Thursday, October 27, 2016

Real fixes for the Health Insurance Deform Act

Again, let's call Obamacare by what it really does; there is nothing "affordable" about the Affordable Care Act Health Insurance Deform Act.  Now given that the chickens have come home to roost, what can be done to rescue healthcare?  And no, it won't be nationalized healthcare, at least if we want to avoid even more death panels than we've already got.  Some humble suggestions:

1.  Equalize the tax treatment of employer paid and self paid health care expenses--either it's all taxable, or it's all tax free, including FICA.  No reason the self-employed or contractor ought to be subsidizing those with employer paid insurance--and yes, this means most Obamacare subsidies need to be repealed, along with the federalization of student loans (which funds the subsidies).   This could be done very simply by enlarging the scope of current healthcare spending accounts.

2.  Allow preexisting conditions clauses.  One of the huge reasons the system is imploding--16 of 23 state exchanges have collapsed--is that people know they don't need to get insurance until they get very sick.  Not surprisingly, they don't, and even less surprisingly, this blows up the actuarial tables.

3.  Stop forcing the young to subsidize insurance for the old; the natural cost ratio is 5:1 to 8:1 for the old versus the young.  Ending the unnatural 3:1 ratio will incentivize health insurance among the young and rescue actuarial tables.

4.  Roll back the Obama regulations that add a lot of coverages that many insures do not want or flat out cannot use, starting with mandatory contraceptive coverage.  There is something morally horrific about the notion "You have the fun, we bill a nun".

Now I don't believe this is terribly practical--too many people love their goodies--but if we want a system that will cover stage 4 cancers with surgery and chemo instead of with morphine and cyanide, this is what we've got to do.


Sue McKeown said...

Oh, boy. I don't have time to respond to all of your ideas all now, but I'll start with the two that appear to be the most frightening and that do not appear in most employer-sponsored health insurance plans:

1) Why discriminate against the sick by charging more for pre-existing conditions? Yes, some pre-existing conditions may occur because of lifestyle issues, but many, many more do not. I have one that is purely biological and so do many of my friends and relatives. Mine can be managed with medication, a healthy lifestyle, and specialist visits every 2-3 months. Couldn't what you say about not people getting insurance until they get sick be helped by 1) Raising the penalty for not having health insurance to at least 2-3x what it is now, and/or 2) Requiring anyone signing up for health insurance in a given year to stay with the plan for at least through the end of the year, if not the next year?

2) Making older people pay more for health insurance than the young simply because they are old. Why? Bet the young might lap that one up now, but how will they feel about it in 30-35 years? Again, isn't that discrimination against the old? Instead, why not community rating when the only factor that affects rates is smoking, which some employers do now?

Believe me, I'm not a freeloader. I spent 39 years in the paid work force, 30 of them full-time (4 of the part-time years were during college). I planned to return to work full-time after going back to school to retrain for a new career. The reason I didn't was because my husband became ill with frontotemporal degeneration. I cared for him at home for 4 years and he is in now in long-term care. I now pay $1,100/mo for my Gold plan PPO ACA insurance and it's worth every penny, although it's a stretch.



Bike Bubba said...

Sue, some answers:

1. Because without preexisting conditions clauses, you can't maintain the actuarial tables to have insurance. People will just refuse to get insured until they need it.

2. Because healthcare for the old costs more. Subsidize it for the poor elderly if we must--that's why we have Medicare and Medicaid after all--but why should the young subsidize the old? Young kid coming out of college with $50k in student loans and a low paying job gets to pay the guy in his 60s with a million dollar net worth...why?

In a nutshell, insurance works as a proportional payment to cover uncorrelated risks--really things that you can't anticipate. The problem with insurance these days is that too much of it is correlated risk--you can statistically predict the problems by behaviors.