Will Federal Health Reform Mean Higher Premiums?
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The current House and Senate versions of federal health reform legislation have at least one thing in common: they will increase health insurance premiums. Consider this list of House and Senate proposals:
o $6.7 billion annual tax on health insurance premiums – Harvard Pilgrim has calculated the impact of this Senate proposal and concluded that it would result in an annual tax payment to the federal government of $34 million, roughly three times our current operating income.
o 40% excise tax on “Cadillac” benefits – So-called excess benefits sold by health plans would be subject to federal taxation. In our New Hampshire market, for instance, we have calculated that this would affect many small companies with workforces averaging 45 years of age or older buying products with $1000 deductibles.
o Weak individual mandate – Policymakers have appropriately recognized that we will not achieve universal coverage unless there is an individual mandate backed up with a penalty for non-compliance. Unfortunately, the proposed penalties proposed are nominal. This means that uninsured individuals needing immediate health care treatment will be the majority of those seeking to purchase insurance, thereby raising the cost of insurance for everyone.
o Aggressive minimum coverage standards – Richer benefits than are currently being sold on average in most state-regulated markets would be established as required “minimum coverage” under the federal plan, thereby raising the average cost of insurance.
o Restrictive rating rules – Many states (not Massachusetts or Maine but certainly New Hampshire) will experience market disruption if current rating rules are changed to 2:1, as proposed by the House and the Senate HELP Committee. While some rates will decrease, many will increase with narrower rating bands than currently exist.
o Medicare cost shift – Medicare rates paid to providers would be reduced in the proposed legislation. Leveraged providers will make up these reductions by increasing rates charged to those with private coverage.
o Phase-in of provisions – Many of the new federally funded benefits and market rules would not begin until 2013. Certain financing and mandated benefit expansions would begin in 2010. Included among these are the health plan premium tax mentioned above and extended COBRA coverage.
It is almost impossible to value the combined impact on premiums of this list of cost drivers (although we will try). Health plans will have no option but to pass these new costs along to customers in the premium. Because they result from clear government mandates it will be relatively easy to justify the increases in premiums, no matter what kind of oversight structure is ultimately approved. These increases would occur first, and the major reform benefits would come later, in 2013.
Does this sound like a winning political formula?
Bruce, what is your alternative solution? How do you mandate everybody to purchase health insurance (as AHIP is requesting) without somebody paying for it? What changes to the Senate and House bills would you like to see?
Paolo - It isn’t the cost of the individual mandate but the weak enforcement of it that will raise costs by triggering adverse selection. In answer to your question: we need a health reform plan with realistic minimum benefit standards (that aren’t so rich they drive up costs), market reforms supported by an individual mandate that is real, an exchange that is really an exchange and not a crypto-regulator, an end to cost-shifting from Medicare, real medical cost savings, and subsidies that federal and state budgets can afford. As in Massachusetts, everyone must shoulder responsibility but in a manner that is fair.
Bruce will you please explain what over the top benefits that are in the present bills? I also don’t understand what you mean exactly by adverse selection. How does that work?
Bruce, thank you for your thoughtful response. It’s encouraging to see industry leaders participate in this debate publicly.
I agree with you that the individual mandate needs to be strong enough to prevent adverse selection. However, a strong mandate also requires that subsidies by sufficiently high to prevent extreme financial hardship to people who will be forced to buy insurance. Many have argued that the Senate Finance Committee bill barely achieves that. For example, the SFC bill expects a family making $52k a year to contribute about $4k to their health insurance costs. How much more do you think such a family can or should contribute?
Increasing Medicare rates may shift back some cost from private insurers to Medicare, but it will certainly increase the total cost of health care. Also any additional payment from Medicate (taxpayer) has to come out of some other tax. Which one?
So we are left with lower minimum benefits standards and real medical cost savings. Are the proposed minimum benefits standards much higher than what we have today in say Massachusetts? Which ones are too high? What real medical cost savings do you think should be included (I presume you don’t like payment bundling)?
