An explanation for Oerdin's magical Obamacare premium drop

[Dinner]

We saw similar price drops with RomneyCare in Mass just like we've seen in states implimenting exchanges under ObamaCare. The truth is every where these exchanges are implimented we see price drops because the more people who are in the insurance pool the lower the prices just like the more transparency there is in the market the easier it is for customers to identify which company is offering the good deals.

Republicans can keep trying to lie and make up excuses but that's the unavoidable reality.

[DinoDoc]

I'm guessing when it goes up to $325 (and then beyond) a lot of folks are going to be looking to getting insurance.

That's not what the analysis by the CBO is showing. I ask again. Where's the incentive for the healthy to subsidize the premiums of the sick in this new system?

[Imran Siddiqui]

Well, allow me to disagree with the CBO's sociological finding for the reasons you chopped off in your quoting of me.

[DinoDoc]

The truth is every where these exchanges are implimented we see price drops because the more people who are in the insurance pool the lower the prices just like the more transparency there is in the market the easier it is for customers to identify which company is offering the good deals.

Do you ever tire of being wrong?

6/6/2013

Health Insurance Costs to Increase Significantly Under Affordable Care Act


Plans Filed with Department of Insurance Show Higher Costs for Ohio Consumers


COLUMBUS — The Ohio Department of Insurance today released details of health insurance plans that insurers have submitted for approval to sell on the coming federal insurance exchange for Ohio. The Department's preliminary analysis of the proposed plans for the individual market reveal that insurers expect the cost to cover health care expenses for consumers will significantly increase.

Based on a report released by the Society of Actuaries earlier this year, the Department estimates this increase is an average of 88 percent. While those costs do not specifically track with the premiums insurers charge individual customers, it is expected that these increases in costs will also translate to significant premium increases for many Ohioans.

A total of 14 companies filed proposed rates for 214 different plans to the Department. Projected costs from the companies for providing coverage for the required essential health benefits ranged from $282.51 to $577.40 for individual health insurance plans.

“We have warned of these increases since a state-specific study in 2011 indicated Ohio would be significantly impacted by the ACA,” Lieutenant Governor Mary Taylor said. “The Department’s initial analysis of the proposed rates show consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014.”

Estimates from a Society of Actuaries study released in 2013 showed Ohio’s current average cost to cover medical expenses for an individual health insurance plan is $223. Based on the proposals submitted to the Department, the average to cover those costs in 2014 is $420 representing an increase of 88 percent when compared to the Society of Actuaries study. The proposed rates are not effective and are currently undergoing the Department’s review process. During this process, rates may change before becoming effective.

The Department released the information today to help health insurance consumers continue to prepare for the expected price increases. Specific premium information varies widely and can be unique to each individual or employer, but it is hoped that the information on proposed costs and rates can help consumers and health insurance consultants determine how their particular situations will be impacted.

In 2010, the federal Patient Protection and Affordable Care Act (ACA), which includes sweeping changes to America’s health insurance system, became law. It includes the creation of health care exchanges in which individuals and small business owners in every state can purchase qualified coverage. According to the federal government, initial open enrollment on the exchange is set to begin October 1, 2013. Coverage purchased through the exchange will have an effective date of January 1, 2014.

http://www.insurance.ohio.gov/Newsroom/Pages/06062013ACAProposedRates.aspx

[DinoDoc]

Well, allow me to disagree with the CBO's sociological finding for the reasons you chopped off in your quoting of me.

It's clear that they don't see themselves as getting something out of it and with the ban on exclusions of preexisting conditions they maybe right economically.

[Imran Siddiqui]

I would think that more people would simply opt for the cheapest insurance they could find, and then do all the doctors visits allowed, rather than pour money down the drain when it gets up to over $300 and then ~$700. Of course those are low end numbers - if 2.5% of your income (in 2016) is greater than $700, then you get that as a penalty instead. That would be my guess as to how it would play out.

[Imran Siddiqui]

In addition:

http://www.marketplace.org/topics/your-money/health-care/will-you-buy-obamacare-or-pay-penalty

But University of Pennsylvania behavioral economist Kevin Volpp says the modest penalty might work better than you think.

“Yeah, the basic phenomenon is called loss aversion,” says Volpp. “People will often cling to that initial purchase price and insist they will not sell for a penny less than that purchase price, even if they have moved out of the house and it's costing them $1000 a month to hold onto the house.”

