Problems with high deductible health plans

From a loyal reader, I was pointed to this story down in Georgia concerning state employees getting a slightly better health insurance plan mid-year.  I want to highlight the problem with the original health plan.

This year has brought on an onslaught of changes, which included one form of insurance from Blue Cross Blue Shield of Georgia – a high-deductible HRA (Health Reimbursement Arrangement) – and no additional selections to choose from. It is no secret that an HRA is not a one-size-fits-all medical plan for every family, particularly individuals with long-term illnesses….In late December, our family was notified that our daughter’s occupational therapy would increase from a $25 co-pay to $127 per one hour session. We are facing $1,000 per month in medical bills between insurance premiums and four hours of therapy….

Health reimbursement arrangements/health savings accounts/high deductible health plans are designed to do one basic thing.  That thing is to shift costs onto the individual for anything that could vaguely look like a “day-to-day” expense.  The theory of change is that the individual will be much more price sensitive and thus a much better price shopper as well as being much more not consume any medical service in a marginal situation.  From here, costs will stabilize and eventually decline.  That is the theory of change.

It is a theory of change that is built on the Rand Insurance Experiment.  The Rand Insurance Experiment showed that making people pay out of pocket reduced health care consumption and expenditure.  However the Rand Insurance Experiment also showed that people are not perfectly rational, infinitely discounting, amazingly discerning health care shoppers; people are human with the limitations of bounded rationality that is shaped by information processing costs and competing priorities.  People being people instead of perfectly rationalizing agents means high deductible cost sharing plan designs don’t guarantee that people get the care that they actually need which leads to worse health outcomes including death in some cases.

High deductible plans are appropriate choices for some people.  They are not appropriate for everyone if we value appropriate as a means of providing effective, efficient care that meets the medical needs of an individual without bankrupting them or their family. 

If I was the health insurance dictator in this country, I would allow high deductible plans to be sold.  They would only be sold to individuals and families who are reasonably young (age is a pre-exisiting condition) without any signifcant claims history.  The policies would not be automatically renewed until the most recent claims and medical history was reviewed.  Furthermore, the potential buyer pool would be limited to people who have the ability to absorb a one-time shock of several thousand dollars without it being a crisis.  This sub-population is fairly small, and can absorb the risk shifting that is inherent in a high deductible plan design.  Anyone with chronic conditions or recurring health maitenance problems should not be a plan designed like this if the goal is to effectively manage health.

Same old Song and Dance

The House Republican Study Committee is offering a “repeal and replace” plan for Obamacare. If we assume that this is purely a marketing document aimed to fulfill the check box that there is a “plan” to “replace” Obamacare that can get 218 votes in the House, then this document aces that evaluation. However, my therapist asked me to try not to be a cynical bastard before my first cup of coffee every morning, so lets evaluate this plan on the following criteria:

  • Provides coverage for people with pre-exisiting conditions
  • Provides coverage for people who aren’t part of the Republican donor class
  • Attempts to bend the cost curve down
  • Covers neccessary medical processes

Before we evaluate, let’s go over the major policy planks.

  1. Repeal all of Obamacare including Medicaid expansion and the three legged stool of subsidies, community rating/guaranteed issue, and mandate.
  2. Give people a tax deduction of $7,500 for an individual and $20,000 for families
  3. Significant expansion of HSA tax advantages.
  4. $25 billion for state run high risk pools with premium support for any premiums that are over twice the state average for insurance.
  5. Coverage guarantee for pre-exisiting conditions only applies to people who maintain continuous coverage
  6. Allow insurance companies to sell a single product through a single state regulatory filing
  7. Allow small groups to pool together for better risk pool pricing.
  8. Improve pricing transparency
  9. Stop comparative effectiveness research
  10. Tort reform to cap damage limits
  11. Random anti-abortion plank

 The short version is MASSIVE FAIL

The long version is below the fold:

Read more

Expand and loot

Good news (via Politico) for Pennsylvania:

Republican Pennsylvania Gov. Tom Corbett is planning a Monday press conference to throw his support behind a version of Obamacare’s Medicaid expansion, industry and legislative sources tell POLITICO.

Corbett’s eyeing versions of expansion that rely on private-sector health plans rather than adding to the public Medicaid rolls, similar to approaches being considered in Iowa and Arkansas, according to the sources. The approach would bring in billions of Obamacare dollars marked for states that back expansion and use them to buy private insurance for the state’s poorest residents.

Medicaid expansion is a good thing for the working poor in Pennsylvania.  The Oregon study strongly indicated that Medicaid significantly improves health and quality of life for its recipients.  Pennsylvania is one of the last Obama voting states that had been holding out  and it is a large hold-out.

The bad news on this probable announcment is that the expansion is being done in a cockamanie manner designed to prove that government can’t work.  Simply expanding state Medicaid elibigibility rules would be faster and cheaper (as Medicaid pays a low reimbursement rate) than sending people to exchanges for products that have yet to be designed.  Two steps forwards, one step back and then a piroutte towards social justice…..

