Comments on: Health Insurance Puzzle

By: Maureen

Maureen — Mon, 27 Oct 2003 03:44:36 +0000

Melanie, It’s pretty typical around here for offices to offer at least a week of vacation. Now, at my old job, my good job, the one that I got laid off from, the one where I made $18,000 more per year than I do now? At that job, I got 3 weeks paid vacation because I had been there for more than 5 years. Now, though, I get my week until I’ve been here 2 years, then I get two weeks. And that’s all I’ll get until I’ve been here for 10 years, when I get an extra week. I sincerely hope I don’t make it that far, though, because I hate my job.

By: Melanie

Melanie — Mon, 27 Oct 2003 00:41:21 +0000

Maureen, You had a paid vacation? Wow. I’ve never had one that wasn’t called “unemployment.”

By: Nicholas Weininger

Nicholas Weininger — Sun, 26 Oct 2003 16:16:20 +0000

Harry—there is certainly a case to be made that the current system makes the labor market less flexible and disadvantages small businesses, because of the differential tax treatment given to employer-bought vs. individual-bought insurance. Not to toot my own horn or anything, but I made this case (and linked to a Ronald Bailey article that makes some suggestions for how to fix it) at: http://www.theagitator.com/archives/008633.php

By: Maureen

Maureen — Sun, 26 Oct 2003 02:55:16 +0000

To add to the whole health insurance mess is this: I have adequate health insurance through my employer, which is not expensive for me and my family. However, I do not have the flexibility at my job to take time off to visit the doctor. I have a minimal amount of paid vacation time, which I mistakenly used for an actual vacation, and now I can’t go to the doctor until next year, when I get more vacation time, because not only do I not have any more paid time to take off, we are so understaffed that they won’t let me take unpaid time off. I know that isn’t really anything to do with insurance, I just wanted to throw in a typical experience for a lower middle class wage earner such as myself. Have insurance: don’t have the time to actually use it.

By: Ophelia Benson

Ophelia Benson — Sat, 25 Oct 2003 23:02:55 +0000

That’s because it’s a ridiculous over-complicated mess that costs a fortune and doesn’t do the job. Other than that, it’s swell.

By: self

self — Sat, 25 Oct 2003 22:56:42 +0000

It’s not quite as simple as switching dilemna based on costs of “health care packages” provided by different GP networks sponsored by different employers at different levels of cost-shifitng(copay and coins). The issues of wage-shifting and plan-membership may be key… There are certainly costs of insurance passed on to the wage structure. These are more burdensome to occupations whose negotiations are lower priority to the employer (translation: lower wage jobs will get screwed on healthcare first). If the position that provides the family’s insurance is less than full-time this is coverage at risk of being reclassified. Employer changes job classification, insurance terms altered. If you switched and then realized this scenario was unfolding and move back, there may be costs to that move as well. There may be screening periods that prevent immediate access to certain plans. You may have to wait to get back on your preferred doctor’s roster. Other close calls on coverage may not be approved with a record of switching out of plans. Sooooooo, it’s really not a pretty picture but you must try to assess how the employer’s choice of dilemna design signals their credibility on not changing the terms at every adverse insurance cost shock. Not an easy task…but the intent of the employer is undoubtedly to shift some of the risks of employer-provided health insurance to the workers. There is no way around that with double-digit premium cost increases as frequent as they’ve been. One thing is for certain. If most of these burdens are falling disproportionately on the low-wage occupations, there is something undeniably wrong with the tax-deductible status of employer-provided health insurance contributions. Continued subsidization of a system whose existence is founded on expanding coverage opportunities for low-income workers (see ERISA language), when the incentives produce the opposite result, is a mockery of a sham of a travesty, or something like that.

By: Hoodie Craw

Hoodie Craw — Sat, 25 Oct 2003 22:37:41 +0000

“Hoodie is confusing Medicare with Medicaid.” He certainly is. Hoodie has been in the US for five years, and the whole of the health insurance business still confuses the tits off him.

