“What do I pay?” is the relevant question

Drew Altman of the Kaiser Family Foundation makes an exceptionally astute point:

But it’s the candidates who can connect their plans and messages to voters’ worries about out of pocket costs who will reach beyond the activists in their base. And the candidates aren’t speaking to that much, at least so far.

There are several different prices in health care. Some are real and relevant to almost everyone and others are seemingly esoteric that excite only nerds and green eye shaders.

Most people care about their premiums. This is the money going out the door every month.

Most people care about their out of pocket maximums. This is the money that leaves their wallet when they need care.

Most people don’t care at all about total cost of care or the incentives of fee for service or bundled payments. Most people don’t care that the Out of Network surprise bill limitation laws have the potential to jack up premiums. Those costs are either diffused through the entire population in the form of incrementally higher premiums or they are hidden by tax subsidies, tax advantages, payroll deductions and tighter networks.

Limiting out of pocket costs that are experienced by most people is good politics.






16 replies
  1. 1
    Caracal says:

    “green lampshaders.”? Maybe green eye-shaders. I think most candidates get the message and at least try to connect with voters on the direct expenses they incur for healthcare.

  2. 2
    Barbara says:

    CMS bangs its head against the wall trying to get Part D beneficiaries to focus on what they would spend under a plan’s benefit structure for their own specific pattern of utilization, instead of obsessing over the monthly premium, almost always without success. Jacob Hacker has conducted research on this issue. People can’t deal with complexity past a certain point. And yes, one way you know these proposals are being offered by people who don’t understand much at all about how Medicare FFS really works is the absence of attention to its limitations, which many of us do understand. Medicaid, on the other hand, really does protect beneficiaries from out of pocket spending.

  3. 3
    NJDave says:

    A couple of points: 1) THIS and 2) I spent 25 years looking at healthcare companies which included looking into regulations and policy. I know enough to know that I don’t know enough. If I get baffled or find something really difficult to explain to family members without a 20 minute lecture how on earth can Jane/Joe Doe manage this stuff intelligently? The complexity is deliberate, IMHO. How are seniors going to understand the Part D “donut hole” and it’s gradual elimination? This forces non-optimal decision-making, which I suspect is more profitable.

  4. 4
    Barbara says:

    @NJDave: In fairness, Congress created the donut hole against the advice of every insurer and academic who has ever studied benefit design. They did it with the express purpose of making sure everyone got some kind of benefit at the front end. That left insurers trying to figure out how to implement such a crazy design. Between complexity and inertia, many people pay way more than they would otherwise need to. CMS knows this and the plans know this, but switching to something new also poses sufficient risks (what if it has other drawbacks?) that once a choice has been made, almost always on the basis of premium, it will not be unmade, unless there is a premium increase. In general, people with Medicare are satisfied even if they hate the out of pocket costs, because everyone does.

  5. 5
    daveNYC says:

    I think for a lot of people insurance isn’t just a way of making sure that they’re covered financially if something bad happens, it’s a way of not having to worry if something bad happens. They just want to pay their premium and forget about it, not have to run numbers through a spreadsheet in order to figure out the ideal plan for their situation.

  6. 6
    Barbara says:

    @daveNYC: Currently, Medicare FFS has no out of pocket maximum for beneficiaries. Nor does Part D. To me, these deficits are far more important than the nickel and diming that sometimes happens within these programs. People with Part D who cross into the catastrophic phase still pay 5% of their prescription drug costs. If you have a drug that costs $2000 per month, that’s $100 every month. For FFS, that means most people end up buying a private plan to cover the costs that Medicare doesn’t. I think people know this, they just don’t really comprehend it as an affirmative weakness in Medicare.

  7. 7
    p.a. says:

    On the private insurance side there is certainly ‘finagling’, on the political side there are numerous stakeholders with varying degrees of skin in the game and varying degrees of ‘pro-bono’ concerns vs ‘greed is good-ism’ and on the public side there is a considerable %-age of the population so effing dim you have to rename ‘Obamacare’ as ‘Totally-Not-S0calism-Not-A-Handout-To-Thosetypes’ to get them to sign up. So yeah, to quote Atrios, Shit is fucked up and shit for anyone trying to design something truly easy and beneficial to the general public.
    KEEP THE GOVERNMENT OUT OF OUR MEDICARE!!! : – P

  8. 8
    rk says:

