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Posted at 4:31 PM ET, 03/ 4/2011

Stingy insurance is not the answer

By Ezra Klein

When you’re talking about health-care spending, you always need to distinguish between things that’ll save a bit of money next year and things that’ll actually cut the growth rate of health care. Saving a bit of money next year is nice, but it’s not that big of a deal. It’s cutting the growth rate that matters. If you don’t cut the growth rate, then any savings you achieve get wiped out in no time. It’s like tapping the brakes without taking your foot of the gas.

Giving people less generous and less comprehensive health care falls into the “tapping the brakes” theory of cost control. The thing that costs money in the U.S. health-care system is sick people. About 5 percent of the population accounts for 50 percent of the spending. And it’s not because their insurance is super-generous. It’s because they’re really, really sick, and in many cases, because their illnesses are chronic and poorly managed. The problem with just giving them less-generous insurance is that they get sicker, and need to be rushed to the hospital more often because they’re not getting the medications and diagnostics needed to keep their conditions in check. More on that here.

It’s very important that health-care reform leaves a lot of room for insurers to experiment with different benefit designs and ways to keep people healthy. That could slow the growth in health spending, which is why I think the administration should be as vague as possible when defining “essential benefits.” But just making insurance progressively less generous doesn’t do you much good, and may in fact do you some harm. It’s hard to imagine any good that’s going to come from a deductible that’s above five figures: If you’re paying $10,000 out of pocket for health care in one year, you’re probably quite sick and just doing whatever the doctor tells you. Meanwhile, the sorts of intensive insurance programs that might keep people from getting so sick will probably be fairly generous, even as they’re cheaper in the long-run. When you’re thinking about this issue, it’s important to keep the sort of cases and costs that Atul Gawande outlines here in mind.

By Ezra Klein  | March 4, 2011; 4:31 PM ET
 
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Comments

So many words! This needs to be turned into simple talking points.

"With healthcare spending, we need to release the gas pedal, not just tap the brakes!"

"Our greatest healthcare expense goes solely to the nations sickest people--we need to make sure they can afford quality care that prevents them from being hospitalized, which costs the nation even more money!"

That last one is too long... it can't stand up against the GOP rallying cry, "We're broke!"

Any suggestions?

Posted by: will12 | March 4, 2011 5:22 PM | Report abuse

My health insurance premiums are going up by 12% next month. Last year it was 8%. Two years ago it was 30%.

So how about this: "We can't just do nothing."

Posted by: DavidinCambridge | March 4, 2011 5:54 PM | Report abuse

Ezra, you can't possibly be this obtuse and not see that the "really sick" often do have a choice before they become "really sick". What percentage of the "really sick" have lifestyle considerations (poor diet, cigarettes, drug use, unprotected sex) affecting their health? If there is more of a cost associated with that behavior, then, is it unreasonable to argue, we might see less of it? You may disagree with that, but at least think constructively for a couple moments instead of just slapping up a strawman argument. It's really obnoxious and just makes you look like an amateur commentator (paging Dave Weigel).

And if the chronically obese or some junkies die a few years prematurely, why should the taxpayer be on the hook in the first place to extend their lives?

Posted by: cdosquared5 | March 4, 2011 6:06 PM | Report abuse

cdosquared5, that is why we have cigarette and alcohol taxes. It's also why we should tax unhealthy food/drinks, and ban transfat.

Posted by: mynameisblehbleh | March 4, 2011 6:31 PM | Report abuse

"The thing that costs money in the U.S. health-care system is sick people. About 5 percent of the population accounts for 50 percent of the spending. And it’s not because their insurance is super-generous. It’s because they’re really, really sick, and in many cases, because their illnesses are chronic and poorly managed."

Ezra, you are young and energetic, but clearly, you have never needed your health insurance for anything but well care visits. Please don't make assumptions!

And funny, the thing that costs health insurance companies money is the very thing we buy health insurance for - to pay for illness. That's why "insurance" - usually purchased to protect against a rare event (car crash, house burned down) - is an inefficient way to pay for something ALL of us need every year.

If you spend $10K on healthcare in a year, it can also be because you broke an ankle ($20K bill for just that alone!) Or you were diagnosed with cancer. Or you take horrible care of yourself and are chronically ill. Or you were born with a rare disease like hemophilia. Or you are an old person who is dying, slowly and painfully over a long period of time.

Posted by: MainStreetMuse | March 4, 2011 6:54 PM | Report abuse

Ezra

You're generally really good on your analysis but you need to better understand the cost of care. It's that cost of care that drives davidincambridges rates higher as well as all the rest of us too.

