I must admit that this post, “Are your employees ready for consumer-driven health care?”, made me chuckle. Any post on health care changes that fails to talk about the cost of health care sounds preachy rather than informative to me.  Now the health care pundits are pounding on my door and yelling you are going to hell unless you change your ways!

So here is their solution.

Aflac recommends that employees sit down with their employers’ human resource professionals to obtain explanations of key health plan terms, deductible limits, and copay and coinsurance requirements. Employees should also estimate their health care budgets and learn about all policies offered by their employers and on their state exchanges.

Yea, like that is going to help. I can’t wait to tell our part time human resource professional who is out on maternity leave about her new responsibility. As an employee of a small business my number one issue is hoping that the company will continue to keep our HRA funded in a difficult economy. Educating new employees is not issue. We have not hired anyone in four years.

This week we found out four in ten Americans are unaware that Obamacare is still the law of the land. It is obvious that the “low information” people failed to get the message on Obamacare’s “free benefits”. Without the “low information” health consumers providing cover for Obamacare it is not surprising that Senator Reid is agreeing with Senator Baucus that health care is a ”˜train wreck’ if not implemented properly.

My problem with Obamacare is that it costs me too much. My health insurance premiums for this year are going to cost me about $4,692 and I am happy with my plan. Without Obamacare my health insurance premiums should be going up at the health care inflation rate. As a healthy family that has consistently poured more money into the health care system then we ever expect to get out, I feel we have done our job and our health insurance premiums should reflect our actual health care risk and our risk of associated with health care costs. For our family we have six more years playing this game before Medicare kicks in and we start playing a new game with a completely different set of rules. Most estimates for my health insurance premiums for 2014 have predicted a 55% to 85% increase based solely on community rating and pushing the people with pre-existing conditions into the individual health insurance market. So at the end of April I was not surprised when I went to Kaiser’s Subsidy Calculator and got this estimate for  2014.

This is 73% increase with a large increase in the out of pocket expenses even though I told the estimator that I had a single adult family. When I went back to the calculator to change the calculation to two adults, I got the number below. Wow, it is amazing what a week can do for your premiums! Obviously Kaiser has made a change in their calculator. This is probably the only situation in which you can say a 28% annual increase in health insurance premiums is good! I felt like I have been yelling for months, “Show me the money” and Obamacare has finally had a Jerry Macguire moment. This is the part of the movie where Rod has told Jerry that he will keep him as his agent but Jerry has has to do one thing for him, “Show me the money!” I have the same feeling toward Obamacare. My health insurance premiums are too high and Obamacare who is playing the Jerry Macguire part as my health care agent has finally started to recognize that healthy people are demanding either a much better deal or a new agent. As a “high information” health consumer I would love to hear how Kaiser arrived at this number since it is well below the amount I saw in the Massachusetts exchange two years ago.

My opposition to Obamacare is where pragmatism and cynicism meet. My health insurance premiums are going up faster than my wages and I cannot do anything about it. This is pretty galling for a healthy person who has not made an insurance claim in this century. If Obamacare cannot fix the largest part of the health insurance market, Obamacare as a health care reform is a failure. It is not even a good first step! So I hope for the best and plan for the worst. For the next two to three years I think that the individual health insurance market will be a better deal than the group health insurance market as I wrote in What if Individual Health Insurance Premiums do not go up as fast as expected? According to this Milliman report on health insurance in Ohio, the two biggest cost drivers in the individual health insurance market is pre-existing conditions and community rating. If we can fix these two problems then the individual health insurance market segment will continue to be more attractive than the group health insurance market. Community rating is just another arbitrary cost shifting scheme that disguises cost pressures. If you want market pressures to help reduce health care cost increases, you do not hide the costs. Since I would prefer that we have slower health care cost increases, community rating needs to be dramatically reduced or eliminated. The individual mandate is a really dumb solution for the pre-existing condition problem. It just needs to go away. Here is a more elegant solution to the pre-existing condition from the Heritage Foundation, The Right Way to Limit Pre-Existing Condition Exclusions. Yes, this solution on one page. Work smarter not harder!

Over 90 percent of Americans with private health insurance are covered by employer group plans where existing rules governing the application of pre-existing condition exclusions are not an issue.  Before passage of Obamacare, the law specified that individuals with employer-sponsored insurance cannot not be denied new coverage, be subjected to pre-existing-condition exclusions, or be charged higher premiums because of their health status, when switching to different coverage. Thus, group market, pre-existing-condition exclusions only apply to those without prior coverage, or to those who wait until they need medical care to enroll in their employer’s plan.

These existing rules represent a fair approach: Individuals who do the right thing (getting and keeping coverage) are rewarded; individuals who do the wrong thing (waiting until they are sick to buy coverage) are penalized.

