Author Topic: When's MMM going to update his thoughts on the ACA?  (Read 5399 times)

Lance Burkhart

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When's MMM going to update his thoughts on the ACA?
« on: July 15, 2017, 03:31:47 PM »
I was looking at MMM's 2016 spending and couldn't help but notice that his medical spending under the ACA has skyrocketed. 
http://www.mrmoneymustache.com/2017/05/19/2016-spending/

I thought the ACA was supposed to control costs and make care more affordable - that it was a friend of the entrepreneur and early retiree?
http://www.mrmoneymustache.com/2013/10/28/obamacare-friend-of-the-entrepreneur-and-early-retiree/

I just talked to an entrepreneur and he says the health insurance costs for his employees have skyrocketed also and that it encourages age discrimination which is exactly what I've seen at work.  Does this mean the ACA is the foe of the entrepreneur and early retiree?   

maizeman

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #1 on: July 15, 2017, 03:45:52 PM »
We haven't seen significant increases in the cost of insuring our employees at either of the companies I work with. Both organizations use an HSA compatible plan and have reasonably young workforces (20s-30s), so it's possible we're just missing these effects?

For early retirees or entrepreneurs, the ACA ensures that there will health insurance available to purchase and that the company won't be able to retroactively disqualify you from the plan if you ever actually need to use it for something expensive. Previously uninsurability and rescission were were barriers to both leaving a stable W-2 job to start your own company or retiring before medicare kicks in.

If you feel ethically comfortable taking advantage of the insurance subsidies, ACA insurance for the average early retiree will also be much lower than what MMM pays. He's got $300,000+/year coming in from the blog alone, disqualifying him from receiving any subsidy for the cost of his family's insurance.
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wenchsenior

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #2 on: July 15, 2017, 03:47:37 PM »
The answer is: It depends.  On your state of residence, your age, your income during retirement, and the particulars of your health situation.  There is no clear cut 'friend or foe' dichotomy.

Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #3 on: July 15, 2017, 03:56:47 PM »
We haven't seen significant increases in the cost of insuring our employees at either of the companies I work with. Both organizations use an HSA compatible plan and have reasonably young workforces (20s-30s), so it's possible we're just missing these effects?

Quite possible.  Our average age is quite high.  We have an HSA-compatible plan, Kaiser, and another option.

Quote
If you feel ethically comfortable taking advantage of the insurance subsidies, ACA insurance for the average early retiree will also be much lower than what MMM pays. He's got $300,000+/year coming in from the blog alone, disqualifying him from receiving any subsidy for the cost of his family's insurance.

How much does the family of 4 making $40-50k per year get subsidized?  Premiums and deductibles now combine for about 40% of your average American's income without subsidies:
https://resources.ehealthinsurance.com/affordable-care-act/much-obamacare-cost-2017

maizeman

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #4 on: July 15, 2017, 04:19:33 PM »
How much does the family of 4 making $40-50k per year get subsidized?  Premiums and deductibles now combine for about 40% of your average American's income without subsidies:
https://resources.ehealthinsurance.com/affordable-care-act/much-obamacare-cost-2017

I plugged in those numbers to this calculator,* assuming a family of four, $40k/year of income, with both parents 50 years old, and got an estimated tax subsidy of ~$14,500/year for the premium. (So about 30% of the average american's household income.)

It can be a bit misleading to lump together the cost of health insurance premiums with the cost of maxing out your deductible every single year. Many folks will go years or decades without needing to actually max their deductible, but everyone has to pay their premiums every year.

*Link to calculator I used http://www.kff.org/wp-content/themes/vip/kaiser-foundation-2016/static/subsidy-calculator-widget.html
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Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #5 on: July 15, 2017, 08:02:14 PM »
I disagree completely.  I've hit my deductible limits probably 3 out of the last 5 years.  Everyone at work who uses an HSA spends ALL the money they save in their HSA every year - an amount near the out-of-pocket max for a family.

maizeman

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #6 on: July 15, 2017, 08:16:23 PM »
Hmm, maybe it is different age ranges at play again?

We've set it up so the company contributes about as much to each employee's HSA as their annual (individual) deductibles, and multiple people have asked whether we can just pay that money to them directly since they've accumulated so much in their HSAs already.

Personally I've been fortunate enough to never come close to hitting my deductible anytime in the past decade but I'll certainly admit luck plays a roll in maintaining the streak this long.
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Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #7 on: July 15, 2017, 08:26:51 PM »
I just went to the KFF health insurance marketplace calculator, plugged in my salary and got an answer for my yearly premium and deductible for my family of 5.  ~$13k for the yearly premium on a silver plan with a $14k deductible.  So my total financial liability if I didn't have coverage through my employer would be about $27k.  My son just broke his arm requiring surgery and we're out $7k, so I would've only forked-out $20k for medical bills this year (so far).  Is this some kind of a sick joke?  You're ineligible for subsidies above 400% of the federal poverty level, which is not all that much of a salary in a high COL area.

maizeman

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #8 on: July 15, 2017, 08:36:13 PM »
Your original question was about a family of 4 making $40-50k/year. 4x times the federal poverty level for a family of four is nearly $100,000 which is the 78th percentile for household incomes in the USA.

You are correct that one of the problems with the way the healthcare law is currently structured is the subsidy cliff as so as you get across 4 times the FPL.
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Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #9 on: July 15, 2017, 08:47:20 PM »
I just went back to the calculator and cut my salary to $80k (283% of the federal poverty limit).  My insurance premiums dropped to $4,755 per year but the deductible stayed the same.  The total financial liability is now about $19k per year.  I think the new deductibles largely explain why only 18% of the population is paying its medical bills in full.  You can't squeeze water out of a rock.  Most people are stiffing the providers on at least some the bills because there's not much left over after you've paid your premiums and insurance companies will only insure that your deductible is high enough that they win and you lose.

BlueMR2

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #10 on: July 16, 2017, 05:41:41 AM »
I just talked to an entrepreneur and he says the health insurance costs for his employees have skyrocketed also and that it encourages age discrimination which is exactly what I've seen at work.

Yeah, health insurance does lead to discriminatory thoughts when it comes to employment.  Besides old people, women of child-bearing age are also impacted as their insurance risk/cost is also exceptionally high (too many million dollar babies out there).

I'd also like to hear more about health insurance thoughts and calculations.  Right now I'd strongly consider going ahead and pulling the trigger on retirement except for the state of health insurance.

jim555

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #11 on: July 16, 2017, 07:02:28 AM »
The ACA is easy to take advantage of by controlling your MAGI which is easy for a FIREee.  It is definitely is NOT a foe for FIRE.  200% FPL is a sweet spot for Silver's with cost sharing reductions.  The other sweet spot is <138%.

