Oct
10
Down to the Wire: The Election and Your Healthcare
Filed Under Health Insurance, USA Health Insurance | 1 Comment
With just one month left until the U.S. Presidential election and growing financial problems in the country, and abroad, it seems like a good time for a quick review of the U.S. insurance landscape.
What should be shockingly obvious at this point is that healthcare in America is by no means the best healthcare in the world as some politicians like to tout. Not even close. The country ranked 37th out of 191 countries in a WHO study in 2000 for health system performance, right below Denmark, Dominica and Costa Rica in 34th to 36th place respectively.
While the American insurance and healthcare market tends to be highly fractured and complex, due to a mixing of state-by-state differences and federal programs, it seems that the overarching trend since 2000 has been overwhelmingly downwards. The state of Florida, like much of the rest of the country, has seen the cost of health insurance grow over three times faster than the median incomes (although better than Missouri which had 4.4 times faster premium growth over median earnings).
Families USA, a Washington, D.C.-based consumer health advocacy group, recently released a state-specific study called ‘Premiums vs. Paychecks’, studying growing healthcare premiums and earnings from 2000-2007. The results are back and they are, in a word, scary. Families on employer-based insurance plans got stuck with a total increase in annual premiums of 72% between 2000 and 2007. That makes a US $4,908 jump from approximately US $6,800 to US $11,700 in premiums. The part paid by the employer rose 63.1% to US $7,899 in 2007, while the employee had a 94.1% increase in their share of the premium, nearly doubling it from US $1,969 to US $3,821 over 8 years. If you’re an individual on an employer-based insurance plan, don’t start feeling left out. Total premiums for individual employer-based plans only jumped 60.6%, up US $1,576 over 8 years to US $4,176. The part paid by the employer increased 55.8% (US $1,170) to US $3,266, while the individual’s contribution rose a measly 80.5% to $910. As if that weren’t enough, there are an estimated 3.7 million uninsured residents in Florida. This equates to one out of four people under the age of 65 in the state is uninsured.
Those figures are a little disconcerting, but it only becomes truly depressing when you stand them next to median earning figures. Over 8 years, median worker earnings rose only 20.2% in Florida, translating into just a US $4,600 increase from US $22,573 to US $27,353. Now, while I wouldn’t be too impressed if it was me, it’s not too bad; except for the fact that those numbers aren’t adjusted for inflation. When earnings are adjusted for inflation they become real earnings, and when we look at the real earnings from 2000-2006, it looks real bad. Median real earnings in the United States dropped from US $29,303 to US $27,239 over those 7 years.
This is not an isolated incident either. A survey released by the Kaiser Family Foundation and the Health Research & Education Trust confirms the findings of the Families USA studies, showing premiums more than doubling since 1999 while earnings increased 34% and general inflation rose 29% over the same period of time. On top of increased premiums (up 5% just this year), the Kaiser/HRET survey also shows an increase in worker insurance plans with high deductibles of at least US $1,000. The survey shows that of all covered workers in the country, 18% are now on plans that require the individual to pay US $1,000, out of their own pocket, or more before their health insurance will start making payments. This figure is up 6% from 2007. This change in the way most people are receiving coverage is even more emphasized in small businesses of 3 to 199 employees. Now, 35% of these small businesses are on plans with high deductibles, up 14% from last year.
So now we have a better idea of what the last 8 years have been doing for the American public’s insurance, what are the possible directions this could go given the impending election of a new U.S. President? It’s probably fair to assume that either of the candidates from the Republican or Democratic parties will win, as there really is no serious competition from third party candidates. So what are our most likely options for the future? The Republican candidate, John McCain, espouses a change in the system which would see an increase of people covered under private insurers, while Barrack Obama, the Democratic candidate, wants to change our public insurance system for better coverage through government plans. Hardly surprising given party lines, but let’s take a closer look at each plan.
