Politics, Math and Premiums

Math. Can’t live with it. Can’t live without it. We all like things to “add up.” We want ledgers to balance. And some folks even believe numbers don’t lie.

But when politics joins the equation the math gets a bit slippery. OK, they get a lot slippery. One accepts that politicians and pundits will perceive the same event quite differently (if only to have something to argue about). But math is pure, right? 2+2=4 and if it doesn’t somebody is selling something – or Congress is in session. (Both cheap shots, but you get the idea).

Which brings us to an interesting Politico story in which David Nather does some fact checking concerning claims being bandied about concerning the impact of the Patient Protection and Affordable Care Act on premiums. Mr. Nather does an excellent job of showing how both Democratic and Republican are playing the numbers game.

President Barack Obama, for example, claims that the PPACA will lower premiums. Mr. Nather notes that while some supporters of the PPACA claim the law may reduce the rate of increase, no one is claiming premiums are going down any time soon. Mr. Nather cites an HHS report claiming annual premiums will fall by as much as $2,300 thanks to the PPACA, but that’s from where they would be without the reform bill in 2014, not from today.

Republicans fare no better (or worse, depending on your point of view) when it comes to juggling numbers. GOP lawmakers have cited the spate of recent rate hikes as evidence that the new health care reform law is already increasing premiums. However, even some of the carriers raising rates exonerate the PPACA. For example, Blue Shield of California has gotten a lot of attention for rate increases of as much as 59 percent on their individual policies (although it’s amazing how few stories mention that the average rate increase is dramatically less). Republicans blame health care reform for this hike. Unfortunately for their cause-and-effect claims, Mr. Nather reports that Blue Shield has said “the increases ‘have almost nothing to do with the federal health reform law. These rates reflect trends that were building long before health reform’ including higher prices demanded by health care providers, more use of health care, and healthy people dropping their coverage because of the bad economy.” How inconvenient.

Mr. Nather concludes his fact checking by citing a Hewitt Associates’ research indicates that “employers will see their premiums go up by about 8.8 percent in 2011 – and about 1 to 2 percent is because of the law.”

Maybe in 2011, but there’s a lot more to come from health care reform and the impact of the PPACA on premiums is only going to grow. Consider:

  1. The Patient Protection and Affordable Care Act imposes new taxes on insurers. Insurers, in turn, will do what companies always do: pass this additional cost of doing business onto their customers, in this case, through higher premiums.
  2. The PPACA also raises taxes on non-insurers such as makers of durable medical equipment. They will pass this cost along to their consumers and, to the extent these added costs are covered by insurance, the result will be higher premiums.
  3. Today it’s not uncommon for young people to pay 1/6th of the premium charged to older insureds. The PPACA reduces this ratio from 6-to-1 to 3-to-1. Let’s assume carriers will compress the premium spread by moving toward the average (as opposed to converging on the highest premiums). For 60 years olds the result would be a premium reduction; for 20 year olds the cost of insurance is going up.
  4. The new health care reform law requires carriers to offer “essential benefits” (yet to be defined) and offer plans with specified actuarial values. This will eliminate many lean, low-cost plans from the market, increasing the average premium of all plans offered.
  5. Many expect the PPACA’s medical loss ratio provisions to restrain future premium increases. However, as I’ve written before, because the MLR is stated as a percentage of premium dollars that must be spent on claims and health improvement, the result may be to encourage carriers to eliminate lean, low-cost plans and focus on more expensive offerings. After all, 20% of a $300 premium plan provides twice as many dollars that can go to administrative costs and profits as 20% of a $150 premium plan.
  6. Supporters also claim the exchanges will help drive down premiums. By driving a hard bargain with carriers the theory is that prices will come down. Maybe, but at least 80% of premiums are going to pay doctors, hospitals and other medical providers. Exchanges can be tough with carriers, but they’re addressing the smaller part of the premium dollar. Yes, the exchanges may wring some administrative expenses out of the system, but over time medical inflation will erase any of those savings.
  7. While there are provisions in the PPACA aimed at restraining medical costs (really, there are) most are pilot and demonstration projects or studies whose impact. Their impact, if any, will not be felt for many years.

In short: there’s a lot of factors in the PPACA which will tend to drive up premiums. There are far fewer that will tend to lower premiums. So even if the numbers take a vacation from reality, logic would lead one to conclude that the new health care reform law will drive up premiums.