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #12 on: July 16, 2017, 07:31:29 AM »
I was looking at MMM's 2016 spending and couldn't help but notice that his medical spending under the ACA has skyrocketed. 
http://www.mrmoneymustache.com/2017/05/19/2016-spending/

I thought the ACA was supposed to control costs and make care more affordable - that it was a friend of the entrepreneur and early retiree?
http://www.mrmoneymustache.com/2013/10/28/obamacare-friend-of-the-entrepreneur-and-early-retiree/
 Does this mean the ACA is the foe of the entrepreneur and early retiree?

ACA is extremely beneficial for those with lower incomes.  I went from zero insurance to $0 to $200 depending on income.  In the first article you linked, MMM states: 

Quote
TOTAL   $30,193
We spent less than 10% of our taxable income this year

Not even remotely lower income.
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Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #13 on: July 16, 2017, 09:10:30 AM »
The ACA is easy to take advantage of by controlling your MAGI which is easy for a FIREee.  It is definitely is NOT a foe for FIRE.  200% FPL is a sweet spot for Silver's with cost sharing reductions.  The other sweet spot is <138%.

How?  Do the deductibles suddenly drop at these income levels?  The calculator gave me an enormous deductible for my family at 2 different income levels.  I would've hit those deductibles 3 out of the last 5 years since we've had babies and my son broke his arm and needed orthopedic surgery.

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #14 on: July 16, 2017, 09:18:15 AM »
The ACA is easy to take advantage of by controlling your MAGI which is easy for a FIREee.  It is definitely is NOT a foe for FIRE.  200% FPL is a sweet spot for Silver's with cost sharing reductions.  The other sweet spot is <138%.

How?  Do the deductibles suddenly drop at these income levels?  The calculator gave me an enormous deductible for my family at 2 different income levels.  I would've hit those deductibles 3 out of the last 5 years since we've had babies and my son broke his arm and needed orthopedic surgery.
A Silver plan at 200% FPL (Individual) would have a max OOP of $2,000 with a $250 deductible due to cost sharing reductions.  CSRs are in the 150-250% FPL range for Silver plans only.
If you are <138% then it is a $200 Max OOP with no deductibles and no premiums.  This would be Medicaid.

maizeman

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #15 on: July 16, 2017, 10:22:39 AM »
I just went back to the calculator and cut my salary to $80k (283% of the federal poverty limit).  My insurance premiums dropped to $4,755 per year but the deductible stayed the same.  The total financial liability is now about $19k per year.

Out of curiosity, what do you think is a reasonable amount of money to pay each year for healthcare for five people?

(Keeping in mind it has to cover not just the cost of the healthcare you actually receive in that year, but also the risk that one or more of you will need something very expensive, like treatment for a heart attack, cancer, or a car crash).
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Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #16 on: July 16, 2017, 01:58:48 PM »
I just went back to the calculator and cut my salary to $80k (283% of the federal poverty limit).  My insurance premiums dropped to $4,755 per year but the deductible stayed the same.  The total financial liability is now about $19k per year.

Out of curiosity, what do you think is a reasonable amount of money to pay each year for healthcare for five people?

(Keeping in mind it has to cover not just the cost of the healthcare you actually receive in that year, but also the risk that one or more of you will need something very expensive, like treatment for a heart attack, cancer, or a car crash).

Good question.  I don't know the answer.  Say your living costs are 30% of your budget, taxes are already 15-30% for most people on here: we're already talking about 45-60% of the money gone before we can think about healthcare.  Most people on here also want to save a lot early so they can retire early.  What's your number?

I think the cost of care is a lot higher because of insurance itself.  The price is hidden from the consumer and many of the payments are negotiated between two parties (the providers and insurers) through a lot of lawyers.  I'd like to see how much it cost to pay for a family before the current system of health insurance, the ACA, and Medicare/Medicaid.  I have yet to see a good study on this.  I've seen an old hospital bill for delivery and maternity care that amounted to about $500 in today's dollars. 

Part of the problem is that the consumer of health care is given 'information' from the press and the bureaucracy that is really just shilling for policies they want enacted.  What's in their interests is not necessarily in mine.   Regardless, I think the answer is local solutions to problems.  Some states could try things one way and other states another way.  Costs are vastly different in different states, for example, because of different malpractice limitations. 



maizeman

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #17 on: July 16, 2017, 02:15:44 PM »
Good question.  I don't know the answer.  Say your living costs are 30% of your budget, taxes are already 15-30% for most people on here: we're already talking about 45-60% of the money gone before we can think about healthcare.  Most people on here also want to save a lot early so they can retire early.  What's your number?

That's interesting. We apparently come at even this question from completely opposite directions. My first reaction was "well what should it actually cost to deliver care if we took all the inefficiencies out of the system" and yours was "well how much slack to people have in their budgets to pay for healthcare."

Anyway, so for my number, I looked up what the USA actually spends per person on healthcare each year (note that this is on actual healthcare services, so it doesn't include premiums paid to insurance companies, but it does count what insurance companies pay to doctors/hospitals).

In 2015, we spent ~$9,500 on healthcare for each man, woman, and child in the country or about $790/month. Now I figure there are some inefficiencies in the system that could be smoothed out, and there should be some financial benefit to using the healthcare system less than other people, so for me, my cap on what a reasonable cost of health insurance should be for an individual is $500/month or $6,000 year. As it happens, this is about $200/month more than what that same insurance calculator linked above estimates I'd pay for health insurance on the exchange with no public subsidy, so I feel like I'm getting a pretty good deal.

At the same time I can appreciate that while $500/month for one person is affordable to me (both now and in FIRE), multiplying that number by the five people in your own household starts to produce intimidatingly large numbers. Unlikely the other major costs in our budgets (housing, food, transportation), there aren't really economies of scale to living in larger households when it comes to healthcare.
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Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #18 on: July 16, 2017, 02:34:36 PM »
Great thoughts.  I like $10k as a starting point given my income, though I can see paying more for a larger family.  Still, someone further down the payscale cannot afford $10k.  The average income in the US is $40-50k.

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #19 on: July 16, 2017, 03:37:23 PM »
Okay that makes sense. But this let's us just get at the fundamental problem of healthcare in this country.

Right now the cost of providing healthcare to five average americans in an average year is $9500*5 = $47,500. Let's call this $50,000/year to make the math easier. Alternatively, using my "what seems fair to me" number above, this would be $6,000*5=$30,000/year.

You're saying that, while earning significantly more than the average household, the amount you can afford to pay for healthcare is $10,000/year.

To get from where we are now, to where you could afford to pay for healthcare for your family, we'd need to shrink the cost of providing care by between 65-80%. Put another way, that means eliminating between two out of every three dollars currently spent on healthcare and four out of every five dollars spent on healthcare. That's going to be hard.

In 2015, we spent $3.2 trillion dollars on healthcare. To cut the cost of healthcare for five people from $50,000 to $10,00, we'd need to reduce healthcare spending to $640 billion/year.