McCain’s plan centers on opening up the market for private insurance. As previously mentioned, most Americans get their health insurance through their place of work. The way it usually works is both employer and employee each pay a certain amount into the healthcare plan, and then the government provides the company with tax breaks. McCain plans on removing the tax breaks for companies and instead giving tax credit directly to people so they can buy their own healthcare. Tax credits of US $2,500 would be available for individuals and US $5,000 for families. Restrictions on buying insurance across state lines would be in relaxed in order to increase competition. Some states do not permit the use of health status for calculating premiums while others do, so relaxation of where you can purchase insurance from frees up individuals and companies to buy from either, depending on which gives them the best plan. The McCain plan says that federal subsidies will be provided for high-risk groups who are usually denied coverage for their health issues.
On the other hand, Obama’s plan focuses more on regulation changes and expanding public program coverage. Medicaid would be expanded to increase the number of low-income adults it covers, and a new public plan would also be rolled out with the aim of providing private or public health insurance coverage for everyone. In addition, insurers would be obliged to offer guaranteed coverage to all applicants regardless of medical history and would also be prohibited from basing premiums on health status for both employers and individuals.
Based on a study by The Lewin Group (a health and human services consulting group), we thankfully have some data and numbers which can help us compare the two. There are a few distinguishing areas in the plans that we’ll look at and they will be: the reduction in the number of uninsured people; the total federal net expenditure; the number of people covered by public vs. private; and the change in annual family health spending.
The Lewin Group projects that under current law there will be 48.9 million uninsured people in America by 2010. Going on McCain’s plan, there will be a reduction in the number of uninsured by 21.1 million people; the Obama plan would lead to a reduction of 26.6 million. So we would see a 43.1% reduction in uninsured people under McCain’s plan, and a 54.4% reduction under Obama.
The next set of figures give us an idea of how much money the federal government will end up shelling out under the two plans. Between the years 2010 and 2019 the study estimates that McCain’s plan will cost the federal government US $2.05 trillion, while the Obama plan will rack up a US $1.17 trillion bill. Although, you should know that the study was not provided with details, by either candidate, about how exactly this would be funded.
Moving on, let’s take a gander at how the two plans will change the lay of the land in terms of how many people would be covered by either public or private plans. Based on the numbers insured and uninsured by 2010, McCain’s plan will lead to an increase in people covered by private health insurance by 26.5 million but will move 5.4 million off of public health insurance. Obama’s plan will lead to 21.6 million leaving their private insurance plans and an added 48.3 million people joining public coverage.
Finally, let’s look at the projected change in the amount of money families spend on health insurance annually, for the year 2010. The study says that based on the candidate’s proposed plans, families will spend US $1,411 less under McCain’s plan, while spending US $426 less under Obama’s plan.
So there you have it. Each plan would have its plusses and minuses, and I truly hope that the information will at least help you better understand what’s going on. However, considering there has been no real change to the American healthcare system in decades, and that either of the candidate’s plans will, in all likelihood, be absolutely butchered by partisan hackery and interest group meddling in Washington; it will be immensely difficult to make such a large scale change. Therefore, it’s a good thing the financial world is in good, solid standing to help usher in the changes of the future. Wait, it’s not? Oh, dear.
Sep
24
AIG – What is happening, and how it affects you.
Filed Under China insurance, Expat Insurance, Health Insurance, Healthcare, International Healthcare, Life Insurance, Medical Insurance, USA Health Insurance | Leave a Comment
AIG: The letters on Manchester United’s football shirts, on buildings dominating skylines in major cities worldwide, and in the past week, on the front covers of the business pages, if not the entire paper.
A company with a long and storied history, AIG had posted total losses of $18.5 billion over the last three quarters, before being bailed out last Tuesday (Sep. 17th) with a loan of up to $85 billion dollars from the Federal Reserve. This was designed to effectively secure the company’s important economic position worldwide, and in exchange the Fed would get around an 80% stake in the company as a kind of security, and 12% interest on the loan.
