I started with Obamacare here in Massachusetts in 2015. It was about $300/month. It went up closer to $400/month for 2016. I just got the first bill for the same plan (Harvard Pilgrim Standard Silver) but at 2017 rates: $705.05/month.
This is for a plan where I pay for at least the first $2000 per year. So if I do actually need health care for any reason the annual cost will be at least $10,460. All of this must be paid with post-tax dollars since I’m paying for it rather than having an employer pay for it.
Note that if I were getting the federal minimum wage of $7.25 per hour and working full time (2000 hours/year), assuming an income and payroll tax rate of 0 percent, I would generate a surplus of only $4,040 with which to pay for (a) food, (b) shelter, (c) retirement, (d) taxes to feed the Great Father in Washington, (e) taxes to support local schools and state operations, etc.
Exercise for the reader: What is the implied annual inflation rate here and what will the cost be next year?
Related:
The implied curve seems exponential but it doesn’t matter since we were promised that O-care will be shut down ASAP right after the coronation. We’ll be back to the good old days where you probably won’t even be able to get insurance (Isn’t being over 40 a pre-existing condition?). Thus, your premiums will be 0. Problem solved!
>Note that if I were getting the federal
>minimum wage of $7.25 per hour and
>working full time (2000 hours/year),
>assuming an income and payroll
>tax rate of 0 percent, I would
>generate a surplus of only $4,040
With those assumptions (in MA) you would qualify for Medicaid.
Thanks for pointing out that proper accounting changes everything, Neal! If other taxpayers were paying these health insurance costs then suddenly I would become a huge asset to the U.S. economy!
Demetri: Excellent point. Another fun exercise would be to try to figure out how many treatments I’ve paid for over my 53 years. Assume a cost of $5,000 per year in 2016 mini-dollars. That’s a total of $265,000 in insurance premiums paid. What would that buy in France at retail? Treatment for three different kinds of cancer plus a heart bypass and an artificial knee?
Hospitals are worse than car dealers. When buying a car, the cost is kept from you until after a tense negotiation but at least you know what you’ll pay when signing the contract. If you go into a hospital for a la carte services you will only find out weeks later what everything cost; never up front. Maybe there is a business opportunity for hospital networks that have open and clear pricing for the many who will soon have no insurance. Or maybe as you say patients will just have to suck it up and go to France or maybe Mexico.
>If other taxpayers were paying these
>health insurance costs then suddenly
>I would become a huge asset to the U.S. economy!
The posting didn’t discuss the value of a minimum wage worker to the economy. The posting discussed the “surplus” a minimum wage worker would have after paying for Obamacare and the number given is not correct.
>What would that buy in France at retail?
US per capita GDP net health care expenditures is still 25% higher than France’s net health care expenditures. Not sure why we would want to benchmark against France.
Anyway, I agree with you that single payer/hmo would be better than Obamacare. I’d bet Obama would also agree with you.
27% increase here in CA, along with reduced benefits for 2017: PPO forcibly migrated to EPO.
By contrast, pre-OC I was able to obtain catastrophic coverage for $450 per year. Thanks to high deductibles and generally good health, my annual spend is now $8,000 higher in pre-tax dollars for zero personal benefit.
Wonder why promising to end the current system was such a potent political message.
Don’t smoke, exercise regularly, hang around with upbeat, fun people, and don’t worry about health insurance.
> Thanks to high deductibles and
> generally good health, my annual
> spend is now $8,000 higher in
> pre-tax dollars for zero personal benefit.
And yet we wonder why none but the rich get any richer.
For reasons that baffle me, society at large apparently fails to notice the connection between massively increased personal spending on insurance plans and the absence of prosperity among the majority of the citizenry. Isn’t it obvious that people can’t afford to enrich their lives when their surplus dollars are consumed by nothing-in-return government mandates?
magoo,
My plan until about age 65 was “let the providers starve in their office waiting for the phone to ring”, but it quit working about age 65. I had employer insurance but never exceeded the deductible.
