7 ms·

The Lesson of Anthem Blue Cross

14 points by terra_t 17y ago

CoryMathews 17y ago
No way, California and money problems.. Never saw that one coming. </sarcasm> downvote away but you know its true.
fnid2 17y ago
The less healthy are staying with Anthem, where their higher medical costs are driving up premiums. The new healthcare bill is great, except of course if you are young, healthy, and don't need insurance at all, in which case, your premiums will go up and you will be forced to buy insurance or face fines. And, because the health care laws in congress will require a maximum premium variability of 2-3x, meaning the most expensive insurance plans (for older unhealthy people) can only be 2-3 times the cost of the cheapest ones (for young, healthy people) then what I predict the insurance companies will do is dramatically increase premiums for the young to keep the upper end of premimum costs, which are currently 10x or more than the cheapest, right where they are and raise the lower levels to come in line with 1/3 of the most expensive. Essentially, this health care bill legally requires young healthy people to buy insurance at high rates to pay the medical bills for the older people. It's a TAX on the YOUNG to care for the OLD.
- anigbrowl 17y ago
  Well, that's demographics for you. Although this article is about Britain, I'd guess the relevant #s in the US are within a few per cent: http://www.economist.com/books/displayStory.cfm?story_id=15495760 http://www.economist.com/books/displayStory.cfm?story_id=154...
- coolnewtoy 17y ago
  it's impossible to buy non-group health insurance for a planned pregnancy. and there's enough scary stuff that COULD happen that you wouldn't want to be pregnant without. Old people have medicare. It's young people who have any medical needs at all who are screwed by the current system.
  - cschneid 17y ago
    Please refer to my post below that starts out with "Insurance companies are not money piñatas". Explain why a planned pregnancy is a candidate for an insurance payout? (not that I don't think pregnancy should be covered, just not by an insurance company, but by a morally based public plan without the profit motive, or insurance model).
    - coolnewtoy 17y ago
      actually I think a profit-based insurance model is the problem. you cannot take care of shareholders and patients at the same time. but since you have a profit-based model, excluding planned (or unplanned for that matter) pregnancies from coverage is the same problem as excluding pre-existing conditions. insurance companies cherry-pick the risk pool to increase profits - they only want to give insurance to people unlikely to need it. for private insurance to provide any social value, you need a large risk pool that includes healthy and high-risk patients, and the insurance companies must be required to actually cover people who need medical care. the healthy can't be allowed to opt out, and the insurance companies can't be allowed to decline coverage to anyone in the group.
      - cschneid 17y ago
        your last line is basically a public plan like I suggest, except run by the private sector, with direct payments instead of taxes. We basically agree on the shape of the solution, if not the specific implementation. But expecting insurance companies as they currently exist to pay for pre-existing without that kind of tradeoff is like crashing your car into a pole, then walking down to state farm and being like "ohh, I need car insurance, full coverage, and pay for my repairs. I don't expect my rates to be different because of that though". And really, a planned pregnancy is mostly a pre-existing condition. I wonder why there aren't any supplemental policies for complications though. Something that wouldn't cover the expected stuff, but would cover real medical complications.
        coolnewtoy 17y ago
- JeremyStein 17y ago
  "It's a TAX on the YOUNG to care for the OLD." <sarcasm> Yeah! Who do those old people think they are, getting all weak and sickly!? </sarcasm> Most of the western world believes that society should be taxed to provide health care for everyone. Like education, welfare, and social security, it's something we all pay for to live in a moral, civilized society. Thank God Ayn Rand doesn't run the universe and the government forces you and me to pay for Grandpa's medication.
  - cwan 17y ago
    I have no problems paying taxes - but let's not be disingenuous about it claiming that they are forcing the young to pay for insurance for their own good. If we need taxes to pay for services of the elderly, then let's call it like it is. The screwed up part of the system is that the idea used to be that you'd pay into the system with an expectation that you would eventually get the same services as you got older - but have you even looked at the actuarial tables lately? Practically ever western country has massive unfunded liabilities especially as the baby boomers retire. Personally I like Megan McArdle's solution - let people buy catastrophic loss insurance and fund the rest out of your own pockets. The premiums would be relatively minimal - but the idea that we have to have the government provide insurance / or that even what's proposed in the current legislation solves this problem is frankly nuts. I find it absolutely bizarre that as a Canadian, that while the US government spends more per capita on publicly funded Medicare/Medicaid than Canadians do, coverage for Americans is spotty at best - and you want the US government to get even more involved in healthcare through regulation and direct interventions?
