Posts Tagged ‘Health insurance’

The worst of all possible health care systems

April 29, 2020

Employer Provided Health Insurance Delenda Est by Scott Alexander, a psychiatrist who practices on the West Coast, for his blog, Slate Star Codex

American exceptionalism in medical care

July 22, 2019

Click to enlarge.

I’ve often run versions of this chart on my web log.  It shows that we Americans pay more for medical care than do people of other rich countries, and yet our health is worse, and many of our citizens lack good medical year.  Yet a lot of us are afraid to change.

As a writer for The Economist said:

Republican reluctance to embrace health care, despite the president’s best efforts, is understandable.

On the one hand, America’s health-care system is woefully dysfunctional: the country spends about twice as much on health care as other rich countries but has the highest infant-mortality rate and the lowest life expectancy.  Some 30m people, including 6m non-citizens, remain uninsured.

And yet, though costs remain a major concern—out-of-pocket spending on insurance continues to rise—Americans say they are generally satisfied with their own health care. Eight in ten rate the quality of their care as “good” or “excellent”.  Few are in favour of dramatic reform.

Source: Health spending and life expectancy – The Big Picture

I think many Americans are in the same situation I am.  I have medical insurance that I can afford, providing by a company that I don’t think is going to cheat me.  I don’t know what I’d do if I had to pay my medical bills out of pocket—partly because the insurance company can negotiate lower rates than I would have to pay as an individual.

So it is natural to fear any change, and to be skeptical of anybody who promises to take away what I’ve got and replace it with something else that supposedly is just as good.

So these fears lock me into a system in which I’m at the mercy for for-profit insurance companies whose profitability is based on maximizing what they take in as premiums and minimizing what they pay back as benefits.

In the best of cases, the insurer’s need for profit is added to the medical bill.

T.R. Reid, in The Healing of Americawritten 10 years ago, said one of the reasons why American pay more for medical care and get less than people of other rich countries is the for-profit insurance system.  At the time he wrote, only Switzerland had for-profit insurance companies.

The other reason is that the other countries negotiate drug prices on a national basis, which the U.S. government is forbidden by law to do, and that medical professionals in the U.S. get more than in other countries.  I don’t have any reason to think any of these things has changed in 10 years.

The justification for the high fees of American physicians is that they have to pay off their medical school debt.  Medical education in other advanced countries is free or affordable.  If Americans ever wanted to cap physicians’ fees, we should combine that with some kind of medical debt forgiveness.

Reid said that there are three alternatives to the U.S. system: (1) the Canadian Medicare model, in which health insurance is nationalized, (2) the British National Health model, in which medical care is nationalized and (3) the system in Germany and Japan, in which non-profit organizations, accountable to patients, provide health insurance.

I don’t think it is feasible to create a patient-run cooperative insurance system for scratch, and I don’t think we Americans have the administrative capability of duplicating Britain’s National Health, even if we wanted to.

So that leaves Medicare for All as the path forward.  And it’s not Medicare for All unless we get rid of private insurance and regulate drug prices.


Why a “Public Option” Isn’t Enough by Benjamin Studebaker and Nathan J. Robinson for Current Affairs. The two writers conflate Britain’s National Health with Medicare for All, which is based on the Canadian system, but otherwise an excellent article.

“Medicare for All” vs “Public Option”: the 2020 Field Is Split, Our Survey Shows by Abby Goodnough and Trip Gabriel for The New York Times.  Where the Democratic Presidential candidates stand.

Doug Muder on how health insurance works

March 13, 2017

Poor People Need BETTER Insurance Than the Rest of Us, Not Worse by Doug Muder for The Weekly Sift.

Health care costs and the U.S. middle class

September 2, 2016

Economics professor David Ruccio points out that, since the previous recession, the American middle class has been cutting back on spending—on everything except medical care.

The Affordable Care Act was supposed to not only make medical care more widely available, but to make it affordable.   This hasn’t happened.  I think this is partly due to opposition by Republican governors and congressional representatives, but largely due to flaws in the law itself.

