ObamaCare Blamed for up to 47% Hike in Insurance Rates

Which is what I've been saying.

Well actually, I've just been repeating what I found in Wiki.

But it seems reasonable.

What is NOT reasonable is that 40% of our health care costs is because of Insurance companies.

What is also not reasonable is that though we pay a lot of overhead for Insurance, as a percent basis, it's not that cost which is growing each year that is causing our premiums to go up so much, which was the other assertion.

It's very difficult to say how much is the cost of insurance vs basic admin costs, because a huge part of the insurance system is the basic billing system and record keeping that is part of the health care system, though this comparison:

, would tend to indicate that about 9% is the amount that Insurance adds to the private programs.

Arthur

 

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You are confusing total healthcare provision costs with insurance company costs. They are not the same thing.

The figures you have given (from Wiki etc) refer to total healthcare provision costs. That is, all the doctors, nurses, paperwork, pills, medical equipment - you name it - that go into actually providing... healthcare.

Insurance companies, on the other hand, provide ... insurance. Their costs (admin included) relate to the provision of insurance, not the provision of healthcare. Thus they are not part of the "healthcare cost" picture you have presented.

Rather, insurance companies operate in response to total healthcare costs. For example, they will refer to healthcare cost forecasts provided by the likes of PriceWaterhouseCoopers and plan ahead accordingly. For instance, if they find that healthcare costs are expected to rise by 9% in 2011 (which they are, incidentally) they will assess the predicted impact on profits and form appropriate strategies. At the end of that year, their Profit & Loss Statement will show an amount for admin - which relates solely to their business - it is an insurance company cost, not a healthcare system cost.

Perhaps your confusion between healthcare admin costs and insurance company admin costs might arise from a perception that insurance companies are "healthcare providers" and thus part of "healthcare costs", when in fact they are not - they are insurance providers.

They do however contribute (as Iceaura pointed out) to personal costs (financial and otherwise) by claiming to be raising premiums solely and "regrettably" in response to predicted healthcare costs, whilst omitting to mention the other driving force behind rate increases - shareholders.

Quite clearly pressure from shareholders has a greater impact on premium increases than healthcare costs, given that premium increases far exceed increases in healthcare costs.

Premium increases are one of two "industry standard" ways to raise profits, the other being to reduce medical loss ratios (payouts on claims).

It should therefore come as no surprise that Anthem's exorbitant increases "happen" to have the convenient "side benefit" of coercing less profitable (sick) policyholders into switching to cheaper but less beneficial policies, or dropping them altogether.

 

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And again, not one iota of evidence that 40% of our health care SPENDING goes to Insurance companies.

You are totally WRONG if you don't think the cost statistics include the price we pay for our premiums in determining our health care costs.

Those costs are summed up by Out of Pocket costs, Govt Costs and Premium costs.

Where the money goes is a slightly different calculation, and that shows that 7% goes to Admin, which includes Insurance overhead.

But, since not all of our medical costs are covered by Insurance, the percent for private insurers is higher.

http://en.wikipedia.org/wiki/Health_care_in_the_United_States

Sometimes industry profit is not included in that number, but as shown, that's only ~.5% of our health care costs.

But, that percent has been relatively stable and so the fact is, the rising costs of our medical care is NOT driven by the rising costs of Admin Overhead.

That's not saying that there isn't a lot of Admin overhead, there is, but its been there for a long time.

Indeed, between 06 and 07 our medical spending went up by $150 Billion dollars.
That was NOT a take-away by the insurance companes, who all up make profits of about $8 to $12 billion per year.

Arthur




Arthur

 

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So? Once again, in hopes that you will attend: That was never claimed.

This is more like it:

It is quite reasonable, unfortunately - if you have some kind of actual argument against it, especially one that deals with the posted and obvious general observation and argument for it (such as posts 35, 37), now's the time.

 

But indeed you did:

But, unlike you, I actually provide evidence and links to back up my claims.
I've yet to see one that backs up your claim that Insurance sucks out 40% of out total spend on health care.