In general, the insurance industry could greatly contribute to a better bill by providing realistic steps that should be taken rather than just state that it will increase premiums. Also, its statements would be much more effective and credible if it focused only on the policy issues that truly benefit everyone (e.g., mandates to prevent adverse selection) and not on those which are just shifting cost from the insurers to somebody else (e.g., increased Medicare payments).
Dr. Green: Not sure I understand your benefits question. Adverse selection is what happens when only those who have immediate need for health care services opt for insurance, while those who do not opt out. Prices rise because the claims experience of the insured pool worsens. Insurance market reforms, like guaranteed issue, can trigger this phenomenon absent an enforceable individual mandate.
Paolo: I did not say that health reform is free. I said that the current plans are out of balance. If Congress is determined to spend $900 billion to $1 trillion the plan put in place should work, rather than raise premiums.
The joke of this whole thing is that the Democrats exempted AARP and their Medigap policies through United Healthcare in order to get them to publicly support their bill. AARP will continue to have a six month waiting period (to prevent adverse selection), are exempt from the insurance windfall profit tax, are exempt from executive pay limits and will not see cuts to their Medigap programs like the proposed cuts for Medicare Advantage plans. So the AARP cuts their own deal to guarantee their revenue and profits and then throw everyone else under the bus in the name of healthcare reform. Add in the AMA getting paid off by fixing the Medicare rates (in a separate bill of course so the billions in deficit spending is not directly linked to the healthcare bill) and you start to get the feeling this bill is going to do NOTHING to control healthcare costs.
Bruce: How much out of balance are the current House/Senate proposals? How much of that $900 billion cost do you think can be reasonably shouldered by the health industry system (insurers, providers, pharma, device manufacturers) vs. additional income taxes?
Also, do you have a rough estimate of what the increased premiums would be like in Massachusetts (where many of the health reform proposals are already in place) vs. a non-regulated state like New Hampshire?
Don:
Bruce is trying to say if you impose an annual penalty of $1,000 while the average premiums for a single person are in the $4,000 range, who do you think are more apt to buy health insurance??? Health people or sick people??
Let me break it down more. A health individual will say, “I will just pay the $1,000 penalty and not have health insurance and save $3,000″. On the other hand, a sick person will buy health insurance. That is what adverse selection is.
Here is the worst part. Even if the healthy individual bets wrong and becomes sick, he or she can go out tomorrow and buy health insurance tomorrow and have any pre-existing conditions covered anytime that they want.
The insurance company gets burned up front, when only sick people sign up (adverse selection) then get burned again when the healthy person, who gets sick, has all their bills paid (open enrollment).
We need to only increase the penalties for both the employees and employers, but we need to limit the open enrollment to one month just like any private company or Medcare (we know how much you love Medicare) does.
Bill Randell
Bruce, You have stated that some of the benefit requirements are too costly and perhaps not needed. I was asking which benefits, services should be optional. What were you proposing to leave out or only partially cover. Please clarify.
The AMA and AARP at least represent patients and perhaps their interest as their mission statements state. However insurers are more aligned with their own business interests.
Bill you keep dancing around the issue that health insurance must be paid for by a large pool in an equitable way. Making subscribers ipso facto potential miscreants is not a very hospitable way to approach the problem. It will also be met with a tremendous backlash. You try and try to figure out how to enlarge the paid covered population then denigrate the only system that makes sense, Medicare For All. Yes I do support Medicare, although like anything else could use improvement. There is no question it has done its job better than any HMO collectively or individually.
Don:
I read that the unfunded Medicare debt, the difference between the benefits that have been promised to current and future retirees and what will be collected in dedicated taxes and Medicare premiums, in 2009 is over 90 Trillion, no billion, but Trillion dollars.
You want to expand this program into the private sector?
Bill Randell
Dr. Green: Minimum benefit standards are not created in a vaccuum. Currently, real people have purchased health insurance policies for which they pay premium costs. If the minimum benefit standard does not start by reflecting the current market, people will pay more for their coverage. A good example is the decision in Massachusetts to mandate drug coverage. Previously, drug coverage was optional - people could buy it or not. With the availability of very low-cost generics through retail stores like Walmart, many opted for coverage without drugs. When drug coverage was mandated, 150,000 people saw their premiums go up.
