Generic drugs are supposed to lower healthcare costs and provide you with another medical alternative. That’s what it says on paper. But there’s a real danger that goes along with these drugs. A danger even your doctor might not be aware of.
Too many people think that long-term care planning is just a decision about whether to purchase long-term care insurance. However, long-term care planning is so much more. It is a discussion about how you will fund this expense, where you will receive long-term care, and who will provide the care.
Politicians talk about the uninsured. Special interests argue on behalf of those with pre-existing conditions. But why is no one wondering how doctors are affected by the new law? They’re the ones on the frontlines dealing directly with new patients, as well as the red tape that makes bureaucracies go round.
Just because you’re retired doesn’t mean you have to stop working. Especially now that you have all the time in the world to do what you really want. Entrepreneurs don’t only come out of Silicon Valley. They come from all walks of life, from all different ages. If you’re retired and want to stay active while you relax, then find out the steps you need to take in order to start, manage, and grow your next small business.
The U.S. dollar has been the world's reserve currency for almost a century, and already there are signs it may be in decline. But that doesn't mean it's not still valuable. On the contrary... As Chris Mayer explains, there are many reasons the U.S. dollar will remain relevant on the world stage for years to come. Read on...
The Congressional Budget Office said the government needed to reach 7 million people by the end of March. They claim to have reached the goal and now the debate about Obamacare is over. But what does this milestone really mean in the ongoing healthcare discussion? And more importantly, how will it affect reforms going forward?
In an effort to cut costs and keep track of patients' records, governments could institute a medical guideline cookbook. Bureaucrats might think they have the best of intentions in mind, but these new rules would drag down the medical process and destroy whatever quality is left in our current system.
When government expansion is allowed to continue unabated or when it casts a heavy regulatory shadow on America’s entrepreneurial spirit, the freedoms that we’ve come to know, and perhaps take for granted, slowly begin to slip away.
The new reality of Obamacare’s tax credits has left finance reporters to pen articles warning readers to “take care” when considering a tax credit and providing strategies for how best to “protect yourself.” So what do finance reporters know that the White House doesn’t?
As full implementation of the Affordable Care Act (ACA) approaches, every doctor, research professional, and health administrator I talk to tells me the same thing: Obamacare is going to reduce the quality of care and cost you more… in some cases, a lot more.
This technology is not simply for modeling and prototyping, either. TV personality Jay Leno uses a 3-D printer to make custom and hard-to-find parts from scratch for his collection of classic cars. Entrepreneurs have been using these printers in a myriad of ways, and the trend is speeding up.
The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
Do you trust your doctor? Most patients assume their doctor is working in their best medical interests whenever he or she orders a diagnostic test or recommends a particular treatment. Customers might wonder whether an unscrupulous auto mechanic is being truthful when he recommends a brake job or a new transmission. But most patients trust […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
So you’ve maneuvered the Obamacare website, plugged in your top-secret information and found out how much you are forced to pay to avoid a fine.And for some of you, it turns out you qualify for a government subsidy — making the premium sound like a bargain. But signing on that line to accept the government’s […]
The New York Times published an interminable article on health care recently. Plenty of facts — how scrupulous are these journalists! — but the article displayed absolutely no comprehension of the basics of cause and effect. I was left wondering about the whole point.The article details how the health care system rewards specialists to an […]
Dr. William C. Padgett is a retired optometrist who has been trying to bring an elderly care facility to Beaufort County, North Carolina, for over a decade.“Our senior citizens,” he laments, “are finding that it is difficult and in many cases impossible to find an appropriate long-term care facility locally.” Though he has received several […]
Professor John H. Cochrane of the University of Chicago had an op-ed in the Wall Street Journal on Dec. 25, in which he gave a brief description of (among other things) a market in which individuals buy our own health insurance — and not from an Obamacare exchange.According to Professor Cochrane: “…we should transition to […]
A new survey from Harvard University found a large majority of young Americans do not believe the law will save them money, do not believe it will improve their health, and do not intend to sign up for insurance through the new exchanges.
