Speaker Paul Ryan is catching heck for saying yesterday that the main problem with the Affordable Care Act is that it relies on the basic tenet of health insurance: healthy people subsidize sick people, with confidence that when they become sick, they’ll enjoy the same subsidy.
Republican Congressman John Shimkus of Illinois expressed an even grosser misunderstanding of health insurance yesterday during the lengthy House Energy and Commerce hearing on the Republican health insurance revision:
WOW. The #GOP’s reason to object to insurance covering prenatal care? “Why should men pay for it?” Watch: #Trumpcare #ProtectOurCare pic.twitter.com/Q55nG1Un8j
— NARAL (@NARAL) March 9, 2017
Rep. John Shimkus brands himself “a Christian who is 100 percent pro-life.” Rep. John Shimkus doesn’t understand his brand or insurance. Let’s enlighten ourselves with this 2013 explanation of women’s and men’s health issues and insurance from Nancy Metcalf to a male Consumer Reports reader with no kids:
Health insurance, like all insurance, works by pooling risks. The healthy subsidize the sick, who could be somebody else this year and you next year. Those risks include any kind of health care a person might need from birth to death—prenatal care through hospice. No individual is likely to need all of it, but we will all need some of it eventually.
So, as a middle-aged childless man you resent having to pay for maternity care or kids’ dental care. Shouldn’t turnabout be fair play? Shouldn’t pregnant women and kids be able to say, “Fine, but in that case why should we have to pay for your Viagra, or prostate cancer tests, or the heart attack and high blood pressure you are many times more likely to suffer from than we are?” Once you start down that road, it’s hard to know where to stop. If you slice and dice risks, eventually you don’t have a risk pool at all, and the whole idea of insurance falls apart.
It’s worth noting that virtually all employer plans cover maternity care for exactly this reason: a unified risk pool. And no one seems to complain about that, for some reason. Moreover, we are all paying taxes to support Medicaid, which foots the bill for nearly half of all live births in the U.S [Nancy Metcalf, “Why Should a Childless Man Have to Buy Maternity Coverage?” Consumer Reports, 2013.11.05].
I just heard Dr. J. Mario Molina, CEO of Molina Healthcare, say that Medicaid pays for 50% of all births in the United States. That’s exactly the figure in South Dakota and California.
A man can get testicular cancer without the involvement of any woman. A woman can’t get pregnant without the involvement of a man. I’d like men and women to keep paying for each other’s travails through health insurance.
This sort of idea that we are all in this together – that humanity – and individual humans – DEPEND on the support of and having mutual interests with other human beings is, of course, anathema to the wide-spread (at different depths) narcissism that the election of one Poppa Don Trump represents. There is an inability – not simply an unwillingness, but a real inability – to experience empathy or sympathy with other humans inherent in that condition.
If you have fire insurance and one house burns to the ground and another had a smoke detector that notified the fire station and it was put out with very little damage, and both had insurance, both would get paid according to the lose. You would not get insurance unless you had the possibility of total lose. There is health insurance only because we all know we might get a situation where we simply would not be able to afford it without insurance. not just a matter of how subsidizes who, but we all have risk.
Wow, what a world this would be if we could opt out of funding governmental items we didn’t agree with. Personally, I’d love to see my federal tax dollars stop paying for military spending but you’ll notice that the only things politicians seem to like talking about opting out for are helping those that need it — the poor, the disabled, the elderly, women (especially single mothers), children, and so forth.
Of all speaking on this matter, Roger has the best understanding of insurance and its actuarial principles. Whether it be Obama or now Ryan, the “explanation” about subsidy in this context is incorrect. I will give an illustrative example. The numbers are selected for illustrative purposes and I make no representation of the relative differentials as being accurate. Just the illustration.
Insurance principles under actuarial SCIENCE is EACH person is evaluated by a set of criteria or predictors for exposure (age, gender, health condition, etc.). The insurance company then determines the Net Present Value (negates time value of money between premium payments and claim payments) of this person’s claims is likely to be $500,000 (I repeat selected for illustrative purposes) over their lifetime.
They then offer to the person to cover their claims for a stream of premium payments of a Net Present Value of $400,000.