Paolo: If, for instance, a broad national goal were set to reduce health care spending growth by, say 1.5%, and a collaborative approach involving all stakeholders were used, with spending targets by sector monitored by the federal government, the bulk of the bill could be funded. The key is collaboration, because efforts in one sector affect others. For instance, administrative simplification by health plans would create health care provider savings. Generic prescribing by physicans would lower health plan pharmacy costs and therefore premiums. Incentives need to be aligned.
Bill, the size of Medicare’s unfunded liability tells us that Medicare is expected to collect less in fixed payroll taxes than it is expected to spend in services over the foreseeable future. If employers performed the same exercise and assumed that they could only use a fixed percentage of revenue or salary to fund employee health insurance, they would also discover gigantic unfunded medical liabilities.
The reality is that both systems are unsustainable. This is not surprising since both sectors use the same inefficient health care delivery and payment system.
Bill, Let’s take the flip side. Do you want to fold in the Medicare population into the private insurers? How many years does the unfunded liability represent. Currently Medicare accounts for half of medical spending, that is 1.2 trillion a year. What is the denominator here? How many years are in that calculation. Further as you asked me on another subject, where did the number come from?
So Bruce where exactly are the frills. There will always be medical discovery and improved treatments. How do you take back or limit what is going to help people? How does restricting which doctors or hospitals patients go to saves money? Are your rates so different from place to place?
Paolo:
Employers don’t pay for their health insurance like Medicare?? Why would they perform the same exercies???
Employers pay premiums to insurance companies, who need to be financially solvent. Insurance companies can not have unfunded liabilities in the trillions.
Bill Randell
Bruce
Great point on the Minimum Credible Coverage (MCC) requiring prescription coverage. Many of my clients are utlizing Walmart at $4 for 30 and $10 for 90 days for their prescription and you don’t even need health insurance. That is the cost off the street. Clients have asked to get a quote without prescription, but they can not since MCC mandates it.
Medicare does not require participants to buy prescription coverage, neither should the Commonwealth of Massachusetts.
Bill Randell
Bill:
Strictly speaking, Medicare has no unfunded liabilities either. There is no contractual requirement for the federal government to make payments based on the current law. Congress can change the law at any time.
The “unfunded liability” number you quote is just an accounting exercise to see what would happen if Medicare’s income and expenses do not change. The same exercise can be done for employers providing private health insurance. Both show that the current trend is not sustainable.
At the end of the day what matters is the cost of health care. And that is growing at an unsustainable rate regardless of whether it is being paid by a private or a public insurer.
Bruce and Bill:
Can you buy chemotherapy drugs at Wal-Mart for $4? If not, then by making drug coverage optional, you are creating the same adverse selection problem that you have both warned against on this page.
If drug coverage where optional, why would I or any rational consumer ever purchase it? I would simply drop coverage and buy Wal-Mart drugs as you suggest. If I ever get a serious disease like cancer that requires really, really expensive drugs, only then would I purchase coverage. The result would be that the only people purchasing this coverage would be those that are incurring huge costs.
At a minimum, there needs to be a mandate for everyone to be adequately insured to cover any medical event that may have catastrophic financial consequences. Otherwise, you will just be encouraging people to game the system by being under-insured and then purchasing additional insurance when they get sick.
Medicare is presently solvent. Its present run goes to 2017. Their financing when done includes a 10 year cycle. Unable to predict the cost of health care much beyond that this seems a reasonable approach. The taxes are adjusted, now at 1.25% of taxable income accordingly or the premium for Part B is adjusted. Other measures such as controlled outlays by determining excessive payments also become part of the law. Sometimes these shifts are done by budget neutrality shifting overpayments to areas of needed reimbursement.
