Selling Health Care Reform : Three easy pieces.
Numbers that have already been circulating, but deserve
repeating. Please add your own easy pieces in comments (with links), and/or correct or amend these figures if I'm mistaken somewhere.
1. Rescission: The health care industry claims that rescission only occurs for 0.5% of policy-holders. What they don't say is that this amounts to roughly a 50% risk of rescission if you get seriously ill and incur high health care costs. Even if you have been paying your premium for years.
In short, if you have private, non-group health
insurance, you do not have insurance. In one in two cases, your policy will
simply be pulled as soon as you send in a claim.
How much is this rescission strategy worth to the insurance
industry? If you use the industry's own figures - 0.5% rescission within the
private health care market private non-group insurance market (roughly 1/2 1/10th of the population) - and a cost-benefit
estimate that rescission makes sense for the insurer only when they expect
claims amounting to at least 3 years' premium ($20.000) - in which group the average expected
claims will be $ 30.000, on a conservative estimate, then it amounts to 1/2 1/10 x
300 million x 0.005 x 30.000.
That makes a total of at least 22.5 billion 4.5 billion dollars in extra
profits for the insurance industry. See Krugman,
Felix
Salmon, and James Kwak
for more.
2. The Public Plan: Some voices, such as Ezra
Klein are downplaying the importance of the public plan in the reform
package. The Health Care Insurance industry would beg to differ. To them it is very
important that the public plan fail.
How important? They
stand to gain 30 billion dollars in market value if the public plan fails. (To be more accurate, three big insurers - Cigna, United Healthcare
Group, Aetna -
stand to gain collectively that amount in value). Decidedly, competition
is bad for business. They
prefer their regional monopolies. Go figure.
3. Medical Innovation: Many people worry that reform will
inhibit the pharmaceutical industry's ability to innovate - creating life-saving
drugs in the future. However, for every dollar of money spent by consumers on
drugs, 20 cents goes to profits and ultimately only 15 cents goes to research
and development, according
to Dr. Jerry Avorn (author of Powerful Medicines). Of that 15 cents,
a good portion goes to unnecessary development of 'me-too' drugs, refreshing
old patents, more expensive drugs with no demonstrable greater efficacy than
cheaper existing drugs. So let us say 10 cents goes to productive research. If
we assume 20 cents on the dollar in drug prices goes to production and
distribution, that leaves 80 cents paid to produce 10 cents of R&D.
That means, opponents of reform must assume that the current system is eight
times more efficient in producing medical innovation than all alternative
systems whereby those 80 cents are directly funneled into financing research
(through the NIH, etc.).
Update: I corrected the rescission-related profite estimate in #1. I originally calculated on the basis of 0.5% of the whole private health-insurance market. It seems that should be 0.5% of non-group policies, otherwise the rescission rate within the non-group section of the market would be truly astronomical. Modifications shown.
On second thought, that last rescission-related profit estimate looks off. But have no time now and will leave it up to smarter minds around here...
August 5, 2009 8:01 AM | Reply | Permalink
corrected.
August 5, 2009 9:56 AM | Reply | Permalink
Is the number off because you are using half of the entire population (½ x 300M), without taking into account the numbers that are enrolled in Medicare/Medicaid, leaving x that are privately insured?
On another note and I'm not kidding, this is what Arthur Laffer had to say on CNN about health care reform:
If you like the Post Office and the Department of Motor Vehicles and you think they’re run well, just wait till you see Medicare, Medicaid and health care done by the government.
August 5, 2009 9:58 AM | Reply | Permalink
Thanks Seashell, yes that was where I was going wrong. But not because of medicare and medicaid. I was calculating on the basis of the % of the population in private health insurance. This is supposedly 59% of the total. But I didn't know if this was of the 'total insured population' leaving out the 15% uninsured, so went with the 50% as a precaution. Maybe got those figures wrong. But now I'm going with the estimated 9% in private non-group health insurance. That might be off as well, but the best I can do so far...
Laffer! Why do they still let this guy on TV... The shallowness of the supposed intellectuals on the conservative side is just unbelievable. With the exception of Tyler Cowen, they just can't be bothered with substantive debate based on, you know, a few facts.
August 5, 2009 10:06 AM | Reply | Permalink
I KNOW!
Good grief! if I have to hear from John Bolton or David Frum or the fricken "always wrong" AEI again on NPR and Marketplace, I might have to run my car radio through with a pitchfork!!!!
