New subject - moral hazard and pre existing conditions

[GernBlansten]

If OJ had assets to protect and collateral he could use to get a loan to pay the first $5000, you might have a point.

 

I doubt a young, entry level fellow, just starting out has that kind of ability to get a loan to even pay the deductible. Especially if his illness/injury is keeping him from working. The plan simply won't help him. Any medical situation that will cost him any more than his deductible will have already drained his meager resources, forcing him into bankruptcy. This policy is of no value to him.

 

His best bet is save his money in a health savings account and hope to stay healthy long enough to get a position that offers him healthcare.

[BrentAllen]

If my son was in that situation, I would hope he would pay for the insurance. As his father, I would much rather help him out with a $5,000 deductible than a $50 - $100,000 hospital bill.

 

 

[GernBlansten]

Absolutely Brent. I'd help my son out until I became bankrupt myself. It may come to my doorstep. My son is Type 1 diabetic. If in OJ's shoes, he'd be unable to get healthcare on his own.

But look at this from the perspective of a young adult, fully emancipated and without the safety net of a well off parent to pull them out of a financial disaster.

Would you recommend that they pay an insurance company $1200 for the pleasure of spending the first $5000 of their cash for health care, in the hope of protecting yourself from additional expenditures above the 5 grand? Especially when your net worth is below that? It just doesn't make financial sense. Like it or not, bankrupcy is a financial option when bad things happen. It gives you a fresh start. It relieves you from the debt you've acquired. Sure, there are downsides to it. But when faced with the crushing debt of a long term illness, your only option is bankrupcy. 60% of bankrupcy is caused by illness. See a problem there? Got a solution to that? I do.

 

[sandspur]

Seems by medical insurance we are talking two different things.

 

Some of us are old enough to recall what was termed major medical. Essentially like the high-deducible policies suggested here. The purpose was to kick in if something major happened that you couldnt pay for yourself. It was assumed you paid for routine or minor issues.

 

The more recent and now more common definition is medical insurance as the payer of all medical benefits except maybe OTC medications. People want every visit to the doctors office paid for with only a small deductible.

 

The problem with the last definition is that since we all have routine medical expenses that the insurer (be it private or government) KNOWS they will have to pay, a lot of cash has to come into the system from somewhere.

 

How can you possibly expect a company to charge an affordable amount for someone (I guess defined as less than he would spend per month to pay the bills himself) when they can be certain the checks they write will be more than the premiums they get?

 

If the employer pays, just means that a portion of my pay is diverted to the policy the employer decides to purchase for me, so I pay in the end.

 

If the government pays, just means that we hope some politically disfavored group (read not you or me) pays for our medical care. As the old saw goes, Dont tax you, dont tax me, tax that guy behind the tree!

 

[sandspur]

Gern:

 

A $5000 expense will cause bankruptcy?

 

Come on.

 

I will not refer specifically to OJ since I do not know him or his situation.

 

But seems to me that the average young man in an entry level job not living at home (like two of my sons) manages to pay for an apartment (their major expense), car payments (even your average used car costs more than 5,000 these days), car insurance etc.

 

So a $5,000 expense resulting from a major illness need not be paid at once. A payment plan (so much per month) is normal. Pay off a few hundred per month and sure, it hurts, but its not bankruptcy time.

 

And yes, I know whereof I speak. My oldest son (in his early twenties and living on his own in an entry level job with an hourly wage) just had an appendectomy. The overall bills will probably top $35,000. But he has insurance (with a deducible and copay) very much like the polices discussed above and will end up paying only about $3-4,000 out of pocket. Which he can pay and will. Never even asked me for financial help. But he chose to get insurance and also to pay for a short-term disability policy as well. Which kicked in as planned. He wont buy a better car this year has he had hoped to, but no bankruptcy. Not even close.

 

So my advice to the young men starting out in life: Buy a major medical policy if your employer does not provide it, also get renters insurance and look into short term disability policies. Live frugally and in a few years youll get a better job at higher pay with, likely, a better health coverage.

 

[GernBlansten]

One fundamental decision point when buying any kind of insurance is to only buy a plan with a deductible you are able to pay. If its greater than your ability to pay it, the policy becomes worthless.