For insurers this process is underwriting and determining what premium should be set. However it is based on garnering market share and making deals among brand name and not so publicly renowed places. These negotiations usually result in cost shifting to the subscribers and much increased costs. In a sense of running a rational system, it makes very little sense.
So the “exercise” by insurers results in hyperinflation compared to the Medicare system. Both are multiples of the general inflation rate but there is clear excess in the private world.
Dr. Green: I am not proposing to take back any benefits. I am referring to the fact that the minimum benefit standard being considered by Congress would expand coverage for certain people who are currently insured and cost more. One of the President’s principles is not to raise the cost of care for the currently insured.
Bruce: The President’s principle is not to raise the cost for those currently insured. It’s obvious that the cost will have to rise for those who are under-insured, just like it will have to rise for those who are completely uninsured.
Anybody who doesn’t have adequate coverage for a medical event that could wipe them out financially is under-insured.
Bruce, I am asking a different question than whether something is taken away. As I understand it this should not be a problem for registered Mass insurers since they will already meet that standard. However, maybe not. Which services would be expanded for HP under present proposals? Does HP not include such services? I knew you were not taking any benefits away. I was wondering if there are any mandates from the law that are not presently in existence for Mass insurers.
Paolo: I wonder if currently insured people, when required to pay more for coverage they may not have wanted in the first place, would agree that they are “underinsured”? On the issue of chemotherapy drugs, 90% are covered under the medical benefit.
Dr. Green: The federal minimum benefit standard being proposed would be slightly richer on an actuarial basis than the Massachusetts standard. Most states have no such standard and will have a much bigger problem (New Hampshire, for example).
Bruce, are you saying that (i) there should be no minimum benefit standard, or are you saying that (ii) there should be one, but that it shouldn’t be as high as in the proposed federal plans?
If (i), how do you prevent adverse selection (healthy people only buying cheap plans with almost no benefits)? If (ii), what should be in your opinion the appropriate actuarial value of this minimum plan?
Here is what I am proposing:
1) limit the open enrollment in the Commonwealth of Massachusetts for the merged markets to one month, unless they can provide proof of prior coverage or have a qualifying event like any other entity does
2) remove prescription coverage from MCC like we we do with Medicare
3) alllow carriers to offer coverage without all the state mandates like larger companies have the ability to do when they self-insure
4) increase the individual and employer penalties for not having or offering health insurance
5) add an asset test in order to be eligible for Commonwealth Care
We don’t need Medicare For All or anything else. Lets just focus on what we have and fixed it. These steps would help alot.
Bill Randell
Bruce what are these enriched benefits? Hopefully it is not a state secret. Also in your answer to Paolo you seem to think people can accurately guess what their health care needs will be over the ensuing year.
Paolo:
I want to answer your question on drugs. Take a look at Don’s favorite subject–Medicare. First you buy a supplement then you pick a drug or no plan at all.
All we are saying is that people in Massachusetts should be given the option to buy health insurance that is deemed to meet MCC without having any prescription benefits. Just like they do with Medicare.
Bill Randell
Dr. Green: The bills do not specify benefits but relative actuarial values.
Bill: Thoughtful recommendations, but I’m not sure the politics work.
Paolo: I am arguing for the latter. If we don’t want to raise existing premiums too much, the minimum standard should roughly track what is being sold in “reformed” markets, on average. This will still create an affordability problem in many states, but it is probably manageable.
Bruce, Obviously something has gotten you concerned. So now what are the “relative actuarial values” that you are targeting. It is important since premium pricing will depend on these perceptions. Please clarify further. I am sure you do not want to appear you are tilting at windmills.
Bruce:
We work with clients every day and I am confident if those changes were made, we would make health insurance more “affordable.” Sadly, I agree with your opinion that politics will not let any of these changes be implemented.
Maybe it will take all the major carries to take a stand and not participate in the Connector/Commonwealth Care plans until some of these ideas are adopted?
Bill Randell
Bruce: Thanks for the response. It makes a lot of sense to set the federal minimum standard that is similar to the AVERAGE sold policy.