I know your first reaction is “bull dung” because the insurance company isn’t willing to have a guarantee of loss which is correct they intend to make their money someplace else.
But, they look at those likely claims and know they can negotiate at least $100,000 of volume discounts and other cost management techniques (i.e. preventative care incentives) the person otherwise couldn’t get. Anything they negotiate above $100,000 is their profit.
(Sidenote #1: The party who makes the most money in the insurance sphere is the insured and not the insurance company. And, that doesn’t include the peace of mind of knowing one is insured against catastrophe.)
(Sidenote #2: It is about a break-even between the insured and property & casualty insurance (i.e. your house can car insurance) and a small loss with regard to life insurance. Since it isn’t the subject of the thread, I won’t go into it and that reality doesn’t mean one shouldn’t get P&C insurance or life insurance.)
Now to Roger’s accurate comment regarding pooling of risks. First, pooling is a form of diversification (think don’t put all eggs in one basket) which actually can enhance return (your stock advisor can explain it to you or in a book. Takes probably 50 pages to do it) to the insurance company above the $100,000. Second, pooling does create gain to the insurance company in other ways (a long list but an example is goes back to volume discounts). Third, pooling creates arbitrage opportunity (concept you will have to read up on your own).
When we started to introduce “subsidy” to insurance it started to get messed up.
Fact, pure insurance to women during child-bearing years is more expensive than for men of the same age.
Fact, pure insurance for men after the age of 45 until 65 is much more expensive than for women.
Fact, over a lifetime, it is less costly to provide insurance to women than men and before we started talking about “subsidy” and the premiums of women during child bearing years, premiums to women over their lifetime were cheaper than men essentially because they generally pursue less risky behaviors.
Fact, now, over a lifetime, men and women pay equal insurance despite the reality women are cheaper to insure. Thus, women subsidize men today whereas it wasn’t historically.
It is no wonder Obama, Ryan, et. al. don’t speak accurately when talking about insurance.
Troy, the insurance companies bought into the ACA on the assurance that they would get to insure lots of young healthy people, since that would subsidize the additional care they would provide to policyholders whom they could no longer cut for pre-existing conditions. Insurers thus seem to go beyond the idea of individual actuarial assessment and buy into the idea of healthy policyholders subsidizing less healthy policyholders. If we throw that idea overboard, then we also throw protection for pre-existing conditions overboard. We throw out the 3:1 old folks premium/young folks premium ratio. We basically ditch what allows million of people to get insurance now.
There comes a point where “every man for himself” leaves a lot of people drowning in the ocean.
Curious, Troy: pre-ACA, weren’t women in general paying more for health insurance than men? Does the long-term “women are cheaper than men because they engage in less risky behavior” argument only apply to auto insurance?
http://business.time.com/2012/05/18/when-consumers-pay-more-due-to-race-or-gender/
Not a fact: It is no wonder Obama, [but not Ryan, et. al.] don’t speak accurately when talking about insurance.
why do you have to pull this bullsheit troy? you are just like trump’s campaign of “crooked lying Hillary.
kristie needs 300,000 letters from registered voters disputing her “non-governer wisdom” of supporting repeal of ACA. this is what she is falsley saying:
“When we talk about healthcare, we’re talking about something that is very personal to people. It’s why I’ve so often looked for ways to put you, the patient, in control of your own healthcare. Since Obamacare came into play, however, rising costs, shrinking options and increased bureaucratic involvement has resulted in control being taken away from patients and their doctors.
While we’ve been able to offer some relief by repealing or delaying the most burdensome provisions, Obamacare remains fundamentally broken.
On Monday, new legislation came forward that puts you back in the driver’s seat. More specifically, this legislation:
•Eliminates Obamacare’s individual and employer mandates.
•Repeals 14 Obamacare taxes.
•Maintains critical patient protections, including those for individuals with pre-existing conditions. It also allows young people to remain on their parents’ plans until age 26.
•Replaces flawed Obamacare subsidies with monthly tax credits that go directly to low- and middle-income families rather than big insurance companies.
•Enhances and expands Health Savings Accounts.”
Cory,
Pre-ACA, lifetime health insurance was cheaper for women. The issue which got all the attention were the premiums for younger women during child-bearing years. I think the break-even was roughly 35.
