The sticker shock of ObamaCare-Lite
[Posted by Karl]
Neither end of the political spectrum will care much for what Ezra Klein wrote yesterday about the state of play for ObamaCare:
A bit later today, I’ll be putting up an interview with Nancy-Ann DeParle, director of the White House’s Office of Health Reform. But there’s a particular argument that I want to focus on. “When you step back,” she told me, “there is broad agreement about 85 percent of what we’re talking about.”
You hear this a lot from the White House. In fact, you hear it often enough that it’s tempting to think it untrue. But it’s very true. And in this moment of violent town halls and ferocious controversy, it’s worth remembering.
Here are the things that, broadly speaking, legislators agree about: insurance market reforms, including community rating, guaranteed issue, an end to rescission, an end to discrimination based on preexisting conditions, and an individual mandate. Subsidies for low-income Americans. Delivery system reforms. Health insurance exchanges. An expansion of coverage to about 95 percent of legal residents. Prevention and wellness policies. Retaining and strengthening the employer-based insurance market. Creating some kind of incentive for employers to offer, and keep offering, health benefits. Expanding Medicaid to about 133 percent of poverty.
The Left does not like reading it because the see the White House laying a foundation for declaring victory on some bill that lacks the most odious components of the Democrats’ proposals, particularly a government-run insurance plan.
The Right should not like it because the so-called insurance market reforms still amount to government-run health care, as everyone from Keith Hennessey to Michael Kinsley acknowledges.
People in the persuadable middle need to hear that. People in the persuadable middle also need to hear that the so-called insurance reforms the Democrats are pushing will jack up health insurance premiums. These government mandates have been particularly bad for the individual insurance market in the few states which already impose them:
Because the tax code subsidizes private insurance only when it is sponsored by an employer, the individual market is relatively small and its turnover rate is very high. Most policyholders are enrolled for fewer than 24 months as they move between jobs, making it difficult for insurers to maintain large risk pools to spread costs.
Mr. Obama wants to wave away this reality with new regulations that prohibit “discrimination against the sick”—specifically, by forcing insurers to cover anyone at any time and at nearly uniform rates. But if insurers are forced to sell coverage to everyone at any time, many people will buy insurance only when they need medical care. This raises the cost of insurance for everyone else, in particular those who are responsible enough to buy insurance before they need it; they end up paying even higher premiums. And the more expensive the insurance, the less likely people will buy it before they need it.
That’s one reason that only five states—Maine, Massachusetts, New Jersey, New York and Vermont—have Mr. Obama’s proposal for “guaranteed issue” on the books today. New Hampshire and Kentucky repealed such laws after finding that they soon had an even smaller individual insurance market as companies fled the state.
Another proposed reform known as “community rating” imposes uniform premiums regardless of health condition. This also blows up the individual insurance market, by making it far more expensive for young, healthy or low-risk consumers to join pools—if they join at all. And if the healthy don’t join risk pools, then premiums go up for everyone and insurers have little choice but to reduce their risk by refusing to cover those who have a high chance of getting sick, such as people with a history of cancer. This is why 35 states today impose no limits whatsoever on how much insurers can vary premiums and six states allow wide variation among consumers.
New York, New Jersey and Massachusetts have both community rating and guaranteed issue. And, no surprise, they have the three most expensive individual insurance markets among all 50 states, with premiums roughly two to three times higher than the rest of the country. In 2007, the average annual premium in New Jersey was $5,326 for singles and in New York $12,254 for a family, versus the national average of $2,613 and $5,799, respectively. ObamaCare would impose New York-type rates nationwide.
Granted, these are state mandates, rather than national mandates, involving individual insurance, rather than employer-based insurance. But mandated benefits, community rating, and guaranteed issue requirements could increase health insurance premiums by as much as 20-94%.
Anyone looking to ask their Representative or Senator questions about ObamaCare could do worse than to ask for an estimate of how much health insurance premiums will go up if even these supposedly modest insurance reforms become law.
–Karl
While that’s an excellent question, Karl, they need instead to first keep asking their reps to at least acknowledge that their own CBO has issued definitive estimates that are so far out from the unreality that this administration has forecasted as to beg incredulity. When you look at the townhall vids, every time a rep is asked to account for this obvious discrepancy they go right ahead and continue with their inane talking points as if it was never asked in the first place. We just saw this same dynamic with Sen. Harkin’s (IA) mealy – mouthed townhall this week in Des Moines. Their constituents get so frustrated with these people at their lack of coherent responses that they usually end up shouting at them to please just answer the question.
