Health care e-mail from the White House

[Magox]

Another interesting one to me is that in the early 90s when Clinton was trying to push health care, 95 cents of every dollar from private insurance went towards paying for care. Today, only 80 cents of every dollar does. That's an enormous difference.

Could the increasing costs of malpractice suits have anything to do with that? The bottom line is if you look at WellPoint's or some of the other large insurers, their profit margins are less than 3.5% . So it's not as if that they are pocketing a huge % of their gross revenues.

[X. Benedict]

Could the increasing costs of malpractice suits have anything to do with that? The bottom line is if you look at WellPoint's or some of the other large insurers, their profit margins are less than 3.5% . So it's not as if that they are pocketing a huge % of their gross revenues.

 

The guy who would know would probably be Henry Waxman...he authored all the California caps on non-economic damage.

 

Actually, as much as this has turned into a liberal/conservative wrastling match....I don't think there is a well defined

position in either party.

 

Wouldn't lower medical liability premiums hurt insurance companies?

Or is this liberals attacking profit again?

[Magox]

Actually, as much as this has turned into a liberal/conservative wrastling match....I don't think there is a well defined

position in either party.

I can agree with this

[IDBillzFan]

Do you really think Tort reform is at the heart of it all?

 

I thought insurance companies took Malpractice Premiums and invested them...which is a big source of income for them.

 

Could tort reform actually hurt insurance profits...and thereby not create dynamic for lower premiums (Texas is much discussed here)...and not really get rid of all the unnecessary tests defensive doctors seem to love either.

 

Just wondering if there is any evidence that Tort reform has lowered premiums and made health care more accessible?

I don't know the answer to that question, but I think it's imperative to consider tort reform (in addition to other ideas, like national competition) when considering health care reform, and not just say "We need a public option as the only way to bring costs down." It seems the only answer any more is "Only the government can fix (fill in the blank)" and for those of us who prefer less government in our lives, that's simply a terrible answer when other options are not being considered.

[X. Benedict]

I don't know the answer to that question, but I think it's imperative to consider tort reform (in addition to other ideas, like national competition) when considering health care reform, and not just say "We need a public option as the only way to bring costs down." It seems the only answer any more is "Only the government can fix (fill in the blank)" and for those of us who prefer less government in our lives, that's simply a terrible answer when other options are not being considered.

 

I can't say I disagree....(geez it's too big for me)...but tort reform is by definition a type of regulation.

 

I really don't see the Obama initiative going anywhere at this point...but the country will probably try it again every 10 years.

[Fingon]

That stat doesn't seem to say or prove anything in this debate other than employers pay for their employee's health care and older people's health care costs more per person, two things everyone knows.

 

I agree with you in generic terms about statistics of course but some are a lot more meaningful than others and some are a lot more misleading or applicable, etc. than others.

 

Another interesting one to me is that in the early 90s when Clinton was trying to push health care, 95 cents of every dollar from private insurance went towards paying for care. Today, only 80 cents of every dollar does. That's an enormous difference.

According to the CBO, medicare is extremely wasteful.

[stuckincincy]

The very idea that an Administration feels the need to send out personal communications to the public is chilling.

 

Pimping for popular support...how weak.

[DC Tom]

That stat doesn't seem to say or prove anything in this debate other than employers pay for their employee's health care and older people's health care costs more per person, two things everyone knows.

 

Neither does your post I responded to. I was just demonstrating that the numbers can be sliced-and-diced every which way, and hence don't prove anything.

 

The numbers I gave, by the way, were administrative costs per patient. You could read the numbers, combined with yours, as demonstrating Medicare's ineffeciency - they cost more per patient to insure, but overall admin costs are less simply because they have fewer participants who consume more. It would demonstrate your numbers as a fallacy...though to be honest, I'd consider any numbers fallacious.

 

Another interesting one to me is that in the early 90s when Clinton was trying to push health care, 95 cents of every dollar from private insurance went towards paying for care. Today, only 80 cents of every dollar does. That's an enormous difference.