Now, can a one time hit of $5000 put you into bankrupcy? Of course it can. Especially when you are young and haven't accumulated wealth. Many young adults live paycheck to paycheck with little more than 2 months expenses in their savings accounts. They rent apartments and lease cars or drive clunkers. Now, throw in a $5000 medical bill they can't settle. They don't have anything they can sell to get cash or secure a reasonable loan. Hospitals and doctors don't setup payment plans. They sell their bad debt to collection agencies. The collection service will slap a whopper interest penalty on it and start litigation if a payment plan isn't worked out to their favor. Now couple that with an illness or injury that keeps the worker from earning. Where is the money coming from to service this new debt?

The collection agency will continue to hound the debtor, searching for any assets or family who will help, all the while racking up more charges. The amount will spiral out of control. Finally, the debtor will have no choice but to throw in the towel and declare bankrupcy. Its a vicious cycle, repeated millions of times in America.

 

A high deductible plan works great for me as I'm healthy and have the money to pay it if I need to. It protects my assets above that amount. It makes sense. It wasn't a very good plan for me when I was 20.

 

[BrentAllen]

The doctors and hospitals around here set up payment plans.

 

How is teaching our youth to go without insurance and to just pass their expenses on to the rest of us in line the BSA program? How is this teaching them to take responsibility for themselves?

[GernBlansten]

It's teaching them business sense. Spending money on a policy that will provide you no benefit is not being thrifty.

[OldGreyEagle]

Sorry I am late to the party, so if I rehash stuff already hashed, well, it will be rehashed.

 

About the Pre-exisiting conditions and the auto example, so what we are saying is if I buy a car with a smashed fender, the Car Insurance company is supposde to pay to have it fixed as soon as I make a single payment on the Insurance Policy?

 

We keep talking about health care like its provided on every street corner (in some places, it may be) but its always provided by individuals who are free (currently) to choose their patients. Many physicians do not take Medicaid or Medicare patients or only a limited number. Will legislation "force" Medical practitioners to take on clients they would prefer not to? Is the Government dictating to an industry the clients they will take on a good precedent?

 

Ok, Hospitals through their Emergency Rooms provide care to all who present, is this the best way to provide care? My wife just had two knees replaced, she had the work done in essentially a "private hospital", a 20 bed hospital that the physician group who did the surgery owns. The care was top notch and the setting wonderful. I know no Medicare or Medicaid paients are done there, the "regular" hospitals get these patients from that group. Is this fair?

 

The orginal Health Care "reform", Which shifted from Health Care reform to Health Insurance Reform to other titles has changed. What is the current form now? It was a 1,000 page document, what is it now and where can it be found?

 

Legislative Language is so confusing, think a Law that says all legislatin is to be written at a 6th grade level (purportedly what we graduate most High Scholl Seniors at) would work, How about 12th grade? Why have Legislators say they can't read the laws they pass? Shouldn't they sign an oath affirming they have read and understood the Legislation? Would that not be an expectation of the job? To know what they are voting for, or against?

 

Was off most of last week driving my father from Maine to Chicago (was supposed to be Arkansas, but he threw us a curve ball) spent a few days in Chicago visiting old haunts. The Seminary just seems like such a sad building these days. The Diocese uses it for office space, but the building was built to prepare men for the priesthood and now its just office space, the places oozes disappointment

[sandspur]

Well, we may never agree, but I still think a major medical policy is a good idea for those who do not have more comprehensive coverage.

 

1. Even if you only have a few hundred dollars in the bank, it is better to owe $5,000 than $50,000.

2. It is in the interest of the medical provider to work out a payment schedule. If you declare bankruptcy, they get nothing or pennies on the dollar. If you work out a payment schedule, they get all their money (maybe takes a year or three) and you avoid bankruptcy. Win/win. Most providers will see the logic.

3. I think we encourage scout values (be prepared?) by asking scouts to think about coverage for disasters. Medical, auto, renters insurance etc. Always makes me sad when there is an apartment fire around here and I read stories of folks who have lost everything and had not renters insurance to replace their lost property. My sons got a policy on my advice and were surprised how cheap it was. My dad gave me the same advice many years ago. (No, I am not an insurance salesman!)

