Inquiring minds are diving into Kaiser Family Foundation reports on health care. The charts and stats are not pretty, and they are sure to get worse.
Health Care Expenditures 1960-2014
The above chart from the Kasiser Family Foundation report Health Spending Explorer.
Deductible Spending Soars
Between 2004 and 2014, average payments for deductibles and coinsurance rose considerably faster than the overall cost for covered benefits, while the average payments for copayments fell. As can be seen in the chart below, over this time period, patient cost-sharing rose substantially faster than payments for care by health plans as insurance coverage became a little less generous.
The above chart from the Kasiser Family Foundation report Cost Sharing Payments Increasing Rapidly Over Time.
The above via Kaiser Family Tweet.
Huge Cost Increases Coming
Those charts hugely understate the problem. All date to 2014.
In January, CNSNews reported CBO: Obamacare Costs to Increase in 2016 As Millions More Get Subsidized Insurance.
Taxpayers will have to shell out an estimated $18 billion more to subsidize Obamacare in 2016 despite lower than expected enrollment in the health care exchanges, according to a forecast by the non-partisan Congressional Budget Office (CBO).
In its latest 10-year economic forecast, CBO predicted that 13 million Americans would purchase health insurance through the Obamacare exchanges in 2016, with 11 million of them receiving government subsidies to help pay for their premiums.
But that figure is 40 percent lower than the 21 million enrollees CBO predicted last year would sign up.
Despite fewer than expected enrollees, the cost of running the exchanges will increase $18 billion, according to the CBO’s Budget and Economic Outlook: 2016 to 2026.
November Surprise
Many consumers will see large rate increases for the first time Nov. 1 — a week before they go to the polls.
Politico comments on Obamacare’s November Surprise.
The last thing Democrats want to contend with just a week before the 2016 presidential election is an outcry over double-digit insurance hikes as millions of Americans begin signing up for Obamacare.
But that looks increasingly likely as health plans socked by Obamacare losses look to regain their financial footing by raising rates.
Just a week after the nation’s largest insurer, UnitedHealth Group, pulled out of most Obamacare exchanges because it anticipates $650 million in losses this year, Aetna’s CEO said Thursday that his company expects to break even, but legislative fixes are needed to make the marketplace sustainable.
“I think a lot of insurance carriers expected red ink, but they didn’t expect this much red ink,” said Greg Scott, who oversees Deloitte’s health plans practice. “A number of carriers need double-digit increases.”
Republicans are already pouncing on UnitedHealth’s decision as proof the law is unworkable. “You’re seeing the beginning of the so-called insurance death spiral,” Sen. John Barrasso (R-Wyo.) said last week.
Related Articles
- Obamacare Death Spiral: Insurers to Drop Plans Unless Premiums Rocket, “Something’s Got to Give”
- United Health Will Dump Obamacare Offerings in 29 of 34 States: Death of Obamacare?
- As Insurance Losses Mount So Do Refusals: “Sorry, We Don’t Take Obamacare”
Also consider Obamacare Redistribution and the Disincentive to Work.
Thanks to Obamacare, it is frequently better for a middle class family to get no raise than even a decent sized raise.
The wage point varies, but many will say “Dear employer, please don’t pay me more. It will cost me a lot of money”.
Mike “Mish” Shedlock
“… legislative fixes are needed to make the marketplace sustainable.”
That, my friends, is the dead giveaway. Statism is the enemy of the free market.
Until people realize that markets don’t need government to flourish, those people will put their confidence in government to fix everything that they caused.
The question is “what does government need to flourish?” (never mind that we don’t want it to). The answer is the ability to rob the Haves and give to the Have Mores, while keeping the Have Nots from starting a revolution. That’s it; nothing else matters.
About the only “legislation” that might be tolerable is a mandate to post prices for all medical services. Drop all the rest of the market distortions.
This visibility might dramatically decrease costs once we can shop around for non-emergency procedures.
Right now there is nearly a complete lack of transparency. No doubt, that is a function of how the “marketplace” has evolved under previous and current regulations.
Legislative fixes ARE the problem. The more they try to fix a ‘problem’, the worse the problem gets. What happened to all the money people were supposed to save with Obamacare? It only got worse the more involved government got. Ditto for education expenses.
This is certainly not true of everyone. My family was scraping money together to pay $700/mo for COBRA since I have a pre-existing condition and could not get alternative care. Now my premium is a third of that.
