing came down to the point where it was cost-effective to calculate likely health outcomes on an individual basis. This moved the health insurance business from being based on setting rates to denying coverage. In the U.S. the health insurance business model switched from covering as many people as possible to covering as few people as possible — selling insurance only to healthy people who didn’t much need the healthcare system.
The goal went from making a profit on most enrollees to making a profit on all enrollees. Since in the end we are all dead, this really doesn’t work as a societal policy, which most of the rest of the world figured out long ago.
U.S. health insurance company profits soared but we also have millions of uninsured families as a result.
Given that the broad goal of society is to keep people healthy, this business of selling insurance only to the healthy probably can’t last. It’s just a new kind of economic bubble waiting to burst.
Some might argue that the free market will eventually solve this particular Big Data problem. How? On the basis of pure economic forces I don’t see it happening. If I’m wrong, please explain.
Tell us all in detail how this will work.
I wonder if it’s totally co-incidental that, at the age when those healthy people who never cost the insurance companies anything are approaching the point where it’s inevitable that they’ll start costing them more and more if they don’t drop dead instantaneously, medicare kicks in and let’s the insurance companies dump those people.
It would be nice if this software had a preview mode.
You Wrote:
> Given that the broad goal of society is to keep people healthy, this business of selling insurance only
> to the healthy probably can’t last. It’s just a new kind of economic bubble waiting to burst.
That is why THE KEY provision of the ACA (Obamacare) is the elimination of pre-exsisting conditions.
If you try signing up you will notice there are no longer the lengthy health questions.
“Some might argue that the free market will eventually solve this particular Big Data problem. How? On the basis of pure economic forces I don’t see it happening. If I’m wrong, please explain.”
If they are only selling to healthy people who have no need to use it, eventually those people will stop buying a product they have no need for (I did exactly that in my 20’s). Thus, in order to survive, the insurance companies must expand their market.
The problem is that people confuse “insurance” and “care”. You do not need insurance (which is nothing more than a bet you are placing with the insurance company – you betting you will need to use it, they betting you will not) in order to get care (which is you seeing your doctor for some medical need). For many things (e.g. checkups, routine visits for cold/flu diagnosis, etc.), it may be cheaper to pay out of pocket than to use a copay + premiums. It is anecdotal, but I know it was cheaper for me.
When you require insurance companies to take people that are outside of their risk pool, you are telling them they are no longer an insurance company. Instead, they are a 3rd party payer, which necessitates them raising their rates as they will need to pay for people with expensive needs using money from those with inexpensive (or nonexistent) needs. In essence, this is just another way to have our grandparents robbing their grandkids (in a very similar method to what Social Security and Medicare do).
You do need insurance to access they true medical costs.
I had blood work done at a major chain. Cost $390. Cost for my insurance company $27.
“Cost $390”. No, the bill was $390. If you had complained about it they probably would have dropped it to the Medicare rate. That’s how it has worked for me. Which is just further proof that health care/insurance has become a scam.
That never worked at any of the clinics I have been to.
So you’re saying we should make health care a bazaar, where we go to the doctor and start negotiating, and people with better negotiation skills pay less?
Perhaps that would work, but it hardly seems fair or convenient. Indeed, it seems incredibly wasteful of everyone’s time.
Perhaps the real solution is “list pricing” without any negotiation at all — insurance companies and walk-ins pay the same amount.
What I can see happening is that if enough people start bargaining and negotiating rates, that it will reach critical mass and cottage industries will emerge (probably already doing so) who negotiate rates down for a percentage of the savings. I imagine that it would deal a blow to the traditional insurance industry who will find their one remaining useful service – negotiating better rates from the overpriced and over fearful of litigation health care industry – rendered moot. Health Care centric insurance companies could eventually be replaced by coops similar to credit unions whose primary responsibility is to it’s members rather than shareholders looking to maximize their investments by betting against their fellow man (and themselves by proxy).
Sounds like buying a Saturn to me… the return of the ‘no-dicker sticker’.
Health care already is a bazaar. At no time in my life time (I’m 40), has the “list price” for health services ever been the actual price charged to anyone. In fact, the “list price,” is set artificially high as a negotiating tool used by hospitals and doctor networks to ensure that next year’s payable amounts are higher than this year’s. Meanwhile hospital CEO’s like to tout to the media all of the “losses” they are taking. Claiming the difference between list and paid is a loss. Even when they had negotiated all of the payable amounts and knew exactly what they would be receiving. Insurance companies aren’t the only ones who hire actuaries to predict revenues.
Health services are expensive because there is too much demand for health services. Remember economically demand has nothing to do with consumption. Consumption is the number of people needing a health service. Demand is the amount of money available to pay these services. Supply, the number of consumers, is always met by the available Demand. Thus as more and more money is injected into the health services industry, Demand increases while Supply (consumption, sick people) remains relatively the same. In this in-elastic economy, of health services, there is no place but for the cost per service to increase, unless something is done to reduce the amount of Demand. Unless something happens to reduce the amount of money available.
At this point it can only come through a change in statutory law.
“What I can see happening is that if enough people start bargaining and negotiating rates, that it will reach critical mass and cottage industries will emerge (probably already doing so) who negotiate rates down for a percentage of the savings. ”
In other parts of the industrialized world where (real) healthcare bills are typically around 50% of what we are charged in the US (for, on the average, not better health outcomes), the government does this bargaining. And it does it quite successfully. Then again, in most other industrialized countries, the populace has a much more pragmatic relationship in terms of what they want their government to be able to do without seeing everything in black and white terms (freedom or communism!). (note my last sentence is not a response to the comment but more of a general statement about the thought process in the US).
The funny thing about getting sick and dying is that most people will avoid it. There is no bargaining power. If your doctor visit is a few bucks + an albuterol inhaler costs equate to $17 dollars (as it does in Europe) or $170 dollars here in the U.S. (not including a Dr. visit), people will pay (or die).
Zac,
Don’t disagree in some parts, but I do disagree with you in the end part of your statement.
The problem is that great, Zac is healthy and he doesn’t have insurance and he isn’t a burden on anyone. UNTIL Zac comes down with diabetes or Zac is in a horrible car crash that requires 15 surgeries and months of PT to get his back to a ‘new normal’ or Zac’s uninsured wife get pregnant, has delivery complications and your child ends up in ICU for 3 months clinging to life.
When you are uninsured, ‘I’ and your ‘grandparents’ pay for all that care you suddenly can’t afford because in most states you have a ‘right to care even if you don’t have the ability to pay’. Your the one sticking it to your grandparents in that case, not the other way around. And all you’ve done in that case is move the 3rd party payer to the hospital and doctors who have even LESS of a chance to negotiate a risk pool and react to people who can’t pay. In theory the insurance company is better at that than the doc’s.
If you want lower premiums that match up with your desire to take risk, then go get a high-deductible insurance plan. But don’t think that because you haven’t had to use it, that you aren’t a potential burden on society. You are only one accident away (as are too many)… I hope you never have one.
If the goal is to be less of “a burden on society”, then just donate to your favorite charity. It doesn’t help society to increase costs by building government bureaucracies and the insurance industry. It would help to take better care of yourself and not take risks, or waste the doctor’s time because you’re “covered”. By artificially increasing the “demand” for health services through insurance payments, they become more expensive for everyone.
Who said the goal of the overall system was to be “less of a burden on society”?
All the GP was pointing out was that under the current “poor people go to the ER” model, those people DO become a burden, not that getting rid of that burden was an overall goal.
Hell, if THAT’S the goal, “giving to charity” is a REALLY shitty solution; a much better, cheaper one would be: “transform ER’s into euthenasia centers”. Or: “pass a law outlawing the practice of medicine / healthcare altogether”. That way, we’d only have healthy people in society, discarding the unhealthy ones and reducing to nearly ZERO the burden healthcare places on society (.22 bullets are CHEAP). My *hope* is that that is actually NOT the goal of all the people bitching about “soshulized nazi med-sin”.
My understanding would be that the overarching goal of the health care system would be to create a … system … that cares … for people’s … HEALTH. (Shockingly enough.)
IMHO, it would ideal if we would do this in a way that provides the most equal care to ALL … I personally don’t see any reason why I, as an upper-middle class white guy with pretty-good insurance, should get so much of a greater chance at a healthy life after illness or injury than some poor dude (who might, after all, be the next Einstein, laboring away in his walk-up flat to solve the world’s energy crisis or discover the Grand Unified Field Theory). Or why some rich guy born with the proverbial silver spoon in his mouth should have that much better chances than me, for that matter.
Which is why, if we want to improve the system, it HAS to include a proviso to try to cover EVERYONE … ultimately, the healthy will HAVE to subsidize the costs the of the non-healthy, because THAT’S THE POINT of insurance, and the costs of the actual care for any non-trivial health episode are now, and will be for the foreseeable future, well beyond the means of any normal mortals to pay for them themselves.
There are any number of problems that could (and SHOULD) be brought up and addressed with the ACA, but universal coverage is NOT one of them. As I always say to people, our healthcare system is ALREADY socialized … albeit POORLY.
Unless we want to KEEP paying MORE AND MORE for healthcare in perpetuity, our choice is not whether we want to provide universal care or keep the system as-is, it’s whether we want to setup firing squads at the ER’s for those unable to pay (the “de-socializing the system” option), or somehow provide universal care and cover EVERYONE, thereby spreading the high costs amongst a larger pool and reducing the cost per capita (the “improving the way in which the system is socialized” option).
Three guesses which idea I think is more appealing, and the first two don’t count.
“Who said the goal of the overall system was to be “less of a burden on society?” That phrase came from the last part of the post I was responding to. But I agree we should put the emphasis on our own heath rather than paying for other people who don’t take care of themselves, but no longer see the need to since they’re “covered”. The poor will still be taken care of by the rest of us even if there is no insurance (“affordable” or expensive). The difference is that we won’t be paying for more public or private bureaucracies.
Covering people with pre-existing conditions is not insurance. This ads another dynamic to the equation. All the insurance companies have done is plug the “pre-existing” conditions variable into their actuaries to come up with the new cost of “insurance” for all of their policy holders. In reality, this “pre-existing” conditions that is required by the ACA amounts to a new tax on all, since everyone is now required to purchase health insurance. Of course, all of this comes with the added overhead of paying the middle-man, the insurance company, a profit. The ACA is the equivalent of a single payer healthcare system with the massive overhead cost of managing complicated IT systems built to coordinate the sale of so called health plans that have no risk to the private insurance companies. If the politicians wanted a single payer system, they should have just went for that instead of creating what is in reality a monstrosity of bureaucratic red tape.
Actually, the insurance companies were not using pre-existing conditions to raise their prices (which would be the case if they were plugging them into their actuaries) but to deny coverage — Bob’s original point.
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The Dems went with the “kludgeocracy” because it was originally a conservative idea and they thought they might get Repub buy-in. They did not figure in the fact that anything with Obama’s fingerprints on it would become toxic, even if it was originally a Repub idea.
“Actually, the insurance companies were not using pre-existing conditions to raise their prices…” That may be true, but it forces those “denied” to look for another more expensive option, one that charges for pre-existing conditions. If insurance companies are allowed to control risk by using the concept of pre-existing conditions, you can’t blame them for doing so. A simple law disallowing risk control may be more appropriate than ACA, new websites, or further government involvement. After all, the insurance industry is already regulated, why not use the regulatory power instead of finding excuses to raise taxes under the guise of “affordable health”. Trying to make something truly “affordable” by law will only make it scarce.
