How Obama's health care plan will actually work--just the facts

[Ardentfrost]

additional thought just to squash this possible point: if they DO entice doctors to lower their costs by giving them tax breaks when offering care to national healthcare subscribers, that is no different than collecting money right out of our pockets since that will be less money the government takes in and therefore they must make that money up from us in some way.

[thewise1]

Originally Posted by Ardentfrost

Wait wait wait.... I'm confused by this "simple economics" claim.

The government subsidizes an optional healthcare plan which obviously allows them to offer lower cost healthcare than the private industry on-the-surface (obvious). This makes them the largest issuer of healthcare simply because people will save on-the-surface money (obvious).

I understand all that.

But unless the real cost of healthcare decreases, NOT INSURANCE COSTS (I can't express how important that aspect is), then the subsidy will have to make up the cost, right? And subsidies come from our pockets in the form of taxes, right? So doesn't that mean we're basically paying the SAME amount we do right now? The only difference is those that opt out would just be paying twice... I mean, I haven't read his plan, but isn't that in essence what will have to happen? They can't FORCE doctors to charge less, so this is the only outcome I foresee.

This is the problem with our school system, right? Everyone pays already, so people are pretty much coerced unfairly into using the system unless they are really wealthy.

And even if it works as an opt-out system (where you do NOT pay taxes to subsidize it unless you use it), then those that do use it still aren't getting a cost decrease because what they don't pay in monthly costs, they pay in taxes.

My ideals aside (which do prevent me from voting for Obama, but I do realize his chances of being president come 2009 are pretty decent), I'm with thewise... I don't see the economic conservatives of the nation being able to prevent this from happening. And since no one is offering a deregulation approach to lower costs, I'll end up having to live with some sort of universal healthcare eventually. If that's going to happen, I am hoping that some idea that will ACTUALLY reduce costs comes to the forefront. As long as I'm going to have a system I don't like, I might as well save money over the current system I don't like

His claim is that there will be no uninsured people to drive up our costs, thus lowering costs.

I view that claim dubiously, though.

[WickedLou9]

This is actually a good article that sort of explains it.

Yahoo! Personal Finance: Calculators,Money Advice,Guides,& More


You need to read the whole ting, but here is the gist of it

So what's the economic rationale for such a heavy-handed approach from politicians as far from each other on the political spectrum as Hillary Clinton and Mitt Romney? Mandatory insurance is pretty much the only way to keep the American employer-based insurance model from collapsing completely. (And even that might not be enough.)
But health insurance is like any other kind of insurance: It pools risk. I buy homeowners insurance not because I think my house is going to burn down, but because in the highly unlikely event that it does, I would be protected from a financial disaster.
So I pay the insurance company a small but predictable amount to make that risk go away. If the insurance company is doing its job right, then the company will make more money from the houses that don't burn down than it pays out in claims for the houses that do burn down.

That's the point of insurance, whether it protects against natural disaster, fire, kidnapping (yes, there's kidnapping insurance), or anything else.
But health insurance is quickly becoming different than all other kinds of insurance: It's getting easier and easier to predict in advance who will get sick and who won't -- even decades in advance, thanks to our greater understanding of the human genome. Researchers have already identified some 1,800 disease-related genes. There are now home DNA kits that enable you to test yourself for many of them.
That may be great for medicine, but it's a disaster for the insurance market. How well would the homeowners insurance market work if we had an increasingly better idea of whose house would burn down and whose wouldn't?

[Ardentfrost]

Originally Posted by thewise1

His claim is that there will be no uninsured people to drive up our costs, thus lowering costs.

I view that claim dubiously, though.

Health Insurance doesn't lower people's chances of being hurt. Doesn't it stand to reason that the hospitals increasing their prices to cover the costs of people who are not insured is the same as universal healthcare? Those of us who are insured pay more to cover the increased risk assessed with higher prices.

Healthcare prices might lower if everyone was insured, but insurance prices would increase due to more payouts.

[JaJae]

Originally Posted by Ardentfrost

Healthcare prices might lower if everyone was insured, but insurance prices would increase due to more payouts.