It’s a well-known fact that we Americans pay more for medical care and get less benefit than citizens of any other industrial nation.



How many Americans still lack health insurance?

April 4, 2016



Source: Charles Gaba’s Blog

Hat tip to Avedon’s Sideshow

A blogger named Charles Gaba has figured out that, under Obamacare, slightly over 294 million Americans now have health insurance, but 29 million are still without—about 9 percent of the population.

The striking thing to me is how much work he had to do to come up with a plausible estimate.  I would have thought that the U.S. Department of Health and Human Services  had that figure on a web site somewhere.

I would have thought that, in general, President Obama would do more to ensure careful management of his signature reform, given how complicated it is and given how determined his Republican political enemies are to make it fail.

Click on Charles Gaba’s Blog for a detailed breakdown of the figures and an explanation of how he arrived at them, and a larger, higher-resolution version of the chart.

The fatal flaws of Obamacare

February 17, 2015

obamacare_screw_o_1When the Affordable Care Act was enacted five years ago, I was aware of its flaws, but I thought it represented an advance over what we had before.

Obamacare did give access to health insurance to millions of Americans, including people with pre-existing conditions, who otherwise wouldn’t have been able to get it.   The tradeoff was that it created a captive market for the health insurance companies to provide bad insurance.

My e-mail pen pal Bill Harvey sent me a link to an article by a Dr. John P. Geyman for the International Journal of Health Services which, in my opinion, sums up the problems with Obamacare very well.

  1. Health care “reform” through the ACA was framed and hijacked by corporate stakeholders.
  2.  You can’t contain health care costs by permitting for-profit health care industries to pursue their business “ethic” in a deregulated marketplace.
  3. You can’t reform the delivery system without reforming the financing system.
  4. The private health insurance industry does not offer enough value to be bailed out by the government.
  5.  In order to achieve the most efficient health insurance coverage, we need the largest possible risk pool to spread risks and avoid adverse selection.

Dr. Geyman thinks the answer is a single-payer health system, financed by taxes which covers everyone.  Such a system would be cheaper for most people than a private system because it simplifies administration and subtracts the need for profit.

One reason why such a system wasn’t considered in 2010, in addition to the entrenched power of pharmaceutical and health insurance lobbyists, was that many Americans were satisfied with their existing insurance and didn’t want to risk an unknown system.

Now private insurance has changed for the worse for most people.  Unfortunately, it will be very natural for people to see the inadequacies of Obamacare as an argument against any government health insurance plan at all.


A Five-Year Assessment of the Affordable Care Act: Market Forces Still Trump the Common Good in U.S. Health Care by John P. Geyman for the International Journal of Health Services.   (Hat tip to Bill Harvey)

Paul Krugman’s defense of President Obama

October 15, 2014

I started reading Paul Krugman’s column in the New York Times during the Bush-Cheney administration, and quickly came to respect him for his incisive and fearless criticism of the administration’s policies.  He didn’t have any insider knowledge—just a willingness to look at the facts and state the obvious.

I don’t read his column regularly any more—partly because the New York Times has gone behind a pay wall and I’m not a subscriber.

Paul Krugman

Paul Krugman

Recently he wrote a long article entitled In Defense of Obama for Rolling Stone magazine, which, to me, is an example of how progressives have come to think of peace and prosperity as unattainable ideals.

I think it is worth discussing in some detail, but I first want to mention the way Krugman framed his argument.  He wrote that “the left” did not get all it wanted, like somebody going to a restaurant and not finding everything they like on the menu.

For me, it is not a question of the degree to which you satisfy the desires of “the left” and “the right”.  It is a question of whether the USA can halt its descent into authoritarianism, militarism and oligarchy before it is too late.  Obama, in my opinion, has not done this.  In my opinion, he has not even tried.

I know this language sounds exaggerated.  I don’t think it is and, if you follow this web log, you will see the reasons why I think so.


Now, Krugman on health insurance reform and the Affordable Care Act.