Fortunately Medicare kicked in and I’m ok for now, but I honestly don’t know how young non-rich-bastards get along. It cannot be sustainable.
Perhaps this is a good time to revisit an old favorite of mine: http://philip.greenspun.com/politics/health-care-reform
The absolute cost of health care was about $12 per hour worked in 2012, probably more now.
http://marginalrevolution.com/marginalrevolution/2013/05/do-low-wages-for-unskilled-workers-weaken-the-case-for-more-immigration.html#comment-157799362
I don’t see why Obamacare is to blame here. In a market economy the price you pay is completely disconnected from the actual cost. Insurance companies will charge whatever they can get away with. Regardless of how many people they actually have to cover. In the absence of Obamacare (or any other regulations), they would (a) stop insuring high-risk “customers” and (b) probably charge even more. Isn’t it great to have the freedom to live in a free market?
Republicans getting rid of Obamacare is actually not that scary (except if you have pre-existing conditions, are near 65, or unemployed). What is truly scary and cruel is the move towards getting rid of Medicare. Much more efficient to give people vouchers and let the free market regulate itself!
People keep drinking the conservative kool aid, fail to notice that they’re being screwed, and then blame the Mexicans.
Tiago: “In a market economy the price you pay is completely disconnected from the actual cost.” That’s not what Econ 101 students are taught. Under https://en.wikipedia.org/wiki/Perfect_competition (a “market economy” without anyone having a friend in the government), the price paid should be equal to the marginal cost of delivering a service or making a widget.
If producers could charge by the value to consumers then water could be sold for $50,000 per year per person (we would all die without water so why wouldn’t we pay up?).
Due to government intervention (limiting the supply of American-born doctors, limiting the supply of foreign-trained doctors, tax subsidies for employer-provided health insurance, patchwork of state regulators for insurance companies and restrictions on doing business across state lines, Medicare, Medicaid, etc.), the medical care industry in the U.S. was not an example of a “market” prior to Obamacare. However, prior to Obamacare it was legal for an American to walk away from this industry. For example, someone who lived in San Diego or El Paso could choose to purchase all health care services in Mexico. Someone who lived near the Canadian border could choose to buy health care in Canada. Someone who lived in the Midwest could fly to France for non-emergency procedures. Now all of that is illegal and Americans are forced to be paying customers through Obamacare.
or you could simply do the math and go for a single-payer system. Still lots of room for private profit if properly set up, but expanding the pool reduces the cost for all. Oh, wait. “socialism”. Never mind.
It is largely illegal to spend money privately on healthcare in Canada, so I’m not sure how many people really travel to Canada from the US. Clinics have tried to operate in the legally permitted private parts of the system and have still been intimidated by local government to stop.
Their lower healthcare costs aren’t just because they’re more efficient in delivering care. It is partly due to the fact that people can’t buy healthcare in the private market, and in the US they can and choose to do so.
I think that it is very bad to encircle a population with a price controlled, supply restricted resource and then make it illegal to obtain through private and voluntary means.
Are comments still moderated? I see that one of mine was disappeared. It was merely an endorsement of our host’s writings, esteemed censors.
Tom: Comments are moderated. If you did endorse my writing, thanks, but I don’t think it would fit http://philip.greenspun.com/blog/comment-moderation-policy/
Suppose that you write “this is the greatest posting ever”. How does that help another reader? He or she has already read the posting. It is not like a review of a 500-page book to which the potential reader doesn’t have access.
Gordon: How is it obvious that single payer would work well in the U.S.? We have single payer for Medicare, right? As a percentage of GDP Medicare alone costs more than most other countries spend on healthcare for 100 percent of their citizens (Medicare covers only those over 65). Merely because Country X can do something well doesn’t mean the U.S. can.
>However, prior to Obamacare it was
>legal for an American to walk away
>from this industry…Now all of that is
>illegal and Americans are forced to
>be paying customers through Obamacare.
