You Only Come by When You Need Something

by Eric Martin

The GOP is deeply unserious about addressing health care issues.  Here is Senator John Cornyn on plans to repeal "parts" of the recently passed HCR legislation, while keeping other provisions:

"There is non-controversial stuff here like the preexisting conditions exclusion and those sorts of things," the Texas Republican said. "Now we are not interested in repealing that. And that is frankly a distraction."

Here's the problem with simply prohibiting denial for pre-existing conditions and "those sorts of things" (which I assume means other popular provisions like bans on rescission): if you implement those prohibitions, no one will buy health insurance until they get sick.  After all, why would anyone?  If the insurance company cannot deny potential customers who have pre-existing conditions, people will just save the money they would have spent on premiums until they need expensive medical treatment, then buy insurance.

Insurance companies would go bankrupt practically overnight.

The current HCR plan mitigates that possibility by mandating that everyone buys insurance now, thus insurance providers are able to increase pool size and spread costs for when some customers (including those with pre-existing conditions, and those it can't rescind) eventually and inevitably require large payouts.

Don't get me wrong, it would still be cheaper to offer a broad public insurance program (cuts out the costs executive salaries, dividends, demands for profit margin, harmonizes hospital record keeping, and other costs associated with private middlemen), but you can't just require private insurers to do these things without giving them a way to remain financially viable.  At least, you can't do that without a public option available to the public when those private carriers inevitably go bust.

Senator Cornyn either knows this and is lying, or he is frighteningly ignorant. 

Comments

[Brett Bellmore]

I think the GOP is semi-serious about thinking that the existence of a problem doesn't automatically mean that the federal government has to provide the solution. They're far more open than Democrats to trying to solve problems in ways that don't involve vast expansions of federal power.

Democrats seem to just tacitly assume that a federal program is the appropriate response to anything they don't like. State programs are laughed off, and doing something in the private sector doesn't seem to even be conceivable.

[cleek]

that's because (the) Democrats (in your head) are evil statist monsters.

[John Thullen]

"Senator Cornyn either knows this and is lying, or he is frighteningly ignorant."

Both.*

He's a multi-tasking zombie psychopath.

Thankfully, now that healthcare reform has passed, if he ever loses the Socialist healthcare plan he enjoys as a Senator, he can no longer be denied coverage because of his pre-existing zombie psychopathic condition.

Help is on the way, which lets him avoid the fate of all zombies -- the Death Palin.

*The alternate theory is that he is merely a liar and is faking zombie ignorance, stretching his hands out in front of him, staring, grring, slavering, tramping stiff-legged inexorably into the Fall election season -- like John McCain faking that he's a J.D. Hayworth zombie.

[John Thullen]

'State programs are laughed off ..."

Well, we've been told to let the states experiment. Massachesetts did. The Federal Government took a look and adopted some of the good ideas, and some of the bad.

You're right though, there is laughing.

[Marty]

You keep making this assertion but it seems you really don't have any facts.

There are plenty of people that, given the chance, would sign up for insurance. They have families or are in fact responsible people.

I bring up welfare layabouts yesterday and get pilloried but you seem confident most people would be the insurance equivalent.

More important with the changes in the way these people would get covered, treated and billed the savings just in emergency room visit costs should overwhelm the private insurance abuse.

Again, take all that away, create a Medicare baseline. But now, since we settled pragmatically for what we have, everything else will be just that much harder to implement.

I am curious though how you believe that the requirement for most people to buy insurance will actually, in real life, be enforced. Because it is such a pillar of your view of how this bill will be successful I wonder if you have thought through what will happen when 165 million of the 30 million simply don't sign up?

[Marty]

15 0f 30 not 165 of 30

[Eric Martin]

They're far more open than Democrats to trying to solve problems in ways that don't involve vast expansions of federal power.

Such solutions being? I mean, suggest. I'm all ears.

You keep making this assertion but it seems you really don't have any facts.

What does this mean? How could I have facts about a hypothetical scenario? Please explain.

There are plenty of people that, given the chance, would sign up for insurance. They have families or are in fact responsible people.

Actually, it would be irresponsible to sign up for insurance until you needed it if insurance companies could not deny you or charge you more. I mean, if you had a choice of providing for your family, or buying unnecessary insurance, the responsible thing is not "buying unnecessary insurance."

And Marty, human nature being what it is, the few that buy unnecessary insurance will not save the private insurers.

I bring up welfare layabouts yesterday and get pilloried but you seem confident most people would be the insurance equivalent.

Pilloried? By who? Not me. Russell mentioned that welfare does not permit people to enjoy comfortable lifestyles - at least not in the northeast. And that working for a living offered the promise of higher pay.

Not having insurance - but knowing you could get it if something goes wrong - is just as comfortable as having insurance. Only cheaper.

More important with the changes in the way these people would get covered, treated and billed the savings just in emergency room visit costs should overwhelm the private insurance abuse.

Not sure what this means. Are you saying that insurance companies will save enough money from non-ER visits that it will compensate for free-riders (or "non-riders")?

Part of the problem with that is that the expensive pre-existing conditions aren't treated in ERs (chemo, radiation, HIV drugs, etc)

I am curious though how you believe that the requirement for most people to buy insurance will actually, in real life, be enforced. Because it is such a pillar of your view of how this bill will be successful I wonder if you have thought through what will happen when 165 million of the 30 million simply don't sign up?

I believe there is a tax penalty. That penalty is in place to cover the cost of premiums that they would have paid had they signed up.

What am I missing?

[Ugh]

Eric: people will just save the money they would have spend on premiums until they need expensive medical treatment, then buy insurance.

Hard to buy insurance when you're riding in the back of an ambulance unconscious from your car accident/heart attack/stroke, etc.

