Tag Archives: health insurance

The Other 20%

Unless you're one of the lucky few who's always had "Cadillac" health insurance through your employer you know how much impact it has on your life. Heck, even if you've always had "Cadillac" health insurance you've probably thought about how much impact it has because you've likely said something like this to yourself: "Man this job is an endless procession of soul-sucking days with absolutely no redeeming value. I'd quit, but damn those health benefits are great." *

Since our mid-20s my wife and I have always been highly attuned to the cost of health insurance because we've always either been self-employed or worked for companies that couldn't afford great benefits. With the exception of the jobs we had when we first got married in '92 we've always had to pay a huge chunk of our health insurance premiums which has translated into a monthly expense ranging between roughly $500 and $1000, and quite frankly we've known plenty of folks who have had it worse. Still we've always managed to keep our insurance, although it often required some sacrifice. Keep in mind, that's just the premiums. To paraphrase former US Senator Dirksen, add your $35 office visit co-pay here, your $20 prescription co-pay there, and pretty soon you're talking about real money.

But what about those people who just can't swing the health insurance? The level of angst they experience over the health care/insurance issue is on a whole other level and is nicely captured in this blog post written by a Scientific American writer living in Cateret County, NC. His son contracted pneumonia, but because they had no health insurance they didn't take him to the doctor immediately because they thought it was the flu and tried to treat it with over-the-counter medication. Eventually they made their way to urgent care, and then the hospital, and thankfully his son is recovering. Still it really is a must-read because he does a great job of providing insight into the reasons behind being uninsured, some common misperceptions about the uninsured, and Catch-22 the uninsured find themselves in. Here's a sample:

But recently my mindset has become affected by our position. I tell my kids not to do things that I certainly enjoyed doing as a kid, like don’t climb high on trees, run a little slower on the trail, watch out for roots and stones! It’s not just the usual parental concern either. I’m consciously thinking “oh my god, I cannot afford to fix them if they get broke!”.

This is the luxury gap between the between the 20% of nonelderly americans who are uninsured and the rest. The luxury is, of course, being able to just walk into a doctor’s office and see them at the appropriate times. It is easy to discount this minority since most are at or near the poverty line. But many of the uninsured are like myself and just can’t seem to make the numbers work for a family of four each month by adding on private individual (i.e. non-group discounted) health insurance. Especially when you factor in the myriad other insurances we already pay: renter’s or home, wind and hail, flood, car, life, etc. It’s not that we are irresponsible, but the numbers. just. don’t. work…

Most of the uninsured in this country aren’t lazy, freeloading hobos who don’t wanna work. They span a wide variety of demographics. As a 30 something, white male with advanced college degree who works full time as a self-employed consultant and writer are you surprised that I cannot afford health insurance for my family? In fact, the majority of uninsured are in my age range and are full or part time workers earning incomes above 100% the federal poverty level. The fact of the matter for many of the uninsured is that employment-sponsored coverage has been in decline due to the escalating costs of health care. Employers can’t remain competitive and pay double the costs they were paying a decade ago for insuring their workers. An October 2011 report from the Kaiser Commission on Medicaid and the Uninsured found that

“Job-based coverage has been gradually declining since 2000, even during years when the economy was stronger and growth in health insurance premiums was slowing.  From 2007 to 2010, the percentage of the nonelderly population with employer-sponsored coverage declined by approximately 5%.[…] Even when workers can afford coverage for themselves, the cost of health insurance for their families is often prohibitive. Employees in firms with many low-wage workers are typically asked to contribute a larger share of the insurance premium than employees of firms with fewer low-wage workers (38% vs. 27% of the premium costs for family coverage). Declines in dependent coverage accounted for more than half of the recent decline in employer-sponsored insurance.”

