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Searching For Value In The Health Exchange

While listening to Ezekiel Emanuel defend the Affordable Care Act on Fox News Sunday I reminded myself that I should do a better job of being prepared for the inevitable cancelation of my grandfathered health insurance plan. Although I have toyed with the idea of going without health insurance I believe my best choice is to replace my current plan with the health insurance plan that has the lowest monthly cost after the subsidy. I currently use this catastrophic care strategy very effectively and all of my routine out of pocket medical costs are paid for directly from the HRA. In my case I had a pretty nice low cost, comprehensive plan, AARP-Aetna(3000/5000/20%). So what would I get with the lowest cost plan offered by the exchange?

The lowest cost bronze plan is the HealthSpanOne 6000 HSA. Here are the details from www.healthspan.org website. Like most exchange plans the deductible is pretty high, $6000/$12000. The 0% coinsurance is nice but like many exchange plans, it has its limitations. The biggest limitations for me is that it does not cover any out of network costs and I could not find my preferred hospital and family doctor on the provider list.

The next lowest cost bronze plan from a different insurance company is the Anthem Bronze DirectAccess ”“ cabu. It has a $5000/$6350 deductible and 30% coinsurance but it is has a higher monthly cost, deductible, and coinsurance than my unsubsidized insurance.

Once again I am reminded that my current plan is a much better deal than the new “improved” plans offered through the exchanges. The exchanges do not have much of a choice and after looking in detail at few of the plans, I can say that their only saving grace is that they are subsidized. They are not bad but they definitely fall short of what I was accustomed to in several areas. I guess Ezekiel and I have different ideas of what constitutes a good health insurance value.

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Things that make me go hmm… Valuepenguin.com

I ran across a nice health insurance pricing site today, www.valuepenguin.com. It was easy to use. My only problem was that when I ran my demographics through the calculator it showed the Anthem cabu plan for my demographics(2-59yr,Ohio,clermont county) would cost $969.52. Over at www.ehealthinsurance.com the price is $844.92. Hmm… Why is there a difference?

*** Oops! I entered my data wrong at www.ehealthinsurance.com. With the correct data it matches the numbers at anthem. It is interesting that the Core DirectAccess plan is 3.3% costlier than the Bronze DirectAccess for the same benefits.

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A Conservative Argument for Health Care Reform

Last week I was amused listening to quotes by President Obama that said:

If Americans like their doctor, they will keep their doctor. And if you like your insurance plan, you will keep it.

The reason that I found these quotes amusing is that this a traditional conservative argument being made by a progressive President. If my notes are correct we find that in Professor Allitt’s first lecture in the Conservative Tradition course, conservatives believe that at the most fundamental level, there is a strong human propensity to keep things the way they are.  Even President Obama realizes that he cannot ignore this aspect of human nature so it should not be surprising that he would use this argument to further his political cause. From this basic conservative idea we can also see why Conservatives have embraced slower, more predictable policies. Progressives are more impatient with change. They want change to happen a lot faster and are willing to trade hardships on “other people” for the greater good of society. Progressive plans generally run into problems when the “other people” is the forgotten, middle class voters. So on one hand the President would like to stick to his progressive health care reform with a “Damn the torpedoes, full speed ahead!” attitude. On the other hand he has this nagging fear that the signature accomplishment of his administration will not work and that his own people will unleash a rein of chaos on middle class voters if unchecked. He realizes now that what he once perceived as a loyal and competent administration is actually an insular group of people that is adamant that they can do stupid all by themselves without any help from an opposition party. This leaves the President and his administration in a quandary. They need an opposition party to check their excesses but from the opposition they have seen so far, they would prefer that this opposition is seen and not heard. Oh, how I yearn for the good old days when Republicans were the stupid party! At least they could lead.

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Review of Bonavita Kettle and Hario Coffee Dripper

Okay, I admit that I am a coffee geek. When my old Presto tea kettle finally stopped working I took the opportunity to upgrade my kettle and picked up Bonavita from Amazon. With a $60 price tag this is an expensive decision but I was willing to go the extra yard for a good cup of coffee. At the same time I purchased a Hario Coffee Dripper to try out the pour over style coffee.

 

My morning routine is to drink a cappuccino first and then follow it with a cup or two from my French press. By 730 am I am finished with my coffee for the day. Occasionally on the weekends I will get the snoozes around 4 pm so I will make a single cup of coffee. This is where the new kettle and the Hario coffee dripper shine. After making a couple of cups using the pour over technique I incorporated some of the same ideas into my French press technique. Now I steep my grains for about 40 seconds and pour the water along the sides of the carafe. Enjoy!