Let's say we're going to cut out all the price gouging by the insurance industry, pharmacies, and hospitals. Depending on the subsector, healthcare companies make between 1-7% profits per year.* If we take the highest end of that range, that means we've gone from $3.2 trillion to $2.98 trillion.

What about drug companies? Drug companies made $515 billion in revenue in the United States and Canada (I couldn't find US only numbers) and make 20% profit margins overall. So if we cut their profit margins to zero, that's another $103B in savings. Now we're down to $2.88 trillion.

What else? Malpractice insurance. This apparently costs 2.4% of total healthcare spending (both for premiums and also unnecessary tests ordered by doctors to avoid legal entanglements). Let's eliminate malpractice liability entirely, that's another $76 billion saved: $2.80 trillion.

Oh right, and what about the administrative overhead of billing and negotiating with insurance companies? It turns out this is a big one, about $471 billion gets spent every year just on this stuff which has nothing to do with actually providing care.** If we zero this out entirely (which is optimistic, but realistically this spending is only 20% as much in systems like canada's public healthcare system or medicare in the USA) we're down to $2.33 trillion.

We've taken on all the traditional villains of the high cost of health insurance, and we've reduced the cost of health care by nearly a third, which is pretty darn good, and would put the US more in the neighborhood of switzerland or norway in terms of per-capita healthcare spending. However that means the cost of healthcare for a family of five would be around $34,600 (Assuming we started at $9,500/person). To get the cost of healthcare down to $10,000 for a family of five, we've still got to find another $1,700 billion in cuts to make and I'm not sure what those would be without reducing the quality of healthcare or rationing healthcare.

I guess my point is just that healthcare is ridiculously expensive, and even tackling all the traditional villains of healthcare costs don't get it down to prices that feel affordable.

*Source:


**https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4283267/
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Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #20 on: July 16, 2017, 08:11:20 PM »
Great post.  Finally someone trying to do back of the envelope calculations. 

I meant, "I'd like to pay no more than  $10-15k per year for my family counting premiums and deductibles."

I don't know if you can eliminate drug company profits and still incentivize drug R&D.  I think a large part of what we pay for drugs is the cost of getting drugs through FDA trials, which needs to be greatly reduced.  The effectiveness of many drugs is also questionable versus the alternatives.  A good example is SSRIs for anxiety and depression versus cognitive behavioral therapy and other drug-free remedies.  Doctors seem to love prescribing drugs.  They tell me that's because patients want them rather than to change their behavior or mindset.  Some of these really expensive drugs are so expensive because few people need them and the drug companies need to recoup their R&D costs.  I do R&D in another industry and can say taking away the profit incentive will lead to less R&D, though much is controlled by large shareholders (financiers) who skim off the profits anyway.  STEM in this country is pretty broken. 

The insurance companies use lawyers to prevent hospitals from charging whatever they want and cover catastrophe through risk-pooling.  Legislation could take away the incentives for people to buy insurance and thus put the insurance companies out of business slowly.  Congress could pass a law that requires hospitals to charge the same amount to the uninsured as they do the insured so there are no more 'negotiated rates'.  This would probably help people with chronic illnesses as well.  There are organizations besides insurance companies that can provide the service of risk pooling.  Some sort of cost-effective patient billing advocacy group could be made legal that allows patients some recourse for dealing with the hospitals over questionable charges, drive-by medicine, and other shady practices.  The point is, a lot of money can be found simply by eliminating the overhead insurance creates. 

Medicare and Medicaid could probably be turned into public options for everyone.  Those on Medicare seem to pay almost nothing for insurance, which is ridiculous given their end-of-life costs.  End-of-life seems to be when most people start to take the most drugs too.  My grandparents are on an entire toolbox of pills now that they're in their '90s. 
 

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #21 on: July 16, 2017, 09:56:25 PM »
Instead of trying to calculate this from the fundamentals, we could also take a look around and see how every other developed nation on earth has solved this problems, just to get some ideas. I didn't keep the analysis I quickly did a month or two ago, but looking at the data available on wikipedia (https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita), it is easy to see that we spend far more than everyone else on healthcare per capita, and we don't cover everyone as all other countries do. We also don't get the same results for all that spending (https://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy shows we just are above Cuba for life expectancy).

In fact, because so many people are not covered, I think the spending-per-capita numbers are misleading for the US. More telling is spending on healthcare as a percentage of GDP
Quote
U.S. also spends 17.9% GDP per year on healthcare, more than double the nearest developed nations expenditure.
https://en.wikipedia.org/wiki/Health_systems_by_country

I think the better way of looking at it is to pretend we can do away with our current system and start a new system from scratch. Take an average of a few similarly rich and developed countries, and see what they spend on healthcare as a percentage of GDP. For example, Australia and New Zealand spend just under 9% of GDP on healthcare. If we instead spent 9% on healthcare instead of 17.9%, I have magically just saved you 50% while simultaneously covering more people and providing better health outcomes. That seems like magic until you realize that everyone else is already doing it.
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Re: When's MMM going to update his thoughts on the ACA?
« Reply #22 on: July 16, 2017, 10:02:53 PM »
There is some argument that the US subsidies the rest of the world by paying a majority of the costs of developing new drugs.  We pay much more than other countries - if we stopped that practice either other countries would face higher prices or some drug development would cease due to reduced profitability.

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #23 on: July 16, 2017, 10:19:08 PM »
I can buy that there is some truth to that, but I can't believe that drug prices in the US account for 50% of our healthcare spending as compared to all other developed nations.

Simply put, I think a big part of why we pay more is because we are the only ones who don't set price controls. The market will charge what the market will bear, and in our country we let it bear whatever people can afford up until the point they go broke and/or die.
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Re: When's MMM going to update his thoughts on the ACA?
« Reply #24 on: July 16, 2017, 10:31:00 PM »
I guess my point is just that healthcare is ridiculously expensive, and even tackling all the traditional villains of healthcare costs don't get it down to prices that feel affordable.

I think you're missing the two biggest source of cost overruns in the American system. 

1.  The facilities themselves.  Why does every American hospital have a saltwater fish tank and a coffee bar?  European hospitals are significantly more utilitarian than American ones.  I'm there for surgery, not a luxury vacation.  I don't care how new the carpet in the lobby is.

2.  The excessive levels of care American hospitals provide.  I don't only mean rationing care to be more cost effective the way many systems do, I mean why does every sprained ankle in American require an MRI?  We do way too many CAT scans and redundant blood tests and no you don't really need three anaesthesiologists present in every OR.  Other nations provide care more cheaply because they are better at only providing the care that is needed.  The American for-profit system makes money by providing (and then charging for) more care than is medically suggested. 

