October 3, 2012 Leave a comment
I cannot say I hate the idea entirely.
the musings of a young professional
October 3, 2012 Leave a comment
I cannot say I hate the idea entirely.
July 10, 2010 Leave a comment
I want to direct you, my loyal reader, to a blog post Dr. Sean Evans recently wrote (also published in the June 25th edition of the Jackson Sun). In this post he reminds us that the Presidency is still, constitutionally, a limited office. He does not have the power to command (outside his power as Commander-in-Chief) and, as Richard Neustadt, the most famous Presidential political scientist points out, can only truly persuade.
Therein lies President Obama’s problem. He came in with high expectations and it appears the idea that the presidency was an office he could use to command his directives, such as health care reform, cap and trade, and more. What we have rediscovered (and the president has probably learned) is that the power of the President is not the power to command, but the power to persuade. He cannot command cap and trade and it come into being (which is why it is dead in the Senate), nor can he command the Supreme Court to rule like he wants them to (see Citizens United). The president can only try and persuade Congress (and the American people) to do what he wants (or he can hide the true contents of bills from them because he is afraid of what happens when people discover what is in the bill).
Which is why President Obama is in a huge bind, as Dr. Evans points out. His high expectations require him to be able to command, something the Presidency is not constitutionally able to do. Since he cannot command, he falls far short of expectations, and then finds himself where he is now: on the wrong side of public opinion and possibly on the wrong side of history.
April 18, 2010 1 Comment
Coming to an insurance office near you. Massachusetts is having some serious issues with its insurance system and extensive government regulation. The Massachusetts system has been praised as having provided the structure of the Obama Health Care Reform. Therefore it is only logical that we find ourselves looking at the Massachusetts system and its problems as a precursor of things to come as we move towards full insurance coverage.
What has happened is that Governor Patrick has imposed price controls on insurance premiums in the small group market. In Massachusetts any increases in premiums must be approved by state regulators and Governor Patrick kicked off his reelection campaign by summarily rejecting 90% of insurance company requests for premium increases.
The despicable aspect of this move is that it is a political stunt, pure and simple. Governor Patrick’s opponent in the November election will most likely be Charlie Baker, a former Executive at Harvard Pilgrim, a health care provider. The political logic is simple: tell insurance companies no price increases, they stop selling insurance, turn to the people and say “Look, Charlie Baker ran insurance companies that are now refusing to sell you insurance as the law requires! Do not vote corporate greed into office!”
The result of these price controls is that the entire small business and individual health insurance market has been shut down as companies wait out the result of a pending court hearing. They have argued that an arbitrary cap will result in more than $100 million in losses and threaten their solvency. 3 of the 4 largest insurance companies in Massachusetts are nonprofits and run the risk of collapsing if they are unable to meet the cost of claims.
Since the Massachusetts insurance system was put in place health care costs have skyrocketed. Interestingly enough the requirement to allow everyone who applies the opportunity to receive health insurance has resulted in gaming of the system. Blue Cross Blue Shield has reported they are tracking short-term customers who get on the system, immediately rack up costs on average 600% higher than normal, and three months later drop insurance all together. Harvard Pilgrim has reported that 40% of new enrollees stay for fewer than 5 months and rack up costs north of 600% above average.
The Massachusetts problem is a microcosm of what America is in for if Obamacare is allowed to come completely online. Massive health care regulation is not going to result in decreased premiums and health care costs. Allowing the markets to work with less government regulation will.
April 16, 2010 1 Comment
I left a little bit hanging out after this post about the Doctor Shortage and Health Savings Accounts. I finished the post with the inference that using a new system spearheaded by the Health Saving Account would save money on health care costs in the long run. That accusation obviously needs to be explained.
Here is how a Health Savings Account works.* This assumes your health insurance policy is provided by your employer. First, you combine a HSA with a high deductible health insurance policy. A typical deductible with an HMO or PPO is somewhere between $500 and $1000 (though this continues to rise as health care costs increase), so you would make this deductible somewhere north or $1500. Anything above your deductible would be split 80/20 (your part being 20%) with the insurance company, placing your annual out of pocket expenses significantly higher than with a PPO or HMO. Anything above this next figure the insurance company takes care of.
Now at this point if it seems very familiar it is because it it. Insurance is set up as protection against adverse occurrences and it holds here. The insured is just responsible for a much higher annual out of pocket figure than with a PPO and HMO.
Here things change. When it comes to your HSA, you, and possibly your employer, contribute a set amount of money into this account. From this account you pay your out of pocket medical expenses. Great, now I have to keep track of my expenditures, right? Right, but you want to. The money is your HSA account is yours. The legal term is “fully vested” which means is you contribute $3000 to your account this year and you only spend $2000 on medical expenses (these expenditures are tax exempt) and boom, free money. The money is yours. Now you cannot pull it out to buy a new TV or PlayStation 3, it is only allowed to be spent on health care costs. But if next year you contribute another $3000 and you spend only $1000, you suddenly have a HSA with $3,000 in it after 2 years.