This is a serious and important side topic — pre-existing condition.
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What are the consequences of NOT covering pre-existing conditions? (1) You wipe out the affected individuals and families financially. (2) You put them on welfare. (3) You force hospitals to treat them for free. Either way society pays for it.
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The problem is medical care has become too expensive. A few decades ago medical insurance was in fact “insurance.” Most people with average incomes could afford basic health care. Medical insurance covered only major expensive, hence the term major medical insurance.
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Today people with average income can barely afford basic health care. If you have a kid with asthma, or gets hurt on the playground, or… you will be taking out a second mortgage on your home to cover the expenses. Health insurance has become nothing more than a scheduled payment plan.
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Until the USA public realizes the root cause of this problem and attacks it, no government health care program, no free market system is going to make things better. Health care costs TOO MUCH.
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The GOOD thing about the ACA is it is going to start educating the USA public on the true costs of health care. When you get sticker shock from the high price of health insurance it isn’t the result of the ACA. In this case the ACA is just the messenger. That sticker shock comes from high health care costs. THAT IS THE PROBLEM.
Thanks Bob,
Being in the healthcare trenches it was my thought that almost all the “Press Theatrics” was just that.
From years of reading your columns I also knew just how bad most large scale IT projects turn out.
Thank god Big Blue wasn’t IT vendor for this project.
California (at least LA County DHS) has been aggressively making this transition for at least past two years. Not without hiccups but no game-stoppers with 300,000 members currently covered with more to come.
For the above responder- at present rates of reimbursement managed care for patients 65-85 (group as a whole) is a very lucrative market.
In the early 90s, I used to work for a medium sized consulting company that was attached to a large defense deparment manufacturer in the midwest. We used to compete against Andersen Consulting and the like. We got selected by Caterpillar’s engine division to do a really large over haul of their materials management system while creating automatic feeds into that system from their customer’s requirements. The project took about 14 months: 7 for analysis, 4 for design and 3 for development. The system, while extremely large and complicated, went in and worked perfectly the first time. Moreover, it was designed for easy maintenance: one program did only one function (except in one module where several things had to happen simultaniously).
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The key to that success was doing analysis first, design second (down to pseudo code level), development last and modeling every step of the way using a modeling method that even laypersons (subject matter experts) could follow, so that problems can be identified easily then fixed. Programming was easy and straight forward – done mostly by recent college graduates. But the whole time were doing the analysis, the client’s IS people kept wondering “why aren’t we coding?”
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During that analysis, one of the client’s subject matter experts said: The Big Six fly in a powerful partner, who gives a powerful presentation, then when the contract gets signed, he gets on an airplane and flies off to sell to another client. Meanwhile a school bus pulls up and a lot of sharp, but inexperienced kids pile off. They then spend the next 8 months argueing over who will be the chief and who will be the Indians, then, with 5 months left, they go into over time mode, and they build a giant hair ball of a system that maybe works but probably doesn’t. Near the end, another partner flies in to manage the completion. And when it doesn’t work, some how is able to arrive at a conclussion with management that the project’s failure was couldn’t be helped and so was no ones fault. Management buys into this narrative because they hired the Consultants.
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My consulting firm was basically run out of the business. And a few years later I was working for one of these big companies right back at Caterpillar and witnessed one of these same versions of events occurring.
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I’ve long worried about Healthcare.gov. Politicians buying consulting services from, basically politicians is not a very good thing. Meanwhile too few organizations and too few consultants have had the experience of knowing how to manage a very large term and complex project through to completion: people still want projects completed yesterday and are still wondering “why aren’t we coding yet”.
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I’m not sure what the problems are at Healthcare.gov, but I can imagine setting it up was large and complex because you have 26 different insurance markets (states) and they have urban, suburban and rural markets within them, and the insurance companies have their own requirements for information to build quotes, etc…
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I could be wrong because every situation is different, but if Healthcare.gov had followed the basic systems development methodology correctly and modeled their system correctly, then fixing it would have been a basically easy or at least doable task and done by now. If they haven’t modeled it properly, I don’t have much faith that they’ll be able to do so and have the thing up and running and sufficiently fixed by the end of November. On the other hand, maybe I overestimate the complexity. Or, perhaps they can make use of one of the state systems, and/or build from one of their models.
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I wish them good luck. I would like it if the result of all of this would be some kind of standards, and common knowledge about how these things work and have to work is spread more broadly across society. The worst thing from all of this is the waist of resources that these flimflam consulting operations siphon off from society. And apparently, Big Blue is the worst of the snake oil salesman. This is ironic, because once upon a time, they were the ones that invented the basic systems development methodology that I learned in my Analysis and Design classes in college.
Did I misunderstand your comment? Your 26 markets/states observation: You do know there are 50. Right?
> 26 markets .. not 50?
The federal site (HealthCare.gov) only had to support those states that refused to setup their own exchanges. There were 26 of those.
Well said. Big IT projects must be well-managed, and I have worked on large projects in both the public and private sector that have failed.
One big problem that I have seen and that seems to be a factor here are unrealistic timelines. As they say, you can’t have a baby in two months just by throwing people at it; no matter what, there are certain activities that must occur no matter what development and management methodology you use.
And no matter what methodology you use, it must be structured, managed, and controlled. This involves well-defined processes and procedural rigor, and this is always a hard sell; decision-makers view it as bureaucratic and unnecessary. In the private sector, executives don’t want to pay for any overhead (i.e., they want to do the least amount of work for the most amount of money); in the public sector, politicians control the purse strings and timelines, and it just doesn’t fit in. And when these corners get cut, there is a high risk of failure.
Big Blue did submit a bid to write the ACA website. Big Blue really wanted to win that contract.
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Lets not forget how federal contracts are won — lowest bid. Skills, experience, competency are all of lower priority. Clearly Big Blue wasn’t the lowest bidder. Given how Big Blue likes to under price contracts these days and then under deliver them, it is a good thing they didn’t win this bid.
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Lets remember how federal contracts are completed — massive over spending to make them work. In the end the cost of the ACA website will probably be higher than the highest bid.
[…] as possible to denying cover to as many unprofitable people as possible. Have a look at: https://www.cringely.com/2013/10/26/big-data-destroying-u-s-healthcare-system/?utm_source=rss&utm… […]
Sorry Bob, but what country are you writing about? Seriously, only a very small percentage in the US currently purchase health insurance on an individual basis. The vast majority get insurance through an employer-sponsored group plan, or the government group program. I pay the same as my co-worker, even if he is obese, smokes like a chimney, and has a history of heart disease and cancer in his family. With the ACA, those not already covered through work or the government will be able to get group insurance based on age, zip code, # of family members covered, and (maybe) tobacco use. That’s it. The business of “only selling to the healthy” will end January 1, 2014.
Your company does not pay the same rate.
Yes they do. According to my wife. Who heads HR.
Peter,
I think he meant your company doesn’t necessarily pay the same rate as another company of the same size, not that everybody in your company doesn’t pay the same rate. It depends on the risk pool you are in and how it’s calculated.
As to your comment about ‘only a very small percentage in the US currently purchase health insurance on an individual basis.’ I don’t know where you come up with the facts to back that up? Here is a link to a study done for the state of Wisconsin. https://www.washingtonpost.com/r/2010-2019/WashingtonPost/2012/07/12/Editorial-Opinion/Graphics/wisconsin-health-care.pdf
Table 1 shows the ‘working’ population of the state and their insurance coverage baseline 2009. In that table only 63.96% are covered by group insurance or public insurance under the ACA guidelines. Even if every small employer offers it, that still only covers 69.7% of the population under 65. Hardly a SMALL percentage?!
The numbers I’ve seen say 50% get insurance through work, 30% from the government, and 15% have no insurance at all. That leaves 5% getting individual insurance. Very small?
Only if you ignore that 15% uninsured. ACA is intended to move that 15% into the private insurance market, subsidized by the government, or if they fall under the new Medicaid thresholds, they would move into that program.
“This moved the health insurance business from being based on setting rates to denying coverage. In the U.S. the health insurance business model switched from covering as many people as possible to covering as few people as possible — selling insurance only to healthy people who didn’t much need the healthcare system.”
I own a small business (under 15 employees) and I’ve never seen anything of the kind in all the years we’ve been providing coverage for our employees. We’ve never been denied coverage even though we have some higher than normal risk employees. When we switched companies we were quoted base rates without underwriting. Coverage could not be denied once a quote was given. After doing a health profile, the rates could be increased above the quote, but only by a max of 65%. I’m not taking a political position here, just stating the facts as we experienced them in our company. With big companies and their group policies, all employees are covered, even those with pre-existing conditions.
I get the sense that Jaron’s statement is more anecdotal than fact based.
Zac is correct in that people confuse “insurance” and “care”. Just because you have the former doesn’t mean you’ll receive the latter. I fear going forward that the amount and quality of care will both decrease regardless of whether or not a person has “insurance”.
Big companies do not buy health insurance for their employees. They self-insure and save 40%-60%. That is why you have not heard a peep from big business about Obamacare.
What are you talking about? I’ve worked for 4 large employers (and worked closely with over 20) and I’ve NEVER met a company that self insures for medical insurance? Would like some proof of that one!
Maybe you are thinking liability insurance?
maybe he’s referring to dead peasants insurance where employers bet on who will die first and take out life insurance policies on them. that, however, is certainly not health insurance.
I got my start at EDS in the mid 1980s. They said that they were self insured. That was a bit of a clash when they got bought out by General Motors and some GM people got moved into EDS, thus losing their blue cross, blue shield insurance.
Even when a company self-insures they use a health insurance company to administer the plan and use their network. The insurance company gets an administration fee, which is obviously much lower then the insurance cost. The employees get a card from that heath insurer, because it’s their network, most employees would never know or take the time to know who is actually paying the bill.
My employer moved away from self-insurance 20 years ago. The rate of inflation on healthcare costs is greater than the rate of return on investment vehicles for self-insurance, so self-insurance is not really practical anymore.
Mike,
I’d say you got lucky or you are in a state that has better, more consumer friendly regulation of their health insurance industry. I know where my dad lives in rural northern Missouri everything you say you didn’t have problems with, he did. He was the superintendent of small school district with about 60 employees plus their dependents. Every year was a fight with the insurance company over the size of the risk pool, the number of people in the pool, dependents being denied coverage because of pre-existing conditions, the inability to pool more districts together to get a better rate based on a larger risk pool, lack of competition, etc. etc. One year their rates all went up because they had a family in the pool that had a child born early and who required months of time in neo-natal ICU and that ‘risk and cost’ had to be spread somewhere. It sucked! Try to find new insurance, and it resulted in having options to drive to Kansas City (over 100 miles) to find in-network doctors from some of the competition.
Like you, not trying to make a political statement, but people take their local area and what they see and try to apply it to a national focus and it just doesn’t work. All politics is local, and unfortunately so has been health care insurance in this country.
I may not agree, like you, with Jaron’s statement as put in Bob’s article. However, I know if Karl Rove can count votes by zip code on election day, the insurance companies have figured out under the old system how to cut their coverage boundaries to lessen losses.
And yep, I think prices are going to go up. I think it remains to be seen the effect this will have on unintended care (i.e. emergency room walk ins when people are at their worst). In states that aren’t expanding Medicaid we are already paying for this ‘hidden premium’ in our taxes and the higher rates we see from the hospital/doctor.
