GOP says market forces will lower health care costs, is it true?

The GOP's healthcare reform plan - the American Health Care Act - is a market-based health care solution IF you consider what it tries to do in terms of shifting the most risky patients - the disabled, the elderly and the very young - off the private insurance market and/or raising their rates considerably and, thereby, leaving the healthier young adults/adults to the marketplace.

The AHCA will raise premium rates for senior citizens (age 65+) up to 3X more than what they're currently paying under ObamaCare. The disabled - those with pre-existing conditions - would once again obtain their health insurance through state-sponsored high-risk pools instead of getting insurance directly through the marketplace under per ObamaCare. Let's not forget: state high-risk pools were expensive before ObamaCare. Rates would increase under the GOP's plan because there won't be enough healthy people to help spread the cost.

More children under 19 yrs old would likely be covered under either Medicaid or the Children's Health Insurance Program (CHIP). In short, instead of expanding Medicaid (expansion efforts would end in 2019), the AHCA would expand access to CHIP at the state and federal levels.

So, that leaves everyone else between 20-64....where do they get their insurance?

From what I've read of the AHCA, ObamaCare wouldn't be repealed; only certain provisions (i.e., Section 4002, for example). The bill would provide millions to the states to promote private-sector health insurance but doesn't outline how that is to be done. Why is this a potential problem? Because a state that currently has one or two insurance providers would likely only create more plans that seem attractive to customers at a "reasonably fair price". Nothing wrong with this except if no other insurance provider* enters the marketplace (see below for more details on this), customers in that state would still only have the one or two insurance providers to choose from and how exactly would they know what's a fair price when there aren't any other options to compare?

It's unlikely that the cost of health insurance would go down once the AHCA goes into effect (01/01/2020) because the federal subsidy that was helping consumers defray the cost will come at the back-end (i.e., refundable tax credit) rather than at the front-end (i.e., direct premium assistance payments). Moreover, it will take a while before the biggest drains on premium cost - the elderly and those with pre-existing conditions - are either "grouped" differently under private insurance plans or shifted to state-sponsored high-risk pools. And even then there's no guarantee that the cost for everyone else - the young and the healthy - would drop because there's no mandate for these people to get insurance. The GOP's plan puts a "compulsory penalty" in place for those who go up to 63 days without insurance. The penalty would work similar to what auto insurance company's do now: if you go months w/o insurance, your rates go up automatically until you've proven to have a safe driving record for a few years (i.e., think "Accident Forgiveness" programs).

I don't know if this bill would fix the problems in our health care system. From what I've studied of it (and I'm no expert in the insurance market), it wouldn't cover nearly as many people as ObamaCare has, the cost of health care itself wouldn't necessarily decrease, and more to the point insurance premiums wouldn't decrease if healthy people choose to take the risk and not get insurance but instead pay the penalty knowing this time the money wouldn't be deducted from their federal tax return and, thus, go to Uncle Sam. In short, there's no real risk to them. Just as with auto insurance, people will go without health insurance for as long as they have to and pay the higher premium price when they feel the need to buy insurance even if they are compelled to pay more for it.

*Now, with that said if health insurance companies feel pressured to compete for customers in a particular marketplace that has a monopoly, the health insurance business could become more robust especially if the insurance market sees a significant drop in insurance enrollment. But that all depends on consumers and the choices they make. I do see where the GOP is trying to go with this. They'd essentially swipe the foam off the top of that glass of beer poured directly from the tap (re: seniors and those with pre-existing conditions coming off private insurance and or paying more but being grouped differently in insurance markets), weed out the youngsters who don't want to drink (or prefer lite-beer) (re: kids <19yo on CHIP or Medicaid), and hope the beer industry (insurance companies overall) will usher in new brewers in several states where hopefully customers believe what they'd be getting in a better insurance plan is more filling (re: more coverage/better options), not less and still tastes great!

Greenbeard said:

Not quite. There's been a lot of attention over the last five years to addressing the cost of care.