At least that’s the way I add things up.

17 thoughts on “Politics, Math and Premiums

  1. funny but out of the 3, politics, mathematics and premiums….the ones in charge of healthcare reform only understand 1 of those.

  2. Alan, THANK YOU! While I am an insurance agent and read your blog to help to stay up with who’s who and in the know~ or at least perspectives other then my own~ I thank you for a very different reason today.

    My daughter is having a tough time with algebra. She’s in the 8th grade and all of a sudden Math is hard work for her. She doesn’t see the need for the understanding of Math when we have caculators and computers. This post is a perfect way for me to show her; if you don’t understand how numbers work you won’t know when someone is working the numbers to blow smoke…so, thank you for giving me a tool to show my daughter how “stats” “numbers” “graphs” opinion polls “percentages” etc can be misleading and it is ALL of our JOBS, to understand the MATH and ask questions!

    If we privately polled a school of 200 students about the school lunch program and posted the results as 90% of the students polled thought the program was wonderful and no changes needed to be made, what does that REALLY mean? Most would say, wow, I don’t like it but I guess EVERYONE else does. They may even ask a few of their peers how they voted, only to find out they all thought the food was horrible, now they may scratch their heads and possibly think birds of a feather flock together and they are in the minority.

    THE TRUTH OF THE MATH is only 10 kids took the poll and those 10 kids recieved complimentary cinnimon rolls if they voted YES the food was great!

    So, no matter the topic, Math matters! Understanding the numbers is key and asking questions when things don’t add up is vital to establishing the problem and finding the accurate answer!

    Let’s rise up future leaders that are critical thinkers and teach them not to disrespect authority but to question it when it doesn’t add up!

    Thanks Again,

    Hayley Friedman
    Independent Insurance Agent, Wife and Mother!

  3. Alan, you are right on the money about this. We lost a perfect opportunity with the passage of this bill to do something really meaningful about the cost of health care itself, which of course drives the cost of health insurance and other health plans. Employers, who foot much of the bill for health coverage in our country, were counting on something real to be done to make providing coverage more affordable. Instead, we have layered new mandates on them and increased costs. It’s no wonder many of them are talking about sending employees to the exchange instead of providing coverage, or if they are larger, paying fines rather than continuing to provide coverage with no end in sight when it comes to controlling costs.

    As you said, very little was done in PPACA to address these issues. while talk of repeal and court action is interesting and could change some parts of the game, it is really critical that we not forget that before all of this happened, we already had a problem. Costs were already skyrocketing and everyone agreed that something had to be done. Unfortunately, Congress did the wrong thing, and forgot that access without affordability isn’t really access at all. After all, what good is a cadillac if you can’t pay for it. We have to keep focused on the critical things that need to be done to keep employers in the game, or the cost increases we are looking at now will seem like nothing. There are parts of this bill that need to be repealed, and other parts that need to be changed dramatically, but doing something about what isn’t there at all – namely – courageously addressing the cost of health care, should be our first priority.

    • Janet, I asked Alan of this last week. Since you are in the “know”, what happened with the separate committee meeting about agent compensation and MLR? It sounds like it was all lip service.

  4. I was pleased to see Alan’s blog included in the February 1st Orange County Register article, “Health Law: Condition Critical”. The opinion column piece included excerpts of blogger reactions to Florida federal Judge Roger Vinson’s decision Monday. Alan’s blog is listed with those of Roger Pilon (Cato Center for Constitutional Studies), David Axelrod (Huffington Post interview), Robert Alt (Heritage Foundation), Adam Winkler (professor of Law, UCLA), and Avik Roy (Forbes online). It’s a great informational piece–here’s the link:

    http://www.ocregister.com/opinion/law-286445-states-constitutional.html

  5. Oh My! I’ve spent so much time writing on side-subjects that I haven’t yet responded to Alan’s actual post. Alan, you can say volumes in just a bullet point.

    For some reason, bullet points 5 & 6 jumped out at me. Why did I never see this before? You said, in #5 that insurers have incentives to “eliminate lean, low cost plans and focus on more expensive offerings. After all, 20% of a $300 premium plan provides twice as many dollars that can go to administration costs and profits as 20% of a $150 premium plan.” You are right, Alan. This is a recipe for spiraling costs. To make matters worse, some cost-containment features are included in the MLR rather than in medical costs. Insurers may begin the process by offering higher-cost plans, but consumers will exacerbate the issue when “entitlement” feelings arise and they over-consume in order to find some value in their overly-expensive plans. A never-ending cycle ensues, one that many of us have seen historically in the insurance industry.

