Paul Krugman, Kevin Drum and any number of others are pointing to the graph in this study from the National Institute for Health Care Reform. It shows a sharp decline in the percentage of Americans with employer-sponsored healthcare insurance.
Boy, I’d sure like to see a little more granularity in those results. Based on the information supplied I can’t distinguish among a decline in employment (which we know happened), a decline in those with employer-sponsored healthcare since 2007 (the conclusion that most of the those posting on the subject take away), and a decline in employer-sponsored healthcare since 2009 (which is what opponents of the PPACA said was going to happen).
There is not much reason for employer-sponsored health to drop due to the ACA since 2009. The full ACA does not start until 2014. What current provisions are you thinking of that would cause that now?
The paper notes that most of this is due to unemployment. Concerns about fewer employers providing insurance existed prior to the ACA.
Steve
Oops, forgot. To be complete we should note that when the ACA is in full effect, those who do not have employer provided insurance would be getting it through the ACA individual market. They would not be out of insurance. That is different than what happens when you lose your job and there is no ACA in effect, ie no health insurance.
Steve
Finer granularity is necessary before any reasonable conclusions can be drawn.
I read somewhere this week that it was estimated that about 1.5% of the most recent year’s increase in costs could be attributed to ACA. That was from something around 9% to 10%. The effect of ACA is small, but it might be enough to get some firms drop coverage, especially in a bad economy. Those small percentages add up over time. (I’m too lazy to look up the article.)
My wife’s old company is really getting pushed hard, and I imagine that after 2013 they will drop coverage altogether. My wife’s new firm is already starting to pare back their benefits as well. What it amounts to is this: If it can’t be paid for, it won’t be paid for. And that goes for government as well as for the private sector or individuals. Every little extra bit puts the collapse that much closer.
(Cue Ben to tell me I don’t know what I’m talking about.)
That was a sharp increase in premiums after ACA passed; I recall some fingers pointed at the legislation, but presumably the insurance companies had investment losses to cover as well.
PD, how do insurance company investment losses account for rising premiums at self-insured companies?
Icepick, good question and I don’t know the answer, but I do believe part of the benefit of self-insuring is the opportunity to have access to the money for your own cash-flow management. It wouldn’t be hard to imagine self-insurers keeping a pool in a money market account for example.
In the next post Schuler comments:
Some use stop-loss coverage, but not all. Have the rates of increase differed drastically between the two? Are those rates of increase solely attributable to the stop-loss policies?
As for the reserves, would the interest on those accounts make that much difference? I know that at my last employer those amounts would get burned through easily in the course of a year – the employees were only bearing 20-something percent of the overall expense.
SHORTER: We don’t have enough granularity in the data! 😉
Dave gets to a point I was going to make in his next insurance post. But first…
I’d see the granularity comment and actually raise him. Pulling those variables apart and understanding the motivations will take a lot more than granularity in my opinion.
Steve – the fact that ACA has not yet been implemented is irrelevant. Planning cycles are long. We are considering acquisitions and major capital expenditures that might not occur for 2-3 years, but we are making provisions for them now. That is, considering financing, staffing, compensation plans etc.
The second point deals with Dave’s later comment.
Drew-The question is if businesses have been dropping employees since 2009 in anticipation of 2014. I find that unlikely.
Steve
Steve
I know you do. But the essence of Dave’s point is it is nearly impossible to disaggregate the issues. So you are left only what you observe occurring out in the world, not what you can do in a controlled laboratory. And as someone in contact with many, many businesses i know it’s occurring. It’s not a popular view, but after all, how many reports do we see these days invoking “unexpectedly” when they can’t come to grips with their perceived reality?
Pulling those variables apart and understanding the motivations will take a lot more than granularity in my opinion.
Very true, but without granularity it is hard to even begin an analysis except in broad terms. In fact, that’s how we got stuck with ACA anyhow: 45 million or so uninsured people in America is an interestingly large number, but what does it mean? How many of those are actually in bad shape wrt insurance and how many are opting out for legit reasons? If I was 25 and healthy I’d consider opting out. That is a rational decision and perhaps even the correct decision.
If I was 25 and healthy I’d consider opting out. That is a rational decision and perhaps even the correct decision.
Perhaps. But it presents a moral dilemma. If you are one of the very few who get sick at an early age, then you have frauded your fellow citizens by not contributing to the risk pool, but benefitting from the benefits of coverage.
On the other hand, if you delay paying premiums until you are, say, 45 years old then an insurance company has no choice, on an actuarial basis, but to charge you sky high premiums to avoid you taking a free ride on those paying premiums for 20 years. And then the 45 yr old bitches.
About two years ago, in the midst of Obamacare, I sent a thought piece to Dave ginned up by a former partner and me an element of which was this: as a society we don’t have the stomach to turn away the sick, even though they raped the system irresponsibly by not entering the premium paying class. Hence a mandate makes sense.
Surprised old “righty” Drew would come to such a conclusion? I just don’t have a better solution. Its a bad one. Perhaps unconstitutional. Im open to alternative suggestions. And Ice just made the point. he’d opt out in the name of naked self interest. But what if he loses the bet…………….? Do we throw him in the trash can?