Bill: I actually like all the items in your proposal except #3. The problem with what I believe you mean by #3 (no coverage mandate) is that it might lead to adverse selection. Healthy people will gravitate towards cheaper policies covering little or almost nothing, making the comprehensive insurance pool very small and expensive. I agree that people should be allowed to opt out of some types of minor benefits (e.g., eyeglasses, dentists, cheap drugs), but you cannot let people opt-out of critical benefits or you will degrade the insurance pool required to protect ALL people from medical financial hardship. Large companies that self-insure are different because their pool is not self-selected. Medicare is also different because it does not depend exclusively on premiums paid by its members. So adverse selection does not occur in the latter two cases.
Don: While Medicare is slightly more efficient than private insurance at providing benefits, both are unsustainable. It is only Medicare part A that is funded until 2017 (8 years from now!!). Parts B and D are both already partly funded from general revenue. The average current Medicare beneficiary has only paid in Medicare taxes about 40% (after interest) of the value of the benefits he/she is expected to get during his/her lifetime. The math is pretty clear. The only way to keep either system working is decreasing medical inflation.
All: Thanks for the reasonable discussion.
It is important to define what is driving medical inflation. The usual explanation is the cost of medical care itself. What this represents is the medical workforce and its high skill level. There will be little savings here unless cutbacks in progress is accepted by the public.
The other area of inflation is administration of health insurance in all its ramifications. This has a $400 billion dollar a year price tag that does little to enhance care. Real pay dirt exists in reorganizing the delivery and stopping the kind of deal making that presently goes on among providers, hospitals, and insurance companies.
The bottom line is that the main cost drivers are the number of people involved in the system. Unless there is pruning of personnel in non essential areas, there will be no savings. Naturally people line up as potential winners and losers creating the political situation we find ourselves in. Unless a necessary transition to a leaner system is accepted no reduction in costs will be realized.
Pablo:
I agree with you on my recommendation number 3. that. You make good points here. The remaining 4, however, would still make a great difference.
Pablo, you beat me to the point on the Medicare unfunded mandates answer. Thanks.
Just want to remind everyone of Don’s plan.
1) offer medicare for all
2) anyone making over 300% of the Federal Poverty level would be hit with a 6% marginal tax rate.
3) anyone making less the 300% of the Federal Poverty level would pay nothing
Would you want to implement my four remaining recommendations (keeping state mandates) or Don’s??
Bill Randell
Well Bill,
Then let me remind people of your plan. Allow underwriting of insurance so that people who actually need it can’t afford it. Punish those who eek out some financing to cover themselves. Forget about problems like excess deaths from lack of insurance and medical bankruptcy, the system is actually working fine. Let hospitals, insurers, and providers make deals and plans that drive up the cost of care. Disregard any input from subscribers. They’ll get whatever after the above processes are done. Continue to let insurers think they bring “value” by interfering in the practice of medicine with unproven recommendations.
While you poo pooing Medicare you might want to gander at the recent insurance bill increases. Mine went up 50%.
If you ask the general public what they think they fully support social insurance for adequate coverage. By the way so do physicians.
What you call a marginal tax rate is equal to premiums that would be paid and is substantially less than what is being paid now. Other than these expansions of your remarks it looks good to me. So now let’s have the vote. Bill, you may be surprised by the final tally.
Don
Let me address some of your comments
“Allow underwriting of insurance so that people who actually need it can’t afford it”
My recommendation was to limit the open enrollment, just like they do with Medicare or any other group sponsored plan. If people missed the open enrollment, they would need to go through underwriting so people did not just sign up, have their medical bills paid then just cancel. This will actually make the cost of health insurance more affordable.
“Punish those who eek out some financing to cover themselves.”
Currently a person can be literally worth millions and qualify for financial assistance if they fall under 300% of the Federal Poverty Limit. Don, there are many people doing this currently. I actually want to add an asset test so that those truly in need of assistance, get it. This is not different then what we do with Medicaid.
“Disregard any input from subscribers.”