By: infamouse

infamouse — Sat, 25 Oct 2003 21:23:59 +0000

Part of the problem with health care in the US is programs like Medicare. For example, Medicare will pay $50 for a general practicioner’s appointment. Now, a full-priced appointment is, I would guess, around $200. So every time a doctor sees a retired person he loses $150. Where does he make that money up? He charges everyone else more. Government health care programs actually caused the rate of increase in prices to double! Now, there are a lot of retired people who go to the doctor frequently, and due to the Baby Boomers, that number is going to jump even higher. There was an article in the NYTimes recently on the use and abuse of Medicare by retired people. It was shocking to say the least. I hate to say it but they’re like vultures. Any excuse to go to a doctor. Especially an expensive specialist. For some of the people the interviewer spoke with, it’s their entire lifestyle. I don’t begrudge the retired their health care, but this was ridiculous. I think that employees should be able to opt into a program with the insurance company where they pay a little extra every month and, in the case they lose their jobs, the health insurance will continue covering them for free until they have another job with benefits, at most 6 months. Also, I’m for privatizing Social Security and Medicare. All the money the government takes from your paychecks would go straight into a medical savings account and a social security account. You could cap the med account at something like $1 million. Everyone, even billionaires, would be required to pay in. People who don’t have enough money in their accounts because they’re poor, etc would have their accounts filled to a certain level every ten years starting at age 50. There are lots of ways to work it. Also, another problem with health care in the US is that the health care companies have an anti-trust exemption! I’m all for keeping the free market system but the current structure is sheer lunacy.

By: Katie

Katie — Sat, 25 Oct 2003 17:34:13 +0000

William- Instead of the government providing everyone with catastrophic coverage (which still leaves the uncovered poor waiting until there’s a catastrophe to get treatment), why not have the government cover preventative care for everyone? In terms of both people’s health and the cost of care, it seems as if this would be better…

By: David W.

David W. — Sat, 25 Oct 2003 17:20:27 +0000

Keith, thanks for the link. Here in my home town, too! I think I can explain some of what’s going on. Officially charged prices are not necessarily what insurance companies will pay. We would give all drugs a “price,” which was always based on our cost, plus a reasonable markup (almost always under 30%). This is what private payers would pay, and a few insurance companies payed us what we said was our price. Actually, I only remember one insurance company that would pay us that amount consistently, and that was the insurance plan for retired longshoreman (who have one of the most powerful unions around). So, it would work like this: Drug X cost us 85 dollars for a month’s supply. Our “price” would be about 110. About 1/3 of our customers would pay this price. The rest would just pick it up for free or pay a co-pay (generally 5-10 dollars). We’d then submit a claim to insurance company #1 and they’d offer to pay us, say, 95 dollars. If an insurance company began to lower their rates such that they were paying us five dollars or less on average, we’d tell the customers we couldn’t accept that insurance plan anymore. And we’d take it. This is also how government payers (AFDC, Indian Health) also worked, and they were even stingier. Now, many—perhaps most—of those who paid cash had insurance, they just did the billing themselves. In fact, some customers had charge accounts for their prescriptions, and would bring in the endorsed checks from their insurance companies when they came in. These insurance plans tended to pay what the customers asked. As you might have discerned, those with generous insurance plans or those who paid cash were subsidizing those with less generous plans. This was an independent store, and I worked their for the last two years it was open. It was still profitable, but the insurance company squeezes were getting worse, and the owners were in their late 50’s and wanted to retire soon. So they sold their inventory and files to Safeway, took jobs there for five years, and then retired. In the small town where this took place, there were six independent pharmacies a decade ago. Now, there is only one. All the other five sold to grocery stores for the same reason—the insurance company squeeze was too great to withstand. So, getting back to Walgreens. I suspect that most insurance companies are not actually paying these prices. I suspect that instead, they (Walgreens) are taking advantage of the private payers and the few with insurance that pays what they are asked to. At those kind of markups, this seems highly unethical, but people are so trained to not question high prices that if they just go to one pharmacy all the time, they wouldn’t know what was happening. But I don’t see insurance companies paying these rates. Why was the situation becoming so rapidly intolerable for independent pharmacies in the US? First of all, because grocery stores are willing to operate at a loss (looking at that article, there is simply no way Costco is making money on the price they’re charging). Secondly, larger chains are able to negotiate better prices from drug wholesalers. Third, back then (I don’t know if this is still the case) some insurance companies were invested in mail order drug enterprises, and there was some cross ownership with insurance companies and generic drug manufacturers. (I don’t know for a fact if this last point is true; that’s what the pharmacy owners thought, and they were rather sensible and not prone to conspiracy theories in their politics). Just thinking about this one small slice of the health care structure here in the US is depressing and confusing. If I were from a sane country, I’d be hard pressed to believe this nonsense.

