CBO: Obamacare costs revised downward, again. Finds lower than expected premiums.

[Emily's Cat]

So, insurance companies rarely suffer losses for long, they are able to pass them on, hence my characterization of them as pain conduits.

We could probably quibble about this, but I don't think it's particularly true as written.

Insurance companies suffer losses pretty frequently. Enough so that there's an entire industry built up around the losses that insurers might suffer. Reinsurance explicitly sells products to insurance companies to protect them from large losses in the same way that insurance protects individual consumers from large losses.

Beyond that... we don't actually get to pass on the losses from a given year unless they're due to underlying characteristics. So for example, if our population is older than we'd originally anticipated, or concentrated in a particular geography, then that goes in to our ratemaking and affects the premium. But things like... A plan crash that didn't kill anyone but put 15 of our members in trauma units at the same time, or the year that we had three sets of premie twins born in the same month all in ICU, or the year we ended up with two cases of a very rare enzyme deficiency paired with three hemophiliacs with multiple factor IV claims... we don't get to pass those along. We just eat that loss. Because that's what insurance (and reinsurance) is for.

All those events are things my company has experienced, and all of those resulted in a loss for the line of business in which it occurred. But none of it went in to the premiums for the subsequent year, because that wouldn't be appropriate actuarial practice. We exclude large claims from ratemaking.

 

[Emily's Cat]

That's what you have to pay every month?

I'm an American expat living in Japan and employed by a Japanese company. I have a wife and 2 kids, so this is for a family of four: $250/month for health insurance and another $40/month for long-term care insurance. Also, Japan spends less than half what the US does per capita on health care. Japan of course has a national insurance system. Somehow, health care costs have not spiraled out of control here like they have in the US.

I would bet that the actual underlying cost is much higher. Your employer very likely contributes a substantial portion of the cost on your behalf. You only pay $250 per month, because your employer is paying the other $1050 for you as part of their compensation package.

Since sunmaster is the employer, he/she is seeing the entirety of the cost that you're sheltered from.

 

[Emily's Cat]

I think the problem lies in too many middle-men between the patient and the doctor. You have the employer first of all, because most people get insurance through their employer. Then you have the insurance companies. Then all the administrative people at the hospital. Some kind of national insurance scheme would be much better than all these private insurance companies, each one negotiating with each health care provider individually.

A lot of people make this same assumption. Yes, the middlemen add a fee for their services... but that's not where the bulk of the cost is generated. Cutting out the middlemen isn't going to halve your costs, for example.

There are a few things that are serious sore spots in the health care industry:

• Prescription drugs - pharmaceutical manufacturers routinely book 20% to 30% profit margins... and those profits are after the cost of R&D. In the past few years, we've seen generic drugs triple in price from the manufacturer. We've seen things like the FDA deciding that the propellant in asthma inhalers is bad for the environment, so it needs to be changed... which garnered the manufacturers a new patent on a drug that's been generic forever, and they raised the price of the exact same drug from around $15 per month to around $200 per month.
• Medical devices and supplies - things like braces, prosthetics, bath rails, C-Pap machines, etc. have increased at rates beyond medical trend, and the device manufacturers routinely make around 30% profit each year. They charge massive prices to hospitals for gauze, needles, thread, alcohol, iodine, etc. because hospitals aren't allowed to just go to the store and pick it up at a retail price.

Beyond that, there's the fact that technology keeps increasing. New drugs enter the market, but they're not replacements for an older drug, they're new treatments for things we couldn't treat before (like HepC). We get new imaging techniques, new surgical techniques that need new kinds of devices and tools. And each of those technologies is more expensive than whatever was out there before.

At the end of the day, the middlemen add a fee, yes. But it's a tiny bit of the whole picture.

 

[Fudbucker]

I would bet that the actual underlying cost is much higher. Your employer very likely contributes a substantial portion of the cost on your behalf. You only pay $250 per month, because your employer is paying the other $1050 for you as part of their compensation package.

Since sunmaster is the employer, he/she is seeing the entirety of the cost that you're sheltered from.

Sunmaster's bill still seems high. For $1,400 a month, the plan my district pays for is Blue Cross PPO $300 individual/$900 family deductible (I think those numbers are right. I know it's less than $1,000 for family deductible), plus prescription, vision, and dental (Delta). There's a $25 co-pay for doctor visits.

 

[Emily's Cat]

Sunmaster's bill still seems high. For $1,400 a month, the plan my district pays for is Blue Cross PPO $300 individual/$900 family deductible (I think those numbers are right. I know it's less than $1,000 for family deductible), plus prescription, vision, and dental (Delta). There's a $25 co-pay for doctor visits.

