Political Roundtable - Part V

[dckingsfan]

Insurance entities aggregate risk. Could the US government become an major insurer. Sure.

Innovation for products is usually outside the realm of insurance companies and bankers other than how they bundle the risk. You wouldn't expect an insurance company to come up with a new procedure for Angina, right?

Now the next question is, will the US government be more efficient than a private company. And the answer to that is "generally" no. And that generally means higher not lower costs over time.

[dckingsfan]

I'd like a response to the question: what do private insurance companies bring to health insurance customers?

If health insurance was actually run as "insurance", then you wouldn't be asking this question.

The purpose of insurance is to guard against catastrophic risk. Health insurance should be like car insurance or fire insurance. You pay a manageable premium on a regular basis to insure that you don't ever have to pay a huge bill at any one time in the event of a catastrophic accident or illness. Routine health care should be paid for out-of-pocket, by an individual or perhaps through a third party broker who is an advocate for the consumer while also having the knowledge to shop a complicated market. Insurance should only come into play for extremely expensive, unforeseen accidents or illnesses.

What has happened is that health insurance has been merged with the concept of a social safety net. Instead of health insurance being something purchased on an individual basis, we have moved to a model where you buy insurance in groups, with those groups continuing to increase in size until the entire nation is one group. This takes the away the incentives for individuals to be healthy because their premiums are no longer tied to their age or health, but on the average age/health of their pool. As the pools increase, the incentives continue to decrease.

At the same time, what is covered under insurance has grown so that routine checkups, cold medicine, yearly checkups, physicals, viagra, Prozac, pap smears, prostate exams, breast exams etc are all included. This is absurd. All these things are regular, foreseeable expenses and should be budgeted for by individuals. We can certainly have a conversation on how much the poor should be subsidized for these things, but they should not fall under the category of insurance.

These two trends: larger pools and more coverage for smaller items, have destroyed the market for health services. Without accurate pricing, competition gets distorted. The winners are not the ones with the best products at the lowest prices, but rather the ones with bureaucratic connections, lawyers, superior obfuscation of costs, and superior methods to exploit the public subsidy system.

Exactly. I might add that tax breaks for healthcare have also added to this dilemma. It started with unions asking for insurance (a good thing), that led to asking for no deductibles (a bad thing) and then government making that income tax deductible (a bad thing).

Catastrophic insurance was good - and insurance companies did a reasonably good job aggregating risk to those companies and individuals.

Then came the "no deductible" bargaining chip. This caused users to undervalue and over use healthcare services. It also allowed doctors to raise their rates without the costs being scrutinized or negotiated by the user. This started the huge rise in costs (much faster than inflation).

Concurrently, unions, doctors and insurers (among others) lobbied for income to pay for healthcare to not be taxable.

Those problems still need to be fixed, health insurance should be come catastrophic health insurance again. Insurance should not be tax deductible. and deductibles should be relatively high. For those that can't afford those services, the government can provide vouchers - kind of like food stamps (although they should still have some skin in the game).

[nate33]

No, private companies innovate new products. What about health insurance companies? What do they innovate? Again, the answer is nothing. They only pass on expenses to consumers. They serve no function other than to make profit for themselves at the expense of citizens and their healthcare needs. They are leaches -- as every other country but ours has rightfully concluded.

Insurance companies innovate just like any other company. The innovation may be more arcane and difficult to understand to the layman, but it's there. Insurance companies must keep up with the latest data on the cost/benefits of thousands of different types of medical procedures. Insurance companies must constantly adapting to an ever-changing world of health care innovation while continuing to effectively price their risk mitigation services, all while managing their finances in a volatile financial market.

[hands11]

No, private companies innovate new products. What about health insurance companies? What do they innovate? Again, the answer is nothing. They only pass on expenses to consumers. They serve no function other than to make profit for themselves at the expense of citizens and their healthcare needs. They are leaches -- as every other country but ours has rightfully concluded.

Insurance companies innovate just like any other company. The innovation may be more arcane and difficult to understand to the layman, but it's there. Insurance companies must keep up with the latest data on the cost/benefits of thousands of different types of medical procedures. Insurance companies must constantly adapting to an ever-changing world of health care innovation while continuing to effectively price their risk mitigation services, all while managing their finances in a volatile financial market.

Should we return to having the banks act as intermediaries for student loans ?

[nate33]

No, private companies innovate new products. What about health insurance companies? What do they innovate? Again, the answer is nothing. They only pass on expenses to consumers. They serve no function other than to make profit for themselves at the expense of citizens and their healthcare needs. They are leaches -- as every other country but ours has rightfully concluded.

