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

[A_C_E]

So often, I see people toss around health care like Obama is trying to ruin the country. Everyone seems to have an opinion, yet seemingly no one actually understands how the plan works. It's actually very well designed, but god forbid we ever discuss facts instead of opinions. Let me break it down for you:

1.) Anybody living in America is already entitled to health care. If you show up in the ER at a hospital, they, by law, CANNOT turn you away.

2.) Lots of people who don't have insurance get injured and wind up in the hospital. This is a fact.

3.) These folks cannot afford their hospital bills, which are obviously far more expensive than they can manage, or they'd already have insurance of some sort. Thus, while the hospitals try and work out payment plans and the like, most of these people wind up defaulting on the payments and the hospitals simply get stiffed. Oh well, right?

4.) As of right now, yes. Oh well. Then the hospitals are forced to raise the costs they charge the insurance companies of people who HAVE insurance (and/or Medicaid and Medicare) to defer the losses they take on having to treat people without insurance.

5.) Solution? Simple: everyone has to have insurance. No more getting stiffed on payments. No more deferred costs. No more skyrocketing premiums. Lower insurance rates across the board for everyone.

6.) How, you ask? Easy: let the government compete with private insurance. Obama's plan is NOT, (LET ME REITERATE, NOT) a fully nationalized UHC plan like Hillary wanted. Basically, Obama would have the government offer it's own "insurance" plan, relatively equal to the most basic health insurance package you could get from a private insurer. The rates and premiums would be capped, and the costs would be subsidized via tax dollars (primarily from a massive reduction in the defense budget and removing the Bush tax cuts).

7.) Now, the next step: private insurers begin to realize that the government (god forbid) is starting to hack into their profit margins when people keep signing up for the cheap insurance instead of their own plans. Thus, private HMOs lower costs for everyone. AND EVERYBODY SAVES MONEY.

8.) Unlike what Hillary wanted, no one would be forced to enroll in the plan. However, Obama would remove restrictions preventing hospitals from suing people treated without insurance into oblivion. So if you want to be a fuckhead and not get yourself cheap, available insurance, and you break your arm and wind up in the hospital? Sucks to be you, the hospital can sue you and take everything you have to pay the bills. Your loss.


So now that we actually have FACTS, perhaps we can get discuss this without mountains of misinformation being thrown around and misconceptions coloring judgment.

I actually copy-paste'd that directly from a concurrent thread in , so if there's any leftover bad fellowship or language that I missed while editing, I apologize

[thewise1]

Sweet, so we can subsidize this national insurance even if we don't use it! Sign me up!

[A_C_E]

Originally Posted by thewise1

Sweet, so we can subsidize this national insurance even if we don't use it! Sign me up!

Yes, that may be. However, have you considered that, at the same time *some* of your tax dollars might go to subsidizing health care, your own health insurance costs will definitely drop at the same time?

It's perfectly reasonable to think that your yearly insurance costs will go down a good deal more than the extra money you may or may not pay in taxes. In fact, it seems very likely that that would be the case.

If your ideology forces you to disagree, then that is fine, and cannot be argued. However, Americans think with their wallets. Obama's plan will probably save you money. Hard to argue with that.

[thewise1]

Originally Posted by A_C_E

Yes, that may be. However, have you considered that, at the same time *some* of your tax dollars might go to subsidizing health care, your own health insurance costs will definitely drop at the same time?

It's perfectly reasonable to think that your yearly insurance costs will go down a good deal more than the extra money you may or may not pay in taxes. In fact, it seems very likely that that would be the case.

If your ideology forces you to disagree, then that is fine, and cannot be argued. However, Americans think with their wallets. Obama's plan will probably save you money. Hard to argue with that.

We'll have to see the specifics I guess.

In all honesty, yes, it's an ideology thing at its base, but either way I forsee it coming true. I think he'll probably win, and he'll probably be able to convince people to try his plan.

Unfortunately, once we start it, we're going to have another massive agency that will eventually be pilfered, even if it's originally run well, by an opposition party, and end up being a drag on us all like social security.

