Healthcare

Do Republicans have workable ideas to replace Obamacare?

No! No! Absolutely not!

I have spent some time looking at the various ideas from Republicans to replace Obamacare. It didn’t take much time because there isn’t much in the way of ideas and even fewer ideas of any value. Their obsession with Obamacare is clouding their common sense and judgement. 

imageThat’s too bad because a lot can be done to fix Obamacare while at the same time concentrating on fixing the health care system itself.  With all its faults Obamacare did expand coverage, you can’t roll that back. You also can’t turn those without employer-based coverage loose on the insurance market and you can’t turn patients into consumers with gimmicks such as high deductible health plans and HSAs.

Here is some advice for Republican candidates. Stop listening to your ill-informed supposed base and exercise common sense with workable and practical ideas.

11 replies »

  1. You are absolutely wrong when it comes to HDHP/HSA. Effectively used over a lifetime, coupled with an innovative stop loss, getting individuals to care about cost is the only viable alternative to PPACA – republican, democrat or independent. Remember, PPACA changed so much, particularly people’s expectations, that a return to the status quo ante is not possible.

    HDHP/HSA is the only viable option, and only if the coverage is in place from birth to death. It is only when people have money at risk, that they will consider changing their health habits. It is only when they have money at risk, that demand for services, the next drug, etc., is moderated.

    Today, we have medicare and Medicaid and public exchange designs that prompt over utilization – given our failure to control the supply of services (IPAB, NICE, etc.). Once people have access, once they have satisfied any deductible, where they only have a $20 or $30 copay, the question is no longer do I need this, but why not… It is only $x. We try to control supply by limiting provider reimbursements, where providers respond, increasingly, by exiting from the Medicare/Medicaid Provider group that accepts participation. Just try to get a psychiatrist when enrolled in Medicaid.

    Finally, so long as a third party is footing all or most of the bill, you will get the same result you have today – where people will look at this as an entitlement, asserting, as they do today, that they should have the best coverage YOUR money will buy.

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    • Logical, but not practical and ignores the fact health care is not like any other purchase. If you needed major heart surgery or better still a loved one did when will your first priority be cost, shopping around, looking for the biggest discount? Average people already have plenty of incentive to care about costs and it has not had any significant impact except perhaps to put further stress on their finances.

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      • As I mentioned in a prior post, the financial incentive is to get and stay healthy – and to minimize your spend via preventive services (which for many hdhp’s are not subject to the deductible and qualify for 100% coinsurance).

        Once you need major surgery, you are no longer a consumer, but a patient. We shop for providers all the time. Our goal isn’t to find the cheapest, but the provider with the best record of success … So we can at least have a good chance of avoiding infection, re admission, etc. And, if you are otherwise in good health, your chances of success and minimizing complications is better… But just as important, because you have accumulated tens of thousands of dollars in your health savings account, paying the deductible and co insurance comes out of savings, does not trigger debt, and will lower anxiety, and avoid incentives to return to work before recovery is complete.

        Sure, you can say that it doesn’t work for those who are older or who are already in poor health, but, I can confirm that I started in a HDHP/hsa in 2005, I have spent about $25,000, and my wife has spent about $20,000 (both amounts are after reduction for negotiated/contracted fees). We have met our $2,500 family deductible three times, spent an average of $1,200 in the other eight years, but we also have accumulated over $50,000 in hsa assets through contributions (regular and catchup) plus earnings over the past 11 years of saving (starting when I was age 52).

        Preparing for the future has been a top financial priority for us. We live in the same modest home we bought and paid off well over a decade ago. I drive a 10 year old car with 263,000 miles. And we live modestly, some would say frugally (some describe me as so cheap, that I squeak when I walk).

        It not only is practical, for almost all Americans, it is much more practical than paying big bucks for Cadillac coverage. My success with hdhp/HSA’s, for myself and the 35,000 employees and their families for whom I designed coverage was so significant, that my successors at that firm accomplished a full conversion last year.

        My only two regrets are that I did not have access to an hdhp/hsa for the first 34 years of my working life, and that you can’t get a hsa qualifying hdhp once medicare begins.