Insurance companies innovate just like any other company. The innovation may be more arcane and difficult to understand to the layman, but it's there. Insurance companies must keep up with the latest data on the cost/benefits of thousands of different types of medical procedures. Insurance companies must constantly adapting to an ever-changing world of health care innovation while continuing to effectively price their risk mitigation services, all while managing their finances in a volatile financial market.

Should we return to having the banks act as intermediaries for student loans ?

Yes. The Federal takeover of student loans will ultimately have dire consequences. It's going to be a repeat of what Fannie Mae did to housing. The cost of education will be driven up by cheap borrowing. Students will end up making poor value judgements on the costs/benefits of education, resulting in many over-educated graduates with useless liberal arts degrees and massive debts. Taxpayers will ultimately take the hit.

[noworriesinmd]

I'd like a response to the question: what do private insurance companies bring to health insurance customers?

In economics you learn a simple truth....everyone acts in their best interest. Every day we live our lives by the "Cost to Benefit" Ratio...(i.e. If I do something will I be better off emotionally/financially/spiritually/etc when it is done). We still are driven by basic instincts.

Private Insurance companies bring innovation (PPP, HMO, etc....), cost savings, scale to the market place (overly simplified). I believe private citizen's with proper competition (that is the key...Government is often used to stifle competition because of money, and jobs in a powerful politicians district...etc)

It is my belief that Government's job is to be the referee and to make/enforce the rules for the players.

Unfortunately, Government has done a terrible job enforcing and setting the rules. Prior to ACA, insurance companies were regulated by local and state entities (this still is the case).

For example, BCBS is called various names in every state. In election cycle most states and local municipalities elect an Insurance Commissioner. Sabilas(sp?) head of HHS used to be an Insurance Commissioner prior to being a Governor.

I think the Republican argument during the election was to let companies like BCBS sell national policies vs. allowing the current system of fragmented insurance plans. The goal was that with national competition, innovation would be spurred and coverage would go up.

Car insurance is not a good example when talking about healthcare, but look at Progressive. Prior to Progressive, your car insurance rate was determined via your driving record, sex and age. This meant that people like myself had to pay huge premiums to drive. Progressive decided that your credit score was a better predictor of insurance claims...and now they are placing technology inside your car to predict your rates better. That is how health insurance could work.

We can look to technology sector to see how the works, until you get into patent law and hb1 visas

I not a huge fan of the ACA bill.
We can look locally to see why Government does not make the best choices.
* Drive down 123 and look at the above ground metro (horrible)
* ICC, took 50 years to build at 10x's the original cost and now it is empty
* Dulles toll road was supposed to be a toll road until paid for, now tolls are being raised for "other" projects
* Purple line. Eminent domain is going to be used against multiple homes EXCEPT the Bethesda Chevy Chase golf club....why....because they have connections. How is that fair?

I could go on and on..some of my arguments are over simplifications.

* Municipalities are selling their sewer systems.
* VA is using public/private partnerships to build roads...because they can't tax more...MD is going to do the same.
* Most states used tobacco settlements to pay for unsustainable budgets, prior to making difficult cuts vs using the money for healthcare.

I would like the Federal Government to stick to a few things and do them exceptionally well. I get tired of hearing that the President "had no idea" or the every word is parsed by speech writers so that you can debate "is" or that people where too afraid to tell the President the truth. Or I'm too dumb to make up my own mind. If that is the case maybe we should allow the electoral college elect the President or State Assemblies appoint Senators.

Most of us live in DC and know the game....I surprised how many of us truly believe gov't is the cure for everything...including healthcare.

This was sold as a cost containment bill vs a coverage bill; however the reverse happened.

[noworriesinmd]

The simple questions we should ask about healthcare:
1. What should be the basic level of healthcare provided to you and I?
2. Should you and I be able to tailor our plans to our needs (for example...why should mental health not be an option vs a requirement).

That was not done because of Lobbyist and politics.

[barelyawake]

"I think the Republican argument during the election was to let companies like BCBS sell national policies vs. allowing the current system of fragmented insurance plans. The goal was that with national competition, innovation would be spurred and coverage would go up."

And economists said the reason why this would not work is that all insurance would run to the state with the least regulation and there would be less competition, in fact, there would be monopolies and a race to bottom of unregulated insurance. It would also pool the young, the old and the sick -- causing insurance for most people to increase in price.

