Health insurance and medical care loom so large in our lives today. Maybe I’m just projecting – but I don’t think so; I think a good chunk of the population spends some non-trivial amount of time worrying about this issue. Prices on insurance keep rising; prices on medical care keep rising; and, it seems like – actual health consequences aside – we’re Sinners in the Hands of an Angry God; only instead of the pit of hell, it’s financial ruin.
Their foot shall slide in due time. Deuteronomy 32:35.
Anyway, the latest waymarker on this forced march is reflected in the City of Richmond’s efforts to grapple with its budget. Its proposal:
The city of Richmond’s administration plans to carve out spouses from health insurance coverage for city employees for the 2012 budget.
City director of human resources Sue Roberson told the Richmond Common Council that that is the administration’s plan in moving forward with preparation of next year’s budget.
. . .
The plan would combat increases in health insurance costs for the city that are expected to climb by 21 percent in 2012.
Among other things, we need to disassociate health care from employment. It’s bad for employers and, I think, it’s bad for employees. It’s probably bad for the economy as well if, for example, employees that could better use their skills elsewhere or go out on their own as entrepreneurs are discouraged from doing so because they are chained to health care benefits their employers increasingly begrudge them.
Pretty common practice anymore. If anything, government is behind the curve on this one.
I work for a governmental entity and we receive at least 2 notices/month from private sector employers that they are terminating coverage for a spouse that is our employee. We have been receiving those for at least 3-4 years.
If only there was a group of nations our country could study involving non-employer tethered health-care in first-world economic conditions…
are they also cutting out the wasteful insurance coverage for the rugrats associated with the employees ?
I’ve been preaching for years that making health care universal and disconnecting it from employement would free up jobs held by those that only need the job for health insurance; allow people the opportunity to become small business owners; and help people pursue opportunities that make them happy, not because they need the insurance. Republicans should latch on to this as a job incubator. More jobs, better health, happier citizens.
I’m n0t sure I understand. Does the city currently pay for the spouse’s coverage without expecting a contribution from the employee? That’s just bad policy. Agree with Doug on this one that health care insurance should not be provided by employers. The problem is if we sever the employment “group-plan” connection, high-risk people will be forced to pay much more for coverage than healthy people, due to the higher costs involved. Many consider this unfair.
Is it that they don’t cover spouses at all, or just that they don’t cover working spouses that get offered insurance through their employer?
Regarding employer provided coverage, keep in mind that the largest “tax expenditure” is the fact that employer provided health insurance is not a taxable benefit. You could address inefficiency AND fairness (obviously, an untaxed benefit is much more valuable in the 35% bracket than the 10% bracket) by eliminating this “tax expenditure” (LOVE that phrase!).
Believe it or not, one of the best things we could do for employers in this country is a single-payer health system. Then, no more spending money on health benefits, and as Doug noted, for entrepreneurs there is one less reason to feel like you need to stay at Big Firm, thus making the economy and job market more fluid. I have a friend who owns two restaurants in Indianapolis and is doing quite well, but his wife continues to work at her job in large part because of the health benefits.
I have no problem with single payer, as long as what is offered is catastrophic health insurance with extremely large deductibles.
The driver of health costs are third party payments and technology. I don’t think we want to stop technology, but if you are paying for most of your health care out of your own pocket, health care inflation will cease.
And I would prefer a plan that provides for basic coverage, encourages healthy living and preventive care. Then require people to pay catastrophic care coverage that puts the burden of preventable issues, like heart failure/attack, diabetes and many forms of cancer, on them.
Spousal carve-out explanation.
Using my experience as a base…
The city likely pays for spouses, but requires a premium contribution from the employee to do so.
If a single employee plan costs the employee $1,000, an employee+spouse plan typically costs the employee their base $1000 contribution plus ~60% of the difference in costs between the 2 plans.
In a carve-out, the employee has to prove that their spouse has no other employer provided option for insurance than being on the plan. If they work for a company that provides insurance, no matter the cost or level of coverage, Richmond will not allow them on the city plan.
And I would prefer a plan that provides for basic coverage, encourages healthy living and preventive care.
Just for the sake of argument…
Suppose we are starting out with a catastrophic plan, one that pays nothing until the bills exceed $3000.
