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The phrase "Defined Contribution Plan" has heretofore been utilized as a soulless, boring euphemism for a 401(k) style plan. In other words, rather than a pension "Defined Benefit Plan," employees are asked to take on the risk of investing for their own retirements. In true other words, employees are paying money without receiving a defined benefit. They just get to pay. And who knows what they'll get for their money? No one can say.
But, it's very profitable for FIRE. And it's mitigates risk for employers. So the "Defined Contribution Plan" won out. Within 30 years, pensions were all but dead. And even though anyone who looks can see the retirement calamity coming for 401(k) holders, the plan still remains popular.
30 years. It only took 30 years to kill the "Defined Benefit Plan." It was the only plan where you knew what you were getting for your money.
ZIRP facilitated this heavily by crashing pension funds (and 401(ks)). But it was already underway.
Well, what if we applied this idea to healthcare?
Right now most middle-class American employees have "Defined Benefit Plans." They pay for health insurance as part of their "total compensation packages" and receive a plan with a defined benefit and deductible etc. It's opaque, to be sure, but there's a defined benefit and usually a contract somewhere that spells out the terms of the plan. But what if we shifted them to "Defined Contribution Plans"? In this scenario, employers would set aside a lump of money just like a 401(k) and employees would have to shop and figure out and buy whatever they could get with it. This way here, the risk of health inflation is pushed to the employee. Rather than control costs, unpayable medical bills would more than likely become more common for the American worker.
In true other words, employees are paying money again without receiving a defined benefit. They just get to pay. And who knows what they'll get for their money? No one can say.
But it's looking more and more like that graph up above will apply to health benefits as well as retirement funds. And when it does, will the middle class be able to deal with catastrophic bills? With networth already imploding, it certainly doesn't look like middle class households will be able to take this new risk off the backs of employers without going insolvent.
So now, on to the news:
Interestingly, Peter Orszag was going on about this about a year ago:
If enacted across the board, this will be the biggest shift in healthcare in 30 years. It will be another serious blow to an already beleaguered middle class. Make no mistake, they're already planning to stiff you with the bill.
The maddening thing is that nothing is being done to actually fix our broken, opaque, backwards, insurance-saturated, shamefully wasteful healthcare system. Let me throw up some charts again to push home the point of just how much the healthcare system has sucked oxygen out of the American economy:
Federal Government Spending Over Time - 23.1% is now healthcare spending. This is enough to provide universal coverage to everyone in every other first world country. And the costs are growing faster than in any other first world country. There's an additional 30% of all 50 state's budgets that goes towards the other half of Medicaid too that's not shown on this chart:
Personal Spending - This Is Only Out of Pocket for the Median Payer And Does Not Include What Employers Pay Towards Healthcare. Personal Expenditures More than Double Even with Insurance. Employers Pay an Additional 6.6% for individuals and a whopping 18.7% for families:
We spend an Obama Stimulus every year more than the next highest spending country on healthcare costs for worse results.
Medicare is ruining the Federal Budget. Medicaid is ruining all states' budgets. Health insurance is ruining employers' and employees' budgets. At this point we have lost 5-6% of our cumulative national wealth per year chasing some healthcare fantasy in the US. That's about one Obama Stimulus per year. Wasted. Health outcomes are no better.
Think about that.
A stimulus every year.
$14TGDP * 5% = $700B.
A stimulus every year.
Just to avoid the single payer solution that even Mexico is putting in place.
Every other nation has a path to do it cheaper. There are many choices to copy. This should be a no-brainer.
When will the country wake up, I wonder? When it is 2 stimuluses per year? Three? Four? The total cost is doubling every 10 years. We'll get there within many of our lifetimes should we not end the "insurance" charade.
And now the average citizen will be asked to navigate complicated, high deductible, likely not-even-quite-catastrophic healthcare plans, the likes of which most, if not all, will not understand. After all, it is clear that the working class in general didn't undertand mutual funds when they got thrust into them. It was clear they didn't understand housing bubbles. They have lost 40% of their net worth over five years. Clearly the median American doesn't understand the game and is getting screwed by it. How should we expect them not to have catastrophic health bills when left to their own devices? How many small business owners here at iTulip who have had to buy their own plans ran into horror stories? Imagine some teenage kid trying to figure this out at his/her first job.
Ultimately, it's nothing more than another sham. But it will be very, very profitable for the health insurance companies. And it will take some risk off employers. So it will happen.
I just wonder, how much more blood can be squeezed from the middle class stone?
What else can we make a "defined contribution" to without knowing what we'll receive for our money?