The market based solution is the ACA. And you know what will happen? The public will demand a public option, and everyone in the market will run to it. Why? Because it will be cheaper (and have more coverage) than all the other options across the board because government doesn't want to make a profit. The market will opt for the public option. Republicans know this. I hear them say it all the time. And they are right.

PS bundling customers is not innovation. Government can, does and will continue to do so. And it will do so on top of not making a profit.

[Induveca]

Having so much faith in government programs to "do the right thing" shocks me...

If this was a healthcare program which covered everyone in the country, complete socialized healthcare...then bravo. But that would cause major waves in the medical sector. Bring a doctor in France, Netherlands is simply not as lucrative as the US. The best treatments are still provided by cash only clinics for the rich (like the orthokine clinic Kobe Bryant goes to in Germany).

As it is, the US implementation is a half assed equivalent to many existing affiliate based marketplaces like ehealthinsurance etc.

If the uninsured wouldn't use those private marketplaces, why the hell would they use a broken online system to receive quotes even higher than the private marketplaces.

Sadly after all of this fails, the current administration will have given private insurance companies a completely defensible reason to excessively raise their rates.

Sent from my HTC One using Tapatalk

[hands11]

Insurance companies innovate just like any other company. The innovation may be more arcane and difficult to understand to the layman, but it's there. Insurance companies must keep up with the latest data on the cost/benefits of thousands of different types of medical procedures. Insurance companies must constantly adapting to an ever-changing world of health care innovation while continuing to effectively price their risk mitigation services, all while managing their finances in a volatile financial market.

Should we return to having the banks act as intermediaries for student loans ?

Yes. The Federal takeover of student loans will ultimately have dire consequences. It's going to be a repeat of what Fannie Mae did to housing. The cost of education will be driven up by cheap borrowing. Students will end up making poor value judgements on the costs/benefits of education, resulting in many over-educated graduates with useless liberal arts degrees and massive debts. Taxpayers will ultimately take the hit.

You do realize the main difference between when the banks where involved and now is simply the government cut out the middle man. The government was backing the private loans anyway so if the students didn't pay, the government picked it up. The banks were only there to skim the profits. Profits that are now saved money to fund the system.

Who gets the loans or not is a separate topic. Always was. Liberal arts degrees got student loans when the banks were the go between as well. Even then the we got to decide which loans the government funded or not.

This concept that government run or involvement is always bad is simply propaganda. Even Rs love government. They love to suck on the tit. They just prefer it be saved for him and not made directly available to the people.

[hands11]

Having so much faith in government programs to "do the right thing" shocks me...

If this was a healthcare program which covered everyone in the country, complete socialized healthcare...then bravo. But that would cause major waves in the medical sector. Bring a doctor in France, Netherlands is simply not as lucrative as the US. The best treatments are still provided by cash only clinics for the rich (like the orthokine clinic Kobe Bryant goes to in Germany).

As it is, the US implementation is a half assed equivalent to many existing affiliate based marketplaces like ehealthinsurance etc.

If the uninsured wouldn't use those private marketplaces, why the hell would they use a broken online system to receive quotes even higher than the private marketplaces.

Sadly after all of this fails, the current administration will have given private insurance companies a completely defensible reason to excessively raise their rates.

Sent from my HTC One using Tapatalk

Thats where the competition of free markets kicks in.

Look, once we decided we would pay to help people if they had insurance or not, this kind of system was inevitable. At that point, there was already no per-existing conditions. It was only a matter of quality of life. How long would someone suffer before they were helped and how much would that cost ?

So our government set limits for plans and set up exchanges.

Short of just letting people die and not helping them if they aren't covered, I have no idea what the Rs are complaining about. This was their Fing solution to the problem.

The rest is all politics and hate of Obama.

They have done everything they could to try to win election running against it. They lost.
They have done everything they could to try to make it fail, they have had some effect. These should have been state run exchanges but to many red states didn't do their jobs.

But the ACA is not a web site. Its more than that. And its going to end up working and when it does, the Rs are going to be in even a deeper political hole then they already are.

What is left of that party except obstruction, hate, war, fear, corporations are people and give the 1% more so they can piss some down to the rest.

Its all politics and they are going to fail because they played it wrong. They could have had part ownership in this solution to begin with but they thought they could win an national election running against it. Obama and the Dems out maneuvered them by taking their idea and implementing it.

They got punked.

[dckingsfan]

And economists said the reason why this would not work is that all insurance would run to the state with the least regulation and there would be less competition, in fact, there would be monopolies and a race to bottom of unregulated insurance. It would also pool the young, the old and the sick -- causing insurance for most people to increase in price.