Uninsured people look just like everyone else. They might look like they can easily afford the premiums and in fact might earn salaries similar to yours. But every family’s situations and employment-based coverage options are unique and this goes far beyond stereotypes of the “working poor”. My son could have suffocated from his pneumonia had we not sucked it up and rushed him to the hospital on Tuesday morning. If we were able to see a doctor a day earlier, he perhaps could have been treated at home as an outpatient with antibiotics. I don’t know what our final bill will be when we leave tomorrow morning, right now I don’t care. All I know is my son got better under the supervision of a wonderful team of nurses and pediatricians. My community has income-based charity care which will hopefully reduce our bill to a much more manageable sum. All minor details when the stakes are as high as your children’s lives. Plus, we can sleep in beds without motors.

*I firmly believe that if you took concerns about health coverage off of the table you'd see an explosion in entrepreneurialism. Soooo many people who hate their jobs/companies would strike out on their own to create something they've dreamed about, or they'd jump ship to someone else's enterpreneurial firm. Sure I could be wrong, but how many people do you know who've stuck with a job simply to keep their benefits? See what I mean? 

More Employers Questioning Need to Offer Health Insurance

Some of the insights shared at a recent Winston-Salem Chamber of Commerce meeting about the state of the health care industry won't shock anyone who’s been paying attention the last few years:

Keith Kiser, a senior vice president for BB&T Insurance Services, said his group is fielding more questions from employers about the justification for providing health insurance to employees, besides as a carrot to hire and retain quality workers.

“Chief executives and chief financial officers are fully engaged in these conversations these days,” Kiser said, considering the cost of providing health insurance typically ranging from $8,000 to $10,000 for each employee.

The 2011 Kaiser Family Foundation study on employer health benefits, out in September, found 99 percent of large companies — 200 or more workers — offer health benefits, but only 48 percent of those with three to nine employees do and 59 percent of those with 3 to 199 workers do.

Three-quarters of small firms (3-199 employees) not offering health benefits believed their employees would prefer a $2 an hour increase in wages rather than health insurance, Kaiser said.

Kiser said the reality that 1 in 5 consumer dollars goes to health-care costs “does keep you awake a night.”

This trend will likely get more prominent as the new federal health regulations, aka Obamacare, go into effect:

The federal health-care overhaul will allow employers to stop providing health insurance — beginning in 2014 — with their employees going into a government-controlled exchange.

However, employers with 50 or more workers that don’t offer coverage will be required to pay $2,000 for each full-time employee in its full-time work force. The fee begins if at least one employee enrolls in a plan through a health-insurance exchange and receives a federal subsidy. Two part-time workers are considered as one full-time employee.

The top executives at Blue Cross Blue Shield N.C., Novant Health Inc. and Wake Forest Baptist Medical Center said they empathize with businesses’ concerns about health-care costs since they are large employers as well as providers.

So, should you spend $8-10,000 insuring your employees or pay the government $2,000 for not insuring them?  An interesting question, especially when you consider that companies only started offering health insurance in general during World War II as a way to entice workers in a highly competitive hiring market.  It’s a relatively recent phenomenon in American history for companies to provide health insurance to their employees and over the years it became a kind of “least common denominator” in terms of employee benefits packages.  That began to change when health care costs started to explode, and now it looks like health insurance is returning to it’s original role – a very nice perk that can act as a set of “golden handcuffs” for valued employees.

Good for the Goose, Good for the Gander

Blue Cross Blue Shield of North Carolina says it's going to reimburse primary care physicians more money if they can prove they're providing higher quality care.  From the article:

The Chapel Hill-based insurer, which with nearly 152,000 enrollees
is the largest health insurer in the Triad, has invited about 4,000
primary care physicians across the state to apply to join its Blue
Quality Physician Program. The program is designed to reward quality
over quantity. Physicians who meet the program’s criteria are eligible
for double-digit percentage increases in standard reimbursements on
some of the most commonly billed procedures.

BCBSNC will score applicants based on clinical quality outcomes, as
measured by the National Committee for Quality Assurance, use of
electronic prescribing, administrative efficiency and the physician’s
ability to care for patients after-hours or electronically, among other
criteria. Those who have scored high enough will qualify, while those
who do not qualify can reapply.

