Comments on: POLICY: I ♥ Uwe Rheindhardt on “Skin in the game”

By: Alex

Alex — Wed, 22 Mar 2006 21:09:27 +0000

Kaiser is liberal but that is where I was getting my stats from too (the Holohan paper).
I don’t disagree with what you are syaing in the last part, but I think ti affirms that insurance under current structure is indeed a subsidy. I mgith be insuring against risk, but I know for damn sure that I’ll be paying for someone whose “house” is already on fire.
The 80/20 rule gets a lot of discussion here but based on the risk pools I’ve seen, albeit those are limited, it seems that there is a 80/15/5 rule. Instead of pretending to spread risk when it is already known, seems to make more sense to have a national high risk pool that just straight up subsidizes those 5%. But I’m just pulling stuff out of my ass now.

By: lordjeff

lordjeff — Wed, 22 Mar 2006 15:46:37 +0000

I don’t know if Kaiser is considered a liberal think tank or not, but they are where I get most of my numbers from. Medicaid payments per adult(non disabled) enrollee in 2002 was 1782. The average emploey based single coverage insurance policy was 3317. Even if you factor in an 11 percent growth rate, that still only 1987 dollars or a little under 60% of the cost of the average policy.
I’m not adovocating for moving everyone to Medicaid(in its current form), though giving everybody under 200% of FPL the option to buy in to medicaid isn’t a bad idea. Additionally, providers would prefer the Medicaid rate to no payment at all. Also, you have to remember that the complexity of Medicaid is just as big a part of the headache for doctors as the low reimbursement is.
I would also contend that the main reason many people get health insurance is not for the everyday inevitable costs, but for catastrophic cases.
You were paying to ensure that if you became part of that 20 or 5 percent then you would be taken care of. Implicit in your insurance payment is the subsidy of those who have high costs, but that’s the case for all insurance.
I agree that we need to do something about chronic, high costs cases, but that’s exactly my point, HSA’s do nothing about these people except for shift more costs to them, the sick and diseased. None of these high decductible plans do anything to curb costs at the price range that we are talking about. That is my main issue with these plans, they don’t address the real problems of health insurance.

By: Alex

Alex — Tue, 21 Mar 2006 16:30:16 +0000

Cost per is closer to 80% and that is after you remove everyone with a disability from the control group and then compare it to the individual market. Also, do you think low reimbursement rates might have something to do with lower spending? Move everyone to Medicaid and then nobody can see a doctor because they won’t see Medicaid patients at those rates. It is happening all over the country and every medical sosciety complains about it incessantly.
HSAs reflect insurance better because of the deductible and that you are insuring against major financial risks rather than insuring against something you know is going to happen (going to the doctor). I don’t see how you get around Kinsley’s point, though I certainly see how you can disagree with the conclusion he draws from it. I was in a pool with state employee for umpteen years and the same 20% (really 5%) were driving the costs. I’m not paying to insure against my risk at that point, I’m paying to subsidize the cost of care for people we know are sick and going to continue being sick for a long time. It is a subsidy. I may get hurt and have insurance cover me, but that risk is nto what is driving costs up.

By: lordjeff

lordjeff — Tue, 21 Mar 2006 15:47:14 +0000

Your point about Medicaid is HIGHLY debatable. The average amount spent per adult on Medicaid was 60% that spent for the average single coverage plan. I heard that Medicaid pays as little as 74% of what it should pay for many services, but even correcting for that leaves a significant savings. Medicaid doesn’t invest profits and its administraive costs of much cheaper.
How is it a subsidy? Kinsley failed at explaining this, but maybe you can offer up a better explanation. As you know, insurance comes in a variety of forms, high decuctible and otherwise so why do HSA’s reflect insurance better then other plans?

By: Alex

Alex — Tue, 21 Mar 2006 13:35:56 +0000

Medicaid is not cheaper than commercial insurance. It merely offloads the costs on to private insurnace and institutions because the feds and state legislatures adopt reimbursement rates that make it charity care for all intents and purposes. As the proportion of patients on Medicaid grows, providers have a few options: a) stop seeing Medicaid patients b) cost shift to commercial c) bitch about the rates and hope they get raised.
Dividing the country into halves and defining the top 50% as “elite” is idiotic as his point about the war, but most of his points are solid, especially that the debate on this needs to happen. The HSA model really is insurance as insurance and not as health coverage or health financing or however else you want to characterize what we currently do. What we call health insurance is really more accurately described as a susbsidy that we decide to call insurance.