That isn't what was said... that is unless you are using the Obama method of simplification.

[dckingsfan]

Having so much faith in government programs to "do the right thing" shocks me...

If this was a healthcare program which covered everyone in the country, complete socialized healthcare...then bravo. But that would cause major waves in the medical sector. Bring a doctor in France, Netherlands is simply not as lucrative as the US. The best treatments are still provided by cash only clinics for the rich (like the orthokine clinic Kobe Bryant goes to in Germany).

As it is, the US implementation is a half assed equivalent to many existing affiliate based marketplaces like ehealthinsurance etc.

If the uninsured wouldn't use those private marketplaces, why the hell would they use a broken online system to receive quotes even higher than the private marketplaces.

Sadly after all of this fails, the current administration will have given private insurance companies a completely defensible reason to excessively raise their rates.

Sent from my HTC One using Tapatalk

Thats where the competition of free markets kicks in.

Look, once we decided we would pay to help people if they had insurance or not, this kind of system was inevitable. At that point, there was already no per-existing conditions. It was only a matter of quality of life. How long would someone suffer before they were helped and how much would that cost ?

So our government set limits for plans and set up exchanges.

Short of just letting people die and not helping them if they aren't covered, I have no idea what the Rs are complaining about. This was their Fing solution to the problem.

The rest is all politics and hate of Obama.

They have done everything they could to try to win election running against it. They lost.
They have done everything they could to try to make it fail, they have had some effect. These should have been state run exchanges but to many red states didn't do their jobs.

But the ACA is not a web site. Its more than that. And its going to end up working and when it does, the Rs are going to be in even a deeper political hole then they already are.

What is left of that party except obstruction, hate, war, fear, corporations are people and give the 1% more so they can piss some down to the rest.

Its all politics and they are going to fail because they played it wrong. They could have had part ownership in this solution to begin with but they thought they could win an national election running against it. Obama and the Dems out maneuvered them by taking their idea and implementing it.

They got punked.

You keep coming back to your hate of the Republicans... not to a discussion of the ACA. Just because Republicans are against it doesn't make it good policy.

Republicans hate it, therefore it must be good isn't a very good argument.

[nate33]

You do realize the main difference between when the banks where involved and now is simply the government cut out the middle man. The government was backing the private loans anyway so if the students didn't pay, the government picked it up. The banks were only there to skim the profits. Profits that are now saved money to fund the system.

You make a fair point here. The problem started when the government started backing up these loans in the first place. That's when education costs spiraled out of control.

Government needs to get out of this mindset that they can act as a bank and provide low rate loans to unqualified borrowers. It's the same story over and over. It starts off with the appearance that it works as more and more unqualified borrowers get their "opportunity". But as soon as the economy turns south, we are faced with the reality that the banks were right all along and these people didn't qualify for a good reason. Bankruptcies ensue and taxpayers get stuck with the tab.

Don't get me wrong though. I'm no apologist for the banks. When these bankruptcies inevitably take place, I'm not in favor of bailing out the banks with taxpayer dollars either. Let them fail. It may hurt the economy in the short term, but it will help in the long term.

[dckingsfan]

You do realize the main difference between when the banks where involved and now is simply the government cut out the middle man. The government was backing the private loans anyway so if the students didn't pay, the government picked it up. The banks were only there to skim the profits. Profits that are now saved money to fund the system.

You make a fair point here. The problem started when the government started backing up these loans in the first place. That's when education costs spiraled out of control.

Ding, ding, ding, ding...

[noworriesinmd]

Getting on a high horse and pointing to bank greed in servicing Federally Backed Student Loans is a joke.

Sallie Mae the largest student loan provider, used to be a GSE in the mold of Fannie and Freddie.
The reason why banks serviced FBSL was because of a government accounting gimmick.
http://febp.newamerica.net/background-a ... ms-history

Read up on the history.

The student loan debacle is EXACTLY the reason why Government involvement in industry is bad.
* Government does not need to adhere to GAAP accounting
* Government does not do the right thing, they do the politically popular thing
* If you have enough money, you can keep a stupid program running for 40 years

[noworriesinmd]

"

And economists said the reason why this would not work is that all insurance would run to the state with the least regulation and there would be less competition, in fact, there would be monopolies and a race to bottom of unregulated insurance. It would also pool the young, the old and the sick -- causing insurance for most people to increase in price.