August 5, 2009 8:18 PM | Reply | Permalink
just dont scratch your dashboard, chicken...
;0)
August 6, 2009 7:32 AM | Reply | Permalink
However it must be sold, it's the President who must lead here. That's why many of us voted for him. That's why many of us who were Clinton supporters agreed to a lessor plan for health care. We believed that Obama had the skill and charisma to make real change.
August 5, 2009 9:23 AM | Reply | Permalink
Why has the monopolistic power of the health insurance industry -- or that of the flood/wind/contents insurance industry -- not been challenged as an anti-trust issue? Where is the DoJ that broke up the phone stranglehold, certain transportation behemoths, etc.?
August 5, 2009 9:48 AM | Reply | Permalink
Hi Wendy, I don't know. But the trust-busting does seem out of fashion. Am hoping for signs it comes back. I don't know if the Insurance case has something to do with the fact that the insurance is regulated state-wide rather than federally. Just the fact that the administration is talking in terms of 'balancing' corporate interests and consumer interests shows what a skewed ideology that still reigns. The POINT of a free market is not to free incumbents from competition and pressure on profits, it is to benefit the consumer. Obama's people don't seem to believe this. At least as long as Larry Summers rules the roost...
August 5, 2009 11:38 AM | Reply | Permalink
Hey Hey . . .
Did you happen to catch my post back in July at the Cafe here?
Health Care Monopoly: Request to Investigate
Just wondering . . .
~OGD~
August 6, 2009 3:37 AM | Reply | Permalink
Great set of links there OGD! And the central argument for the public option, imo. What happened there - no recs?! Anyway, thanks.
August 6, 2009 4:30 AM | Reply | Permalink
The problem of health care is that so many voters, who are healthy, have a self-satisfied complacency - imagining they will never be sick or without insurance. It's denial in spades!
There is something very wrong with the roots of our society - and it relates to an absence of ethics and morality based upon knowing that we are inextricably tied to each other.
August 5, 2009 12:36 PM | Reply | Permalink
Thera, the polls are showing a plurality of all generations believing that the reforms will lead to higher health care costs/worse coverage.
http://voices.washingtonpost.com/ezra-klein/2009/08/the_problem_with_seniors.html
So someone is failing on the salesmanship. And secondly they should be hammering the MORAL argument for this legislation: universal coverage. People believe that this legislation will make them personally be worse off, and yet they still support it. The american soul is not completely lost. Though it doesn't handle that moral compass all too well...
There's the denial as well. But it is the kind of thing that is understandable when most of the serious health expenses is concentrated within 1% of the population, at least for those in private insurance. Everyone believes Medicare will take care of them when they get old, and they are right. And everyone believes they won't get sick, and most of those people are right. What they don't understand is that if they do get sick, THE INSURANCE COMPANIES WILL TRY TO KILL THEM. This is really a sick industry, the more that sickness is exposed, the more people will get the overall picture. anyway, that's my idea...
August 5, 2009 1:34 PM | Reply | Permalink
Oops
"And everyone believes they won't get Seriously sick Before they retire..."
August 5, 2009 1:45 PM | Reply | Permalink
Don't forget. Medicare also takes care of the Disabled. But they are stuck waiting 2 years after being disabled - and having to be certified by Social Security first - in order to get Medicare benefits.
The rethugs are telling any lie they think will stick. It's no more than a game for them. A zero-sum game. While we're playing for win-win.
I think it's hard to "sell" something that you've just dumped into a "legislative process". If they had a specific product, it could be sold. But how do you sell "legislative process"? Then everything remains up for grabs! That's the pickle they've put themselves in!
August 5, 2009 2:01 PM | Reply | Permalink
PS, Obey... I've been thinking that the only way repubs can maintain their skewed views of so many things is a huge amount of denial and rationalization, which practically results in some kind of brain dysfunction. You'd have to call it a personality disorder really - since it's clearly not organic. But it's a way of compartmentalizing things so people never face the illogic of what they profess. It would make an interesting set of experiments, I think.... (hint, hint...) And beyond that - what are the implications if people simply stop themselves from using their frontal lobes to compute realistic outcomes?
I don't expect an answer here and now. Just for pondering.
I really, really need not to be blogging. But I've felt compelled to wade into this thuggery business - because it is so destructive of our society and our democratic ideals. I'll only write if I think I have something to say that's not been said. Or a way to say it that's not been addressed yet. Please steal any and all ideas! And pass them on! Thanks. You're really, really doing a great job here! :-)
August 5, 2009 12:42 PM | Reply | Permalink
It's great to see you back in action, Thera!