We won’t have the full data on 2014 until next year’s census report, but multiple independent surveys show a sharp drop in the number of Americans without health insurance, probably around 10 million, a number certain to grow greatly over the next two years as more people realize that the program is available and penalties for failure to sign up increase.

Democrat Lady and Her Republican FriendIt’s true that the Affordable Care Act will still leave millions of people in America uninsured. For one thing, it was never intended to cover undocumented immigrants, who are counted in standard measures of the uninsured. Furthermore, millions of low-income Americans will slip into the loophole [Chief Justice John] Roberts created: They were supposed to be covered by a federally funded expansion of Medicaid, but some states are blocking that expansion out of sheer spite. 

obamacare&alternativeFinally, unlike Social Security and Medicare, for which almost everyone is automatically eligible, Obamacare requires beneficiaries to prove their eligibility for Medicaid or choose and then pay for a subsidized private plan. Inevitably, some people will fall through the cracks.

Still, Obamacare means a huge improvement in the quality of life for tens of millions of Americans – not just better care, but greater financial security.  And even those who were already insured have gained both security and freedom, because they now have a guarantee of coverage if they lose or change jobs.

tomTomorrow-20090804What about the costs?  Here, too, the news is better than anyone expected. In 2014, premiums on the insurance policies offered through the Obamacare exchanges were well below those originally projected by the Congressional Budget Office, and the available data indicates a mix of modest increases and actual reductions for 2015 – which is very good in a sector where premiums normally increase five percent or more each year.  More broadly, overall health spending has slowed substantially, with the cost-control features of the ACA probably deserving some of the credit.  [snip]


The U.S. can do a lot better than Obamacare

October 24, 2013

The Affordable Care Act is a bad plan.  It may be a lesser evil than the system we had before, just as the system we had before was better than nothing at all, but it falls short of what Americans have a reasonable right to expect.

Obamacare creates a captive market for the for-profit insurance companies, which in themselves contribute nothing to the availability or quality of medical care.

It is a form of privatization of social insurance, which creates a bad precident—especially ominous in the light of President Obama’s repeated statements about the need to cut Medicare and Social Security.

By design, it does nothing to control some of the main things that make health care so expensive in the United States.  In addition to locking the insurance companies into the system, it allows pharmaceutical companies to charge Americans more than what they charge Canadians and Europeans for identical products.  And it complexifies the needlessly complex existing system.

Instead of providing a universal system, it creates a means-tested system where different people give different levels of health insurance, and some are still outside the system.

While the ACA provides subsidies to low-income citizens who can’t afford health care premiums, these may in the long run turn out to be mere pass-throughs that enable insurance companies to raise their rates, just as the Pell grants to college students eventually become mere pass-throughs to the colleges.

And while it assures insurance to many people who previously were denied it, I seriously question whether either competition or federal regulation will guarantee insurance premiums are affordable. Even if government regulators are serious about keeping insurance affordable, there are many ways for companies to game the system, by providing lower levels of care, asking higher deductibles and simply making it difficult to file claims (I have personal experience with the latter).

I do recognize that Obamacare has helped many people and even saved lives.   I don’t advocate wiping it off the blackboard and going back to the previous system.  But we Americans shouldn’t accept that this is the best we can do.


States block health insurance for millions of poor

October 4, 2013

Double click to enlarge

The New York Times reported that, thanks to the Supreme Court’s Medicaid loophole and the actions of the governments of 26 mostly Southern states, millions of poor people will be excluded from Obamacare.  The article said:

A sweeping national effort to extend health coverage to millions of Americans will leave out two-thirds of the poor blacks and single mothers and more than half of the low-wage workers who do not have insurance, the very kinds of people that the program was intended to help, according to an analysis of census data by The New York Times.

Because they live in states largely controlled by Republicans that have declined to participate in a vast expansion of Medicaid, the medical insurance program for the poor, they are among the eight million Americans who are impoverished, uninsured and ineligible for help.  The federal government will pay for the expansion through 2016 and no less than 90 percent of costs in later years.