[Carleton Wu]

I think the GOP is semi-serious about thinking that the existence of a problem doesn't automatically mean that the federal government has to provide the solution.

But are you, or they, semi-serious enough to actually answer the question? Or is the bar so low that you'll praise Cornyn even when he isn't making sense? He doesn't have to make sense, he's pro-free market!

State programs are laughed off, and doing something in the private sector doesn't seem to even be conceivable.

Yeah, like how the Dems got rid of all of the private insurance companies with their new plan. Some moderate Dem proposed keeping them around, but that was laughed off as inconceivable.
Do you guys have a special news feed that modifies stories so that they don't make your heads explode from dealing with the real world?

[Eric Martin]

15 0f 30 not 165 of 30

I gave your math the benefit of the doubt.

[John Thullen]

Just so I'm as up-front as can be about the terrific depths of my socialist sensibilities, I believe welfare layabouts ought to have taxpayer-subsidized health insurance, too.

No premium-cut pork chops, no vodka, cheap non-subsidized shoes will suffice, but definitely health insurance coverage.

[Eric Martin]

Hard to buy insurance when you're riding in the back of an ambulance unconscious from your car accident/heart attack/stroke, etc.

No, but you can use the money you saved by not paying premiums for the prior 10-40 years to pay the medical bills.

Granted, freak accidents will still leave people without insurance exposed.

But as we see even now (where you CAN get denied for pre-existing conditions), young, healthy people don't buy insurance. They tend to view it as an unnecessary cost at this point in their lives.

They wait until they get a little older and/or have kids - or get a job that provides it cheaper/free.

[Marty]

"What am I missing?"

I suppose it would be how many people that currently have no insurance would pay taxes at all, file a return or be identified as such by the IRS. (Noting that there is much discussion in MA over how effective that enforcement mechanism is.)

I am also asking because I am not clear what happens if someone that hasn't purchased insurance shows up at a hospital, other than what happens today. Do they have a number to call? Do they have to identify people for future IRS followup?

I was really asking about the practicality of forcing 30 Million people to buy insurance next week (or wheneever).

[russell]

the existence of a problem doesn't automatically mean that the federal government has to provide the solution.

I agree with this. In fact, my preference is for private or local solutions.

The problem in this case is that nobody else was stepping up.

Senator Cornyn either knows this and is lying, or he is frighteningly ignorant.

Or, Senator Cornyn knows that any of his constituents who think about it for two minutes are going to conclude that eliminating the pre-existing conditions exclusion is good policy, and is in their best interest.

It'd be like taking a principled stand against ice cream. Nobody's that principled, or that stupid. Well, almost nobody. But certainly not Senator Cornyn.

Russell mentioned that welfare does not permit people to enjoy comfortable lifestyles - at least not in the northeast.

Actually I observed that all of the layabouts I kept hearing about seemed to be down home good old boys, spending our tax dollars on cheap beer and bait.

Which was, perhaps, a cheap shot (or then again perhaps not), but had nothing to do with pillorying Marty.

[hairshirthedonist]

There are plenty of people that, given the chance, would sign up for insurance.

And there a plenty who wouldn't. And, of those who would, a significant percentage would do so because they knew they would need covered care in excess of what they expected to pay in premiums. So the insurance companies either go out of business or charge really high premiums to cover their costs. In the latter case, as the premiums go up, fewer and fewer healthy people are willing to pay them. So they go up more, until no one can afford to pay them and the insurance companies have no way to make a profit, or break even, for that matter, and go out of business in the end, anyway.

It doesn't make you a layabout if you don't want to pay for something you don't think you'll need. That's just rational, and has nothing to do with being lazy or having no interest in the pleasures of being productive and using your mind and/or body. So there's not much of a comparison there between choosing welfare over work and foregoing insurance, the two being very different situations.

[Eric Martin]

Marty, those are pretty good questions all. I'd defer to someone that is more familiar with those features of the bill.

[Sebastian]

"No, but you can use the money you saved by not paying premiums for the prior 10-40 years to pay the medical bills."

Sure, for the financially responsible. What do you do for the other 95% of Americans? ;)

[Marty]

"Which was, perhaps, a cheap shot (or then again perhaps not), but had nothing to do with pillorying Marty."

Maybe not pillorying, but a cheap shot a little for sure. I took it personally as an admitted down home good old boy. :-)

[Eric Martin]

Sure, for the financially responsible. What do you do for the other 95% of Americans

One assumes they weren't likely to buy insurance "just in case" in the first place ;)

Unless I just redundified your joke.

[Carleton Wu]

Hard to buy insurance when you're riding in the back of an ambulance unconscious from your car accident/heart attack/stroke, etc.

Ok, so someone starts offering catastrophic insurance with no medium- or long-term care. Cheaper, and if you need longer-term care you can always get it.

Russell mentioned that welfare does not permit people to enjoy comfortable lifestyles - at least not in the northeast. And that working for a living offered the promise of higher pay.

Couple of other factors:
1)there's an existing social stigma against being on welfare, but not for freeriding on insurance
2)people like to work; I know too many retired people who took jobs they don't even need bc they didnt want to sit around all day. Having a decent job adds to one's self-image. I don't think "having insurance" is like that.
3)a small but significant number of free riders will push up the cost of insurance, pushing more people into the free rider category, and so on.

[John Thullen]

There's a guy running a blog who encourages folks to throw bricks through Democratic pols' windows to protest government intrusion in the healthcare market -- or something.

He reportedly has time for this because he's on Social Security Disability.

I hope it's not a bad back -- when SS finds out about the brick-throwing, they are likely to look askance.