Many forget Obamacare has a provision to try alternative systems like single payer. When it was first designed in 2010, I said the whole thing was a ruse for single payer and it would happen by 2020. We will likely end up with some type of system like Canada – private insurance and health care but the federal government is the single group negotiator of rates for all 315M people.
Market oriented reform desperately needed’ quite unlikely
Obamacare is an abortion and will only get worse
So many of my patients thinking they have insurance, realize they cannot afford to use it
We would go to jail for doing anything similar
Great for GDP!
Misallocation of capital is good? Well, it produces the “number” for the gubberment, so it’s “Mission Accomplished”. Anythhing to make obama look legitimate.
According to the charts in Mish’s post it seems that health care costs were exploding long before the Affordable Care Act (AC). This would seem to indicate there is a deeper reason behind rising health care costs than ACA.
The healthcare industry cartel has monopolistic protections from top to bottom. Federal, state, and local. If there was competition you would see MRI midnight specials for $400.
And you cannot resolve the high cost of healthcare as long as you can get someone else to pay for it.
If health care became a truly free market industry over night, you’d see doctors, hospitals and big pharma panic that morning. The government is their “Union” and we are paying the dues.
Many doctors and hospitals would be OK, as long as “free market” also mean free from ambulance chasers and clueless meddling apparatchiks. Their costs would fall so much, and the massively reduced complexity and uncertainty of running their business, would make up for much of the loss of what they currently receive in tablescraps from the totalitarian junta.
For large part, the same would even hold true for those doing real work in pharma. Some extreme, fundamental long shot research projects may become too risky to undertake, but at the same time the freedom from having to drag around boat anchors would enable many more smaller optimizations and developments. A few attempted moonshots vs a million babysteps, IOW.
As always, the only people made indisputably better off by the totalitarian racket, are the usual suspects; incompetent lawyers, apparatchiks, “financiers”/banksters, and other similarly useless and expendable hacks, whose entire well funded existence derives from nothing at all besides having the government rob and harass their betters on their behalf.
Well, what would you expect?
In California (and likely in other states too) illegal alien minors are now eligible for Medi-Caid (known as Medi-Cal in California). And there is talk about opening up Medi-Cal for illegal aliens adults as well. Huge incentive for more indigent illegals to invade the country. In San Francisco there is talk about allowing illegal aliens to vote in local elections.
But somebody has to pay for all the illegal indigents getting free health care. No wonder health care costs are skyrocketing.
I know someone on Medi-Cal. She has better health care options than most people I know who pay large premiums with hefty $5,000 deductible plans. And their selection of docs isn’t much better than the Medi-Cal patient.
Most of us know this is a big windfall for the health care corporations who bribe the politicians to enact favorable health care laws (ie. giving illegal foreigners access to free US health care, etc..) that reward the medical community with bigger revenues while punishing the productive working consumers who are forced to pay for it all.
Anyone who can’t see this is either blind or willfully ignorant.
As of late, California’s temporary 15% income tax has been failing to pay all the bills. I wonder if November’s election will include a ballot for increasing that to 20%.
Medi-Cal also charges a service fee of $500 per month to the enrollee’s account. This fee and others may be recovered upon death of the Enrollee from their estate, much like late life long term care may be recovered.
Any enrollee in these kinds of plans is a slave debtor, and better plan to die with nothing, or pass any assets they might have a long time before they die.
I’m very surprised the Medi-Cal asset recovery hasn’t been legally challenged. Let me tell you why.
The low-income population is mandated to enroll into Medi-Cal if they fall under a certain income threshold. They can opt out and join the exchange – but they would receive zero subsidy from the government for doing so. They would have to pay full price for whatever plan they chose. And if they opt out of Medi-Cal and fail to pay full price for another plan – they would be subject to the penalty for not having insurance.
Worse yet, the asset recovery program that you alluded to only applies to those Medi-Cal patients who are 55 years of age or older. So someone 50 years of age could run up $200,000 in medical bills under Medi-Cal and the State could not (by Law) initiate a legal recovery on any assets they own when they die. The magic age is 55. Once you turn 55 you are fair game for asset recovery. This is for ANY medical cost – outpatient, inpatient or nursing care – and for the $500 monthly premium (as you mentioned).
A widespread misconception is that one must be indigent (no or low income and few assets) to be enrolled into Medi-Cal. Not true. Assets are not considered in the enrollment process. One only has to fall under a certain income threshold (depending on # of dependents). So theoretically one could live in a $1.5M home and have a million bucks in the bank – and get enrolled in Medi-Cal – assuming a low enough reportable income that falls under the eligibility guidelines.
