I don’t know any more details about Mr. Abbate’s specific situation than what was included in the article about the rally.  I don’t know if he has chosen to carry a private Medigap policy or Medicare D for prescriptions.  But I wonder if he’s aware of just how much a private health insurance policy would cost if such a thing were available.

Individual health insurance is available until a person reaches age 65, but the prices increase dramatically with age; people in their 60s pay substantially higher premiums than people in their 30s.  Statistically, health care costs increase with age, and it would stand to reason that if people could continue buying their own health insurance past the age of 65, the prices would continue to climb rapidly.

Out of curiosity, I ran quotes for a perfectly healthy non-smoking, 64 year old male living in Pueblo.  The premiums for my hypothetical client ranged from $123/month for a bare-bones, $10,000 deductible policy with 50% coinsurance, all the way up to $1,788/month for a very comprehensive, 100% coverage HSA plan with a $1,200 deductible.  Most of the popular policies were in the $300 – $500/month range.

I’m not able to run quotes for an 80 year old, but obviously the premiums would be significantly higher for an 80 year old than for a 64 year old, if such policies existed.  Even if Mr. Abbate has chosen to have the very best Medigap and Medicare D coverage he can get, my guess is that his combined monthly premiums for his health insurance is a fraction of what it would cost if he were buying all of his health insurance from private carriers.  I wonder if he would still be saying “If I can’t afford health care, that’s my problem…” if his only option were to purchase his own policy at 80 years of age?

Individual health insurance is a great option for people who are healthy, and especially those who are relatively young.  For people who are self-employed, it’s a good alternative to higher-priced group of one policies, and it gives people the flexibility to pursue entrepreneurship without being tied to employer-sponsored health insurance.  But the price increases with age, and many early retirees find it a challenge to pay for health insurance during the years before they are eligible for Medicare.  My guess is that even if private individual policies could be purchased by people over the age of 65, very few people would take that option, simply because of the price.

We currently have 50 states with 50 different levels of health care regulation.  For people who are ill, some states are much better places to live than others.  State-driven health care reform could theoretically be expected to increase the populations of sick people in states with very patient-friendly laws, thus driving health care costs even higher in those areas.  No state is an island.

Since much of the health care reform debate comes down to money, I think David’s comment that “…the federal government has an easier time running large deficits than the states do.” is the most pertinent point of all.  Basically, the logistics of genuine health care reform could bankrupt many states.  It might run the federal government into a good deal of debt too, but the feds have more avenues for dealing with debt than the states do.

I feel fortunate to live in a state where we have a solid high risk pool (Cover Colorado) and lots of options for policies in both the individual and group market.  But I can’t help but think of people who live in states where there aren’t any health insurance policies available to people who are sick and not covered by an employer’s plan.  Or people who live in states where health insurance is guaranteed issue but not mandatory, and thus extremely expensive.  For them, health care reform on a state level has a long way to go, and might not happen at all.

David’s article was included in last week’s Health Wonk Review, hosted by Brad Wright at Wright On Health.

Last fall, I wrote an article about what happens when health insurance is guaranteed issue but people are not required to maintain coverage.  The large premium increases that Wellpoint is proposing are a good example of what happens when young, healthy people have the option to be uninsured.  The recession has crunched budgets for families all over the country.  For people who are healthy, health insurance might have been one of the first things to go.  People who are sick and currently in need of care will go to much greater lengths to keep their coverage.  And thus begins the vicious cycle.  As more healthy people drop their coverage, there is less money to pay claims for people who are sick.  So premiums increase, leading to more healthy people opting to go uninsured.  The 25% – 39% rate increases happened because healthy people dropped their coverage… but there isn’t yet a guaranteed issue mandate requiring all applicants to be accepted.  Imagine how much worse the rate increase would be if that were the case.

Group health insurance premiums increase every year too, but not as quickly as individual policy premiums.  Group plans are partially (sometimes completely) funded by the employer.  Premiums are automatically deducted from paychecks, and the whole process is somewhat out of the employees’ hands.  There just isn’t as much incentive for a healthy employee on a group plan to go without health insurance as there is for a person who buys her own health insurance.  People who buy their own health insurance must pay the whole bill, every month.   When it’s time for their rate increase, there’s no employer shouldering part of the burden.  The option to continue or drop coverage is there every month when it’s time to pay the premium… and if it comes to a decision between the rent or the health insurance, it’s easy to understand how a healthy person might opt to go uninsured.

Eye-popping premium increases will absolutely become the norm if we end up with a system that requires all health insurance policies to be guaranteed issue, without a strong, enforceable measure requiring everyone to be part of the health insurance pool.