 

That is interesting. Personally...I blame attempts at cost control via justifying every little thing. See the "transparency" thread...

[Kelly the Dog]

Neither does your post I responded to. I was just demonstrating that the numbers can be sliced-and-diced every which way, and hence don't prove anything.

I think the 4% versus the 20% is a very important number because somewhere in between 4% and 20% is where all of the money needs to come from if insurance premiums are going to come down, due to the relatively small percentage the insurers make on each enrollee that we discussed. The co-ops, btw, (some) come in at around 12% which would be a good start.

 

A great deal of the problem with insurers is the big guys keep buying up a lot of small guys and they have to keep their shareholders (mostly hedge funds and the like) and Wall Street guys happy, so their need to make more profit comes at the expense of their enrollees. That's part of why the 95 cents has dropped to 80 cents.

[Kelly the Dog]

According to the CBO, medicare is extremely wasteful.

 

It is, and some of the reform bill addresses that, although not nearly enough. In the last decade, however, Medicare costs on a percentage basis have risen a lot less than private insurers and we know how wasteful Medicare is, and how much fraud there is, and how inept the government can be. Yet the private industry is doing significantly worse.

[Magox]

I think the 4% versus the 20% is a very important number because somewhere in between 4% and 20% is where all of the money needs to come from if insurance premiums are going to come down, due to the relatively small percentage the insurers make on each enrollee that we discussed. The co-ops, btw, (some) come in at around 12% which would be a good start.

 

A great deal of the problem with insurers is the big guys keep buying up a lot of small guys and they have to keep their shareholders (mostly hedge funds and the like) and Wall Street guys happy, so their need to make more profit comes at the expense of their enrollees. That's part of why the 95 cents has dropped to 80 cents.

You are absolutely correct in your first paragraph, if I'm understanding you correctly. Somewhere in between the 4-20% range is where the problem needs to addressed, and from my understanding a lot of that comes from the claims department and consumer services, administrative costs, government payments and compliance.

 

If the problem was mainly overinflated profits in the health insurance industry, competition would solve that problem. Since a 4% profit margin seems to be right around the industry standard for the health insurers, I don't see what further competition would do to lower these costs.

 

Here's an interesting report from Wellpoint, it's a little long, but informative.

 

http://www.wellpoint.com/pdf/Premium%20Cost%20Drivers.pdf

 

http://www.healthinsurancecolorado.net/blo...rance-industry/

[DC Tom]

I think the 4% versus the 20% is a very important number because somewhere in between 4% and 20% is where all of the money needs to come from if insurance premiums are going to come down, due to the relatively small percentage the insurers make on each enrollee that we discussed. The co-ops, btw, (some) come in at around 12% which would be a good start.

 

Or in other words: the money needs to come from the $300 per person per month in administrative costs the insurers spend.

[Magox]

You are absolutely correct in your first paragraph, if I'm understanding you correctly. Somewhere in between the 4-20% range is where the problem needs to addressed, and from my understanding a lot of that comes from the claims department and consumer services, government payments and compliance.

 

If the problem was mainly overinflated profits in the health insurance industry, competition would solve that problem. Since a 4% profit margin seems to be right around the industry standard for the health insurers, I don't see what further competition would do to lower these costs.

 

Here's an interesting report from Wellpoint, it's a little long, but informative.

 

http://www.wellpoint.com/pdf/Premium%20Cost%20Drivers.pdf

 

http://www.healthinsurancecolorado.net/blo...rance-industry/

 

 

Here is also a list of what most other industry profit margins are

 

http://money.cnn.com/magazines/fortune/for...stries/profits/

 

If you read the second link from the previous thread you will see that the Health insurance number that is listed is actually much lower than it shows because it is combined with Life and Health (stock).

 

It's pretty clear that it isn't the insurers that are the greedy one's here.

 

Government seems to be barking up the wrong tree.

[Kelly the Dog]

Or in other words: the money needs to come from the $300 per person per month in administrative costs the insurers spend.