Liberal supporters of the Affordable Care Act specifically, and big government in general, are quick with excuses for all the problems that Obamacare has been experiencing in these early days. We have heard: they did not have enough time, it’s complicated, it’s the insurance companies’ fault, we just need to make a few adjustments, and […]
I opened a new bottle of probiotics this morning, and it had one of those circular seals on the top. You know, the one that reads, “Sealed for your protection.”And that seal got me thinking… how much protection do we need? How much security is enough?How much homogenization, pasteurization, disinfection, national security, etc…. do we […]
As the fallout continues over the cancellation notices sent to millions of people covered by health plans in the individual insurance market, it is becoming clear that millions more workers and their families are expected to lose their employer-based coverage as the Affordable Care Act (ACA) is implemented.According to the Congressional Budget Office (CBO), 156 […]
A president stands disgraced. Congress is scattering. Bureaucrats are baffled. Pundits are reaching. Industry is scared. Politicians are scrambling to do something, anything, to make it better. One political party is in meltdown and the other loving every minute of it, hoping to ride the calamity to electoral gains.The so-called Patient Protection and Affordable Care […]
Any married couple that earns more than 400% of the federal poverty level -- that is $62,040 -- or a family of two earns too much for subsidies under Obamacare. But if that same couple lived together unmarried, they could earn up to $45,960 each -- $91,920 total -- and still be eligible for subsidies through the exchanges in New York state.
“This only works if young people show up,” said Bill Clinton the other day. He was explaining Obamacare.
On the surface, that’s an odd thing to say. Medicare seems to work just fine without a lot of young people. It needs taxes from young people, of course. But nobody has ever said young people need to buy into Medicare or it won’t work. What’s so special about Obamacare?
To understand that, we need to go back to square one.
One of the strange things about the market for health insurance is that almost none of us ever sees a real price. More than 90% of people with private coverage get it through an employer. Employers, on the average, pay about three-fourths of the cost, and the remaining share tends to be the same for every employee — irrespective of expected health care costs.
In most states, the only people who face real premiums are in the “individual market,” where individuals and families pay for insurance out of their own pockets. Yet the Affordable Care Act (Obamacare) will outlaw the pricing of individual risk (medical underwriting) by the year’s end. Health insurance, therefore, is very different from just about every other form of insurance.
In other insurance markets, a person newly entering an insurance pool will be charged a premium that reflects the expected cost and risk the individual brings to the pool. With respect to life insurance, disability insurance, homeowner’s insurance, and (for the most part) even auto casualty insurance, you pay for what you get.
That practice, by the way, works quite well.
When premiums reflect expected costs, people are essentially paying their own way. When that happens, it really doesn’t matter very much who chooses to buy insurance and who chooses to self-insure and bear the risk themselves. With life insurance, for example, you can have pools with a lot of old people or pools with a lot of young people. You can have pools with a lot of people at high risk of dying or pools with a lot of low-risk enrollees. Or you can have combinations of all of these.
When was the last time you heard anyone say that life insurance won’t work unless we mandate its purchase? Or that the life insurance market will fall apart unless we convince a lot of young, healthy people to buy it? Have you ever heard of a life insurance company spending millions of dollars on rock stars and sports icons and librarians and local civic associations to beg youngsters to buy the product?
Why are things so different in the market for health insurance? Because in this market, premiums are regulated, and that regulation is completely dominated by the idea that it’s unfair to charge real premiums. In fact, the most common belief is that everybody should pay the same premium for health insurance, even if everyone’s expected health cost is different.
It’s not easy to say where this idea came from, or why it is so widely believed. The health policy community often exudes a herd mentality. Once an idea is accepted, it tends to be repeated again and again — until a point is reached at which no one can exactly remember why the idea was ever proposed in the first place.
One reason why this issue has suddenly become a topic of discussion in the blogosphere and in the public policy community is that Obamacare was sold to the public on deceptive terms. When he was campaigning for the presidency in 2008, Barack Obama made it sound as though his health reform was designed only to help people who couldn’t afford health insurance afford it. Everyone else was going to be left alone. (“If you like the health plan you have, you can keep it.”)
Then, on the eve of passage of the legislation, the focus changed to those few people (very few, it turns out) who are denied coverage because of a pre-existing condition. At last count, there are about 107,000 enrolled in newly created risk pools because of this problem.