Now that you mention it, I've got a post brewing on the moral psychology of republicans. Working with the data compiled by John Haidt, if you know him. Not a fan of his conclusions, personally. Just need to find the courage/time to do publish it... As for experiments, I'd personally like to see what wingnuttery does to your neurons, must go to a town-hall meeting and round up some, uh, subjects...
August 5, 2009 1:42 PM | Reply | Permalink
To round then up, just advertise for people willing to shout down speakers in meetings - for cash. (those are the subjects you're after...)
I'm not really "back" - just driven here from within. I long for peace... not conflict. I am strictly rationing my time here.
Your project sounds great! (I'm not familiar with the guy you mention.)
Courage! Take time out to set your priorities. And publish only when you feel driven to do so - if it's out of your comfort zone. I give you my blessing!
August 5, 2009 1:49 PM | Reply | Permalink
I'm familiar with Haidt's conclusions, Obey. Like you, I can't say they are easy to buy into.
Have you read Jost, et al?
August 5, 2009 3:16 PM | Reply | Permalink
I can buy that people use similar defense mechanisms. But I think people bark up the wrong tree to try and define personality types. It's better to consider the dynamics. Not a static kind of "type". You can assemble data. But how? On the basis of self-report? Waste of time! On the basis of behavioral coding? Too discrete in terms of info collected. You need a "working brain" kind of situation.
I hate that so much of psychology believes it's a "science". So much of social science pretends to be scientific. Problem with any of the social sciences is that "facts" or theories end up affection behavior - not really explaining it.
I can work with an individual person. I can even see them change in beneficial ways. Can I really codify why or how? No, not really! Relationships help people change. But we can't really explain it all. Too many variables. Each person is a mystery in so many ways. So is relationship.
Waste of verbiage here! Sorry....
August 5, 2009 5:06 PM | Reply | Permalink
Always a pleasure to read your verbiage, TheraP! :-)
As far as the "science" of personality, my understanding is that these studies started after WWII, when governments wanted to know how it was that the German people were led so easily down the Nazi path. That's one reason why there is so much more information about the right wing versus the left.
John Dean, former White House counsel to Nixon, wrote a book on the subject, Conservatives Without Conscience: The Demise of Conservatism, and The Rise of Authoritarianism.
I'm betting that Dean would add health care reform to that list if he was writing the book today.August 5, 2009 6:51 PM | Reply | Permalink
Jost is really good, Seashell. But few of these affective-cognitive models trying to explain what is going on really convince me. A mix of shaky methodology and apophenia - an overly optimistic parsing of the data. But that kind of comes with the territory of being a very young science. Experimental psychology is like medicine in the 2nd century - still trying to sort out its conceptual fundamentals. My problem with Haidt isn't so much his methodology. But it has to do with his framing of the left-right distinction as standing between moral systems. The left is largely limited to considerations of harm and fairness, whereas the right bases its moral standpoint on disgust-related 'miasma', obedience to authority, loyalty to the tribe. I don't find the latter to be 'moral' in even a broad sense. They are primitive affective systems that serve a purpose in social regulation. But social regulation is not morality. There are many ways to regulate society and maintain stability in immoral ways. Tribal norms, then slavery-based society and feudalism were stable, but conditions permitting, they evolve into something more moral. The problem then remains - what is morality? And getting a good handle on that notion without begging the question in terms of left and right wing conceptions of it isn't too easy. At least for me. But what the democrats too often fail in doing is taking the moral high-ground. Who the hell made the republicans the Values party?
I found this piece by Will Wilkinson useful.
http://www.willwilkinson.net/flybottle/2007/09/19/whats-the-frequency-lakoff/
August 6, 2009 5:02 AM | Reply | Permalink
It would be very interesting to study the emotional reactions people have at these meetings and across the political spectrum. It seems to me the Reich has created these buzz words that trigger reactive behavior in the "faithful". What is it about these people that their reactions preempt any rational conversation?
One consideration I have to offer is a fear factor, already revealed as a mechanism of propaganda. Because the Reich acts out in this aggressive/abusive way, people feel safer behind them, rather then in front of them. The dominating behavior attracts people who want to be on the winning side. This is removed from any consideration that the "winners" are "Right".