And because insurance doesnt even factor into a large percent of our Medical care costs (the Gov provided and out of pocket costs), the TOTAL Admin expense, including insurance costs, as part of our medical care is about 7%.

Not 40%.

Arthur

 

First of all, there is not one iota of evidence for the "40%" statement because (as has been pointed out to you several times) you are asking for evidence of a statment that was never made. Hence that was not the purpose of my post.

Secondly, I am correct to say that corporate healthcare insurance costs (i.e. the costs incurred by companies providing insurance) are not part of national healthcare costs - they are not included in the expenditure types which together amount to total healthcare costs. Additionally, out-of-pocket expenses and (the portions of) premiums paid as reimbursements are in fact sources of revenue - they contribute (along with state, federal and local funding) to the total funds by which total healthcare costs are met. If you don't get this, never mind.

The fact remains (to get back on topic) that with healthcare costs rising at 9% or so per year, on what basis can healthcare insurance companies justify premium increases hugely in excess of this?

On analysis, there is no justification. Premium hikes are simply a profit-garnering exercise that also - by placing the blame on rising healthcare costs/reform - conveniently (or shall we say, purposefully) demonizes healthcare reform.

 

Yes the statement was made.

How many times must I repost this?

PROVE IT, because when I talk about the total that we pay for health care, that includes insurance premiums and I can't recall seeing an analysis of the cost of health care that didn't also include the cost of the Insurance system because it is so integral to the BILLING/PAYMENT system used by much of our health care providers so you can't subtract it out if you wanted to.

As to premiums going up vs cost of health care, I don't think you will find that the average premium increase is significantly greater than the average rise in medical care though, over time. I know my own premiums have gone up, but they have done so in relation to the rise in the cost of services, medicines etc.

Face it, as I keep repeating, from 06 to 07 our health care costs went up $150 Billion, and that was NOT a take away by the Insurance Companies.

Arthur

 

You are absoutely correct Gypsi. I was wondering where the hell Arthur was getting that 40% figure too...sounded like a strawman to me.

 

I've been responding to Post 20, which clearly states that the Insurance companies represent 40% overhead in our health care costs.

Just because you or Gypsi didn't make the claim doesn't mean it wasn't made.

Arthur

 

It does not.

If that phrasing was initially confusing, my apologies - but any misunderstanding has been corrected several times now, with courtesy and so forth, with expansion and clarification and redundant reference, and that should be enough.

Now with your better understanding of the argument, revisit posts 35 and 37 among several others on this thread, and the discussion can continue without your almost irrelevant references to the administrative expense line on corporate financial statements, or the total percentage of medical care expenditures paid out by private insurance companies, and so forth.

Example item: in the news recently, Blue Cross has been accused, formally and officially, of collusion with care providers involving a competitive advantage gained by differential price hikes (BC agreeing to pay higher prices, in return for market advantage). None of that extra cost would appear under "administrative expenses" of Blue Cross. It would affect the entire system of medical care - everybody's costs were forced up in the affected markets, if that happened, including Medicare's.

 

Sorry iceaura,

You say you make no such claim in 35, and then state the exact SAME claim.
Without proof of course.

.

Referring to it as "the standard estimate" might be meaningful to you, but means squat to me.

Arthur

 

Apparently you just aren't interested in the actual discussion, or my actual claims.

Fair enough. You get one more repetition in response to this post, I won't respond, and we'll call that the last word from you on the matter of my "claims" in this thread, OK?

Meanwhile:

The average rise in the cost of actual medical care is difficult to estimate, in the US. Comparisons with other systems providing equivalent or superior care indicates that it is rising at most about half as fast as the typical US insurance premium (that is, the percentage going to overhead doesn't seem to be changing as indicated by cost comparisons with lower overhead systems, so the rise in overhead costs is that percentage of the increase).

the situation: http://www.medhealthinsurance.com/bcbsarizona.htm

 

Except that nearly two-thirds of the rise in health care spending is linked to a rise in treated disease prevalence (for example, diabetes) and innovations in medical treatment.

