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.

How can we most fairly spread the total cost of care for all Americans across the whole population?  Should sick people pay more than healthy people?  Should overweight people pay more than their slender neighbors?  Should a family with six children pay more than a family with one child?  Should older people pay more than younger people?  Should people with higher incomes pay more for their health care than lower income families?  These are the sort of questions that address the issue of how to fund our current high-priced health care.  And they are a huge part of the reform debate, including all the discussions about mandatory health insurance and guaranteed issue coverage.

But value in health care is another cost issue, and one that I don’t believe has been adequately addressed in the current health care reform bills.  Earlier this year, we had to call a plumber to have some work done in our bathroom.  He did a great job, and our total bill came to $165, including parts.  A week later, our son caught his finger in a door, ending up with a pretty severe cut.  We took him to the emergency room (unfortunately it happened after the lower-priced urgent care center had closed for the evening) where he had an x-ray and got three stitches.  We’ve started to get the EOBs from Humana, and so far the total amount that we’re expecting to be billed is over $1,400 (that’s after the network negotiated discounts, and there are likely more EOBs to follow).

We have an HSA qualified policy with a $5,000 deductible, so we’ll be paying the whole bill for our son’s finger ourselves.  But that’s not really the point.  Regardless of whether a bill is paid by the patient or by the health insurance company, we all need to be asking ourselves whether we’re really getting a good value for our money.  When the average household income in America is just over $50,000 a year, does it make sense for a cut that requires three stitches to cost more than $1,400?  Health care spending in the US is 16% of our GDP, which is dramatically out of proportion with what other countries spend.  And all of those dollars being spent on healthcare aren’t available to be spent on other things like education and quality food and clean energy.

Both the plumber who came to our house and the PA who stitched our son’s finger performed a very necessary service for us.  Both are highly skilled in their areas of expertise, and we’re grateful for the work that they did.  But was the work that the PA did ten times more valuable than that of the plumber?

Perhaps the question we should be asking is not who should be paying for healthcare, but rather, why in the world are we paying so much in the first place?  Health insurance premiums will continue to rise as long as health care costs do the same.  It won’t do any good to try to address premiums without first figuring out why we’re paying so much for our health care in the first place, and doing something about it.

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.

My guess is that the people who want congress to stop working on health care reform are those who have great health insurance that is largely funded by an employer.  Or they may be very wealthy individuals who have little if any concerns about  paying for unexpected medical bills.

One of the biggest obstacles to public support of health care reform is all the different avenues by which Americans get their health insurance and health care.  People who live in towns with great public clinics that provide services based on a sliding fee scale might not be is such bad shape, even without health insurance.  People who have excellent employer-sponsored health insurance are also doing pretty well in terms of health care.  Even public health insurance varies from one state to another, with some states having much more restrictive limits on who qualifies for programs like Medicaid.  And the simple fact remains that most Americans get their health insurance from their employers, and are thus relatively insulated from the whole process of purchasing health insurance and dealing with problems like pre-existing conditions and medical underwriting.  In addition, rate increases on group plans are partially paid for by employers, which means that the impact of rate hikes in the group market isn’t felt as strongly by individual members as it is in the individual market.

The people who are hurting the most are those who purchase their own health insurance, and people who work for very small businesses that struggle every month to continue to pay the premiums to keep their policies in force.  These people make up a relatively small percentage of the population, and their voices are being drowned out by all the people who don’t have to deal with the issues being addressed by health care reform.

The Republicans are saying that we need to start again, scrap the whole thing, and take “baby steps” towards a solution.  But I’m skeptical as to how that would work.  For the most part, congress in 2010 is made up of the same people that were there in 2009 (with some notable exceptions, like John Murtha and Ted Kennedy).  I find it hard to believe that starting again would result in a significantly different bill this time around.  Wouldn’t it just be a waste of another year of lawmaking efforts?  It’s unlikely that the people who came up with the first bill would be willing to make major changes if they did it again this year… we’ve seen resistance to compromise from both sides of the aisle over and over during this debate, including during the bipartisan summit last week.