What happened? Why did AIG suddenly need so much cash to avoid going under? Should they have been lent it?
This was not the start of the story, and it is far from being the end of it. It began, like so many of today’s economic worries, with the sub-prime mortgage crisis. To enable them to continue making yet more bad loans, banks in the US and Europe insured some of the loans with insurers such as AIG. As the largest insurance company in the US, AIG also insured many other deals made by banks or large companies, so as the economy went into recession, it lost a great deal of money, resulting in a situation where the company was very illiquid and could therefore fail. This would have had a huge knock-on effect on banks and companies not just in the US but worldwide, meaning that the Fed felt justified in bailing out AIG (whereas it left Lehman Brothers Holdings Inc., who announced last week that they would file for chapter 11 bankruptcy protection, to their own devices).
The government was fresh from shoring up Freddie Mac and Fannie Mae, (the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association) with guarantees and the prospect of a ‘conservatorship’, and back in March, the Fed backed the purchase of the stricken Bear Stearns by JP Morgan. The Federal Reserve has as a result been rather seriously depleted.
The US is not the only country that is having to take action of this kind. The UK government ‘nationalized’ the Northern Rock bank, another victim of the sub-prime crisis in the US, back in February. Some slack is taken up by companies taking over other companies, e.g. Bank of America buying Merrill Lynch, Lloyds TSB merging with HBOS, or Barclays buying up some of Lehman Brothers’ core assets- which many would argue is how the market should work. At present, however, the US looks likely to spend yet more money to try and solve a problem that, although originating in the country, affects the world’s economy as a whole. It is unlikely that other countries will be able to continue to sit back and watch the US deal with the problem alone for very long.
The AIG bail-out looks to be only the start of an almost unprecedented level of government spending to assist private business. Lawmakers are still hashing out the details of a plan to use taxpayers’ money to buy the bad debts of financial institutions with significant operations in the US. The plan would put about $700 billion dollars spending money into the hands of Treasury Secretary Henry M. Paulson Jr. who would theoretically decide how to spend it in a way that balances the interests of the taxpayer - minimizing immediate costs but ensuring liquidity in the financial markets in the long term. This is a very controversial plan, and has even been called a kind of undemocratic socialism. Paulson in fact used to be head of Goldman Sachs, which along with Morgan Stanley just announced a change of legal status to enable it to take advantage of the proposal. Many politicians, including McCain and Obama, have expressed concern and are demanding greater oversight, but as it is hard even for financial experts to put a value on bad loans of the type that caused the crisis, it is unclear how this would work.
How does this affect my insurance?
Essentially, it shouldn’t. AIG has been more or less guaranteed by the US government. In any case, most private policies are with subsidiaries of AIG that are separately regulated and financially sound. Also, in the US, policies are usually guaranteed to some extent by state run associations should an insurer fail.
However, as anyone who has seen Mary Poppins should know, customers are not necessarily rational beings, as has been demonstrated in the past week, particularly in Asia. The offices of AIG subsidiaries in Singapore, Taiwan and Hong Kong have been mobbed by people wanting to either enquire about the safety of their policies or cancel them altogether. In Hong Kong some 1,700 people surrendered their policies with AIA on Tuesday. This was despite assurances, including from the monetary authority of Singapore, that the subsidiaries of AIG are still sound. AIA in Singapore has announced a policy conservation program to enable those who surrendered their policies in panic last week to reinstate them. While some unscrupous agents might be tempted to advise people to switch insurers to get a new commission, the best course of action is probably to wait and see.
Effects on the presidential election race, and the candidates’ healthcare proposals:
Both candidates are going to have to make significant changes to their policy proposals in the face of the economic realities which will likely face the next administration. They also both have to come up with a stance on this new proposal. So far their responses have been fairly similar, with both calling for more oversight. Both McCain and Joe Biden were supporters of the deregulation in the late 90s that arguably made the sub-prime crisis possible, which may mean Obama has the edge in not having to backtrack too much. What is certain is that there is going to be a lot less money available for expensive programs such as Medicare or Medicaid, and any candidate promising tax-cuts will have serious credibility issues. The future of health insurance and healthcare financing in America is now very unclear.