Changing how doctors get paid

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First, I bow to your knowledge on this topic and feel that I'm not qualified to debate this with you.

That said, I blunder forward...

My thought is that the address of the care should address the care. In Indianapolis, my home, I see various little shops in strip mall type settings for Immediate Care that cater to walk ins. This is a new approach vs. 20 years ago here and addresses the care component. The payment component is needed to support this, but the payment and the care, while intertwined, are separate.

Owning a car generally requires making a payment, by the payment is not the car.

The debates in Congress for the Democrat Plan in the past and the Republican plan today center primarily on paying for the care, not on the care itself.

During the debate on on the ACA and the debate today, I am left wondering why the ENTIRE payment system is being addressed. The part of the payment system that needs to be addressed is the part that covers those that are difficult (on a cost basis) to insure.

Why not address that sliver of the population and allow the insurance companies to cover those with the risks their models can tolerate?

Coastal Flood Insurance comes to mind as a model to use.

https://www.propublica.org/article/four-ways-the-government-subsidizes-risky-coastal-rebuilding

independentusa said:

The basis for the new health care bill pushed by the GOP is that market forces will lower health care costs. My question is will it? Reagan did away with government controlled health care when he came into office saying that competition, i.e., market forces, would not only slow health care costs, but reduce them. Did it work back then, no, it lead to what we have today. Competition in most markets contain three forces, demand, price and quality. Most of the time we have both of the alst two working to force prices down and quality up. but is that true in the health care system? I worked in health care for over forty years and most health care decisions are based on distance, insurance and services provided. Most people go to the nearest provider, or where there insurance provider sends them. Providers do not compete by price but by the services they can provide. How many times does someone you know go from provider to provider to see where they can get the best price as you might do with a car or even a washing machine. That is because there is no price competition in the health care system. So if there is no price competition in health care, how will the market control costs and force providers to reduce costs? That's right, it won't. This whole bill is a big scam. the only thing it is based on is reducing taxes to the top 2%. they will gain in total between 275-400 billion dollars. Most of the rest of us will be the losers as health care costs continue to spike.

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Well, since lefties like to take the CBO at face value then the answer is that several years down the road the Republican plan will be 10% lower than Obamacare. In other words, premiums will be higher than they are today, just less than Obamacare.

independentusa said:

The basis for the new health care bill pushed by the GOP is that market forces will lower health care costs. My question is will it? Reagan did away with government controlled health care when he came into office saying that competition, i.e., market forces, would not only slow health care costs, but reduce them. Did it work back then, no, it lead to what we have today. Competition in most markets contain three forces, demand, price and quality. Most of the time we have both of the alst two working to force prices down and quality up. but is that true in the health care system? I worked in health care for over forty years and most health care decisions are based on distance, insurance and services provided. Most people go to the nearest provider, or where there insurance provider sends them. Providers do not compete by price but by the services they can provide. How many times does someone you know go from provider to provider to see where they can get the best price as you might do with a car or even a washing machine. That is because there is no price competition in the health care system. So if there is no price competition in health care, how will the market control costs and force providers to reduce costs? That's right, it won't. This whole bill is a big scam. the only thing it is based on is reducing taxes to the top 2%. they will gain in total between 275-400 billion dollars. Most of the rest of us will be the losers as health care costs continue to spike.

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Porsches and Lamborghinis are sold on the free market. And yet most people still can't afford them. I don't see how diagnosis and treatment for a child's leukemia is ever going to be different.

The only way we are ever going to keep healthcare costs from rising anymore is if we stop all further research and technology in it.

ataraxia said:

Porsches and Lamborghinis are sold on the free market. And yet most people still can't afford them. I don't see how diagnosis and treatment for a child's leukemia is ever going to be different.

The only way we are ever going to keep healthcare costs from rising anymore is if we stop all further research and technology in it.