    - jojopotato 17y ago
      Every country with a declining birth rate and a promise to the older generation has massive unfunded liabilities. The United States, China, Japan, everyone is having to deal with the problem of "How do we pay for the elderly when we have so few children?" I'm not saying I have an answer, but we need to address the real question previous generations never had to face before, which is how much burden do we want to put onto the younger generation to take care of the older one when there are so much fewer young people? At what point do you say "The cost to keep Grandma alive another 6 months costs too much."?
- billjings 17y ago
  That's incredibly shortsighted. The young are the only people who really do need to insure their health, because by and large they're the only people who don't know how they're going to die yet, or how much it's going to cost. They're the only ones with any uncertainty. The fact that a healthy young person can fail to buy insurance because they "don't need it" (because they're never going to get sick - hah!) and then obtain it later on in life when they need medical coverage is completely broken. How are insurance companies supposed to make money like that? Why, by dropping people when they actually get sick. Who would ever buy this product? How on earth can you sell it? The only way that it even begins to make sense is if you have to have it for your entire life.
  - fnid2 17y ago
    Quite the contrary sir, I'm thinking 10 decades into the future, because that is probably how many I have yet to live. The older generation is thinking just a decade or two, maybe three.
- terra_t 17y ago
  Young people today will be old people tomorrow.
  - fnid2 17y ago
    At this rate, there won't be any young people in America at all. They'll all go to other countries that treat all citizens equally. I know many believe elders deserve respect, but I disagree. The older generation in this country has sapped our energy sources, polluted the planet, and robbed other nations of their resources for decades. Now, they want to continue to require other people to pay their bills, ensure their quality of life, and help them live even longer at the expense of all those things for the young. When the younger generation has nothing positive to look forward to in this nation, they are going to go to another nation that will welcome them and treat them with the same respect and decency that the U.S. currently showers on the baby boomers. The older generation is already rich. They've already saved up their money. They are already getting free rent through social security and medical care through medicare. They are set. The young don't have jobs and can't get them. They can barely feed their own families and here the government wants to take even more money from them. It is unsustainable.
    - terra_t 17y ago
      Where you gonna go? I've lived in some other places, and let's put it this way... there's a reason why people want to move to the US. There are all sorts of things wrong with the US, but it's as bad or worse in every other country, be it China, Japan, France, the Netherlands, Germany or any place or whatever that is. Note, for instance, that all developed countries have universal health insurance, so you've got to go to China or Somalia or some hellhole like that to get away from 'socialized' medicine.
      - fnid2 17y ago
        I don't have a problem with socialized medicine, though that term means different things to different people and we tend to categorize countries differently around the world, but I think the Canadians have a good system. Lots of European countries do really well with their systems, which are much appreciated by the recipients of their care. Taiwan has a very good system. We could adopt something closer to one of the good examples out there, rather than recreate something messed up from the beginning. Besides, health care overseas when paid for with cash is often better and more cost effective than the health care that can be acquired in the united states with insurance and a copay. This new policy will be in place for decades. Let's get it right.
- icey 17y ago
  People who think they are impervious to illness who do get sick without insurance are a measurable part of the reason for high medical costs. Those people end up not being able to pay for their care, so everyone in the system has to absorb the cost that was incurred and could not be recouped.
  - fnid2 17y ago