Couple of things:  I'm curious as to how I'm going to be cared for electronically.  I'm tempted to get sophomoric and start talking about sticking electronic probes in interesting places, but I'll resist.  Maybe they think the doctor can have me go "ahhhh" into a webcam and he can look at my tonsils online.  Whatever.

What I'd really like to know is if I can base my reimbursement to BCBSNC on their quality of service?  For every disputed claim we'll knock off double-digit percentages and for every drug not in their schedule we'll knock off even more.  For every letter I get from my doctor saying my bill hasn't been paid and it's been, oh, 90 days we'll just waive the payment completely.  Who will be our arbiter, our very own NCQA?  Well, we'll found the Carolina Association of Righteously Pissed Patients (CARPP) and it will judge each claim based, in part, on BCBSNC's ability to care for patients at all without sucking over 15% of their gross income out of their pockets.  Sound good?

Why Progressives are Bat—t Crazy

Via Ed Cone comes this interesting piece with an even more interesting graphic about the Senate's health care reform proposal. The graphic compares the projected annual costs of health care (defined as premiums and cost sharing) to a family of four making $54,000 a year in 2016 under three different scenarios: If the Senate Bill is passed, the Status Quo (nothing changes from today's system), Status Quo + SCHIP (the cost of insurance under the status quo if you qualify for SCHIP subsidies).  Basically the annual out of pocket expense for the family under the Senate Bill would be $9,000 while under the status quo it would be over $19,500. The difference is due to a $10,000 subsidy the author identifies in the Senate bill.  He also says that progressives, who generally don't have a problem with "big government," should be all over this thing instead of railing against it.  Here's an excerpt from his breakdown of the "Status Quo" figures:

In 2009, the average premium for a family in the individual market was $6,328, according to the insurance lobbying group AHIP.
However, this figure paints an optimistic picture for two reasons.
Firstly, the average family size in the AHIP dataset is 3.03 people;
for a family of four, that number would scale upward to $7,925, by my
calculations. Secondly, the CBO's estimates are based on 2016 figures,
not 2009, so to make an apples-to-apples comparison, we have to account
for inflation. According to Kaiser, the average cost of health coverage
has increased by about 8.7 percent annually
over the past decade, and by 8.8 percent for family coverage. Let's
scale that down slightly, assuming 7.5 annual inflation in premiums
from 2009 through 2016 inclusive. That would bring the cost of the
family's premium up by a nominal 66 percent, to $13,149. And remember:
these are based on estimates of premiums provided by the insurance lobby. I have no particular reason to think that they're biased, but if they are, it's probably on the low side.

I'm glad to see someone finally putting some digestible figures out there.  While the figures might just be estimates the author at least puts the argument in the proper context.  As someone who has an average healthy family of five (two adults, three children) and who has been in the individual insurance market for years I can tell you that the $19,500 estimate is definitely in the ballpark since we've been dancing in the $12,000-$14,000 a year territory for quite a while.

Out of curiosity I decided to see how this health expense compares to a yearly mortgage expense.  I went to an online mortgage calculator and put in $150,000 for a 30 year loan at 7% interest.  The monthly mortgage payment would be $997.50 which my middle-school level math tells me is a little under $12,000 a year. So the projected "status quo" premium of $13,149 in 2016 is over a $1,000 than the annual mortgage expense on a $150,000 note.  That's truly insane. 

Oh, and the more the insurance is the higher the monthly expense the insured has to report on his loan application and that lowers the amount that he'll qualify for.  That means he and the other average folks like him buy less house, which means the developers have to build smaller/cheaper houses, which means the developer's suppliers sell him less stuff, which means they employ fewer people, and so on.  All so average people can pay out the nose for a piece of paper which tells them that they might not be bankrupted by a horrible illness as long as it wasn't some sort of preexisting condition or didn't happen during a full moon.  That's not just insane, that's bat—t crazy.