The poll found that although people were generally concerned about people who are uninsured, there was little consensus in terms of approval for the health care reforms that congress has worked on over the last year, and people – especially those with high incomes – were worried that health care reform would make their own situation worse.

The fact that 75% of people with health insurance are happy with their current coverage gives a clue as to why there has been so much protest surrounding the reform debate.  When people are happy with their health insurance and hearing a lot of noise from lawmakers about reforms, it’s natural for them to be concerned that their own coverage is going to change.  I think that if people were generally unsatisfied with their current health insurance, the reform process would have been less bumpy.

Nearly 60% of American get their health insurance from an employer.    This accounts for a large portion of the American people, and they are somewhat insulated from the rapidly rising cost of health care and health insurance.  In addition, they generally don’t have to deal with issues surrounding pre-existing conditions.  Employer-sponsored health insurance has large premium increases just like individual policies do, but employers typically shoulder a chunk of the increase, softening the impact on employees.  However, the percentage of people who are covered by employer-sponsored health insurance has steadily declined over the last decade, and more people than ever are having to fend for themselves when it comes to getting coverage.  Perhaps this explains the general sympathy towards those who are uninsured.

The big problem – as usual – comes down to money.  People want to keep their current health insurance and also extend coverage to those who are uninsured, but would prefer to do it without paying additional taxes or health insurance premiums.  Something’s gotta give.  We’ll have to wait and see what congress comes up with next week during their summit with the president, but there’s no way they’re going to make something out of nothing.  In order to provide health insurance for everyone, we’ll either have to give up some freedoms (in the form of a mandate requiring everyone to carry coverage) or pay a little extra in taxes or premiums.

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When we consider mandates, the result is generally higher premiums for everyone, and a greater benefit for the collective population – but not necessarily for each member of the population.  In states where health insurance is guaranteed issue, there is absolutely a benefit for people with pre-existing conditions, but there is also a tremendous cost in terms of higher premiums for everyone in the state.

In Colorado, lawmakers tried to pass a bill this month that would have halted new mandates for a year, but it died in committee last week.  This was followed closely by the passage of a bill introduced by Diane Primavera that will make medically necessary oral chemotherapy a covered expense on health insurance policies.  Primavera had introduced a similar bill in last year’s legislative session, but it didn’t pass.  This year’s version is likely a less costly mandate, since it includes the stipulation that the oral chemotherapy must be medically necessary in order to be covered.  The focus of this year’s mandate was on saving lives, whereas last year’s bill was intended to expand treatment options and make life a little easier for cancer patients.

As soon as the Colorado legislative session got underway last month, there were several bills introduced that focused on health insurance.  It’s easy to see injustices in the health care delivery system, and it’s natural to want to remedy them.  When we see a person suffering from ill health and also struggling to pay medical bills, it’s easy to understand how lawmakers want to mandate more comprehensive health insurance coverage for everyone – nobody should be bankrupted by medical bills or have to choose between getting treatment or having a place to live.

But the cold reality of money is hard to ignore.  The fact remains that every time we mandate additional benefits for health insurance coverage, we drive premiums up for the whole population.  And that invariably results in some people – who may have been right on the brink of being able to afford coverage in the first place – opting to go uninsured.  Which perpetuates the cycle of increasing costs for everyone in order to cover provider losses incurred in our overflowing emergency rooms.

But what if we tried to find a middle ground between those who would like to see every health condition fully covered by health insurance and those who can only afford basic premiums (and thus basic benefits)?  Maybe we could implement a system whereby all policies had to have a deductible of at least a certain amount – a minimum out of pocket.  We could eliminate policies with very low deductible and copays, but do so gradually, with annual deductible increases.  As out of pocket expenses increased, premiums would decrease.  Of course one of the problems with high deductible, low premium policies is that people often don’t have money saved to cover out of pocket expenses when they have a claim.  I can see a few ways around this.  One, we could allow anyone – regardless of what type of health insurance they have – to open a tax advantaged health savings account (HSA).  The money deposited into the account would be tax deductible, and would be available when medical expenses arose.  A second option would be to create “forced” savings accounts and payroll deduct a small amount of money – sort of the way we do now with things like social security and Medicare taxes.  This money would be held in an account in the employee’s name, and would be available if needed for medical expenses.  If it were not needed, it would belong to the employee upon retirement.  To be fair, these accounts should be tax deductible too, and could be waived if an employee showed proof of having their own HSA.  A third option would be a low-interest loan available from the government to help people pay their deductible.

I’d like to see a compromise between people who have health insurance that covers everything with very low out-of-pocket exposure, and those who have minimal coverage and huge financial exposure in the event of a serious illness.  Most of the very high end policies are group coverage, and are usually funded in large part by employers, which means that a lot of people truly have no idea how expensive their health insurance is.  And a mandate that increases coverage and cost is likely to be felt more by the employer than by the employee.  But it will be felt especially hard by people who pay for their own health insurance, with no help from an employer.