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The Problem With Subsidized Health Insurance

I wasn’t going to blog about health care today but Ross Douthat wrote about one of my Affordable Care Act pet peeves, Obamacare’s Losers and Why They Matter. In the dogged pursuit of expanding access to health care, the Affordable Care Act supporters have to admit that the status quo has become more entrenched. The key to this problem is that subsidized health insurance is becoming even more entrenched and difficult to reform. When the federal government subsidizes health insurance in every market it looks like one massive shell game in which there will be one arbitrary group of winners and another arbitrary group of losers and common sense is no longer a valid argument.

If we want health inflation to stay low and health care costs to be less of an anchor on advancement, we should want more Americans making $50,000 or $60,000 or $70,000 to spend less upfront on health insurance, rather than using regulatory pressure to induce them to spend more. And seen in that light, the potential problem with Obamacare’s regulation-driven “rate shock” isn’t that it doesn’t let everyone keep their pre-existing plans. It’s that it cancels plans, and raises rates, for people who were doing their part to keep all of our costs low.

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Mr. Zients Versus The Mythical Man Month

Last week I had to chuckle when Mr. Zients announced that “by the end of November, HealthCare.gov will work smoothly for the vast majority of users.” I am one of the few long time www.healthcare.gov visitors and have been anxiously looking forward to improvements since 2010 when I first complained the insurance finder was useless. Although I admire his chutzpah the two things I can say for sure is that there will be a touchdown dance on November 30th and there will still be a lot of serious problems to fix. The touchdown dance is the easy part of his task. Unfortunately the American people are married to this software. Like a bad Las Vegas wedding in which we hate to admit our mistake, we will trudge onward for the sake of the children.

The first problem facing Mr. Zients is that he is up against the software engineering and project expertise of Fred Brooks, whose central theme in his book, “Mythical Man Month”, is that “adding manpower to a late software project makes it later” has been ignored by the administration. They have already announced their plan to hire QSSI to come in and fix the problems with the web site in 30 days. Adding more people and thinking this will fix the problem is a big problem. Saying that it has to be done in 30 days has me in alternating fits of laughing and crying. As a person who has made his living fixing “other people’s code” for thirty years, this solution is a recipe for disaster and no seems to be listening. So let me frame the problems facing this system with a diagram from the book, Mythical Man Month.

MythicalManMonth

Using the analogy from the book software products start out in the “Program” quadrant and are transformed via generalization, testing, documentation, maintenance, and system integration into a “Programming System Product”.  The “Programming System Product” in our case is www.healthcare.gov and the final acceptance test is whether the American people can use it to purchase subsidized insurance. In 1974 Mr. Brooks asserted that a “Programming System Product” costs nine times as much as the “Program” so the vast majority of the cost and effort is spent generalizing, testing, documenting, and integrating the interfaces. Unfortunately for Mr. Zients this part of software engineering has not changed over the years.

From the reports I have read there has been very little testing and the specifications for the programming interfaces did not go out until eight days before the launch. It looks like most of the money and effort was spent in the “Program” quadrant and very little was spent in the areas that would actually result in a successful “Program System Product”. This reeks of management failure. As part of 1% who successfully got through the application process far enough to download a copy of my potential insurance plans I can say that the site has a lot of serious problems. It brings a whole new meaning to the term, “bad beta site”. Although I have no doubt that this new contractor, QSSI, can clean up the code discussed in this Reddit thread, the other problems that have been reported are more daunting and time consuming. Here is a short list of problems in no particular order.

  1. The usability problems pointed out by the NN group
  2. The back end problems pointed out by Dan on marginal revolution.
  3. The 834 problems pointed out by Sarah Kliff on the Wonkblog
  4. Identity theft  problems pointed out at MotherJones.

I think both the Affordable Care supporters and detractors agree that despite the fact that the web site is a clusterfark of monumental proportions, it will get fixed eventually. The question is whether it will be sufficiently complete and secure in time. Since they ignored my old web development adage, “copy the best and ignore the rest”, maybe they should start looking at an exit plan that involves joining forces with the “best in the business”. There is still time for letting www.eHealthinsurance.com and its six competitors finish a smaller, less politicized version of the  the job and minimize the impact of a failed www.healthcare.gov.

