Jesus Creed

Jesus Creed


Health Insurance Premiums and Your Choice of Doctor

posted by Scot McKnight

Wow, this just in … and it concerns me:

As the Obama administration begins to enact the new national health care law, the country’s biggest insurers are promoting affordable plans with reduced premiums that require participants to use a narrower selection of doctors or hospitals.

The plans, being tested in places like San Diego, New York and Chicago, are likely to appeal especially to small businesses that already provideinsurance to their employees, but are concerned about the ever-spiraling cost of coverage.

But large employers, as well, are starting to show some interest, and insurers and consultants expect that, over time, businesses of all sizes will gravitate toward these plans in an effort to cut costs.



Advertisement
Comments read comments(29)
post a comment
RJS

posted July 21, 2010 at 2:30 pm


What is either concerning or new here?
For the last 18 years (even before) we have had a choice – pay relatively little out-of-pocket and stick with a particular network of doctors and hospitals (connected with the University), or pay a good deal more both out-of-pocket and in premiums and have the freedom to go to any doctor.
It has not really been a problem.



report abuse
 

Scot McKnight

posted July 21, 2010 at 2:32 pm


Restriction of doctors and hospitals is not a new policy, of course, since we’ve had HMOs, but it’s the movement of some who were giving free choice to the more HMO type of arrangement that strikes me as new.
No?



report abuse
 

Robin

posted July 21, 2010 at 2:33 pm


First things first, if employers have insurance plans where the employee shares some of the burden for monthly premiums, then healthcare reform requires that the employer cover 90.5% of the fees or be faced with a $3,000 fine per employee. So, if you are a company like Whitecastle that has provided insurance to its employees for 85 years and currently covers 70 to 89% of total expenses, you really only have a few options. (1) Switch to a cheaper plan so that your current insurance outlays will be the equivalent of 90.5% of total expenses (2) Keep the current plan but kick in more money per employee and let your profits drop (3) Drop insurance altogether and just pay the $3,000 fine.
Limiting doctors to drop the plan prices seems like a way to attempt strategy 1. We would all love to see strategy 2 (Except for people with retirement accounts that include Whitecastle) but it is probably foolish to think that lots of businesses are just going to voluntarily let their profits drop. Strategy 3 would probably be the worst scenario, so all in all, this current response might not be all that bad.
Secondly, this might be a sort of price discrimination for people who are less healthy. Since healthcare reform requires community rating you can’t charge the chronically unhealthy more just because of their health conditions, but if their voluntary choice of a program that covers more means they have to pay a higher premium then you end up with a situation where the healthy people in the cheap plans pay less than they unhealthy people in their high risk pool. Since they are excluding specific doctors it makes me think this might be the case. My dad lost vision in one eye as a teenager and was almost legally blind in his other eye. He had a cornea transplant when I was 18 performed by a world renowned eye surgeon who basically invented the procedure. Now, he is a great surgeon, but that is really all he does and he can charge very high premiums and orders lots of tests to complete his work, consequently pretty much all of his patients normally have lots of other problems as well (they need new corneas for crying out loud) so when our health insurance company kicked that doctor out of network because he ordered ‘more tests than the industry average’ they weren’t just getting rid of a doctor, but signaling that if you were a really sick patient that needed extensive care you better find different insurance.
So, the same policy has 2 effects in my estimation (1) It lets employers keep providing essential insurance without paying a $3,000 fine and (2) It lets insurance companies dump, or at least charge more money for sick patients without violating the community rating provisions. Laws have unintended consequences.
http://www.cleveland.com/open/index.ssf/2010/07/ohio_hamburger_chain_says_insu.html



report abuse
 

Robin

posted July 21, 2010 at 2:39 pm


On a side note. I work for state government and we have cadillac plans. The total annual cost for my insurance is around $12,000 but the state only picks up about $6,000. If we were a private entity like Whitecastle the state would now have to pay a $3,000 fine since I have to pay so much in premiums, but my understanding is that the governor’s pushed for an exemption so that we will get to abide by different rules than private employers (no fines for government insurance programs)