Imagine a world of "defined contribution" haircuts, where you go in, pay for a haircut, and then maybe get half of your head trimmed, depending on how many customers came through that day and how much the hairdresser owed on a car loan. The details would all be spelled out in size 7 font on a piece of tissue paper in incomprehensible legalese.
Or we could have "defined contribution" funerals. Just pay $5,000 bucks and maybe a priest will show up.
First they came for the pensions,
and I didn't speak out because I didn't have a pension.
Then they came for the unions,
and I didn't speak out because I wasn't in a union.
Then they came for health care,
and I didn't speak out because I didn't have a health plan.
How long until they come for you?
But, it's very profitable for FIRE. And it's mitigates risk for employers. So the "Defined Contribution Plan" won out. Within 30 years, pensions were all but dead. And even though anyone who looks can see the retirement calamity coming for 401(k) holders, the plan still remains popular.
30 years. It only took 30 years to kill the "Defined Benefit Plan." It was the only plan where you knew what you were getting for your money.
ZIRP facilitated this heavily by crashing pension funds (and 401(ks)). But it was already underway.
Well, what if we applied this idea to healthcare?
Right now most middle-class American employees have "Defined Benefit Plans." They pay for health insurance as part of their "total compensation packages" and receive a plan with a defined benefit and deductible etc. It's opaque, to be sure, but there's a defined benefit and usually a contract somewhere that spells out the terms of the plan. But what if we shifted them to "Defined Contribution Plans"? In this scenario, employers would set aside a lump of money just like a 401(k) and employees would have to shop and figure out and buy whatever they could get with it. This way here, the risk of health inflation is pushed to the employee. Rather than control costs, unpayable medical bills would more than likely become more common for the American worker.
In true other words, employees are paying money again without receiving a defined benefit. They just get to pay. And who knows what they'll get for their money? No one can say.
But it's looking more and more like that graph up above will apply to health benefits as well as retirement funds. And when it does, will the middle class be able to deal with catastrophic bills? With networth already imploding, it certainly doesn't look like middle class households will be able to take this new risk off the backs of employers without going insolvent.
So now, on to the news:
Survey: Half Of Employers Will Stop Offering Health Coverage, Give Workers Cash For Plans Instead
By MATTHEW STURDEVANT, msturdevant@courant.comThe Hartford Courant8:57 p.m. EDT, June 19, 2012
A new J.D. Power and Associates survey says nearly half of employers plan to change the way they provide health insurance to workers — offering them a set amount of cash to buy their own plan rather than providing coverage and charging employees a portion of the premiums.
The change would happen as states set up health exchanges, which are marketplaces for individuals and small groups to buy coverage, required under federal health care reform.
Many observers say health exchanges, in various forms across the states, will happen even if the U.S. Supreme Court strikes down the so-called individual mandate for coverage in a ruling expected in the coming days. That means a move away from employer-based health coverage, long discussed, could be a trend that gains speed over the next few years.
Health insurers, however, said Tuesday it's unlikely that employers will veer away from employer-based health care, and even J.D. Power's senior director for health care, Rick Millard, advised caution in interpreting the survey results.
J.D. Power found that 47 percent of 6,579 employers surveyed say they "definitely will" or "probably will" switch to a "defined contribution" model within a private exchange — meaning they would offer employees a set amount of cash to go out and buy coverage on their own.
The study — which rated Aetna highest in employer satisfaction among third-party administrators for self-funded plans, typically at larger companies — also found that some employers "may consider eliminating coverage altogether."
"As the landscape of health care changes, employers face many choices in how to best serve their employees with competitive coverage at affordable costs," Millard said. "While some reports have predicted that a large number of employers might stop offering coverage, [other] study findings indicate that a large majority won't walk away from offering coverage to their employees."
Still, the health exchanges, which would be available by 2014 under the reform act, along with employers' limiting how much they pay for rising health care costs, could make so-called "defined contribution" plans attractive to businesses.
The results of the J.D. Power survey included a mix of self-funded insurers, 42 percent of whom said they would consider a defined-contribution plan, and fully funded insurers, 51 percent of whom said they might switch, Millard said. Self-funded plans are generally larger employers that take on the risk and pay insurers to run the plans; fully funded employers are generally smaller companies.
The eagerness of employers to try something new might just be frustration with a tumultuous health care environment with rising prices, deeply divided political leadership, a Supreme Court decision that might spike the legislation passed two years ago, and state laws that vary across the U.S.
As unemployment subsides and companies must compete for employees, health insurance, like any other benefit, becomes a tool for recruitment.