If I can only spend this money on health care why do I care? Because if you are young and healthy you can save for when you are old and need this money to pay for health care. If you spend wisely you could conceivably, after 40 years, have somewhere north of $40,000 dollars to be used on health care costs. Suddenly need cancer treatment? Covered. If you take care of it and spend your money wisely (shop around when you need treatment, buy generic, etc.) you could literally hand your children a nest egg from which to pay for their unexpected health care costs.
If you are thinking “the current system provides fine for me at this point, why would I need to change to a Health Savings Account, especially when I need to purchase health insurance anyway?” The purpose of the HSA is twofold. First, it provides incentive for consumers to shop around for treatment and drugs that are more affordable. Second, it will have the cumulative effect of lowering health care costs across the board. Health care is 18% of GDP currently. In 1960 it was about 5%. There are some good reasons for health care costs increasing (living longer, more advanced treatment, etc.) but our health care system is set up to allow for overindulgence. Want your insurance premiums to go down? Want the cost of prescription drugs to fall? Want to be able to pass along to your children a small nest egg from which they can pay for health care costs in the advent of an emergency? Then you, and others, need to make use of HSAs.
*This information is provided courtesy of Dr. Howard Newell, University Professor of Business Administration at Union University.
April 14, 2010 Leave a comment
Unfortunately I will be unable to get one of the blogs I have been sitting on up today. I do want to give you an update and let you know that I have a blog on Health Savings Accounts (thank you Dr. Newell), one on the state of the near-universal health care in Massachusetts, and another on US exports, tariffs, and potential trade wars. There are exciting things brewing! I will keep you posted.
While you are waiting for those stirring posts I want to turn your direction to this article from Nowhampshire. The gist of it is that a leaker from inside the New Hampshire Democratic Party has leaked that the party is in the process of recruiting liberal activists to attend tea party rallies carrying signs expressing “fringe sentiments.” The source believes that party leaders are afraid the “Tea Party” movement will overwhelm them and they are seeking to discredit them as quickly as possible. Since the fringe liberal activists are so adamant that Tea Party members are racist pigs I can only imagine what racist signs we will find at Tea Party rallies attended by these activists in the near future.
While attending the Southern Republican Leadership Conference in New Orleans this past weekend I was surprised at the emphasis the Republicans were making to unite the Tea Party movement and the Republican Party (both of which share a conservative base) and the number of times Republicans were warned to defend their Tea Party friends from Democratic attacks aimed to separate the Tea Party movement from the Republicans. I think this is a small piece of evidence that the Democrats and their liberal activists will stop at nothing to prevent a loss of power to Republicans.
April 13, 2010 4 Comments
Yup, you heard it here that it may be a problem and now we see that it already is. As the ranks of insured expand we will see an approximate shortage of 150,000 doctors, mainly primary care doctors, in the next 15 years, according to medical experts.
Part of the problem is that medical money is wrapped up in testing due to how our insurance system is currently set up (more on this to come), leading many doctors to go into very specialized fields. Between 2002 and 2007 the number of medical school applicants entering family medicine fell by more than a quarter. This drop will more than likely mean longer lines to visit your primary care physician, especially when the millions of uninsured are finally insured under Obamacare.
Do not take this as a critique of doctors because they are behaving rationally. This is a critique of the system currently in place. This is the way the system is currently set up:
Employer-Provided Family Benefit
(Husband and Wife, no Children)
|Annual Expenditure||Employee Pays||Employer Pays|
This is what this means: For all medical expenditures, you, the employee, pay the first $800. This is more commonly known as the deductible. For the next $8000, the employee pays 20%, or $1600, and the employer pays 80%, or $6400. Everything above that $8800 mark, the employer pays for all. To use an illustration Dr. Newell used in class, image this product which your employer provides for is food. What would you be tempted to do? Overindulge is correct. You would as quickly as possible get to the $800 mark so that your employer picked up the slack and then everything after that would be mostly paid for by someone else. If this was me, Megan and I would be eating Outback Steakhouse, Olive Garden, and Texas de Brazil all the time. Why? “Because I am not paying for it baby!”
The same concept applies to your health insurance. Once you reach a certain level, as long as you (or more commonly, your employer) are paying for your insurance you can have as much testing, as many name brand prescription drugs, and as many doctors visits as you want and all you will have to pay in the course of a year is $2400, no matter how much you use it. The incentive is to overindulge, resulting in higher health care costs.
The problem Obamacare is (at least overtly) seeking to combat is the rising cost of health care. The reality is that his “reform” does not reform anything, it only regulates. If we really want to reform we must change the system itself. One way to do this is through Health Savings Accounts, which have been used with some success by Indiana state employees. Mitch Daniels, the current governor of Indiana, was the leader of the state when they moved to these Health Savings Accounts as an option for all employees. What Indiana does is deposit $2750/year in an account that is completely controlled by the employee. So when they need a prescription, they can ask for a generic (and save a bundle) and make cost conscious decisions about testing. The savings this is generating for the state in health care costs is truly startling considering where health care costs have been going. Even more encouraging is that a whopping 70% of Indiana state employees opted into the system! Why? Because when the year ends, they get to keep everything left in their health savings account. There are numerous tax advantages to a Health Savings Account, which you can read about here.
If we truly want lower costs then we need to change the system, in particular by giving individuals more power over it. Further regulation will not drive down costs.