osewalrus (osewalrus) wrote,
osewalrus
osewalrus

Watching the Train Crash

I am a wealthy white guy in a major urban area. Even so, I will probably be screwed over by the "repeal and replace" Obamacare strategy Republicans just agreed to.

Why? Well, start here: http://www.marketwatch.com/story/im-a-former-health-insurance-ceo-and-this-is-what-obamacare-repeal-will-do-2017-01-02

Well before Congress passed the ACA, pretty much everyone agreed that our health care delivery system, and the way we paid for it, had severe market failures. So it woukld be bad enough is we just teleported back the state of things in 2007. But proposed repeal and delay promises to strip away everything, eventually, but hopefully before that we will come up with something wonderful.

Asking insurance companies to participate in the exchanges and offer coverage in poor areas, with no assurance that they will get compensation, with almost certain reduction in the medicaid expansion, and with Republicans promising that they will prohibit bans based on lifetime conditions, is crazy.

Which means in 2017, we can expect a lot more exchanges to simply collapse as insurers rush out.

That has huge impacts on everyone. For one thing, insurers have no way to predict their market in the interim period. The non-exclusion and the "keep you kid until age 25" provisions will still be in place for national coverage -- based on Trump and Congressional Rs. That means everyone's premiums will go up.

Why, because that is how insurance works. It's one of the major reasons the cost of insurance was in a death spiral in the '00s that prompted Dems to push for universal health isurance (based on expanding CHIP in 2007 and Romneycare back in MA). The cost of coverage is allocated over the entire pool. Health care *costs* have continued to rise as a function of lots of things unrelated to the insurance market (well, kinda related, but then we need to get into 3rd party payer issues, which makes this even more complicated).

At any rate, if you read the article linked to above from a former insurance industry big-wig turned Case Western professor, you will get a glimpse at the Dirk Gently Hollistic Insurance problem. Crash a major piece, and the ripples go everywhere. Pull out the exchanges, and the overall insurance pool drops. While that helps the insurer in the short term, it drives up costs/down profits to the drug companies, hospitals, pharmacies, etc. who were getting paid for the sicker patients. They all have to raise their prices to meet ther profit incentives or see their stock prices drop. So they raise their prices. This makes it worse for hospitals and other caregivers who are not able to turn away uncomepnsated care, or whose reimbursement rates are fixed by contract with insurers or Medicare/Medicaid. Hospitals have to either fail financially (which happens with alarming frequency), cut back on care, or increase the cost to the comepnsated care patients. The later, of course, drives up insurance for the remaining people who can afford it.

Rinse, lather, repeat.
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