10k is nothing. If you have a baby you see 30k easily in costs without fail. If there are complications for mother or baby it's easily into six figures.

Once the MLR is in place for a year you will see.

Oh and the California rate increase came back from an independent auditor as justified. CA regulators are balking and watchdog groups are doing their own analysis as well so we will see what comes of that.


A good article from Mr Pear at the nyt as well. Prices going up dramatically. Republicans blame PPACA but insurers reply it's not that it's the cost of care. They do agree that minimal provisions like free preventative care and dependents to age 26 have a minimal effect because it's not free.

The answer as I've said before is Capitation

Posted by: visionbrkr | March 4, 2011 9:04 PM | Report abuse

Plus, it's just a very bad thing for families and our country for most people to have to constantly live with terrible risk of financial and/or physical devastation because we have chinzy health insurance.

We're the greatest country in the world and most of our families are supposed to live with constant risk of financial and physical devastation because we have inadaquate or no health insurance, or we can easily get that way if there's a recession, or for many other reasons? This is not how Americans lived before the generation of Republican dominance, and no other people in the world in first world countries live this way.

Posted by: RichardHSerlin | March 4, 2011 9:37 PM | Report abuse

And don't give me this, if the deductible is too low, people will waste health care because it's artificially cheap.

How many people do you know who like to go to the doctor just for fun? How many people say, hey, I get to go to the doctor for 90% off, I'm going every day! Colonoscopies, x-rays, full body skin cancer screenings sign me up, let's party!

No, even if health care is 100% free, the problem, on average, will still be UNDRERuse, not overuse, because most people dislike, or really dislike, going to the doctor, and self-discipline is an issue (even though it's assumed away in most economic models). People will still tend to wait too long to get check-ups and treatments, resulting in much more expensive treatment later on.

Posted by: RichardHSerlin | March 4, 2011 9:47 PM | Report abuse

Let us take an example of Texas. The "Wise Health Insurance" is quite popular in Arizona. It provides so many offers for the low income people.

Posted by: racheltucke | March 5, 2011 1:41 AM | Report abuse

Thank you very much! Here is my 2 cents, I just printed Coupons for free. You can print coupons before you shop by searching "Printapons" online

Posted by: triciatadams | March 5, 2011 5:00 AM | Report abuse

"It’s very important that health-care reform leaves a lot of room for insurers to experiment with different benefit designs and ways to keep people healthy."

No. It's not. Health insurers are not in the business to keep people healthy. They are in the business to make money. They make money in the US by being parsimonious with their benefits and charging high premiums. Denying health care by making it so expensive that people spend their money on more immediate-seeming needs (or do their own home surgery) is not solving the problem, and this is basically the "solution" conservatives and insurers have chosen.

And all this dreck about how people need to take responsibility for their own health is a thinly veiled way of saying, "Don't make me worry about caring for the sick and dying." We live in a toxic soup of an environment, and rig the game so our poorest citizens live in the very worst environments under the most challenging conditions, and then rail at them for not pulling themselves up from the mess by their bootstraps. And the better off we are, the more we rail.

Every damn one of us is only one car accident or sudden fall from medical bankruptcy, so don't give me this crap about how the unicorns would play in the chocolate fountains if only fat people would go on a diet and the smokers we rely on for taxes to care for our elderly would just stop smoking.

Really, the hypocrisy is just breath-taking.

Posted by: Riggsveda | March 5, 2011 6:26 AM | Report abuse

Two weeks ago my grown son and his wife were playing with their 3yr old and 1yr old children. My daughter-in-law bumped her her and had (unbeknownst to her) a slight concussion. Two hrs later, after she threw up and passed out, they called the paramedics.

When they were retelling me this story, I was amazed that they discussed whether to take her to the hospital in a ambulance or just go in the car. And it was ALL about how much the ambulance cost! Not whether the ambulance was really necessary or not.

I'm finding harder and harder to justify this in our society.

Posted by: paulyheins | March 5, 2011 10:54 AM | Report abuse

I think the ever-present paid spammers in these threads -- which the WaPo seems incapable of addressing -- tell you a lot about how the American Way of Healthcare allows low-rent fraudsters to exploit the vulnerable.

http://peoplelikingpeople.blogspot.com/2011/01/wise-health-insurance-bullsh-marketing.html

Posted by: pseudonymousinnc | March 5, 2011 6:37 PM | Report abuse

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