I doubt those two would take us quite far enough to meet Lance's somewhat optimistic targets.  Are there ANY countries that provide care as cheaply as $2000 per person per year (which is what he wants) when measured as actual costs of care, instead of costs to the patients?  My personal annual care costs are certainly well below that, but I don't have cancer.  All it takes is a very few sick people who cost millions per year to wildly swing the average, so I don't see how to provide care that cheaply without just refusing to treat anyone who requires expensive care.
« Last Edit: July 16, 2017, 10:32:50 PM by sol »

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #25 on: July 16, 2017, 11:42:25 PM »
Thanks for the interesting and civil discourse on this topic.

I recently asked my sister (a family practice physician) about costs and the two big ones in her mind were:

1.  Defensive medicine.  This is alluded to by Sol's post above (I think) and in maizeman's post also.  These are the MRIs and CAT scans and blood tests and strep tests that are run because the doctors can't just make the judgment call any more; they have to make sure that if they get sued they did everything that could possibly (in retrospect) have mattered.  Not to disrespect maizeman's numbers, but it sure seems to my sister and me that it is more than 2.4% / $76B.

2.  End of life care.  A lot of money is spent trying to give grandma another few months.  A lot of interventions are tried that help a small percent but more often than not do nothing but give the family and the patient some hope along with more time in the hospital getting poked, prodded, tested, operated on, etc.  American doctors tend to try to exhaust all options to "do something".  Because these high costs are socialized through insurance and there are those stories of the one grandma who was truly helped, it is understandable why we do this.

I will add that to me, an additional factor is American's bad diet and exercise habits.  Go to anywhere in China, Japan, or Europe and you'll notice that most people are thinner.  Come back to American and you'll notice that we're almost all overweight, especially anyone over about the age of 35 or 40.  We're also driving our big trucks and SUVs around, even for 2 mile trips, and we're stopping at Wendy's and drinking a large soda of like 900 calories.  I think this is a large part of how other countries can spend less and live longer - the cost of obesity-related diseases is quite high - diabetes, heart attacks, strokes, etc.

(*) Of course by we I mean most of the people I see when I'm out and about, my high school classmates, and my friends and family.  Obviously some of us are fit, ride bikes, and are doing yoga in our 50s.  But the former outweigh (ha!) the latter when I look around.
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Re: When's MMM going to update his thoughts on the ACA?
« Reply #26 on: July 17, 2017, 05:00:16 AM »
Thanks for the interesting and civil discourse on this topic.

I recently asked my sister (a family practice physician) about costs and the two big ones in her mind were:

1.  Defensive medicine.  This is alluded to by Sol's post above (I think) and in maizeman's post also.  These are the MRIs and CAT scans and blood tests and strep tests that are run because the doctors can't just make the judgment call any more; they have to make sure that if they get sued they did everything that could possibly (in retrospect) have mattered.  Not to disrespect maizeman's numbers, but it sure seems to my sister and me that it is more than 2.4% / $76B.

2.  End of life care.  A lot of money is spent trying to give grandma another few months.  A lot of interventions are tried that help a small percent but more often than not do nothing but give the family and the patient some hope along with more time in the hospital getting poked, prodded, tested, operated on, etc.  American doctors tend to try to exhaust all options to "do something".  Because these high costs are socialized through insurance and there are those stories of the one grandma who was truly helped, it is understandable why we do this.

I will add that to me, an additional factor is American's bad diet and exercise habits.  Go to anywhere in China, Japan, or Europe and you'll notice that most people are thinner.  Come back to American and you'll notice that we're almost all overweight, especially anyone over about the age of 35 or 40.  We're also driving our big trucks and SUVs around, even for 2 mile trips, and we're stopping at Wendy's and drinking a large soda of like 900 calories.  I think this is a large part of how other countries can spend less and live longer - the cost of obesity-related diseases is quite high - diabetes, heart attacks, strokes, etc.

(*) Of course by we I mean most of the people I see when I'm out and about, my high school classmates, and my friends and family.  Obviously some of us are fit, ride bikes, and are doing yoga in our 50s.  But the former outweigh (ha!) the latter when I look around.

I'll just respond to the first point you bring up.  The issue we have in this country is the fact that there are no limits on the doctors' liability.  Medical tort reform is a prerequisite for any meaningful healthcare reform in this country.  There needs to be a system where patients are compensated in the event of true medical malpractice but damage awards need to be limited and clearly defined.  Without that every doctor practices defensive medicine and pays an arm and a leg in malpractice insurance premiums.  And the lawyers make a killing.  We need to lessen the burden of medical lawsuits on the system.  I am a lawyer, BTW :-)



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Re: When's MMM going to update his thoughts on the ACA?
« Reply #27 on: July 17, 2017, 06:31:07 AM »
I guess my point is just that healthcare is ridiculously expensive, and even tackling all the traditional villains of healthcare costs don't get it down to prices that feel affordable.

I think you're missing the two biggest source of cost overruns in the American system. 

1.  The facilities themselves.  Why does every American hospital have a saltwater fish tank and a coffee bar?  European hospitals are significantly more utilitarian than American ones.  I'm there for surgery, not a luxury vacation.  I don't care how new the carpet in the lobby is.

2.  The excessive levels of care American hospitals provide.  I don't only mean rationing care to be more cost effective the way many systems do, I mean why does every sprained ankle in American require an MRI?  We do way too many CAT scans and redundant blood tests and no you don't really need three anaesthesiologists present in every OR.  Other nations provide care more cheaply because they are better at only providing the care that is needed.  The American for-profit system makes money by providing (and then charging for) more care than is medically suggested. 

I doubt those two would take us quite far enough to meet Lance's somewhat optimistic targets.  Are there ANY countries that provide care as cheaply as $2000 per person per year (which is what he wants) when measured as actual costs of care, instead of costs to the patients?  My personal annual care costs are certainly well below that, but I don't have cancer.  All it takes is a very few sick people who cost millions per year to wildly swing the average, so I don't see how to provide care that cheaply without just refusing to treat anyone who requires expensive care.

Thanks sol! #1 had not even occurred to me. I'm not sure how to turn "spend less on fancy looking hospitals" into a number, I'll have to think about that one. I don't disagree with #2, but I do think any attempt to address this problem would start people shouting that we were trying to ration healthcare (even though it wouldn't actually reduce the quality of care).

Constraining ourselves to the developed world* I couldn't find any countries that spend only $2,000 per capita on healthcare. Compared to other countries one might guess we spend between 1/4-1/2 more on healthcare than we need to in order to provide quality care. But even if we address all that, healthcare is still going to cost a lot of money, whether it's paid for individually or at the government level.

*It's a lot easier to provide cheap high quality healthcare if doctors earn $6,000/year.
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maizeman

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #28 on: July 17, 2017, 06:42:48 AM »
1.  Defensive medicine.  This is alluded to by Sol's post above (I think) and in maizeman's post also.  These are the MRIs and CAT scans and blood tests and strep tests that are run because the doctors can't just make the judgment call any more; they have to make sure that if they get sued they did everything that could possibly (in retrospect) have mattered.  Not to disrespect maizeman's numbers, but it sure seems to my sister and me that it is more than 2.4% / $76B.