Those excluded will be stranded without insurance, stuck between people with slightly higher incomes who will qualify for federal subsidies on the new health exchanges that went live this week, and those who are poor enough to qualify for Medicaid in its current form, which has income ceilings as low as $11 a day in some states.


The 26 states that have rejected the Medicaid expansion are home to about half of the country’s population, but about 68 percent of poor, uninsured blacks and single mothers.  About 60 percent of the country’s uninsured working poor are in those states. Among those excluded are about 435,000 cashiers, 341,000 cooks and 253,000 nurses’ aides.


Barry Ritholtz on The Big Picture provided this map showing the overlap between those who want to block health insurance for poor people and those who want to shut down the government.


Double click to enlarge


The essence of Obamacare

April 26, 2012

Click to view.

I don’t know whether the Affordable Care Act — also known as Obamacare — is a good thing or not.  It could be, but I’m not sure it will be.  But if the mandate that all individuals buy health insurance is declared unconstitutional, then Congress might as well repeal the whole law and start over.

The problem with U.S. health insurance is that we Americans spend more on medical care than the people of any other advanced nation and, in fact, our government spends more than the governments of most nations, and yet we have 47 million people uninsured.

Candidate Barack Obama proposed an alternative, which he called the public option.  The government would set up its own insurance plan which would accept anybody who applied.  The theory was that since (contrary to widespread belief) government systems are so much more efficient than for-profit systems, the public option could still compete even if it had to accept people with pre-existing conditions.  You could choose between a public option where 5 percent or so of premiums went to overhead, as with Medicare and Medicaid, or a for-profit system where more than 30 percent of premiums went to overhead and profit, or you could opt to pay your medical bills yourself (good luck on that!).

In office, President Barack Obama evidently decided that this was not politically feasible.  Instead he supported what became the Affordable Care Act requires everybody to buy health insurance, like it or not, just as state laws require every driver to buy automobile insurance.

For-profit insurance companies have an incentive to spend as little as possible on actual medical care.  The payout to patients is called the “loss ratio.”  The law attempts to get around this by means of regulation.  It requires insurance companies to spend 80 to 85 percent of what they collect in premiums on medical care or improved health.  There are many potential pitfalls in his, including decisions as to what expenses are included in the 80 to 85 percent.  But if this provision really is enforced, the Affordable Care Act could be an improvement over the existing system.

But the new law couldn’t work without the mandate that every individual be required to buy health insurance.  Otherwise the only people in the system would be poor, sick people, and premiums would have to be enormous.

Back in the glory days of Eastman Kodak Co., the Rochester, N.Y., was considered a model for health insurance.  Hillary Clinton came to Rochester to call attention to our good system.  What made it work was that Eastman Kodak Co. allowed its employees to be insured in a community-wide system.  Because Kodak employees were healthy and solvent, that lowered the overall cost of insuring the people of the community.  Later, when Kodak fell on hard times, the company withdrew and set up its own health insurance system.  And now, with the company in bankruptcy proceedings, many of my friends who’ve retired from Kodak are worried about whether they’ll keep their health insurance.  I think it is unrealistic and unfair to saddle private corporations with responsibility for public welfare unrelated to their business.  But that’s another story.

Click on Patient Protection and Affordable Care Act wiki for Wikipedia’s excellent explanation of the provisions of this complicated law.

Click on Medical Loss Ratio: Getting Your Money’s Worth on Health Insurance for an explanation of the Affordable Care Act’s provisions requiring 80 to 85 percent of premiums be used for actual medical and health costs.

Click on Supreme Court and Obamacare for an argument as to why the Affordable Care Act is constitutional.

Click on Obamacare Has Already Transformed U.S. Health Care for Business Week’s analysis of the impact of the Affordable Care Act.

Click on What Mitt Romney Would Do In Place of Obamacare for a speculative article analyzing Governor Romney’s campaign statements.

Click on Why I Do Not Like Providing Health Insurance to My Employees for an argument against employer-provided health insurance.