report abuse
 

stephen

posted July 21, 2010 at 2:44 pm


I don’t mind insurance companies putting together networks to lower costs. But, I think we should have a wide choice of insurance providers, so they compete on price AND quality of the networks they offer.
The problem now is our choice is very limited.
(I am in a BCBS HMO and pretty satisfied overall, but I live in the suburbs and the plan has a good choice of primary care docs and hospitals here)



report abuse
 

Fish

posted July 21, 2010 at 2:46 pm


Like any corporation, the sole purpose of a health insurance company is to produce the maximum profit for stockholders.
When Obama backed away from the gold standard of a single-payer system and Congress decided that health care reform essentially meant forcing everyone to buy insurance so that those companies would decide who gets how much care and who they get it from, this is what we get.
As long as the insurance companies remain in charge, we will continue to 1) give them 30% off the top of our premiums for the privilege of rationing our care and 2) suffer through new ways for them to make money by reducing our care.
Managing our collective risk and liability for health care costs should not be a for-profit activity. If we take the 30% of health care spending that the insurance companies consume and subtract the 10% that a single-payer system would cost, we’d save 20% of our national health care premiums.
And that would pay for a lot of care for poor people. Not to mention avoiding issues like this post.
And I have to say that I put a lot of the blame on libertarian Christians for their opposition to any reform that involved the government. Surprise! Perhaps leaving the insurance companies in charge of who gets how much care may not have been the best thing, even though that preserved our modern savior, the free market. IMHO.
This is a hot button issue for me, I’m sorry. Never have I been so close to leaving the church. To me, our health care system is a national sin akin to abortion. Intolerable.



report abuse
 

RJS

posted July 21, 2010 at 3:00 pm


Robin,
I have not paid much attention to this debate – you know much more about it than I do. But for a family of four our plan runs $14,400 per year. We pay $3072 per year in premiums, the rest is employer paid. There are deductibles and copays – and we are tied to a hospital, doctor network (happens to be our University hospital network, this is limiting in choice, but excellent in quality except I get tired of being seen by new residents).
Anything can have unintended consequences – but networks to contain costs rather than running open market anything goes seems reasonable.



report abuse
 

Robin

posted July 21, 2010 at 3:02 pm


Single payer government insurance is no panacea, it depends entirely on how well it is funded and operated. Sure, if we had a perfectly efficient government that was willing to pay top dollar for the care of all its citizens, even to the point of raising taxes and slashing funding for things like Farm Subsidies and national defense to pay for healthcare, then maybe we would get a great product.
I don’t think that would be the case. I think if we had a massive national healthcare system then senators and representatives would view its large budget as a source for funding for their local earmark projects, just like they viewed social security reserves for 60 years (and the main reason social security projections are in the red). So what would we end up with? Something funded along the lines of Medicaid. And what do we know about Medicaid?
The largest study I am aware of on the mortality rates of Medicaid surgical patients (almost 900,000 patients) showed that Medicaid patients were 97% more likely to die than people with private insurance and even 13% more likely to die than the uninsured. This was multivariate so things like poverty and race were controlled. The likeliest explanation for the results is that Medicaid is poorly funded so patients only get to see the worst doctors.
If we’re going to design a government insurance system we have to design one that takes into account the self serving actions of legislators and bureaucrats and limits their ability to screw things up. Oh, and those evil HMO’s and other private insurance plans, I’ll say it again, even controlling for other risk factors, people with governmentally provided Medicaid are 97% more likely to die following surgery than those with private (evil) insurance.
http://www.americansurgical.info/abstracts/2010/18.cgi



report abuse
 

Scot McKnight

posted July 21, 2010 at 3:15 pm


Robin,
Help us on the restrictions that this post is about. I get the government option, which we don’t really have, and I get the corruption that occurs when everything gets centralized, but what about restricting choice as this article discusses?