The problem is that the same kind of rules did not apply to the “individual” (non-group) market””about 9.4 percent of the total market for private health insurance. Thus, an individual can have purchased non-group health insurance for many years, and still be denied coverage or face pre-existing condition exclusions when he or she needs or wants to pick a different plan.

The obvious, modest and sensible reform is to simply apply to the individual health insurance market a set of rules similar to the ones that already govern the employer group market.

Instead, Obamacare prohibits the application of pre-existing condition exclusions under any circumstances, thus encouraging everyone to wait until they are sick before buying health insurance. These perverse incentives are a recipe for disaster. To limit the effects of that disaster (of their own making), lawmakers included an unpopular individual mandate to buy health insurance in the health care legislation.

There is an old saying, “Don’t look a gift horse in the mouth”. It is supposed to mean that you should not be ungrateful when you receive gifts. This saying was more relevant when horses were an essential part of our economy. In today’s economy it has a new meaning. As a horse person I can say that horses are easy to get and hard to get rid of. They are very expensive pets so we do not want to go there. Killing horses when they are no longer useful is an unpleasant but necessary business. As a horse person most deals we have been offered involving gift horses were bad deals and if it did not work you got stuck with killing the horse. Since the justification to expand Medicaid rests almost exclusively on the idea of free federal money, I wish Governor Kasich and Scott good luck with their Medicaid expansions. Medicaid expansion looks like a gift horse.

Wow! I must be stuck in a time warp. I still spend money on healthcare like I am in the 1970s.

Health Care Spending In America, In Two Graphs

Lam Thuy Vo and Jacob Goldstein

February 04, 2013 2:26 PM

Spending on health care has, of course, been rising in the U.S. for decades. Health care now accounts for 18 cents of every dollar Americans spend, up from 7 cents in 1970.

But where, exactly, is all that money going? And, for that matter, where is the money coming from to pay for all that health care? We found answers to both of these questions in this data set.

First, here’s where the money is going.

Source: Centers for Medicare and Medicaid Services

Credit: Lam Thuy Vo / NPR

Despite huge changes in medicine and medical technology, the share of health dollars that flows to each major category has changed little in the past 40 years. In other words, spending on each category ”” drugs, hospitals, doctors, etc. ”” has increased at about the same rate.

What has changed dramatically is where the money comes from.

Source: Centers for Medicare and Medicaid Services

Credit: Lam Thuy Vo / NPR

In 1970, by far the biggest share of health care spending was what people spent out of their own pockets. Today, insurance (private plans along with Medicare and Medicaid, which are government-run) covers almost everything.

We emailed Uwe Reinhardt, the Princeton health economist, to ask about this shift.

Insurance coverage has become much more comprehensive, he said.

For example, in 1970, people typically had to pay for drugs out of their own pockets. By 2000, it had become routine for private insurance to cover drugs. Medicare drug coverage began in 2006.

What’s more, he said, in many cases, employees gave up some freedom of choice in health care in exchange for less out of pocket spending. But that trend is reversing itself, he said.

"Now we are going the other way, with higher deductibles and coinsurance for employer-based plans," he said.

A giant, long-term study conducted in the ’70s and ’80s is relevant here. Researchers randomly assigned people to receive different types of insurance ”” some had full coverage, while others had to pay for a big chunk of the care they received.

People had to pay more for care tended to get less care. And people who were poor and who had to pay more for care fared worse on some key health measures.

The underlying question here is one of the oldest and most contentious in health economics: What costs should health insurance cover, and what costs should be left to individual patients?

For more, see our recent story on insurance coverage for breast pumps, and see the Kaiser Family Foundation’s Health Care Costs Primer.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Health Care Spending In America, In Two Graphs
Mon, 04 Feb 2013 19:26:00 GMT

On Friday I decided to follow-up with the Department of HHS about my question about HRA, “Can a firm with less than 50 employees continue to offer HRAs since these firms are specifically exempt from the Affordable Care Act(2711) regulations?” So I called the HHS switchboard and they transferred me to a regional office where I left a message. As a person covered by a HRA in which I purchase health insurance in the individual insurance market, I am a person with “skin in the game” and I doubt that my place of employment will add a group sponsored health insurance to the HRA plan. My boss had said they chose a HRA with individual health insurance since it achieved the same results with less cost to the firm. That is an interesting statement. I found confirmation for his statement in the brief, Spending for Private Health Insurance in the United States, and posted my results in the post, Spending for Private Health Insurance in the United States. This begs the question, “Why is the HHS promoting such an inefficient health care policy?” I think I know the answer. Some things are better left unsaid if I want my particular situation to stay unchanged.

Follow-up to my Questions about Health Reimbursement Accounts | alazycowboy.com