No offense taken. Here's the source I used for that number. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3048809/ (Note that I used their percentage. Their actual dollar value is much lower than the one I came up with because the study is from 2010 and uses data from 2008). I found another estimate that put the total cost of defensive medicine plus malpractice insurance at 10% of total healthcare spending but it was from 1996 and extrapolating only from treatment of heart conditions.

To put either number in some context, there are about 800k MDs in the US. So $76B is about $100,000 per doctor per year in combined malpractice insurance and tests or treatments ordered by not medically necessary. If the 10% number is correct, that means each MD is responsible for $400,000/year in malpractice insurance and treatments/tests which are not medically justified.
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maizeman

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #29 on: July 17, 2017, 06:59:02 AM »
I think the better way of looking at it is to pretend we can do away with our current system and start a new system from scratch. Take an average of a few similarly rich and developed countries, and see what they spend on healthcare as a percentage of GDP. For example, Australia and New Zealand spend just under 9% of GDP on healthcare. If we instead spent 9% on healthcare instead of 17.9%, I have magically just saved you 50% while simultaneously covering more people and providing better health outcomes. That seems like magic until you realize that everyone else is already doing it.

Hi, ysette. I don't disagree with your numbers at all. The downside of this approach is that it doesn't tell us what changes we would need to make as we start our brand new healthcare system in order to get our per capital healthcare spending down to a percentage that's more in line with other developed nations. Some folks will argue the problem is that we don't have a single payer healthcare system, others that we have too much government regulation, and still others that the problem is americans don't walk enough compared to the residents of other countries. My personal pet idea about a thing that is wrong with the american healthcare system is that we pay doctors way too much compared to other developed nations (partially we have to do this because we've also made the training to become an MD take way longer and cost much more than it does most other places in the world).

Without digging a little further into the numbers, there's no way to prove or disprove any of those four potential explanations or half a dozen other ones for why America spends so much more on healthcare than other countries without better outcomes than other countries which leads to a very unsatisfying discussion (at least for me).
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jlcnuke

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #30 on: July 17, 2017, 07:35:23 AM »
The ACA is easy to take advantage of by controlling your MAGI which is easy for a FIREee.  It is definitely is NOT a foe for FIRE.  200% FPL is a sweet spot for Silver's with cost sharing reductions.  The other sweet spot is <138%.

How?  Do the deductibles suddenly drop at these income levels?  The calculator gave me an enormous deductible for my family at 2 different income levels.  I would've hit those deductibles 3 out of the last 5 years since we've had babies and my son broke his arm and needed orthopedic surgery.

Yes, there are people who hit their out of pocket max and/or deductible limits every year. There are also lots of people that don't even see a doctor in any given year and thus pay absolutely nothing outside of their premiums in a given year. I've looked and have been unable to find any statistics on what percentage of insured reach their deductible and/or out of pocket max. If I relied on my workplace insurance only, I'd hit mine every year before April. Other friends/coworkers wouldn't have reached theirs so far in their lifetime. If 50% are hitting their OOP max or deductible each year, then discussing health care costs assuming 1/2 that amount is included above and beyond the premiums would make sense. If it's only 5%, then maybe that isn't the most logical way of discussing the costs. If anyone can find what percent of the insured reach their deductible or OOP max each year, I'd be very interested in knowing that.
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Re: When's MMM going to update his thoughts on the ACA?
« Reply #31 on: July 17, 2017, 06:04:43 PM »
On the topic of "things that are wrong with the American healthcare system," another problem I'd nominate is our cockeyed fee-for-service paradigm, where doctors and hospitals bill (and insurers pay) based on how many tests they order and how many procedures they perform. Under this system, providers have a profit incentive to be as wasteful and inefficient as possible, and outright fraud is much easier to get away with.

Regardless of who's paying, what we should be demanding is "fee-for-outcome," where health care providers get paid for correctly diagnosing and fixing the problem. That will align market forces in the right way to get costs down. The ACA did a little to move us in this direction, but not nearly enough.

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #32 on: July 17, 2017, 08:01:39 PM »
I guess my point is just that healthcare is ridiculously expensive, and even tackling all the traditional villains of healthcare costs don't get it down to prices that feel affordable.

I think you're missing the two biggest source of cost overruns in the American system. 

1.  The facilities themselves.  Why does every American hospital have a saltwater fish tank and a coffee bar?  European hospitals are significantly more utilitarian than American ones.  I'm there for surgery, not a luxury vacation.  I don't care how new the carpet in the lobby is.

American patients seem to want this not knowing how much it ends up costing them.  They turn maternity wards, for example, into luxury hotel rooms.  Women rave about it to their friends.  It attracts customers.  You have to fix Americans' mindset first.

Quote
I doubt those two would take us quite far enough to meet Lance's somewhat optimistic targets.  Are there ANY countries that provide care as cheaply as $2000 per person per year (which is what he wants) when measured as actual costs of care, instead of costs to the patients?  My personal annual care costs are certainly well below that, but I don't have cancer.  All it takes is a very few sick people who cost millions per year to wildly swing the average, so I don't see how to provide care that cheaply without just refusing to treat anyone who requires expensive care.

There are, but not in the first world.  Singapore spends $4k per capita per year.  If they can't get the costs down any lower for first-rate care, no one can.  This, incidentally, is something I'm willing to pay if I can get some sort of tax credit.
https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #33 on: July 17, 2017, 08:04:13 PM »
On the topic of "things that are wrong with the American healthcare system," another problem I'd nominate is our cockeyed fee-for-service paradigm, where doctors and hospitals bill (and insurers pay) based on how many tests they order and how many procedures they perform. Under this system, providers have a profit incentive to be as wasteful and inefficient as possible, and outright fraud is much easier to get away with.

Regardless of who's paying, what we should be demanding is "fee-for-outcome," where health care providers get paid for correctly diagnosing and fixing the problem. That will align market forces in the right way to get costs down. The ACA did a little to move us in this direction, but not nearly enough.

Great idea.  This might finally push diagnosis towards automation.  Someone was telling me software can do it better.  I don't know if this is true, but I have a chronic pain condition and very few doctors knew what to do about it being behind about 20 years on pain science.  It's a lot easier to update a diagnosis program and distribute it than update doctors' professional knowledge.

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #34 on: July 17, 2017, 08:07:03 PM »
Quote
2.  End of life care.  A lot of money is spent trying to give grandma another few months.  A lot of interventions are tried that help a small percent but more often than not do nothing but give the family and the patient some hope along with more time in the hospital getting poked, prodded, tested, operated on, etc.  American doctors tend to try to exhaust all options to "do something".  Because these high costs are socialized through insurance and there are those stories of the one grandma who was truly helped, it is understandable why we do this.