Sep
8
Global Healthcare Equality: The Reality
Filed Under Health Insurance, Healthcare, International Healthcare, USA Health Insurance | Leave a Comment
The World Health Organization (WHO) was recently presented with the results of a 3 year study by an advisory body named the Commission of Social Determinants of Health (CSDH). The commission was comprised of policy makers, academics, heads of state and health ministers from around the world including two former directors of the U.S. Center for Disease Control, a former president of Chile, an economics Nobel laureate and a former prime minister of Mozambique. The study focused on what, outside of medical knowledge and technology, affects our health in the largest ways and what we can reasonably hope to do about it.
Health data from across the world was gathered and studied by the advisory body to afford us a more thorough knowledge of global health inequities, described by the WHO as “unfair, unjust and avoidable causes of ill health”. The study confirmed prior reports which highlighted inequities between countries but also showed that even within a country’s own borders there is a gradient of health. Those living in abject poverty were more likely to live shorter, sicklier lives than poor segments of the population, while the poor were, in turn, worse off than those of average incomes and so on.
The social determinants looked at by the commission covered almost every aspect about a person’s situation which could be changed by altering political or economic resources. Topics included education, the environment, availability of basic amenities, economic circumstances, and gender equality, as well as political and cultural factors.
The report is replete with factoids and statistics relating to the difference in life expectancy and mortality rates of diverse sectors of the population both between and within countries. For instance, not only will a girl born in Japan live on average, 42 years longer than a girl born in the country of Lesotho, Africa, but an indigenous Australian man will live, on average, 17 years shorter than their non-indigenous counterparts. However, the commissioners stress that the wealth of a country is not a determining factor in the level of health inequity. Countries such as Cuba, Costa Rica, China, Sri Lanka and others have done a surprisingly good job of maintaining good levels of health in their populations despite their relatively low per-capita income. The U.S. leads the charge in the other direction with a larger gap in health equity than many other wealthy nations. A former U.S. Surgeon General says this may be due to both to the high level of diversity in the American population and the fact that the U.S. does not invest much into improving the social gradient in terms of trying to ensure that the entire population has access to a basic level of healthcare.
The general conclusions and broad recommendations that the commission drew from their data and research had precious little to do with improving medical care and technology. In fact, the advice was to not rely on medical advances as these would most likely further increase social health inequity. Instead, we should focus on improving the day to day conditions of where people are born, live, work and age. Clean drinking water needs to be provided and substantial investments need to be made in education, public transport, working environments and housing. The panel of experts also says that the problem of inequitable distribution of wealth, power and resources needs to be tackled on every level; global, national and local.
The commission strongly advises that further study and data gathering needs to be done on health inequity and its social determinants so we may further understand the problems and that any move forward needs to be fully examined and assessed to determine what impact it will have on social health inequity. Focus needs to be on managing health resources more efficiently, with the commissioners in fairly unanimous agreement that reallocating health investments to focus on social determinants will save money and peoples lives over time. This of course means that policy makers and many workers both inside and outside of the health industry will need to be trained to asses these impacts.
The question is will this bring about a brave new world of healthcare? Will other countries reorient their healthcare systems to promote socially equitable healthcare, let’s take the U.S. for instance. With staggering numbers of uninsured, underinsured and people in medical debt in the U.S., will the growing movement for a government-backed single-payer system come to pass? Brazil, Canada, Chile, Iran, Kenya, Mozambique, Sri Lanka, Sweden, and the UK have already drawn inspiration from the WHO commission’s findings, declaring that they are already developing policies which are committed to improving the social factors of health equity. With a growing public concern in the U.S. over the cost of healthcare and many Americans being nigh uninsurable under the current for-profit system, does America have the political wherewithal to enact such broad sweeping changes or will they continue to run with what they have? Maybe we’ll get a sign of the future in November.