We cannot continue to just tack on more mandates that increase health insurance benefits without addressing the inevitable premium increases that will follow.  We absolutely need to address the problem of people facing staggering bills when a medical condition is not covered at all by their health insurance, but if we continue to add mandates without looking for ways to bring down costs, we’re only going to push more people into being uninsured.

Another issue in this debate is how much health insurance premiums can vary from one employee to the next, working at the same company, and with the exact same coverage.  To get an idea of the discrepancies, I calculated a quote for a small group policy with Anthem Blue Cross Blue Shield (which has very competitive premiums in the Colorado market) for a hypothetical company based in Denver with six employees.  I looked at premiums for single employees as well as employees with families, and used a wide range of ages for the employees.  While Anthem has a wide range of plan designs available, I specifically looked at premiums for a policy with a $500 deductible and 30% coinsurance, with an out of pocket maximum of $3500 in addition to the deductible ($4000 in out of pocket exposure each year).  The policy I looked at only covered generic prescriptions, and did not include any dental, vision, life insurance, or disability coverage.  In other words, it had no bells and whistles and wasn’t even close to what most people would consider a “Cadillac” plan.

For a single, 21 year old employee, this policy would cost $3144/year, well below the threshold for the Cadillac tax.  But a 60 year old single employee with the same policy would be paying $15528/year (the employer would likely be paying a good portion of each employee’s premium, but the tax is calculated based on the total premium, not the portion that is paid by the employee).  This would mean that $7028 of the 60 year old’s premium would be taxed – at 40%.

For families, the disparity in premiums is similar.  Family coverage for a 24 year old at our hypothetical company would cost $13860/year – quite a bit under the threshold for the tax.  But family coverage for a 62 year old would be $34,056/year, and $11056 of that would be taxed (the portion that is over the $23,000 premium limit).

Taxing expensive health insurance policies is an idea with its heart in the right place.  Making individuals and employers more aware of the cost and value of their health insurance policies is a good start towards real comparison shopping.  But setting a flat dollar amount above which a plan will be taxed seems ill-advised.  It doesn’t really do a good job of weeding out health insurance plans that truly have too many bells and whistles, and it wrongly penalizes people who live in areas where health care costs are higher than average, or companies with a disproportionate number of older workers.

Joe Paduda’s article was included in the Health Wonk Review, hosted this week by Jaan Sidorov of the Disease Management Care Blog.

But I felt that one of their points needed to be addressed because it could be a little misleading.  They note that 40% of Colorado residents have an income of less than $43,000 for a family of four, and that these families simply cannot afford health insurance, as the price of coverage for a family of four is “approaching $15,000″.  The authors note that families simply cannot afford to pay more than a third of their income for health insurance (I agree).  But that $15,000 figure is based on the cost of guaranteed-issue group health insurance.  Individual and family policies that are purchased without going through an employer are much less expensive.  And even when a family has group health insurance, the employer usually pays at least part of the premiums – it is rare to find a family that is actually paying $15,000 a year for their health insurance.  (People on COBRA are paying the entire cost of their group health insurance premiums, but they make up a small segment of the population).

My concern when I see articles noting that the cost of family health insurance is in the $13,000 – $15,000 range is that people might be so discouraged by those figures that they simply give up and opt to be uninsured without looking at what their options really are.  My husband and son and I will pay just over $4000 this year for our health insurance (we’re self-employed, so we pay the full cost of our health insurance ourselves).  True, we have a high deductible, HSA qualified policy that wouldn’t work for everyone.  But it’s perfect for us, and the premium is a fraction of the figure that often gets tossed around when people talk about family health insurance premiums.  If we opted for a more comprehensive policy with office visit copays and a lower deductible, we would still be paying roughly $7000 or so in annual premiums.

For families that are relatively healthy, there are lots of options for health insurance that they can purchase on their own.  The premium will likely be quite a bit less than the numbers that get mentioned in most articles that discuss the cost of health insurance.  I hope that people don’t see those numbers, assume that they can’t afford coverage, and give up without looking at all of their options.  We’re still three years away from most of the benefits of health care reform, and that’s a long time to be uninsured.