Dmac (e6d1c2) — 8/13/2009 @ 8:55 amThe only way we’re going to make headway on this issue is to start with what most of us can agree on. Keep it simple. I agree that most people will agree on a large number of the ideas proposed. But all of the fringe portions of the proposals see the light of day – and the ire rises.
Corwin (ea9428) — 8/13/2009 @ 9:11 amA real leader would state exactly what he/she wants (with real numbers the CBO can back up).
My state has 40 mandates already..over the years we’ve all heard the pathetic news stories about some treatment or other that tragically isn’t covered by someone’s policy.
It’s all about adding new mandates, and up go the costs for all of us.
cassandra in MT (5a5d33) — 8/13/2009 @ 9:21 amLet ’em pass it. Everyone’s rates go up dramatically, the kicking and screaming starts and we throw the bums out that much sooner.
Whaddayamean what am I smoking?
Phil Smith (1cf25d) — 8/13/2009 @ 9:35 amAaaargh. clear cache dammit.
Phil Smith (1cf25d) — 8/13/2009 @ 10:44 amWhat do you mean, #4? What government program have you ever seen eliminated? Once enacted they take on a life of their own and never go away. They just keep getting bigger. Also, eliminating the pre-existing condition thing is like trying to get car insurance AFTER an accident has happened or life insurance after you die.
jwarner (0a2a75) — 8/13/2009 @ 11:06 amI doubt many intelligent people would agree with these”reforms.” All involve higher costs without reasonable benefits. Eliminating “re-exisiting conditions?” So if someone refuses to buy insurance when they are young and healthy and then live a lifestyle that invites AIDs the rest of the citizens should pay?
In the current system you can get insurance abetat a very expensive rate. What is unfair about this?
Uniform premiums? How about this for income taxes?
The nonsense this bill contains is a Marxists wet dream. Our freedoms are sacrificed for what?
Time to water the tree of liberty.
Thomas Jackson (8ffd46) — 8/13/2009 @ 11:11 amIf you force insurers to take everyone that applies (and I’m guessing at the same rates as everyone else), and you force “community rating”, you have essentially made the insurance business completely unprofitable. They cannot reduce their risk – or spread risk around enough. Insureres will either have to dramatically increase premiums on everyone or go out of business – which will ultimately lead to government controlled health care.
And, increasing Medicaid to 133% of poverty? Again, take a bankrupt system and increase its costs dramatically.
Add those two components together and I’m sure it will “improve” healthcare.
Monkeytoe (e66874) — 8/13/2009 @ 11:12 amNot so quick. As Karl alludes, pretty much a large number of the ideas proposed will drive up health insurance costs for most people… and you think most people will agree to that?
Most people’s complaints can be summarized as: ‘I want more coverage but I don’t want to pay the commensurate costs of that additional coverage’… and if the individual receiving the care doesn’t pay, it is left to the rest of us to pick up the tab in the form of higher premiums, higher co-pays and/or reductions in the quality or quantity of care we receive.
Eliminating caps on lifetime coverage? Require coverage for pre-existing conditions? Provide insurance for those without? Eliminate restrictions on ‘experimental’ treatment? All result in more money paid in benefits and because insurance companies aren’t going to eat these costs, people not bumping up against caps, without pre-existing conditions and those who have insurance will all pay more.
As we’re seeing in this debate, health insurance ‘reform’ polls great… until the public realizes they pay more than they’ll get from any reform.
steve sturm (369bc6) — 8/13/2009 @ 11:28 ammandated benefits, community rating, and guaranteed issue requirements could increase health insurance premiums by as much as 20-94%.
That along with the increased costs associated with any foolish anti-global-warming cap-and-trade legislation enacted by Congress may affect our economy in a way that resembles some of the negative influence of Smoot-Hawley on the nation’s (and world’s) economy during the Great Depression.
And I’m not even factoring in the effects of the huge, quickly growing deficits of the Obama-ized US federal government.
Mark (411533) — 8/13/2009 @ 11:31 amIt’s more expensive to live in NJ and NY. Thanks for that bulletin from the Dept. of the Obvious.
JEA (1eb0e1) — 8/13/2009 @ 11:40 amZOMG – JEA destroyed your winger argument!!!