 

Yes. But that's not what you said, you made the comparison between Medicare spending three times more per person as if to say that private insurance is not overspending, but relatively cheap compared to public insurance.

[DC Tom]

Yes. But that's not what you said, you made the comparison between Medicare spending three times more per person as if to say that private insurance is not overspending, but relatively cheap compared to public insurance.

 

And you're saying that Medicare spends three times more, but 80% less.

 

Of course, that three times more per patient per month, but 80% less on an overall "cost of goods sold" [sic] basis. Or, to put it another way, per individual Medicare spends $900/month on admin, representing 4% of expenditures; while private insurance spends $300/month representing 20%. Stop for a minute and think about what that actually means.

[Kelly the Dog]

And you're saying that Medicare spends three times more, but 80% less.

 

Of course, that three times more per patient per month, but 80% less on an overall "cost of goods sold" [sic] basis. Or, to put it another way, per individual Medicare spends $900/month on admin, representing 4% of expenditures; while private insurance spends $300/month representing 20%. Stop for a minute and think about what that actually means.

 

Where do you get these numbers? How is it that Medicare spends $900 per person per month on administration? That's $10,800 a year just on administration per person? So it costs the government $270,000 per person on Medicare?

[DC Tom]

Where do you get these numbers? How is it that Medicare spends $900 per person per month on administration? That's $10,800 a year just on administration per person? So it costs the government $270,000 per person on Medicare?

 

And what's wrong with those numbers? You would expect Medicare to have higher administrative expenses - people enrolled in Medicare tend to be older and thus consumer more health care resources...and thus, generate more administrative overhead. You'd also expect Medicare's administrative expenese to be proportionally lower, because while their admin expenses are more, their direct health care expenses are a HELL of a lot more.

 

My point being that you're argument that Medicare's somehow more efficient because their overall administrative costs are 4% compared to 20% for insurers is a completely fallacious one. You're comparing completely different programs based on a simple ratio rather than the very complex (and probably different) accounting standards of each. You simply can't get to your conclusion from your information.

[Taro T]

Where do you get these numbers? How is it that Medicare spends $900 per person per month on administration? That's $10,800 a year just on administration per person? So it costs the government $270,000 per person on Medicare?

Don't know where those #'s come from, but for a Heritage Foundation / Paul Krugman biatchslap contest, the administrative #'s being bandied about for 2005 were $509/yr for Medicare and $453/yr for private health insurance.

 

Those sound a bit closer to realistic as they put the costs of coverage for each more into the ~$10k/yr for Medicare and ~3k/yr for private insurance range. I doubt either is correct, but as mentioned they do seem more realistic.

[DC Tom]

Don't know where those #'s come from, but for a Heritage Foundation / Paul Krugman biatchslap contest, the administrative #'s being bandied about for 2005 were $509/yr for Medicare and $453/yr for private health insurance.

 

Those sound a bit closer to realistic as they put the costs of coverage for each more into the ~$10k/yr for Medicare and ~3k/yr for private insurance range. I doubt either is correct, but as mentioned they do seem more realistic.

 

My point was less the numbers than it was that comparing Medicare to private insurers is an apples-to-oranges comparison made doubly stupid when no one knows the real numbers anyway, and triply stupid when one uses a single data point for comparison.

 

Though the $300/$900 numbers don't seem out of line to me - in my own health plan, I'm healthy, my wife's not comparatively, and I'm sure her admin costs are at least that much more than mine because of it. I can think of three easy reasons they'd be right - and three they'd be wrong (first on the list being: they're from the Heritage Foundation).

[DC Tom]

That you're saying it costs Medicare $900 per month per person, which is $10,800 per person in administrative costs alone -- and yet acknowledging that Medicare's administrative costs are 4% of its total cost. So the math says it costs the US government $270,000 per person on Medicare.

 

There are about 40,000,000 Americans on Medicare. We spend $10,800,000,000,000 (almost 11 trillion a year) on Medicare?

 

So how much is it then? What are the actual per person administrative costs of Medicare, that they're a fifth as much as provate insurance?