Now it must be said, the Obama administration isn't counting on the penalty to move the masses. It believes people will buy insurance because they need it and, for many, the government will help them pay for it. The penalty, it's a kind of backup motivator. The theory behind loss aversion is that even if it's the five bucks you lost in the college basketball pool, it's the losing not the loss that matters. Some economists believe the penalty could also work because its is a reminder, you're not following the rules.

They mention the 6 million number, but at the end of the article:

Ho thinks many will simply refuse to pay. In fact, paying the penalty will be a point of pride. But pride is going to get more expensive. By 2016, the penalty ratchets up to 2.5 percent of your income. Ho says high enough for people to feel the pinch.

I think at 2.5% the loss aversion for most people will kick into overdrive.

[Ben Kenobi]

I think at 2.5% the loss aversion for most people will kick into overdrive.

Seig Heil!

Why not make it 100 percent?

This is terrible logic, btw.

Loss aversion only takes place when people actually purchase something. Charging people who aren't paying anything a certain percentage of their income for something that they don't want or need isn't going to trigger this response.

Loss aversion would be charging people to keep their existing health care plan. People will be very unwilling to do without their doctors and the plans that they have become accustomed.

Charging people who are uninsured isn't going to motivate this section because they have nothing to lose. They are already not getting any health care benefits. What you will see is rational actor behaviour. If the person in question believes that they will receive more from Obamacare than they will pay, then they will enroll. If they believe that they will get less than they pay, then they will simply choose not to pay. Fining people won't change this math - except for the fact that if they don't have any money - then you aren't going to be able to collect. Jacking up the penalty higher will simply make it more worthwhile for people to evade payment.

[DinoDoc]

In addition:

Let's use the example of a person described in the article you quoted. We have a healthy massage therapist in New York state who will face a one time penalty of 400$ or a monthly premium of $315 a month. What's the incentive for this woman to buy insurance in this situation?

[Imran Siddiqui]

A) that's not a one time penalty forever, just for next year. It goes up after that.
B) as the penalty increases, the loss aversion gets stronger - note what she said:

“That is like border of what I was considering acceptable. You know, I don't have health problems. So it's like a gamble,” says Grey.

The year after her penalty will rise... and cross the border.

[DinoDoc]

Re loss aversion: Where's the loss in situations where the "penalty" is less than the premiums that would be paid?

[Dinner]

Do you ever tire of being wrong?


http://www.insurance.ohio.gov/Newsro...osedRates.aspx

Moron, lying moron. That claim was completely debunked in the other thread. The baseline they used was a price which no one actually qualified for and even other Republicans said it was dishonest and a lie. Go head and look at the other thread because all you're doing is dragging up old lies and attempting to pretend they haven't been debunked over and over.

[Imran Siddiqui]

You are paying for nothing. Even if you are paying more for a good, at least you are receiving a service in return - so it doesn't subjectively feel as a loss. I think it'll be enough to push a lot of folks over, esp as the loss for nothing increases.

[Ben Kenobi]

B) as the penalty increases, the loss aversion gets stronger

Again - loss aversion would be forcing people to pay in order to retain their current coverage. This doesn't apply to the uninsured.

[DaShi]

Here's an interesting article on how the health care reform movement may make current hospitals a losing business model:

What's The Role Of A Hospital In 10 Years?

The 7 Habits of Highly Patient Centric Providers
Dave ChaseDave Chase
Contributor
Topol has gone on the record stating that in the future, the only real reason to have hospitals is for their Intensive Care Units if digital medicine is adopted. His recent tweet of his vision was provocative comparing it to Wired’s vision. Despite the widely held view of over-capacity and alternative scenarios such as Topol’s, I have yet to hear about the health system board thinking in these terms. With the board’s fiduciary responsibility to think further out than the CEOs since their tenure usually outlives CEO tenure, is this not a dereliction of their duties?

While some healthcare leaders may dismiss Topol, his ideas aren’t without precedent. In Denmark, they realized that most people weren’t having their end-of-life wishes met — generally speaking people want to be with family and friends at home while being warm, dry and pain free. A shift in approach shifted the norms from well over half of people dying at hospitals, to 92% dying at home according to their wishes. A mix of remote monitoring, video conferencing and house calls enabled this. This also happens to be far less expensive — not an insignificant point in these budget-constrained times.