        Here’s my best offer of proof of success – my kids are in a hdhp/hsa – each of my children have their own hsa and each (ages 31 and 27) have already accumulated > $10,000 and each is on track to accumulate well in excess of $300,000 prior to age 67 or older retirement – assuming they don’t change the statutes and/or regulations – all without spending any more than they would have spent on contributions for a plan with a <= $500 deductible – so far, each usually spends less than $1,000/year on care that is not preventive).

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      • You know you are the exception, right? Most people can’t accumulate that kind of money. Few people invest what they accumulate. Most people can’t pay their medical bills, save in an HSA and save for retirement. Besides all that who needs any incentive not to spend money on health care. The only insurance I want to use less than health insurance is life insurance. But if it comes to getting the best care or paying the least amount, find me one person motivated to the latter.

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      • Sure. Yes. I am the exception.

        But no, it is not because most american’s can’t save for retirement and out of pocket medical. It is because they prefer to spend their modest take home pay on other things and financial priorities. It is why I mention my son and daughter, both in HSA’s, one with annual income of $75,000 a year, one with annual income of about $25,000 a year.

        They don’t save because the government entities (federal, state, local,social security, sales, real estate, school district, medicare and other taxes) leave so little of their wages behind that few have accumulated any savings … Not only in a 401k, but even less so in a HSA.

        That said, 401k assets total in the trillions, even though that design just celebrated 35 years. The HSA is only 10 years old… Expect to see savings, individual account income replacement like the 401k, and increasingly individual account savings like the Health Savings Account continue to increase. But only if enrollment is automatic, the default. Else, the money, what little of it is left after taxes, goes elsewhere.

        Many reject designs because they don’t work for all Americans in the first year or two after enrollment … But I say that, compared to paying employee contributions that are three or four or more times as much, just to lower the deductible from $1,500 to $500, not only makes little sense, but it may well consign individuals to a lifetime of living paycheck to paycheck.

        Give it a fresh look.

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      • Up to a point you certainly have a valid observation about spending. I see it every day too, but with average household income around $52,000 or so I see no way to accomplish all those goals frugal or not.

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      • Even at $52,000 a year, saving is possible, it just doesn’t happen because people have other priorities – cable tv, a new car, vacations, etc. remember, a large part of the funds to save in a health savings account will come from avoiding the cost to buy down the deductible from $1,500 to $500 (or for a family, to buy down from $3,000 to $1,000. So, a single person has to accumulate at least $1,000 a year, a married person $2,000 , just in case they have expense that will require them to satisfy the deductible. Turns out that most people satisfy a “high” deductible only once every few years, so by not buying down the deductible, you accumulate assets in the hsa. For most, akin to pricing deductibles for other insurance. That is, once you have satisfied the deductible, and are in, typically, 80 percent coinsurance, there is little difference between a hdhp and another plan … Except, you are much more likely (if we’ll designed) to have accumulated money in a hsa.

        It DOES work for most workers, I have proved it to myself, and to leadership. People change their habits, and those with significant expense, find the hdhp works the same once the deductible is satisfied.

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      • And are you saying that once the initial impact of the high deductible on premiums is over that thereafter the rate of increase in that plan is significantly less than a more traditional plan?

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      • No. The first year “savings” is a misrepresentation by brokers … All that happens is a reallocation of the spend in the year of conversion.

        The savings (and changes in trend, utilization, and inflation) occur once people change their spending habits and more importantly their health care utilization and habits.

        Utilization changes when people see the value of improving their individual health status – in terms of their quality of life (health and financial). It really does happen.

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    • I cannot shop by cost if I want to. I still have not found a local doctor as a PCP since I moved 16 months ago. When the insurance company pays a claim it is pennies on the dollar so I never know what the true and fair cost is.

      To me, insurance is to cover unexpected cost. The deal with HMOs was to prevent unexpected cost by staying healthy so they covered wellness visits. Putting out $135 for a doctor visit unexpectedly for everyone in family can add up real fast and bust most budgets. With the restrictions came small premiums and really forced me to use it and I for the most part stayed healthy.

      I kind of wish I knew how the old Blue Cross / Blue Shield Major medical plans worked when I was a young man. They must have been costly because I have not heard of that type of plan for a long time but it seems that is what the Medicare Part D or xyz really is. Pay a small cost on every visit and help cover the major hospital stays to prevent bankrupting you. (I could have this wrong, I am still 12 years away from Medicare).

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