"I think in the main, employers who provide health insurance do it because they want to," said Keith Stover, a lobbyist and spokesman for Connecticut Association of Health Plans, an insurance trade group. "Whether you're a sophisticated person or an unsophisticated person, given all of the back and forth and push and pull and court cases and politics and rhetoric, what would you be saying? 'I'm going to look at everything.' "
The consumer group Families USA has a different take, saying that fewer small- and medium-sized employers have been offering health insurance to their workers for at least 10 years, and the trend has been accelerating.
"The Affordable Care Act is actually, in its intent and some of its provisions, designed to stabilize that decline in offers of employer-based coverage," said Kathleen Stoll, deputy executive director at Families USA.
Employers may be thinking that rather than not offering coverage, they might offer cash that, when combined with a premium tax credit made available in federal reform, would afford a worker roughly the same amount of coverage as an employer-based health plan, Stoll said.
Employers and employees surveyed by J.D. Power said their biggest concern with a health plan was the price, not the service. Employers, in general, view fees by doctors and hospitals as the reason for rising health care costs, while employees most frequently believe health insurance companies' administrative costs are driving up costs.
UnitedHealthcare spokesman Daryl Richard said, "from UnitedHealthcare's perspective, we continue to hear strong interest from the employers we serve in terms of their desire to offer coverage to their employees."
Said Cigna Corp. spokesman Jon Sandberg: "There have been many studies and projections on this topic. Most have concluded employers plan to maintain employer-sponsored insurance as exchanges become part of the health care system. We talk to our clients every day to help them develop innovative plans to maintain a healthy and productive workforce, and this survey does not coincide with what we are hearing in the field."
By MATTHEW STURDEVANT, msturdevant@courant.comThe Hartford Courant8:57 p.m. EDT, June 19, 2012
A new J.D. Power and Associates survey says nearly half of employers plan to change the way they provide health insurance to workers — offering them a set amount of cash to buy their own plan rather than providing coverage and charging employees a portion of the premiums.
The change would happen as states set up health exchanges, which are marketplaces for individuals and small groups to buy coverage, required under federal health care reform.
Many observers say health exchanges, in various forms across the states, will happen even if the U.S. Supreme Court strikes down the so-called individual mandate for coverage in a ruling expected in the coming days. That means a move away from employer-based health coverage, long discussed, could be a trend that gains speed over the next few years.
Health insurers, however, said Tuesday it's unlikely that employers will veer away from employer-based health care, and even J.D. Power's senior director for health care, Rick Millard, advised caution in interpreting the survey results.
J.D. Power found that 47 percent of 6,579 employers surveyed say they "definitely will" or "probably will" switch to a "defined contribution" model within a private exchange — meaning they would offer employees a set amount of cash to go out and buy coverage on their own.
The study — which rated Aetna highest in employer satisfaction among third-party administrators for self-funded plans, typically at larger companies — also found that some employers "may consider eliminating coverage altogether."
"As the landscape of health care changes, employers face many choices in how to best serve their employees with competitive coverage at affordable costs," Millard said. "While some reports have predicted that a large number of employers might stop offering coverage, [other] study findings indicate that a large majority won't walk away from offering coverage to their employees."
Still, the health exchanges, which would be available by 2014 under the reform act, along with employers' limiting how much they pay for rising health care costs, could make so-called "defined contribution" plans attractive to businesses.
The results of the J.D. Power survey included a mix of self-funded insurers, 42 percent of whom said they would consider a defined-contribution plan, and fully funded insurers, 51 percent of whom said they might switch, Millard said. Self-funded plans are generally larger employers that take on the risk and pay insurers to run the plans; fully funded employers are generally smaller companies.
The eagerness of employers to try something new might just be frustration with a tumultuous health care environment with rising prices, deeply divided political leadership, a Supreme Court decision that might spike the legislation passed two years ago, and state laws that vary across the U.S.
As unemployment subsides and companies must compete for employees, health insurance, like any other benefit, becomes a tool for recruitment.
"I think in the main, employers who provide health insurance do it because they want to," said Keith Stover, a lobbyist and spokesman for Connecticut Association of Health Plans, an insurance trade group. "Whether you're a sophisticated person or an unsophisticated person, given all of the back and forth and push and pull and court cases and politics and rhetoric, what would you be saying? 'I'm going to look at everything.' "
The consumer group Families USA has a different take, saying that fewer small- and medium-sized employers have been offering health insurance to their workers for at least 10 years, and the trend has been accelerating.
"The Affordable Care Act is actually, in its intent and some of its provisions, designed to stabilize that decline in offers of employer-based coverage," said Kathleen Stoll, deputy executive director at Families USA.