That's not true at all and counter-intuitive. That stands to reason that the largest insurance companies would have the highest rates simply for having more people. We know that is false. The more people you have the more likely you are to make money. That is why larger policies are cheaper. On average insurance companies MAKE money off individuals. They lose money on far less than they profit from. That is how they make money. If they have more people paying into the system they have more stability to pay for those they lose money on. In short, the more people, the less the risk of losing money. Also, the more people with health insurance the more likely people are to be diagnosed early and costly medical bills can be avoided and the more people those bills will be spread over. So the people with health insurance will pay less since there are now more people to share in the added costs from those the insurance companies lose money on.

The biggest problem with all of this is trusting the government to handle health insurance on a large and public scale and to do so affordably. The larger the program the more likely it is for the government to add wasteful spending and screw it up.

[motivez]

I don't have a problem with taking away customers from an industry that's really murder by spreadsheet.. that's what they do. They make more money the more pain and suffering they allow to happen, the less care they provide, the less payouts they pay.

We've seen thousands of cases where the insurance companies have gone the extra mile to deny coverage or payment for someone, labeling it a pre-existing condition, labeling the treatment you need to live as experimental (including organ transplants in some cases I remember reading abuot), using some other legal bullshit tactic, because they lose money.

They hire people for the sole reason of looking for loopholes to avoid paying for the care of people who've been paying customers for years because it hurts their bottom lines, and when they do.. people die, and they make more money.

The entire industry is unethical when you consider the libertarian philosophy of profit being the only thing that matters. For them to profit as much as possible, they have to make as many people suffer without coverage as possible.

In fact, the more people who die, the better. Once you get sick and require a payout more than you've paid in, you're nothing more than a drain on their financial resources, and for them to benefit their shareholders as much as possible, they have to look for ways to prevent you from getting the care you need.

It's people's lives we're talking about here, not some high minded philosophical debate, and if you're like me, who thinks this is the only life you get, it's pretty damn important that you get what you need to continue it. No one should die without care because the insurance company found some bullshit loophole to avoid paying.. and so someone offering the care that's not interested primarily in profit, but instead making sure you get the care you need seems to me to be far more ethical.

[thewise1]

The libertarian philosophy isn't that profit is the only thing that matters.

Ugh.

I think this describes it pretty well. YouTube - The Philosophy of Liberty

[motivez]

It's been said many times on this site by libertarian folks that a company's only responsibility is to it's shareholders

In an industry like the insurance industry, that means that they have to do everything they can to deny coverage to maximize profits.. which results in suffering, death, and so forth.

[thewise1]

Originally Posted by motivez

It's been said many times on this site by libertarian folks that a company's only responsibility is to it's shareholders

In an industry like the insurance industry, that means that they have to do everything they can to deny coverage to maximize profits.. which results in suffering, death, and so forth.

This has nothing to do with it being the totality of the philosophy of libertarianism

[thewise1]

Also, they have to do it within the bounds of their agreement. Don't like it? Why did you buy it knowing that was the limitation of the policy?

[Ardentfrost]

Originally Posted by JaJae

That's not true at all and counter-intuitive. That stands to reason that the largest insurance companies would have the highest rates simply for having more people. We know that is false. The more people you have the more likely you are to make money. That is why larger policies are cheaper. On average insurance companies MAKE money off individuals. They lose money on far less than they profit from. That is how they make money. If they have more people paying into the system they have more stability to pay for those they lose money on. In short, the more people, the less the risk of losing money. Also, the more people with health insurance the more likely people are to be diagnosed early and costly medical bills can be avoided and the more people those bills will be spread over. So the people with health insurance will pay less since there are now more people to share in the added costs from those the insurance companies lose money on.

Yeah, that would make sense if you limit your view of the economy

Economics isn't about looking at things with tunnel vision... that is the basis for BAD economic practices and is quite frankly prevalent.

Anyhow, bigger companies don't have to charge more because the assessed risk of each individual balances out on the whole... for all people who are insured no matter who they get insurance from. Insurance is all about the many incurring the financial impact of the few. Currently doctors and hospitals have to also assess their risk for those who are uninsured and need medical attention. This affects their prices. Those increased prices increases the risk assessed of any individual by an insurance company.

