gdp's Comments

KeithHennessey.com : Why you can’t do just the health insurance reforms

Wed, 27 Jan 2010 02:23:59 +0000

Guaranteed issue only works if ALL insurers have to do it. If only one does it, that insurer would incur significant adverse selection.

KeithHennessey.com : Why you can’t do just the health insurance reforms

Wed, 27 Jan 2010 02:22:39 +0000

I think this would work a little better than no mandate. One could legislate an even more stringent rule (e.g., subscribers must pick their plan 60 days before the start of the new year, and commit to the year unless subscriber leaves the state, etc) and it would significantly decrease the number of folks who elect not to insure. Massachusetts has no such limitation (as I understand it) so folks can subscribe and unsubscribe whenever they get sick. I like the standard 12/12 pre-existing condition provision too. It would certainly stop those with pre-existing conditions from dropping insurance (since they would incur the exclusion again) but I don't think the problem has been to get those with conditions to subscribe. The intent is to get those without conditions to subscribe. I do think that allowing high deductible policies (versus the low-deductible comprehensive coverage in the federal bills) will generate more subscribers as well.

KeithHennessey.com : The House-passed bill’s effects on health insurance coverage

Mon, 16 Nov 2009 16:45:26 +0000

Keith- I am frankly a little confused/surprised by this analysis. Two points: 1) I would expect a net loss in employer sponsored insurance, since many employers would see the penalty for not paying insurance as cheaper than providing it. 2) The authors point out that the "18M" people who willingly pay the tax in place of buying insurance are those "with relatively low health care expenses for whom the individual or family insurance premium would be significantly in excess of the penalty". But as people move out of employer-sponsored insurance, more folks will experience their true insurance bill, unsibsidized by the government. I think among those folks that earn too much to get significant governmental subsidy, they will figure out (over a relatively short window) that it is FAR cheaper to remain uninsured that to buy an unsubsidized policy. Do recall that about 20% of the folks in the US consume about 80-85% of the care costs each year. This means that about 80% of subscribers would do better each year by being insured. They could buy insurance when they need it (as they do in MA) and drop it immediately thereafter. It is reasonable to expect that over a short window, many folks will figure out the implications of #2. And I would expect that the thousands of financial advisers in the country (and a long list of pundits) will be quick to figure this out, and to publicize the rationale. Isn't there a credible argument that the net uninsured will actually rise (and significantly) and that the remaining uninsured will see premiums rise (significantly) as a result? TSB

KeithHennessey.com : Higher premiums and lower wages

Wed, 14 Oct 2009 15:48:55 +0000

I think you are absolutely correct, Marty.

KeithHennessey.com : Numbers matter

Sun, 11 Oct 2009 14:46:24 +0000

Freddy- I am a little confused. The Feldstein plan did nothing to the payer market at all. IN THE PLAN, The Feds just provide vouchers to cover a portion of private insurance. Why did you think this is single payer? TSB

KeithHennessey.com : Numbers matter

Thu, 8 Oct 2009 15:13:15 +0000

Goodness. Did y'all read the proposal from Martin Feldstein in the Post today? http://www.washingtonpost.com/wp-dyn/content/arti... He suggests that the feds should 1) issue a voucher for the actuarial cost of insurance for costs greater than 15% of income. Ergo, the voucher phases out to zero as income rises. The voucher could be used for any policy from any private insurer. 2) Issue a "credit card" from the govt for folks that cannot cover the potential cost of care within the 15%-of-income amount (in case the low income incur costs that exceed their ability to pay) 3) pay for all of this by eliminating the employer deduction for insurance This is a remarkably clean reform plan, and would drive many toward cost-containing higher-deductible policies. Thoughts anyone?

KeithHennessey.com : Numbers matter

Thu, 8 Oct 2009 14:37:48 +0000

I think the decision to put a cap on out-of-pocket expenses is the element that raises aggregate costs the most. If the mandate permitted (or even better, encouraged) acquisition of (or transition to) high-deductible plans (say, $10,000), aggregate health costs would probably fall. But forcing more folks to have low-deductible plans is grossly counterproductive.