Many of my clients have been asking me how to contain costs. Here are some tangible ideas that will help contain costs. Specifically we deal with many small businesses that are not on any prescription medication, who would like to drop their PCS coverage and merely pay out of pocket in the event they need any prescriptions. Dropping PCS as mandatory under MCC is listening to subscribers.
“Mine went up 50%”
Well aware of the increases that have been brought upon us by HealthCare Reform, that is why we came up with these recommendations to help control the costs.
“What you call a marginal tax rate is equal to premiums that would be paid is substantially less then what is being paid now.
In previous posts, you want to impose a flat percentage on income of anyone earning over 300% of the Federal Poverty Level. You recommended 6% . Don, it is not what I call but what anyone would call a marginal additional tax rate.
In the end, all I am suggesting is that we work with the current system but make some changes.
Bill Randell
Bill,
Nothing to do but let your explanations stand and let others digest what they think the reality is. Health reform has not even passed and has a start date in the future and you are blaming that on premium increases. This is a new kind of logic.
The average household holds about $5000 in reserve. This is not going to tip the scales in either direction. I am assuming you don’t expect people to borrow or sell their homes to pay for their health insurance. The idea is to figure out how to include people at reasonable cost not exclude them. Let’s see that list of millionaires who are misreporting their assets.
Your clients are the buyers of the insurances but it is their employees who are the subscribers. It is this group to whom I was referring.
As yet there is no health care reform and you blame the insurance increases on something that does not presently exist. This defies logic.
People can opt out of Part D but pay a penalty if they need it later. I do not think this is wise strategy unless you have a crystal ball to predict your future health needs. Your customers are playing Russian roulette with their health.
In looking over what I analyzed about your proposals you have only solidified my interpretation.
Let me make a prediction. There will be an improved Medicare For All in the next ten years because medical inflation can not be controlled to any extent without a single risk pool with removal of all the bureaucratic overhead.
I’m still waiting for the votes to come in. I have no problem matching my proposals with yours. It was the same struggle to bring about true reform wherever it has put into place.
Don???
In 2006, healthcare reform was passed in Massachusetts effective January 1st, 2007. Ths is important to know since the Federal model is quite similar to that in Massachusetts.
Although we have been successful in getting the uninsured insured, we have not been as successful controlling costs which is reflected in the health insurance renewals. We need to do a better job controlling the costs, thus my recommendations.
Let me get this right:
1) you believe the split between HMO/PPO is 50/50
2) you are unaware the healthcare reform pass in Massachusetts 3 years ago
Honestly, not being a wise guy but you can not be a doctor in Massachusetts if you did not know either of these two things.
Bill Randell
The issue of private vs. public health insurance is not all that important. Either system can work well with the appropriate regulatory framework in place. Most importantly, a successful health care system should have a basic/minimum set of guaranteed benefits that everybody can afford and must purchase in addition to optional/premium benefits that anyone can purchase with their own money.
Medicare-for-all can do this as long as it is possible for doctors to opt out and for individual to buy additional supplemental insurance. Likewise, a fully private system can do this as long as there is no underwriting, reasonable premium differentials, a mandate to cover everyone with the basic set of benefits, and subsidies to make it affordable.
So I could live with either system, although the state (and perhaps the country) is moving towards the latter model. Bill’s proposals strengthens the private model by discouraging people from gaming the system. I would go one step further. I would have the payments for the mandatory/basic insurance withdrawn directly from payroll (just like social security, medicare, unemployment insurance, etc.) This is actually what is done in Switzerland.
Pablo:
Good point on the direct withdrawal.
Bill Randell
Dear Bill, You are the wise guy since you know I was referring to national reforms since I thought you were referring to premium increases in general. The Globe had a recent story corroborating that I am not alone in such increases. Some small businesses have seen a 42% inrease in their premiums.
However I do agree that the state plan has failed to control costs or even done the most effective job on enrollment. However they are not the reason for increased premiums and the logic you presented still does not hold water. It is the same old same old that is causing the raises. I have outlined that above. If you want to nit pick since I was looking at things differently but you must have a better way to exchange views.
