Posted in Economic Issues, Free Society, Free-Market, Leadership, Liberty, Philosophy, Policy Issues, Poverty, Rule of Law, Subsidies, Uncategorized, Wealth

Why Hong Kong’s Economy Has Grown 7x Faster Than Cuba’s Since Since the 1950s – Foundation for Economic Education

By Dan Mitchell

“Communists claim that their ideology represents the downtrodden against the elite, yet the evidence from Cuba shows wretched material deprivation for most people.

In Hong Kong, by contrast, incomes have soared for all segments of the population.”

How important are key individuals in shaping the success or failure of economies? …Neil Monnery’s A Tale of Two Economies is in some sense a polemic against historical determinism, at least insofar as promoting economic reforms is concerned.It stresses the importance of two single individuals, one a great man for many, one an obscure official and political unknown to the most, in shaping the destiny of their respective countries. …Ernesto “Che” Guevara and John Cowperthwaite. …Monnery insists that both of them were “deep and original thinkers.” …The key difference between the two was perhaps that Cowperthwaite had a solid education in economics… Neither the way in which Hong Kong progressed, nor Cuba’s, were thus inevitable.

Monnery points out that Hong Kong’s success happened not because Cowperthwaite and his colleague were trying “to plant an ideological flag,” but because they were “professional pragmatists.” …Then the success of relatively libertarian arrangements in Hong Kong perpetuated itself. …Cowperthwaite tested what he knew about classical economics when he “first arrived in Hong Kong, in 1945” and “was put in charge of price control.… He soon realized the problems with attempting to set prices low enough to meet consumer needs but high enough to encourage supply, and in a dynamic environment.” He opposed subsidies that he saw as “a brazen attempt to feed at the trough of government subsidies.” …Cowperthwaite is a hero to Monnery, who emphasises his competence, and even more, his integrity.

https://fee.org/articles/why-hong-kongs-economy-has-grown-7x-faster-than-cubas-since-since-the-1950s/

Posted in Access to healthcare, Affordable Care Act (ObamaCare), Direct-Pay Medicine, Direct-Pay Practice Models, Economic Issues, Health Insurance, Healthcare financing, Individual Market, Insurance subsidies, Medicaid, Medicaid Expansion, Medical Costs, News From Washington, Patient Safety, Policy Issues, Reforming Medicaid, Subsidies, Uncategorized

Options Will Increase, Sky Will Not Fall, If ACA Ends

For example, the AMA complains that hundreds of millions would be at risk of losing “coverage.” In fact, only a net 1.7 million people gained private coverageunder ACA, after subtracting the nearly 6 million who lost it, at a shocking cost of $341 billion or $200,000 per newly insured person. Most of the claimed increased coverage came from expanding Medicaid to childless, able-bodied adults. This reduced access to services by the sickest patients, and at least 21,904 patients died on Medicaid waiting lists according to a 2018 report.

Without ACA and its unaffordable requirements, Americans would have many more options to buy affordable insurance. Instead of paying as much as a mortgage payment for “coverage” they are unlikely to use, they might join a DPC (direct primary care) practice and get preventive care and routine medical treatment for at as little as $50/month. They might buy catastrophes-only major medical insurance that ACA outlaws for persons over 30 years of age. Congress might enact Health Freedom Accounts as proposed by Rep. Chip Roy (R-Tex.) and liberalize Health Reimbursement Accounts.

https://mailchi.mp/aapsonline/aca-standing-639035?e=f50410ece3

Posted in Affordable Care Act (ObamaCare), Economic Issues, Employee Benefits, Employer Mandate, Employer-Sponsored Health Plans, Health Insurance, Individual Mandate, Large group insurance market, Medical Costs, Small group market, Subsidies, Uncategorized

The Current Status of the ACA Employer Mandate: 2019 – Integrity Data

Caution Employers!