Like Bob asks, I haven’t yet heard anyone else come up with a credible alternative EXCEPT managed national care like Canada. Which I have to admit I’m not a big fan of, though I don’t really like my insurance company either. 🙂
Michael, maybe we did get lucky, or maybe we have a good agent. We’re in Kansas City on the Kansas side of the line. Much of what you mentioned your dad went through is due to limited competition. With customers being required to shop for coverage in their states only, competition is limited and prices go up. Same with not being able to bundle together those in similar businesses, but with different employers, for better group rates. If I’m not mistaken the UAW does this very thing for their members, but this option isn’t available for the average Joe. Give me GEICO for medical insurance and the ability to bundle for better rates, and many of the problems of the previous system would have gone away. Instead, now everyone is going to be impacted … and most not in a good way. We’ve been informed that our rates are increasing, after already going up by 39.9% from 2012 to 2013 … so much for everyone’s rates dropping by $2500.
Mike,
Sorry to hear that increase. Mine last year for the first time in recent memory only went up about 2% (was trending about 9% a year prior and granted I work(ed) for a large, multi-state employer). I’ll know the end of this week what will happen for this year.
I agree that the state thing was one part that never made sense to me, but insurance is highly regulated at the state level for all types (GEICO has to register in every state it offers in after all). I don’t know if that was viewed as squashing the states too much so they limited the geographic boundaries to a state under ACA for pooling purposes? I’d guess rates will be slightly more consistent under the ACA, even state to state, but regionally as you note there will be some big skew changes.
GEICO? Blech! As a customer of theirs prior to their expansion into non-governmental employees (Government Employee Insurance COmpany), I dealt with their contract wording, exclusions, and their expansion/advertising campaign paid for by increased rates on long-term customers. Their coverage exclusions would surprise you if you read the fine print.
The last time I had a real job with health benefits was 1994. Since then I have had individual policies with a variety of carriers. Sometimes it changed because I moved, sometimes because I got a better rate elsewhere and twice because I was dumped by the carrier. I have also been denied coverage three times. Throughout this period of 19 years I have had no significant health problems at all yet I’ve been turned down for coverage three times. In this time I lost both a wife and a child, which explains the two times I was dumped. What, that’s not supposed to happen? Incurr a $250,000+ medical bill and watch it happen. As for why I’ve been denied coverage three times, in each case it was because of unexplained items in my health history from doctors I had never met or even heard of. If you think fixing your credit score is hard, try getting expunged an errant prescription record from three states away. Obamacare so far appears to be a better deal for my family and me. Your mileage may vary of course.
There’s no reason a free market couldn’t solve this. If predictions of future health-related costs are accurate, it’s easy enough to come up with premium that covers those costs plus a healthy profit margin. The only issue with that is that people with large health risks and modest means may not be able to pay that premium. In the telecoms industry a similar issue is solved with the universal service fund, which is effective but not efficient.
If healthcare cost estimates are correct, in 25 years, 100% of all our money will go to healthcare.
Very interesting! I had a big wake-up call last year when I was laid off from my employment and had to get some ‘major medical’ insurance on my own. Previously, I had been continuously employed and covered under some employers plan for the last 35 years. It was a shock to be told that I would only be sold a policy for 6 months to cover a ‘transition period’ and after that I would be denied coverage because I have Type 2 diabetes. Did not matter that my diabetes is very well controlled, in good health otherwise, not overweight or eat an unhealthy diet. I did not worry to much as I figured I would be re-employed by then. To young ofr Medicare so what do you do?
Well, here we are 16 months later and I finally start a half-time job on Monday, no benefits of course but it’s good to be going to work regularly. I had done some consulting and piece work while unemployed but that was only enough to keep the bills paid and no funds for ‘extras’, like the health insurance I could not buy anyway (I live in Florida where this is permissible, not so in some other states).
Bob is right about the insurance companies only selling their insurance to the folks who don’t need it. Now that I need it, I can’t buy it and that really sucks. It’s extremely fortunate that I have not had any major medical event such as a heart attach or accident requiring a trip to the ER. The cost of a single trip to the ER is out of sight, we are talking thousands and thousands of dollars, not hundreds. My savings could be wiped out and I would be destitute if a ‘big medical event’ happened. So I will be signing up for Obamacare as soon as they get the bugs worked out with the website.
Larry,
My story is very similar. I’ve always been very healthy (in fact many years ago I made the Olympic trials in a sport requiring outstanding fitness) and 2 years ago I was laid off when my employer was bought and most of the engineers were laid off (hi, China!)
I have borderline hypertension (BP is typically measured around 150/90, although it’s also “white coat hypertension” – often measures 120/130 over 70 at home when relaxed).
ANYWAY – after a lifetime of “normal employment”, I went out on my own, opened a coaching / training facility, and used COBRA. Little did I know, when I went to apply for insurance on the open market (this was about 2 years ago), I was shit out of luck. NEVER smoked a puff (of anything!) in my life, 2-3 drinks per week MAX, around 7 pct body fat, resting heart rate around 45, and I was told to (excuse me) FUCK OFF because I had hypertension.
My point is that Larry is exactly right, and Bob is *exactly* right. It became 100%, unequivocally, indisputably clear that the insurance companies were saying, “F*** off, we are not guaranteed that we won’t lose money on you, so hit the bricks, pal.” Meanwhile there are people at my former employer who eat cheeseburgers 5x a week, don’t run, they smoke, etc. and they can be insured! Let me tell you, it bent my mind. Seriously, read that again. I thought I was in a bad dream. “This can’t be true! Fred, the fat cheesesteak fan who smokes a pack a day can be insured, but me, a (time redacted) long distance runner can’t get insurance?”
So Bob, not that you doubt yourself, but you are one thousand percent right here. The insurance companies have been allowed to “hand pick” the winners, like going to Vegas and getting to pick your cards & dealer ahead of time.
I’ve traditionally voted right of center (barely), but the AHA is >>so<< important, it makes me want to throttle the neck of any congress-critter who doesn't support health insurance for all.
As a physician caring for the very ill, I have seen insurance companies play every trick to deny their coverage. They will stop sending premium notices hoping the ill patient will “forget” to pay, look for any pre existing condition (even if it has nothing to do with their present illness), I even saw one insurance company ask for signed time cards from the patient’s place of employment hoping to show they worked less that the required hours for coverage.
Insurance is no longer a method to share risk, it is a method to create $ for shareholders.
I am very hopeful that the ACA will help, but the US has so much work to do before it does cost %100 GDP for health care.
Bob said “Tell us all in detail how this will work.” Like AppleCare. Each person makes an individual decision between self-insurance and paying for the peace of mind of insurance, based on the cost of that peace of mind.
And then emergency rooms remain the primary centers of care for those who don’t have insurance, and that costs everyone else money.
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There’s a difference between electronic products getting broken while not under extended warranty coverage and people whose bodies are broken when they don’t have health insurance.
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Apple tells you up front how much a repair is going to cost, and if you don’t have extended warranty coverage and you’re unwilling or unable to pay that, the repair just doesn’t get made.
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Emergency rooms provide treatment up front, and if those patients don’t have health insurance and can’t pay after the fact for that care then those costs are passed on to everyone else.
I rarely go to an emergency room. When I do, I pay the bill. Much cheaper than insurance. Sure, my bill for emergency room care forces me to pay for those who are treated but can’t pay. Once again, buying insurance is paying for peace-of-mind, an individual decision.
If one has at least $500k set aside for cancer, heart attack, stroke, collision with uninsured drunk driver, or other unpredictable event, then that’s almost reasonable. If not, without health insurance you’re a potential welfare supplicant, and those of us with insurance will be picking up the cost of your treatment.
When I was laid off at 58, I could have done that, but I’d have needed to use that money for my wife’s pre-existing condition, and it would sure have crimped my retirement lifestyle. I managed to find work with companies that provided good insurance. Two of those (both ESOPs) basically self insured, using a major insurer to administer the health plan, but paying each year for last years coverage costs plus a fee to the insurance company for management (including profit).
My point is that health insurance is an individual decision based on the need for the peace-of-mind. You can self-insure, you can accept lower pay knowing your employer is paying for you, or you can go directly to an insurance company. But the more we artificially raise the demand for medical services, the more expensive they will become, and involving government bureaucracies will even further increase the hidden costs.
Bob,
You’ve sure have the kid gloves out for the contractors and government staff that built this website.
If IBM had this contract it is probably guaranteed that they’d have failed too, but man you sure as hell would have laid into them.
Bob is smart by having the kid gloves out. No one knows who the guilty parties are yet. There’s a lot we don’t know about this story yet to come out into the light of day. You be glad IBM isn’t involved yet. They would have put more levels of management in this clusterf___k than Carter had pills. I know. I made a 30+ year career cleaning up the cesspool of big IBM projects in the ditch.
One thing’s for sure. If bubba and the hookers at the bar on 14th street cannot not clearly understand the enrollment process when described to them over a drink in five minutes, then the process and the web site are doomed to fail. Simplicity, consistency and dumb are a requirement for IT to succeed. That’s what I told the desperate CMS folks when they called me to help them.
Bob, have you looked at the Australian healthcare system. I’ve been here some 13 years, so I’ve had a chance to get a good look at it. They took a look at the British NHS system and the American insurance-based system, took the good bits from both and rejected the bad bits of both. It’s not perfect, but it seems to work pretty well.
First, it has basic, free or cheap “National Health” cover for everyone. It will look after you in emergencies, but you’ll be on a long waiting list for anything non-urgent. On top of that, for those who want it, there is private cover, which is is heavily regulated to ensure nobody is excluded. You can choose how much cover you want, depending on your circumstances and how much you want to pay. Any exclusions for pre-existing conditions have a limited time period (generally one year), They can’t throw you out if you have a series of expensive problems. You can change provider without losing cover (although there would be a waiting period if the cover is extended). They can’t penalise you when you get older. Whatever age you’re at when you join, you are deemed to remain at that age indefinitely, so long as you retain unbroken cover (with any provider). New immigrants, provided they join up within 3 months, are deemed to be aged 30, whatever their real age is – my father joined in his 70’s.
Obviously this system restricts the profitability of the healthcare providers, but there are plenty of them, so they must be making enough money to make it worth being in the business.
Lastly, anyone on above-average wages who doesn’t get health insurance, pays extra income tax.
As I said, it’s not perfect, but it seems a definite improvement on either the UK or British systems.
Also: if you are an Australian health insurance company with lots of young people on your books you have to pay into a pool, and if you have lots of old people on your books you receive money out of that pool.
So the incentives to avoid old people and only sign up young people aren’t as strong as they otherwise would be.
However, big data is creeping in dangerously: one of the main supermarkets has moved into car insurance after discovering that people who drink milk and eat red meat are better drivers than those buy pasta, rice and alcohol (and particularly those who buy petrol late at night). It’s only a matter of time before they use that sort of information for health insurance. I think this would be permitted by current legislation. https://www.smh.com.au/digital-life/consumer-security/supermarket-spies-big-retail-has-you-in-its-sights-20130914-2trko.html
Something I forgot to add about the Australian system – how they control the cost of medical procedures. Each insurer has a list of “preferred healthcare suppliers”, which their customers are encouraged to use. The insurer set a price which they consider reasonable for each procedure, which (generally) the preferred suppliers stick to. If you get more expensive insurance, then the insurer will probably set a higher “reasonable price”. This may buy you a more comfortable hospital, or a shorter wait, or some other benefit (but, hopefully, the same standard of care). You don’t have to use the “preferred supplier” – you can go anywhere you want, but the insurer only pays up to their set price. If you choose a more expensive one then you pay the difference. For example, a few months ago I needed some dentistry and I paid a bit extra to get a dentist who did the job during my lunch break and fitted better-looking crown. In many cases it’s possible to bargain for the best price between competing doctors or dentists.