By the way I am still waiting for Bruce to do the breakdown on the PPO/HMO equation. In my practice it was 50/50. You do have a noisome habit of trying to put people down with no backup of your information. If I’m wrong and its 90/10 as you state, OK. Let’s see the data. I tried researching on the internet and the only data I could find was from Michigan where the ratio is 60/40 PPO/HMO.
Paolo Medicare now uses private insurers to pay claims and supplement plans abound. No one has to take Medicare either patient or doctor. However all pay in to support the system and keep the insurance affordable. Parts B, C, D are all options that are elected not mandated. In other parts of the world insurance companies are non profits and therefore have a different modus operendi than this country. Medicare is already a deduction from salaries or income. The fact is the wheel does not have to be reinvented. Patients gaming the system is such a minute part of bringing costs down it should be way down the list.
Don:
We are all well aware of the health insurance increases. As a broker I see it everyday and was referring to the increases in the Commonwealth of Massachusetts. Do not need any third party to tell me that, stop by my office and I will show you all the renewals that I am working on.
When I mentioned how bad it is lately I blamed it on healthcare reform, which has done a good job getting the uninsured insurance but has not good a job controling cost. That is why I came up with now 5 recommendations (Pablo has me thinking about droppin number 5).
1) limit open enrollment to one month
2) drop prscription coverage from MCC standards
3) increase employee/employer penalties
4) add asset test to qualify for Commonwealth Care
5) offer a small business plan that does not have all the state mandates (backing off on that one)
Even these 4 changes would be simple and would do alot to help control costs and lower premiums for small businesses. If you want me to back it Harvard/Pilgrim did a study of Between April of 2008 and March of 2009, about 40% of the people who purchased individual insurance from Harvard Pilgrim stayed covered by us for less than 5 months. Even more amazing, they incurred, on average, about $2,400 per person in monthly medical expenses - roughly 600% higher than what we would have expected. People are gaimgh the system and this needs to be controlled.
Why don’t we trying working within the system to control costs not replace it with another government bureaucracy.
Thanks
Bill Rande;;
Dr. Green,
On April 6, 2009, The Congressional Research Service published a paper titled “Setting and Valuing Health Insurance Benefits.” It talks mainly about the concept of actuarial value as a way to make comparisons among health plans. At any rate, in the report, it states that in 2008, 69% of the insured population was covered by a PPO plan and 23% were covered by an HMO. I’m not sure if this includes the Medicare and Medicaid populations or not. You can access the paper at: http://assets.opencrs.com/rpts/R40491_20090406.pdf.
Bill, I do not need to stop by your office to see the increases, it has already been cataloged in the Globe. My point was the measures taken in this state did not increase medical costs to insurers. They actually received extra revenue from the program. No tinkering with the present system will control the costs. Health insurance since it is a universal and necessary need requires a single risk pool that includes everyone. Personnel in the medical system, administrative and to some extent clinical, need to be removed from non essential areas to get a hold on premium upswings. Medical costs like most businesses lays in their payrolls. None of what you suggested changes this but rather cost shifts to other sectors. At some point about 20% of the population requires one of the exclusions you propose. The problem is nobody can predict if they fall into this group and it is the purpose of insurance to give this security at a reasonable price instead of gambling that it will not occur.
By the way Barry above has answered the question on the HMO/PPO ratio. Wish I had a bet on that one.
Donald:
I was referring to subscribers in Massachusetts when discussing the PPO/HMO split.Since we were refering to health insurance premiums, I was referring to group sponsored plans not Medicare/Medicaid.
Barry’s answer has nothing to do with what we discussed. Maybe Bruce can give a break down of his subscribers in Massachusetts between HMO and PPO.
Bill Randell
I dont understand . what drives the premiums up ? and how will we be able to lower the cost if this medicare bill is passed ?
All: As of the end of October 2009 Harvard Pilgrim had 409,446 members in PPO products and 518,719 members in HMO products.
Thanks Bruce. Not quite 50/50 but close enough. 44% for PPO and 56% for HMO.