I’m not seeing them as underdogs, but it’s entirely possible I lost my place in the test booklet

I’m temperamentally inclined to resist sales pitches that are based on fear. Every time I hear one I think of those home alarm commercials where the frantic women sees the masked intruder crashing through the sliding door. They’re not selling the alarm system. They’re selling fear. They lose me when they choose that approach. The longer I read on the school reform industry-marketing end the more I believe they’re not selling “reform” substantively, to the public, anyway. They’re selling fear that they hope will drive their version of “reform.” Because I have been alive and had a pulse the last 20 years I’m particularly wary of fear-based political appeals that spring from a “bipartisan consensus” because all that really means is a bipartisan group of politicians, think tank, elite non-profits and opinion media people have reached consensus, and what that means to me is there are very few dissenters in the top ranks.

Whether it’s system-wide in Atlanta or DC or Chicago or all the way down to the individual level, where certain anxious fourth graders are taking a high stakes test where they didn’t review the material and they aren’t given enough time to complete the test, fear seems to permeate the whole reform approach. Here’s some political schemers of various stripes and motives who are hoping for low scores on a test that is essentially rigged to produce low scores so they can sell reform in the suburbs. Do they sound like people who are confident in the value of the product? Why would they need to create failed and failing public schools full of failures to sell market-based reform to people in the suburbs? Why not just sell their “sector agnostic” approach to public education– where a public school is the same as a publicly funded for-profit or private school-directly?

While kids are taking their standardized tests some very well compensated reformers are back out on the road, selling reform, or something. This is the message of a reformer who is a particular favorite of Arne Duncan:

Educators make excuses for failing schools, Rhee said. But, she added, “The bottom line is: The system did not become the way that it is by accident. It operates exactly the way it was designed to operate, which is in a wholly unaccountable, dysfunctional manner.
“So when you seek to change that dynamic” – including going after “low-performing” teachers – “you’re gonna have a whole lot of unhappy people on your hands. When you stop that gravy train, somebody is going to be unhappy.”

What is that? What are these awesome, mighty forces that are opposing her? It seems to me she has nearly every powerful political actor and billionaire behind her, including the person who did or did not invent Facebook. How much cheering affirmation does she need? Isn’t South Carolina a Right To Work For Less state, anyway? South Carolina isn’t known for worker protections, reformers. Maybe she didn’t know where she had landed that day, because there’s also this:

Former Washington, D.C., schools chancellor Michelle Rhee had trouble recalling the names of South Carolina’s “key players” after a quick visit to the State House on Wednesday. But state lawmakers may want to take note of hers.
Rhee’s education advocacy group, StudentsFirst, is lobbying in 18 states, including South Carolina.

Eighteen states! No wonder she can’t keep the “key players” straight. That’s all right. She’ll get it when she writes them a campaign check. The Committee To Elect Reform Rubberstamper probably won’t cut it. Why would the US Department of Education back this stuff, to the extent where Duncan personally intervened to try to save this particular reformer’s job in DC?

I’m the parent of a public school student and I don’t believe our local public school employees are “riding a gravy train.” I know what public school teachers are doing here right now, in fact. They’re prepping for Duncan’s standardized tests. I thought 2011 was the year for the ritual denunciation of public employees, and now we’re back to thanking teachers and firefighters “for their service” after Newtown and then Boston, whatever that means. I hope it doesn’t mean they have to be unpaid volunteers or they’re self-interested and not credible. Why doesn’t that rule apply to lobbyists? I’m not a teacher, but it seems to me they’ve set this up so there’s no way for those teachers who don’t agree with them to question what reformers are doing in our schools without their being labeled wholly self-interested slackers. I’m not a teacher so it also won’t bother me or shut me up (obviously) but why all the threats and grim fear-mongering? There’s nothing new or “transformational” about that. It’s an old, old idea.

Mid-Afternoon Open Thread

The polling in the last couple of days has all gone the President’s direction.  Of course, 538 and the Princeton Election Consortium have it decisively in the President’s favor the last several days.  Princeton reported this morning (before the site went offline) that the re-election likelihood was 93% for the random distribution, and 98% for the weighted calculation.

I’m trying not to get too excited.  I’m trying to keep perspective, but it looks, from reports out of Michigan and Ohio, that the whole “lying about car production” and the fake relief rally have both hurt Romney in the region.

Now it’s time for the final argument.  If there’s anyone out there that any of you know that is still undecided, or uncommitted at this point, please, please refrain from choking the ever-living shit out of this person, and make this final argument:

It is time to take responsibility.  Our vote is our voice in how we want the country to be run, and what we stand for.  It is, in the purest sense, our will writ upon the world stage.  We have to take responsibility for the leaders of our country, and we have to vote accordingly.  If you are OK with a man who lies and dissembles every time he gets in front of a microphone, you should vote for Rmoney.  If you are OK with the idea that a small group should control everything in the country from positions of immunity and leisure while the rest of the country toils from birth to death for what scraps they’ll drop, then you should vote for Rmoney.   If you think that the citizens of the greatest and most powerful country in the world should risk being poverty-stricken due to illness, you should vote for Rmoney.   If you think that going to war against Iran in order to protect a third country is the proper use of American military personnel–if you think that protecting Israel and Saudi Arabia are worth your children being killed and maimed, then you should vote for Rmoney.  And you should do these things with pride.  If you think however, that America deserves better in every one of the above cases, then you should vote to re-elect the President.

Some of the aforementioned polling:

NYT/CBS: Obama up 5 points in Ohio, 2 points in Virginia, and 1 point in Florida.

Franklin & Marshall College: Obama up 4 points in Pennsylvania.

PPP: Obama up by 5 in Wisconsin and in Iowa.