With all the focus on Transparency mandates and HRA executive orders, much of the ACA remains in force (unfortunately). Even though the individual mandate penalty (uh…tax) will not be enforced beyond 2018, the employer mandate is still in effect, with all the coverage provisions!

https://www.integrity-data.com/current-status-of-aca-employer-mandate-2019/

Posted in Access to healthcare, advance-pricing, Affordable Care Act (ObamaCare), British National Health Service, Deductibles, Direct-Pay Medicine, Direct-Pay Practice Models, Employee Benefits, Employer-Sponsored Health Plans, Free-Market, Government Regulations, Health Insurance, Healthcare financing, Individual Market, Individual ObamaCare Market, Insurance subsidies, Large group insurance market, Medical Costs, medical inflation, Medical Practice Models, Medicare, Patient Choice, Policy Issues, Price Tansparency, Quality, Subsidies, Third-Party Free Practices, third-party payments, Uncategorized

Lies That Won’t Die: Health Insurance Costs and Healthcare – Post Hoc Ergo Propter Hoc

In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause—it is seen. The others unfold in succession—they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference—the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favorable, the ultimate consequences are fatal, and the converse.  ~Frederic Bastiat

The results of the immediate/ intended effects (the seen) and the subsequent/ unintended effects (the unseen) of U.S. healthcare policy are clearly instantiated by examining the way we use, and misuse, health insurance.  

Despite the ostensibly good intentions to improve access by expanding coverage for various medical services, the “ultimate consequences are fatal, and the converse.”

Our insurance-based third-party payer protocols have pernicious and nefarious economic consequences on our healthcare system.  This manifests as rampant healthcare inflation catalyzed by the macro-economic market distortions of the 3rd party payer effect and perpetuated by the micro-economic price-obscuring distortions of the billing cycle.

As evidence for the negative consequence of misusing insurance as a pass-through system for virtually every healthcare expense, we can examine the employer-sponsored group market premiums. From 2007 – 2017 the average premium for family coverage increased by 55% and employee contribution rate as a share of premium cost increased by 74% over the same 10-year period; while median household income went up by only 3%.

To add financial injury to insult, the percentage of employees with an out-of-pocket maximum of greater than $3,000 doubled, going from 30% to 60% of employees.

“Eighty-one percent of covered workers have a general annual deductible for single coverage that must be met before most
services are paid for by the plan. Among covered workers with a general annual deductible, the average deductible amount for single coverage is $1,505
.  ~KFF.org

In the ACA individual market insurance exchanges, single coverage premiums (unsubsidized) increased by 62% and family coverage premiums increased by 75% just since the implementation of ObamaCare!

And between 2002 and 2016, medical costs for a family of four in an employer-sponsored PPO plan increased 180%! 

Given that household income has barely budged in real dollars since 2002, these increases are clearly not sustainable. By contrast, the auto insurance market (a real indemnity product) increased by only 17% from 2007 – 2016, while deductible offering ranges remained stable, averaging $500.

The refusal of some to recognize the valid comparatives between the health insurance market & the auto insurance market (ostensibly because healthcare is SO different) is not an argument suitable to justify the dysfunction and high costs of Healthcare; nor does it explain why health insurance premiums have become an unwelcome surrogate for total healthcare costs! The irony being that a competitive cash market for all things related to driving and keeping a car in working order, which are not paid for at all by insurance, is exactly why the auto insurance market is affordable and sustainable! Based on data from 2014, auto insurance accounts for about 15% of the cost of ownership of a nicer car for an average safe driver. Stated differently, the cost of insurance adds about 18% to the cost of ownership compared to not having insurance.

Health insurance, on the other hand, adds about 50% to the cost of healthcare compared to no having insurance. Now consider that cost ratio in light of the NIHCM 2012 study on the concentration of healthcare spending.

“… mean annual spending for the bottom half of distribution was just $236 per person, totaling only $36 billion for the entire group of more than 150 million people… 15% of the population had no spending whatsoever in the year.”