The other factor which I believe would have broken the US insurance based system pre-Obamacare is widely available genetic screening. As this becomes widely available and Moore’s law continues to do it’s bit for the cost of it, the asymmetric knowledge issue was going to cause all kinds of grief for the insurers, the insurance mandate saves them.
Bob,
If you have found an alternative I’d be interested to look at it too! I don’t like the ACA in many instances, but I can’t find a viable alternative outside of the complete single payer setups most other western countries have (maybe Clive’s info about Australia would be the exception to the rule?). So I’m generally in favor of the ACA.
I do find it interesting that many of the so called ‘red states’ (and I live in one) who are against expanded medical coverage are all still by-and-large states with ‘must treat’ laws where the hospital has to provide care even if they know you can’t pay. If they are so against funneling money into this problem, why aren’t they out trying to repeal those laws as well?
Mit Romney can’t have his cake and eat it too (i.e. his whole ‘we pick up sick people and take them to the hospital in an ambulance’ discussion), else as a good Christian (and I’m one of those too), he’d have to look at a sick person without insurance and say ‘God must just want you to die today unless you can raise enough money to pay your bill, sorry we don’t provide care for the uninsured.’ And so they stick it to everybody else, including the hospital.
I have real concerns about whether or not this will work, but can it really be worse than what we have today? I pray not!
Well, the Swiss know their insurance…
If you live in Switzerland you will generally have two health insurances.
You must buy Basic insurance if you are working, and if you are not working it gets covered as part of your unemployment insurance. This covers a defined list of treatments and conditions. The insurer for a Basic policy is allowed to ask you your name, address and so on for billing purposes; they can’t ask you anything about your actual health. They can only do community rating.
Then you (optionally) buy your private insurance over the top of this: the insurer can offer an insurance for any kind of condition or treatment (obviously, anything not on the Basic list). They can ask you any question they want to, and make any demands about how you interact with them. One company had a policy where before you went to a doctor you had to phone a triage nurse, which presumably kept their claims cost down.
It’s a vast improvement over the pre-Obamacare system, and arguably slightly better than ACA but the downside is that it is still the second most expensive healthcare system in the developed world (second only to the USA) being beaten easily by all the single-payer systems in every other developed country. To be fair though, even though it is expensive the Swiss do have some of the best health care in the world.
Smart people are many times the source of the problem and not the solution.
The looming problem running through all of this is what the care itself costs. Regardless of access to the care, the wall will be hit somewhere. Down the road in a model where the Gov. gurantees everyone access, we will need to start being very creative and alternative about the way we care for our health or we will all end up paying much higher taxes to finance our current heathcare model. So in the end how we do healthcare insurance won’t matter as much as what the care itself actually cost. When in like a video I saw, a surgery group in the midewest can do a surgery for $7,500 that the local medical center charges $50,000 for (using the same surgeons) you begin to see a picture here. The Dr.s in this video made it very clear that their invoices were detailed and transparent, that local Med Centr. not so much.
Bob I work in insurance business and I think you have over simplified a complex issue (probably due to trying to keep your column at a certain length). Our “health insurance” is now more of a full heath plan. We cover nearly everything and do little to put the consumer in charge of the spending. Bills are paid and the health insurance owner sees little of the actual cost. Utilization of services continues to soar, technologies are invented that may or may not improve outcomes, and we have little incentive to take care of our own health.
Insuring everyone and throwing more money at the problem will solve nothing except bankrupt the country. I agree everyone needs catastrophic coverage but not the way we are trying to do it. My solution? Health savings accounts and open competition amongst providers. For those that cannot afford an account, subsidies to give them basic care.
On the mess that is healthcare.gov, I can’t disagree with you more. The amount of money spent on that project is insane for the results. Yes large IT projects fail at an alarming rate. That doesn’t make it right.
Dave,
Interesting thoughts. What would be the difference between your catastrophic plan and that ones that are being offered under the ACA exchanges?
Michael
Dave,
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You are exactly right. A catastrophic plan would be one with a really high deductible like $5K or $10K and everything is paid after that at 100%. It’s only for the big stuff like surgery, cancer, car accidents, etc. If you then had a health savings account that didn’t expire each year, you can pay out of pocket for all of your preventive care and for small things. You’d be paying cash and a lot of providers will give you a cash discount not much more than a typical $35 copay. Over time when you’re healthy you’d accrue a good nest egg to cover your huge deductible and even if you haven’t been able to accrue enough, $5K or $10K isn’t enough to bankrupt a person.
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The other improvements I’d recommend are to allow the sale of insurance across the state lines to increase competition, allow more medical schools to be opened to increase competition between doctors and prevent businesses from providing group insurance. All insurance should be individual and the whole state should be the group. Prevent being denied for pre-existing conditions. If your whole state is your group, then they should be able to cover people with pre-existing conditions much like large companies can.
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The only way to bring down health care costs is to put individual consumers back in charge of their own health care. That’s the problem we have now. Individuals aren’t clients anymore. Insurance companies are the clients of doctors and hospitals and companies are the clients of the insurance companies. That’s why the whole system is so screwed up. If we were in charge of paying the doctor, we could be more savvy shoppers and doctors would be more about service and competing with their competitors then everyone would win.
To add…
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Check out this John Stossel report.
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https://www.youtube.com/watch?v=kf3MtjMBWx4 (This is part 1 of 5. Watch them all)
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This is the part where Whole Foods decided to do something similar to this for their company.
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https://www.youtube.com/watch?v=sj_LGM8aiwY
Exactly right. Getting employers out of the health insurance business is one of the best things that could be done to solve the “healthcare crisis”. Making everyone buy health insurance themselves would solve the “portability” problem right off the bat. Getting employers out of the health insurance business would save them a lot of money and enable them to focus all their resources on their core business(es). And as you said, spending their own money on health care via HSAs would encourage people to shop around for the best combination of price and healthcare quality, thus driving costs down by introducing competition among healthcare providers for those consumer dollars, just like every other business. Obamacare does nothing to drive healthcare costs down. All it does is drive costs up for everyone, either by forcing insurance plans to cover things that many people don’t want or need (birth-control and maternity coverage for post-menopausal women, for example) or by subsidizing premiums for lower-income people (and we all know where the money for those subsidies comes from) or by increasing the burden on providers by adding tens of thousands of new medical billing codes that providers will be required to use.
A true story: A few years ago my friend needed a mammogram, which wasn’t covered by her individual insurance policy. None of the half-dozen or so providers she called could (or would) quote her a price for the service. They just aren’t equipped to deal with anything other than health-insurance companies, with whom they’ve agreed on charges for the various types of procedures and services they provide. How can that possibly introduce competition into the healthcare marketplace when consumers can’t even shop around for the best price?
It’s wrong for a government to require that hospital emergency rooms take care of all customers regardless of their ability to pay. The hospitals then are forced to pass these unreimbursed costs on to the paying patients. The government that mandates this entitlement should be paying for it, not the patients. Most sick people already have to pay for their own hospital care. So to impose the additional costs of this government entitlement program onto them is outrageous. This is like kicking people when they are already down.
WTF? Mandated emergency care being paid for by the other customers when “the government” should be paying for the mandates? From whom do you think “the government” gets its money?
The government gets its money from taxpayers (and the Federal Reserve), not from sick people. Taxpayers (and the Federal Reserve) have a far better ability to pay for government entitlement programs than sick people.
What? Sick people pay taxes.
Let’s say that in a typical year 100 thousand people out of 1 million taxpayers in a particular area will get sick enough to go to a hospital. Perhaps 90 thousand patients are billed both for their care and for the entitlement program (the non payers who use the emergency room facilities). What is fair, to have only the 90 thousand patients pay for the government entitlement, or to have the 1 million taxpayers pay for the government entitlement? I vote for the taxpayers.
I’ve worked for 15 years in health insurance IT. I know the business from the inside. From the comments so far, there is a lot of confusion about how healthcare and health insurance work in the US.
First, there is no free market in US healthcare because there is too little cost transparency. Do you know what healthcare costs? No. So how can there be a free market? Those who provide healthcare have no incentive to share cost information and complain bitterly when health insurance companies pursue transparency in the name of consumer education. “Consumer driven” health care is all the rage in the industry. But not everyone is on board.
Regarding insurance for small employers, those with a few dozen employees, this market is heavily regulated by the states. Insurance premiums are approved by the state reglulators. Insurers are allowed to adjust premiums up or down within limits based on risk, calculated from prior healthcare claims. Premiums are high in this market because the risk pool is small and administration is costly.
Very large employers (with very few exceptions) choose to self insure. This means they pay for their employees healthcare. This is done through a health insurance payor to simplify administration, one check each month instead of dozens. But more importantly the employer can take advantage of the much lower costs negotiated by the insurance company. No one but the uninsured pays retail.
Which brings me to my final point about cost which is the root of the problem with US healthcare. Our healthcare costs more than any country in the world, but our outcomes are by many measures worse than many.
One cost driver that troubles me is consolidation in provider systems. Hospitals and provider organizations are joining so they can demand higher fees. Insurance companies need doctors and hospitals in their network to attract customers and doctors need insurance companies to funnel patients to their clinics. With consolidation, the insurance companies lose leverage in contract negotiation and costs climb faster.
Unless the US can bring transparency to healthcare costs and create real competition, there will never be a free market. Costs will continue to skyrocket. Soon we will spend 25% of GDP on healthcare. And the trend shows no sign of slowing.
To bring this back to IT, the business is incredibly complex and highly regulated. And the players are risk averse, slow to adopt new technology. Both the government and insurers are unused to dealing with consumers. With that, it’s no surprise to me that the ACA implantation has gone poorly.
John,
I 100% agree on the cost transparency thing. Some of the recent discussions on the varying price of a simple bag of saline are a good case in point (the price CHARGED for a bag of saline that costs 25 cents to make varies wildly from $15 to over $300!).
I still don’t get the whole ‘self insurance’ bit however, so maybe you can expound and educate? Maybe what you mean by that is they ‘buy down the risk pool’? I’ve worked for 4 major employers (1 of which was the Federal Government) and I’ve yet to see anyone who was self-insured in this area out of any of the major defense contractors, etc. etc. so maybe I’m missing something? My employers have all done ‘cost sharing’ of my premium, and honestly for a family of 3 my monthly premiums have not been that far off of what I’m seeing the exchange pre-employer cost sharing (within $100 for so) (I’ve had BC/BS, Cigna, and now UHC).
Michael
Part of the ‘self-insurance’ confusion: underwriting and administration are available as separate services. My employer contracts with Humana, so when we go to the doctor, it looks like Humana is paying the bills. It’s only through a separate avanue that I happen to know that the bills eventually get paid by my company. John mentioned this in his post, talking about ‘health insurance payors’.