Aug
27
A few reasons for the cost of healthcare in the US- and will they be addressed?
Filed Under Health Insurance, Healthcare, Medical Insurance, USA Health Insurance | Leave a Comment
With the US presidential election around the corner, one of the issues getting the most media attention is the candidates’ differing stances on healthcare. Everyone agrees that something needs to be done about the rising costs of healthcare in the US to the federal and state government and to private individuals; the question is: ‘what?’. But to answer this question, we need to know why costs are rising in the first place.
Part of the reason is the large numbers of different groups trying to make money out of the system. Pharmaceutical companies, hospitals, insurers; unfortunately, altruism is not always the primary motivation, and as with any detective investigation, the question we should ask ourselves is ‘cui bono?’- or ‘show me the money!’.
Hospitals in the States and elsewhere, especially with the rise of medical tourism, will often try and sell themselves to prospective patients by advertising their latest equipment or more advanced surgical techniques. Sometimes a hospital will buy a machine, such as a CT scanner, for this very reason, but in any case, once it is bought, the hospital will want to make sure it is used, even if it is expensive, unnecessary for a particular patient, or even dangerous (for example, CT scanners subject patients to radiation equivalent to that of hundreds of x-rays) - not least because of the amounts they can bill. A CT scan often leads to additional precautionary treatment- increasing costs even more. Insured patients will often want the peace of mind that new technology can bring- it may have attracted them to the hospital in the first place- and insurers may end up footing the bill, much as they try to avoid paying for unnecessary treatment. Insurers may sometimes try to avoid such costs, but only at the risk of legal challenges and their reputation in a competitive market, especially when they get it wrong.
State and federal medical programs such as Medicare and Medicaid have more difficulty when they want to exclude certain procedures from their coverage on utilitarian grounds, and are often under pressure to include more procedures. Unlike in many countries, cost-benefit analysis is not so rigorously applied in the US- for example, the The Food & Drug Administration is forbidden by law from taking cost into account when considering the approval of a new device or drug.
Drugs are another reason for the high cost of US healthcare. Other governments which run universal state healthcare systems put limits on how much they will pay for drugs, and some say that this actually pushes up the price of drugs in the States.
On the other hand, Professor Sir Michael Rawlins says that other countries are having to pay for the marketing cost of drugs in the US, which he estimates at about twice the amount spent on actual research and development- the pharmaceutical representatives who make sure their companies’ products are used in hospitals and by doctors, a privilege companies will pay for - and advertising directed at potential patients, which is forbidden in many other countries. If this is the case, it is unlikely that marketing costs will go down any time soon, as big pharmaceuticals see the patents on their money-making drugs expire and face competition from ‘generics’.
Pushing unnecessary, inappropriate and expensive drugs might not happen if cost-benefit analysis was more carefully applied to new products and techniques. As it is, physicians face pressure from drug managers who try and keep costs down for hospitals and on behalf of insurance companies. These competing forces mean a doctor might be under pressure both to promote expensive drugs and procedures and at the same time not to approve these for insurance purposes.
The questions that all this has created about the validity of being able to trust your doctor to make an unbiased prescription of the most appropriate drug, and the direct marketing of many alternative brands of drugs to patients, has created a feeling that for determined individuals the right drug is out there if they are willing to put in independent efforts to find it, and the idea that the cost will primarily devolve upon the individual may create a sense of entitlement to the newest treatments, even if they are untested and have a slim chance of success. There is even debate about whether this atmosphere may prejudice clinical trials.