So in any given year, 150 million of us spend less than $300 per person on actual medical care. Even more striking is the statistical likelihood that roughly 15% of the population (nearly 50 million) will have no personal health expenditures in a given year (we have no reason to believe the year in question was an aberration)!

The flip side to this story – and one that is often used to justify the way we use health insurance – is that about 81% of the spending comes from 20% of the population, which holds largely true in almost any given year. But this is the rule for almost any market and is not unique to healthcare. Most of the cars or new homes or new roofs or refrigerators or new tires or new windshields are purchased by a small percentage of the population each year; but it is not by the same people every year.

This is precisely why insurance is necessary and valuable; but also precisely why insuring too many things that are more affordable in a cash market is a horrible financial strategy! Yet we continue to commit to paying for all the small stuff, plus the unpredictable catastrophes, with this expensive proposition we call health “insurance”!

So maybe should re-frame how we look at healthcare and ask…”What have we done TO healthcare to make it behave the way it does?”

Instead of blaming “market failure” – or any of the usual suspect villains – for the high costs & low quality of healthcare, maybe we need to re-frame how we view the provision of healthcare. And when it comes to blaming the “free-market”, how do you blame something that is wholly absent? Because almost NONE of the factors which define a normally functioning free market system (discoverable, actionable prices and outcomes data with competition based on price & quality) are operational in healthcare today.

Rather than market failure, a more productive and accurate way to view healthcare would be as a massive, systemic, well orchestrated pricing failure…brought to us almost exclusively by the central planners in Washington DC, And the perverse incentives that are baked into the system.

Dr. John Goodman, economist and healthcare policy expert, has
this to say
about the consequences of this [“pricing failure”].

“In every  profession outside medicine – law, accounting,
engineering, architecture, etc. – providers are able to repackage and reprice what they offer to the market…Doctors by contrast are slaves to a third-party payer system that has been shaped and molded by government.

Many of the problems begin with Medicare, which pays doctors today the
same way it paid in the last century – long before there were emails or
iPhones. Most private insurers and most employers pay the same way. State governments pile on. Sometimes they make consultations with patients by phone or by email or by Skype illegal. In most places, doctors can’t freely practice across state lines.” –
Dr. John C. Goodman

Collectively, these interventions add excessive costs of our healthcare system. It is important to remember that many of these cost over-runs are manifestations of the applied distortions, not intrinsic to healthcare itself.

One of most pernicious of these pricing failures can be traced to the bizarre way in which we utilize health insurance; which brings me to our featured “lie that won’t die”, and it goes like this…

“Health insurance is expensive because Healthcare is expensive.”

NOT!

But like all effective fallacies, it contains just enough truth on the surface and enough logical coherency to be believable. Let’s explore why this commonly held doctrine in healthcare circles is not only wrong, but counterproductive to useful healthcare reform.

Insurance should be the financial fireman that protects us from the consequences of catastrophic events.  But for insurance to work, these catastrophic events must be infrequent & unpredictable, thus spreading the risk of these infrequent events across a large population; so at any given time, only a few are affected.

When insurance becomes a funding source for the routine – the predictable – the affordable events, then we actually concentrate risk rather than spreading it! This model changes “insurance” into a perpetual payout fund, violating every tenet of insurance! And to compound the effect, the contractual obligations on both the demand side and supply side promote the incentive for everyone to utilize their health plan as often as possible.

It doesn’t take a Ph.D. in economics to predict that the costs of sustaining such a model are never satisfied, always being squeezed by patients who are chasing the benefits and providers who chase the billing codes for reimbursement.

So health insurance is definitely the Fireman or “lifeguard” when we have a costly health crisis; but when it becomes an expensive medical maintenance plan, insurance also becomes the arsonist.

We have taken a tool designed to pay out rare higher-priced claims on unpredictable events, and turned it into an inflation-prone product whose design promotes an incentive for everyone to use it as often as possible. That makes about as much sense as trying to buy insurance for a car that is regularly used in a demolition derby.