We can still have a viable health insurance industry that makes a profit and benefits large swaths of the population even in the presence of big data. The key thing is asymmetry of risk tolerance. For simplicity, let’s say I am an average shmo with average income and savings. And, there is a zillionaire I happen to know. We both have perfect information about my current health and future health care trajectory. There’s a tiny probability that I will get hit by a car or otherwise need big-bucks health care. Say it’s 1/1,000,000 and if I lose, the health bill will be $1,000,000. So, a $1.00 bet would be even money. However, if I have to pay $1,000,000 out of pocket I’m hosed. Whereas my zillionaire friend would view a $1,000,000 check as an inconvenience. Different levels of risk tolerance. So, we could both be happy if I paid my friend $5.00 in exchange for a guarantee from him that he would cover my $1,000,000 bill if I ever needed it. He would be making a 400% profit relative to the expected outcome. And I would be protecting myself from catastrophic harm. For this to make sense, of course, the zillionaire can’t be allowed to welch on the deal if I do get hit by the bus and need his dough. So, popping out of the metaphor, members of the public should be able to buy as much or as little insurance as they care to, and cover themselves through death if they care to. The probability distribution of likely outcomes and associated costs is something the person and the insurance company agrees on, and the win-win is due to the asymmetry of risk tolerance between me and the insurance company. But, there have to be ironclad rules for forcing the insurance companies to keep their end of the bargain in every case. Including things like transferring the policy to a pool or even the government if the insurance company goes out of business etc. But, the other side of the coin is that the consumer can’t expect to sign up for a policy that is at a price point that essentially guarantees that the insurance company will get hosed. You can’t buy something with an expected value of $1.00 for 10 cents. In those cases, I think the government should create health care of last resort, sorta like public schooling or the VA system on steroids. Anyone that wants to can walk in to a government-run health care facility that will provide everything. Just crappy service, DMV-type employees, long waits, smelly waiting rooms, typical government hassle, etc.
Is paying off someone who shouldn’t be hassling me in the first place the only economic primitive left?
[…] ← How Big Data is destroying the U.S. healthcare system […]
Well, I’m in South Korea right now. South Korea, Japan and Taiwan all have the same basic system. Taiwan’s is the most recent incarnation of a national health insurance system anywhere (setting aside Obamacare and Romney Care). The PBS Frontline documentary covered both Japan’s and Taiwan’s systems in their documentaries titled “Sick Around the World”. In that documentary they looked at 4 baseline national approaches to health care insurance and compared the various trade offs.
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They pointed out Japan’s as being the best overall, and that in the early/mid 1990s, Taiwan took that model, after doing their own best of breed studies, and then re-engineered it to an improvement on Japans. Both Korea and Japan have lots of private insurance companies. Taiwan rationalized the approach by creating one national health insurance company (monopoly) and managed to realize some additional efficiencies by doing that, so the report said.
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In essence, in these systems, the insurance companies operate like Banks.
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You make a deposit into the system when you pay your monthly premium.
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The withdrawals are made by the health care providers.
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The insurance company has no say in whether you, through your healthcare provider, can withdraw money from them. And, why should they? Can you imagine if a bank said: “Tell us why you need to withdraw money”, and you said “Because I have skin cancer lesion I need removed”, and they said, “I’m sorry, you can’t have the money, its a pre-existing condition, and we told you when you deposited money with us, that we wouldn’t let you withdraw money for that.”
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So the insurance companies here are like banks. You pay your premium, and they live off the juice they generate through investments. When you go to the Doctor, you give the billing clerk your health insurance card, and the payment is processed against a pre-existing schedule of payments for procedures. Prices are set by a commission with representatives from health care providers on the one hand bargaining with health care insurance companies on the other, with the government in the role of mediator.
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I actually think our system could evolve into something like this. Once Obamacare is up and running, the only thing missing, really, is the commission that sets the prices.
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A subsequent step might be to set up a central processing service to handle all the claims flowing from the healthcare providers against the deposits sitting in the insurance companies.
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A subsequent step beyond that might be to orchestrate a merger between all the health insurance companies, al a Taiwan. But that might not be efficacious: Taiwan is a small country about half the size of Indiana (with a population more like Texas).
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In America last fall, I paid $250 a month and my employer paid $250 a month, but really that was my money they paid because I was a contract IS worker – so I was paying $500 a month. In Korea, my health insurance cost me $42 a month paid by me, and the same by my employer. From what I’ve been hearing, that’s in the ball park of some of the amounts people are being quoted on the various exchanges. And the American insurance might be a better product as there is no cap to benefits. In Korea, catastrophic events like prolonged cancer treatment aren’t covered (but you can buy insurance for that for around $30 a month). So, basically I’m insured for $85 a month, plus $30 if I want stronger coverage.
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The tick is Taiwan’s per person insurance is vastly cheaper still. I seem to recall Frontline saying that insurance cost are $23 per person per month there.
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Hopefully, we’ll get past this current episode. And soon, all people will be able to buy health insurance at reasonable, affordable prices. The release in purchasing power from reduced insurance cost could finally be the event that increased people’s purchasing power, and aggregate demand in the overall economy, ending the jobs depression once and for all.
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I don’t quite understand the instinct of those that want to deny people affordable health insurance. I think the nation would be better off if insurance wasn’t a part of employment. My father was a born inventor and tinkerer, but he worked for a big fortune 500 company to please my mom and to provide insurance and other benefits to our family. In the future, people who want to take a risk, and go off on their own, will be able to do so, and that’s a great thing.
“I don’t get all these people who want to deny all these people health insurance”
I don’t get what vapid marketeers like yourself gain from feeding 11 million people to the insurance industry as acceptable collateral damage. Obots are all up in this debate, and we on the real left, not the bourgeois liberals, will be here to call you out. Take your campaign pitch elsewhere, and yes, it is a campaign when you spend almost no effort on substance and almost all concern on PR.
An offered observation.
Working with other agencies; especially across the boundaries of fed/state/local can be littered with artificial road blocks. When working on a project just within DOT (fed/state) we had protracted negotiations about accessing their data. TX eventually totally refused and instead offered to “normalize” their data and do periodic dumps that we could then download. It was a way for them to block “access” and spoon feed us what they wanted us to see.
That was just bridge inspection data; health data that is covered from privacy laws.
I could easily see a project team running into these hurdles early and deciding that it was easier and quicker to building from bedrock than fight those battles with uncertain outcomes.
“That was just bridge inspection data; NOT health data that is covered UNDER privacy laws.”
For giggles and stuff Saturday morning I logged onto Healthcare.gov to set up an account. After about 6 or so very basic questions, such as state of residence, type of insurance needed, a wee bit of family history as in size and a few other questions that I have since forgotten, walla !!!~ I had 26 plans to chose from. Not bad at all.
Since I rarely watch Fox news or MSNBC I am not sure which station would call me a fraud or call me a tech smart American consumer. Not that it matters. Just wonder why all the fighting about providing healthcare to millions of people who need it.
Congrats! I think part of the problem is all the agencies needed to check to see if you are covered by other programs and/or to prove who you are. I wonder if we’ll ever get to the actual, technical, bottom of the problems.
They have also enabled “shopping” which doesn’t require ID or income verification – a design decision that they backed away from just in the last couple of weeks.
Don’t I know you from somewhere? https://www.correntewire.com/must_read_on_fail_of_obamacare_pr_machine_in_week_one
When billions of dollars are at stake, *always* expect shills, because they’re cheaper than losing the game.
D.Lamar, why are you running interference for the entitlement mentality of the insurance industry and blocking Healthcare for *All* (not just whoever the Democratic Party needs to buy) by flogging your weak sauce here? Why have you decided to stand behind a sick morality that establishes ANY right whatsoever for organizations that have negative social value, rather than revoking their right to exist, selling them off as scrap and using the money to provide health *CARE* for people rather than a twice-yearly chit that obligates nobody to anything they don’t already want to do except individuals?
As demonstrated by shills like this one, Obamacare is a *political* campaign, and like any political campaign, its purpose is to sell people to a brand. The 11 million people who BY DESIGN will not be covered are grist for Wall Street as far as people like you are concerned. Your type is not welcome in civiclized society.
D. Lamar,
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Based on your post, I decided to try it again after A LOT of tries in the past. I did get to try and make my login right away where before it put me in a queue (A queue on a website? Are you serious?). I got about as far as I ever got and it gave me an error and told me to call a call center so I got no further than I did before.
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I tried it 3 times just to be sure.
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I’m sure there are lucky people who get through when the stars align but most of us just get errors.
Speaking as a Brit, I find the US medical system quite extraordinary. According to many it is one of the most expensive per head in the world, while the UK’s state funded system is one of the cheapest. And yet many Americans seem to think it is an excellent system, and deride ours as a form of communism.
Six years ago I needed open heart surgery to replace a faulty heart valve. Private medical care is of course available in this country but I have always been happy with the NHS so went with them. I was not told how much the operation would cost but I asked out of interest and was told that if I went private in the UK it would cost around £10,000, of which £5,000 was the cost of the artificial valve itself (which is made by a private company). I was also told that in the US the same operation would cost anything up to $100,000.
I was also surprised that I only had to wait about a month for the operation (it was not life-threatening as yet). This was because of the QALY or ‘Quality of Life Year’ system operated by the NHS to allocate resources. The NHS evaluates priority according to the number of years the patient can expect to gain while maintaining a reasonable ‘quality of life’. I was relatively young (mid-50s) and otherwise fit and healthy so was allocated a high number of QALYs. As a result I became higher priority than, for example, an obese 70 year-old smoker with diabetes.
I am of course paying for this through my taxes, but I am not aware that taxes in this country are particularly higher than those in the US – at least not for someone like myself with an income of around $30,000 a year.
Regarding above comment which says cost of private heart valve replacement is £10,000 (~US$16,000), according to https://www.indicure.com/heart-surgery/heart-valve-replacement.htm, in India:
Approximate, all inclusive cost for valve replacement surgery vary between USD 6000 and USD 9500, depending on the valve chosen, facility & city you choose to get the procedure done.
Does that include plane fair to India? Follow up visits?
You’re throwing some babies out with the bath water, here.
One possibility that had gotten some traction before the health insurers institutionalized their rental extraction by force of law was the direct capitation model. As I understand it, one subscribes to medical groups the same way one would join Costco or an ISP: write a check, get extreme member discounts on services up to 100%.
Sadly, the disorder that turns everything into a permanent gold rush and seeks to privatize and extract every bit of the commons and every drop of its value seems to be untreatable.
It’s not called “direct capitation” now, it’s called “concierge medicine”, and it’s popularity is exploding. Doctors are opting out of Medicare and Medicaid, refusing to take insurance, and grouping together into Concierge Medical groups. They charge you ~ $1500 dollars a year (or thereabouts), which gives you basically unlimited access to their services. It’s a great example of the free market trying to get traction in an industry that has almost been completely crippled by government interference over the last 45 years.
Bob, let’s pretend it’s still 2006 or so and rewrite one of your paragraphs as follows:
“I’d especially keep in mind that the people who are most upset about the chaos in Iraq are those who opposed the war in the first place. They are glad the problems are happening — happy to complain. It’s not like they want the war to actually be go well. I’d venture to say that these critics, while demanding specific policy changes, would really be happier if those policy changes didn’t happen. They are hypocrites.”
Would you have agreed with that statement?
You are off topic, Bruce, but I’ll answer anyway: I wouldn’t have written that in 2006.
My point is that there’s nothing hypocritical about saying, “see, I told you so”, which is what Obamacare opponents who are complaining about the disaster with the web site are doing.
> U.S. health insurance company profits soared but we also have millions of uninsured families as a result.
This misunderstands how health insurance companies make profits. Its not from denying claims while raking in payments; rather the bulk of health insurance profits come from “claims repricing”.
Most everyone knows that hospitals bill, for example, $1000 then insurance companies “negotiate” and pay only $100, “saving” $900. However, what most people don’t know is that the insurance companies back-charge the policy holders up to 35% of the “savings” negotiated on fictitious prices (“claims repricing”).