KeithHennessey.com : Wall Street Journal op-ed

Mon, 28 Sep 2009 19:00:58 +0000

I have debated this on a couple other sites, including Keith Hennesey's. If the guaranteed issue framework uses modified community rating and includes adjustments for both age and geography, we would eradicate the subsidy of young to old. It is true that the bills in Congress limit the ratios of young-to-old premiums, and this should be adjusted to true rating based on age and geography (probably county). I also agree that the guaranteed-issue framework establishes some bad incentives, such as the house-on-fire example above. However, I think that if insurers were allowed to charge 2 years premiums for individuals who were previously uninsured, it would not only drive folks toward buying insurance, but it would drive folks toward higher-deducitble policies (since both the premium and then penalty would be lower). Now all we have to do is get federal legislation that does not outlaw high-deductible policies (as most of the bills in Congress do) and does not skew community rating to damage the young folks.

KeithHennessey.com : Incorrect conventional wisdom about health care reform

Fri, 4 Sep 2009 19:22:00 +0000

Incidentally, as a reminder, "bundling" inpatient costs into DRGs in the '80s did actually decrease costs, and certainly decreased inpatient days. Effective new care service bundles would do the same thing. It might be the only approach to "bend the curve".

KeithHennessey.com : Incorrect conventional wisdom about health care reform

Fri, 4 Sep 2009 19:19:23 +0000

Re CW#4- It is not only "guidelines" that become defacto standards over time. Even more importantly, the specifics of what the government pays for (and how it pays) become defacto standards. Look at the transition to DRGs in the early '80s. Most payers began to pay on DRGs (the first real "bundling" experiment) soon thereafter. The vast majority of private insurance payments to providers in the US system are for the the same items that Medicare pays, albeit at different prices. The immense difficulty in shaping a different "product" (i.e. a specific bundle of services) --and getting payers to pay for it-- is the largest obstruction to price competition (OK, OK, second largest- after the fact that few pay for their own care).

KeithHennessey.com : Who should decide whether additional medical care is worth the cost? (part 2)

Thu, 3 Sep 2009 15:25:25 +0000

Pat- Absolutely outstanding thinking. I do have to raise a point of contention on this last post. You said: "Routine checkups (including basic cancer and heart disease screening for at risk age groups), vaccinations, *basic* emergency care... all of these things are things that can actually be provided to everyone using any number of reasonable mechanisms. All of them will drastically reduce medical costs, as many expensive illnesses are actually fairly cheaply treated provided you have early detection" This is often repeated, but fundamentally untrue. The vast majority of preventative measures raise costs. (The New England Journal did a strong review of this last year). In fact, most (over 80%) raise cost for the specific disease under treatment. We don't preform preventative interventions because they save money. We do them because they improve outcomes. Further, in the population-cost category, keeping folks alive longer generally increases the sixe of the population under care, hence costs rise in aggregate (since the successfully treated will eventually incur additional expenses later). This does not obviate most of your position. It is worth noting that a hybrid solution where individual bought catastrophic insurance ($10-20,000 deductible) and also bought pre-paid care (e.g., primary care services for $1,000 -$2,000 per year) would meet many of the contentious objectives of this discussion: 1) high cost items are insured, 2) low cost items (where the individual is more likely to be an efficient evaluator are in the hands of the individual, and 3) aggregate costs (premiums plus out-of-pockets) would fall. Just a thought.

KeithHennessey.com : Understanding the President’s legislative options for health care reform

Thu, 3 Sep 2009 04:05:26 +0000

Angus- I think your scenario of GI/Community rating (or modified community rating) is plausible. I assume by "doc fix" that you meant adjustment in Medicare provider reimbursement rates. The potentially interesting result is that many folks would eventually be disappointed with this solution since it would probably adversely impact rates (premiums would rise) and yet we would get very few of the "47 million" insured, since most of those folks do not want insurance. But this is indeed an interesting scenario. From a libertarian perspective, people that elect not to buy insurance should be allowed to avoid it. It might fly.

KeithHennessey.com : Understanding the President’s legislative options for health care reform

Wed, 2 Sep 2009 19:06:43 +0000

At the risk of being identified (accurately) as a policy wonk, I would like to suggest a legislative alternative that would improve the analysis of option 4. If the proposal replaced the "individual mandate" with an option (not an obligation) for insurers to penalize previously uninsured subscribers (think 2 years of premium as a penalty) then enforcement would go away as a problem. It would also significantly decrease complaints from insurers. This model would incentivize newly insured subscribers to opt for high deductible policies. since the cost (premium plus penalty) is lower. If the plan exempted very high deductibles (think $10,000 or $15,000) form the penalty, it would generate more affordable plan options for those below median income. I suspect independent analysis would even show this "bends the cost curve" down, since it skews toward high deductible plans. IT has the collateral benefit of incentivizing providers to innovate on cost for the high deductible population. Thoughts anyone?