Everyone being insured only means that doctors and hospitals would no longer have to be assessing the risk, but it increases the average risk for insurance companies... let me put what is being compared in statistical terms:

U = Pr{ Everyone in the system }

A = Pr{ medical costs incurred | insurance }
B = Pr{ medical costs incurred | no insurance }
M = A + B = Everyone who incurs medical costs

C = Pr{ no medical coverage needed | insurance }

I = A + C = Everyone who has insurance

D = Pr{ no medical coverage needed | no insurance }

Z = B + D = Everyone who is not insured

Hospital View:
Ch = Expected cost incurred by patron
Ph (Price of services at hospital) = Ch + Ch * B + Profit
*NOTE: This is simplified, it's likely there are 100 Ch's to account for various services*

Insurance View:
Ci = A * Hp
Pi = Ci + Profit

That is current. What is important is that A != B and that B increases Pi since Hp is based on B. If you have statistical evidence to prove A=B, I welcome you to present it. I have no reason to believe those two numbers are equal. Analysis of variance would have to be performed before that could be proven.

From what I understand, the plan is to get rid of B and D altogether. This means that A+C=U

If currently A > B, then the proposed plan would have a net reduction in Pi since overall the probability of someone incurring a medical cost would be reduced.

If currently A < B (which I find to be more likely), then Pi would have a net increase.

In both cases with the new plan, Ch would decrease, and MAYBE it would decrease enough to offset the overall increase in Pi (this would especially be the case if the hospitals aren't optimizing their pricing structure currently and charging too much, but do optimize afterward).

If that is the case, then sweet, net gain for all. But how can anyone not only assume that hospitals aren't currently optimizing their pricing (especially since they are one of the largest hirers of industrial engineers of all industries), but that they suddenly WOULD optimize their pricing after.

Seems like a stretch to me.

[motivez]

Originally Posted by thewise1

This has nothing to do with it being the totality of the philosophy of libertarianism

It wasn't my intent to say it was

[thewise1]

I would be afraid to sell insurance in this country, personally. You get villified because you sell medical insurance that covers up to $2 million dollars in costs - knowing full well that it would take 833 years to pay that in at $200/mo - and then someone gets sick, incurring more than $2 mil in costs, and you have to cut them off because their insurance runs out.

But then, everyone calls YOU unethical because you're not taking care of their entire bill, even though that was never the agreement in the first place.

[Ardentfrost]

Let me also state that given my scenario (where the added costs are spread), there is still a winner... the group I called B the previous post. A, C, and D all get the shaft and B wins.

[motivez]

Originally Posted by thewise1

Also, they have to do it within the bounds of their agreement. Don't like it? Why did you buy it knowing that was the limitation of the policy?

Because you have to have insurance. There's no choice about it. People can't afford the cost of a serious illness in this country without insurance unless they're incredibly well off to begin with.

Don't pretend like if you didn't like it, you could go somewhere else that has terms you agree with.

There's no good choice out there, no insurance company is any different than the next, while some have good commercials and pretend to be compassionate and care, they all screw people over every chance they can legally find.

[Ardentfrost]

Question: Under Obama's plan, what is the coverage amount for people insured? I mean, do people get covered no matter the cost for $100/month (or whatever the price is)?

[motivez]

Originally Posted by thewise1

I would be afraid to sell insurance in this country, personally. You get villified because you sell medical insurance that covers up to $2 million dollars in costs - knowing full well that it would take 833 years to pay that in at $200/mo - and then someone gets sick, incurring more than $2 mil in costs, and you have to cut them off because their insurance runs out.

But then, everyone calls YOU unethical because you're not taking care of their entire bill, even though that was never the agreement in the first place.

That's my point, the entire industry is built to profit off the suffering of other people because they know you can't afford it without them, and to maximize profits, they'll deny anyone they can.

It makes much more sense for something like health insurance to be covered by an entity that isn't concerned with denying your care to make a profit first, and your care only if they're unable to weasel their way out of it.

[thewise1]

Originally Posted by motivez

Because you have to have insurance. There's no choice about it. People can't afford the cost of a serious illness in this country without insurance unless they're incredibly well off to begin with.

Don't pretend like if you didn't like it, you could go somewhere else that has terms you agree with.

There's no good choice out there, no insurance company is any different than the next, while some have good commercials and pretend to be compassionate and care, they all screw people over every chance they can legally find.

This is simply not true. The options for insurance are awesome if you go outside of your employer's insurance.