Another consideration is the Faith Card. People emotionally invest quite seriously in their faith. This is an aspect the Reich challenges and, in an effort to prove their faith, people react. They do not question the wisdom of the challenge, and whether it really is related to their beliefs. They are focused on proving themselves worthy, or driven by guilt, that someone died for them so the least they can do is {Insert whatever here}. It's an intangible desire, in it's most sincere form, to express love greater then themselves, to sacrifice.
A third proposition is similar to the first two and maybe I am being redundant, but the taunting of political and religious leaders, often one in the same. It becomes a question of loyalty if not to religious faith, then to country, and by extension to Party.
It is a difficult decision to break from one's "tribe" and break out on their own, or worse, to join with a group long believed to be the enemy. There is a captivating aspect to this whole game. I hope someone does do the work to determine more precisely how these people are triggered. I suspect it all comes down to studying propaganda. I doubt we need to break new ground much less then we need to reveal the truths that have aleady been established in this field.
August 5, 2009 3:58 PM | Reply | Permalink
You're getting at dynamics. Much more fruitful area for thinking about this. But again, each single solitary human is unique. We mustn't ever forget that. Indeed, I think the left is better at remembering it. Which is why we're so fragmented. The right likes to herd humans.... Yech!
August 5, 2009 5:08 PM | Reply | Permalink
I've always thought of them as chickens {no offense to Bwak}, pecking at whatever is new, or foreign, or nearby. Unable to evolve into anything more developed or complex.
August 5, 2009 5:47 PM | Reply | Permalink
hmmmm.
(thinks)
None taken. (pecks Zap)
August 5, 2009 8:27 PM | Reply | Permalink
{hugs cheekun!}
August 6, 2009 3:03 AM | Reply | Permalink
I miss Gregor.
A lot.
August 6, 2009 11:15 PM | Reply | Permalink
So does mum.
August 6, 2009 11:16 PM | Reply | Permalink
This is really good Gregor! I'm glad it's on one of my threads so I can come back to it...
What I'd also like is an explanation of the other side of the coin - the democrats' defensive crouch. Where's the outrage at the assumption that gays are less than human? that the poor don't deserve decent health care? that killing a million brown people is a resounding success? that locking up, torturing innocent brown people is acceptable? Where is the politician that will appeal to people's better angels, that will even recognize they exist? And what is wrong with a political culture where such politicians come across in the media looking like wackos? All very strange...
August 6, 2009 5:26 AM | Reply | Permalink
This is really good Gregor! I'm glad it's on one of my threads so I can come back to it...
What I'd also like is an explanation of the other side of the coin - the democrats' defensive crouch. Where's the outrage at the assumption that gays are less than human? that the poor don't deserve decent health care? that killing a million brown people is a resounding success? that locking up, torturing innocent brown people is acceptable? Where is the politician that will appeal to people's better angels, that will even recognize they exist? And what is wrong with a political culture where such politicians come across in the media looking like wackos? All very strange...
August 6, 2009 5:29 AM | Reply | Permalink
Thanks for this Obey. Good links.
Wai
August 5, 2009 1:46 PM | Reply | Permalink
Thanks Obey, very concise.
I've been wondering. When Obama talks about making sure insurance companies don't have the power to deny coverage to those with pre-existing conditions, is this just a friendlier way of saying mandatory coverage for all?
I would hate it if all this bill did was increase the insurance industry's customer base by 45 million, but didn't institute a large enough and influential enough public option to reduce costs across the board, and infuse the industry with a sense of competition, and as a result, innovation.
August 5, 2009 4:45 PM | Reply | Permalink
That's my biggest fear, that we pass a bad bill that has individual mandates but no strong public otpion, is a giveaway to the corporate interests but doesn't bring down costs. No reform is better than a bad bill that leaves us financially or politically unable to undo the damage of failed healthcare reform.
Great post Puggsley.
August 5, 2009 10:01 PM | Reply | Permalink
Re:
It has to be mandatory-for-all, for the simple reason that otherwise people (not all people, just some) who opt out will attempt to "game the system".Imagine I have a button in my car labeled "insurance". I can drive around all I like, uninsured and paying nothing at all, until I see that I am about to be in an accident. I then push the button and buy insurance. Moreover, I can hook it up to the collision-detect circuit in my new (fancy) car (some new Lexus and/or Mercedes models have these, if I remember right). The result is that I only contribute to the insurance pool when I am about to take money out of the pool. This system is unsustainable: the only way to make it work is to charge me $50k (or whatever average figure Instant Insurance types wind up costing) for my Instant Insurance, so that I contribute enough to the pool so that when I take the $50k back out to cover my fancy car replacement, the pool breaks even. In which case, there's no point in having the button—or the insurance pool—in the first place.
