Late last week, I saw opponents of Obamacare pushing a story out of Indiana that said insurance premiums would spike 72% up to an average premium of $570/month. Not long later, I saw Aaron Carroll at the Incidental Economist cautioning against putting much stock in those numbers as we didn’t know much about what went into those averages.
Sarah Kliff, writing for the Washington Post Wonk Blog has a good explanation about why those numbers are misleading. We still don’t know what all is in those numbers, but it seems very likely that the expensive premiums in some Cadillac plans are pushing up the average and that the less generous plans are likely to have premiums that are in line with those of other states where the premium jumps don’t look all that notable.
The health-care law envisioned Americans having a choice of different levels of insurance coverage. Sick people, for example, might want to pay a higher premium for a health plan that would cover a greater chunk of their bills. Healthy individuals, conversely, could gravitate to a more bare-bones plan –- one that left them more financially vulnerable but also with a smaller premium.
These plans are categorized into metal levels. A “bronze plan,” for example, covers 60 percent of the average beneficiary’s bills and would likely have the lowest premium. A silver plan covers 70 percent, and a gold plan foots, on average, 80 percent of the bill. At the very top of the heap are platinum plans, which foot a hefty 90 percent of the average subscriber’s costs.
There’s some evidence to believe that the most important rates are the prices we should watch most closely. Those are likely the plans that buyers on the exchange will gravitate toward. We saw this in Massachusetts, where the vast majority of enrollees purchase a bronze or silver insurance plan.
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We’ve seen in other states’ data that bronze plans and silver plans can have hugely different premiums. Here in the District, for example, CareFirst plans to charge a 27-year-old $172 for bronze coverage and $341 for a platinum plan.Indiana’s $570 figure comes from squishing together all the filings –- every plan that is bronze, platinum or anywhere in between –- and coming up with one composite.
Tony Cook’s story for the Indianapolis Star reported the Pence administration’s side of things and had asked for a breakdown on the individual level plans. The deputy at the state Department of Insurance who had a political message ready to go bemoaning the fate of Hoosiers under Obamacare did not, however, have information about the different plan structure. Darn the luck.
“We still don’t know what all is in those numbers.”
One of the key problems with health care has been that nobody knows what costs are, so costs aren’t controlled. This was before Obamacare. The main thing this exercise of making numbers dance to suit narratives on both sides of the aisle shows me that this key issue- what will things cost- hasn’t even slightly been addressed. We’re this far along and don’t know yet? That’s a cluster.
On this particular issue anyway, a lot of states do know and have reported the various plan numbers; the silver plan rate seems to be an important metric. Indiana’s shortfall appears to be more political than anything else.
But, I agree that interested parties of all kinds cook their numbers to fit their narratives. (Seems like I read that California’s emphasized either group plans or individual plans, whichever made the rates look lower.) And, one of the big challenges in health care pricing has been that the costs are so opaque. I see this as a function of subsidies, natural uncertainty of outcomes when providing medical services, and because some people are profiting mightily from the lack of transparency.
It’s a subsidy of sorts, alright, but the direct result of an absence of price competition. No health care consumer really knows what any procedure costs, and if they are insured, they have every incentive in the world not to be concerned about, at least insofar as it affects their own pocketbook. So, yeah- costs are opaque. Why post the prices like a gas station does? It only agitates people.
I hate the involvement of insurance in anything but catastrophic care. The thing that always sticks in my craw is how the insurance companies lay out what they will pay without any apparent price shopping. Procedure ‘A’ costs the care provider ‘x’ to execute, but the insurer will provide ‘x * 3’, so the provider learns to bill at ‘x * 3’. Anyone will haggle with their mechanic and get somewhere on price from time to time. Try that with the doctor for even a routine blood screening.
Healthcare for only catastrophic coverage incentivizes foregoing primary and preventative care.
Health benefit providers do bargain with providers, but generally lack market power because of relatively small membership pools. And they find it is easier to raise premiums than effectively bargain down costs. Or they end up with cost savings of only 10 or 20%. Payors should be paying only 30-40% of billed charges
Tax-exempt organisations often do not know their costs. For-profit entities generally have knowledge of their costs as they must report to management on performance.
I worked with about 100 tax-exempt orginizations over a 5 year period and worked directly in 2 for the last 5 years. In one of the last 2 I was CFO and I could tell you my costs down to the penny for every cost center in my $15 million annual budget. That is not out of the ordinary with 95% of the orginizations I worked with.
I reported to management monthly, quarterly, semi-annually and annually on 7-10 performance indicators and was held accountable for them.
Any successful hospitals?