Our third-party payer system has created a dependency paradox; the same funding method (health insurance) that contributes to runaway costs also causes us to be more dependent on it for access.

The result is a healthcare system that costs way more than the sum of its parts. This is why playing the blame game does not solve the problem. American doctors could take a 50% pay cut and we could eliminate the spend equal to all care during last 12 months of life and we would still spend more per capita than any other country. You can go down the list of culprits and repeat the calculations, which I’ve done, but the math doesn’t add up; it doesn’t reconcile.  

The introduction of DPC has deflated these cost escalations considerably.  In the individual market, data from several sources bears this out.  CovenantMD, a Direct Primary Care practice in Lancaster, PA illustrates the potential savings based on a typical family’s utilization.

They compared the total costs incurred using a Bronze ACA plan with $6K individual/$12K family deductibles without and with a DPC membership at CovenantMD.  Pairing a Bronze Plan with a DPC membership resulted in an out-of-pocket savings of $7,267, even after the cost of the membership was counted.  That is a 65% reduction in out-of-pocket costs!

Zenith Direct Care did a similar analysis for a typical family of five with an 80/20 plan with $3,000 deductible.  They compared annual costs for this scenario with a Zenith Direct Care membership plus a Health Cost-share Plan (health-sharing member).  Estimated out-of-pocket costs with the traditional insurance alone was $18,343 compared to $6,160 with the Zenith/HCS combination.  A savings of 66%!

Core Family Practice, a DPC practice in Kennett Square, PA, compared a 90-day supply of four common primary care medications purchased through Aetna’s Mail-order supplier with the prices their members pay for same quantity.  The annual cost for the Aetna mail-order came to $2,248.68 compared to only $850.80 for the same medications from Core’s generic supplier, which were dispensed in the office. That $1,397.88 savings equates to a 61% reduction in out-of-pocket costs for the married couple!  They also looked at the costs of obtaining three sets of commonly ordered lab tests for the same couple.  Out-of-pocket costs using their high-deductible plan (QHDHP) was $480 in lab test responsibility. The same tests drawn and paid at time of services to Core FP totaled $63.17 yielding an incredible 87% reduction.

All components of healthcare spending add to cost of care. But the overwhelming cost drivers for the U.S. healthcare system are embedded so deeply within the way we access and pay for medical services that we often overlook them, choosing instead to blame the symptoms for the disease rather than the disease for the symptoms.

So the next time you hear someone say or pen the words, “health insurance is expensive because healthcare is expensive”, please gently remind them of the facts. It is the unwise use of a pre-paid, highly regulated & gated access model, masquerading as insurance, that causes medical care to be more expensive than it needs to be; and the same payment model suppresses the market for more cost-effective alternative pathways to access healthcare.

Posted in Access to healthcare, Affordable Care Act (ObamaCare), Economic Issues, Employee Benefits, Employer-Sponsored Health Plans, Essential Benefits under the ACA, Health Insurance, Healthcare financing, Individual Mandate, Individual Market, Insurance subsidies, Large group insurance market, Medicaid, Medicaid Expansion, Medical Costs, Policy Issues, Small group market, Subsidies, Tax Policy, Uncategorized

Who Wouldn’t Have Coverage If the Obamacare Mandate Is Repealed | The Heritage Foundation

…a recent review of the academic literature on the subject finds a mixed bag, but with the strongest link between coverage and health outcomes in cases where health insurance coverage improves access to care, “particularly among people with lower incomes and chronic conditions.”

That makes sense. Having health insurance makes less of a difference to people with higher incomes who can afford to pay for more of their medical care directly. 

That leads us to the crucial, practical question that this academic debate largely misses: Who are the people that would no longer have health insurance if the mandate penalty were repealed?