President Obama needs to sign an Executive Order transferring this guy's SSD payments to Gary Farber.

[Eric Martin]

Word.

[russell]

Maybe not pillorying, but a cheap shot a little for sure. I took it personally as an admitted down home good old boy. :-)

My apologies.

My comment actually did come up because your example was about the third or fourth in as many days of freeloading involving good old boys, cheap beer, and fishing.

I sensed a pattern.

There was some minor chain-yanking intended, but pillorying not at all. ;)

[Marty]

"3)a small but significant number of free riders will push up the cost of insurance, pushing more people into the free rider category, and so on."

but, as far as catastrophic care is concerned, all 30 million are free riders today. They are going to buy insurance because they got a cold? So doesn't every one of them that does sign up net a plus for insurance companies (or HC costs overall, which translates to lower costs thus to insurance companies?)

Not that everyone that doessn't is a new cost?

There is a middle group that will recognize they have a chronic condition and buy insurance to cover ongoing cost (diabetes, HIV, etc.) but how many are those?

[Eric Martin]

So doesn't every one of them that does sign up net a plus for insurance companies (or HC costs overall, which translates to lower costs thus to insurance companies?)

Yes. But people that are not party of the 30 million will stop paying for premiums if they can get the same insurance later if and when needed. Not to mention future generations, who will adopt this posture as a rule.

[hairshirthedonist]

but, as far as catastrophic care is concerned, all 30 million are free riders today.

But they don't buy insurance when they show up a the hospital.

They are going to buy insurance because they got a cold?

No. It would be a much better situation if such a common, frequent and minor thing would make people sign up for insurance in the absence of a mandate.

There is a middle group that will recognize they have a chronic condition and buy insurance to cover ongoing cost (diabetes, HIV, etc.) but how many are those?

Enough, and they're very expensive.

[Jacob Davies]

The picture of someone "not buying insurance by choice" as a worthless layabout is 100% off the mark. I have some friends who are uninsured, who all have jobs (albeit poorly-paid or part-time jobs with no health coverage), who just can't afford to pay for health insurance. It's not that they don't want it, it's that they can't afford it and therefore have to take the chance that they won't get seriously ill.

So what happens is, the people who actually do buy insurance tend to be people with more chance of getting sick; the costs paid by the plan per head go up; the cost they have to charge customers goes up; more people drop off because they can't afford it.

There's no value judgment in either direction there, not on the customer (or non-customer) or on the insurer. Neither one can help this dynamic.

The trigger for it - the reason the system worked at all for a long time but isn't now - is higher costs for health services as a percentage of average income, which is mostly outside of the control of the insurer and the patient.

It does not help to look at this as being about "virtuous" people buying health insurance and "selfish" people who don't. It's a question of economically rational behavior at the margin.

But even if you do want to look at it in terms of morality, the vigorous opposition to the mandate coming from the supposed party of personal responsibility is bizarre. Free-riding is okay now? The rest of us should just suck it up over our higher premiums to pay for those who "don't bother" to have insurance?

Thanks, but no. I want everyone who can pay in the contribution pool and I want absolutely everyone in the beneficiary pool.

[Charles S]

A significant chunk of the 30 million uninsured are not free riders, they are people with pre-existing conditions who can't get health insurance. And any of them who get sick (without this law) still aren't free riders, because now they can't get health insurance.

Cornyn's proposal (no pre-existing conditions restrictions and no mandate and no subsidies) would turn all of the 30 million uninsured into free riders, people who are already established as people unwilling or able to buy health insurance who either would immediately get health insurance because they are currently priced out of the market by pre-existing conditions, or people who would now be able to buy into the market should their projected medical expenses ever become more expensive than the cost of insurance.

Additionally, as the 30 million free riders drove up the cost of insurance (as the currently sick ones joined, and gradually as some of the healthy ones got sick), they would drive up the cost of insurance, forcing other healthy people to abandon their insurance as too expensive. Then, when some of those people got sick, they would pick up insurance again, driving up the cost of insurance even further.

This is what we currently have in the private policy arena. Although people who are sick and uninsured can't get insurance, the spiraling costs of insurance are driving healthy insured people to cancel their policies, leaving only sick insured people still in the pool, further driving up the cost of insurance.

Obviously, medicare for all would be better than what we got, but I don't see why what we got makes medicare for all less likely somewhere down the line. Medicare for all was impossible this go around. When all the problems of the new system have been made visible in another decade, there will be a push to fix this system, and government provided basic coverage for all will be one option (leading to something like the French system of hybrid government and private insurance) that will probably look a lot less radical then.

[Marty]

"A significant chunk of the 30 million uninsured are not free riders, they are people with pre-existing conditions who can't get health insurance."

"I have some friends who are uninsured, who all have jobs (albeit poorly-paid or part-time jobs with no health coverage), who just can't afford to pay for health insurance. It's not that they don't want it, it's that they can't afford it and therefore have to take the chance that they won't get seriously ill."

A couple of examples of specific reasons people didn't have healthcare. Some assume the pre existing condition people will rush now to enroll, others that people who can't afford it will now be able to through subsidy and will pay their share.

Great.

I concede that some will have appropriate motivation. I think it will be half as many as 30M (opinion only, and no one has a number that isn't opinion).

The question remains how do you enforce it if they don't? What do you actually do if they show up at an emergency room, now that they are criminals?

[Jacob Davies]

You treat them the same as you would otherwise. Because they're not criminals, they're just people who have to pay a penalty tax of (the larger of) $700/uninsured family member (max $2,100/family I think) or 2.5% of household income.

Now, if you don't pay that you might be a criminal. Tax evasion is a crime.