A lot of this has to do with Medicare re-imbursements. Hospitals seem to love Medicare patients because they know they're going to be paid by Uncle Sam.  This incentivizes hospitals to provide a lot of services Medicare patients demand, like end-of-life care.  Sounds like care will have to be cut back in this area which would be greatly helped by limiting malpractice liability.

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #35 on: July 17, 2017, 08:08:58 PM »
Computers are already better than trained dermatologists at diagnosing skin cancer.

Nature link (seems to currently be down for maintenance): https://www.nature.com/nature/journal/v542/n7639/full/nature21056.html

Popular press article (since first link is broken as I post this): http://news.stanford.edu/2017/01/25/artificial-intelligence-used-identify-skin-cancer/
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Re: When's MMM going to update his thoughts on the ACA?
« Reply #36 on: July 17, 2017, 09:23:10 PM »
I decided to move DAA's, Maize's and my discussion over here:
Quote from: Lance Burkhart on July 16, 2017, 08:28:57 PM
Quote
Quote
Me: In summary, Medicare is a $600 billion entitlement that covers only 17% of the population.  Multiplying $600 billion by 5 gives you the back-of-the-envelope cost of insuring everyone ($3 trillion).  The IRS took in only $3 trillion last year, didn't it? The cost of providing single payer to just California was estimated to be $400 billion (our legislature is trying to figure out how to pay for this).  We have roughly 40 million people or 12.5 % of the population.


I agree the cost of health care has to come down. I also don't think you can extrapolate the cost of 65 and older population to what the healthcare costs are going to be for those younger than that. Younger are going to have considerably lower health care costs on average. Many younger won't have any health care needs for years or decades. In fact you could probably just double the current cost of Medicare to cover the other 75% of people.

That's actually pretty good considering that we spend $3.2 trillion a year on giving most (but not everyone) healthcare right now. And as DAA points out, taking care of folks on Medicare is going to be significantly more expensive per head than younger healthier people

I am not optimistic about this. Singapore spends $4k per person per year on medical care.  They have a completely nationalized system AFAIK.  Their median age is 37.3 years.  Ours is 37.8 years and we spend roughly $12k/year on our Medicare patients.  So we're (publicly) spending 250 to 300% of what they're spending despite similar age profiles.  At current rates of health expenditure, we'd have to double tax revenues to scale Medicare out into a completely-nationalized system.  I'm sorry, but I don't see this happening.  The US (American voters, Congress, the bureaucracy) takes a 'drunken sailor' approach to spending public money, just like they do private money. 

We spend $3 trillion on health care in total in this country, making it really a wash whether we have a completely nationalized system or a private system.  Should Medicare figure out how to spend money more efficiently, my opinion will change.  Singapore is a city-state run by a benevolent dictatorship of hyper-competent software engineers.  The United States isn't. 

bender

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #37 on: July 17, 2017, 09:37:54 PM »
Wow the Singapore system seems really good:
https://www.google.com/amp/s/www.vox.com/platform/amp/policy-and-politics/2017/4/25/15356118/singapore-health-care-system-explained

They focused on keeping costs down, forcing people to save for and pay for their own medical care, and the insurance problem basically solved itself.  US is too focused on finding a way to pay for care that is far too inefficient, wasteful and expensive.

maizeman

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #38 on: July 17, 2017, 10:05:47 PM »
Lance, I don't think it's a fair to compare singapore's spending per person averaged across their entire population (including lots of young healthy folks) to what we spend per person specifically on folks over 65.

An estimate I found suggested 1/4 of all medicare spending goes to folks in the last year of their lives. At 65, the average man has about 18 years left to live and the average woman 21 years. Let's call it 20 to make the math easy. If 1/20 of the medicare population is using 1/4th of all all the spending on medicare and the average spending per person on medicare is $12k, with a bit if algebra -- I really really thought I'd never have to use algebra again after HS -- it looks like the annual cost of care for people in their last year of life is ~$103,000/year, and the cost per year for everyone else on medicare is $7,200, which is significantly lower than our overall per person spending on healthcare in this country (~$9,500) despite medicare enrollees still being statistically in much worse health than the average 20-40 year old.

Here's another way of looking at the same data.



(Be careful about looking at the absolute numbers, as this data is from sometime before 2009). The rise of healthcare costs with age looks an awful lot like a the mortality curve, which is consistent with the last year of life being extraordinarily expensive for healthcare).

What I hope this graph illustrates is that using data on how much healthcare costs per person for over 65s to estimate the cost of healthcare for folks under 50 is going to produce extremely misleading results.
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Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #39 on: July 17, 2017, 10:50:29 PM »
The graph isn't showing.  Another way to estimate what it would cost if EVERYONE were covered by Medicare is to find out how much other countries with socialized care spend on their <65 population then normalize to our population size and age profile.  Singapore would, again, be the gold standard.  If someone can find the data I'm willing to do the BOTEC*. 

Bear in mind also that Singapore has a highly productive, rich population.  If anyone else is willing to touch the third rail with me, they are, on average, almost one SD smarter as well.  Taiwan is pretty similar. 

*BOTEC: back-of-the-envelope calculation. 

Lance Burkhart

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #40 on: July 17, 2017, 10:55:41 PM »
Quote
What I hope this graph illustrates is that using data on how much healthcare costs per person for over 65s to estimate the cost of healthcare for folks under 50 is going to produce extremely misleading results.

I agree but I arrived at the same per capita health care spending by taking the estimate to implement a single-payer system in California.  The math is on the other thread.  Basically, they estimated $400 billion for a population of 40 million which is about 12.5% of the US population.  I don't know the methodology used for the estimate.  Two different ways of estimating; remarkably similar results (3 trillion vs. 3.2 trillion). 

Another way of estimating is outlined above. 

Either way, you can't just start giving people free stuff.  Singapore's system incentivizes work and savings.   

runewell

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #41 on: July 18, 2017, 07:02:39 AM »
I was looking at MMM's 2016 spending and couldn't help but notice that his medical spending under the ACA has skyrocketed. 
http://www.mrmoneymustache.com/2017/05/19/2016-spending/

It skyrocketed because:
1) his son broke his arm, and
2) he stopped getting a government subsidy. 

So all that really happened under the ACA here is that the government temporarily gave him some money, and the moment that money is taken away it is labeled as government causing spending increases.  That doesn't mean that the actual cost of the insurance skyrocketed during that time. 
Please leave Dicey out of this! Have you not been paying any attention? Trolls are not welcome here!

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #42 on: July 18, 2017, 08:34:53 AM »
I've seen an old hospital bill for delivery and maternity care that amounted to about $500 in today's dollars.