[willis]

Originally Posted by A_C_E

3.) These folks cannot afford their hospital bills, which are obviously far more expensive than they can manage, or they'd already have insurance of some sort. Thus, while the hospitals try and work out payment plans and the like, most of these people wind up defaulting on the payments and the hospitals simply get stiffed. Oh well, right?

4.) As of right now, yes. Oh well. Then the hospitals are forced to raise the costs they charge the insurance companies of people who HAVE insurance (and/or Medicaid and Medicare) to defer the losses they take on having to treat people without insurance.

8.) Unlike what Hillary wanted, no one would be forced to enroll in the plan. However, Obama would remove restrictions preventing hospitals from suing people treated without insurance into oblivion. So if you want to be a fuckhead and not get yourself cheap, available insurance, and you break your arm and wind up in the hospital? Sucks to be you, the hospital can sue you and take everything you have to pay the bills. Your loss.

i have a tough time feeling sorry for hospitals, and it all boils down to one thing.. the price I pay if i were to go as an uninsured person is exponentially larger than the price the insurance company pays..

yes, people who are uninsured sometimes have things happen and have to go the hospital. for example, my ex gf had to go to the er while we were driving to boston once.. away from home, no insurance, late at night, no local dr offices.. what can you do besides a hospital.. we were there for an hour and a half, she got a bill of 600 dollars. I guarantee that if she had insurance, insurance would not have paid 600 dollars to the hospital they probably would have paid closer to 100 or 200.. I had to have my tonsils out a couple weeks ago.. i just saw the final bill from the hospital to my insurance.. the hospital charged 6000, insurance paid out 1200, i owe nothing.

which is the true price of the medical service? Why are hospitals charging people without insurance the higher price? it's a system doomed to failure, when you're going to charge the people who can afford it least the most money. it's annoying to hear the medical industry complain about uninsured people not paying when they are inflating the cost of their services to these people who they already know likely can't pay

whether obama's system will solve any of this, who knows.. but i truly think many of the medical industries problems are brought on itself and dislike the idea of yet another govt program to try and bail out a private industry that will most likely fail

[6SpeedTA95]

How are my insurance cost going to go down due to government getting involved? I know for a fact MY cost wont go down but how will the overall cost of health insurance drop?

[A_C_E]

Originally Posted by 6SpeedTA95

How are my insurance cost going to go down due to government getting involved? I know for a fact MY cost wont go down but how will the overall cost of health insurance drop?

It's basic economics. Imagine you have an industry which is operating in equilibrium. You have a number of firms in competition, and an equilibrium price (for insurance) has been reached. Say that price for the average American is $150/month (arbitrary number).

Now, enter the government. The gov says that it will offer basic health insurance at a tax-subsidized rate of $100/month, saving the average American $600/year. Since the government would instantly become the largest firm, they would draw a substantial base of both new buyers and buyers leaving their old firms for the cheaper, government plan. You have fundamentally altered the equilibrium quantity demanded and used subsidization, which will, in turn, drive the equilibrium price down.

Say the equilibrium price for the average American is driven down to $130/month because of competition from the watered-down government insurance. EVERYBODY just saved money.

[thewise1]

Originally Posted by A_C_E

It's basic economics.

Actually, in basic economics, when government becomes involved, they take a lot of the customers other private firms have now, because as you said, they instantly become the largest provider, and their prices don't go DOWN, they go UP, because the private firms have to make up their revenues. Of course, this is all backed by taxpayer subsidy, so it doesn't need to be efficient to survive, which is why it will turn into a giant form of bloat while simultaneously hurting private enterprise in that market.

But hey, I'm just sayin'.

[A_C_E]

Originally Posted by thewise1

Actually, in basic economics, when government becomes involved, they take a lot of the customers other private firms have now, because as you said, they instantly become the largest provider, and their prices don't go DOWN, they go UP, because the private firms have to make up their revenues. Of course, this is all backed by taxpayer subsidy, so it doesn't need to be efficient to survive, which is why it will turn into a giant form of bloat while simultaneously hurting private enterprise in that market.