Health insurance for contraception

March 9, 2012

If it had been up to me to choose a witness to testify on behalf of health insurance for contraception, I would have picked a married woman of modest means who would testify how she and her husband could barely provide for their three children and could not provide for a fourth.

If I had been allowed a second witness, I would have chosen a woman with a disabling hormone imbalance who would testify how she needed the “birth control pills” in order to lead a normal life.

Civil law, canon law, sharia law

February 7, 2012

Bishops of the Roman Catholic Church protest the refusal by the Obama administration to grant an exemption from federal regulations for certain Catholic charitable organizations.

Specifically, they say their conscience does not allow them to include contraceptive services in their employee health insurance plans, even though their non-Catholic employees might want such services.  Catholic churches, schools and other strictly religious institutions are exempt, but Catholic charities that employ both Catholics and non-Catholics and serve both Catholics and non-Catholics are not.

In other words, the bishops believe that they should not be required to obey American civil law when it conflicts with Catholic canon law.  My friend Bill speculated on what an uproar there would be if some Muslim charitable organization wanted an exemption from federal law on the grounds that it conflicted with Muslim sharia law.

Click on U.S. Catholics dismayed by Obama administration ruling and Religious Exemptions and Contraceptive Coverage for more discussion of this issue.

If it were up to me, I would have the federal government give up the effort to regulate private health insurance plans, and instead create a public insurance option.  If there was a public option, somebody who lacked insurance or wasn’t satisfied with their insurance coverage could sign up for the self-financing, non-profit government plan, which would provide all the benefits the government thinks people should have.  The public option would provide a benchmark for private insurance companies.  Either the private insurance insurance companies would provide satisfactory coverage, or people over time would migrate to the public plan.

Will Vermont show the way on health care?

June 20, 2011

Health care reformers now look to the state of Vermont rather than the federal government to lead the way on the way to a universal public health insurance system.

Vermont Gov. Peter Shumlin in May signed into law a bill which commits the state of Vermont to set up a publicly-funded, publicly-administered health insurance system that would cover all 622,000 residents of the state.

More than 5 percent of Vermonters are without health insurance, and another 15 percent are considered under-insured.  Health care costs in Vermont are rising at the rate of 9 percent a year, twice the rate of the state’s economic growth.  Shumlin and other reformers say the new plan will give everyone the coverage they need, and at less cost than the present system.

Under the law, a five-member board will be appointed in October to set up a plan called Green Mountain Care.  The first step will be for Vermont to set up a health insurance exchange to provide a simplified health insurance marketplace as called for under the federal Affordable Care Act.  Starting in 2014, the public would have a choice between the new Green Mountain Care system and at least one private system.  The goal is to go to a single-payer system by 2017.

There are a lot of things yet to be worked out – in particular, how to pay for the system, and how much health care providers will be paid.  The original idea was a payroll tax variously estimated at 12.5 percent or 14 percent, most of it, in theory, paid by the employer.  This is a lot!  While many people pay an even higher percentage of their incomes for private health insurance, that is still a lot of money.

The board’s mandate is to set up a system that will (1) not have a negative effect on Vermont’s economy, (2) have a sustainable system of financing, (3) cost less to administer than the present system, (4) reduce the rate of growth in per-person health care spending, and (5) reimburse health care providers at a sufficient rate that doctors, nurses and other health care workers will not leave the state.

Vermont’s health care reformers think that it actually is feasible to provide better health care at less cost.  One way to do this is by means of preventive care – helping people to stay healthy so they won’t need a lot of medical treatments.  Under the new law, the board will look into capitation, a system of paying health care providers a set amount per patient rather than fee for each service provided.  Under a fee-for-service system, the financial incentive is to maximize visits to clinics and doctor’s offices; under a capitation system, the incentive is to minimize the need for visits.

Another way health care costs would be kept down is that a public system would not have to pay actuaries to determine the individual risk and premium level for each person, nor set aside an amount as profit for the owners.

You might wonder whether this is realistic.  In fact, a number of foreign countries provide more extensive health insurance coverage than in the United States and at less cost through just these methods.