It is very likely that this all inclusive approach to drugs and medical techniques has pushed up the cost of healthcare in the US without proportional benefits to life expectancy and child mortality
How can this be changed? The pharmaceutical lobby is likely to use the threat of a drop in profits due to generics taking over many of their markets to try and influence any new health-care system, and it will be hard for any government to limit drug costs unless they are simply brought down by market competition, in which case there is still the possibility that they will have to include newer and more expensive treatments in healthcare cover. The existing systems federal and state medical provision such as Medicare have been leaking money recently, because of the involvement of subsidized private intermediary plans, and well publicized incidences of paying for fraudulent and improper claims. Congress recently overrode a presidential veto which would have reduced Medicare payments for doctors; the president had justified his veto partly on the grounds that bill would “perpetuate wasteful overpayments to medical equipment suppliers.” The existing state provision appears to be wasteful and inefficient, so while everyone agrees it needs to be changed it may be harder to appear to advocate more state spending, even if it would save money. While it would seem that socialized medicine would reduce overall individual insurance costs by virtue of healthy young people’s payments subsidizing risk prone older individuals, there is a good deal of disagreement on the subject, not least because of the element of ‘Socialism’ involved.
There are many myths about the reasons for the cost of American health care- Mark Gimein in Slate points out that too much blame cannot be put on private insurers, whose profits only make up a small percentage of total healthcare costs. The popularity and promotion of expensive medical techniques and drugs must surely play a large role, and will have to be taken into account and checked more aggressively if any more universal system of health care is to be introduced in the US.
Jun
27
US Health Insurers Moving into China
Filed Under China insurance, Expat Insurance, Health Insurance, Medical Insurance, USA Health Insurance | 1 Comment
Recently, many major American insurers have looked to international markets for new customers. Thus far, major insurers have primarily targeted the booming expatriate market as their source for international customers, often times establishing field offices to better serve them. A prime example of this trend is in China, where household names such as Aetna, UnitedHealth Group and Wellpoint have all recently established field offices.
The main reason for a growing expatriate segment in China is that various multi-national corporations are setting up shop to take advantage of China’s booming economic growth. According to Martha Temple, president of Aetna global benefits, China is “…a real hotbed place for large U.S. multinational or multinational corporations [from other nations] to open or expand their offices.” As a result, Insurance companies are cashing in by aggressively targeting expatriates.
However, with the slowdown of the US economy, and China experiencing social changes such as a booming middle and upper class, insurers are now pondering the decision of whether or not to offer insurance to Chinese citizens. More and more Chinese are looking for western “luxuries” such as private health insurance as they experience and enjoy their newfound wealth. Even though China has a basic national health insurance plan, many of the middle class and well-to-do nationals would opt to supplement the national insurance plan with private insurance to have a wider range of coverage. And with a population over 4 times the size of the United States, China may be a much needed supplement to insurer’s US business.
Interestingly, foreign insurers within China must have a field office open in the country for two years before it may start selling its products, as required by the Chinese government. Aetna, which only recently opened its China office, needless to say, will have a lot to think about in this period. Possibilities of what to sell are diverse. Insurers could opt to sell non-insurance products such as wealth management plans, or offer abbreviated services such as case management or diseases management insurance. In any case, the outcome of these insurers’ decision will be an interesting one.
Jun
20
AMA hands out health insurance report cards.
Filed Under Health Insurance, Healthcare, Medical Insurance, USA Health Insurance | Leave a Comment
The Health Insurance Industry Convention is currently well underway in San Francisco this week and even though its only been one day record numbers of protesters are showing up to rally against the current healthcare system in the USA. This is occurring in the same week as the American Medical Association released its health insurance report card to individual insurers. All in all, it’s been a difficult week for American insurance companies.
Among the insurers rated by the report are companies like Aetna, Anthem BCBS, CIGNA, Coventry, Health Net, Humana, United Healthcare (UHC), and Medicare; and while the report has no ‘grades’ per-se, it does reveal some interesting facts about some of the country’s top insurance providers. The major focus of the report is with relation to how quickly doctors are receiving payment form insurers for services rendered to policyholders and the consensus is that most insurers are too slow.