The auto “risky behaviors” and health “risky behaviors” are different. In the latter they are related to weight, exercise, diet, controlling high blood pressure or cholesterol, etc.
Regarding your comment on the health insurance companies, you are so right which is why ACA was most good for insurance companies (or so the insurance companies thought) until they realized the magnitude of the cost of the “sign up if sick” and “cancel when well” incentive for people under ACA.
Regarding every man for itself comment, pure insurance actually is the opposite because the person can “win” the most benefit by getting insurance early in life (the $500k of actuarial cost for $400k of premium discussed early) but it requires a return to a paradigm that goes back even longer than ACA whereby everyone understands the value of insurance and we tailor premium subsidy to make it affordable for those who need it.
Leslie, insurance is a word which has a definition. And definitions and adhering to definitions is how we communicate clearly. Way to often ALL of our politicians use the word “insurance” when they are talking about “access to health care.” They are not the same thing and their conflating these two distinct concepts leads to confusion. This is a problem infecting both sides of the aisle equally.
Wingnuts are working on a bill that allows insurance companies access to employees genomes for the purpose of weeding out those with potential illnesses and calling it pre-existing to deny insurance. They also want to fine employees who refuse to cooperate in their own demise. Gotta love wingnuts persistence in making the lives of the havenots pure dee miserable.
And, Troy- both sides DON”T do it.
That Troy, is simply not true. Women always had higher health insurance premiums than men. It did not matter the age, women were always higher. In life insurance, women were lower, true that, but not in health insurance.
Access to health care is certainly not the same as insurance. Insurance is purchased, access means you can go to the emergency room, period. If you are dying, they will admit you so you don’t have to die on the sidewalk, but that is all.
Jerry,
Insurance is a contractual relationship between the insured and the insurer. If it is health insurance, the relationship is essentially a promise to pay premium in exchange for a promise to pay health claims as per the policy.
What you described is basically emergency room care (essentially triage care) which is not access to comprehensive health care. Access to health care comes in many forms (which is not insurance):
1) I am employed by a company which provides health care benefits (the company has insurance but the employee does not) which continue so long as I remain employed boy the company or am paying the premium under COBRA.
2) I am poor and eligible for Medicaid whereby access to health care continues so long as I’m poor enough to qualify for Medicaid. Medicaid is essentially an agreement with providers to provide health care to those eligible and the government will pay them according to a payment schedule.
3) I have millions of dollars in the bank and can pay for my health care.
For those who want access to health care, I am sure that is a distinction without a difference. However, for those discussing or designing a health insurance program, conflating the concepts does a disservice to a rationale discussion.
And yes, Obama conflates the two concepts. Ryan did at the beginning. Shimkus did. Richard did in his comment. Cory did in the last sentence of his original post.
Cory is correct, we all must pay to make sure that we are all covered. We must pay in one form or the other. Women have always paid the most for healthcare, always. In my research, prior to ACA/Obamacare, Montana was the only state that was unisex in the ratings as the ACA/Obamacare is now. That is a fair assessment of how to continue further as it makes the most sense. You are a 45 year old male non smoker, you should pay the same amount as a 45 year old female non smoker, fair deal.
Troy, this statement of yours is not completely correct sir “Insurance is a contractual relationship between the insured and the insurer. If it is health insurance, the relationship is essentially a promise to pay premium in exchange for a promise to pay health claims as per the policy.” The health insurance company agrees to pay “in network claims” at a certain rate and “out of network” claims at rates to be determined. So the coverage is not blanket coverage from one end of the state to the other, it is dependent upon who the insurance company has a contract with.
To me, that is not insurance as a premium for a promise to pay claims as per the policy, that leaves the insured at to much risk. Much has been discussed by the trumpers on insuring over state lines and yet you cannot go over state lines without authorization for treatments. That means you have to go through the HMO in the state, yes Sanford and Avera are HMO’s, to see if they will allow you to go to Mayo or to Anderson for treatment. You are paying premiums for healthcare that is not really insurance, it simply is not. Life insurance, on the other hand, is pure insurance; you die, they pay. Health insurance should be the same. You get sick, you pay the deductible and co insurance and you go where you feel you will get the best service available. The insurance company should honor their contract and pay for all services that are rendered. I would rather have government controlling my healthcare than an actuary sitting in a windowless room counting beans. Medicare for all!