And why do hospitals artificially bill for $1000 then accept $100? Because: 1) they claim that $900 difference as an accounting “loss” to maintain their fiction of being non-profit organizations; 2) the federal govt rebates them a percentage of that “loss”.
https://www.youtube.com/watch?v=dRn9ySc-RDM#t=6m25s
Yes and the poor folk without insurance get charged $1000 as well. But they don’t have the same barganing power as the insurance company and so end up paying the full amount, or at least siginificantly more than 10%.
But if your REALLY poor then the Hospitial will OH So Generously cut your bill down to $250 and give you a payment plan. And claim that as charitable deduction.
Well as a Brit who has lived in the US for most of the last 30 years and whose immediately family deals with the health care systems in 5 countries (4 European), and who is familiar with the health system of half a dozen other countries,I’ve learned that all the complaining about the US system by Americans boils down mostly to a bunch of noisy middle class people wanting someone else to pay for their healthcare. Nothing else. Most of the stats quoted by the critics turn out to be little more than political posturing with little basis in the reality of how the (very complex) US system actually works.
All the problems I’ve seen over the years lead directly back to US government policies – tax policy that ties health insurance to jobs, the utterly insane Medicare and Medicaid systems, all the government regs that completely subvert any sort of sane pricing mechanism. The only system that would work in the US is the Dutch model. But as this would involve most of the middle class moaners who vote Dem actually paying the true cost of their health insurance (but a hell of a lot cheaper than the current system) you will not see that option discussed any time soon.
As to the Brit above who does not know how much the worst health care system in the western world, the NHS, actually cost him in tax. Its around $400/$500 a month. That $170 billion has to come from somewhere. He’d be paying a lot less, and getting a far better health system, if the UK moved to a Dutch or Swiss style system. There is a very good reason why noone else uses the NHS model – it is terrible.
“I’d especially keep in mind that the people who are most upset about site performance issues are those who oppose its very existence. They are glad the problems are happening — happy to complain. … They are hypocrites.”
Boy, have you missed the boat on this one. People are “happy” to complain not because they are hypocrites, but because what they are really complaining about is the government taking over a private sector function, and making a muck of it in the process. The ACA is but an instance of the real problem — the arrogance of central planning.
Nothing hypocritical complaining about that.
Actually I think you just proved his point.
If your “hero” thinks that the use Big Data by private insurance companies is the problem, then I’m sorry, he’s an idiot because it pales in comparison to the real problem: Big Government.
The institution that is responsible for more denial of coverage than all others is Medicare. Furthermore, Medicare has done more to divorce health care prices from the actual cost to provide health services than any other.
The fix for one bloated, corrupt, inefficient government program can never be another bigger bloated, corrupt, inefficient government program.
Obama and his Gang That Couldn’t Shoot Straight will eventually get the website functioning. But Obamacare will still be a flawed law that will only serve to strip individual liberties and undermine the economy by drawing the country deeper into debt.
“Some might argue that the free market will eventually solve this particular Big Data problem. How? On the basis of pure economic forces I don’t see it happening. If I’m wrong, please explain.
“Tell us all in detail how this will work.”
If you want a concrete example, take a look at the wildly successful Surgery Center of Oklahoma (https://www.surgerycenterok.com/) that uses transparent pricing and has striped out layers of unnecessary bureaucracy to keep costs low. This is what a real free medical market could look like.
Cringley the socialist economist is dutifully trying to help out his president, but what X doesn’t apparently realize is that Obama has no interest in the ACA as it is just a step to single payer. If he cared at all he would have made sure this rollout wasn’t a complete debacle. Obama has lied 100 ways about this to the public, from ‘you can keep your plan’ to ‘you will save $2500 a year’ to ‘its not a tax’. Cringley, do you care about such blatant dishonesty?
Second, Obama has never run a single thing in his entire life, except a campaign, why would you expect him to be capable of implementing something so complex? He has no experience doing anything.
Thank you for stating the obvious. Cringely is a Socialist. He ignores the problems with Dear Leader. To him 0bama is just another Democrat. Nevermind he’s trying to crush Western culture which has made man more free than any other form of government in the history of mankind. Cringely needs to read Victor Davis Hanson.
“To him Obama is just another Democrat.” You’re implying he’s worse than that. But others who support the principles of socialism and government protectionism may feel he is “better” than that since he could not do anything without their support. People need to realize that that they only have 3 choices in any election: Democratic, Republican, or abstaining. We should choose a philosophy and vote accordingly since we are actually choosing a team rather than individual players.
Uh, doesn’t Obamacare solve this? It’s illegal to deny coverage based on pre-existing conditions, and we get full community rating. Insurance companies now must issue coverage, and the medical loss ratio is fixed, so insurance companies are only allowed to be profitable to a certain degree.
Am I missing some way that insurance companies are allowed to still use Big Data?
If the websites were working, Obama’s problems would be substantially more, as people would realize how much they are now expected to pay. Insurance companies denying care sounds reasonable in theory, but in reality they would end up with no money. Insurance companies are making their money by selling to businesses who are not going to be looking out for best value for their employees.
The idea that you don’t shop for health care prices so a free market wouldn’t work is not reasonable. Do you really know the price on everything you buy, whether it is the best deal? Some people pay close attention to these things, enough to shift the overall market and the price that everyone pays. The same would happen in health care.
Instead, we are left with a situation where you might be taxed if you don’t buy insurance, which is now more expensive, and you can still get insurance after you get sick with no penalty.
It strikes me that this is pretty much the same argument that you’ve made about investment bankers. They’re not doing their jobs any more because they’re trying to only invest in the winners.
The common thread here seems to be that with Big Data, both insurance companies and investment bankers think that they can pick the winners and leave the risk behind.
It rather betrays an arrogance about their Big Data, and unfortunately their errors have far more effects on others than themselves.
I don’t think you’re wrong that insurance is collecting fees unjustly and inefficiently(from a consumer perspective). I think you’re wrong that there is anything bubble-like about it or that it will inevitably stop. Economic rents often persist indefinitely. Insurers collect rents as a sort of high fee forced health savings program. In exchange for this, they save money for you for health and act as a sort of payment intermediary/negotiator with hospitals.(not sure why we need a health negotiator, when we don’t for most other payments…)
For it to be bubble-like it would have to have some positive feedback or exponential growth aspect. In this case, it just grows. some “job creators” profit for doing little to nothing at negative value and the wheels of our health care system keep turning.
When I saw the headline, I thought you were going to write about the other side of big data in health care. Most of my doctors are being forced to put their patient records online. Offices are going crazy trying to juggle records between the “old system” and the “new system”. Patient visits are extended as doctors take longer to put data in the new systems. Who is all this newly accessible data for? Not the doctor — most of mine already had computerized records. Not the patient — I don’t have access to any of this information. Now that I think about it, maybe this isn’t so much the other side of big data, but a major source of the more detailed information that insurance companies want about us.
“Tell us all in detail how this will work.”
1) Repeal all free government health programs – Medicare, Medicaid, etc., except care to those employed by the goverment injured on the job (especially soldiers in combat zones).
2) Drop the requirements that any health service provider, including hospital ER, provide any care to those who can’t pay, or aren’t insured. Of course they may elect to, as charity.
Surprisingly, 90% of the medical industry will not go out of business. Prices will adjust to what most people can afford.
I love a little humor right before bed. Clearly, if you know anything about how the healthcare system functions, these remarks would be just a joke. Oh — you don’t know anything about the healthcare system? My bad.
I’m old enough to have lived in the time when Medicare, Medicaid, and mandated care in emergencies didn’t exist. One of my high school friends was in a car accident, was taken to the nearest hospital with a BONE STICKING OUT OF HIS LEG, and was told that he would have to go somewhere else because he could not pay for the ER treatment. Oh, did I mention that there was no ambulance to take him to the hospital, and friends were driving him in their effing car?
Yeah, I guess I kind of lose my sense of humor when some know-nothing clown not even old enough to have gotten beyond the peach-fuzz stage on his upper lip, starts yakking about how great it would be to go back to those “good old days.” So, sue me.
Obamacare is better than “I don’t care.”
“1) Repeal all free government health programs – Medicare, Medicaid, etc., except care to those employed by the goverment injured on the job (especially soldiers in combat zones).”
Now now, why go all socialist and make such an unreasonable exception? Stay pure, young randian – those soldiers were injured doing something they freely chose to do and deserve the freedom to pay their own way.
Or to put it another way: stop being such a libertarian asshole and grow up.
Chris, don’t feel bad about the reaction to your post. Notice that they can’t refute your conclusion “Surprisingly, 90% of the medical industry will not go out of business. Prices will adjust to what most people can afford.” Of course, by “medical industry” I assume you mean “health care providers” and not the ever-growing bureaucracies built around it.
Hi Bob.
Jaron Lanier is describing rescission. http://en.wikipedia.org/wiki/Rescission#Insurance
Boosts short term profits at the expense of long term viability. Since everyone eventually gets sick, and would therefore be culled, the insurance pool size trends towards zero.
Without the ACA and the individual mandate, insurance companies would go out of business. Maybe sooner than later. This is why insurance companies supported ACA.
ACA was the conservative, insurance company profiteering preserving health insurance reform. In contrast, the progressive plan is Medicare for All (aka universal coverage w/ single payer).
About the future of Big Data in Healthcare…
Insurance is moving to the capitation model to reduce costs. Reward wellness vs disease. Works great. This is where Big Data will shine, to the benefit of patients and tax payers. http://en.wikipedia.org/wiki/Capitation_(healthcare)
Cheers, Jason
PS- I’ve implemented 5 regional healthcare information exchanges. No one working in healthcare IT would be surprised that the ACA rollout was bumpy.
PPS- Blank lines in comments really should have paragraph spacing.
Hi Dennis.
“Who is all this newly accessible data for?”
Insurance companies. It’s part of the transition from ICD-9 to ICD-10. They believe ever greater data gathering will enable better analysis, to enable better care. Sounds great. But like most technotopian views, their belief is faith-based.
More data does not yield more wisdom. Ask any QA/Test pro. Or accountant. Or marketing analyst. Data gathering should be directed by experiment design, not utopian views.
But now that ICD-10 is entrenched, providers will be measured on their data entry skills.
Cheers, Jason
I know it’s off the subject, but I can’t help but comment that US intelligence agencies appear to hold this same technotopian view…
Rupe
Hi Chris.
“Prices will adjust to what most people can afford.”
Please provide one instance where that has been the case. Any where at any time.
As a pragmatist, I base policy choices on existent proofs and hard data. Not the theology of teenage boys crushing on Ayn Rand.
Cheers, Jason
When changing from one employer to another, at age 31, I lost health insurance upon voluntarily leaving my (then) current employer but was required to wait 6 months before being allowed on my new employer’s insurance. I picked up catastrophic health insurance (which was all I felt I needed at the time) for a very nominal price.
There you go – one such example. It was in 1984.
You paid the going rate. Or went without. The epitome of the free market at work. Very cunning.
So Jason, you think that with Obamacare, or any other government based insurance plan, the average medical care consumer will pay LESS that the average going rate? Since insurance always adds the costs of running the insurance plan to the costs of services delivered, insurance always mandates the average consumer to pay more than the average cost. Such trivial macro economics….
Hi Chris.
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What do I think? I think we should base policies on best available data. What I like to call “reality”. Not the wishful thinking of teen fiction authors.
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Please use the googles to find out for yourself. Sample queries are “per capita healthcare costs” and “life expectancy by country”. Which countries have the lowest cost? Lives the longest? Do you see the correlation?