JD (d9176e) — 8/13/2009 @ 11:46 amIt’s more expensive to live in NJ and NY. Thanks for that bulletin from the Dept. of the Obvious
Yes, but the question is why? The answer is because the democrats have controlled these states and regulated, mandated, taxed and otherwise found a way to make everything much more expensive than it needs to be, without any equal increase in what one gets for their money. My overly expensive NY health insurance is no better than a plan 1/2 the cost in another state. The same holds true for just about anything you can think of. Public education, police services, etc. It’s all driven up in cost by idiotic ideas such as these health care ideas.
Meanwhile, most people’s pay does not go up and unemployment sours as business leaves the state.
Anyone with 1/2 a brain would look at NY or CA and realize that liberal ideas do not work and will bankrupt a government.
Monkeytoe (e66874) — 8/13/2009 @ 12:52 pmthat is, unemployment “soars”. it is also pretty sour
Monkeytoe (e66874) — 8/13/2009 @ 12:53 pmJEA,
In addition to the basic point made by Monkeytoe, there is also the basic point of comparing what premiums were in these states before and after the mandates were imposed (adjusted for the overall cost of living there). The final link in the original post goes a bit into all that icky math stuff.
Karl (7bf51f) — 8/13/2009 @ 1:23 pmI live in New York and our health insurer just came in with the renewal rates: 28.2%!! We “negotiated” them down to 20%, but if this keeps up, pretty soon we’ll be paying more in premiums than we make in sales! Now if I remember accounting theory correctly, I believe that a 1:1 ratio of health care expense to sales income would put us out of business just a little bit.
sparrow (509da3) — 8/13/2009 @ 1:47 pmI absolutely agree with these reforms. It’s not just people without insurance that need guaranteed availability without regard to pre-existing conditions. It’s also people who leave their current employer.
I’d be more than willing to pay 40% more if I had true guaranteed health insurance availability.
Jim (743658) — 8/13/2009 @ 2:16 pmThat’s really not accurate at all, at least in New York. While our private plans are forced to cover everyone at the same rate, they do not apply to pre-existing conditions for a full year unless the person had comparable prior coverage. So if you get sick, and then go buy insurance after that, it doesn’t have to pay a thing for a full year. I don’t think at least “one year ahead” counts as “only when they need it.”
jvarisco (be0edb) — 8/13/2009 @ 4:23 pmAs for the price, of course New York is more expensive. Take a look at property values sometime.
#18
Since when do property values determine the cost of living? If true Hong Kong and Tokyo would be far more expensive than NY.
Taxes, bureaucracy, and a corrupt government drive up the cost of living more than property values.
Last time I looked the property values in Harlem and the South Bronx weren’t anything to brag about.
Thomas Jackson (8ffd46) — 8/13/2009 @ 5:02 pmNothing stopping you, Jim. You can buy whatever coverage you want…as long as you are willing to pay for it. It is available. Problem is, you want everyone else to chip in for what you want.
Sorta like the “Cash for Clumkers”…..I helped with the down payment of several of those babies.
rls (e58293) — 8/13/2009 @ 5:20 pmI find it interesting that even in a land of liberalism up the wazoo (aka Massachusetts), reactions to healthcare reform (or “reform”) gravitate towards the following.
Mark (411533) — 8/13/2009 @ 7:26 pmThe huge problem with health care reform is that no one wants to face the hard problems, which are as follows:
1. People below the poverty line and at some level above it cannot afford insurance that most people would find minimally acceptable.
2. Health care demands, if not rationed or limited by fiat, constantly increase on a per person level because of the incrementally increasing cost of every advance in medical care.
3. Health care demands are often not easily schedulable; therefore the system needs extra capacity to deal with peak demand. The better the system copes with peak demand, the more waste and redundancy on average.
4. People are not that price sensitive about critical health care needs.
I have lived in the US, UK, Japan, Sweden, Switzerland and Japan. If you can afford it, the US and Switzerland have the best care. Japan is very close behind Switzerland.
The UK has the worst, Sweden is a bit better. The UK has the most cost-efficient system–indeed, it is amazingly efficient compared to anywhere else.
The model the US should be following is Japan’s. Japan has two insurance system: government run individual policies for everyone where the policies are income based and very, very progressive (my first year premium was $25 because of no past income history, my last year $5,000) ; and employer run systems that involve private insurers.
The Japanese individual insurance is simple. They pay 70%. You can go to the private insurance market to make up the difference, or not. There are public health clinics that offer long waits but reduced or free care, or you go private if you want to pay for it, and hospital are a mix of public and private.