    In Bullet Point #6, you said, “Exchanges can be tough with carriers, but they’re addressing the smaller part of the premium dollar. Yes, the exchanges may wring some administrative expenses out of the system, but over time medical inflation will erase any of those savings.” That’s another important point that I’ve honestly never thought about before. The 20% portion can only be harnessed so much before the 80% portion and the out-of-control health care costs overtake it. It seems like PPACA strained out a gnat and swallowed a camel.

    Mark Goodman, in his comment below said, “The insurance reform sounds like a wage and price freeze which has never worked.” That is another stunning statement. How I wish Congress had focused on root causes of medical inflation and rising premiums rather than “squeeze” the administration portion until it bleeds.

  6. I love this group. How often does it happen that everyone who writes has something “absolutely RIGHT” in his/her post? Both Mark and Jim talk about the need to implement on a broader scale the “new” model of healthcare delivery (Jim when he mentioned Mayo; Mark when he mentioned Kaiser which is available only in Ca, Co, Ga, Or, and Oh right now). Paul and Stevie Lee both have scored with their arguments that constraints on hospital and medical billing must somehow be fairly implemented. Chris and Robert were both right to stress the part of Alan’s blog discussing the difficulty of fuzzy math and to point out the inconsistencies. No one has all the answers, but I believe Alan, et.al. (responders) come closer than any other list serve/blog that I regularly read and research. Kudos, dudes! (I’m in Kona right now so I just had to throw in the slang.) Susan

  7. Jim, please note something. The last post (Stevie Lee) said he pays $16K in premiums and has a $7K deductible, costing him $23,000 before he gets any benefits. You said you pay $22,386 in annual premium, and in a prior post you said you have a $500 deductible, meaning you pay less than Stevie Lee. You pay less than I do for my family ($22,800 for premium + deductible).

  8. What a pleasure it is Alan, to read thoughts of reason like yours in this world of political hyperbole and “fuzzy math”.

    I never believed that PPACA would reduce our premiums. The value in it is that it makes valuable coverage accessible to more people. Insurance premiums were skyrocketing before PPACA and they would’ve kept increasing without PPACA.

    Although PPACA causes larger increases due to richer benefits, it’s erroneous to think that it’s the cause of high insurance costs.

  9. Alan, as always, I think you are probably correct in your analysis.

    But I would argue–and I am sure many fellow posters would qualify this as a selfish argument–that though premiums will generally go up for most people, for those of us currently paying exorbitantly for health insurance on the individual market, premiums will have to go down. If it doesn’t, then the no one outside of multimillionaires will be able to sustain the premium charges, and the whole system will collapse.

    Is it fair and just that young people, like my own sons, who are currently 18 and 22, will have to pay significantly more for their insurance? No, certainly not, especially since they are extremely low utilizers of the health care system. (Neither takes any medicines or ever goes to a doctor short of an emergency, like my older son’s recently fractured wrist. Even then, he waited a month before getting it checked out, figuring it would probably get better on its own.)

    Each of my sons today could probably get a bare-bones policy for $100, give or take, per month. After reform kicks in, this will rise to what? $200, even $300 a month? It can’t rise too far beyond the average kid’s ability to pay because there is, as the saying goes, only so much blood that can be extracted from a turnip.

    But what about my end of things? Currently, I am paying $22,386 a year for our family’s health insurance (which, I should add, covers my sons, too.) Surely, when the elimination of pre-existing condition exclusions kicks in, this will have to go down at least a little. How can the feds, or anybody, for that matter, expect middle class people to contribute a third or more of his pre-tax income to health insurance that he or she rarely even uses?

    Is it fair that my sons–or your kids, or any other commenters’ kids–will be subsidizing the estimated 48 to 86 percent of Americans in the 55 to 64 age bracket that the HHS data recently found live with a pre-existing condition?

    No, it’s not fair. I won’t argue that. But it doesn’t help our kids to impoverish their parents, either. There are many, many of us in the individual market who would be thrilled to pay the full ride for the kind of policies available to folks–with the same, or much worse, health status than we have–who happen to work for larger companies able to negotiate group rates.