But hey, I'm just sayin'.

That's just simply incorrect. Government entering industry as a competitor increases the supply of insurance without changing the demand. Everyone has a demand for insurance, but some can't afford it at current prices. So the demand curve doesn't change. Supply curve does, moving to the right. Thus, equilibrium prices for insurances will go down.

My rough MS Paint graph:

[Rouger2]

Businesses will drop their health insurance plans and let the government insure their workers, and emergency care is bad health care. You don't wait until things are bad enough to go to the er to get help. Preventive care is needed especially with diabetes and high blood pressure,etc.

[A_C_E]

According to this study, a hybrid-payer system like the one advocated by Barack Obama would save the US 1.5 trillion dollars in health care costs over the next decade.

Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending

[kinggovernor]

I would want to see his cost/benefit analysis but I could see how this would save resources.

[thewise1]

Originally Posted by A_C_E

That's just simply incorrect. Government entering industry as a competitor increases the supply of insurance without changing the demand. Everyone has a demand for insurance, but some can't afford it at current prices. So the demand curve doesn't change. Supply curve does, moving to the right. Thus, equilibrium prices for insurances will go down.

My rough MS Paint graph:

[img]http://uploader.ws/upload/200806/obama_health.jpg[/i]

until you realize that it actually costs $x amount to provide insurance, and companies have a difficult time competing with a subsidized competitor

[A_C_E]

Originally Posted by kinggovernor

I would want to see his cost/benefit analysis but I could see how this would save resources.

So would I.

In fact, so would all of us But it's not really possible to do a 100% accurate study until he has oversight of all the resources and can use the right information. You could make a pretty good guess but it would be tough to say with certainty as a White House outsider.

[thewise1]

To be fair, though, since I don't honestly think we're going to be able to shut this down (we as in the more libertarian/conservative folks in the US) I will be interested to see the experiment take place. I just hope that I can shield myself against any pain this causes us, if it does.

[kinggovernor]

Originally Posted by thewise1

until you realize that it actually costs $x amount to provide insurance, and companies have a difficult time competing with a subsidized competitor

here is where it would save resources:

in our town (myself and ACE) the way first aid works is inefficient. It wasn't until I say it first hand did I understand just how awful the system was.

My father is a professional firefighter and in our city they respond to all first aid calls as a way to cut costs. So a poor guy is sick with bronchitis but can't afford the medicine to take care of it. What does the medicine cost, maybe $50-200? Instead he waits until he has trouble breathing and dials 911. So they will send out a firetruck to respond which costs several hundred dollars and then they call for an ambulance to send him to the hospital. At this point, the guy needs emergency care because he hasn't been taking care of himself. So an ambulance shows up, at a cost of $500-2000 to take him to an emergency room, at a cost of another several thousand.

So this poor guy racks up several thousand in bills to himself and to the system and he can't afford to pay for any of them. So the system eventually absorbs the cost, wouldn't it be better if we absorbed the cost of the medicine when he was sick.

The reason it is inefficient is because of our value system, we will provide emergency care to anyone at anytime. This is not an efficient way of conducting business, especially with the poor.

[kinggovernor]

Mass. Bill Requires Health Coverage
State Set to Use Auto Insurance As a Model

By David A. Fahrenthold
Washington Post Staff Writer
Wednesday, April 5, 2006; A01



BOSTON, April 4 -- The Massachusetts legislature approved a bill Tuesday that would require all residents to purchase health insurance or face legal penalties, which would make this the first state to tackle the problem of incomplete medical coverage by treating patients the same way it does cars.

Gov. Mitt Romney (R) supports the proposal, which would require all uninsured adults in the state to purchase some kind of insurance policy by July 1, 2007, or face a fine. Their choices would be expanded to include a range of new and inexpensive policies -- ranging from about $250 per month to nearly free -- from private insurers subsidized by the state.