 

On a national scale, I wonder if we might all be better off if we went back to the idea of major medical to cover the big stuff, made it universally available (maybe subsidized by tax dollars if needed for those who cant afford it on their own) but dropped the idea of insurance that covered every visit to the doctors office, routine vaccination etc and handled that ourselves.

Yeah, we will have the issue of someone who cannot afford their prescriptions, but part of the reason these things cost so much is we have become insensitive to price. If my prescription really costs $200, I dont care (I pay $20 regardless of the real cost), my doctor doesnt care because he knows I dont care, and the drug company can decide to boost the price to $300 because I wont even know and nobody but the insurance company that pays the bills will care.

 

But just think if we had to write the check ourselves. Bet we might say hey doc, is there a generic? Doc himself might actually take the time to find out how much the drugs he prescribes cost and take that into account.

 

[scoutldr]

"but dropped the idea of insurance that covered every visit to the doctors office, routine vaccination etc and handled that ourselves."

 

I suggested that several days ago. That will never pass muster by the Liberals (like my MIL), who think that "someone else" should pay for everything and "we" should not have to pay anything.

 

I think we are moving that direction anyway. The Democrats are right...the current trend is not sustainable...but the solution is to let the free market decide. We'd be amazed at how many MRI's are no longer "necessary" if the patient balks at paying $5000 for each one out of pocket. And if Docs are no longer able to pass the cost of the machine off to the Insurance companies and quit buying them, I'll bet the cost of the machines will drop. Simple supply and demand. Econ 101.

 

Brings an analogy to mind...the Speedy Muffler place where I always got my car inspected (and always passed), got a new "laser headlight alignment" gizmo. Lo and behold, every time I took my car in after that, the headlights needed aligning, or they wouldn't pass it. Took my car to another inspection place and it passed, just fine. Haven't been back to Speedy since. Their loss, not mine.

 

[nolesrule]

You have to be careful when you reduce demand on manufactured items. Once you go below a demand threshold, machine costs will actually go up because manufacturing will always have fixed costs that are built into the price of units sold. This is very noticeable in the medical devices field (among others, such as aviation manufacuring) because of the need for over-engineering and QA analysis before a unit can be used in the field.

 

Unless there's evidence of unreasonable profit margins in the medical engineering field.

 

 

I have to apologize. My wife is an accountant at a major engineering/defense contractor. So i get to see the cost side of the equation.

 

One of the reasons that drugs cost so much is because no one except the uninsured pays the retail price. We may pay $5/$10/$20 for our drugs, but the insurance company doesn't pay the balance. Same goes for pretty much any medical costs covered by insurance.

 

I had a temp job out of college doing medical billing for a for-profit healthcare company. My job was the data entry of charges and payments. When we got insurance payments, it generally translated to "insured pays $10, insurance company pays a percentage less than half, the rest is written off."

 

I look at what actually gets paid in a doctor's office, calculated by the number of patients they have and I wonder how they can stay in business (and even pay off those medical school loans). At the same time, I wonder how the uninsured can afford to go to a doctor. There needs to be some point in the middle where we can all meet.

 

I don't know what the answer is, but something needs to be done. If it's the world's largest group insurance plan run by a not-for-profit, so be it.

[nolesrule]

I also. I forgot to mention the cost oh having a child these days. I'd go into detail, but I have a 19 day old in my other arm, so it's slowing my typing. Maybe I'll review the hospital bill later when I have 2 hands free.

[JoeBob]

Contrarian thoughts on Health Care:

 

1- Isn't it ironic that the entity that prohibits free market competition

a) No out of state insurance purchases

b) All policies must cover certain conditions

claims that they need to create a Government run insurance program to provide competition?

 

2- What are trial lawyers going to do for money when the Public Option eliminates private insurance and they can't sue the government?

 

 

[SR540Beaver]

Somebody please explain the "no out of state insurance" thing to me.......because my health insurance has not come from inside my state for a decade. I work for a company that has employees across the nation as does my wife's and currenlty out insurance is out of Georgia. We live in Oklahoma.

 

We sat at the table last night and compared the offerings between our two companies as it is "that time of year" again. Higher premiums, less coverage. It kind of reminds me of all these companies that tell the departments each year to reduce costs by 15%. Eventually your budget gets so small you've cut your nose off to spite your face.