Employers may be thinking that rather than not offering coverage, they might offer cash that, when combined with a premium tax credit made available in federal reform, would afford a worker roughly the same amount of coverage as an employer-based health plan, Stoll said.
Employers and employees surveyed by J.D. Power said their biggest concern with a health plan was the price, not the service. Employers, in general, view fees by doctors and hospitals as the reason for rising health care costs, while employees most frequently believe health insurance companies' administrative costs are driving up costs.
UnitedHealthcare spokesman Daryl Richard said, "from UnitedHealthcare's perspective, we continue to hear strong interest from the employers we serve in terms of their desire to offer coverage to their employees."
Said Cigna Corp. spokesman Jon Sandberg: "There have been many studies and projections on this topic. Most have concluded employers plan to maintain employer-sponsored insurance as exchanges become part of the health care system. We talk to our clients every day to help them develop innovative plans to maintain a healthy and productive workforce, and this survey does not coincide with what we are hearing in the field."
Interestingly, Peter Orszag was going on about this about a year ago:
Defined Contributions Define Health-Care Future: Peter Orszag
By Peter Orszag Dec 6, 2011 7:00 PM ETQ
Over the next decade, we are likely to see a shift in health insurance in the U.S.: So-called defined-contribution plans will gradually take over the market, shifting the residual risk of incurring high health-care costs from employers to workers.
The market today is dominated by “defined-benefit” plans, under which companies determine a set of health-insurance benefits that are provided for employees. These will gradually be replaced by defined-contribution plans, under which companies pay a fixed amount, and employees use the money to buy or help pay for insurance they choose themselves.
The defined-contribution concept is already familiar to most American workers through their retirement benefits. Over the past two decades, company retirement programs have moved decisively away from defined-benefit plans, in which workers are paid a given amount of retirement income, and toward defined- contribution 401(k) plans, in which risks -- from fluctuating financial markets, for example -- are borne by workers.The fundamental driver of this shift is the effort by American businesses to reduce their exposure to health-care costs. But the recent health-care-reform law may accelerate the shift.
In 1985, a total of 89 of the Fortune 100 companies offered their new hires a traditional defined-benefit pension plan, and just 10 of them offered only a defined-contribution plan. Today, only 13 of the Fortune 100 companies offer a traditional defined-benefit plan, and 70 offer only a defined-contribution plan.
Defined-Contribution Plans
The movement toward defined-contribution plans for health insurance is, in some ways, similar to the one that occurred for pensions, as Kenneth L. Sperling and Oren M. Shapira explained in an article earlier this year. The pension shift occurred in a series of stages: First, the traditional defined-benefit plan was redesigned. Then a hybrid approach was introduced (the cash- balance plan). Finally, defined-benefit plans were frozen.
The change in health insurance is already well under way in coverage for retirees. In the early 1990s, in response to accounting changes and rising costs, companies began to re- evaluate retiree health plans, and some capped the amount they were willing to pay at a multiple of existing costs. Over time, as those limits were reached, most companies declined to raise them, thereby effectively creating defined-contribution retiree health-insurance plans, with the company’s contribution set by the cap. Exchanges have been created to allow retirees to use these employer contributions to purchase their own health insurance.
For current workers, the precursor to a defined- contribution approach is the “consumer-driven” health plan. This typically has higher deductibles and co-payments than a traditional plan has, and it is often tied to a health savings account. It typically still provides generous insurance for catastrophic cases.
The share of workers enrolled in such plans remains quite low but is expanding rapidly. A recent survey of large companies found that, in 2012, almost three-quarters will offer consumer- driven health-insurance plans.
The natural next step will be for employers to strictly limit their health-insurance contributions to a set amount of money that workers could use to buy insurance. Companies will thus eliminate their exposure to unexpectedly high health-care costs.
Some insurers are already anticipating the shift. Bloom Health Corp. will begin offering defined-contribution exchanges in 2012. Bloom, based in Minneapolis describes itself as “a leader in the defined-contribution health benefits marketplace,” and says it is “committed to assisting employers of all sizes move toward an employer-sponsored system that has effective cost predictability for employers and increased choice and personalization for employees.” In September, the company announced that Health Care Service Corp., Blue Cross Blue Shield ofMichigan and WellPoint (WLP) Inc. had purchased a majority of its equity.
Health-Care Reform
The inevitable transition to defined-contribution health insurance may get a little push from the new health-care-reform law. Indeed, the legislation may have a larger impact on the type of health-insurance plan that employers offer than on their decision about whether to drop health-care benefits altogether.