Drew, I think there is something missing in your analysis here. I think healthcare insurance is “claims-based” — the insurance will pay the medical expenses incurred during the policy year, and when the policy is over, its over. Next year, the insured can renew, but if he goes to work somewhere else, he generally can’t; employer-based policies lack portability. So, its not as if paying healthcare insurance early in life is an investment in the system, he’s paying a one year’s worth of actuarial risk, which is probably pretty low. Part of me thinks the game being played is to try to find a way to get the young to overpay for healthcare insurance, when generally in this economy they can’t.
The real problem is the notion that the employer is the basis of insurance. A 25 year old may expect to change jobs a few times. If they come down with a severe illness, they will eventually have to quit their job and will only have a period time under Cobra to maintain any coverage. In the meantime, the insurance company can raise everyone’s premiums in the group with the hopes that the employer will fire the weak link.
Pd
Only missing from the analysis because I didn’t include it out of brevity. You are absolutely spot on.
Thank the liberals, and especially their Holy Icon FDR for employer based insurance and the attendant problems. But who is surprised?? They fuck up just about everything.
Portability and opt out are two major problems with the system. I think portability should be an almost slam dunk proposition. For example, if your employer offers Guido and Louie’s coverage, you ought too either not take the job, or take a cash payment in liu, to which you would apply at Chubb, Blue Cross whatever etc. and switching employees should not be an issue as long as you stayed as a memebr in good standing (pay your premiums) in the Blue Cross system. We now have some balance in who paid premiums and who gets benefits, the paid for quality of care and the actuarial realities of the system.
Doesn’t auto insurance work similarly?
I may face this very situation soon. We’ve just about had it with Dodd Frank. We are out fundraising but Dodd Frank costs and liabilities change (and always grow more expensive) by the day. So we might disband. Now what? I pay $40K in health care premiums each year. That’s right. $40K. A so called gold plated plan. I (and my partners, their pro rate share) pay $40k a piece for our employees. Being the evil, greedy bastards we are. Deductibles are $10. Heh. $10.
But what if we disband? I have pre-existing conditions. Cervical disc disease. Fusions or prosthetics come at about $80K all in for the procedure. High cholesterol. Reynolds used to whine and bitch about how he couldn’t get a few hindered bucks to cover his statins. Imagine where I’ll be? And if I need the proverbial quad bypass? Where will I get insurance?
I’ve paid over $500k in premiums in just the last 13 years. Perhaps another couple hundred if you go back to early employment days. Some people don’t make that in a lifetime. That’s my insurance premium.
So my point is simply that portability is probably the most important issue on the table. And people whining because their blood pressure medication isn’t affordable when t heir local weekly bar tab is probably 4 x isn’t too compelling to me.
Drew, I opted out when I was 20 because I had no option. My job didn’t provide healthcare insurance, and I couldn’t afford it on my own. Then I was in a violent car accident. It left me with a shattered left leg and a broken back.
The bills were LARGE. Rather, they seemed so at the time. My two weeks in the hospital, which included time in an ICU and a PCU, an operating room, lots of drugs and so on and so forth.
(The hospital bill for all that was ~$25,000. My mother had a standard outpatient procedure, a cystoscopy of her bladder, several times in the last few years of her life. The cost for eight hours in the hospital, as billed? Over $40,000.)
The hospital had to eat that cost. Was I a free rider? Sure. But what were the alternatives? I couldn’t afford HI, and that was way back in 1988. I suppose they could have refused to treat me, but do you want to live in that country?
Later, when I had a job I knew people were free-riding off me. So be it. Hopefully many of them will do better in life latter on. Some won’t. Now it’s my wife paying for the freeriders. So be it.
But your description of how the premiums are paid doesn’t matter because for most people it doesn’t work that way. When you’re working for MegaCorp Industries, LLC they don’t have different premium schedules for 45 year-olds that have been free-riding the system versus 45 year-olds that have been paying their own way since they reached adulthood. They won’t even have different premiums for 45 yos vs. 20 yos vs. 60 yos who have smoked, drank, taken amphetamines and been overweight for 40 years. The free-riders get absorbed across the whole system pretty much on a per cap basis, as you well know.
(Additionally, when I was 20 it wouldn’t have mattered if I had been paying in since I turned 18. Costs would have far exceeded what I could have paid in. So I’m a free-rider in that sense regardless. As is any woman that gets pregnant with an insurance policy she hasn’t been paying into for some time, especially if ANY complications arise.)
Drew, don’t balem FDR, blame Hitler. If he hadn’t been raging around Europe and North Africa the US would have neveer gotten dragged into a war in Europe, the Japanese would have taken more pause before attacking, and we would have never gotten into WWII. No WWII no wage controls – no wage controls no need for things like tax breaks for employer paid medical insurance. It’s all Hitler’s fault!
Ice pick
On Hitler, get a life.
On your early misfortune. I’d say either the answer is to stay on your parents policy, or that yes, their are the rare circumstances that require society to band together and collectively eat the loss. Those case are rare, in my opinion. Your sessions with shattered leg and back ailment victims aren’t held in large auditoriums, right?