“History doesn’t repeat itself, but it does rhyme.” - Mark Twain

Lessons From Newspapers For Health Systems’ Immense Challenge

Health system CEOs and board have an immense challenge I have heard described as the equivalent of going down a rough river with one foot in one canoe called fee-for-service (FFS) and their other foot in another kayak called fee-for-value (FFV). The objectives of FFS and FFV are diametrically opposed and puts hospitals in an untenable situation. For example, in one they operate like a hotel wanting to have heads on beds maximizing occupancy. While in the other, a hospitalization represents a failure in the system to be avoided.

In theory, a non-profit health system board has an easier decision to make since topline revenue shouldn’t matter as much as long-term economic sustainability. Thus, they could make decisions that would harm their topline revenue as long as it was economically sustainable. Unfortunately, health organizations are dooming their innovation to failure the way they are going about their reinvention.

While no analogy is perfect, health system boards would be well advised to study what newspaper industry leaders did (or perhaps more appropriately, didn’t do) when faced with a dramatic industry change. Turn back the clock 15 years and the following dynamics were present:

Newspaper leaders knew full well that dramatic change was underway and even made some tactical investments. However they didn’t fundamentally rethink their model beyond window-dressing.
Newspapers were comfortable as monopoly or oligopoly businesses allowing for plodding decisions. Their IT infrastructure mirrored the plodding pace with expensive and rigid technology architectures.
Newspaper companies bought up other newspaper chains and took on huge debt.
Owning printing presses was a de facto barrier to entry allowing newspapers unfettered dominance.
Depending on one’s perspective, it was the best of times or the worst of times to be a leader of local media enterprise.
Before they knew it, owning massive capital assets and the accompanying crushing debt became unsustainable. The capital barrier to entry transformed into a boat anchor while nimble competitors dismissed as ankle-biters created a death-by-a-thousand-paper-cuts dynamic. Competitively, newspaper companies worried only about other media companies or even Microsoft MSFT -1.83%, but their undoing was driven by a combination of craigslist, monster.com, cars.com, eBay, and countless other substitutes preferred by the majority of their customers. In addition, there were easier ways to get news than newspapers. Generally, the newspaper’s digital groups were either marginalized or unbearably shackled so that the encumbered digital leaders left to join more aggressive competitors. The enabling technology to reinvent local media didn’t come from legacy IT vendors who’d long sold to newspaper companies, but from “no name” technologies such as WordPress, Drupal and the like.

The parallels with health systems today are clear. Consider the present dynamics:

The handwriting is on the wall for health systems but there is little evidence that organizations are aggressively moving at a scale corresponding to the enormity of the change.
Health systems have been aggressively gobbling up other healthcare providers and frequently taking on debt to finance the growth. Concurrently, health systems often have capital project plans that equal their annual revenues even though no expert believes the answer to healthcare’s hyperinflation is building more buildings. Consider the duplicative $430 million being spent in San Diego to build two identical facilities just a few miles apart as Exhibit A of the problem. Studying other countries that shifted from a “sick care” to a “health care” system, more than half of their hospitals closed. They simply weren’t needed or appropriate.
Until recently, complex medical procedures always took place in an acute care hospital setting. Increasingly they are being done more and more in specialty facilities that can do a high volume of particular procedures at a signifiantly lower cost. With “hospital at home” programs proving to be move effective than regular hospitals for an increasing number of procedures, Topol’s view of only needing hospitals for ICUs starts to come into view. Company-sponsored Centers of Excellence programs are rapidly growing with companies ranging from Boeing to Lowes to Pepsico to Walmart further obviating the need for duplicative infrastructure for non-emergent surgeries. The byproduct is making every community hospital in competition with Mayo and Cleveland Clinic with inferior outcomes in most cases. [See graphic below]
Just as newspapers were implementing multimillion dollar IT systems while nimble competitors were using low and no cost software to disrupt the local media landscape, health systems are similarly implementing complex systems to automate the complexity necessary in a multi-faceted system. Meanwhile, disruptive innovators are implementing new models at a fraction of the cost and time. For example, it’s well understood that a healthy primary care system is the key to increasing the health of a population. Imagine if a fraction of the billions being spent by mission-driven, non-profit health systems on automating the complexity of the old model was redirected towards the reinvigoration of primary care. They’d further their mission and lower their costs. Of course, they’d likely see revenues drop but presumably maximizing revenues isn’t the mission of a non-profit. See Health Systems Spending Billions to Prepare for the “Last Battle” for more.
The plodding pace and scale of innovation at most health systems isn’t up to the enormity of the task. The vast majority of health system innovation teams are constrained by how they have to fit innovation into an existing infrastructure. That approach rarely, if ever, leads to breakthroughs, as its true intent is to make tweaks to a current system rather than a rethink from the ground up.