report abuse
 

Robin

posted July 21, 2010 at 3:32 pm


There is a growing literature that suggests that doctors that own their own equipment like to order lots of tests because then they get paid twice, once for owning the equipment and once for the doctoring. McAllen Texas has the highest Medicare cost per enrollee in the nation (I think Obama used them as a “bad” example in his healthcare reform speeches). I believe it is around $15,000 per patient while the national average is around $7,000 to $8,000.
The main reason it has such high expenditures appears to be that the hospital is physician-owned. When doctors not only make treatment decisions, but also have a financial stake in the overall profitability of the hospital, there is a tremendous incentive to provide as many services as possible.
If you are an insurer and can keep a high cost hospital like McAllen out of your network because you know their doctors are worried about the bottom line of the hospital, then you decrease costs for everyone else.
http://content.healthaffairs.org/cgi/content/full/22/6/56
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande



report abuse
 

Scot McKnight

posted July 21, 2010 at 3:51 pm


Robin,
Are you suggesting, then, that this move will drive down the prices of other doctors etc?



report abuse
 

Robin

posted July 21, 2010 at 3:51 pm


On the other hand, some doctors just charge more because (1) they are using the extra spending to actually get better treatment for their patients or (2) Their patients are sicker and require extra treatment.
Option 1 doesn’t hold much water in most scenarios. McAllen, TX was spending twice as much money than a neighboring community with similar demographic and outcomes (El Paso) and the Mayo Clinic, which I assume is one of the best hospitals in the country, achieves its outcomes while remaining in the bottom 15% expense wise.
Option 2 makes sense to me if you are in a high poverty area or if you are a specialist.
In the case in the article, they are still letting you go to the high dollar doctors, they are just putting them in a separate, more expensive plan. Most healthy people won’t pick that plan, but the rich might if they think it gets them better hospitals. The people who will pick it will be people who KNOW they need access to the doctors in that plan, which leads me to believe they are probably sicker than the average patient.
Dr. Cutler at Harvard (who works for the President) did a similar study on what happens when you have tiered plans like this (they did it with the Harvard employee plan). All the health people pick the cheap plan, all the sick people go with the expensive one. Prices go down in the cheap plan because they have a healthier risk pool, prices go up in the costly plan since they have all the sick people. Once prices go up, people are are kind of sickly migrate to the cheap plan because they can’t bear the price increase. This goes on and on until the costly plan becomes outrageously expensive and noone can afford it and everyone is forced into the cheap plan that covers less.
This will happen to these plans. If the only people in the costly plan are the ones with chronic illnesses the plans will eventually collapse and they will be forced into the public exchange.
The final outcome for employers, practically, is as follows. By giving employees a costly and cheap option, you ensured that your least healthy employees would make decisions that eventually forced them to go into the public exchange, because your cheap plan doesn’t cover what they need covered and the costly plan is just too costly. So in the end, you are only providing coverage for your healthy employees and all your unhealthy employees are now the responsibility of the government exchange.
Sorry this is long and rambling.



report abuse
 

Robin

posted July 21, 2010 at 4:00 pm


Scot (9),
I’ll try to sum up. There are 3 reasons to do this, all of which have different effects, simultaneously.
(1) To get out of paying the health care reform fine by lowering costs – if this is the main reason it will mean that people get to keep insurance through their employer without profits decreasing for their company. This is a good deal for most employees.
(2) To get rid of doctors that are gouging the system – Doctors that are gouging will still get paid because they can still take advantage of Medicare, however, they won’t get to keep driving up insurance costs for private insurers which will be better for the rates for most of us.
(3) To get rid of doctors that have sicker patients – If the doctors are more expensive because they have sicker patients (like my dad’s eye surgeon) we have just ensured that people who aren’t on public insurance (Medicare or Medicaid, not sure about the exchanges) will now have limited access.
Our state employee and retiree plan is Humana and they kicked out the eye surgeon. This worries me because my dad’s first transplant was rejected and he had to have a second one. If this one rejects he cannot go back to that doctor, and since it is a state retiree plan he cannot go get insurance from someone that will contract with that Doctor.
Those are the main effects I see from limiting the doctors who are paid by the insurer.



report abuse
 

Robin

posted July 21, 2010 at 4:04 pm


RJS,
By my calculation your employer is paying less than 80% of your expenses. That would put them in the silver provision level. If I read the law right by 2014 they will either have to give you an extra $1,500 or so or pay a $3,000 fine. Congratulations on your impending raise.
There is some ambiguity because I am not sure if the 90.5% coverage requirement refers only to premiums or to all annual expenses including co-pays and premiums.



