My Health Plan Is Now Illegal In Massachussetts
Yesterday, I posited that current proposals for government health care are worse than other welfare programs, because they not only will cost a ton of money, but they will also, unlike say government housing, make my personal health care worse.
I only had to wait one day for an example (actually, I didn't have to wait at all, since I could just mine Europe and Canada for examples).
Massachusetts has now set the minimum level of insurance required to
comply with the state's individual mandate. Not only will every
resident of the state be required to have insurance by July of this
year, but by January of 2009, no one in the state will be allowed to
have insurance with more than a $2,000 deductible or total out of
pocket costs of more than $5,000. In addition, every policy in the
state will be required to cover prescription drugs, a move that could
add 5-15 percent to the cost of insurance plans.
After a lot of study, my family chose a high deductible health plan combined with a medical IRA (they actually call them something else, but I can't remember the abbreviation). We had a low deductible plan, but ran the numbers, and found we would save tons with a higher deductible plan, particularly if we dumped the savings into the IRA. We set the deductible at the level of economic pain we thought we could bear in a bad year. Even if we had a medical disaster once every three years, we would still be ahead with the lower premiums and the IRA-style tax savings. And if we don't have a disaster that frequently (we never have had even one in our lives) then we will build up some nice savings for retirement.
Of course, this makes too much sense to be legal. It actually involves individual choice and stuff, and god forbid we be allowed to exercise that. For our own good, of course.
Bob Smith:
"medical IRA" == "Health Savings Account"
Here's an HSA blog I came across: http://www.health--savings--accounts.com/hsa-weblog/
March 21, 2007, 10:06 pmDon Lloyd:
Warren,
In an email to Michael Tanner, I asked the following question :
"...Not only will every resident of the state be required to have insurance by July of this year, but by January of 2009, no one in the state will be allowed to have insurance with more than a $2,000 deductible or total out of pocket costs of more than $5,000...."
I suspect that 'total out of pocket costs' doesn't include the insurance premium itself, so my question is as follows:
With my current MA non-group, non-deductible, drug benefit, age 60 single policy premium of $800 + per month and rising at ~ 14% per year, will the effect of the new law be to :
a. cause my policy to be eliminated for legality reasons
b. cause my policy to be eliminated for cost feasibility reasons
c. increase the cost of my policy to me.
d. effectively reduce the quality, choice and availability of provider services
e. All or most of the above and the kitchen sink as well.
I have previously had Massachusetts legislate a non-group policy out from under me, so the threat is real.
Regards, Don
March 22, 2007, 1:41 amKnox:
I agree with you on high deductables. I've certainly done that with house insurance and car insurance. I certainly don't like what's been done in MA.
But the thing that seems screwed up about the free market with health care is that I understand that HMO's negotiate prices TEN TIMES less than a cash payment. I don't think Hertz gets their cars for 10% of what I pay. The thing that seems broken about health care is the huge difference between paying in cash and paying through an HMO.
At least when states experiment with intervening in the health care market, it can be compared to other states and see how it works. Let's at least keep the Federal government out of it.
March 22, 2007, 2:06 amJeff:
I've run the numbers for my family and came to the same conclusion you did, and my wife works for a large health insurance company. Even with two pregnancies in 4 years, we're breaking even.
The nice part about a high deductible plan with an HSA is you still pay the insurance company's contracted rate for out of pocket expenses with in-network providers.
I do agree with Knox, health care is the only industry that cannot seem to get transparent, consistent pricing. Because the vast majority of the market is third party payer.
Jeff
March 22, 2007, 6:12 amXmas:
I haven't looked into this in a long time, but I believe the problem with medical services pricing all comes down to Medicare. I believe that their payment scheme is based on a rule that says for any procedure or device something like:
"The government will pay amount $X OR 80% of the lowest price you offer to anyone else."
Then the insurance companies and HMOs take that same price list (since the government publishes it) and say, "We'll pay you 120% of what Medicare is going to pay you for this procedure."
Thus the whole craziness of Medical Billing Codes arises, because doctors can only make money by charging for every, single little thing that they do. Because Medicare's payouts are too low and the doctors are barely breaking even. But if you went to your doctor and said, "Hey, I'm paying this with this here credit card" (HSA or not), perhaps they'll charge you full price for your procedure, but drop all of the other nitpicky things from the bill.
March 22, 2007, 6:39 amIan Random:
I used to do data entry for a health insurer. One of the many teams I worked on, dealt with Medicare. I'd say that on average Medicare pays 30% of the billed, at least 10 years ago it looked that way.
March 22, 2007, 8:12 amKeith Casey:
I've had an HSA for about two years now. For my wife and I - getting into our late 20's in reasonable health - it was a simple and great investment since we have minimal costs now but expect to have them some day.
Personally, I feel better knowing that my health problems aren't going to be forced on other people.
March 22, 2007, 8:25 amCam:
Great points. But there are some other implications of public health care. When the government takes responsibility for your health, they in essence now own it. Then you have a bunch of bureaucrats sitting down planning different ways in which they can make people behave in "healthier" ways, justifiable now since government is going to foot the bill. So not only do you get stuck with the tragedies of a collectivized industry, the nanny state expands at the same time.
March 22, 2007, 12:29 pmmarkm:
I've had an HSA under an employer health plan for a year now. It's the best deal in health care going, aside from one glitch. Whoever does the payroll processing for my employer screwed up how the HSA contributions were reported on the W2, and I think screwed it up worse on the corrected W2 - and this isn't because there's anything complicated about it, they appear to have turned the programming over to some non-English-speaker that can't tell the difference between "employer contribution" and "employee contribution".
If I understand correctly, Massachusetts has nearly made HSA's illegal in that state. You can't have an HSA at all unless you've got high-deductible health insurance. I don't recall how high is "high", but you can't contribute more to an HSA in a year than the deductible - so at best you can put in $2,000 a year. That will work for people who are pretty healthy, so they can just keep building up money in the account until there is a medical emergency - but if you routinely run $2,000 in expenses a year, you might as well be on a full-pay insurance plan and nothing else.
March 22, 2007, 5:13 pmCaptain Arbyte:
markm, the law recently changed and now you can contribute more than the deductible.
March 23, 2007, 11:34 pm