What would be covered under a “basic” plan, or is catastrophic coverage by definition “basic”?
What justification is there to pay for “prevention”? What is “prevention” anyway?
Doesn’t paying for your own health care out of your own pocket “encourage healthy living”?
Basic coverage is just that.
Physicals, wellness checks, minors bumps bruises scrapes, the sniffles etc.
The justification for prevention is that in my experience, people that have access to could basic coverage that encourages healthy living tend to have less preventable catastrophic health issues.
Maybe I am thinking about it wrong.
Please give us more details of what you are trying to do with your plan.
The justification for prevention is that in my experience, people that have access to could basic coverage that encourages healthy living tend to have less preventable catastrophic health issues.
Completely untrue. I mean, you can believe that (and most people do, it is a common fallacy). But the economic literature is clear that prevention does not save money, and one way that socialized medicine countries save money is by skimping on prevention.
What I am trying to do in “Buzzcutcare” is to get health care consumers to pay for their consumption more directly. By doing so, basic economic principals kick in, and health care inflation will come to resemble inflation of other services paid for directly by the consumer.
Third party payment puts the health care consumer in a completely non-economic situation, where demand is essentially unlimited (because he or she has prepaid for services, and the procedure is essentially free). Even with co-pays (which are better than nothing) what is paid bears little resemblance to what the procedure actually costs, or more importantly, the actual benefit to the health care consumer.
Keep in mind that, with a large enough deductible, very little of the health care system could be paid for by the government, and what is paid for would be more likely to be amenable to rationing (say, really high dollar, high risk cancer treatments with little likelihood of success, or things of that nature).
This could be a very inexpensive system, freeing up capital to be used for more productive pursuits.
So we both encourage choices by imposing financiL consequences, but from different sides of the equation.
I can get on board with your methodology, but you have to stop using the moniker “buzzcutcare”. :)
the economic data is not quite as clear as buzzcut would have you believe:
http://www.nejm.org/doi/full/10.1056/NEJMp0708558
“Studies have concluded that preventing illness can in some cases save money but in other cases can add to health care costs. For example, screening costs will exceed the savings from avoided treatment in cases in which only a very small fraction of the population would have become ill in the absence of preventive measures. Preventive measures that do not save money may or may not represent cost-effective care (i.e., good value for the resources expended). Whether any preventive measure saves money or is a reasonable investment despite adding to costs depends entirely on the particular intervention and the specific population in question. For example, drugs used to treat high cholesterol yield much greater value for the money if the targeted population is at high risk for coronary heart disease, and the efficiency of cancer screening can depend heavily on both the frequency of the screening and the level of cancer risk in the screened population.”
stAllio, the devil is in the details, as even your quote acknowledges. Yes, if you ruthlessly target people with risk factors for preventive care, it pays off.
The problem is, that is not how preventive care works in the real world. In the real world, EVERYBODY goes for annual physicals, gets screenings, etc. etc. etc.
Just look at the outcry after the guidelines for mammograms changed, to better align with the last sentence of your quote. People WANT preventive medicine, even if the benefits do not come close to exceeding the costs. Thus, the outrage.
With third party payment, there is no incentive for people to consider if the benefits outweigh the costs.
You also selectively quoted. The sentence right before the paragraph you quoted (part of the paragraph you quoted, in fact) says, “Sweeping statements about the cost-saving potential of prevention, however, are overreaching.”
Thus very nicely reinforcing my point.
no, your point was overstated. just as sweeping statements about cost savings are overreaching, so was your sweeping statement that “prevention does not save money”. the truth is somewhere in the middle.
Actually, I’d go a lot further than simply saying that preventative care doesn’t save money.
Pretty much all health care spending is wasteful.
The problem is that we can’t know what spending is effective and what is wasteful. That’s why simply rationing care and just spending LESS (as the countries that have socialized medicine do) is so effective. It cuts waste AND effective procedures, but the effective procedures are such a small fraction of overall spending that health care outcomes are little effected.
In case I wasn’t clear:
Yes, there are effective health care procedures. But they are not clearly effective. Health care is an incredibly complex system, and outcomes are generally muddled, at best.
So, to do what Obamacare is going to try to do, and determine “which procedures work and which don’t” (and fund the former but not the later) simply cannot be done.