The system has some problems particularly in under-funding of emergency care. But it has pretty successfully managed to keep a population half the size of the US comprising heavy smokers and drinkers pretty healthy. Moreover, the Japanese insurance system would not require wholesale abandonment of the private sector. Finally the 70% number seems to impose a reasonable degree of price sensitivity while keeping the bulk of the health care costs borne by the poor close to zero.
Cyrus Sanai (ada6da) — 8/13/2009 @ 7:37 pmEnd socialism in America.
And start by putting a stop to Obama’s bid go grow more of it.
Then vote for Sarah Palin/Katy Abram in 2012.
They have the balls, uh, ovaries, to sic death panels on Medicare and Social Security. They will stop giving away our hard-earned tax dollars to those who do nothing and don’t deserve it.
Don’t let Obama cheat the drug companies and insurance companies out of their profits. Profits are the American way. Socialism is the un-American way.
Larry Reilly (45c8f2) — 8/13/2009 @ 7:44 pmThe Los Angeles Times writes about the Democrats’ message machine.
“I think it is very hard because [Democrats] don’t have the message machine the Republicans do,” said George Lakoff, a UC Berkeley linguistics professor who has advised some Democrats on how to sharpen their message. “The Democrats still believe in Enlightenment reason: If you just tell people the truth, they will come to the right conclusion.”
Michael Ejercito (833607) — 8/13/2009 @ 7:47 pmI see Larry still has not grown up.
Michael, that’s an astonishing bit of arrogance from Lakoff – especially given the many untruths we see Democrats telling. And its typical of the Times’ crappy reporting, since a lot of opposition to healthcare reform is coming from people separate from Republican limp “leadership”. Just incoherent news reporting – typical of the LAT.
SPQR (26be8b) — 8/13/2009 @ 7:57 pmMawy is off its meds again. Jackoff is an unbridled unprincipeled jackarse.
JD (10c938) — 8/13/2009 @ 8:21 pmYeah, the democrats, the super-majority party that also holds the white house, does not have a message machine. It’s those bad evil republicans who have such a great machine. The pro-health care forces don’t have the AARP, all the unions, George Soros, possibly Pharma, and untold left wing groups – plus the mainstream media pushing for the health care monstrosity.
Anyone who says or believes that the dems don’t have a message machine at least as good, most likely much, much better, than the republicans is either incredibly stupid or lying.
With Lackoff, it is lying. that’s what he does for a living. That’s what he teaches – how to say things in a way that people don’t know what you are talking about, or in a way that people believe you are agreeing with them.
Just b/c people don’t agree with your message doesn’t mean you aren’t getting the message out.
Monkeytoe (e66874) — 8/14/2009 @ 5:37 amRLS, the problem is that the coverage I want is not now available in my state. My choices are either: (1) an employer group policy or (2) an individual policy in a catastophic risk pool with family premiums of around $2200/month and significant deductibles/co-pays. There is no middle ground.
Jim (743658) — 8/14/2009 @ 7:20 amCan anybody think of any isurance market where rates are indepent of risk? It is insane. Were this question of say flood insurance, would sane people demand that those who lives in flood plains pay the same rates as those who live on mountain tops?
One size fits all health insurance will force the state to mandate one size fits all life style. What ever happened to freedom?
DavidL (02e14f) — 8/14/2009 @ 10:47 am“RLS, the problem is that the coverage I want is not now available in my state. My choices are either: (1) an employer group policy or (2) an individual policy in a catastophic risk pool with family premiums of around $2200/month and significant deductibles/co-pays. There is no middle ground.”
Jim – Blame your legislators and regulators. They obviously legislated and regulated competition out of your marketplace. If insurers don’t have a chance of breaking even in a market they tend not to stay.
daleyrocks (718861) — 8/14/2009 @ 3:38 pm“One size fits all health insurance will force the state to mandate one size fits all life style.”
David – No, it will force insurers to charge rates high enough to offset their inability to medically underwrite customers, leading to a substantial increase in rates. That’s the whole point. Where are the freaking cost savings Obama keeps talking about coming from?
daleyrocks (718861) — 8/14/2009 @ 3:42 pmIt’s great that the barking moonbats have got virtually nothing to say about this post. Facts scare them. Emotion driven argument is great but facts are scary.
Gtrat job Karl.
daleyrocks (718861) — 8/14/2009 @ 3:44 pm