But it has been only very recently that New York Times columnist Paul Krugman and others have been in print explaining that Obamacare won’t work unless the government controls the premiums paid by everybody in the entire country! No one ever said that during the presidential campaign or during the congressional debate. As far as the general public is concerned, this is a brand-new idea.
There is one other way in which government regulation has caused health insurance to be different. Traditional indemnity insurance basically doesn’t exist anymore. What we call health insurance is really a health plan. It is an entity that controls what care you are entitled to and who can deliver it. When you choose a health plan, you are not just choosing an entity that will pay your medical bills. You are also choosing a network of doctors and hospitals and a set of protocols that determine how medicine will be practiced.
Here’s why that matters. When premiums are regulated so that they cannot reflect expected costs, four things will happen:
1. On the buyer side, people who are undercharged will overinsure, and people who are overcharged will underinsure. This is basic economics. If the price you are asked to pay is artificially low, you will buy more than you otherwise would; if the price is artificially high, you will buy less. If you are sick and require a lot of medical care but can pay the premium ordinarily charged to a healthy enrollee, for example, you will likely choose the richest plan you can find.
2. In order to avoid attracting high-cost enrollees, health plans will respond by scaling back their benefits and their provider networks until the richest plans look pretty much like every other plan. In the individual market today, in most states, you can buy a Blue Cross plan that covers almost all doctors in your area and practically every hospital, including all the best hospitals. I predict those plans will never see the light of day inside the (Obamacare) health insurance exchanges. See this health alert on the race to the bottom with respect to access to care.
3. At the same time, health plans will seek to attract the healthy. Of course, to a certain extent, they are doing that today. But with an electronic exchange in which healthy people tend to buy on price and sick people tend to buy on benefits and software that makes it easy to do those things, the insurers will be even more pressured to reconfigure their offerings to make them more attractive to the healthy and less attractive to people who need medical care.
4. Finally, the perverse incentives do not end at the point of enrollment. They continue. Health plans will have perverse incentives to overprovide to the healthy (to keep the ones they have and attract more of them) and to underprovide to the sick (to avoid attracting more of them and encourage those they have to go elsewhere).
[By the way, risk adjustment in the Obamacare exchanges may actually overpay for certain types of chronic illnesses -- making them more attractive to the health plans than healthy people. But anytime there is nonmarket fixing of premiums and artificial risk adjustment, the total revenue for any particular enrollee is almost certain to be wrong -- in one direction or another.]
There is something else that tends to happen in an insurance market where no one is paying a real premium. If you have problems and need help, you are likely to discover that the insurance company is about as accommodating as the Department of Motor Vehicles.
Dealing with a vendor who doesn’t want your business can be unpleasant. When you call, you are put on hold. Or you never get to talk to a real person in the first place. You are shuttled from one office to another, buried in a complex web of bureaucracy and paperwork that seems intentionally designed not to meet your needs. (See a previous post on paying for medical care at my blog.)
I know what you’re thinking. This is the way insurance companies already treat everybody! Yes, but there is a reason for that. In a world in which market forces have been completely suppressed, anyone who makes frequent calls to a health insurance company is probably someone with lot of health problems, paying a premium well below the cost of her care, who is prima facie a customer the insurer wishes it didn’t have to deal with.
So how should the market for health insurance work? It should incorporate two features:
1. Whenever you enroll in a health plan, you want the premium paid to the plan to reflect the expected cost of your care — especially if you have medical problems. Otherwise, your new plan will have perverse incentives to skimp on what you need.
2. To be able to afford that premium in case you become ill, you should be able to purchase “change of health status insurance” in addition to garden-variety insurance. Such insurance pays the extra premium caused by a change in your health status.
In such a world, health plans would compete for the patronage of the sick just as vigorously as they compete for the healthy. Most likely, health plans would specialize — with plans carving out such markets as cancer care or diabetic care. Instead of running from problems, the insurers would see common, expensive illnesses as entrepreneurial opportunities — just like we observe in other markets.
“Change of health status” insurance doesn’t exist today and isn’t envisioned under Obamacare. But we need it. If the providers of medical care are to have good incentives, we need to allow such insurance and encourage it.
– John C. Goodman
Article originally appeared here.