    I am not talking about paying just the employee’s contribution–I am talking about paying this AND the employer’s contribution. (As a self employed person, I am already used to doing this with Social Security tax–another 15 percent of my income off the top!) Maybe I am deluding myself, but I can’t believe that any Fortune 500 company anywhere comes close to being charged $22,386 a year for a family of 4, especially for the kind of decidedly non-Cadillac plan we have.

    If I am wrong, I trust my fellow commentators will quickly disabuse me of my ignorance.

    If I am correct, I hope a few of you might put yourself in my shoes and consider why so many of us on the outside looking in are not bothered so much that the PPACA won’t lower premiums for everyone. We do hope and pray, however, that it will lower premiums for those of us who are currently doing our best to do the responsible thing but remain on the downside horribly unlevel playing field.

    A moderate new pain for many Americans; a giant decrease in agony for others?

    Fair? There are clearly arguments on both sides. Like buttered bread, I don’t expect those on buttery side to have much sympathy for those of us on the plain side.

    • The CBO report cited by Mr. Nather unequivocal: “CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.” http://www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf

      So, yes, there’s winners and losers, but on balance, averaged over everyone, non-group premiums are HIGHER under health reform than if the law had not been enacted. Yes, there’s subsidies to help out those with low incomes in this market, so some families may pay less than they would otherwise. But that is irrelevant to a discussion of whether the law “bent the cost curve” as claimed repeatedly by its proponents, including the president. It did, but the direction was UP, not down.

      Can anyone say with a straight face that the law adheres to the president’s repeatedly stated promises that if your income is below $200K (individual) or $250K (family), your taxes would not go up “one dime”?

      I think any even-handed assessment of claims for and against the law would quickly show which side stretched the truth more. Glossing over this fact by observing that both sides made statements of questionable veracity doesn’t quite do justice to the reality.

    • Hi Jim –

      I don’t have much trouble with WHAT you say. You are intelligent and express yourself clearly. However, I have a problem with HOW you say it.

      In this post, your words were very kind and sympathetic toward your own position. You said, “…put yourself in my shoes and consider why so many of us on the outside looking in are not bothered so much that the PPACA won’t lower premiums for everyone. We do hope and pray, however, that it will lower premiums for those of us who are currently doing our best to do the responsible thing but remain on the downside horribly unlevel playing field.”

      It sounds sympathetic, warm and kind to those “on the outside looking in.” However, in your last post, under “Federal Judge Declares PPACA Unconstitutional”, you said, “…an interesting metaphor for the healthcare situation in sinking-ship America: there are those who have comfortable seats on the life raft, and those treading water in the cold sea. When the latter do their best to hold on to the side of the raft, perhaps even have the temerity to try hoisting themselves up and in, the former stomp on their fingers and do their best to pry them back into the frozen brine! The justification of these goodly folks on the life boat? If we let those wretches in, it will sink the boat and we’ll all be drowned.”

      Both paragraphs describe the same thing – one group on the “inside” who don’t care about the plight of those on the “outside”. However, HOW you say it is strikingly different. You sound sympathetic for yourself, but you demonize others with inflammatory verbage.

      Jim, there are valid points on both sides of the argument(s). I have always noticed that people who argue an “extremist” viewpoint usually resort to name calling, demonizing and exaggerating. However, rational arguments are usually fair and balanced, even though they may indeed include points from one extreme or the other. There are really 3 sides to an argument – left, right, and balanced. It’s not hard to work up your ire over leftside or rightside arguments, but to find a workable and successful balance takes patience, understanding and a cool, rational head.

      Jim, balanced and fair people really want everyone in America to have ACCESS, AFFORDABILITY, and QUALITY in health care. The method for obtaining that goal is the current focus. It must be done in a way that is fair to “insiders” and “outsiders”, without demonizing the other party. You admitted in one of your posts that you are “not bothered so much that the PPACA won’t lower premiums for everyone”. I find this as bothersome as your claim in the prior post about the other party stating that they, “stomp on their fingers and do their best to pry them back into the frozen brine”.

      A proper solution doesn’t have anyone stomping on anyone else’s fingers. A balanced, fair system doesn’t have one party not caring about the plight of the other party. If that is being done, it is an indication that there is no justice in the method being used to solve the problem. If you feel that the other party doesn’t care about your plight, and you admit that you don’t care about their plight, then it’s a pretty clear indication that a just and fair solution has not been reached in PPACA. Really, most of America wants everyone in a safe position. Most Americans want everyone to have ACCESS, AFFORDABILITY, and QUALITY in health care. Most Americans care deeply if it hurts the outsiders and solely benefits the insiders. With the help of those who are balanced and fair in their statements, arguments and solutions, we may indeed reach a “fix” to PPACA and true health care reform.

