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Thread: Why do Americans pay more for health care?

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    Re: Why do Americans pay more for health care?

    Quote Originally Posted by cpwill View Post
    I actually went out today and got some work on this sort of stuff, let me read it through and I'll digest and see what we got - I haven't forgotten I told you I would see what was out there.
    okedoke, the best piece of research that I found on this subject seemed to come from the work of the University of Chicago economist John Cochrane. Cochrane has worked up a model of "Health-Status-Change" insurance, which guards against dramatic shifts in your premium costs. So, for example, if you were suddenly diagnosed with cancer, and your regular health insurance premiums shot up the next time you renewed your policy, your HSC insurer would be required to make up the difference, either over time or in a lump sum which would be placed into an custodial-HSA-like-account (so that it could grow for you in the meantime) from which you would be free to draw the difference. So your while your premiums would go up, your out of pocket coverage of them wouldn't.

    It seems to act as a kind of reinsurance, except aimed at the individual consumer rather than the insurers. It is quite plausible (and indeed, likely) that insurance agencies will begin to offer this product as an addendum to their current product line - one of the nations largest health insurers, UnitedHealth Group, already does - but if not you would be able to purchase it rather affordably on your own. the number of people who are going to need heart transplants is rather small, and the HSC insurer is only looking at a payout if some kind of permanent (read: would extend into or beyond your next policy renewal, the definition of "permanent" seemed to indicate also that it would include "long term") dramatic shift occurs in your health.

    There are a couple of tangital benefits. Since the reinsurers are now footing the extra premium cost; regular health insurers now have a financial incentive to compete for sick people just as they compete for the healthy ones already (insurance companies don't care where the money comes from - they only care that it comes). It also shifts the "dump" power back from the insurer to the individual. If one's health status get's suddenly worse in the middle of a contract - the insurer is forced by law after all to honor it's contract and pay up; that's that insurance is. If, however, your health status suddenly get's better, then you as a consumer can be easily wooed away by another company with the promise of lower rates - leaving you technically in the net positives once you figure in your HSC payouts. People no longer have to fear losing their insurance - insurers have to fear losing their customers, and will be forced to take competitive steps (perhaps they'll hire talking geckos) to try to convince them to stay.

    For people like you who are already in the situation where you face astronomical costs, Cochrane acknowledges the "importance of fully addressing the transition" to the HSC system. Because you can't really purchase insurance - just prepay healthcare (as insurance is a guard against catastrophic events - and yours has already occurred), then the free insurance market doesn't have a non-prohibitive answer for you. Basically he argues that this is a place for government to step in to subsidize the initial generation of 'high risk' (or however you wish to describe them) plans.

    The last one led me to wonder how politically palatable it might be - would there be a constituency against any government creation and subsidization of healthcare plans, especially given the gearing up to fight Obamacare (which included such a subsidy for nearly everybody). However, it turns out that even the CATO guys are fine with this solution - which they describe as being perhaps market inefficient, but not meant for a large enough percentage of the population to make such a program prohibitively expensive, and still fundamentally equitable. If the CATO dudes are willing to back government subsidization of plans the kind and cost of which you would have to get in that system, then I'm betting you won't see anyone else on the Right argue against it.
    Last edited by cpwill; 05-20-11 at 01:33 PM.

  2. #62
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    Re: Why do Americans pay more for health care?

    Quote Originally Posted by cpwill View Post
    okedoke, the best piece of research that I found on this subject seemed to come from the work of the University of Chicago economist John Cochrane. Cochrane has worked up a model of "Health-Status-Change" insurance, which guards against dramatic shifts in your premium costs. So, for example, if you were suddenly diagnosed with cancer, and your regular health insurance premiums shot up the next time you renewed your policy, your HSC insurer would be required to make up the difference, either over time or in a lump sum which would be placed into an custodial-HSA-like-account (so that it could grow for you in the meantime) from which you would be free to draw the difference. So your while your premiums would go up, your out of pocket coverage of them wouldn't.