But enforcement has nothing to do with the provision of care, nor should it. (For one thing some number of uninsured people who visit the ER actually pay their bill.) There's already a good enforcement system for federal taxes.

[Charles S]

marty,

Oddly enough, the CBO agrees with you. Half the 30 million newly insured people will be people who will now buy insurance, and half the 20 million people will be people who will now be covered by medicaid. I'm too lazy to look it up, but I believe the CBO thinks something like 3-5 million will decline to get insurance and have to pay the extra taxes, so that would be about 1/4 of people who are supposed to buy insurance that will opt out. Lower than your guess of 1/2, but same order of magnitude.

As Jacob says, people who opt out of buying insurance and are above the income cut off will be required to report it on their tax forms and pay the penalty. How many people will cheat on their taxes is an open question. Probably that will depend on how the forms are handled. If one has to self-report that one don't have insurance, lots of people will cheat, since enforcement will be very difficult (basically a random audit is the only way you'd get caught). If the insurance companies are required to send out a tax form to everyone with insurance, then almost no one will cheat, since they would have to forge a insurance coverage form to claim exemption from the tax.

As Jacob says, it is not paying the tax that will be a crime. Going to the ER without insurance will just be a pain, same as it is now. You'll either end up with a huge bill you'll be paying for years, or you'll convince the hospital to drop the fees due to your poverty, same as now.

[Eric Martin]

Marty,

FWIW, Ramesh Ponnuru at the National Review agrees with me:

Understandably, Cornyn doesn’t want to touch the most popular element of Obamacare, the ban on discrimination based on pre-existing conditions. But unless it’s modified substantially, the individual mandate has to stay too — and therefore so do the subsidies and the minimum-benefits regs. Without perhaps realizing it, Cornyn has come out for tinkering at the edges of Obamacare.

And as Matt Yglesias notes, now Cornyn is backtracking and indicating that he supports repealing it en toto.

[Pete Wilson]

Don't get me wrong, it would still be cheaper to offer a broad public insurance program (cuts out the costs executive salaries, dividends, demands for profit margin, harmonizes hospital record keeping, and other costs associated with private middlemen)
A couple of points: The administrative costs of insurance (profit, consumer services, claims processing and salaries) is 13 percent, the remaining 87 is paid directly for medical services. Profit is (average across the industry) 4.4% (per Yahoo biz) just below confectioners. The reason it seems large is that we spend a truly enormous amount of money on health care, so any percent would seem large. Remember that almost 90 cents of every dollar goes to the costs of medical care. It turns out that the costs are not due to high quality service.
Price variations are not correlated to quality, severity of services, the number of patients on Medicare or Medicaid or whether it is a teaching or community hospital, price variations are correlated to market leverage and higher priced hospitals are gaining market share at the expense of lower priced hospitals, which are losing volume. Price increases, not increases in utilization, caused most of the increases in health care costs during the past few years in Massachusetts. form the MA AG's "Examination of Health Care Cost Trends and Cost Drivers."
This report points out that hospitals are where money is spent and it is not correlated to quality. If there is a next step to HC reform it is to bring the cost of services down. If that is done with some sort of national regulatory structure then it doesn't matter if the insurer is public or private, cost will go down across the board.

[Eric Martin]

A couple of points: The administrative costs of insurance (profit, consumer services, claims processing and salaries) is 13 percent, the remaining 87 is paid directly for medical services.

Is this the case in the private market though? If so, why does the current HCR bill mandate at least 85% be spent on medical services, and why did the insurance industry object to that if they already pay more?

Unless the private, for-profit numbers end up looking better when averaged with the non-profits and public versions?

[hairshirthedonist]

This report points out that hospitals are where money is spent and it is not correlated to quality.

My first thought on this: how much of those costs are due to the uninsured using the ER as a substitute for primary care? Shouldn't keeping people out of the hospitals (usually after whatever is ailing them has gotten really bad) and going to a doctor's office (earlier, when they can be more easily treated) help lower those costs?

[russell]

The administrative costs of insurance (profit, consumer services, claims processing and salaries) is 13 percent

Medicare and Medicaid are at about 2% overhead. 98% goes to care.

Even taking the profit out of the mix, the public sector is something like four times more efficient than private insurers.

About half of all health care dollars go to direct hospital, doctor's office, and clinical services. Another 10% goes to Rx pharma.

The *great majority* of those dollars -- about 75% of total health care expenditures, and in the 80 to 90 percentiles of direct care dollars -- go to treating people with chronic diseases.

Most of those diseases are, to a great degree, either preventable or controllable with simple, low-cost changes in lifestyle.

Don't smoke.
Don't eat a lot of processed food.
Don't eat a lot of sugars, especially refined sugars.
Do eat fresh produce.
Get a modest amount of exercise.

By "modest amount of exercise" I'm talking about walking a half hour a day. Doesn't have to be fast, just take a freaking walk.

We could lower the cost of health care in this country, significantly, for short money. It would require simple public initiatives to change people's habits, similar to those that were used to change people's habits around things like smoking, driving while drunk, or wearing seat belts.

All of this would, of course, impinge upon somebody's sacred liberty. Just ask Rush.

But it would be cheap and simple.

[Eric Martin]

By "modest amount of exercise" I'm talking about walking a half hour a day. Doesn't have to be fast, just take a freaking walk.

The benefits of living in my urban hellhole is that I have to take several long walks a day, complete with stairs up and down subways.

Incidental exercise.

[Pete Wilson]

Medicare and Medicaid are at about 2% overhead. 98% goes to care.

From your link there is a 5% drop in overhead (7% vs 2%), not the 11% you imply. This is still a savings but I believe that there is much more than that to be achieved with some sort of controls on the cost of the care provided.