      • Ann, extremely well argued and tactfully delivered! Your points are well-taken, and I cannot weasel out of your critique of my rhetoric!

        I do think most of us humans are somewhat guilty of having what U VA social psychologist, Jonathan Haidt, PhD, describes as an inner PR agent whose job it is to relentlessly buff our image to others on our team; and an inner Prosecutor whose job it is to point out the evil machinations and self-serving nature of our perceived dead beat adversaries on the other side!

        I know I am guilty of this, but until you pointed it out with such concrete examples from my own comments, I suppose I have been trying not to pay too much attention to just HOW guilty I am!

        Anyhow, mea culpa.

        Your other point is also well taken. I suppose people on all ends of the ideological spectrum see evil doers proliferating on the other side. What we all share in common is that nobody likes a free rider, i.e., someone who scams the system and gains unfair personal advantage at the expense of the common good.

        What is different between us, I think, is who we perceive these free riders to be.

        For the more conservative people, the stereotypical villains are those who don’t work hard if at all, live partly or wholey off the public dole, pay little or no taxes, impregnate or get pregnant and expect everybody else to subsidize the care and feeding of their kids, are perhaps even in our country illegally, etc.

        For the more progressive types like me, the stereotypical villains are fat-cat Wall Streeters and/or small-minded country clubbers who pay little or no taxes because of accounting gimmicks or hiding all their moolah in the Caymuns, manipulate the financial system every which way to their own advantage, lobby for special perks for their pet projects, etc.

        I suppose both stereotypes exist to some measure–but arguably in far fewer numbers than the paranoid fears of us partisans suggest.

        One final point. I do not know how much money you guys earn, but I am sorry to hear that you, too, are paying an awful lot of money for health insurance. I also have come to agree that the cost here is not primarily due to insurance companies, though I do think that they are at least part of the problem. Rescision and other such practices–especially when there was no fraud on the part of the rescinded patient–have hardly endeared some of the more aggressive companies to folks like me.

        To me, bending the cost curve will mean that an awful lot of providers, drug and device manufacturers, hospital administrators, and yes, health insurance executives, who have gotten used to making an awful money in ways that do not always behoove their patients, are going to have to change behaviors in ways they will absolutely not want to do.

        A growing number of researchers have argued, for instance, that drug companies should be required to test new drugs not against placebos but against currently available generics. If they can’t show significant benefits beyond what these cheap drugs provide, then the public should be told that.

        Doctors, for their part, should not be allowed to own testing apparatus, like MRIs, which creates a moral hazard of sorts–send every patient who has a sore toe in for an immediate MRI? Good for the doctor, not so good for the healthcare system.

        As far as self-employed people go, why can’t there be some way that we can pool ourselves together in a large group that can qualify for the same economy of scale discount available to, say, Microsoft or GE?

        There is so much money in healthcare, and so many people who earn their livings from it. I, for one, would love to see the Mayo Clinic model repeated nationwide, but it’s never going to happen.

        PPACA may not be the right change, but I still maintain it represents a un-close-able crack in the Berlin Wall. There’s no going back now, even if PPACA is repealed, or ruled unconstitutional. I truly hope you are right that a “fix” can be made, and that true health care reform will take place.

        With folks like you and Alan, I think there is a chance of this.

        In any event, thanks for your critique, and I will do my best to muzzle both my inner PR agent and my inner Prosecutor.

        • To My Friend, Jim. I enjoyed conversing with you this time. I read every paragraph twice, yes 3 times, and cannot find a thing I find distasteful. Every paragraph you wrote was thoughtful, reasonable, and intended to work toward a solution. Yes!

          Finding a balanced solution takes balanced thought. But sometimes it takes an occasional “wake-up call” from someone with an extreme left or extreme right viewpoint also. There’s nothing wrong with that, so long as the intent is to maintain a fair, equitable solution. It makes us avoid turning “balanced” into a watered-down compromise. A balanced solution usually works. One of the problems with an extreme left or extreme right solution is that it simply never works. It’s not functionally possible in the long haul.