As for the idea of “baby steps”, I don’t really understand the benefit that would be created by going slowly.  The current House and Senate bills could be considered baby steps as they are, given that most of their major provisions wouldn’t take effect for another three years.  For people who are uninsured and struggling to pay for health care (or not receiving any at all), I imagine that the prospect of a three year wait seems like an eternity already.

A lot of the provisions in the current bill make sense:  no pre-existing condition exclusions, no policy rescissions, subsidies to help people pay for health insurance, and a strong mandate requiring everyone to carry health insurance.  Americans are generally in favor of the idea of doing away with pre-existing conditions exclusions and policy rescissions, but tend to balk at the idea of requiring everyone to carry health insurance.  But I doubt that the former are possible without the latter… unless we all want to pay much higher health insurance premiums.

If we started over, do we really think that the same group of lawmakers would come up with a dramatically different bill the second time around?

The recent debate over the Wellpoint premium increases should be a warning sign that premiums will not be controllable unless we add more healthy people to the insurance pool.  When I read through the President’s proposal, I see lots of things that will be beneficial to the average insured person – especially those of us who buy our own health insurance on the individual market.  No more denials because of pre-existing conditions, no annual or lifetime benefit caps, and plenty of tax subsidies for a lot of families.  But the mandate requiring everyone to carry coverage is still very weak.  I guess it makes sense that it isn’t dramatically changed, given that the President’s proposal is a compromise between the House and Senate bills, but it’s still disappointing.

In the President’s compromise, the annual flat dollar penalty for those who can afford health insurance but choose not to carry it would start at $325 in 2014, and go up to $695 in 2016 (indexed thereafter for inflation).  The alternative penalty (people would be charged whichever amount is higher) is based on an percentage of income, and would start at 1% in 2014 and go up to 2.5% in 2016.  To Obama’s credit, the percentage of income penalty in his proposal is significantly greater than what was proposed in the Senate bill (0.5% in 2014, going up to 2% in 2016).  But I just don’t think this is going to get the job done.

Let’s look at the average American family earning $50,000 a year.  Let’s say they choose not to carry health insurance.  1% of their income would result in a penalty of $500 in 2014.  By 2016, that penalty would equal $1250.  My own family has a “bare bones” health insurance policy that will cost us about $4000 in premiums this year.  We have a high deductible ($5000) HSA qualified plan, and other than some preventive care, all of our expenses go towards our deductible (although we do get some great network-negotiated rates).  It would be tough to find a less expensive policy (in Colorado anyway) without significantly increasing our out of pocket exposure or ending up with lots of holes in our coverage.  So even with a high deductible policy, our premiums are eight times as much as the penalty that would be assessed against the average family for not carrying health insurance, in the first year of the program.

If people know that they won’t be penalized for pre-existing conditions and that health insurance companies will have to accept everyone, a penalty that is just a tiny fraction of the cost of coverage might be the preferred option for a lot of people.  And without a large pool of healthy insureds, I just don’t see a way that premiums won’t increase significantly.  I’m keeping an open mind, but I’m skeptical that we’ll be able to provide all of the proposed consumer benefits with such a lax enforcement of mandatory health insurance.

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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What the report card basically shows is that things went downhill between 2003 and 2007.  Colorado was 3rd in the nation for childhood obesity in 2003, and 23rd in 2007.  It remains to be seen what effect recently-implemented programs will have on this number, but hopefully when the report card is issued with 2010 data a few years from now, we’ll have moved back into a higher ranking.

Governor Ritter signed an executive order last week that will make the application process for Medicaid and Children’s Health Plan Plus (CHP+) easier by implementing electronic data-sharing programs among state agencies.  There are still lots of children in Colorado who qualify for state-funded health insurance but continue to be uninsured.  There are plenty of reasons for this, including a sometimes complicated application process and parents who are unaware of what programs are available.  Anything that simplifies and automates the process is bound to result in more children being covered by some sort of health insurance.  I’m hopeful that the next Colorado Health Report Card will show a big improvement across the board, but especially in the area of children’s health.

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.