So if it increased from $5791 to $13375, all but $2,528 of that is for treated disease prevalence and more expensive medical treatment.

http://content.healthaffairs.org/cgi/content/full/24/6/1436

Arthur

 

The unfortunate fact that you have to address arthur is that other industrial countries provide better healthcare for all of their citizens at less than half what it costs to treat a percentage of the population here in the United States.

So for all the color and chaff you like to throw around, that is the bottom line. The article you cited was correct in the statement below;

"To date, U.S. cost containment policy has focused too narrowly on demand-side interventions such as changing the design of insurance benefits and increasing cost sharing." - Health Affairs

The recent healthcare reform law does take a stab at the supply issue by increasing funding for physicians trainning.

But ironically the article drops the subject and only addresses supply side issues...suggesting that Americans should get less ill and thereby avoid the need for medical treatment. My guess is because the journal represents the industry and has no long real interest in solving the supply side of our heatlhcare problem.

 

Joe, did you miss this?

The ISSUE that I've been discussing is not that our Insurance system doesn't represent a significant overhead to our medical costs, I've repeatedly stated that it does, but that the large YEAR TO YEAR increases we are seeing in the total cost of our medical care is not primarily driven by a rise in costs associated with the Insurance industry.


Here are the changes in cost from 2008 over the previous 10 years, expressed as Billions and percent change. Since population increased only 9% over that time, any increase over 9% represents an increase in cost per capita.

POPULATION increased by 25 Million or 9%


Figures are all from US dept of Health and Human Services

http://www.cms.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage

(These figures are in Billions)

Our total National Health expeditures in 2008 were $2,338 Billion.

The rest of the figures will show the increase in spending since 1999.

Total National Health Expenditures increased by $1,073 or 85%

Which breaks down by: (Red equal primary catagories covered by Med Insurance)
Personal Health Care went up $884 or 83%
Hospital Care went up $323 or 82%
Physician and Clinical Services $226 or 84%
Dental Services $44 or 77%
Other Professional Services $28 or 77%
Home Health Care $33 or 105%
Other Non-Durable Medical Products $9 or 33%
Prescription Drugs $129 or 124%
Durable Medical Equipment $7 or 39%
Nursing Home Care $47 or 53%
Other Per'l Hlth Care $ 34 or 100%

Structure, Equip, Research, Pub Health $100 or 80%


Admin. & Net Cost of Priv. Hlth Insurance $88 or 124%

Increase in our Admin as % of total costs over the decade was 1.4%
Percent of Admin in 08 was 7.3%

So what have I been saying:

Back at post 33 I estimated the cost of Insurance and Admin

Pretty close.

Or in post 43

And indeed, we can see that the annual Admin. & Net Cost of Priv. Health Insurance over the last decade has grown by $88 Billion (from $71 Billion), but that growth, in absolute terms PALES in comparison to the growth of our total medical bill, which has grown by a staggering $1,073 Billion.

Or look at it this way, our total Admin/Net Cost of Priv Health Insurance over the last decade is $1,211 Billion dollars, so YES, the cost of admin and insurance is very expensive, BUT in comparsion to the $17,953 Billion dollars we spent on Medical care, it is still less than 7%.

So the facts seem to support my contention, back in post 17:

or from post 43

Arthur

 

That appears to be false, in the US - as your own observation of the extraordinary amount and rapidity of the increase would immediately suggest, should you take an interest.

Quality and average level of delivered care have not increased by anything close to the cost increase.

If we were offered the level of care available ten years ago for the cost ten years ago (even corrected for ordinary inflation, which should not apply in cases of advancing efficiency and value), most of us would take it with gratitude. If we were offered the care and cost of any other First World system (none of which incorporate absurdities like the US employer based private insurance industry), we would be ecstatic.

It is, though, by all appearances - one more way to see this (other ways mentioned above, ignored by you so far) is to note that if it weren't, the efficiency of medical care delivery under the unique US system would have increased greatly as this supposed large increase in genuinely effective expenditure swamped the formerly dominant insurance company influence.