    I believe people should be required to pay according to their ability. Right now, a young person 20 yrs old right out of college earning 40k a year, will pay < $200 a month for insurance. Under the new health care plan with the same premiums for the young, an older person who earns $400k/yr will pay about $600 a month for insurance. See where the inequality erupts? This is the vision for the new health care plan and it is carrying much future baggage.
    - icey 17y ago
      Those are some funny numbers you're throwing out there; I'd love to see some citations. (Disclaimer: I work in the health insurance industry and I specifically deal with health insurance rating systems, so linking anything generated by politicians on either side of the fence isn't going to cut it.)
      - fnid2 17y ago
        http://www.nytimes.com/interactive/2009/11/19/us/politics/1119-plan-comparison.html#tab=8 http://www.nytimes.com/interactive/2009/11/19/us/politics/11... This side by side comparison says, House version Premiums for older people cannot be more than double the premium for young adults. Senate version Premiums for older people cannot be more than three times the premium for young adults.
        icey 17y ago
        Okay, this argument makes much more sense now; your issue isn't with the actual rates but with the variance between the lowest rates and the highest where age is concerned. I don't have the time to generate the full model, but generally speaking the Senate version of the bill isn't that far off from where variance is in most states today - if you compare the costs between a 20 year old and a 50 year old, you're going to see the 50 year old pays around 3 times what a 20 year old pays. A 64 year old will pay between 5 and 6 times more (these examples are using data from a state with very lax insurance regulation by the way; in states like California and Massachusetts, the variance will be lower). Insurance rates are determined by guessing at the risk of any given pool of people and the estimating costs that may be incurred given the riskiness of the pool. By forcing healthy people to buy insurance, the pool of insured people should become less risky; hopefully drawing costs down. I've got no idea as to whether or not that might happen, but assuming the actuaries continue to derive rates the way that they always have; it should lower costs on the whole.
cschneid 17y ago
I'm crossposting my comment from a very similar Reddit thread (although that thread was more about "omg, insurance companies are teh evilz"). Hopefully I get some more meaningful discussion about it here. ------------ Insurance companies are not money piñatas. They are insurance. The premise is that you have a low probability of having a massive expense. You pool your money with others (via the insurance company) to cover it if it happens to be you who gets unlucky. The insurance model falls apart when somebody is already sick. Then it's no longer a low probability of having the expense, it's almost guaranteed. So now insurance is the wrong financial model. Charity, or a publicly funded option is, since it becomes a moral issue (we don't let people die of stuff we can fix), rather than a financial (I pay in a bit, possibly need large payout). That's not to say they aren't evil, and want their profits, and go out of their way to be dicks about it, but all the hubbub about existing conditions just shows that insurance is the wrong model for health care coverage. I fully support a public option, which is effectively an insurance company that also has the moral backing of paying for blatantly unprofitable cases. It won't be perfect, and might suck in many cases, but it sure would be much better than any insurance based health care system could be.
- akeefer 17y ago
  Exactly: the incentives are wrong for everyone under an insurance model. Healthier people have an incentive to leave the risk pool and/or only keep catastrophic coverage, increasing premiums for everyone less fortunate. Insurance companies have no incentive to insure anyone who seems like a high risk, i.e. due to a pre-existing or likely-to-emerge condition. Consumers have no incentive to manage their own care expenses or make decisions for themselves, because if they have insurance they're not really paying the full costs. Insurance companies have incentives to deny care whenever possible. Hospitals and doctors have an incentive to charge uninsured people more than insurance companies so that the insurance companies can provide a value-add and because they have to make up for all the care provided to un-/underinsured people who can't pay their bills. If you believe that a wealthy society like ours has a moral imperative to take care of its poor and sick and elderly, then the insurance model is hopelessly broken. It doesn't mean there's some perfect model out there that has perfectly aligned incentives and no moral hazard, just that this one is probably one of the worse ways to organize things. If you don't believe that there's any such moral imperative, then that's an entirely different debate.