I had my children in the early 1980s and never had a single ultrasound.  My kids and their friends are of childbearing age now, and it seems that every single mother I hear of has multiple tests, including many ultrasounds, even for low-risk pregnancies of healthy young mothers.  My parents were born under even more bare-bones circumstances - both were born at home with the assistance of midwives.  I don't think we need to go back to that system for the most part, but the excessive intervention that goes on today jacks up the cost of having a baby quite a lot.  Before my husband retired, he was an x-ray tech.  He had lots of stories about doing x-rays on people after they'd already had more advanced tests, such as MRI.  It seems the doctors order x-rays no matter what ... cheap and easy money for the hospital.  It goes on and on.  Hospitals are not cost conscious about excessive procedures and testing because they don't have to be.  They just bill the insurance.  In the meantime, the CEO of the hospital where my husband worked made millions (it was just a small community hospital), while the employees would get letters signed by him saying they couldn't have raises because the hospital was losing money due to the ACA.  Such a racket.  This is what you get with a for-profit healthcare system.

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ysette9

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #44 on: July 22, 2017, 07:44:18 AM »
Back on the question of what exactly we need to do to fix our system.

I don't have a complete list of Dos and Don'ts, but found this study interesting.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC64512/

Quote
Conclusions
The widely held beliefs that the NHS is efficient and that poor performance in certain areas is largely explained by underinvestment are not supported by this analysis. Kaiser achieved better performance at roughly the same cost as the NHS because of integration throughout the system, efficient management of hospital use, the benefits of competition, and greater investment in information technology.

In short, we already have the answer in-house. It is simplistic to say kaiser for everyone", but it looks like that model is an example of something that will get us what we are looking for with prices that are on-par with a very comparable country with very average healthcare spending as compared to other non-US rich countries.
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Re: When's MMM going to update his thoughts on the ACA?
« Reply #45 on: July 22, 2017, 12:30:11 PM »
Some great discussions here on curtailing cost and I don't want to add or detract from it too much or impose any political views.  One line item addressed here has been rationing care and I would like to elaborate on it a bit. I think most of us will agree that in a society we should be able to provide basic medical care for every individual. What does basic medical care actually mean?  Does it mean the bare minimum or does it mean luxurious hospital suits, and expensive testing? Does it mean zero wait times? If a drug company comes out with a new cholesterol lowering drug that works 10% better at decreasing heart disease but costs $80/month as opposed to the $4 generic medication which medication do we use? If a surgeon can remove your gallbladder using the traditional laparoscopic technique vs using the much more expensive da Vinci robot which technique do we use?  I can go on and on with todays examples.

Patients in the US expect the utilization of the latest and greatest technology and medication when they see their doctor. If someone has a joint problem or a back problem patients expect an MRI. If a new medication is released that may be slightly better than the alternative, patients want the new medication even if it cost 20 times more than the generic alternative.  Our population is demanding the more expensive treatments and we are all paying for it. This process is exacerbated by government regulations. Patients receive satisfaction surveys and the higher the survey results the more money a hospital gets reimbursed by CMS. Studies show that patients will provide higher survey results when more testing is done because they think the doctor did everything possible to diagnose them.

I will leave you all with one straw man fake example. Lets say I invented a process that takes your DNA and your specific biomarkers which I use to develop a virus that can decrease the decay of brain tissue.  In effect as you age you will not have a decrease in cognitive function and this drug will halt progression of dementia. In essence if you take this medication once a year your mind will stay as sharp as it is forever. Here is the thing this medication is so specific to each person that treatment comes out to $50k/person/year. Do we give this medication to everyone or does this not qualify as basic medical care?  Obviously an extreme and ridiculous example, but I think it proves a point that we must be able to decide what is basic medical services and then as a society have a way to make it affordable to every person. 

Anything outside of basic medical care should be considered a luxury that can be purchased directly by those with the means to afford it. Is that fair?

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #46 on: July 22, 2017, 01:29:02 PM »
Back on the question of what exactly we need to do to fix our system.

I don't have a complete list of Dos and Don'ts, but found this study interesting.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC64512/

Quote
Conclusions
The widely held beliefs that the NHS is efficient and that poor performance in certain areas is largely explained by underinvestment are not supported by this analysis. Kaiser achieved better performance at roughly the same cost as the NHS because of integration throughout the system, efficient management of hospital use, the benefits of competition, and greater investment in information technology.

In short, we already have the answer in-house. It is simplistic to say kaiser for everyone", but it looks like that model is an example of something that will get us what we are looking for with prices that are on-par with a very comparable country with very average healthcare spending as compared to other non-US rich countries.

Thanks.  I did a lot of reading on the NHS in the last several days.  You see the flip-side of the arguments we make about health insurance here.  In their public system, they still complain about lack of funding though funding has grown steadily since WWII.  Some of the commenters in these articles said they could spend their entire GDP on the NHS.  Some say more private options are needed.  The government also has to make judgment calls on end-of-life care, how much care they will give for a given condition.  Patients lose a lot of control   Single payer will not magically solve the problem.  It depends on the type of system and the people asking for care.  Search "NHS funding" in DuckDuckGo and read the articles and comments.

I worked for the federal government for 18 months and what I saw truly horrified me.  Employees mostly had nothing to do but managers were always trying to hire more.  There are now 21 million federal employees.  Almost 1 in 13 people in this country is a federal employee who is not employable in the private sector.  When I left a manager told me he could fire 80% of his employees and suffer no loss of productivity.  Of course, it's almost impossible to fire a federal employee.  These are the types of people I'm worried about giving more control of my health to. 


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Re: When's MMM going to update his thoughts on the ACA?
« Reply #47 on: July 22, 2017, 01:31:41 PM »
Some great discussions here on curtailing cost and I don't want to add or detract from it too much or impose any political views.  One line item addressed here has been rationing care and I would like to elaborate on it a bit. I think most of us will agree that in a society we should be able to provide basic medical care for every individual. What does basic medical care actually mean?  Does it mean the bare minimum or does it mean luxurious hospital suits, and expensive testing? Does it mean zero wait times? If a drug company comes out with a new cholesterol lowering drug that works 10% better at decreasing heart disease but costs $80/month as opposed to the $4 generic medication which medication do we use? If a surgeon can remove your gallbladder using the traditional laparoscopic technique vs using the much more expensive da Vinci robot which technique do we use?  I can go on and on with todays examples.

Patients in the US expect the utilization of the latest and greatest technology and medication when they see their doctor. If someone has a joint problem or a back problem patients expect an MRI. If a new medication is released that may be slightly better than the alternative, patients want the new medication even if it cost 20 times more than the generic alternative.  Our population is demanding the more expensive treatments and we are all paying for it. This process is exacerbated by government regulations. Patients receive satisfaction surveys and the higher the survey results the more money a hospital gets reimbursed by CMS. Studies show that patients will provide higher survey results when more testing is done because they think the doctor did everything possible to diagnose them.