This is especially important in regards to your example of chronic disease (Heart disease, Cancer, Diabetes, Arthritis and Obesity). Chronic disease effects "60% of the 56.5 million total reported deaths in the world and approximately 46% of the global burden of disease" per the WHO. Is it any wonder that it takes a large percentage of spending? If the costs of treatment are contained, then everything will be cheaper, public, private, even uninsured.

[Pete Wilson]

Sorry to double post but. . .
"In comparing Medicare and private market administrative costs, the risk covered and the size of the population should be taken into consideration. The average annual cost per person under Medicare is more than double that under private health insurance. In 2003, the average medical cost for Medicare is estimated to be about $6,600 per person per year, while the average medical cost for private health insurance, excluding out-of-pocket cost is $2,700 per person per year. Further, Medicare covers 42 million people versus numerous private insurers/employers covering a total of about 160 million people. If Medicare’s claim costs were the same as in the private market, Medicare’s administrative costs would increase to perhaps 6-8% of administrative costs and claims." per Milliman's actuarial report.

[Marty]

If only it were so easy. It is interesting how deeply ingrained it is in our society that getting sick is really your own fault.

No one in the world had more weekly exercise than me(well probably someone) until RA made that level of exercise impossible. 50% of lung cancer patients never smoked.

Good health habits are great but these diseases aren't "preventable" by walking a half an hour a day.

[russell]

From your link there is a 5% drop in overhead (7% vs 2%), not the 11% you imply.

Your cite was 13% with 4.4% due to profit. 13 - 4.4 = 8.6. 8.6 / 2 = 4.3. I was being generous.

But I'll settle for 3.5 times more efficient if those are what the numbers are.

It is interesting how deeply ingrained it is in our society that getting sick is really your own fault.

It's interesting that you can get from my comment to any implication that "getting sick is really your own fault".

At least two of the most common chronic diseases in this country -- heart disease and diabetes -- respond very well to moderate levels of simple daily aerobic exercise.

Don't believe me, ask any freaking doctor on the face of the earth.

Sorry you're prevented from taking advantage of that. Other people aren't.

Seriously, do you have some kind of problem with people making simple, inexpensive changes in diet and lifestyle?

And for "inexpensive", please read "virtually free of cost".

Do you think they would have no impact on the prevalence of chronic disease in this country?

Do you have a better, simpler, less expensive, more readily available, less bureaucratic or cumbersome idea for helping people get and stay healthy?

I'm trying to get my head around what your problem is with what I've suggested here. Because a lot of people really are very sick with diseases that *are* preventable and/or manageable with simple lifestyle changes, and I don't see a lot of other suggestions on the table for how to address it.

If you have a better idea, fire away.

[Marty]

Eric, I am just more skeptical of the whole prexisting condition thing. In employer provided healthcare there is a standard 90 day waiting period before coverage for prexisting conditions kicks in. So, with the small percentage of overall people who are buying private insurance, I don't believe the assertion by either expert. I am on my phone (on a tarmac) so I will try to read the links for facts when I land.

[Eric Martin]

In employer provided healthcare there is a standard 90 day waiting period before coverage for prexisting conditions kicks in. So, with the small percentage of overall people who are buying private insurance, I don't believe the assertion by either expert.

You have to unpack this. I'm not sure what you're getting at.

[Marty]

"Are preventable" is the problem. Jim Fixx died of a heart in the midst of his daily 5 mile run.

[Eric Martin]

Marty,

What percentage of people do you think are buying private insurance? Then what is the number that would if they had the opportunity to have a pre-existing condition?

Further, you know that some people that buy insurance have carve-outs for pre-existing conditions that aren't covered.

Further, you realize that looking at the numbers now doesn't tell the whole story.

The problem is, in the future, people that currently buy insurance (even many small businesses) will drop that insurance if they can get covered for pre-existing conditions down the road.

Keep in mind, Ramesh is an ultra-conservative. So you have numerous experts on the right and left saying the same thing, you have Cronyn backpedalling, and you don't believe any of them?

[Marty]

It isn't that I don't believe them, it is I don't think they have the right numbers. I am very interested in this topic so let
Me respond in more depth later(on a new tarmac now).

[Jacob Davies]

I think it's at least possible that the mandate won't be as important as we think, in combination with decent subsidies and must-issue & community-rating. Most people want health insurance and if they can get it at an affordable price they're going to get it whether they need it or not, even without the pre-existing-condition bar. For instance, no health insurance means paying out of pocket at the ER if you break your leg. (Maybe you could sign up the next day to cover the followup care, but I seriously doubt that the new regulations are going to let you sign up for insurance that takes effect the same day... that would unnecessarily open up the possibility of gaming the system for no real gain - we don't want people to buy insurance at the last second, we want them to buy it as a precaution.)

I don't know if it's certain to be necessary, but on the other hand, I also see the harm as being pretty minor. You aren't forced to buy something you can't afford, because of the existence of subsidies and exclusions for very-low-income households who are probably on Medicaid anyway; even if you make enough money to buy it but just decide not to, there is a perfectly legal "out" in paying the penalty tax; and for about 90% of people who already have insurance, it won't have any effect at all.

I certainly don't see it as a big political problem, since the overwhelming majority of people already have health insurance and won't be affected, and those that are affected are mostly in groups that are financially helped by the bill. It's a better slogan than political wedge, in other words.

As far as basic principle goes, it's no different to any other tax. There is a basic libertarian problem with taxes, but there's a basic libertarian problem with an economy that works like a Monopoly game, with all the money piling up on the people who already have all the money, and I rate the latter as much more important a threat to liberty than the former.

[Eric Martin]

Marty,

By all means. And I hope the tarmac is being traversed for pleasure, and not business purposes. And if the latter, at least fruitful.