    It seems to act as a kind of reinsurance, except aimed at the individual consumer rather than the insurers. It is quite plausible (and indeed, likely) that insurance agencies will begin to offer this product as an addendum to their current product line - one of the nations largest health insurers, UnitedHealth Group, already does - but if not you would be able to purchase it rather affordably on your own. the number of people who are going to need heart transplants is rather small, and the HSC insurer is only looking at a payout if some kind of permanent (read: would extend into or beyond your next policy renewal, the definition of "permanent" seemed to indicate also that it would include "long term") dramatic shift occurs in your health.

    There are a couple of tangital benefits. Since the reinsurers are now footing the extra premium cost; regular health insurers now have a financial incentive to compete for sick people just as they compete for the healthy ones already (insurance companies don't care where the money comes from - they only care that it comes). It also shifts the "dump" power back from the insurer to the individual. If one's health status get's suddenly worse in the middle of a contract - the insurer is forced by law after all to honor it's contract and pay up; that's that insurance is. If, however, your health status suddenly get's better, then you as a consumer can be easily wooed away by another company with the promise of lower rates - leaving you technically in the net positives once you figure in your HSC payouts. People no longer have to fear losing their insurance - insurers have to fear losing their customers, and will be forced to take competitive steps (perhaps they'll hire talking geckos) to try to convince them to stay.

    For people like you who are already in the situation where you face astronomical costs, Cochrane acknowledges the "importance of fully addressing the transition" to the HSC system. Because you can't really purchase insurance - just prepay healthcare (as insurance is a guard against catastrophic events - and yours has already occurred), then the free insurance market doesn't have a non-prohibitive answer for you. Basically he argues that this is a place for government to step in to subsidize the initial generation of 'high risk' (or however you wish to describe them) plans.

    The last one led me to wonder how politically palatable it might be - would there be a constituency against any government creation and subsidization of healthcare plans, especially given the gearing up to fight Obamacare (which included such a subsidy for nearly everybody). However, it turns out that even the CATO guys are fine with this solution - which they describe as being perhaps market inefficient, but not meant for a large enough percentage of the population to make such a program prohibitively expensive, and still fundamentally equitable. If the CATO dudes are willing to back government subsidization of plans the kind and cost of which you would have to get in that system, then I'm betting you won't see anyone else on the Right argue against it.
    Dude, it's totally like, some people are interested in finding solutions, instead of running at magical "fallacy of a single cause" solutions.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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    Re: Why do Americans pay more for health care?

    Quote Originally Posted by cpwill View Post
    For people like you who are already in the situation where you face astronomical costs, Cochrane acknowledges the "importance of fully addressing the transition" to the HSC system. Because you can't really purchase insurance - just prepay healthcare (as insurance is a guard against catastrophic events - and yours has already occurred), then the free insurance market doesn't have a non-prohibitive answer for you. Basically he argues that this is a place for government to step in to subsidize the initial generation of 'high risk' (or however you wish to describe them) plans. .

    What the State of Texas has done as well as several other States is set up a high risk pool. What they do is double the average rate of your area. I'm not sure how they figure up the average. And that is the rate it is adjusted annually. Obviously this is not enough to cover the costs so proportionately health insurance companies operating in the State have to make up the difference. Last year that difference was 98 million.

    okedoke, the best piece of research that I found on this subject seemed to come from the work of the University of Chicago economist John Cochrane. Cochrane has worked up a model of "Health-Status-Change" insurance, which guards against dramatic shifts in your premium costs. So, for example, if you were suddenly diagnosed with cancer, and your regular health insurance premiums shot up the next time you renewed your policy, your HSC insurer would be required to make up the difference, either over time or in a lump sum which would be placed into an custodial-HSA-like-account (so that it could grow for you in the meantime) from which you would be free to draw the difference. So your while your premiums would go up, your out of pocket coverage of them wouldn't.
    Sounds interesting but what about the people that don't make enough money to pay the premiums in the first place and or after they become ill? And with an HSA account I'm not sure there is one out there or is going to be created that would pay an interest rate high enough to match the increases with out depleting the capitol of the account.
    Last edited by winston53660; 05-20-11 at 06:47 PM.

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    Re: Why do Americans pay more for health care?