          I’ve enjoyed making you my friend. With tactful rhetoric, you may express your opinions to me anytime. You are certainly intelligent and well-read. When I read your words, I am reminded of my college Philosophy professor. His arguments always sent me to the dictionary to learn a new word, and to the encyclopedia to learn a new subject (groan, my college days were obviously before Google!).

          One of your ending remarks said, “I truly hope you are right that a ‘fix’ can be made, and that true health care reform will take place. With folks like you and Alan, I think there is a chance of this.”

          Right back at you, Jim. You can be a valued team player, too. We need those with opposing viewpoints to express themselves intelligently and factually, as you do, and to present their points in a way that works toward a peaceable solution. Yes, I agree the Berlin wall has been torn down, and there’s no going back. But really, no long-term insurance agent will argue that they want absolutely no health care reform. We don’t want to “go back” either. We want to go forward, fix the “tweaks” that President Obama mentioned, and move deeper to fix the “freaks” that he didn’t mention. No, I’m not name-calling. I mean freakish provisions in the law that are damaging in the long run and not even productive in the short run. But that’s another story. Let’s walk forward as friends, including steps on the left side of the spectrum, steps on the right side, but a decidedly productive intention to stay balanced and go forward.

          Ann H.

    • Jim,

      The cost of your health insurance is truly a reflection of the cost of health care, unless you feel the carriers are nothing more than greedy parasites sucking as much blood from us as possible. If that is the way you feel, nothing anybody writes is going to change your mind nor open your eyes.

      You’re pinning your hopes on a terrible law and you seem to miss Alan’s point. This law has done little to put any downward pressure on the cost of HEALTH CARE. What do you think happens to premiums as the cost of health care increases? I’m a broker, and for my family of four, I pay over $16k per year with a family deductible of $7k per year. So I spend $23k per year before I see any benefits. Why? Because I’ve seen client medical bills where they were in an oupatient clinic for one hour and racked up more than a $10k bill. I often see a two or three day hospital stay billed in the six figures. The risk to the insurance companies is enormous, given the cost of health care.

      When you think about all the new taxes foisted on the insurance companies (not to mention the taxes we citizens will pay), the scores of new gov’t agencies this ill-conceived law will create, you have to wonder how anyone thinks it’s good legislation.

      You’re self-employed? How do you like the idea of giving a 1099 to everyone and every company with whom you spend more than $600/yr? This, alone, epitomizes the complete lack of forethought and inability of the drafters of this law to have any sense whatever of its results and implications.

      You may feel that PPACA gives you a light at the end of the tunnel, but I guarantee that light is nothing more than a freight train headed in your direction.

    • Jim in your first paragraph you said premiums will have to go down. How? Why? I am all for reform but you seem to believe that something magical is about to happen and you will pay less.

      Physicians are getting higher reimbursements, hospitals operate (no pun intended) with little regard to cost and pharma companies are having record earnings. So Jim where is the savings going to come from?

      The insurance reform sounds like a wage and price freeze which has never worked. If you tell or mandate what an insurance company can charge but also tell them what they have to cover how do you manage this?

      How health care is delivered is the key to the kingdom, so to speak. Here in California Kaiser membership is growing exponentially compared to competitors. It visioned what it needed to do many years ago and set about doing it. It was not a straight line and it was incredibly expensive but the results now speak for themselves. It shows in premium, cost for services and in the attitude of their staff. It has become the first choice for physicians finishing their training.

      Jim until delivery is changed you will be writing larger checks every year.

    • Removing pre-existing conditions restrictions will not cause any premiums to go down. It will have the opposite effect. This will increase demand for services without increasing supply of doctors and hospitals placing upward pressure on prices as well as causing more costs to be incurred in general to be spread among those covered. More importantly, those who would then opt-in are much more likely to use services at an above average rate (they are the ones who immediately need to address conditions) exacerbating this effect.

      And the system would not collapse with a failure to address costs in the individuals market. the individual market might collapse in theory, but 1) this represents a small minority of the overall system and 2) insurance companies with some exceptions are generally making money in this market and would be interested in creatively offering new products and services to avoid losing out a whole source of revenue.

      Overall, cost is the central issue whether in the individual market or no. I regret that congress has created some limited ‘reforms’ while generally ignoring the root issue: cost. An incremental set of reforms that more closely align costs to performance (outcomes) would be the desireable way to ‘fix’ this unsustainable path we are on.

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