Notice what CBO is not saying. CBO is not saying that those Americans will “lose” coverage. Rather, CBO is saying is that—absent the mandate penalties—those Americans, will voluntarily forego enrolling in health coverage. CBO is explicit on this point…

That explains CBO’s somewhat counterintuitive projection that, without a mandate penalty, millions of poor people will turn down the offer of free Medicaid coverage. The reason is that they don’t think they need it (because they are healthy) and if they become ill and seek care at a hospital, they know the hospital will enroll them in Medicaid to get paid. Indeed, it is also why, long before Obamacare came along, that there was a persistent and notable gap between the number of people eligible for Medicaid and the number of people enrolled in the program.

It also explains CBO’s other counterintuitive projection: that eliminating the mandate penalty will generate higher tax revenues.  While not collecting mandate penalties brings in less revenue, CBO projects that there will be new revenues coming from the healthy people who decide to turn down tax-free employer health insurance in exchange for higher (taxable) cash wages. Presumably, CBO thinks that being healthy and very much alive are basic prerequisites for expecting those folks to generate additional tax revenues.

Repeal of the Obamacare mandate will not result in social catastrophe. Supporters of the mandate would have a more compelling argument if millions of poor and sick persons would be thrown out of their existing coverage, struggling with potentially fatal chronic illnesses and unable to get insurance to maintain continuous access to regular care. But that is not what CBO is projecting. Their argument is hardly compelling, to say the least, when the cohort of the future uninsured are healthy people who simply choose not to buy Obamacare coverage because they believe they don’t need it or want it.

http://www.heritage.org/health-care-reform/commentary/who-wouldnt-have-coverage-if-the-obamacare-mandate-repealed

Posted in Access to healthcare, big government, DC & Related Shenanigans, Economic Issues, Government Regulations, Government Spending, Health Insurance, Healthcare financing, Independent Physicians, Liberty, Medicaid, Medical Costs, Medical Practice Models, Medicare, News From Washington, Organizational structure, Patient Choice, Patient Safety, Policy Issues, Reforming Medicaid, Reforming Medicare, Subsidies, Tax Policy, third-party payments, Uncategorized

Are You Sure You Want Medicare for All? – Reason.com

A big part of the problem, as Cato’s Tanner pointed out earlier this year is that “Americans want widely contradictory things from health-care reform. They want the highest-quality care for everyone, with no wait, from the doctor of their choice. And they want it as cheap as possible, preferably for free.” Promising, as Sanders and Warren do, to give everybody high-quality health care without regard for ability to pay will always find an enthusiastic audience. But delivering on that promise is likely to give us not the illusion of Medicare for All, but rather its awful, unsustainable reality.

Source: Are You Sure You Want Medicare for All? – Reason.com

Posted in Access to healthcare, Affordable Care Act (ObamaCare), Economic Issues, Government Regulations, Government Spending, Health Insurance, Healthcare financing, Independent Physicians, Medicaid, Medical Costs, Medical Practice Models, Medicare, Organizational structure, Patient Choice, Policy Issues, Quality, Reforming Medicaid, Reforming Medicare, Subsidies, Uncategorized, Wait times to see a doctor

Most Americans Want Government-Run Health Care Until They Find Out the Government Will Run Health Care – Hit & Run : Reason.com

“While 55 percent of Americans say they want a single-payer/Medicaid-for-all plan, those in favor tend to change their minds when they hear that it means giving the government more control over health care, or that Americans would have to pay more in taxes.

That tracks with other polling on the issue. A May poll from the nonpartisan Public Policy Institute of California found support for single-payer state healthcare at 65 percent statewide, but that number dropped to 42 percent when respondents were told at least $50 billion in new taxes would be required to pay for it. That’s a pretty optimistic view of the taxes that would be required to pay for single-payer in California; the actual cost would be well over $100 billion annually.

Are you sure you want government-run health care? Many Americans don’t seem to understand the question. But once they do, the answer is “no.” “