    Quote Originally Posted by winston53660 View Post
    What the State of Texas has done as well as several other States is set up a high risk pool. What they do is double the average rate of your area. I'm not sure how they figure up the average. And that is the rate it is adjusted annually. Obviously this is not enough to cover the costs so proportionately health insurance companies operating in the State have to make up the difference. Last year that difference was 98 million.
    this plan seems to be based around keeping one's premiums at a rough parity - i couldn't give you the actual math, but it sounds like for first-generationers like you your subsidy would be larger than what you are describing in the high risk pools.

    Sounds interesting but what about the people that don't make enough money to pay the premiums in the first place and or after they become ill?
    the premiums for high-deductible plans of the kind that are matched with HSA's are comparatively pretty low, and employers actually save alot of money by moving to them instead, even as their employees build wealth.

    Indiana offered HSA's, which have patients save money in tax-free accounts (where it grows and remains theirs forever and ever unless theys pend it) matched with high deductible plans to it's employees. Employees began to respond to price signals, and medical costs per patient were reduced by 33% and expenditures to the state were reduced by 11%.

    Whole Foods instituted HSA's, and let's the employees choose what they want the company to fund. This institutes price pressure on the medical side (WF covers the high-deductible plan 100%), and their CEO points out that as a result Whole Foods' per-capita costs are much lower than typical insurance programs, while maintaining employee satisfaction.

    Wendy's instituted HSA's, and saw the number of their employees who got preventative and annual checkup care climb even as they saw claims decrease by 14% (in one year).

    ...and so on and so forth. because high-deductible plans with HSA's allow insurance to function as insurance, it isn't susceptible to the same market distortion as the majority of our health-insurance plans are.

    And with an HSA account I'm not sure there is one out there or is going to be created that would pay an interest rate high enough to match the increases with out depleting the capitol of the account.
    well, from Indiana's experience, after a couple of years:

    ..Unused funds in the account—to date some $30 million or about $2,000 per employee and growing fast—are the worker's permanent property. For the very small number of employees (about 6% last year) who use their entire account balance, the state shares further health costs up to an out-of-pocket maximum of $8,000, after which the employee is completely protected...
    Last edited by cpwill; 05-20-11 at 07:12 PM.

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    Re: Why do Americans pay more for health care?

    Quote Originally Posted by cpwill View Post


    well, from Indiana's experience, after a couple of years:

    In the second straight year in which we've been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay. (Even if an employee had health issues and incurred the maximum out-of-pocket expenses, he would still be hundreds of dollars ahead.)
    What are they counting as take home pay? Are they counting the HSA dollars as take home pay? If so that would be a bit misleading since they are restricted dollars supposedly.

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    Re: Why do Americans pay more for health care?

    money is fungible, and even if the employee uses the max, he still ends up a few hundred dollars ahead of the game. I would suggest that complaining because an increase in take-home pay goes into an account that grows tax-free and is earmarked to cover your medical funds is splitting hairs when the alternative is nothing.


    and an 11% reduction in government costs? that's pretty impressive when we're looking at a healthcare-driven debt crises.
    Last edited by cpwill; 05-20-11 at 07:56 PM.

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    Re: Why do Americans pay more for health care?

    Quote Originally Posted by cpwill View Post
    money is fungible, and even if the employee uses the max, he still ends up a few hundred dollars ahead of the game. I would suggest that complaining because an increase in take-home pay goes into an account that grows tax-free and is earmarked to cover your medical funds is splitting hairs when the alternative is nothing.


    and an 11% reduction in government costs? that's pretty impressive when we're looking at a healthcare-driven debt crises.

    I can only trade it for health care not a stick of gum if I want.

    Any hows I'm glad to see your support of government run health care:

    Also like Obamacare, HIP is fiscally unsound and pushes states’ Medicaid costs onto federal taxpayers. Every $1 Indiana spends on HIP triggers at least $2 of spending by the federal government; no matter what state you call home, you’re paying for Mitch Daniels’s government-run health-care plan. Even so, an independent review found that Daniels’s cigarette-tax hike hasn’t kept pace with Indiana’s share of the spending, and further cost overruns may be on the horizon. If Obamacare remains on the books, Daniels wants to put all new Medicaid enrollees into HIP, with the feds paying 100 percent of the cost.
    Mitch Daniels

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    Re: Why do Americans pay more for health care?