By: David Naylor

David Naylor — Sat, 25 Oct 2003 16:13:00 +0000

The british concept of healthcare that is “free at the point of use” is unknown, or derided as “socialized medicine” here in the US.

Blimey. That’s just so… nineteenth century! :-) Thanks for filling me in.

By: Harry

Harry — Sat, 25 Oct 2003 14:39:17 +0000

Just to confirm Keith: I’m thinking about adding my wife’s employer’s insurance to my own employer’s—even though mine will start costing me a good deal out of pocket, we feel its worth it for keeping our own primary care provider (GP). So the point of getting the other insurance as well is to save us a little bit of the new costs we shall be incurring. I’m glad the non-Americans find it all so perplexing—makes me feel saner. IN response, though, to the comment about potential reform—the ballooning deficit is a major problem, not just for that but for any sensible future reforms. One last thing though—I know a number of small entrepreneurs who bemoan the non-portability of health insurance, believing (I suspect rightly) that it limits the talent pool they have access to as employers. Is there a case that US arrangements are inefficient not only because of the absurd market power they give to drug companies, etc, the hihg levels of bureaucracy, the annual costs incured by the insured who have to revisit and revise decisions, but also because they make labor markets less flexible than they otherwise would be?

By: Keith M Ellis

Keith M Ellis — Sat, 25 Oct 2003 10:11:54 +0000

Correction: “but a not insignificant number of insured attempt to utilize ERs for general medical care” should read “uninsured”, of course.

By: Keith M Ellis

Keith M Ellis — Sat, 25 Oct 2003 10:08:12 +0000

Hoodie is confusing Medicare with Medicaid. Medicare is the health care insurance/benefit associated with the national retirement program, Social Security (which also handles permanent disability benefits, as well). Medicare is a huge portion of the federal budget. Medicaid is a health plan for a very small portion of the poor—specifically children, pregnant women, people on welfare, and other qualifying individuals. (The “people on welfare” part might confuse people, even Americans, since there’s an erroneous belief that American welfare is simply needs-based and all poor people qualify. They do not. The real name of the welfare program is “Aid to Families with Dependent Children”, which tells you much more about who’s eligible and who’s not. This is not at all like the “dole” in other countries.) Medicaid forms a substantial portion of the federal budget, but is much smaller than Medicare, I believe. (Note that Medicaid covers prescription drug benefits, while Medicare does not, although this is the legislative topic of the year.) Medicare and Medicaid coverage may at one time have been less than average relative to other health insurance, but today it’s about average in terms of coverage, I think. Basically there is no federal safety net for the poor without health insurance. This is a large number of people (not just the poor): in recent years, it’s estimated that as much as 20% or more of the US population has been completely without health insurance within a single year. I know that in my twenty years as a working adult, I’ve had health insurance for perhaps only a third of those years. This is true for most, or at least many, people under 40, I think; while it is much less true for people over 40. Because uninsured people still get sick, the slack has to be made up somehow. True, a lot of illnesses are simply untreated. Many states and many large municipalities have health care programs for the financially needy, the extent of coverage is usually pretty limited, although it can vary widely. I imagine, however, that most of those eligible are unaware of their eligibility. Finally, most hospitals, for at least liability reasons but also sometimes by law, will never refuse care to someone admitted into the emergency room. This isn’t “free”: costs and debts are incurred, it’s just the the hospitals can’t refuse care. Many people take advantage of this. I personally have for authentic or marginal emergency situations (like the five kidney stones I’ve had); but a not insignificant number of insured attempt to utilize ERs for general medical care. So, this and the other messages above are a “Health Care in the US Summary” for European readers of CT. :) It’s a mess, isn’t it? It’s much worse than what’s been described, actually. The national political mood about health care reform has changed considerably since the debacle at the beginning of the Clinton administration. All else being equal, I’d expect a major reform in the next eight years. However, the looming budget crisis complicates matters.

By: Keith M Ellis

Keith M Ellis — Sat, 25 Oct 2003 09:38:38 +0000

David: yes, my story’s definitely true. Here’s a news article about it I found: King 5 News: Generic Drugs But I had already discovered all this independently, finding news stories about came later. I first discovered that a friend of mine was paying much, much less for fluoxetine than I was. And of course I know it’s true now from personal experience. The point you made regarding your own experience working at pharmacy is one that’s not answered by the news article to which I linked. Why are the insurance companies willing to pay so much more than wholesale plus a reasonable markup for fluoxetine or other generics?