[hairshirthedonist]

Jim Fixx died of a heart attack, therefore there is no health benefit to running. Got it. That should save me some money on sneakers, but I'll probably have to buy new pants in a couple of months.

[russell]

Jim Fixx died of a heart in the midst of his daily 5 mile run.

And Pete Maravich died at age 40 playing pick-up basketball.

We all go sometime.

Let's try again:

If everyone walked half an hour a day, that would not prevent every instance of every chronic disease.

However, simple changes in lifestyle, diet, and moderate exercise could significantly decrease the incidence, severity, and treatment cost of the chronic diseases that currently make up about 75% of all health care dollars spent.

Does this statement past Marty muster? It sure as hell passes mine.

[Marty]

Yeah russell its ok, I don't think it will significantly reduce that number, even if we legislated those things.

[russell]

I don't think it will significantly reduce that number

With respect, I'd like to note that your counterargument here is "I don't think so". Which is, essentially, your opinion, with nothing more offered to back it up.

Everyone's entitled to think whatever they like, but I'm not sure what the point is of engaging in a discussion on the basis of "I can think of an exception to your information" and "You can show me whatever you like, but I don't think so".

Take it FWIW.

[hairshirthedonist]

russell,

What you don't seem to understand is that there is no data or scientific understanding of the benefits of exercise and a proper diet. You have to do better than to present these unsettled, controversial and fanciful notions. Your New Age theories just don't cut it. Sorry.

[Marty]

russell. fwiw I am engaging in a counter argument that is equivalent to the argument. If everyone ate better and walked a half an hour a day we woul;d spend less on health care is a wives tale. Just yesterday the Today show covered a study that said women needed to exercise vigorously for an hour a day to keep from gaining weight.

I am sure it would lower the costs some, I am just as sure it wouldn't be "significantly".

More important, and probably where I should have started, it is just another step in "society" trying to limit others freedoms by claimimg a nebulous greater good argument.

Not that urgent a conversation and you are certainly right is opinion only.

[Marty]

hsh and russell,

As another piece of this argument there is a direct correlation between overall health and extended lifespan and the increase in health care costs. Seems that if more people live longer then more of them get expensive chronic diseases.

Not a good argument against being healthy but a direct conflict to that saving healthcare costs.

Yeah, yeah I'll go find my cite.

[hairshirthedonist]

Don't bother.

[Hartmut]

That brings us back to that old proposal to put small amounts of methanol in drinking water. That would reduce life expectancy without noticable effects on quality of life but also significantly reduce the burden on the SS and pension system.

Disclaimer: I do not propose that but I read about this thought experiment long ago.

[russell]

fwiw I am engaging in a counter argument that is equivalent to the argument.

If everyone ate better and walked a half an hour a day we woul;d spend less on health care is a wives tale.

Yeah, yeah I'll go find my cite.

OK, some responses.

Regarding "wive's tales", sez you. And pretty much nobody else but you.

Regarding cites, no you won't, because you never do. You're too lazy, or you can't be bothered, or you don't give a crap, or the cites aren't there. You just opine. It's a free country, live it up. You should expect people to invest exactly as much in your argument as you do, and no more.

You actually should have started with the "limiting others' freedoms" line, because there is a reasonable argument to be made *some* public health approaches to changing people's lifestyles could be intrusive. Too bad you went with the BS.

Regarding "significant" differences, 75% of all health care dollars and something like 90% of all direct care dollars go to chronic disease management. That means pretty much any measurable change *at all* is going to save a significant amount of money. Certainly as much, if not more, than any other proposal I have seen, on either side of the aisle.

Last but not least, next time the opportunity arises to engage you in a discussion where facts, or at least information, are involved, I doubt I'll bother.

Hope you had a good trip.

Thanks -

[Marty]

Interesting russell, I have been criticized often, sometimes even legitimately for not citing authoritative sources. From you it is less expected as a significant number of your posts are simply "rants against the machine"

So for you, here is a nice cite from CBO testimony on Growth in Health Care Costs and a few money quotes:

First, the CBO agrees with me that there is no data supporting your basic assertion:

In addition to those changes, a variety of approaches to changing health-related behavior could improve health outcomes at a given level of costs…..

In that context, proposals that encourage more prevention and healthy living can help promote better health outcomes, although their net effects on federal and total health spending are uncertain.

Pretty much exactly what I said.

Second, it isn't clear that even advances in medicine that extend life save money :

It is occasionally suggested that advances in technology can lead to reduced spending, and that might be the case in some instances. Vaccinations, for example, may sometimes offer the potential for savings, and certain types of preventive medical care may help some patients avoid costly acute care hospitalizations. But, overall, examples of new therapies for which long-term savings have been clearly demonstrated are few. Improvements in medical care that decrease mortality by helping patients avoid or survive acute health problems often paradoxically increase overall spending on health care, as those (surviving) patients live to use health services through old age. New curative therapies with one-time costs could potentially reduce spending if they obviated the need for costlier treatments. Many advances in medical science, however, do not fall into that category. In fact, many of the most notable medical advances in recent decades involve ongoing treatments for the management of chronic conditions such as diabetes and coronary artery disease.

(bold mine)

It is interessting, however, that the rise in obesity specifically has increased the rate at which health care costs go up by about 4%.

and, ultimately the problem is with the rising costs of services, and that is worldwide:

The United States spends more on health care per person than do other industrialized countries. Data from the Organisation for Economic Co-operation and Development show that per capita health care spending in the United States in 2005 was nearly twice that in France, Canada, and Germany and roughly two-and-a-half times that in the United Kingdom, Italy, and Japan. Although the level of spending per capita in the United States contrasts sharply with that of other wealthy countries, the growth rate of spending in the United States is less unusual. Most industrialized countries—even those with a financing system quite different from that in the United States—have experienced a substantial long-term rise in real spending on health care.