report abuse
 

Robin

posted July 21, 2010 at 4:05 pm


*co-pays and deductibles



report abuse
 

Christine

posted July 21, 2010 at 4:15 pm


I really don’t like it when folks say, “I told you so . . .,” but many of us DID predict this would happen, and this is only the tip of the iceberg ’cause when employers are penalized for offering more rich plans, they won’t continue to do so and our choices will be narrowed accordingly. Many small physician groups will either be swallowed up into bigger groups or go under. And folks like Obama or Teddy Kennedy when he was alive will ALWAYS be able to choose the doctor of their choice, opt for the best hospitals and the premium care ’cause they can afford it. It’s the little guys, like moi, who will feel the pinch of restricted choices and fewer specialists, etc.
Many of the benefits of the health care plan were to be rolled out first so that folks would be pleased, and the harder things would come once we’re past the elections. So yup, it’s gonna get worse.



report abuse
 

RJS

posted July 21, 2010 at 4:16 pm


Robin,
I’m not counting on it before I see it. The ‘claim’ is that we can see a larger share dumped to employee paid premiums in the next year. But it is also a system where those at the higher end of the pay scale pay more than those at the lower end – so they may be alright on average (if that counts).
Like I said, I haven’t paid much attention.



report abuse
 

RJS

posted July 21, 2010 at 4:21 pm


It is far, far, far too early for any intelligent “I told you so.”
Scot should pose the question in three – or better five – years and we’ll see.



report abuse
 

Robin

posted July 21, 2010 at 4:26 pm


Christine,
Don’t forget that many of the features of the plan were most likely never really intended to take effect. The “cadillac tax” that hits union plans isn’t scheduled to go into effect until 2018, 2 years after President Obama’s potential 2nd term. My guess is that provision will go the way of the annual AMT patch and Doc-Fix and get legislated out before it has the chance to actually raise tax revenue for the government.



report abuse
 

Robin

posted July 21, 2010 at 4:38 pm


Re (19): “many” is probably an overstatement. I do believe the cadillac tax was just added to make the bill look less fiscally harmful, but that it will never be implemented. I am not sure if any of the 2014 provisions will likewise be removed before they are allowed to take effect.



report abuse
 

Christine

posted July 21, 2010 at 4:45 pm


Robin (19 & 20) – ah yes, you may be right, but by 2018, will there be any who employers who can still afford the cadillac plans given the public options?
RJS (18) – I disagree, but let’s check back to see if I’m right according to your timeline! :-)



report abuse
 

Ann F-R

posted July 21, 2010 at 5:02 pm


It is unfortunate that the pressure of increasing profits for shareholders has overtaken most of the economic system. In broad strokes, removing that relentless pressure is why I support single-payer, universal healthcare. In terms of US business, we need to change the formulation of what “good businesses” do; there are measures which are far healthier for a market economy than strictly financial considerations and high executive pay packages. A “Benefit corporation” will be required to consider societal, environmental and other benefits apart from $$ to shareholders. http://www.bcorporation.net/index.cfm/fuseaction/content.page/nodeID/be2fd378-d039-4d35-90a7-48b824bcac78/externalURL// In a post-Christian nation, checks to balance out the worship of money can help mitigate the pernicious effects of greed on our society.



report abuse
 

muse

posted July 21, 2010 at 5:47 pm


Sorry Scot, but didn’t you see this coming?



report abuse
 

Tim

posted July 21, 2010 at 6:04 pm


Isn’t there a demographic problem with our nation’s health care? The older you are, the more likely you are to have health problems, the more expensive insurance coverage becomes. Is there any way around, “you get what you pay for”?



report abuse
 

JonathanBlake

posted July 21, 2010 at 8:03 pm


This is why further reforms are needed because the reforms passed really weren’t too extensive. This is what happens when people who are not accountable to the people and only care about the bottom line and shareholders are left in charge of EVERYTHING. Because unlike what most people have heard and accuse the president, government obviously didn’t take over anything in the healthcare or insurance industry.
IMO, accountability and democracy is what we need more than this corporatocracy we have now.