Prior to Obamacare it was (and still is) possible for a person to walk into an emergency room and receive care which the hospital was/is legally obligated to provide regardless of the patient’s ability to pay. Obamacare merely requires (in a ridiculously complicated way) that everyone to pay into the system which they were/are already entitled to draw benefits from.
As a practical matter, walking away from the US health care system by obtaining health care outside of the US was not an option used by a significant number of people before Obamacare so that option (or its removal) had little effect on the “market”.
Well, I endorsed another piece of your writing, not this one.
>How is it obvious that single payer would
>work well in the U.S.?
>We have single
>payer for Medicare, right?
>As a percentage of GDP Medicare alone
>costs more than most other countries
>spend on healthcare for 100 percent of
>their citizens (Medicare covers only those
>over 65).
The relevant benchmark is our existing system, not what other countries are doing. I agree with the implication that traditional fee for service Medicare would not be a good blueprint for a nationwide single payer system. As a side note, Obamacare included Medicare cost containment measures which have helped significantly, although probably not enough to make expanding Medicare a good idea.
>a “market economy” without anyone
>having a friend in the government
The article referenced identifies about a dozen other factors (and misses at least one) which must also be present for a “market economy”. Some of those factors also contribute to the “imperfection” of the healthcare “market”.
philg: when I said “market economy” what I actually meant was an oligopoly. Libertarians like to promote the concept of “perfect competition” that you linked, but that is an utopia as impractical as communism. What happens in practice when there is little regulation and companies are given free reign is that (1) they tend to merge or otherwise kick out small players, and (2) avoid to compete against each other either by dividing the market geographically or by product class. Because of (2), they can actually jack the prices to whatever people can pay. Great examples in the US are cable/ISPs and cell phone providers.
People would not pay $50,000/year per water because governments would not allow that, and in any case people would manage to source it themselves if needed (unless, of course, they lived in Nevada). Healthcare is not an industry that people could replace by themselves, and most need it to survive, hence the jacked up prices. In fact, the healthcare/insurance market in the US before Obamacare (and after, for that matter) resembles a lot the situation of the cable companies. There is no reason to believe that the “voucher-care” of Republicans would lead to “perfect competition”, in fact all signs point towards consolidating the oligopoly.
Medicare is not really single payer. Republicans in congress have worked hard to make Medicare as inefficient as possible, e.g. by making it illegal for Medicare to negotiate drug prices.
Assuming that the rate is before the premium tax credit, minimum wage earner will qualify for the premium tax credit which can cover majority of the cost.
Because “tax credits” is just another word for “non-minimum wage taxpayers.” Or “sovereign debt”. Which still leads to the former eventually. Or default!
What is the deal with reversing supreme court rulings? Is that extra-special hard? The insurance mandate that the court ruled in favor of is the only particularly scary thing. Without the mandate it was always at some level possible to opt out of the whole obscene racket that is US “sickcare”.
As long as I had $50k cash ready I don’t see why insurance should ever be necessary. Trauma and obstetric care is the only stuff that actually works in terms of lifespan extension. It should be affordable on a cash basis.
All this other stuff like oncology and geriatric heart surgery amounts to a racket. These people live another four shitty years thanks to a million dollars of OPM. What’s the point.
Everybody healthy needs to go on strike and refuse to pay into this racket. But the supreme court said you’re not allowed.
I don’t think health care is a natural oligopoly like cable TV or cell phone towers where there are physical constraints on how many frequencies there are or how many different sets of wires you can run down the street. Hospitals are expensive to build but anyone can hang up a shingle for his own practice and even most surgery can now be done outside a hospital setting. If anything, one of the things that is driving costs now is that there are too many places to get health care, not too few. All these free standing MRI centers, etc. need Medicaid mills to drive patients to them.
When the price of gas to pump my car was going up by 10%, 20% or even 50% the news media was all over it and Congress was up in arms. In fact, the White House released gas from the strategic reserve to “ease the pain”.