14 points by terra_t 17y ago

No way, California and money problems.. Never saw that one coming. </sarcasm> downvote away but you know its true.

fnid2 17y ago

The less healthy are staying with Anthem, where their higher medical costs are driving up premiums. The new healthcare bill is great, except of course if you are young, healthy, and don't need insurance at all, in which case, your premiums will go up and you will be forced to buy insurance or face fines. And, because the health care laws in congress will require a maximum premium variability of 2-3x, meaning the most expensive insurance plans (for older unhealthy people) can only be 2-3 times the cost of the cheapest ones (for young, healthy people) then what I predict the insurance companies will do is dramatically increase premiums for the young to keep the upper end of premimum costs, which are currently 10x or more than the cheapest, right where they are and raise the lower levels to come in line with 1/3 of the most expensive. Essentially, this health care bill legally requires young healthy people to buy insurance at high rates to pay the medical bills for the older people. It's a TAX on the YOUNG to care for the OLD.

anigbrowl 17y ago
Well, that's demographics for you. Although this article is about Britain, I'd guess the relevant #s in the US are within a few per cent: http://www.economist.com/books/displayStory.cfm?story_id=15495760 http://www.economist.com/books/displayStory.cfm?story_id=154...
coolnewtoy 17y ago
it's impossible to buy non-group health insurance for a planned pregnancy. and there's enough scary stuff that COULD happen that you wouldn't want to be pregnant without. Old people have medicare. It's young people who have any medical needs at all who are screwed by the current system.
- cschneid 17y ago
  Please refer to my post below that starts out with "Insurance companies are not money piñatas". Explain why a planned pregnancy is a candidate for an insurance payout? (not that I don't think pregnancy should be covered, just not by an insurance company, but by a morally based public plan without the profit motive, or insurance model).
  - coolnewtoy 17y ago
    actually I think a profit-based insurance model is the problem. you cannot take care of shareholders and patients at the same time. but since you have a profit-based model, excluding planned (or unplanned for that matter) pregnancies from coverage is the same problem as excluding pre-existing conditions. insurance companies cherry-pick the risk pool to increase profits - they only want to give insurance to people unlikely to need it. for private insurance to provide any social value, you need a large risk pool that includes healthy and high-risk patients, and the insurance companies must be required to actually cover people who need medical care. the healthy can't be allowed to opt out, and the insurance companies can't be allowed to decline coverage to anyone in the group.
    - cschneid 17y ago
      your last line is basically a public plan like I suggest, except run by the private sector, with direct payments instead of taxes. We basically agree on the shape of the solution, if not the specific implementation. But expecting insurance companies as they currently exist to pay for pre-existing without that kind of tradeoff is like crashing your car into a pole, then walking down to state farm and being like "ohh, I need car insurance, full coverage, and pay for my repairs. I don't expect my rates to be different because of that though". And really, a planned pregnancy is mostly a pre-existing condition. I wonder why there aren't any supplemental policies for complications though. Something that wouldn't cover the expected stuff, but would cover real medical complications.
      - coolnewtoy 17y ago
JeremyStein 17y ago
"It's a TAX on the YOUNG to care for the OLD." <sarcasm> Yeah! Who do those old people think they are, getting all weak and sickly!? </sarcasm> Most of the western world believes that society should be taxed to provide health care for everyone. Like education, welfare, and social security, it's something we all pay for to live in a moral, civilized society. Thank God Ayn Rand doesn't run the universe and the government forces you and me to pay for Grandpa's medication.
- cwan 17y ago
  I have no problems paying taxes - but let's not be disingenuous about it claiming that they are forcing the young to pay for insurance for their own good. If we need taxes to pay for services of the elderly, then let's call it like it is. The screwed up part of the system is that the idea used to be that you'd pay into the system with an expectation that you would eventually get the same services as you got older - but have you even looked at the actuarial tables lately? Practically ever western country has massive unfunded liabilities especially as the baby boomers retire. Personally I like Megan McArdle's solution - let people buy catastrophic loss insurance and fund the rest out of your own pockets. The premiums would be relatively minimal - but the idea that we have to have the government provide insurance / or that even what's proposed in the current legislation solves this problem is frankly nuts. I find it absolutely bizarre that as a Canadian, that while the US government spends more per capita on publicly funded Medicare/Medicaid than Canadians do, coverage for Americans is spotty at best - and you want the US government to get even more involved in healthcare through regulation and direct interventions?
  - jojopotato 17y ago
    Every country with a declining birth rate and a promise to the older generation has massive unfunded liabilities. The United States, China, Japan, everyone is having to deal with the problem of "How do we pay for the elderly when we have so few children?" I'm not saying I have an answer, but we need to address the real question previous generations never had to face before, which is how much burden do we want to put onto the younger generation to take care of the older one when there are so much fewer young people? At what point do you say "The cost to keep Grandma alive another 6 months costs too much."?
billjings 17y ago
