Healthcare in the United States is a complex issue, but there are, ultimately, two categories of problems:
First, the rising cost of healthcare in general, as it affect everyone: those insured by their employers, those with individual insurance policies, and taxpayers, insofar as the rising cost of Medicare, Medicaid, and other government-provided healthcare programs impact us.
As a bit of background, I work as a pension consulting actuary in a firm which also has a practice advising companies on healthcare, so I’m not an expert on healthcare topics, but learn quite a bit from training sessions, informational materials the company produces, etc. And this is what I see: employers, large and small, are looking for, and don’t have, an answer. The current direction is “consumer directed health plans” — that is, high deductible plans. (And we see the trends earlier than most, because the company offers them to its own employees right away. Thirteen years ago, when my fist child was born, we were covered by an HMO, where we paid $10 for everything related to the pregnancy and childbirth — not per visit, but in total. Later, that same child was in speech therapy, and we paid nothing, not even a co-pay. Now we have a $1,500 per person/$3,000 family deductible.) The other approach is “Defined Contribution” or “private exchanges” — where the employer decides on a fixed amount per family type (single/+1/+family) and the employee goes on an “exchange” (administered by a benefits outsourcing firm such as my employer) to purchase healthcare, from what are hoped to be a greater variety of competing providers than if the company had to make individual arrangements with all of these insurers itself. What remains to be seen is whether they take the next two potential steps of (1) moving from a contribution that varies by family size/type to a fixed amount per employee regardless, and (2) increasing the employer subsizy by a fixed amount or by CPI, but not trying to keep pace with medical inflation any longer.
I really don’t believe that insurers are the bogeyman as far as high health insurance costs are concerned. They do compete with each other to offer employers the best price and I’ve never heard any hint that insurers engage in anticompetitive practices. What’s more, large employers are usually “self-insured” meaning that they bear the entire cost of their employees’ health care, with the health insurance company whose name is on the insurance card the employee has in his wallet really providing “administrative services only” (ASO in industry terminology) — processing claims for a fee. It’s the providers — but I’ll save that for another post.
The second issue is cost to individuals. What I mean is that for many people, purchasing an individual insurance policy is genuinely cost-prohibitive, and healthcare without insurance, for any major healthcare need, is inaccessible (hospitals simply won’t provide non-emergency treatment without an insurance card) or unfathomably sky-high — especially because of the quite nefarious practice of charging “sticker price” (double, triple what the negotiated rates are for an insurance company) so that it’s a matter of skill and no small degree of luck whether one can negotiate the price downwards.
And people without insurance behave in ways that are, really, not rational — avoiding visiting a doctor for preventative care or early diagnosis, even if they could swing the private-pay cost, out of a fatalistic “what’s the use, I couldn’t afford the treatment cost anyway, so I’m better off not knowing.”
Decisions not to purchase health insurance are also often not rational — even in cases where people could genuinely afford a premium they go without because of a mindset that health insurance is something one gets through one’s employer. My sense is that if a family has a middle-class life with all the accoutrements (single family home, cable, meals out), and a job change leaves them without insurance, there’s a fairly strong likelihood that that family would deem health insuranc unaffordable if they had to sacrifice one of these markers of middle-classness. And someone leaving Medicaid due to success in a job hunt would never even consider a basic, high deductible policy.
I have a lot of issues with Obamacare, which I hope to write about later, and one of them is the way they’ve made insurance overpriced for the young by requiring cross-subsidies, but I am curious about what the “exchange” enrollment rates will be with respect to these groups that don’t purchase insurance because they deem it to be too expensive.
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