People can do the same with health care and insurance: go around uninsured, pay for minor things like cough-and-cold on their own, and then if they discover they have cancer, or badly stenotic (clogged) heart or neck arteries, only then buy the insurance. (You are not going to die immediately from either one, so you have time for this. Depending on the form of cancer etc., you may even have many months.)
People will and do game the current system, which is why insurance companies deny coverage for "pre-existing conditions". (Of course, the insurance co cannot tell whether you are deliberately waiting to buy insurance until you find that you are going to need $50k of procedures; they simply assume the worst every time, since that is in their best interest. But it does happen, and that gives them the excuse they need to be allowed to do it.) In order to prevent such gaming, everyone "in the system" has to be "in the system" at all times, rather than being allowed to hop in (and perhaps back out again later) whenever it benefits the individual.
(This, by the way, is also why auto insurance companies do not have Instant Insurance. In order to be covered, you have to buy the insurance before you discover you need it, so that there will be enough people who pay in and never collect a dime, to cover those who collect $50k, or however much. Plus, of course, a nice big profit for the insurance CEO....)
August 6, 2009 2:51 AM | Reply | Permalink
Thanks for that ct. Nicely explained.
August 6, 2009 5:58 AM | Reply | Permalink
That's what pisses me off about reform champions like Ezra Klein, not to mention the White House and Schumer, kind of downplaying the importance of a public option. You can't abolish discrimination for pre-existing conditions without some kind of mandated insurance, because of the huge free-rider problem. If you have a mandate and no discrimination, you no longer have an insurance-based system at all. It's just pooled costs. Which means everyone has an incentive to overuse health care. On the other hand, in the absence of a public option, there is no incentive for insurers to control costs, because they have complete price control on premiums. And I have little faith in insurance exchanges as a competitive measure. For one thing, the insurance companies seem much less worried about it than they are about the public option. They know they can just buy the regulators, as usual.
August 6, 2009 5:49 AM | Reply | Permalink
Here's a good rule of thumb...if the insurance companies like it, it must be bad...
I've said it before and I'll probably say it a thousand times before we're done with this, I don't trust the government, but I don't trust big business (in this case the insurance companies) more...
August 6, 2009 11:33 PM | Reply | Permalink
fifteen cents. How much for false advertising?
How much for management?
Good post
August 5, 2009 4:56 PM | Reply | Permalink
Recommended.
Now I know what rescission is, though I had to use spell check to get it right. I'm taking everyone's word for the numbers, as I can't calculate 0.5% of anything without pencil and paper and those are packed away as my office moves across campus.
What I'm kind of suggesting is that the information is really important. Now it needs a human face--several human faces. Suppose that advocates for the public option and other important reforms, gathered a panel of the rescissed(???) together to tell their stories. Make sure that they represent enough different classes, ethnicities, regions and ages so that the audience sees them. Ditto those who have lost their insurance through losing their jobs. The greatest selling point is "that could have been me, up there".
August 5, 2009 5:03 PM | Reply | Permalink
"sees themselves, of course" Sorry. I'm rushing.
August 5, 2009 5:04 PM | Reply | Permalink
Thanks Amike, Yes both the numbers and the stories are needed. Or rather, you need to hear the story and then show the trend behind that story.
uh, think it's "rescinded", or maybe 'rescunt'? But the latter sounds reeeally rude...
August 6, 2009 5:55 AM | Reply | Permalink
Grassley was just on the News Hour saying that a government takeover (a coup?) of HC would not be a competitor. A public plan would be a predator. Now can you guess who his constituents really are when he claims government provided HC is predatory? (I wonder how he feels about all those vicious VA hospitals out there or Medicare, which he would probably be using if he didn't have his privileged [ahem, government-provided] top o' the line health insurance).
August 5, 2009 8:30 PM | Reply | Permalink
Well . . .
Not that I can stand the corn cob son-of-bitch but at least he's out there hitting the tube while Bauc...Bauc...Baucus is up at his resort in Big Sky relaxing with with the common folks... The common folks of the health insurance lobby that is ...
~OGD~
August 6, 2009 3:46 AM | Reply | Permalink
I wouldn't doubt that Grassley's getting his talking points from Baucus ("No,no,no, I keep tellin ya, we want to put the poor people into co--ops, not coops").
August 6, 2009 2:32 PM | Reply | Permalink