Romney said the bill, modeled on the state's policy of requiring auto insurance, is intended to end an era in which 550,000 people go without insurance and their hospital and doctor visits are paid for in part with public funds.

"We insist that everybody who drives a car has insurance," Romney said in an interview. "And cars are a lot less expensive than people."

Tuesday's votes approving the bill -- 154 to 2 in the House and 37 to 0 in the Senate -- were the culmination of two years of politicking and several months of backroom negotiations, as rival health-care plans from Romney and the two Democrat-led chambers were hammered into one.

What resulted is a proposal that health-care experts say is unlike any other in the country. What to do about the 45 million Americans without health insurance has flummoxed both the Bush administration, whose proposal for "health savings accounts" fizzled, and that of Bill Clinton, whose broad plan for health-care changes fell flat.

On the state level, Hawaii and Maine have programs that seek to offer near-universal access to health insurance, and Illinois last year approved a subsidy plan that will widely increase coverage for needy children.

But no state, experts say, has taken the step of making health insurance coverage a legal requirement. The idea was applauded by Uwe E. Reinhardt, a professor of economics and public affairs at Princeton University, who said that he has long believed that the American system of allowing uninsured patients to receive care at the government's expense was nothing more than "freedom to mooch."

"Massachusetts is the first state in America to reach full adulthood," said Reinhardt, noting that the new measure is a move toward personal responsibility. "The rest of America is still in adolescence."

As simple as the idea sounds -- buy insurance or else -- the proposal is complex and, in some cases, still unfinished. For instance, it leaves the task of determining exactly how much some low-income residents will pay for their new, more affordable policies to a new agency that would serve as a liaison between the government, policyholders and private insurance companies.

Because of that uncertainty, some still worry that the residents required to buy insurance would not be able to.

"Who defines what's affordable?" said the Rev. Hurmon Hamilton, a minister in the Boston neighborhood of Roxbury and a leader in an interfaith organization that has pushed for health-care changes.

Another aspect that may change is the $295 annual fee that the bill would require companies to pay for each employee they do not provide with insurance. Legislative leaders have insisted that this money be fed into the pool that would subsidize low-cost policies for the uninsured, but Romney said that would be unnecessary.

"That's likely to be adjusted by me," he said -- potentially through the use of a line-item veto.

This is how Massachusetts leaders envision the plan would work:

Uninsured people earning less than the federal poverty threshold would be able to purchase subsidized policies that have no premiums, and would be responsible for very small co-payment fees for emergency-room visits and other services. Those earning between that amount and three times the poverty-level amount would be able to buy subsidized policies with premiums based on their ability to pay. Though no maximum premium is set in the bill, legislators' intent seems to be for it to top out at about $200 to $250 per month.

All residents will have to provide details about their health insurance policy on their state income tax returns in 2008. Those who do not have insurance would first lose their personal state tax exemption, perhaps worth $150, and later face penalties equal to half the cost of the cheapest policy they should have bought. That might work out to $1,200 per year, officials said. Those who cannot find an affordable plan could obtain a waiver.

Enforcement of the requirement will not be done by hospitals, officials said: They will treat uninsured patients as before.

The bill's passage was celebrated as a victory in the state legislature, with House Speaker Salvatore F. DiMasi (D) telling colleagues that they had succeeded where other states had failed.

"We did something to solve the problem," he said.

The same message might provide a political boost to Romney, who is considering a presidential run in 2008. By proving he can work with Democrats, and find a health-care solution that relies on the private sector, Romney can portray himself as an executive who can work across the aisle in harshly partisan times.

"It might help him to say, 'Look, I have a solution for health insurance,' " said Julian E. Zelizer, a professor of history at Boston University.

I really thought this would turn Romney into the national spotlight, it is a really good policy idea.

[kinggovernor]

Originally Posted by A_C_E

So would I.

In fact, so would all of us But it's not really possible to do a 100% accurate study until he has oversight of all the resources and can use the right information. You could make a pretty good guess but it would be tough to say with certainty as a White House outsider.

a cost/benefit analysis is never 100% correct, I would just want to see what his proposal is.