    Quote Originally Posted by Dittohead not! View Post
    Is it because of widespread obesity? Alcohol consumption? an aging population? outrageous malpractice suits? all of the above?

    Check it out here:

    Now, how can we bring those costs under control?
    We don't have to invent the wheel all we have to do is follow the example set by other industrialized countries, our health care system is the most costly in fact at least twice as expensive as other countries that have universal health care and making matters worst are the poor results we are getting from our health care.

    The answer is simple we pay more because we DO NOT have universal health care

    List of Countries with Universal Healthcare « True Cost – Analyzing our economy, government policy, and society through the lens of cost-benefit


    Thirty-two of the thirty-three developed nations have universal health care, with the United States being the lone exception [1]. The following list, compiled from WHO sources where possible, shows the start date and type of system used to implement universal health care in each developed country [2]. Note that universal health care does not imply government-only health care, as many countries implementing a universal health care plan continue to have both public and private insurance and medical providers.



    Country Start Date of Universal Health Care System Type
    Click links for more source material on each country’s health care system.
    Norway 1912 Single Payer
    New Zealand 1938 Two Tier
    Japan 1938 Single Payer
    Germany 1941 Insurance Mandate
    Belgium 1945 Insurance Mandate
    United Kingdom 1948 Single Payer
    Kuwait 1950 Single Payer
    Sweden 1955 Single Payer
    Bahrain 1957 Single Payer
    Brunei 1958 Single Payer
    Canada 1966 Single Payer
    Netherlands 1966 Two-Tier
    Austria 1967 Insurance Mandate
    United Arab Emirates 1971 Single Payer
    Finland 1972 Single Payer
    Slovenia 1972 Single Payer
    Denmark 1973 Two-Tier
    Luxembourg 1973 Insurance Mandate
    France 1974 Two-Tier
    Australia 1975 Two Tier
    Ireland 1977 Two-Tier
    Italy 1978 Single Payer
    Portugal 1979 Single Payer
    Cyprus 1980 Single Payer
    Greece 1983 Insurance Mandate
    Spain 1986 Single Payer
    South Korea 1988 Insurance Mandate
    Iceland 1990 Single Payer
    Hong Kong 1993 Two-Tier
    Singapore 1993 Two-Tier
    Switzerland 1994 Insurance Mandate
    Israel 1995 Two-Tier
    United States 2014 Insurance Mandate

    U.S. ranks last among seven countries on healthcare performance | Healthcare IT News

    Suggested Content
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    U.S. ranks last in study of six nations' health systems
    United States lags other nations on care quality
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    U.S. last in study of six nations' health systems
    Survey: U.S. patients report high rate of medical errors
    Countries unite on patient safety
    Countries unite on patient safety
    Kiwi companies bring healthcare IT expertise to the U.S.
    Down Under IBA seeks share of U.S. market

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    Re: Why do Americans pay more for health care?

    Quote Originally Posted by winston53660 View Post
    I think all these things are good ideas. My problem is when one confronts a catastrophic situation like a heart transplant. The first year alone in 2008 (it was either 08 or 06) costs on average 787k. And there after drug costs range from 1.5k to 2k per month for life.

    And when I say my problem I really do mean my problem. I'm in this situation.
    I feel for you.. I have been a heart patient all my life.. My aortic valve was replaced 3 years ago with a mechanical one.. I am now on blood thinners for life and heart regulation meds..

    So I can associate with you..
    Last edited by DemonMyst; 05-21-11 at 01:43 AM.

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    Re: Why do Americans pay more for health care?

    Quote Originally Posted by DemonMyst View Post
    I feel for you.. I have been a heart patient all my life.. I have had over 18 heart related surgeries, 7 major or open heart.. My aortic valve was replaced 3 years ago with a mechanical one.. I am not on blood thinners for life and heart regulation meds..

    So I can associate with you..

    Are you taking carvedilol (coreg)? If so I wonder if you have any side effects from it?

    I went to the drs this week and my prognosis changed a bit. At first it was around 2 - 3 years before an LVAD now they are projecting 4-5 years before I will need a LVAD.

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