Why isn’t the public, the news media, Congress and the White House outraged about healthcare cost going up at over 100% very much year after year and now worse after Obamacare?
Nevermind, they are busy trying to find fault on Trump and his supporters for Hillary’s lost.
>Why isn’t the public, the news media
>Congress and the White House
outraged about healthcare cost going
>up at over 100% very much year
>after year and now worse after Obamacare?
Growth in healthcare spending has moderated significantly since Obamacare despite bringing 20 million new people into the system. Cost control measures included in the legislation deserve part of the credit. Obamacare exchange policies are a relatively small part of the system and the price increases Philip is experiencing is related to insurers discovering the nature of the new risk pool.
@Neal:
I work for a “big” company and they pay toward my healthcare cost. Before Obamacare, it was going up by an average of 5%. After Obamacare, by at least 10%. For 2017, it is up by 13.3%. What’s more, there were couple of years where I saw $0 or little annual salary increase to cover the healthcare cost increase, in effect, I ended up the year with a salary cut.
Do you have data to show that “Growth in healthcare spending has moderated _significntly_ since Obamacare …”?
I don’t care what insurers are discovering to cause this increase for me, for Phil or anyone else. The fact of the matter is this: healthcare cost is going up at a rate far higher than inflation or income increase and this too I wouldn’t care about but then I read the law and see that I’m *required* to *buy* it otherwise I’m breaking the law.
To put this into another perspective: the cost of cable subscription has been going up too, it is not required by law for me to buy it, but yet there are far more news coverage and Congressional hearing about it.
Healthcare was a mess and out of control before Obamacare. Obamacare should have fixed the mess first but all it did was enforce the mess by making it into a law.
It was entirely foreseeable that the premiums would go up rapidly. The math for Obamacare never worked. If you allow people with preexisting conditions to sign up for “insurance”, it’s like selling fire insurance to someone whose house is currently on fire – it’s a sure thing that you are going to pay out more than you collect in premiums. One seriously ill person can run up millions in costs. Now this was supposed to be subsidized by forcing lots of young healthy individuals who didn’t really need comprehensive health insurance to sign up, but they did not materialize in sufficient numbers.
The fundamental problem is the total amount of cost in the system, which is way more expensive than any other countries. Unless you take cost out of the system, SOMEONE is going to end up paying for it (and that someone is not insurance companies) and Obamacare is just a game to shift costs around without really reducing them.
@George A:
Obamacare is a marginal improvement on a very bad system which has produced (surprise surprise) a very bad system. However, even a marginal improvement on a big system can produce significant benefits in absolute terms. BOTH are true.
>Obamacare is just a game to shift costs
>around without really reducing them.
Not true; Obamacare included significant reforms of Federal reimbursement systems intended to control costs. Health care costs are still going up faster than the rate of inflation, but not as fast as they were before Obamacare (I am not claiming that Obamacare is the only or even the major factor responsible for this change, only that it is one factor. Nor am I claiming that the reforms Obamacare introduced are by themselves sufficient.):
http://www.insurancejournal.com/news/national/2015/11/12/388800.htm
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/highlights.pdf
There are two basic approaches to providing universal health care coverage, single payer and Obamacare. As Phil points out in his health care polemic, single payer is the superior approach IF one gets the reimbursement system correct (and a catastrophe if one doesn’t get the reimbursement system correct). Obama may have selected the less desirable approach, but the fault lies with the opponents of Obamacare, not the proponents. Obamacare was designed using the Republican blueprint for health care reform as a political compromise. I suppose this is where I’m supposed to blame the Republicans for opposing Obamacare, but I must take a page from Phil’s book and point the finger at “us” writ large. Most Americans like the quality and convenience that an employer based fee for service system provides. The cost and sustainability of that system doesn’t concern them as long as it remains hidden behind HR’s door.