More lunacy in the world of government. Go figure.
Thank you for putting a dollar number on clawbacks in CA. I have an acquaintance in Palo Alto who will be inheriting his mom’s $2 million house when she dies (and she is old and in pretty bad shape now). He lives there with her and has been on Medi-Cal for years. If it is only $500/month then that is a good deal for him (in any case he has no kids, so he doesn’t care about leaving an estate). I have read of the clawback amounts being much higher in other states; $500/month isn’t bad. But the lack of disclosure, and the forcing people into the system is really evil. The clawbacks are a trap that people don’t know about when they sign on for “free” health care.
An interesting blog by a California attorney who describes ObamaCare’s impact on Medi-Cal eligibility and enrollment – and the possible asset recovery dilemma that could apply to the estates of those over 55 who enroll in Medi-Cal.
“If you are over 55 with an income low enough to be eligible for expanded Medi-Cal— your estate WILL be subject to recovery.
This means that for people between 55 and 65 it isn’t simply health insurance: it is a LOAN”.
http://ask-roxy.blogspot.com/2013/12/alert-go-on-obamacare-medi-calmedicaid.html
What’s so bizarre to me is that someone slightly over the low income Medi-Cal threshold can choose a HC plan from the exchange and get a BIG government subsidy that is NOT subject to asset recovery after they die.
But those over 55 enrolled in Medi-Cal are fair game for asset recovery, provided that they have something to take once they turn to room temperature.
What a mixed-up nutty world we live in.
It’s like the movie Logan’s Run, only instead of running for your life when you’re nearly 30 you have to leave California just before you’re 55. Moral: don’t be oldish and poor in the land of affluent youngsters.
The doubling time is like seven years and now health care is like twenty percent of GDP. No way it’s going to be fourty percent. The system will buckle and pretty soon IMO.
but but who is “peddling fiction” now?
“This law will cut costs and make coverage more affordable for families and small businesses. It’s reform that brings — that begins to bring down our government’s long-term structural deficit.”
https://www.whitehouse.gov/the-press-office/remarks-president-affordable-care-act-and-new-patients-bill-rights
Nate Silver: 79 percent chance Clinton wins Prez
By Nolan D. McCaskill
06/29/16 10:02
http://www.politico.com/story/2016/06/nate-silver-who-will-be-president-prediction-224931
You have to wonder how much of these increases can be attributed to ZIRP.
Especially irksome is the poor quality of care typical of the system. If you have a complex problem there will be no effective treatment plan even after dozens of appointments. If you have a simple problem you will be better off researching and developing your own treatments. Especial hazards in using the hospital. Observed all recently with elderly or sick relatives.
Other services you can get a proposal, quote and have some responsibility taken for achieving a result. Not with health care industry and yet they still expect to be paid premium prices for their crummy product.
Really grates to pay more than the cost of a new car each year for health care premiums. Most new cars come with a warranty and most likely will need no service for years. The health care industry is 100 years behind all other industries in quality and management skills. Likely to stay that way now with government subsidies to tap into.
As a Pharmacist I can tell you US citizenry takes too many medications, visits to health care providers are more frequent for those on a state or fed subsidized program, and if nobody thinks there is anything wrong here from the food to patient to the prescriber to the CEO then we are going over a cliff. Everybody is pre diabetic now yet nobody questions the sugar content placed in most every thing we consume( salad dressing!) and huge carbo loads. Soda, fast food, cigarettes, candy, booze, sugar cereal, sugar in lunch meat, the damn dog food is better for you. So, if you want to keep cost down a complete re socialization of behavior is needed, taxation of shit food and a rebate from the insurance industry if your labs are in normal limits. There is no incentive for people to be concerned about their health if they believe the a pill or procedure will save them….guess what, it doesn’t. I can’t tell you how many times I’ve seen a patient getting 9 bottles of insulin a month standing in front of me with a McDonalds bag full of fries and Big Macs. WTF
Everything you describe is simply the moral hazard of welfare. Name one Democrat or Republican who is against expanding welfare. I sure can’t. At best you might hear someone wanting to curb the growth rate, but that is still expansion.
As a pharmacist you know damn well the health care industry is more concerned with “managing patients” than making them well. Why would they want to shut off an income stream?