Compared to newspapers, the scale and importance of the challenge is far greater for health systems so they must aggressively take action or risk their future viability.

Rx for Healthcare From a Newspaper Industry Executive
In the midst of the newspaper industry disaster, there is one notable bright spot from an individual who has gone against the conventional wisdom that newspapers are doomed to fail. His name is John Paton and he’s reinventing local media. Highlighted below are some of what he’s done to turn a bankrupt (creatively and financially) enterprise into a profitable, dynamic and rapidly growing enterprise attracting the all-stars of the industry such as Jim Brady. It hasn’t been without continued challenges as he transparently reports on his blog.

There has been an expression in traditional media that analog dollars are turning into digital dimes. Rather than lament that, here’s John Paton’s response:

“And it is true that print dollars are becoming digital dimes to which our response at Digital First Media has been – then start stacking the dimes. All of that requires a big culture change. A change that requires an adoption of the Fail Fast mentality and the willingness to let the outside in and partner. Partnering is vital to any media company’s growth whether it is an established media company or start-up. We are going to marry our considerable scale with start-up innovation to build success.”

It’s worth noting that those “digital dimes” are often more profitable than the “analog dollars” of the past because much less overhead is required. It’s well understood that hospitals are shifting from revenue centers to cost centers so it behooves healthcare provider leaders to adopt new models that are well-positioned to be profitable in the fee-for-value era.

The following is John Paton’s 3-point prescription for reinvention that led to a 5x revenue increase and halving of capital expenses. This resulted in his organization going from bankruptcy to $41 million of profit in two years.

Speed to market: One new product launched per week.
Scaling opportunity: Sourced centrally, implemented locally. Ideas can come from all over. Identify the best ideas/people from all over.
Leverage partners: Feed the fire hose of ideas from outside.
Unfortunately, before John Paton was able to affect this level of change, scores of newspaper employees lost their jobs while traditional newspaper executives dawdled. It is the rare leader that can create the sense of urgency necessary to affect this scale of change before the enterprise is a hair’s breath from extinction. It might be one of those tough-as-nails nuns running a health system that isn’t concerned about bonuses that refocuses their mission from growth to health. As the old oil filter ad says, “you can pay now or pay later” – of course, the cost is much greater if change is delayed. The only question is whether health system leaders will have the courage to make the change before the inevitable hurricane hits with full force.

Applying Reinvention Lessons into Healthcare
Listed below are some ideas and examples of how this approach can be applied to tackle the enormous challenge facing health system leaders. The wave of disruptive innovation is building with pioneers such as WhiteGlove Health and Qliance forging new territory and then others putting their own twist on it.

[Disclosure: The company where I’m CEO, Avado, provides Patient Relationship Management technology for some of the organizations mentioned which is why I have a view into their projects.]

Fresh, Outside Perspective is Imperative
As John Paton brought in outside advisors such as Jeff Jarvis and Jay Rosen, health systems would be well-advised to do the same. They can go a step further and partner with innovators driving new models. They can be project managers or partners. One example is Dr. Rushika Fernandopulle founded Iora Health and was highlighted in now-famous The Hot Spotters article linked to in The Hot Spotters Sequel: Population Health Heroes. Iora Health has partnered with hospitals such as Dartmouth-Hitchcock. From reports I hear, their CEO is using Iora Health to catalyze change amongst his medical staff as they can see a modern delivery model in action that is unencumbered by the flawed fee-for-service model.

Like local media executives in the late 90’s, healthcare leaders can view the present time period as either the best or worst time to be in their role. The health system leaders who believe it’s the best of times would do well to ask themselves “What Would John Do?” John Paton demonstrates how a strong leader can reinvent and reinvigorate a lumbering giant turning it into a dynamic organization.

http://www.forbes.com/sites/davechase/2013/07/24/whats-the-role-of-a-hospital-in-10-years/

Ironically, many hospitals around the world have struggled with how improving care and services hurt their bottom-line. This is the first article I've seen where someone has wisely questioned the whole model of how hospitals work.