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For extra credit, you could also determine what’s happened to healthcare costs after a mere partial rollout of ACA.
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Cheers, Jason
@Jason. Remember the old USSR thought that the cost of toilet paper was getting too high, so they controlled the price causing people to wait in line for the limited supply. It’s not about controlling the cost so much as reaching a fair balance between the desires of the receivers and providers of health care. The bureaucracy of controlling costs will reduce the quality of care available at the same cost or make the same level of service more expensive for all.
Hi “Cark”.
“Obama has no interest in the ACA as it is just a step to single payer.”
Correct. The long game. The poison pill within ACA is the mandated 85% medical loss ratio. Meaning insurers must payout 85% of premiums towards medical care — vs advertising, yachts, or executive bonuses. The bet is that no insurance company can remain viable with such constraints.
For contrast, Medicare’s MLR is something like 94%. A bargain for tax payers.
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“If he cared at all he would have made sure this rollout wasn’t a complete debacle.”
You clearly don’t work in software or IT.
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“Obama has never run a single thing in his entire life, except a campaign…”
POTUS can defend himself… But Obama’s campaign was a marvel to behold. An information technology powerhouse. Everything from barackobama.com / OFA to the cunning plan to accrue delegates during the primary.
This has been reported on. For instance, The Victory Lab https://www.thevictorylab.com https://www.amazon.com/The-Victory-Lab-Science-Campaigns/dp/030795479X
“He has no experience doing anything.”
Sure.
Cheers, Jason
“Big data” is not the problem — the profit-taking system is the problem. Corruption is a huge problem, with insurance companies and providers illegally gouging money out of the system.
Rick Scott, now governor of FL, was forced to resign from his position as CEO of Columbia/HCA after government audits found more than $350 million in fraudulent charges during his tenure. And that was in 1999, when that sum was huge. The problem has not been alleviated, and one of the ways that the ACA seeks to reduce costs is by more effective “Big Data” management, not less management.
From bankrate.com:
“In a May 2012 report, FBI Special Agent David Welker said, “The United States spends more than $2.5 trillion on health care annually, and rough estimates indicate that anywhere from 3 (percent) to 10 percent of all health care expenditures are attributed to fraud.””
The GAO reported $65 billion — that’s BILLION — in “improper payments” for Medicare services in 2012. That year, the DOJ and FBI recovered $4.5 billion and indicted over 2400 individuals for Medicare fraud.
We have a system which positively encourages dishonesty, because of its complexity. It is relatively easy for practitioners and insurance companies to “game” such a system. Keep in mind that the people doing this are among the most intelligent and highly educated people in the country. They know how to steal. We cannot continue to depend on honesty and personal morality when such huge sums of money are being Hoovered out of the system.
To support what you’re saying…
According to the best auditors, switching to single payer would simplify accounting and thereby reduce fraud.
Healthcare Fraud: Auditing and Detection Guide
http://amzn.com/0470127104
Big Data isn’t the problem Bob. Indian outsourcers who got paid $400 million for a broken system are.
In Japan the govt sets caps on what doctors and hospitals can charge.
Until very recently there was little BIg Data in health and medicine except as it applied to insurance. Now we are seeing big data applied to disease. That is good thing. We are also seeing big data being harnessed in the mobile market and used by patients that is needed change in healthcare. Remember just 4 years ago the adoption rate of computer technology in the doctors office was 20 years behind the business sector. Can you imagine your daily work flow without computers? Frightening isn’t it?
[…] Obamacare based on a growing obstacle to purchasing health insurance. The argument seems to be that big data has allowed the underwriters to hyperspecifically target to deny or price out individuals a… and that this rise in the effectiveness of underwriting has led to trouble getting health […]
I think the problem is that a lot of young people don’t think they need health insurance because they think “that is for sick people who refuse to take care of themselves”. This is a blatant fallacy and the reason it is so appealing is that healthcare in the US is actually “too” successful so people think not needing healthcare if you keep fit or being able to pay cash for an rare doctor visit, or a single annual checkup if you are a female, is the normal state of affairs. We have all but eliminated those “minor” childhood diseases that routinely killed children or permanently weakened them, like whooping cough, polio, measles, rubella (german measles), mumps, and others. We have nearly eliminated typhoid fever, scarlet fever, TB, cholera, and the rest by modern medical knowledge. We have eliminated infections as a major killer of young and middle aged adults. We have found expensive ways to allow diabetics, heart patients, COPD, asthmatics, and others with chronic health condition not only survive, they are actually productive members of society. It is not like you can look at a crowd and automatically know who has a chronic condition. It is even worse that people point to fat people and assume that these fat people are the only ones having chronic conditions. If you tell them that even healthy people have chronic conditions they assume that those people were “unlucky” and that it is a rare thing to happen.
Add to that the “baby boom” generation is now close to retirement age, just when parts of our bodies start to malfunction or fail due to age and environment requiring much more from our healthcare system. The risk for Type 2 diabetes, cancer, heart disease, COPD, and other conditions increase greatly. Also accidents become tougher to recover from requiring longer stays in very expensive places like hospitals, physical rehab centers, and the like. The need for healthcare is skyrocketing but few young people know anything about this except that their parents now need a prescription or two.
The Obama Administration should have just called it the Healthcare.gov BETA, just like Google does. This would have given them the live traffic they need to debug things, and would have taken some of the heat off.
Health care will just make the same mistakes as Microsoft… that is, Price itself out of the market.
Everyone wants to be an Apple,everyone wants to be a Walmart (successful).. no one wants to deal with the Public one customer at a time.. that is how companies eventually drive themselves out of business. “this time its different.. I’m special.. companies aren’t people no matter how they see themselves.. but they make the same mistakes”
For the poor or uninsured individual, or the masses.. healthcare will “create” a startup community of “StartUps” of alternative care, be it “Healthcare clubs” or “Online self serve medicine” or Community wisdom in Forums. Primacare or strictly “for profit” emergency care centers.. similar to Veternarians for people are an example. Medical tourism is another.
It may not be as safe or “regulated” but it will cost less and be adopted more and more.. Doctors with shrinking profits and smaller groups of clients who can “afford to pay” will do their own kinds of Startups.. their own exclusive healthcare clubs… kind of like haircare salons.
Medicine and healthcare is a business like any other.. its got a rather inflated ego right now, and an aura of
“Quality and Professionalism” not seen since the Dotcom era or the Housing bubble.. but in the end its a service, like any other.. and will have its ups and downs.. the market will simply not bare hand over fist profits forever.. iPhones will be Upgrading Siri with MRI and Medical Doctor apps based on Watson before long. Either way it will drive innovation.
Under ObamaCare, the incentive is to not buy health insurance, as you can always buy it after you get sick, at no additional cost.
If they display this on the healthcare.gov website as the first thing you see “No need to buy health insurance now, as you can always buy it after you get sick, at no additional cost.” it would solve the website problem over night.
This is not directed at any one person, it’s a rebuttal to a proposal mentioned more than once here and widely elsewhere.
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Oh yes, we must eradicate all health insurance (including Medicare/Medicaid) so that fee-for-service is paid by the consumer (i.e. patient) and therefore prices will naturally fall to an affordable level. Eradicate must-treat regardless of ability to pay laws. Brilliant. (Yes, sarcasm.)
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Think about the comment earlier from the guy with a friend with a broken leg, bone sticking out through the skin, who was told “Go somewhere else if you can’t pay.” Think about being possibly concussed due to a head injury. Think about enduring 48 hours of uncontrollable vomiting and diarrhea.
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In any of these situations, y’all advocate the suffering person should research medical providers and services, balancing reviews of quality of care, licensing credentials, and fees, before selecting a few to contact to inquire as to their availability? You canNOT be serious.
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In what shape would YOUR brain be in, considering the pain, inability to focus your eyes, or dehydration/starvation? I’ll give you a hint: People cannot think properly when they are in pain, scared out of their wits, or ill.
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People also generally don’t have the expertise to know WHAT all is wrong, or what they need, and cannot begin to research and price all of the available options for these things they don’t know! Yes, the broken leg is obviously broken, but how severely? The head injury needs attention, but is it a mild concussion, or is there possible brain bleeding? The vomiting/diarrhea can be stopped with an injection, if you recall correctly, but what on earth is causing it? For all three scenarios ….. Which tests are going to be needed, how much do they cost, where do you have to go to get them?
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It’s tough enough when your brain doesn’t work to just get to a doctor’s office, lab, or emergency room. Hell, some people can’t even manage to accomplish that much at the time of crisis (this is the reason we have ambulances). This is not an overstatement, folks: When people are in pain or ill, their brains simply can’t perform logical functions. Add a healthy dose of panic for people whose moment of crisis is unrelated to a chronic condition (I.e. they have no bloody clue what is wrong with them), and they are reduced to (best-case) a 12-year-old child’s cognitive ability.
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Y’all seriously think that adding to injured/ill people the exponentially more difficult task of, without even knowing what all they actually medically need, researching medical providers and services, balancing reviews of quality of care, licensing credentials, and fees before selecting a few is going to create better medical outcomes at less expense?
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Y’all think this is the in toto solution to spiraling US medical costs, insane insurance rates in the private market, health events that bankrupt entire families, people who die from the lack of ability to pay for non-emergent but life-saving treatment, and the shady practices of health care tratement organizations charging three different clients 20%, 60%, and 100% of the retail which is thousands of percent inflated? (I could go on, but I’ve made the point.)
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In most cases, medical care is not an equivalent to a car wash, maid service, or a hair cut. You can’t expect the person who needs the service to do competent due diligence before agree to the contract to provide said service. For checkups, physicals, or routine chronic conditions, these actions would absolutely play a part in a multi-pronged approach to getting a grip on healthcare costs … But we have just GOT to stop blaming the acute patient for the entirety of the mess of our US healthcare system.
I would not go so far as to outlaw insurance, but in the end it always is “fee for service” since there would be no health care providers if they were not paid for their services. But keep in mind no one advocates eliminating “911” in an emergency. People need to recognize when they’re healthy that they need to have a plan for emergencies. If there were no insurance available, that fact, known and discussed publicly, would result in answers as to what to do in an emergency. The problem with turning it over to the government, is that since there is no limit to the costs involved in maintaining and repairing one’s health, the cost will grow until we are all paying a 100% tax rate, essentially slaves of the state, in return for the where-with-all of survival.
Running any insurance company to maximize profits for the shareholders will minimize the benefits to the policyholders. If it is to the benefit of society to see its citizens protected, it must either strictly regulate the insurance industry, or provide the insurance itself. In America, hordes of lawyers and lobbyists line their pockets by guaranteeing neither comes to pass.
“If it is to the benefit of society to see its citizens protected…” The question is who should protect them. In the end citizens protect each other. Health care providers are compensated for their services by those that actually need them and by those that wish to contribute to a “fund” because they made need those services in the future. That’s how the free market works as long as there isn’t too much government meddling.
Hi Ronc.
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Yes, everyone still needs to get paid. The capitation model, which rewards wellness vs treating disease, is the alternative to free for service.
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It’s all about the incentives. Market design doesn’t have to be just some giant Darwinian cage match between belligerents while society numbly accepts the domination of whoever emerges victor.
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Cheers, Jason
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PS- There is no such thing as a free market.
As long as we are talking unrealistic extremes, all I can say is there is no such thing as a controlled market. It’s either a market that balances the desires of receivers and providers of service, or a system that takes care of itself at the expense of those who want to buy and sell services.