Jerry,
#’s match to your paragraphs:
1) I think a 45 yo female non-smoker should pay less than a man of the same age because she is likely to demand less health care until she is eligible for health care. The reason she is likely to demand less is women practice better health habits than men do.
2) Read my opening paragraph (especially the end). What I said is correct. Yes, it MAY not be “blanket coverage from one end of the state to the other” if that is not the terms of the policy.
3a) If one buys a particular policy with the features they want and if it doesn’t insure some things, the insured assumed the risk when they bought the policy. That said, I think shortcomings in health insurance should be clearly disclosed so people don’t buy a bill of goods (which is the law in South Dakota).
3b) If you can’t go out of state or out of network for care, it is because it is the terms of your policy. Has nothing to do with Obama OR Trump. Whether Obabacare is repealed and replaced or not, this will not change unless you want greater freedom which will cost more.
3c) If you want Medicare level coverage, there are a multitude of policies out there which mirror Medicare with regard to coverage and flexibility. I encourage you to do so if that is your wish but please don’t make me have to go there.
These policies are among the very cheapest policies available. However, you WILL NOT be able to “go where you feel you will get the best service available.” You will only be able to go to providers willing to accept Medicare reimbursement rates just like everyone on Medicare.
Troy, 1. It really does not matter what you think the premiums should be for a 45 year old female non smoker, the fact is she paid more.
2. As that is the case, then it is really not health insurance. It is partial coverage that you must then be prepared to go to the division of insurance for settlement. You are in Pierre correct, trot on over there and ask how many of these come through there office. Wellmark had health insurance for the individual marketplace and it was covered across the state, but that is no more, even with rate increases of 40% each year.
3. The law in South Dakota does not guarantee the bills will be paid.
3b. True that, I stated that the two plans that are offered in the state, Avera and Sanford are HMO’s that require you to go through a referral system that may or may not allow you to get your treatments at a center of excellence like MD Anderson or Mayo. What I was referring to was the argument that you should be able to cross state lines to purchase health insurance and if that is what is wanted, then the health insurance companies should cover you in other states or than the domiciled state the insurance company calls home.
3c. Name one medical policy in South Dakota that mirrors Medicare. Just one Troy. Not to hard as there are only two being offered. Which Avera policy? Which Sanford policy?
Regarding Medicare policies. You can have a Medicare supplement policy that is traditional like Mutual of Omaha or Wellmark that will cover your goods and services outside of your state of residence, even if you move. You are correct on one thing though, the premiums for these policies is much less than that of a 60 year old non smoker with a cost of $802.69 per month for a $5,000.00 deductible no frills policy that is not an HSA.
What matters the most and what this country is sorely lacking anymore is solidarity. That waived bye bye to us some time ago. Your republican party has passed genetic testing for employees http://www.salon.com/2017/03/10/house-committee-passes-bill-that-could-allow-employers-to-require-genetic-testing/
How long do you think it would take to find out what degree of whiteness you are?
Jerry,
A couple of crazy days at work and meeting tonight. Not avoiding you but might be Tuesday or Wednesday when I respond. If i forget, don’t hesitate to remind me. I did make a note though at my desk.
More choices, right troy?
Trump/GOP willrepeal two tax increases on high earners enacted in 2010 to help pay for the Affordable Care Act: an increase in capital gains taxes and other investment-related income, and a surcharge on Medicare taxes.
People making $200,000 to $999,999 a year would also get sizable tax cuts. In total, the two provisions would cut taxes by about $274 billion during the coming decade, virtually all of it for people making at least $200,000, according to a separate assessment by the committee.
“Repeal-and-replace is a gigantic transfer of wealth from the lowest-income Americans to the highest-income Americans,” said Edward D. Kleinbard, a professor at the University of Southern California law school and former chief of staff for the Joint Committee on Taxation.
https://www.nytimes.com/2017/03/10/business/tax-cuts-affordable-care-act-repeal.html?mabReward=ACTM2&recp=2&action=click&pgtype=Homepage®ion=CColumn&module=Recommendation&src=rechp&WT.nav=RecEngine