I’d say either the answer is to stay on your parents policy
Not an option.
Your sessions with shattered leg and back ailment victims aren’t held in large auditoriums, right?
Don’t know. People with shattered legs and broken backs just don’t get around much. (No doubt you would accuse us of being malingerers.) The truth is people with the severity of injuries I had are usually lucky if they end up paralyzed or amputees – most end up dead.
On Hitler, get a life.
You’re blaming the problems of today’s system on someone dead before either of us was born. I am doing the same. Not much difference. Turning a temporary wartime, depression-era policy into a permanent structure can hardly be blamed on a guy that died before the war was over. Not to mention the almost 67 years of other policy choices made since his death. It was a stupid, fatuous point you made. I just made it sillier.
People with shattered legs and broken backs just don’t get around much. (No doubt you would accuse us of being malingerers.
C’mon, ice pick. It was snark. It’s not a huge population. That was the auditorium point.
You are talking to a guy with 4 herniated or degenerative cervical discs and three fusions. currently on my left hand my pinky and next finger are numb. And the pain goes right up through the hand through the central forearm and triceps. That’s the C8 nerve root and C7 T1 disc acting up. I have a permanent tremor in my left hand from all the nerve trauma. I’ve had a paralyzed left arm for 9 months from a c4 getting squashed. So please, cut the crap on not understanding back problems.
There seems to be a definite pattern. I deal with things. You whine.
Who’s whining about a broken back? I had injuries, they healed, it was long ago. I cited it as an example.
C’mon, ice pick. It was snark.
Which is the BEST you ever offer for anyone with any kind of problem. Please, tell me some more about how my once broken back and leg amuse you. Perhaps you can tell me about the lighter side of famine while you’re at it.
You have no empathy whatsoever. And you actively denigrate every pain and misery that isn’t your own. Every little inconvenience of yours is tantamount to the Seven Plagues of Egypt. That’s the pattern.
Examples: Drew not liking his job surpasses the misery of the long-term employment of not just anyone else, but everyone else. Oh, cry for Drew not liking his job! (As though no one else ever had a shit job.)
There’s nothing that can happen to anyone else such that Drew, excuse me, I mean Topper, can’t find something at most 1/10 as bad that happened to him once which both surpassed the Passion of the Christ and the Trials of Job, much less the petty travails of whichever hapless soul gets stuck listening to him.
Yeah, the pattern is that you DO NOT CARE about anyone but yourself.
So as for your back? You’ve got no sympathy for anyone else and deserve none in return. I hope you enjoy every last moment of that burning numbness that comes from disk problems. You know pain killers can’t actually do anything for it when it gets bad, right?
That’s right. See there is an infinite amount of money because money now is not tied to a commodity like gold. It is really just a bunch of 0s and 1s in computers. So, there is no limit on the cash we can put into the system. So long as we have infinite amounts of electricity…oh…wait…uhmmm dammit!
Ever since Krugman became a polemicist he continually surprises me as to how he can reach dumb conclusions. Drum…he is an economic illiterate, so no big shock there.
The thing is employers, given the preferred tax treatment of health care aren’t going to be dropping health care just willy nilly. There will be a reason. So pointing to the above and saying, “See LOOK!!!!1!!11!!!one!!Eleven” Is completely unsatisfying. The follow up should be, “Why are employers doing that?” Obvious answer: health care costs are rising rapidly and given that pay (as defined as wages and benefits) is set in competitive markets employers can only offer so much in benefits.
The next obvious question is, “Why are health care costs rising so fast?” Here there is no “obvious/trivial” answer. Some things I’d list:
1. The tax preferred status of employer provided health benefits results in over-insuring.
2. Medicare: subsidizing the consumption of health care resources for those who demand/use those resources most intensively is going to have an upward impact on prices.
3. Various supply constraints: doctors and nurses are one example where the supply is restricted by various institutional reasons.
4. Feedback effects: as prices go up, insurance companies will want to reduce expenditures where they can which in turn will likly drive up administrative/monitoring costs.
5. Disconnect between care and the ability to pay: right now if you show up at the ER you will get treated whether you can pay or not. This is very costly, both in that it is an expensive form of care and people will consume resources even if they can’t pay for them.
6. Coverage of things that are not really insurable: example, pregnancies and child birth. Yes it is expensive, but it sure isn’t something that is rare and in many cases it is something people actually work towards. Compare this to something like brain cancer or a heart attack. How many people want the latter vs. those who want the former?
All of these things, and many more are driving health care costs at an unsustainable rate.
I think there is some truth to this. If you know in 5 years you have to make a significantly larger payment on something you aren’t going to sit around and ignore it. You start planning sooner, especially at a big company with billions of dollars in profits at stake.
Considering many things that are problematic today can be traced to FDR and some of his shenanigans…yeah, we can blame him. Our entire regulatory structure is a result of the Commerce Clause…which the SCOTUS got creative with when FDR threatened to pack the court. I think this is one significant reason why we get so much rent seeking. Then there is the tax preferred status of employer provided health care benefits, a driver in unsustainable health care costs.