That's incredibly shortsighted. The young are the only people who really do need to insure their health, because by and large they're the only people who don't know how they're going to die yet, or how much it's going to cost. They're the only ones with any uncertainty. The fact that a healthy young person can fail to buy insurance because they "don't need it" (because they're never going to get sick - hah!) and then obtain it later on in life when they need medical coverage is completely broken. How are insurance companies supposed to make money like that? Why, by dropping people when they actually get sick. Who would ever buy this product? How on earth can you sell it? The only way that it even begins to make sense is if you have to have it for your entire life.
- fnid2 17y ago
  Quite the contrary sir, I'm thinking 10 decades into the future, because that is probably how many I have yet to live. The older generation is thinking just a decade or two, maybe three.
terra_t 17y ago
Young people today will be old people tomorrow.
- fnid2 17y ago
  At this rate, there won't be any young people in America at all. They'll all go to other countries that treat all citizens equally. I know many believe elders deserve respect, but I disagree. The older generation in this country has sapped our energy sources, polluted the planet, and robbed other nations of their resources for decades. Now, they want to continue to require other people to pay their bills, ensure their quality of life, and help them live even longer at the expense of all those things for the young. When the younger generation has nothing positive to look forward to in this nation, they are going to go to another nation that will welcome them and treat them with the same respect and decency that the U.S. currently showers on the baby boomers. The older generation is already rich. They've already saved up their money. They are already getting free rent through social security and medical care through medicare. They are set. The young don't have jobs and can't get them. They can barely feed their own families and here the government wants to take even more money from them. It is unsustainable.
  - terra_t 17y ago
    Where you gonna go? I've lived in some other places, and let's put it this way... there's a reason why people want to move to the US. There are all sorts of things wrong with the US, but it's as bad or worse in every other country, be it China, Japan, France, the Netherlands, Germany or any place or whatever that is. Note, for instance, that all developed countries have universal health insurance, so you've got to go to China or Somalia or some hellhole like that to get away from 'socialized' medicine.
    - fnid2 17y ago
      I don't have a problem with socialized medicine, though that term means different things to different people and we tend to categorize countries differently around the world, but I think the Canadians have a good system. Lots of European countries do really well with their systems, which are much appreciated by the recipients of their care. Taiwan has a very good system. We could adopt something closer to one of the good examples out there, rather than recreate something messed up from the beginning. Besides, health care overseas when paid for with cash is often better and more cost effective than the health care that can be acquired in the united states with insurance and a copay. This new policy will be in place for decades. Let's get it right.
icey 17y ago
People who think they are impervious to illness who do get sick without insurance are a measurable part of the reason for high medical costs. Those people end up not being able to pay for their care, so everyone in the system has to absorb the cost that was incurred and could not be recouped.
- fnid2 17y ago
  I believe people should be required to pay according to their ability. Right now, a young person 20 yrs old right out of college earning 40k a year, will pay < $200 a month for insurance. Under the new health care plan with the same premiums for the young, an older person who earns $400k/yr will pay about $600 a month for insurance. See where the inequality erupts? This is the vision for the new health care plan and it is carrying much future baggage.
  - icey 17y ago
    Those are some funny numbers you're throwing out there; I'd love to see some citations. (Disclaimer: I work in the health insurance industry and I specifically deal with health insurance rating systems, so linking anything generated by politicians on either side of the fence isn't going to cut it.)
    - fnid2 17y ago
      http://www.nytimes.com/interactive/2009/11/19/us/politics/1119-plan-comparison.html#tab=8 http://www.nytimes.com/interactive/2009/11/19/us/politics/11... This side by side comparison says, House version Premiums for older people cannot be more than double the premium for young adults. Senate version Premiums for older people cannot be more than three times the premium for young adults.
      - icey 17y ago
        Okay, this argument makes much more sense now; your issue isn't with the actual rates but with the variance between the lowest rates and the highest where age is concerned. I don't have the time to generate the full model, but generally speaking the Senate version of the bill isn't that far off from where variance is in most states today - if you compare the costs between a 20 year old and a 50 year old, you're going to see the 50 year old pays around 3 times what a 20 year old pays. A 64 year old will pay between 5 and 6 times more (these examples are using data from a state with very lax insurance regulation by the way; in states like California and Massachusetts, the variance will be lower). Insurance rates are determined by guessing at the risk of any given pool of people and the estimating costs that may be incurred given the riskiness of the pool. By forcing healthy people to buy insurance, the pool of insured people should become less risky; hopefully drawing costs down. I've got no idea as to whether or not that might happen, but assuming the actuaries continue to derive rates the way that they always have; it should lower costs on the whole.