There's a lot that goes in to cost. Underlying cost of care in that region, the age of the people in the pool, the discount that insurer has negotiated with the providers in their network, etc.

 

[Fudbucker]

There's a lot that goes in to cost. Underlying cost of care in that region, the age of the people in the pool, the discount that insurer has negotiated with the providers in their network, etc.

That's true. I think the pool I'm in is called Self Insured Schools of California.

 

[Beerina]

A lot of people make this same assumption. Yes, the middlemen add a fee for their services... but that's not where the bulk of the cost is generated. Cutting out the middlemen isn't going to halve your costs, for example.

There are a few things that are serious sore spots in the health care industry:

• Prescription drugs - pharmaceutical manufacturers routinely book 20% to 30% profit margins... and those profits are after the cost of R&D. In the past few years, we've seen generic drugs triple in price from the manufacturer. We've seen things like the FDA deciding that the propellant in asthma inhalers is bad for the environment, so it needs to be changed... which garnered the manufacturers a new patent on a drug that's been generic forever, and they raised the price of the exact same drug from around $15 per month to around $200 per month.
• Medical devices and supplies - things like braces, prosthetics, bath rails, C-Pap machines, etc. have increased at rates beyond medical trend, and the device manufacturers routinely make around 30% profit each year. They charge massive prices to hospitals for gauze, needles, thread, alcohol, iodine, etc. because hospitals aren't allowed to just go to the store and pick it up at a retail price.

Beyond that, there's the fact that technology keeps increasing. New drugs enter the market, but they're not replacements for an older drug, they're new treatments for things we couldn't treat before (like HepC). We get new imaging techniques, new surgical techniques that need new kinds of devices and tools. And each of those technologies is more expensive than whatever was out there before.

At the end of the day, the middlemen add a fee, yes. But it's a tiny bit of the whole picture.

By the way, a terrible insurance system that left people out, but helped maximize the rate of new development would save more lives than it costs, and the discrepancy would build year after year. These lives just don't show up in front of the camera.

"Your mama died because the cure hadn't been invented yet, whereas a more business and development-friendly society would have invented it two years ago."

These kinds of calculations never make it in front of a journalist's camera.

 

[twinstead]

"Your mama died because the cure hadn't been invented yet, whereas a more business and development-friendly society would have invented it two years ago."

I'd be concerned about giving that "more business and development-friendly society" (read: profit-driven) too much credit; the only thing worse than 'your mama died because the cure hadn't been invented yet' is 'your mama died because she couldn't afford the cure'. There's a world of "cures" that the average person can't afford even now

 

[Ziggurat]

the only thing worse than 'your mama died because the cure hadn't been invented yet' is 'your mama died because she couldn't afford the cure'.

Why is that worse?

If you think about it logically and not emotionally, you'll see that you have in backwards. In the former case, everyone in your mama's medical condition will die. In the latter case, only some people in your mama's medical condition will die. Why should any moral person prefer the former to the latter? They should not, obviously. The latter may be unfair, but the former is still objectively worse.

There's a world of "cures" that the average person can't afford even now

But they will be able to in the future. That's how technology goes: profits taken from the rich today are what make it possible for the poor of tomorrow to afford those things.

 

[Shalamar]

Ahh. The argument that we should deny people healthcare now, so that others in the future will live.

 

[wareyin]

But they will be able to in the future. That's how technology goes: profits taken from the rich today are what make it possible for the poor of tomorrow to afford those things.

As an added bonus, we kill off more of the poor today while earning those profits!

 

[twinstead]

Why is that worse?

If you think about it logically and not emotionally, you'll see that you have in backwards. In the former case, everyone in your mama's medical condition will die. In the latter case, only some people in your mama's medical condition will die. Why should any moral person prefer the former to the latter? They should not, obviously. The latter may be unfair, but the former is still objectively worse.


But they will be able to in the future. That's how technology goes: profits taken from the rich today are what make it possible for the poor of tomorrow to afford those things.

Medical Darwinism? I like it!

And if the executives of these companies can make a couple extra bucks in the process more power to 'em.

 

[Emily's Cat]

I'd be concerned about giving that "more business and development-friendly society" (read: profit-driven) too much credit; the only thing worse than 'your mama died because the cure hadn't been invented yet' is 'your mama died because she couldn't afford the cure'. There's a world of "cures" that the average person can't afford even now

Why is that worse?