Hi Ronc.
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How very cynically Libertarian of you.
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The study of Economics has progressed beyond bludgeons and sharp sticks. Time for you to update your medieval views. Seriously, your obstinate foot dragging is holding every one back.
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For every one else interested in human progress, here’s a taste:
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The Art of Designing Markets
http://kuznets.fas.harvard.edu/~aroth/papers/HBR.ArtOfDesigningMarkets.pdf
http://hbr.org/2007/10/the-art-of-designing-markets/ar/1
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Cheers, Jason
“Cynically Libertarian” I prefer to think of my views as conservative, like the Republican majority that is trying to save taxpayer money. Thanks for the links to the 2007 article. I did not see anything in the discussion of “designing markets” that contradicts basic principles of supply and demand. Facilitating markets is good; distorting them is bad.
Why do so many people blame the health insurance companies and their profits. Count the number of blue cross companies that are not for profit. I can name a few: Blue Shield of California. Blue Shield of Michigan. Let’s not forget the big HMO…. kp.org for Kaiser Permanente. They are all not for profit. Even the for profit companies are regulated such that they can only have so much overhead. They must give back to the members anything over a certain amount. Cringley, stop blaming the insurance companies for being too greedy. Check out the facts.
Why do so many people blame the fire brigades and their profits. Count the number of red helmet brigades that are not for profit. I can name a few: Red Helmet of California. Red Helmet of Michigan. Let’s not forget the big HMO…. augustus.org for Caesar Augustus. They are all not for profit. Even the for profit brigades are regulated such that they can only have so much overhead. They must give back to the members anything over a certain amount. Cringley, stop blaming the fire brigades for being too greedy. Check out the facts.
It’s definitely good for baby boomers. It shouldn’t make a big difference to Gen X. Gen Y is probably the largest group of uninsured, but it doesn’t help them. The only way to keep the system going without them would be if you pushed everyone out of their corp programs. So that might be what you can expect.
I moved to Italy two and a half years ago, and have had some time to experience government managed health care… I also have two teenaged kids, so I am actively involved in the medical system as a result! 🙂
That said, health care over here is a completely different experience. There’s no constant threat of liability, and if you’re hurt or sick, you just go to your doctor and get taken care of. Kinda what “health care” was supposed to be doing in the first place, right?
Now this is not a perfect solution for all Italians. If you don’t want to wait for an appointment to see your doctor, you can also go see a “private doctor” who will treat you outside of the government health system. This costs additional money, and is considered a premium service.
Most importantly, it just works. People need help, they get help. If you can afford to pay extra for quicker appointments then you have that option, and if you want that kind of service, you have to pay for it. Everyone wins.
That said, the real difference here that I can see is the cost of the health care. In the USA, health care is easily an exponential leap over what I am paying over here. This is partly due to insurance and how it has been mis/non-managed for so long, and also due to the medical industry’s insatiable appetite for money. Pharmaceuticals have essentially turned physicians into drug dealers, and it is all about the almighty dollar now.
I know a lot of people are not going to like hearing this – but ultimately the mess Americans are in is due to greed, and little else. We are watching the costs for so many things in our lives go down, except for gasoline and anything to do with the medical industry.
Seriously. Changing how health insurance is managed is not going to fix anything, this is like changing shoes for a wicked case of dandruff. The problem is the costs of health care.
Basically, Cringely and others are upset that insurers are willing to charge healthier people less money. Cringely would rather they pay more than they are likely to be costing, so they can subsidize his own health care.
Really? Why didn’t I know that?
From Victor David Hanson
The Obamacare Ten-Step Self-Help Program
As all the still underappreciated contours of Obamacare become known, and as those who hold employer-provided plans will soon discover their existing “scams” also do not pass ACA muster, the public will begin to understand that Obamacare is another redistributive zero-sum plan to transfer wealth from one segment of the less-deserving population to another more deserving.
Like most other Obama policies, there are the usual footprints and assumptions that accompany the too-clever-by-half redistribution.
One is the idea of fairness, or rather everyone’s indebtedness to the state: those who budgeted for health care, either through individual plans, or obtained at work, got some sort of silent automatic benefit from the state, an advantage usually without much credit due to themselves. In contrast, those without insurance are all assumed to be victims of the system, who either were long ago dropped, or could not afford formal coverage, and were both without recourse to health care (such as walk-in clinics, emergency rooms, federal and state clinics), and were in that position due to someone else or nefarious forces beyond their control. Whiners who complain that their premiums go up are really the selfish who do not wish to pay “a little more” for their less fortunate brethren.
Two, all wise and moral Washington technocrats must rightly step in, divide up the victims from the victors, make the necessary adjustments, and even everything out with a standard plan that fits all on the back end. Government minds know what is best for private employers and the self-employed, despite never working for anyone other than government and never being self-employed.
Three, exemptions from Obamacare are assumed for the noble architects who drew up the plan; given their exalted labors, they deserve to be excused from the ramifications of their own ideology. In some cases, the progressive and sympathetic, in the otherwise dubious private sector, may also have to be given a few exemptions as well.
Four, the now-accustomed tawdry, postmodern presidential lying is the usual necessary means that is always justified by the assumed noble ends. So lies become somewhat untrue or unfortunately not quite completely true in all cases, or true in spirit if not quite 100 percent true in mundane expression.
Five, the opposition is demonized as callous and cruel; skeptics really wanted Obamacare to fail rather than being worried about its effects on fellow Americans.
Six, note the now-normal Orwellian use of language. This time around it goes well beyond the aptly named “affordable” health-care act. Thus existing but to be cancelled plans are linguistically reduced to “scams” and “substandard” and “rip-offs” and therefore deserve to be ended by a federal government far wiser than the rubes who were taken in.
Seven, legislative deception is again omnipresent. Before the election, the goodies that were “free” were front-loaded into the system (e.g., stay on your parents plan until 26, no one gets turned down from preexisting conditions, etc.), either deemed “free,” or properly to be paid by “them” (e.g., the usual suspects: the 1 percent, the greedy, and the didn’t-build-it crowd). Only after the election, and after the acrimony of the bill’s passage, Americans learn that offering more products to more people is usually more expensive. The American public, like the proverbial fish, was seen by Obama as hungry, skeptical, and a bit unaware, and thus had to be first hooked with trinkets and power bait, before being reeled in.
Eight, as usual with Obama, the middle class takes the hit. The noble poor get subsidized care, the rich have the money or clout to navigate around Obamacare, while the non-romantic young and middle class, especially the grasping self-employed, will end up with higher deductibles and premiums for things they rarely use and may not, albeit in their ignorance, want.
Nine, we see the usual Obama techie cool. Kayak, Amazon, etc. are the accustomed hip referents, as if the wired postmodern Obama assures us pre–Silicon Valley dinosaurs that there is always an online solution to pesky old problems like human nature. Thus the cool one-step website . . .
Ten, of course, is the usual Obama disingenuous doubling down. It was not enough to swear that plans were not going to be dropped or prices to rise or doctors to be changed, Obama had to add the emphatic “Period!” after each false promise given ad nauseam at campaign stops.
https://www.nationalreview.com/corner/362919/obamacare-ten-step-self-help-program-victor-davis-hanson
“Given that the broad goal of society is to keep people healthy”
Yeeeeah. That’s not even close to true. Not that I’ve seen.
Echoing some other posted comments, and apologies in advance for my poor articulation here: I’m confused by what the author is confused by. The ACA’s primary purpose is to address exactly this problem. It requires mandatory insurance coverage for EVERYONE, for exactly the reasons outlined by Cringley.
The word “confused” was only used by you. But it’s impossible to guarantee coverage for everyone without either limiting the quality of care or raising taxes/rates to cover the increased cost of care (as it becomes more available and as people vote for more items to be covered).
You misunderstand entirely the economics whereof you opine.
We are, each of us, responsible for our own bills.
(There are needy. So as a humane society we put a floor under that responsibility, The specific terms do not change the fundamental principles of these considerations.)
TRUE insurance is a service, a swap. We prefer to avoid the 1% chance of a $100,000 loss for a $1,000, or even $1,200 sure cost. That service is what actuaries provide, not a fraud to hide redistribution. Alas, in order to hide redistribution, some now call mere dollar-swapping “insurance.” First Social Security and now Obamacare.
That is the fallacy underlying Obamacare. Some seek deliberately to conflate three very different things:
1. Actual provision of medical care.
2. “Lay-away plans” for financing routine expenses. Obama says “you are too stupid to budget for annual checkups, bumps, colds etc., so I, Obama, will reach into your wallet and MAKE you put aside money for that. Not only that, but I, Obama, will make you pay 125% of the costs (medical loss ratios of 80% remember?) after shipping and handling. And not only that, but I will OVERCHARGE some of you so that I, Obama, can SUBSIDIZE others. This is just the old “Christmas Club” scheme of department stores, writ large.
3. True insurance. We take the tolerable certain cost, to avoid the larger ruinous contingency.
Some comments have noted that there is a “true” medical cost, currently only accessible by insurance schemes. Yes. And that is a matter for FTC enforcement.
Regrettably, it is the government itself that created the issue of “chargemasters.” By exploiting monopsony powers (via Medicare and Medicaid), government squeezed the balloon of costs on the public side. No wonder it bulged on the private side. That then creates a “crisis” for government to “solve.”
An analogy for the innumerate: A hippo gets in the bathtub. Water sloshes everywhere. The hippo declares an emergency and nationalizes all the towels.
“A hippo gets in the bathtub. Water sloshes everywhere. The hippo declares an emergency and nationalizes all the towels.” 🙂 Thanks for that great “video metaphor” of taxpayer funded boondoggles.
All the lefties are out in force trying to say “It aint Obama’s fault”………
……what a bucket of carp!
I enjoyed the analogy, too. Thanks for that hippo-sized load of crap. I’m sure you’re happy to have others continue to subsidize emergency room visits for non-critical care, as long as it doesn’t happen in your [insert name of county, city, 1%-er gated community].
However use of the word “opine” really boosted your credibility.
“…I’m sure you’re happy to have others continue to subsidize emergency room visits for non-critical care…” Clearly that’s a waste of “others” resources. But the whole point of opposing AHC and more bureaucracy is to avoid that very problem.
How is it that western European countries have solved the universal healthcare problem and we can’t seem to make any progress. Yes, their systems aren’t perfect, but they are universal and their overall health is better, on average, than ours. A major problem in our system is that everyone expects unlimited amounts of healthcare, regardless of the cost, and they’re not willing to face up to paying for it. This is exacerbated by a medical/industrial complex that creates greater and greater demand for more and more expensive diagnostic devices and treatments. Meanwhile, individuals are not incented to live healthier lifestyles, leading to ever-increasing demand for more healthcare. This vicious cycle, must be broken or we will become a nation where only the rich can afford to participate and the rest of the population will have to do without.
You said “European countries have solved the universal healthcare problem”. If that were true, they could use the same techniques to solve the energy problem, the education problem, the world hunger problem, etc. To the extent that they attempt to control costs they also remove the incentive for medical services and research. The free market automatically creates incentives for progress and services, and since they are expensive, the additional incentive for people to take better care of themselves. People only “expect” something for nothing when the government prints money and uses it to subsidize the services directly or indirectly by subsidizing insurance for services. Governments role should be limited to outlawing false advertising and monopolistic practices and enforcing those laws.
[…] first users of big data. They happily made it available to their actuaries and used the results to deny coverage and set rates for those enrolled in their programs. Most countries in the world collectively […]