The Medicaid expansion represents basically all the “new” people on Obamacare and we could have done that one for a pittance compared to the final Obamacare tally. Heck, raise the roof on that sucker to 200% of poverty level and we’d still come out cheaper than the ridiculous exchange system and hijack-taxing of employers, especially those who self-insured cheaply.
Medicaid expansion alone would not enable the elimination of experience rating for individual policies. Anyone who is sick, not employed, and not poor would still be SOL (at least until they became poor enough to qualify for Medicaid).
And by the way, Republicans vigorously expanded what Medicaid expansion did occur.
Neal, what you’re talking about was already law (the states were already doing that). New York was a particular canonical example, but there was zero need to make it national, the states were already there or planning to do it anyway. It’s also just a plain stupid provision anyway. Just pay for the very sick directly instead of pretending they “need insurance”. No, they need charity care and it’s fine to do that, it’s how they do it in Texas as one example.
The preexisting issue was always overblown at best and mostly imaginary at worst, depending on how it was defined and who was crying about it.
Like philG, our household has been beaten up and had our lunch money stolen by Obamacare. It’s no fun to lose money, even if you have plenty left over.
I’m not sure why people think that sending a lower-income American to a hospital here for surgery or cancer treatment is such a worthy charitable endeavor. Wouldn’t a lower-income person be happier with $200,000 in cash, a plane ticket to France, and a $50,000 treatment in France than with a $250,000 equally effective treatment here in the U.S.?
It would be bad to have cancer, and fortunately I do have more money than the average person, but I would choose the $200k in cash and French hospital in a heartbeat!
@Practical:
I am afraid you might be misinformed, and not from a liberal POV either. Things are much worse than that. In fact, I would venture to say that the article from Insurance Journal is a blatant lie (I wouldn’t call it a mistake since that would be doubting the statistics education in the US); it’s a lie on at least 2 counts: data interval engineering, and lie by omission.
Now, this is separate from judging if Obamacare achieved humanitarian goals: it has, and I am a (still alive) evidence to that. People with pre-existing conditions and those who are really poor benefited: the share of Americans without health coverage dipped from 11.5% to less than 8%. However, that goal was achieved at a cost that would have made the F-35 Air Force program managers blush: I assert that it would be cheaper to simply fly beneficiaries to, say, Costa-Rica, treat them there, fly them back, and repeat as needed.
The problem is that making health care affordable was never a goal of ACA: the real goal was to increase coverage as much as possible, and if cost-cutting could help with that then it would be fine too. The system was never broken, it functioned as designed, so the real question is whether the design was good. The US system is designed for maximum profit while all other concerns are secondary. (I myself or members of my immediate family had prior experience with healthcare systems of Canada, France, Germany, India, Israel, Hong Kong (pre-PRC), Australia, and Taiwan.)
As usual with this administration, the goal was noble yet never accomplished: it was yet another “red line”, like the one in Syria; the industry simply played it. Controlling cost was a pipe dream. The transitional years from 2010 through 2013 were used to ratchet up prices (our neck of the woods saw 30, 25, and 25% annual hikes) in expectation of the rate freezes by 2013, aka “Y1” in the insurance speak. That is why showing rate increases compared to year 2010 is not representative (lie #1): 2010 saw the largest rate hike of this century: guess what year Obamacare became a law? (Extra source: Kaiser/HRET Survey of Employer Sponsored Health Benefits, 2010-15).
Say, you are an executive and you certainly expect a regulatory price freeze in 3 years. Would you consider raising prices in the meantime so that it would become a new status quo in time for subsidies to kick in? and what if the hike is a bit too steep?
Lie #2. Rates are only cheap if you exclude direct subsidies (sorry, incentives). No, these were not incentives for people with pre-existing conditions: those were rolled in via a separate plan, known as a bridge plan (the American Cancer Society helped me sign up, and the plan terms were equivalent to an exchange “gold” plan). No, these were not the same as for people with Medicare/Medicaid, those were extra. I hope you know that there are exchange subsidies to everyone who buy a bronze- or a silver-level plan (hi philg! did you know you were getting a discount?)