If you think about it logically and not emotionally, you'll see that you have in backwards. In the former case, everyone in your mama's medical condition will die. In the latter case, only some people in your mama's medical condition will die. Why should any moral person prefer the former to the latter? They should not, obviously. The latter may be unfair, but the former is still objectively worse.

It's worse in terms of ethics, at the very least.

Beyond that, there's a world of difference between "You can't move to Mars because we don't have the technology to do that" and "You can't move to Mars but other people can, because you don't meet some requirement".

If a thing doesn't exist, it's not "worse". The thing isn't a thing. If the thing does exist and is actively denied to some class of people, that would seem worse to me.

Now... that doesn't mean I think everyone should be able to get everything perfectly equal. I don't.

Consider end of life care. Sure, there are things that can be done for terminal patients that extend their life by two or three weeks, and only cost a mere $500K. In that case, I think that making that treatment available on the dime of other people is worse than having a small number of people die a few weeks earlier.

There's a balance in there somewhere. I don't know exactly where that somewhere is, but it's there.

That's how technology goes: profits taken from the rich today are what make it possible for the poor of tomorrow to afford those things.

Uhh... I disagree. Profits freely invested by the rich today make it possible for the poor of tomorrow to afford those things.

 

[Ziggurat]

As an added bonus, we kill off more of the poor today while earning those profits!

We aren't killing anyone.

 

[wareyin]

We aren't killing anyone.

Yes, we are merely denying them lifesaving healthcare. Much better!

 

[Ziggurat]

It's worse in terms of ethics, at the very least.

Why? Why are more dead people ethically preferable to less dead people?

Beyond that, there's a world of difference between "You can't move to Mars because we don't have the technology to do that" and "You can't move to Mars but other people can, because you don't meet some requirement".

If a thing doesn't exist, it's not "worse". The thing isn't a thing. If the thing does exist and is actively denied to some class of people, that would seem worse to me.

I dispute that there is a real difference, since in this hypothetical, the lack of the technology is still due to a deliberate choice that you made. But even accepting that this is a difference, it still doesn't explain why that difference matters, or why we should prefer the result where more people die, regardless of what you want to attribute those deaths to.

Now... that doesn't mean I think everyone should be able to get everything perfectly equal. I don't.

Then on what basis can you say that denying something to everyone is better than denying it only to those who cannot currently afford it?

Consider end of life care. Sure, there are things that can be done for terminal patients that extend their life by two or three weeks, and only cost a mere $500K. In that case, I think that making that treatment available on the dime of other people is worse than having a small number of people die a few weeks earlier.

The problem with extending life for a few weeks at great cost to others is that the transaction isn't voluntary (the people paying didn't have a choice to not pay) and the opportunity cost is huge, and arguably outweighs the benefits.

But when you're talking about rich people spending their own money, the transaction IS voluntary, and they've obviously decided that the benefits are greater than the costs. So I'm not sure why this problem come up in regard to the perverse perception that it's worse to let rich people buy expensive treatment than to deny that treatment to everyone.

Uhh... I disagree. Profits freely invested by the rich today make it possible for the poor of tomorrow to afford those things.

Why do you think they make those investments? Because other rich people will then be buying that stuff at high prices, providing the profits that justify those investment risks. You aren't actually disagreeing here, you're just looking at a different step in the same process.

 

[Ziggurat]

Yes, we are merely denying them lifesaving healthcare. Much better!

You're denying me your life savings. Stop denying me.

 

[wareyin]

You're denying me your life savings. Stop denying me.

Is this the part where you equate taxes with theft?

 

[Ziggurat]

Is this the part where you equate taxes with theft?

I won't equate taxes with theft if you don't equate NOT getting taxed with theft. Deal?

 

[Emily's Cat]

Why? Why are more dead people ethically preferable to less dead people?

I dispute that there is a real difference, since in this hypothetical, the lack of the technology is still due to a deliberate choice that you made.

Only if you can absolutely PROVE that the technology WILL be invented in the future, as opposed to it *might* be possible.

We *might* in the future invent a way to download our brains into robot bodies so we'll never die. By your argument, it's unethical of us not to invest untold billions into research for that, because failure to do so is causing the death of so many future people, and it's more ethical for us to let some people die now of starvation and need while we search for that robot body solution.

If you assume that resources are unlimited, and that all things can be accomplished... then you might have half an argument here. If, as most people, you accept that resources are limited and some things are not feasible, your argument falls apart.

Then on what basis can you say that denying something to everyone is better than denying it only to those who cannot currently afford it?

You cannot deny people something that doesn't exist. Your premise is flawed.