[russell]

There, now that wasn't so freaking hard, was it?

[Sebastian]

"Regarding "significant" differences, 75% of all health care dollars and something like 90% of all direct care dollars go to chronic disease management."

I actually hate asking for cites, but I can't find anything like this. How are you using "chronic disease management" in this context? Every time I've ever looked into it, at least a third, and in some studies nearly a half of all health care dollars go toward something more like "end of life" care. Which I guess might conceivably not contradict your "chronic disease management" in some technical way (that lots of people die in the end under the influence of some sort of chronic disease), but which doesn't really jibe with the idea of "chronic disease management" at least as I would use it.

[russell]

OK, some comments on the substance of your cite.

First, Orzag's observation that extending people's lives can paradoxically increase the overall lifetime cost of their health care is an interesting point, and one I hadn't considered.

Second, Orzag here focuses on the introduction of new technology and new treatments as the most significant driver of increases in cost, both absolutely and in terms of rate of increase.

One simple observation I would make is that that can be true, *and* it can be true that changes in lifestyle, diet, exercise etc could also make a significant change in costs. Because the two things are orthogonal. In other words, they are largely independent factors.

If changes in lifestyle, diet, etc make the use of expensive therapies *unnecessary*, then those therapies make that much less of a contribution the cost of care.

In general, Orzag doesn't spend much time considering the possible benefits of changes in lifestyle, diet, etc. Instead he appears to assume that illnesses will exist as they do now, and discusses what the costs of treatment will be.

The significant exception to that is the increase in obesity.

To that point:

It is interessting, however, that the rise in obesity specifically has increased the rate at which health care costs go up by about 4%.

You refer to the first of two models presented in Box 1, which appears on pages 8 and 9. Both models try to come up with an estimate of the increase in health care costs that can be attributed to the increase of the percentage of the population that is obese between 1987 and 2001.

The first model, the one you cite, comes up with the figure of 4% by eliminating all factors other than the percentage increase in obesity. Specifically, it assumes that the difference in the amount spent on obesity-related illnesses per capita has not changed between 1987 and now.

In fact, that amount has changed, dramatically, from 18% higher in 1987 to 70% higher now.

The second model, also Box 1 but now on page 9, repeats the exercise, only this time it includes the difference in what is actually spent to treat obese people vs people of normal rate in 2001.

In the context of *what we actually spend on treating people in 2001*, changing the percentage of obese people from what it was in 2001, to what it was in 1987 would result in a 12% savings on total health care costs.

So, one and only one lifestyle factor -- reducing the rate of obesity from what it was in 2001 to what it was in 1987 -- would, alone, save 12% of the increase in costs.

Not the point I think you wanted to make.

Last but not least:

Pretty much exactly what I said.

No, not really.

"wives tales" and "uncertain" do not stand in any relation than can be described as "pretty much exactly".

Not even "pretty much".

As you can see, I've given you the respect of actually looking at the material that you presented to back up your claim.

Some things I hadn't considered, and they are worth considering.

Other things don't say what you claim they say.

With that, I'm done discussing this with you because I don't consider that you are arguing in good faith, or with any particular respect for the information on the table. I refer both to the information I've presented, and to your own.

Thanks for the cite, I appreciate it.

Have a nice day.

[russell]

OK, some comments on the substance of your cite.

First, Orzag's observation that extending people's lives can paradoxically increase the overall lifetime cost of their health care is an interesting point, and one I hadn't considered.

Second, Orzag here focuses on the introduction of new technology and new treatments as the most significant driver of increases in cost, both absolutely and in terms of rate of increase.

One simple observation I would make is that that can be true, *and* it can be true that changes in lifestyle, diet, exercise etc could also make a significant change in costs. Because the two things are orthogonal. In other words, they are largely independent factors.

If changes in lifestyle, diet, etc make the use of expensive therapies *unnecessary*, then those therapies make that much less of a contribution the cost of care.

In general, Orzag doesn't spend much time considering the possible benefits of changes in lifestyle, diet, etc. Instead he appears to assume that illnesses will exist as they do now, and discusses what the costs of treatment will be.

The significant exception to that is the increase in obesity.

To that point:

It is interessting, however, that the rise in obesity specifically has increased the rate at which health care costs go up by about 4%.

You refer to the first of two models presented in Box 1, which appears on pages 8 and 9. Both models try to come up with an estimate of the increase in health care costs that can be attributed to the increase of the percentage of the population that is obese between 1987 and 2001.

The first model, the one you cite, comes up with the figure of 4% by eliminating all factors other than the percentage increase in obesity. Specifically, it assumes that the difference in the amount spent on obesity-related illnesses per capita has not changed between 1987 and now.

In fact, that amount has changed, dramatically, from 18% higher in 1987 to 70% higher now.

The second model, also Box 1 but now on page 9, repeats the exercise, only this time it includes the difference in what is actually spent to treat obese people vs people of normal rate in 2001.

In the context of *what we actually spend on treating people in 2001*, changing the percentage of obese people from what it was in 2001, to what it was in 1987 would result in a 12% savings on total health care costs.

So, one and only one lifestyle factor -- reducing the rate of obesity from what it was in 2001 to what it was in 1987 -- would, alone, save 12% of the increase in costs.

Not the point I think you wanted to make.

Last but not least:

Pretty much exactly what I said.

No, not really.

"wives tales" and "uncertain" do not stand in any relation than can be described as "pretty much exactly".

Not even "pretty much".