cschneid 17y ago

I'm crossposting my comment from a very similar Reddit thread (although that thread was more about "omg, insurance companies are teh evilz"). Hopefully I get some more meaningful discussion about it here. ------------ Insurance companies are not money piñatas. They are insurance. The premise is that you have a low probability of having a massive expense. You pool your money with others (via the insurance company) to cover it if it happens to be you who gets unlucky. The insurance model falls apart when somebody is already sick. Then it's no longer a low probability of having the expense, it's almost guaranteed. So now insurance is the wrong financial model. Charity, or a publicly funded option is, since it becomes a moral issue (we don't let people die of stuff we can fix), rather than a financial (I pay in a bit, possibly need large payout). That's not to say they aren't evil, and want their profits, and go out of their way to be dicks about it, but all the hubbub about existing conditions just shows that insurance is the wrong model for health care coverage. I fully support a public option, which is effectively an insurance company that also has the moral backing of paying for blatantly unprofitable cases. It won't be perfect, and might suck in many cases, but it sure would be much better than any insurance based health care system could be.

akeefer 17y ago
Exactly: the incentives are wrong for everyone under an insurance model. Healthier people have an incentive to leave the risk pool and/or only keep catastrophic coverage, increasing premiums for everyone less fortunate. Insurance companies have no incentive to insure anyone who seems like a high risk, i.e. due to a pre-existing or likely-to-emerge condition. Consumers have no incentive to manage their own care expenses or make decisions for themselves, because if they have insurance they're not really paying the full costs. Insurance companies have incentives to deny care whenever possible. Hospitals and doctors have an incentive to charge uninsured people more than insurance companies so that the insurance companies can provide a value-add and because they have to make up for all the care provided to un-/underinsured people who can't pay their bills. If you believe that a wealthy society like ours has a moral imperative to take care of its poor and sick and elderly, then the insurance model is hopelessly broken. It doesn't mean there's some perfect model out there that has perfectly aligned incentives and no moral hazard, just that this one is probably one of the worse ways to organize things. If you don't believe that there's any such moral imperative, then that's an entirely different debate.