Exactly…..I ask my my employer to stop the sale of cigarettes as it was counter productive to my job. They laughed at me but one of the chains in my area did stop selling them. I turned to my boss and said do you ever think how ridiculous this is filling 480 metformin 500mg tabs for this and many other patients each month is? She said ….least it’s job security. WTF the machine rolls on.
Those terrible bankers just keep printing health care inflation to the moon. Will they ever stop?
Privatize the Veterans Administration.
After the Doe drops 2000 points tomorrow I’m sure the right wing wackos will be screaming kill ’em all either way.
Now here’s another 100 billion for Puerto Rico and tell the United States Postal Service to drop dead….signed the United States Senate.
They say those fires in Ireland burn for a thousand years….
The problem is that even intelligent people can’t resist the hard-wired social hierarchy that developed in our hunter-gatherer past. That hierarchy was strictly limited in scope by the availability of resources (number of people and zero sum economics) and it created a slight survival advantage thus ensuring its continuity.
In our current era the social hierarchy has evolved into a top-down chain of command hierarchy, practically free of restrictions, living off wealth producers, and having a seemingly endless desire for growth. While a government hierarchy can provide a survival advantage compared to other more controlling and destructive ones, it is woefully inadequate when compared to a free society with free markets. Compared to the absence of government, it reduces survival greatly.
Health care is just one example of government’s success at failure.
First graph smells like alarmist crap. You have a graph that starts at 1960 showing total spending in billions. Not considered are:
1. Inflation.
2. Population
3. Population Age
4. Medical innovations – (for example, in 1960 chemotherapy was rarely used for cancer, if it was its primary purpose was to ease some symptoms before the patients died, now chemotherapy is often used to try to cure or at least force cancer into remission. The category ‘health care’ today includes things that didn’t even exist as categories let alone products in 1960).
5. GDP
I agree on inflation, but the fact is that insurance makes healthcare more expensive. One of the main reasons goes back to a postwar law that subsidizes employer driven insurance at the expense of personally bought insurance.
We used to have the lodge system in the US, which made health services so cheap, the physicians formed cartels, lobbied congress, used the AMA etc. to drive up prices.
The American people will come crawling to the government soon to have a single payer system for all. this was how Obamacare was designed from the start. When people can no longer get healthcare on some else’s dime and those actually contributing to the system see their income fall even further things will change or there will be riots in the street. Just give it time Utopia is coming for all!!!!
“When people can no longer get healthcare on some else’s dime and those actually contributing to the system see their income fall even further things will change or there will be riots in the street. Just give it time Utopia is coming for all!!!!”
That is the way cycles work. There has never been any way of preventing them.
A boom is always followed by a bust. The fourth turning always comes, in any cycle. Freedom gives way to tyranny. Prosperity gives way to poverty.
I can see the fall of the Roman Empire, happening in the U.S., right before my eyes.
“the cost of running the exchanges will increase $18 billion”
Less health care, and more health care administration. The system is designed like the worst of the top-heavy bureaucratic dysfunctional big-city school systems. Think Chicago.
The graphs look like they are getting ready to go parabolic, which should mean collapse is in the future without a TARP-like bailout for the “Health Care Administration Industry” (i.e. lots of political kickback $$). Legislative fix = “No Politician Left Behind.”
Opting out and paying the penalty is the only personal escape, which also means disengaging from the sugar-carb USA food care system. D, the pharmacist, has it right.
Pingback: Black Coffee: The Independence Day Edition - Len Penzo dot Com
The article and the comments widely miss the mark. (Blaming the usual suspects.)Think of the Healthcare industry as you would the housing and financial services industries before they crashed. It shares many of the same characteristics: 1) the assumption that it will always grow 2) a Brahman caste of overvalued experts and managers who profoundly misunderstand their own industry 3) wrongheaded regulation of course, but most importantly 4) Becoming a pyramid scheme built on the backs of the poor…In the case of the housing industry policies, touted as benefiting people with bad credit, resulted in bankruptcy and unemployment. Similarly we see healthcare heading in the same direction, massive debt and expenditures yet the healthcare status of the bottom third of the population is plunging. The housing bubble burst when bankruptcies reached a threshold level, my guess is that healthcare will burst when mortality and morbidity levels approach the 1950 level. In other words, healthcare is broken. I’m just a country doctor, but that’s how it looks at ground zero.
The common culprit is the federal government intervening in each industry, claiming to make improvements, and only doing more harm than good. If the feds did NOTHING in the health insurance industry, we would have real health insurance, rather than third party payer The fact that “insurance” covers normal health products and services is the result of federal subsidies.