Instead, we see decreasing efficiency in the US system especially - rocketing expenditures conjoined with plateaued or even decreasing actual delivery (millions more simply not receiving timely medical care; emergency rooms under increasing stress from increasingly neglected health problems; ever greater bureaucratic and executive rakeoffs; etc).

Why do you keep posting this irrelevancy? We are not discussing the line item for "administration" on insurance company corporate budgets.

 

Source?
How are you measuring these two quantities?

Oh, and I left off the cost of inflation in the previous calculations.
Inflation over that time frame was 28%
Population growth was 9%
So 37% would be just nominal growth in the cost of medical care over that period.
Except the population is aging, and so an increase of ~40% would be "expected".

So the real question is what caused the increase beyond what would be expected.

And the answer is, of the $567 billion more than what would have been expected:

Hospital care cost $165 billion of that, or 29% more than what would be expected
Physician and Clinical Services cost $118 billion of that, or 21% more than would be expected
Prescription Drugs cost $87 billion of that, or 15% more than would be expected.
Structure, Equip, Research, Pub Health cost $50 billion of that, or 9% more than would be expected
and finally
Admin and NET cost of insurance cost $59 billion of that, or 11% more than would be expected.

Well I don't think we have less receiving medical care over the last decade, but maybe you can substantiate that claim. Personally I've seen improvements in care in every area of medicine, but maybe that's just my own situation, I can't say as I have overly unique knowledge of the medical field, though I am fairly well acquainted with it.

Yes, we have growing expenditures, but it isn't because of the cost of insurance, from what I can tell, we have rising costs in almost all segments of health care (see previous chart) and it is this nearly across the board increase in costs, faster than inflation, that is causing the rise. Simple answers are probably not to be found.

Well because that is NOT what that line represents, this is the Government's figures and it is clearly labeled: Admin. & Net Cost of Priv. Hlth Insurance

NET COST of Private Health Insurance.

I don't know how I can make it any clearer.

Our costs are higher, about 85% higher over 10 years primarily because we spend a LOT more per capita today for:

Hospital Care went up $323 or 82%
Physician and Clinical Services $226 or 84%
Dental Services $44 or 77%
Other Professional Services $28 or 77%
Home Health Care $33 or 105%
Other Non-Durable Medical Products $9 or 33%
Prescription Drugs $129 or 124%

As those line items clearly show.
(Inflation and population growth and aging population account for about 1/2 of the percent increase)


Arthur

 

No.

The "expected" percentage increase is from a base already almost doubled over the cost of delivering comparable care in systems without the US employer based private insurance setup.

So if efficiency were improving, as you claim, so that insurance company imposed overhead were not increasing in step, the total percentage increase would be far less than the nominal rate of inflation.

Instead, it's more. So we seem to be paying more yet, increasingly more even as a percentage of the total, for the privilege of incorporating private insurance companies into our system.

 

Excuse me?

Where have I said that our part government part insurance based system isn't more expensive than a single payor system?

I have not. (although I'm not nearly as ready as you to concede that our system costs nearly twice as much as it should, but that's an entirely different issue)

Then please point to where I said "efficiency is improving"?

Indeed, I have not.

Indeed, I just posted that Admin/Insurance costs are 11% higher than inflation and population growth can account for.

I've said the recent increases which we have been seeing year to year are not primarily due to increases in the cost of insurance overhead but primarily to the increases in medical costs that I specifically listed.

I've produced the govt figures to back up that claim.

Arthur

 

You have several times stated that the extra overhead created by maintaining these insurance companies within the US system makes little or no contribution to the large recent rise in various and total costs.

Hence, the percentage of those costs that constitute that overhead would have to be declining. Lower percentage overhead = greater efficiency.

But cost comparisons with other systems, as well as observation of the US system's workings, suggest that it is not - the opposite, apparently. I gave a couple of examples, such as the rising strain on emergency rooms as people with neglected problems or problems better handled in regular medical settings swamp them.

And I have pointed out that you are not, thereby, even addressing the argument, at least not any argument I am making.

See post 20, which you claimed to be addressing. I have already reposted it once.