As you can see, I've given you the respect of actually looking at the material that you presented to back up your claim.

Some things I hadn't considered, and they are worth considering.

Other things don't say what you claim they say.

With that, I'm done discussing this with you because I don't consider that you are arguing in good faith, or with any particular respect for the information on the table. I refer both to the information I've presented, and to your own.

Thanks for the cite, I appreciate it.

Have a nice day.

[russell]

I actually hate asking for cites, but I can't find anything like this.

The 75% number comes from the Kaiser piece I cite upthread, and from this CDC piece.

I don't have the ~90% cite at hand, my apologies. It comes from an article I cited in another thread. I will try to find it for you.

By "chronic disease" I mean basically what the CDC and other public health organizations mean: diabetes, cardio-pulmonary disease, cancers, stroke, arthritis.

I agree that the degree of overlap between "chronic disease" and "end of life care" is unclear.

The one and only point I'm trying to make here is that we could probably make a significant dent in the cost of health care, at relatively low public cost, by getting people to make really simple, non-intrusive, inexpensive changes in their personal habits.

Low-hanging fruit is good.

[hairshirthedonist]

First, Orzag's observation that extending people's lives can paradoxically increase the overall lifetime cost of their health care is an interesting point, and one I hadn't considered.

There's a word related to cost, but that doesn't describe exactly the same thing: value. What do you pay on a per-human-per-year basis rather than a per-life basis?

Now, if we're discussing keeping people alive so they can suffer miserably while being completely unproductive, I guess that wouldn't represent a good value. But keeping people living longer and able to have a fulfilling existence, which almost has to imply some sort of contribution to society, even if it's simply sharing wisdom, then it's money well spent.

I know that's a bit separate from a discussion purely of cost, but maybe the discussion of value is more relevant and meaningful.

A larger population will require more health-care spending, too. But, then again, it increases the number of contributors to pay for it. The same applies to increasing the number of productive years we can spend on the planet.

[Sebastian]

I guess I'm not sure how to interpret it then in the context of your comments, because your advice definitely applies to some, but mostly doesn't apply to others.

Diabetes: Yes. Treatable, chronic, and largely fixable by changing personal habits.

Cardio-pulmonary disease: 50/50. Sometimes treatable, not always chronic, I'm not sure which modifier to use regarding changing personal habits (it isn't rarely, but I'm not sure it is often either).

Cancers: Mostly no. Sometimes treatable. Chronic in the sense that you'll often die from it. Largely fixable by changing personal habits, no. (Except lung cancer and I suppose maybe liver cancer?)

Stroke: also mostly no. Treatable, yes but normally in crisis not ongoing. Chronic, often but when chronic usually NOT treatable. Largely fixable by changing personal habits? Mostly no.

Arthritis, yes but not in the way you mean. Treatable, yes but normally not all that expensive compared to other chronic treatments. Chronic, definitely. Largely fixable by changing personal habits? I think, no, unless just living with the pain is what you mean.

I guess I'm having trouble with it at this level of abstraction especially when 'chronic' appears to cover so much ground.

I know I sound like I'm being obtuse, but I'm not trying to be. I guess I'd agree that we could save lots of money by convincing people to eat better and control diabetes that way. I'm pretty sure that isn't true of arthritis and most cancers. I don't really know about controllable strokes that well (I know that they are treatable sometimes but I didn't know much about preventable). Cancers largely no. Heart disease, a mixed bag.

[russell]

Hey Seb -

From what I understand of the diseases in question, I would say:

Diabetes, very much.

Cardio-pulmonary, some yes, some no. Your 50/50 is probably about right.

Cancers, not treatable with lifestyle changes, but many cancers are definitely preventable with lifestyle changes. So, I think, more amenable than you indicate.

Stroke and arthritis, agreed, mostly no.

The big wins to my eye for lifestyle-and-diet public health outreaches are the relatively low cost and ubiquitous availability.

Also, the result is *improved health*, not just staving off death. Which is worth something also, both monetarily and otherwise.

[liberal japonicus]

I don't know about arthritis, at least for the knees and hips. You lose 10 pounds and you've got at least another few years of mobility. This came up on a cursory google

[Marty]

"What percentage of people do you think are buying private insurance? Then what is the number that would if they had the opportunity to have a pre-existing condition?"

Eric,

I have not forgotten this (you reasonably may have). I do know the number to the second question is 5M people that are currently uninsurable due to preexisting conditions.

For a while (prior to this discussion) I have been trying to get numbers for things like (average cost to treat them per year, breakdown by condition, etc.) and really haven't found any numbers, which is surprising because it is such a part of the HCR discussion.

If we accept that some large percentage of people that could afford it and have it now(even 25%)will take the chance that they will pay less out of pocket for care of their colds and flu, a broken leg, etc. than they would for insurance then certainly you are correct. I was focused on adding to the current baseline of people.

Perhaps it is a generational difference that I can't imagine anyone choosing to live without insurance, even knowing I could get it if I found out I had a chronic or catastrophic illness, I would want it to pay for all those things that aren't.

I would only add that I find that,as I pointed out, coverage for a preexisting condition in most employer coverage has a 90 day wait period after signing up. I would suspect that would be incentive enough for most people to not wait.

[Eric Martin]

Dunno Marty. I know that one company, Fortis, netted a couple hundred million in one year from rescission of expensive customers.

So it is very expensive, even for small numbers of people.

Regardless, as mentioned, I have not seen any expert anywhere ever suggest that this would work - perhaps it is generational, but the consensus is that young, healthy people would rather save the money than pay for something they will likely never need - and if they did, they could get later when the need arises.

It's not just the number that are uninsured now, it's the number that would flee the system that are currently in it.