report abuse
 

Nitika

posted July 21, 2010 at 10:18 pm


My non-profit, self-insured employer is being required to broaden coverage. The prize: 15% premium increase!



report abuse
 

kevin s.

posted July 22, 2010 at 3:27 am


“It is unfortunate that the pressure of increasing profits for shareholders has overtaken most of the economic system. In broad strokes, removing that relentless pressure is why I support single-payer, universal healthcare.”
Insurance companies operate at a three percent margin. If you get your wish, the best case scenario is that insurance will be three percent cheaper. Either way, your insurance program will be driven to meet a certain bottom line.
The worst case scenario is that we have a single-payer system with no bottom line, which will almost assuredly bankrupt the nation.



report abuse
 

Fish

posted July 22, 2010 at 10:48 am


“Insurance companies operate at a three percent margin. If you get your wish, the best case scenario is that insurance will be three percent cheaper.”
Wrong. You have to look at the ratio of claims paid out to premiums paid in. In our current system, only about 70% of premiums are paid back out. The 30% goes to things like multi-million dollar CEO salaries, lobbying, marketing (e.g. boxes at sports events and trips to golf tournaments), lawyers, etc.
The 3% is a number that has no relationship to any comparison of our system vs. single-payer. It’s a smokescreen.
I have owned businesses and you can do all sorts of things to change your net profit. The smaller your net profit, the less taxes you pay, so you spend the money someplace. Or if you want to show a large profit, you simply lay some people off or defer expenses into the next year.



report abuse
 

catcompare.com

posted July 30, 2010 at 7:01 pm


some insurance companies will make a short term loss in profit, in order to grow as a business in the mid to long term through brand awareness etc(by under cutting the market)
compare health insurance with catcompare.com



report abuse
 

Post a Comment

By submitting these comments, I agree to the beliefnet.com terms of service, rules of conduct and privacy policy (the "agreements"). I understand and agree that any content I post is licensed to beliefnet.com and may be used by beliefnet.com in accordance with the agreements.



Previous Posts

More Blogs To Enjoy!!!
Thank you for visiting Jesus Creed. This blog is no longer being updated. Please enjoy the archives. Here are some other blogs you may also enjoy: Red Letters with Tom Davis Recent prayer post on Prayables Most Recent Inspiration blog post Happy Reading!  

posted 11:15:58am Aug. 16, 2012 | read full post »

Our Common Prayerbook 30 - 3
Psalm 30 thanks God (vv. 1-3, 11-12) and exhorts others to thank God (vv. 4-5). Both emerge from the concrete reality of David's own experience. Here is what that experience looks like:Step one: David was set on high and was flourishing at the hand of God's bounty (v. 7a).Step two: David became too

posted 12:15:30pm Aug. 31, 2010 | read full post »

Theology After Darwin 1 (RJS)
One of the more important and more difficult pieces of the puzzle as we feel our way forward at the interface of science and faith is the theological implications of discoveries in modern science. A comment on my post Evolution in the Key of D: Deity or Deism noted: ...this reminds me of why I get a

posted 6:01:52am Aug. 31, 2010 | read full post »

Almost Christian 4
Who does well when it comes to passing on the faith to the youth? Studies show two groups do really well: conservative Protestants and Mormons; two groups that don't do well are mainline Protestants and Roman Catholics. Kenda Dean's new book is called Almost Christian: What the Faith of Ou

posted 12:01:53am Aug. 31, 2010 | read full post »

Let's Get Neanderthal!
The Cave Man Diet, or Paleo Diet, is getting attention. (Nothing is said about Culver's at all.) The big omission, I have to admit, is that those folks were hunters -- using spears or smacking some rabbit upside the conk or grabbing a fish or two with their hands ... but that's what makes this diet

posted 2:05:48pm Aug. 30, 2010 | read full post »




Report as Inappropriate

You are reporting this content because it violates the Terms of Service.

All reported content is logged for investigation.