Cross posted at wehuberconsultingllc.com

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The Affordable Care Donut Hole

Yesterday I made a comment on the post, Do Obamacare’s three “mores” spell long-term failure?, highlighting my concerns that the Affordable Care Act makes it very difficult if not impossible to bend the health care cost curve. I used as an example my own situation and pointed out that if I had to purchase health insurance on the exchange today I would get a subsidy that would pay the majority of the cost increase. My costs would go up but the government would be stuck with most of increase. That is the good news. The bad news is that I have an out of pocket cost dilemma. If health care reform was working right then I should be selecting a silverish bronze plan from the exchange with a similar out of pocket cost to my current plan. The problem is that the cost for a similar plan from the exchange will be greater than my HRA allotment and the excess amount will be paid out of my disposable income. To avoid this problem I am being nudged from my 2013 silverish bronze plan to the lowest cost bronze  or catastrophic plan and building up a much larger savings account for health emergencies. The Affordable Care Act has has forced me into a riskier financial profile. Since most of my health care costs for 2014 will probably fall below the deductible and the deductible has gone up to at least $6,350, it is even more important from a personal finance standpoint to have this savings account fully funded. So here is the dilemma. Do you buy catastrophic health insurance and gradually increase the savings rate or go “cold turkey” and dramatically increase your savings rate? If you are living paycheck to paycheck without any wiggle room in the family budget for increased savings then you are stuck in the Affordable Care Act donut hole. Hmm… this could get ugly!

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RE: AN INSURANCE DEATH SPIRAL?

Powerline has a post that is near and dear to my heart, “An Insurance Death spiral?” He highlights that maybe the most serious problem facing the Affordable Care Act may come from spiraling insurance subsidies. Since I have not found anyone with a good understanding of 2013 insurance costs I would not be surprised if the 2014 budget severely underestimates the subsidy costs. If the government is paying the bulk of the bill then it makes business sense for insurance companies to jack up the 2nd lowest silver cost plan as much as they can get away with. That assures that even people like me get a subsidy. I understand why this makes political sense but it also makes controlling health care costs a moot subject. Here is my comment:

Thanks for the post. I was wondering who was paying the subsidy and why. As an example I am paying $391 per month right now for what I call a bronze plus plan. The lowest exchange price for a bronze plan for me is a little above $1,000 per month. The exchange calculated subsidy is $522 per month. So the insurance company is going to get an extra $87 from me and $522 from the government for a policy that is not as good as the one I have in 2013. This sure sounds like a sweet deal for the insurance companies and a real risk the government will get stuck with an out of control entitlement program. Maybe someday in the future we will look back at these days and laugh about the times when we could buy health insurance without a subsidy.

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When Is The Affordable Care Act Going To Save Me Money?

I listened to the video clip on the page, Arrival of Obamacare forcing insurers to drop customers with low coverage, and started to wonder when the Affordable Care Act was going to recognize that the customer is always right. The Wikipedia entry for the customer is always right says it was popularized “by pioneering and successful retailers such as Harry Gordon Selfridge, John Wanamaker and Marshall Field” who “advocated that customer complaints should be treated seriously so that they should not feel cheated or deceived.” Here is my simple proposition. Here is my existing health insurance plan. Show  me which part of this plan is going up and why. Put both plans on the table side by side and show me where the new Affordable Care Act is the better deal. It is put up or shut up time!

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My Greatest Health Care Fear

I must admit that my greatest health care is not getting sick but having my grandfathered policy canceled. I dread picking up my mail every day. Every day I look at the prices for policies on the federal and private exchanges, I imagine that dynamic duo of Affordable Care Act supporters and insurance companies are licking their chops. To them they see health care reform as a revenue problem and see me as the perfect insurance customer, healthy and have not filed a claim in twenty years. They have grand plans for health care reform and they need more money. Even though I may agree with some of their goals I am constantly irritated that once again a small portion of the middle class has been chosen to bear a disproportionate share of the burden. I feel betrayed by the President. I do not think he was careless when he said “If you like your plan, you can keep it.” He was expressing a commonly held belief that our existing plans were adequate and the transition would be planned, gradual, and painless. Now we find out that the health exchange was not planned very well, that insurance cancellation notices are snowballing, and getting a new policy via the federal exchange is painful. All of this pain and suffering for a reform that they are pretty sure will not work. Yeah, we are in the best of hands!