    The only reason why I seem to be paying for insurance is maybe I won’t go 100% bankrupt if there is a big health issue in my family. Otherwise I don’t see what I have can even be called insurance. I have Obamacare for the family. Pay around $1700 per month and a $14000 deductible. Every specialist visit is $100 and every doctor visit is $50. I pay for any tests which the doctor orders (each set of tests usually run into hundreds of dollars), I pay for all the prescription medications. I’m always told by sympathetic pharmacists that all this is because my deductibles are so high. I haven’t met my deductibles so far in any year, so we start the cycle over every year.
    I don’t care what the arguments are, from my point of view I don’t know what I’m being insured for because until I cough up $34000 in one year, insurance will pay nothing.
    What’s happening in this country is a crime. It’s unsustainable for people like me. Even with insurance I avoid going to the doctor, because I don’t want to shell out a minimum of $ 300 dollars per visit. And all this is when no one in my family has long term issues.
    Someone should explain to me how people like me are supposed to deal with this. I don’t understand why we have to start afresh every year and why insurance and deductibles cannot roll over to the next year?

  9. 9
    Seanly says:

    The issue of out-of-pocket costs is a huge one. Even still though, people still aren’t asking the right question. Most folks look at the amount of cash that goes from their paycheck into their bank account. They don’t care how much is federal taxes, state taxes, health insurance, etc. It’s all about what goes in & what you have to pay the doctor.

  10. 10
    Mnemosyne says:

    @rk:

    Ugh. Can I ask if that’s an employer-sponsored plan or one that you bought on the Exchanges? Because a whole lot of employers decided to cheap out, screw their employees with a high-deductible plan, and claim that “Obamacare” made them do it.

  11. 11
    rk says:

    @Mnemosyne:

    I bought it for myself from the exchange. This is an HMO. A PPO is $2300 with same high deductible. No employer involved. I know some people with employer based plans and they hate their high deductibles of around $3000. I’d kill for a $3000 deductible.

  12. 12
    Luthe says:

    @rk: See if you can’t find a plan with a separate prescription deductible or where prescriptions aren’t part of the deductible.. That’s what I go for (when I have Exchange-based insurance anyway). It’s not perfect, but it helps when you have a lot of prescriptions but would never meet a combined deductible with them.

  13. 13
    rk says:

    @Luthe:

    I’m not sure if there is one such which is offered. I have been using Obamacare almost since it first started. I’ll look into it. Bottom line though is that healthcare in this country is affordable, except for the very rich. Even with health insurance, if you don’t have cash flow, you can get into trouble very quickly. I’m lucky that I have a small amount of money in the bank, but I’m gone with a major medical expenditure. One year I was supposed to shell out almost $3000 for a emergency visit for my son. This visit involved no testing, everything was in the clear, the doctor should not even have sent him there. I fought the hospital tooth and nail and got it reduced to a $1000. But I’m fed up of spending significant chunks of time with insurance companies and hospitals.
    Another aspect of health care which is rarely mentioned, but is a huge deal is how insurance company customer service people give either incomplete or contradictory information. On some issues I’ve spent months trying to resolve them. One person says one thing, someone else says the opposite. Health insurance in this country is a complete shit show! I feel one solution would be to have everyone in the same type of system. The population is divided into medicare for the old, employer based for others, government based for govt employees and politicians, and hell based for the rest.

  14. 14
    WhatsMyNym says:

    @Barbara:

    CMS bangs its head against the wall trying to get Part D beneficiaries to focus on what they would spend under a plan’s benefit structure for their own specific pattern of utilization, instead of obsessing over the monthly premium, almost always without success.

    It’s hard enough to get seniors at my condo complex to file for property tax relief/exemptions which would save them a bundle every year in WA.

  15. 15
    bob hertz says:

    If your family size is 2 and you can get your income down to $60,000 or so, you can get a decent subsidy.

    Otherwise we should let folks like you buy into Medicare.

  16. 16
    Mnemosyne says:

    @rk:

    Also, insurance prices vary enormously by state and even regions within the state. There are lots of low-cost options in heavily populated areas in large population blue states like NY and CA, but get outside of those large metro areas and costs go up sharply. Health insurance is expensive in low-population states even when Democrats are running the Exchanges.

    We should have been able to spend 2010-2016 fixing some of these problems, but Republicans decided to sabotage the system instead and people continue to get screwed. 😡

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