You are making my argument. The key principle to your argument is that Government would be the reason why this would not work. Regulate and do your job properly and markets work efficiently.

I'm for regulation, but I'm not for corruption determining winners and losers.

[hands11]

You do realize the main difference between when the banks where involved and now is simply the government cut out the middle man. The government was backing the private loans anyway so if the students didn't pay, the government picked it up. The banks were only there to skim the profits. Profits that are now saved money to fund the system.

You make a fair point here. The problem started when the government started backing up these loans in the first place. That's when education costs spiraled out of control.

Government needs to get out of this mindset that they can act as a bank and provide low rate loans to unqualified borrowers. It's the same story over and over. It starts off with the appearance that it works as more and more unqualified borrowers get their "opportunity". But as soon as the economy turns south, we are faced with the reality that the banks were right all along and these people didn't qualify for a good reason. Bankruptcies ensue and taxpayers get stuck with the tab.

Don't get me wrong though. I'm no apologist for the banks. When these bankruptcies inevitably take place, I'm not in favor of bailing out the banks with taxpayer dollars either. Let them fail. It may hurt the economy in the short term, but it will help in the long term.

Well they don't just back the loans, they pay the interest on them until you graduate.

I haven't read up on it in a while but last I did, numbers showed it was a smart investment. They get many time back what they put in because people are smarter and produce more in the economy. I got loans and a small amount in pell grants. I was the one to paid back the loan with interest so that cost them nothing more then floating the interest on the loan for 2 years while I was in school. Once I was out, the payments and interest was on me. Probably cost them between the floating the interest and the pell grants like $2000 max and they got many many times that in my tax returns and my productively to society.

As for keeping the cost down on schools, there are other ways to do that similar to the way the made insurance companies spend 80 percent of what they take in on actual insurance. Private schools can do what they want. But if a school is taking federal dollar, they can regulate them in smart ways that would drive down costs.

[hands11]

"

And economists said the reason why this would not work is that all insurance would run to the state with the least regulation and there would be less competition, in fact, there would be monopolies and a race to bottom of unregulated insurance. It would also pool the young, the old and the sick -- causing insurance for most people to increase in price.

You are making my argument. The key principle to your argument is that Government would be the reason why this would not work. Regulate and do your job properly and markets work efficiently.

I'm for regulation, but I'm not for corruption determining winners and losers.

There is no perfect system. Things will always get out of wack here and there. There will be bad eggs. People will screw up. You just want to have as quality a checks and balances as you can and catch it wilth over sight, etc as soon as you can. And you want to isolate things so it doesn't bleed out.

Having to big to fail banks is a terrible idea. So is to big to fail insurers. Or anything that is critical to markets and the economy functioning. If you are for diversifying the risk pools of the insurers, then you should like the ACA vs single payer. Sure the insurance companies get profits in that models ( 20% limit ) but you also have lots of insurance companies balancing their books instead of one federal government account. This is very in line with how government sanctioned monopolies worth with unities in the past.

[noworriesinmd]

Hands, I don't believe that free markets is nirvana, however I also don't believe government will efficiently spend capital. We need to find that nice mix. Let markets innovate and the government create rules and referee. I liken it to sports. No one likes the refs to determine the outcome of a game. However we want them to to keep the game flowing and enforce the rules. Sacramento fans are still mad about the Lakers playoff win. Or how bitter are some about the NBA possibly rigging the draft so the Knicks could get the #1 pick

I was listening to CNN today, specifically State of the Union and GPS.
It bothers me that no one tells the truth (D's and R's). There is so much spin. It bothers me so much that Van Jones, actually was agreeing that the President lied, but he's spinning it like its the Republican's fault for the President's dishonesty. REALLY!!?? I wonder how anyone can believe what is coming out their mouth. I never defended or liked Sarah Palin's death panels, but Democrats are just as bad. It bothers me that in 3 1/2 years the President could not implement his signature piece of legislation. He either was kept in the dark by underlings (i.e. fear) or unengaged as an executive. This level of incompetence rivals Bush.

That is why ACA is a bad idea. We get spin instead of results.

Instead of talking about why the system is broken, we skirted around the issue for political gain.
Bloomberg, said is best when he said that most politicians try to implement things so they don't have to face the consequences....ie 50 years in the future.

I think single payer has some pros and cons.
I know there are other models that are better.

FYI, we will never get to single payer.
I was listening to a economist talk about why we implemented ACA the way we did.
Congress will never destroy 9% of our economy ( to go to single payer). Congress would never displace 17M workers who might become energized and vote.