According to some AMA members physicians are spending approximately 14% of their annual income simply to receive payment from insurance companies. And in the current economic climate, this is simply an issue that will not stand with the AMA. Paying out claims is a key issue, and failure to complete payments in a timely and efficient manner is resulting in a large amount of unrest among primary caregivers.
According to the AMA the worst offender when it comes to paying claims at the contracted rate is United Healthcare (UHC), with only 62% of all claims being paid, while Medicare was the best with a 98% completion record. While some insurers are able to follow through on Doctors payments with limited hassle many insurance companies are simply dropping the ball.
This is leading to a number of Doctors starting ‘boutique’ medical clinics in an effort to remove themselves from the world of insurance. With boutique clinics patients will typically pay a monthly, or annual, retainer under which they are entitled to 24/7 access to their caregiver. In addition to this Boutique medical practices are focusing on a more personalized form of medicine by only working with a limited number of patients, something which is paying off as many people in the
There is a problem though, Boutique practices, due to the level of attention and care provided are only accessible by patients who are relatively wealthy, meaning that the majority of the American population is unable to use these services, which brings us back to the insurance companies. As mentioned previously, the Health Insurance Industry Convention has been rocked by large numbers of protesters clamoring for a single payer healthcare system. Single payer healthcare was supported by a number of politicians running in the presidential primary elections, most notably Senator Hillary Clinton, however with John McCain and Barrack Obama sealing their relative party nominations this proposal has a very limited chance of being established.
With the presidential election coming up in November the issue of healthcare is becoming ever more important to the American Public. With a number of proposals being floated to address the current problems in the system it is clear that there will have to be a fairly radical reassessment of healthcare in the
With a number of insurers failing to meet their requirements towards primary healthcare providers it is clear that something must be done to address the system. When the domestic insurer who has the best record in settling claims is the one that is administered by the government then maybe it is worth looking at initiatives that would see the government prop up the local market. All that remains clear at the moment is that this crisis of care will not end anytime soon and that everyone in the American healthcare industry needs to be looking at viable options for the future. Whether this is in regards to improved claims handling, better insurance policy coverage, subsidies for prescribed medicines, or simply looking to lower the cost of healthcare, something must be done, otherwise there may not be the standard of quality healthcare that exists in the
Jun
18
The Way Forward
Filed Under Medical Insurance, USA Health Insurance, Uncategorized | Leave a Comment
You know it’s going to be a bad day in the healthcare industry when the chairman of the Federal Reserve, Bernard S. Bernanke, is predicting a massive rise in the cost of healthcare in the
With the primaries over, and the presidential elections just round the corner, Barack Obama and John McCain are going to have to convince the voting public that they will be able to address the current healthcare crisis, and it may not be as easy as you think. Both these candidates know that their ability to offer a suitable solution may be the difference between winning and loosing a state. With that in mind we’re going to give you a brief rundown of the options and what they could mean if implemented.
The two main options on the table are:
Barack Obama’s Proposal
1. A move to a paperless healthcare system where all patient records and health insurance documents would exist only in electronic form. This would be implemented along with quality disease prevention (as opposed to disease management), and ensuring portability of health insurance should a policyholder loose their job, and consequently their coverage.
John McCain’s Proposal
2. Create tax breaks of up to $2,500 for individuals, and $5000 for families, who have purchased private health insurance. These tax breaks will occur each year, and while this would have a relatively limited impact on the number of uninsured individuals in the
These two proposals aim to solve the current healthcare and insurance crisis in radically different ways. By removing paper from the healthcare industry Obama aims to eliminate one of the major sources of spending (namely paper) by moving everything to an electronic format. It’s easy to see how this simple proposal would save quite a bit of money, but there is a problem.