The subsidy stands at no less than 30-50% of the nominal price, and the exact number is unknown since the Congress declared it illegal and the Obama administration was sued by the House Republicans (see House vs Burwell) since budgeting is the Congress’ prerogative. So, what you can see on exchange is not even close to a real price. In fact, insurance industry representatives have made statements during a Quora QnA session that Americans are not ready to see a 100% realistic healthcare premium price on a public exchange (no source, sorry).
So, why have premium prices been stable? Because the government was throwing lots of money at insurance companies hoping to make it so. Most of those incentives are supposed to be phased out between 2017 and 2018. Uh-oh… have the prices been inching up for you lately?
On a tangential note, here is how the president-elect can bury Obamacare without even going to the Congress: just end the Cost Sharing Reduction payments to commercial insurance companies (they are not required to participate in the exchange program without payments from the federal government; some companies signed up with individual state exchanges will probably be contractually bound until 2018, and after that: bah-buy) Source: Dan Munro, the author of Healthcare Casino, “Stopping the CSR payments is another way to simply choke off the supply of affordable healthcare coverage under Obamacare. Again, no legislation or “repeal” needed. The question remains – will Trump do this?”
>The preexisting issue was always overblown
>at best and mostly imaginary at worst,
>depending on how it was defined
>and who was crying about it.
Someone in my family was denied coverage pre-Obamacare for moderately high cholesterol. I assure you the concern was neither overblown nor imaginary. Prior to Obamacare the healthcare coverage situation for anyone who didn’t qualify for Medicaid and didn’t get insurance through an employer large enough to provide a decent sized risk pool was indeed precarious.
>Neal, what you’re talking about
>was already law (the states were
>already doing that).
I’m not sure what you are referring to by “that”. Do you mean providing charity care? If so, I’ll point out that one of the issues Obamacare is intended to address (but does so only imperfectly) is that a lot of charity care in our system was (is) in fact provided via unfunded mandates. That produces cost shifting and then management of cost shifting and then obscenely high administrative costs.
@philg
Is there really anything in the current system which prevents us from implementing your suggestion in comment 38? I believe that the retail cost of a procedure in the US could easily be 5x the French retail, but I’m skeptical that the actual cost to most US insurers is 5x French retail (India retail, maybe). Even so, there may be a big enough difference to make the suggestion worthwhile.
phlig:
I do have cancer, and when I was diagnosed I tried to find out from other patients what a nominal price tag for the first year would be (back in 2011-12). The number I got was, of course anecdotal, and it stood at about 1 to1.2 million. So an average middle-class patient would stand no chance, and $200K sounds like a bad a joke.
@bobbybobbob’s 50K would only be good for the initial CT-scan, bone-marrow sample, and the first chemo-session: the very minimum course is 6-8 sessions.
Neal: Why don’t insurance companies send customers to Europe to get a replacement knee? I don’t know!
Anon: I’m sorry to hear about your cancer. I hope that the treatment works as well as it can.
On the cold-hearted dollars and cents side… the statistics in https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3107566/ show that $50,000 to $100,000 (Table 4) was a more typical cost for the first year of cancer treatment in the U.S. in 2010. Maybe this is what Neal points out as the difference between advertised “retail” price and what insurers actually pay.
@philg:
Yes, the number is not unreasonable. 🙂 What I found out that one of the chemo drugs was only produced by a single plant in the US, because it was not profitable, so we buy plenty of stuff from Teva in Israel.
Israel is a small country and my PCP is from there, so he tried to help me out and negotiate a delivery. I got an assurance of a 6-months supply at 200% MSRP, including international certification and air transport from Tel Aviv to New York. Unfortunately, my (state-) hospital charge was 3000% MSRP, and it was made clear to me that nurses would not administer any unofficial substance.
Could somebody remind me how wonderful it was before Obamacare? I seem to have forgotten those halcyon days.