By: John Fembup

John Fembup — Mon, 20 Mar 2006 19:03:34 +0000

I like Uwe because one never quite expects how he illustrates his thinking.
“When I pay that out of the HSA, it will cost me, at most, $600, because if you add up all these taxes that I face at the margin, for every dollar I put into the HSA, it cost me only, at most, $0.60. The gas station attendant, the waitress, the WalMart worker, it cost them around $900 for the same root canal in after-tax dollars.”
Seems to me there is an ethical problem hiding in here as well with graduated income taxes – I know, off topic – I’ll get back on.
When should a given “deductible” expense be more valuable for one taxpayer than the other? Answer – when the imcome, and therefore the tax rate, is higher for one taxpayer than for the other. Is that the result anyone who thinks about tax equity would design into a tax code? I didn’t forget who oversees our tax code. The same people to whom we will entrust the oversight of our bright, shiny-new single-payer health insurance system.
I’m so comforted.

By: Trapier K. Michael

Trapier K. Michael — Mon, 20 Mar 2006 17:05:10 +0000

I am not begruding Prof. Reinhardt his human hat, not his policy hat. I have them too and like them. I’m just saying, I think he’s lost his economist’s hat, which is awkward since his credibility as a policy wonk rests on the being heralded as the nation’s premiere health economist…
http://marketplace.md/community/blogs/hayekmd/archive/2006/03/20/1774.aspx
Trapier K. Michael
http://www.marketplace.md

By: lordjeff

lordjeff — Mon, 20 Mar 2006 16:54:38 +0000

Additionaly, I have been thinking of few healthcare ideas, and I would love to get a bit of constructive criticism on them. This seems like just as good a place as any to get some comments from healthcare professionals.
1) Optional Medicaid buy-in for anyone under 200% of the poverty line. Medicaid is obviously much cheaper then private care. According to Kaiser it costs only 60% as much to provide single coverage as it does to cover a single adult. Let any businesses who want to buy into Medicaid. Yes it would increase the size of government but it would do so optionally. Yes many Doctors and hospitals hate Medicaid, but they hate footing the bill for the uninsuranced even more.Won’t this crowd out private insurers? Perhaps, 29% of folks under 200%FPL have coverage. But you could offer the stipulation that you must have been uninsured for one year, similar to some of the stipulations with Medicaid waivers.
2)Reverse HSA’s. Basically, you would get a partial rebate of your standard health plan premium that could go towards future coverage. The rebate would only be partial so that you’d still be paying into the system for high costs cases. This would put a bit more “skin into the game” without uneccessarily encouraging people to forego needed care.
3) The third idea and possibly the biggest would be similar(but not completely to a plan that brian spelman offered up in the contest. Basically, if a patient chooses a more cost effective treatment, then he and perhaps the doctor would get part of the savings from the cheaper treatment. For instance if you choose the 25 dollar treatment over the 125 treatment, you and the doctor split 25 bucks. The money would be transferred to an HSA and would have a 10 thousand dollar a year limit. Medicaid patients would have a smaller maximum amount, but part of their money could be saved specifically for additonal pay for services. The money could be transferrable to relatives after someone passes away. Initially such a program would have to be very specific as to which cases it offers these savings. For instance, a sure bet would be generic versus name brand drugs.

By: lordjeff

lordjeff — Mon, 20 Mar 2006 15:34:48 +0000

Aren’t you making quite an assumption that HSA’s will drive down costs? The biggest problem with HSA’s is that they do absolutely nothing to combat the high cost cases that account for the vast majority of health costs. Let’s assume that HSA’s become wildly successful and cut costs in half for simple check ups and procedures. That still would only save the health care system something like 10% of costs, because the majority of health care costs would occur past the deductible limit, and thus there is no incentive to curb costs where they really matter. Any savings due to HSA’s also assumes that larger costs won’t occur due to the lack of preventative care that people will forego due to high deductibles as per the RAND study.

By: BlogReader

BlogReader — Mon, 20 Mar 2006 15:20:04 +0000

Reinhardt makes the mistake of thinking that HSAs happen in a vacuum — that companies are going to switch over to using them and somehow pocket the difference, or to pay for another $4k skiing trip.
In the case of the waitress it is probably a HSA or nothing as mom and pop restaurants can’t afford to offer “real” insurance. Perhaps now they can pool some resources to help employees buy this new tool.
Also Reinhardt completely ignores the financial impact of HSAs on healthcare that should drive costs down. To use a worn out analogy: if there was “oil changing insurance” Jiffy Lubes would be charging $150 for 6 quarts.
Now I’m sure the standard response to this will be “but healthcare is different!” Yeah well every member of a industry with skin in the game thinks that their industry is different and should be protected. I welcome HSAs as for too long there’s been a disconnect between what people get in care and how much it costs.