Electronic conversion is moving at a snails place in the
By far the most promising part of this proposal, at least in the eyes of the American public, is the issue of health insurance portability should an individual loose his job, and subsequently their employment backed insurance. However, it is important to note that with the HIPPA and COBRA legislations the
Citing immediate results may get Obama votes on this issue, but analysts are warning that even if these proposals are accepted by the government, the earliest changes to the system will happen approximately 5 years after the institution of the plan. This means that the
In terms of immediate impact the winner is clearly the tax break initiative proposed by John McCain. Creating a system whereby individuals would receive tax credit for any health insurance policy that they have purchased could be instituted immediately, which could give strength to the proposal in the eyes of the voting public. In addition to this McCain is not planning on upsetting the current free market system of healthcare in the
Critics of the McCain plan claim that this proposal would seriously undermine the American public’s ability to access healthcare as the policy would involve the removal of employer backed health insurance coverage. However, this is not the case at all. Under the tax break system suggested by McCain employees would still be entitled to job-sponsored insurance and this initiative would simply give a dollar for dollar tax rebate to any individual who had purchased medical insurance.
This would, in McCain’s eyes, give the American public an incentive to go out and buy health insurance, which would in turn reduce corporate spending, and improve the overall quality of health insurance plans which in turn would increase the availability of healthcare. If there truly was a free and open market for health insurance established in the
Both arguments have their critics and supporters, and both proposals recognize that there is a fundamental problem in the American healthcare system. With rapid medical inflation, millions of uninsured and underinsured citizens and pharmaceutical prices skyrocketing this is an issue that may play a very important role in the upcoming elections. But it’s up to the voting public to inform themselves and understand the subject. Is one of these plans the way forwards for healthcare and insurance in the
Jun
12
Underinsurance; A catastrophe in the making
Filed Under Health Insurance, Healthcare, International Healthcare, USA Health Insurance | Leave a Comment
We’ve talked quite a bit about the worrying amount of uninsured individuals in the
But what’s the issue? Many commentators will say that these underinsured individuals, while not being comprehensively covered by an insurance policy, still have some protection, and due to their above average incomes will be able to contribute towards the cost of any medical treatment that they receive with very little trouble. This may have been true 20 odd years ago, but in the modern world this could be considered slightly delusional.
With the levels medical inflation during the 1990’s and early 21st century, specifically in the
Now an onlooker may say, sure – but that’s individuals with no insurance – people who have insurance should be able to afford this coverage. And they would be right; to a point. The study defined underinsurance as anyone who has an annual health insurance but still contributes 10% of annual income towards medical costs, and whose deductibles were equal to a further 5% of their annual income. Low income individuals who spent 5% of their income on health insurance or deductibles also qualified for this bracket.
Think about that for a second, in the midst of a global credit crisis and worsening economic fortunes for the average American citizen, many of these individuals are spending between 10 and 15 % of their total annual income on healthcare, and for many of these people this is without having ever seen a doctor! Compound the actual deductibles and co-pays on top of this and the situation starts to look extremely grim indeed.
With medical inflation reaching levels never seen before many domestic insurance companies are scaling back coverage, without also scaling back premiums. This is understandable, however it leaves the average policyholder woefully unprotected. International insurance companies are realizing, however, that increased coverage is most definitely needed as the costs continue to rise. A great example of this would be seen with IHI Danmark’s travel insurance; over the last year IHI saw the increased need that travelers have for comprehensive protection and raised the overall maximum benefit of the policy to ‘Unlimited’. This means that under the new IHI travel policy there is no coverage limit, and this move has seen the company increase the number of policyholders obtaining these short term travel medical insurance policies.
Now obviously the above example would only work for individuals who are planning on being outside of their home country for a period of time, but the idea is clear. In a time when domestic health insurance companies in the
The point is this, increasing premiums and healthcare costs in conjunction with lowered coverage is leading to more and more Americans finding themselves in a position where they are simply unable to access, or afford, the healthcare that they need. With a 60% increase in the number of underinsured Americans in the last 4 years, and the total number of Americans who are either uninsured or underinsured at 75,000,000, its not hard to see how this situation will worsen in the years to come.