My worst investing mistake was, well…investing. I ignored (until recently) putting aside 3-6 months worth of living expenses in my money market fund. So going forward I am building up my cash reserves by setting aside a set amount each month that will remain untouched unless needed. My “wake up” call was my wife’s $700 Rx for an ongoing issue and as these “uncontrollables” keep coming at me, cash is needed…since you never know what will come at you next…

This is a perfect place to point out the value of a Health Savings Account (HSA).  If you have access to one, funding it is definitely a good idea.  Since most people get their health insurance through their employers, HSA qualified plans are only available to them if the employer has opted to offer one.  If yours doesn’t, you might want to request that they do.  If you are purchasing your own health insurance and are in good health, an HSA is well worth considering.

With an HSA, you can choose to invest your money just as you would in another retirement account, based on your own risk tolerances and preferences. The money stays in your account, growing from one year to the next, until you need it for medical expenses.  Once you’re on Medicare, any money that is still left in the account can be withdrawn (and is taxed at that point, similar to a traditional IRA).  The contributions you deposit to your HSA are tax deductible, and money you withdraw is tax and penalty free if you use it for medical expenses.

The number of people with HSA qualified plans has been steadily increasing over the last few years, and the plans are very popular with our Colorado clients who purchase their own health insurance.  For anyone who doesn’t want to have to choose between investing and saving for a medical emergency, HSAs are a perfect fit.

Most of our health care industry (including private health insurance) is profit driven.  This is the case with most private industry in the US, and for many of them, it’s a good model.  It drives innovation, fosters competition, and spurs our economy.  But one has to wonder if health care might be different (and should thus be treated differently) from other industries.  There aren’t many other industries where one’s very life may depend on  being able to afford a certain product.  But we know that people who are uninsured are more likely to die than their insured neighbors.  A person with cancer who isn’t able to pay for treatment has a pretty grim prognosis when compared with another person with the same cancer and a good health insurance policy.  In my opinion, this sets health care in a category apart from material things like cars and clothing.

Even shelter – undeniably necessary when temperatures drop below zero the way they have in much of Colorado this week – can be found on many different scales.  A person can escape the cold in a mansion, mobile home, public housing, or even shelters – all will protect against the elements.  But a person with kidney failure needs dialysis, and a person with type I diabetes needs insulin… no matter what their financial status might be.  Health conditions are a good equalizer; people get sick regardless of their ability to pay for care.

We’ve discussed how health insurance – especially in the individual market – isn’t really a good example of a free market commodity.  People with serious health conditions simply can’t purchase private individual health insurance in most states.  But we often find that people are unaware of this fact if it doesn’t impact them or someone they know.  People who are covered by an employer plan, or who are healthy enough to get an individual health insurance policy, might think that things are just fine as they are.  And sometimes those people will comment that government should stay out of free market affairs.  But then that person will get an annual premium increase of 25%, or be declined for coverage by a private insurance company, and their question for us will be something along the lines of “is that legal?”

Basically, we can’t have it both ways.  If we want smaller government, we have to accept that it comes with fewer regulations.  And that means more control in the hands of industry and less in the hands of consumers.  If we want regulation over things like premium increases and pre-existing condition limitations, we have to accept that it means more government intervention.  In the case of health care and health insurance, we’ve obviously got some flaws in our current system.  In some states, a person without access to an employer-sponsored health insurance policy cannot get coverage at all.  That is a problem any way you look at it.

Yes, some of the problems stem from personal irresponsibility (although hopefully mandatory health insurance will help to address this issue).  But some of the problems are built into the health care system, and that is why reform in the shape of government intervention is such an important task.  Because a consumer versus an industry isn’t really a fair match-up.

I found Joe’s article in the Health Wonk Review, hosted at Workers’ Comp Insider.

“According to the analysis, under current law some 14 million people are expected to buy health policies on their own by 2016. Average premiums would be roughly $5,800 for single policies and $15,200 for family policies under the legislation, compared with $5,500 for single policies and $13,100 for family policies under current law. The legislation is expected to more than double the number of people who would buy health policies on their own.“

This indicates that current individual-market annual premiums are $5,500 for an individual and $13,100 for a family.  That would mean that the average family buying their own health insurance is paying over a thousand dollars a month for a policy.  In our experience with clients in Colorado, almost none of them purchase a policy that expensive – not even close.  Most of our clients buy policies with premiums that are much more in line with the results of an eHealth study, usually under $200/month for a single person, and under $500/month for a family.

I think that perhaps the CBO and the Joint Committee for Taxation confused average group health insurance premiums with those in the individual market.  Under current law, which allows for medical underwriting in most states, individual health insurance is significantly less expensive than group coverage – for those who can qualify based on medical history.  If we end up with reform that adds additional mandatory coverage (like maternity care) to all individual policies and requires coverage to be guaranteed issue without mandating that everyone be part of the insurance pool, we might well end up with premiums for individual policies that are similar to what was mentioned in the WSJ article.  But for now, individual health insurance premiums aren’t even close to that amount.