I will leave you all with one straw man fake example. Lets say I invented a process that takes your DNA and your specific biomarkers which I use to develop a virus that can decrease the decay of brain tissue.  In effect as you age you will not have a decrease in cognitive function and this drug will halt progression of dementia. In essence if you take this medication once a year your mind will stay as sharp as it is forever. Here is the thing this medication is so specific to each person that treatment comes out to $50k/person/year. Do we give this medication to everyone or does this not qualify as basic medical care?  Obviously an extreme and ridiculous example, but I think it proves a point that we must be able to decide what is basic medical services and then as a society have a way to make it affordable to every person. 

Anything outside of basic medical care should be considered a luxury that can be purchased directly by those with the means to afford it. Is that fair?

Great points.  Sounds fair to me. 

I would also like to discuss the cost-shifting that seems to go on at hospitals.  Am I seeing a bill only for the services I've received, or am I also being charged for other people who ducked their bills? 

A lot of people are complaining about the costs of care in the form of provider profits and health insurance profits.  The profits are only the tip of the iceberg.  The iceberg itself are the costs passed onto the consumer.  As long as these costs continue to rise and providers and health insurance companies can keep passing them onto the consumer, we'll be stuck in this positive feedback loop of rising costs.  Some of these costs have been mentioned on this thread. 
« Last Edit: July 22, 2017, 01:36:01 PM by Lance Burkhart »

EnjoyIt

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #48 on: July 22, 2017, 02:53:41 PM »
Some great discussions here on curtailing cost and I don't want to add or detract from it too much or impose any political views.  One line item addressed here has been rationing care and I would like to elaborate on it a bit. I think most of us will agree that in a society we should be able to provide basic medical care for every individual. What does basic medical care actually mean?  Does it mean the bare minimum or does it mean luxurious hospital suits, and expensive testing? Does it mean zero wait times? If a drug company comes out with a new cholesterol lowering drug that works 10% better at decreasing heart disease but costs $80/month as opposed to the $4 generic medication which medication do we use? If a surgeon can remove your gallbladder using the traditional laparoscopic technique vs using the much more expensive da Vinci robot which technique do we use?  I can go on and on with todays examples.

Patients in the US expect the utilization of the latest and greatest technology and medication when they see their doctor. If someone has a joint problem or a back problem patients expect an MRI. If a new medication is released that may be slightly better than the alternative, patients want the new medication even if it cost 20 times more than the generic alternative.  Our population is demanding the more expensive treatments and we are all paying for it. This process is exacerbated by government regulations. Patients receive satisfaction surveys and the higher the survey results the more money a hospital gets reimbursed by CMS. Studies show that patients will provide higher survey results when more testing is done because they think the doctor did everything possible to diagnose them.

I will leave you all with one straw man fake example. Lets say I invented a process that takes your DNA and your specific biomarkers which I use to develop a virus that can decrease the decay of brain tissue.  In effect as you age you will not have a decrease in cognitive function and this drug will halt progression of dementia. In essence if you take this medication once a year your mind will stay as sharp as it is forever. Here is the thing this medication is so specific to each person that treatment comes out to $50k/person/year. Do we give this medication to everyone or does this not qualify as basic medical care?  Obviously an extreme and ridiculous example, but I think it proves a point that we must be able to decide what is basic medical services and then as a society have a way to make it affordable to every person. 

Anything outside of basic medical care should be considered a luxury that can be purchased directly by those with the means to afford it. Is that fair?

Great points.  Sounds fair to me. 

I would also like to discuss the cost-shifting that seems to go on at hospitals.  Am I seeing a bill only for the services I've received, or am I also being charged for other people who ducked their bills? 

A lot of people are complaining about the costs of care in the form of provider profits and health insurance profits.  The profits are only the tip of the iceberg.  The iceberg itself are the costs passed onto the consumer.  As long as these costs continue to rise and providers and health insurance companies can keep passing them onto the consumer, we'll be stuck in this positive feedback loop of rising costs.  Some of these costs have been mentioned on this thread.

Yes, those costs are passed onto you through higher prices.  Although Medicare says their overheads is only 7%, it doesn't reflect all the bureaucracy seen at the patient care level. It takes a whole team of people to do all the charting, coding, billing, fighting denial of claims, complying with computer regulations, complying with some really crazy credentialing regulations, etc.  BTW, everything I just listed provides no value to patient care but the cost is paid by somebody.

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Re: When's MMM going to update his thoughts on the ACA?
« Reply #49 on: July 22, 2017, 03:22:20 PM »
Back on the question of what exactly we need to do to fix our system.

I don't have a complete list of Dos and Don'ts, but found this study interesting.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC64512/

Quote
Conclusions
The widely held beliefs that the NHS is efficient and that poor performance in certain areas is largely explained by underinvestment are not supported by this analysis. Kaiser achieved better performance at roughly the same cost as the NHS because of integration throughout the system, efficient management of hospital use, the benefits of competition, and greater investment in information technology.

In short, we already have the answer in-house. It is simplistic to say kaiser for everyone", but it looks like that model is an example of something that will get us what we are looking for with prices that are on-par with a very comparable country with very average healthcare spending as compared to other non-US rich countries.

As I was reading this, it seemed to me that the methodology was flawed, and the I saw a linked article off to the side:
https://www.ncbi.nlm.nih.gov/pubmed/15186560
Quote:
RESULTS:
Analyses revealed four main areas in which Feachem et al's methodology was flawed. Firstly, the populations of patients served by Kaiser Permanente and by the NHS are fundamentally different. Kaiser's patients are mainly employed, significantly younger, and significantly less socially deprived and so are healthier. Feachem et al fail to adjust adequately for these factors. Secondly, Feachem et al have wrongly inflated NHS costs by omitting substantial user charges payable by Kaiser members for care, excluding the costs of marketing and administration, and deducting the surplus from Kaiser's costs while underestimating the capital charge element of the NHS budget and other costs. They also used two methods of converting currency, the currency rate and a health purchasing power parity conversion. This is double counting. Feachem et al reported that NHS costs were 10% less per head than Kaiser. Correcting for the double currency conversion gives the NHS a 40% cost advantage such that per capita costs are 1161 dollars and 1951 dollars for the NHS and Kaiser, respectively. Thirdly, Feachem et al use non-standardised data for NHS bed days from the Organisation for Economic Cooperation and Development, rather than official Department of Health bed availability and activity statistics for England. Leaving aside the non-comparability of the population and lack of standardisation of the data, the result is to inflate NHS acute bed use and underestimate the efficiency of performance by at least 10%. Similar criticisms apply to their selective use of performance measures. Finally, Feachem et al claim that Kaiser is a more integrated system than the NHS. The NHS provides health care to around 60 million people free at the point of delivery, long-term and psychiatric care, and continuing care after 100 days whereas Kaiser provides care to 6 million people, mainly employed and privately insured. Important functions, such as health protection, education and training of healthcare professionals, and research and development are not included or properly costed in Feachem et al's integrated model.

Also, this data is from 15 years ago. Although not all of Kaiser's patients are privately insured, most are. In those days, insurers could deny new coverage to those with pre-existing conditions.