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We need to stop rising healthcare costs from the roots up instead of the top down. You can't ever expect to kill a weed if you don't get down to the roots. Both Obamacare and the Republican plan don't get down to the roots. I mean the roots, like the cost of a doctor's education. Like the cost of an MRI machine. We need to work with medical providers and even Big Pharma to get an idea of how to cut down their costs instead of just assuming they are the devil and stiffing them. Roots.

Moderate Right said:

We need to stop rising healthcare costs from the roots up instead of the top down. You can't ever expect to kill a weed if you don't get down to the roots. Both Obamacare and the Republican plan don't get down to the roots. I mean the roots, like the cost of a doctor's education. Like the cost of an MRI machine. We need to work with medical providers and even Big Pharma to get an idea of how to cut down their costs instead of just assuming they are the devil and stiffing them. Roots.

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Whenever the free market gets at the roots of why Porsches and Lamborghinis are so expensive, they will get to the roots of why MRIs and cancer treatment are so expensive. Just because something is on the free market does not mean it is automatically going to be cheap, or "accessible to all", as Paul Ryan likes to say.

independentusa said:

The basis for the new health care bill pushed by the GOP is that market forces will lower health care costs. My question is will it? Reagan did away with government controlled health care when he came into office saying that competition, i.e., market forces, would not only slow health care costs, but reduce them. Did it work back then, no, it lead to what we have today. Competition in most markets contain three forces, demand, price and quality. Most of the time we have both of the alst two working to force prices down and quality up. but is that true in the health care system? I worked in health care for over forty years and most health care decisions are based on distance, insurance and services provided. Most people go to the nearest provider, or where there insurance provider sends them. Providers do not compete by price but by the services they can provide. How many times does someone you know go from provider to provider to see where they can get the best price as you might do with a car or even a washing machine. That is because there is no price competition in the health care system. So if there is no price competition in health care, how will the market control costs and force providers to reduce costs? That's right, it won't. This whole bill is a big scam. the only thing it is based on is reducing taxes to the top 2%. they will gain in total between 275-400 billion dollars. Most of the rest of us will be the losers as health care costs continue to spike.

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If that were the basis for the new healthcare law, it would have incorporated price transparency.

As it stands, if you faint in public, an ambulance may pick you up and take you to a hospital which will charge you an arbitrarily large sum of money for services you may not have even agreed to. If you do not pay this bill, the government will help the hospital to confiscate your property to settle the debt.

Government is already involved. If you give consumers the freedom to turn patients away and you give hospitals the freedom to turn patients away, you can hardly expect to improve the state of healthcare insofar as the public is served. Problem is that people's lives are still being leveraged for profit, so government really needs to enforce some system to balance between the forces of supply and demand. That system can be relatively hands-off but not completely, if it is to function how we would intuitively expect.

Absentglare said:

If that were the basis for the new healthcare law, it would have incorporated price transparency.

As it stands, if you faint in public, an ambulance may pick you up and take you to a hospital which will charge you an arbitrarily large sum of money for services you may not have even agreed to. If you do not pay this bill, the government will help the hospital to confiscate your property to settle the debt.

Government is already involved. If you give consumers the freedom to turn patients away and you give hospitals the freedom to turn patients away, you can hardly expect to improve the state of healthcare insofar as the public is served. Problem is that people's lives are still being leveraged for profit, so government really needs to enforce some system to balance between the forces of supply and demand. That system can be relatively hands-off but not completely, if it is to function how we would intuitively expect.

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That's funny. First you argue that we need a hands on system and then you say that that system can be relatively hands-off.

Moderate Right said:

That's funny. First you argue that we need a hands on system and then you say that that system can be relatively hands-off.

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I argued:

1) the system is already hands-on, and the balance is currently in favor of healthcare industry (as evidenced by the mammoth 17% chunk of GDP they take and the pathetically low average life expectancy they provide)
2) a completely hands-off system would be objectively terrible
3) the system can succeed with varying levels of involvement- there is actually a wide range of viable options on healthcare system architecture