A misleading survey by McKinsey & Co. has suggested the potential for huge declines in employer-based health insurance. But projections from the Congressional Budget Office and other respected researchers generally point to only a modest net decrease. And the experience to date in Massachusetts, which has a health-care law similar to the Affordable Care Act, is consistent with this prediction. (All such estimates are highly uncertain, and what actually happens will probably depend, in no small measure, on herd behavior. Employer surveys indicate that most companies will consider dropping their health plans only if other firms do.)
If most employers do retain their health plans, the state insurance exchanges created under the new federal health-care law will make the basic idea of a defined-contribution health plan more prevalent, and thus may speed its adoption. The regulations written to carry out the new law will determine how things play out. If defined-contribution plans that are sufficiently generous count as employer-based coverage -- as is generally expected -- the trend toward such plans will probably accelerate.
Whether this turns out to be a good thing will depend in no small part on whether the defined-contribution model helps to constrain overall health-care costs. There’s little point (and much potential harm in terms of risk-sharing) in having individuals, rather than businesses, take on the responsibility of paying for health care if there is no change in the total cost.
I have written elsewhere that although consumer-driven plans could help somewhat, they are unlikely to be a crucial step toward reducing health-care spending over the long term. The evidence to date, with a few exceptions, suggests that such plans reduce costs only modestly. After all, the majority of costs come from the expensive cases that are still generously insured by catastrophic-care provisions in consumer-driven plans.
Full-blown defined-contribution plans could perhaps generate better results, though it will still be crucial to get doctors and other providers to deliver more efficient care especially for high-cost cases.
In any case, the bottom line is that a shift toward defined-contribution plans seems likely. I’d be willing to bet $1 that most large U.S. employer health-care offerings in 2020 will be defined-contribution plans. Any takers?
(Peter Orszag is vice chairman of global banking at Citigroup Inc. and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)
To contact the writer of this article: Peter Orszag at orszagbloomberg@gmail.com
By Peter Orszag Dec 6, 2011 7:00 PM ETQ
Over the next decade, we are likely to see a shift in health insurance in the U.S.: So-called defined-contribution plans will gradually take over the market, shifting the residual risk of incurring high health-care costs from employers to workers.
The market today is dominated by “defined-benefit” plans, under which companies determine a set of health-insurance benefits that are provided for employees. These will gradually be replaced by defined-contribution plans, under which companies pay a fixed amount, and employees use the money to buy or help pay for insurance they choose themselves.
The defined-contribution concept is already familiar to most American workers through their retirement benefits. Over the past two decades, company retirement programs have moved decisively away from defined-benefit plans, in which workers are paid a given amount of retirement income, and toward defined- contribution 401(k) plans, in which risks -- from fluctuating financial markets, for example -- are borne by workers.The fundamental driver of this shift is the effort by American businesses to reduce their exposure to health-care costs. But the recent health-care-reform law may accelerate the shift.
In 1985, a total of 89 of the Fortune 100 companies offered their new hires a traditional defined-benefit pension plan, and just 10 of them offered only a defined-contribution plan. Today, only 13 of the Fortune 100 companies offer a traditional defined-benefit plan, and 70 offer only a defined-contribution plan.
Defined-Contribution Plans
The movement toward defined-contribution plans for health insurance is, in some ways, similar to the one that occurred for pensions, as Kenneth L. Sperling and Oren M. Shapira explained in an article earlier this year. The pension shift occurred in a series of stages: First, the traditional defined-benefit plan was redesigned. Then a hybrid approach was introduced (the cash- balance plan). Finally, defined-benefit plans were frozen.
The change in health insurance is already well under way in coverage for retirees. In the early 1990s, in response to accounting changes and rising costs, companies began to re- evaluate retiree health plans, and some capped the amount they were willing to pay at a multiple of existing costs. Over time, as those limits were reached, most companies declined to raise them, thereby effectively creating defined-contribution retiree health-insurance plans, with the company’s contribution set by the cap. Exchanges have been created to allow retirees to use these employer contributions to purchase their own health insurance.
For current workers, the precursor to a defined- contribution approach is the “consumer-driven” health plan. This typically has higher deductibles and co-payments than a traditional plan has, and it is often tied to a health savings account. It typically still provides generous insurance for catastrophic cases.
The share of workers enrolled in such plans remains quite low but is expanding rapidly. A recent survey of large companies found that, in 2012, almost three-quarters will offer consumer- driven health-insurance plans.
The natural next step will be for employers to strictly limit their health-insurance contributions to a set amount of money that workers could use to buy insurance. Companies will thus eliminate their exposure to unexpectedly high health-care costs.
Some insurers are already anticipating the shift. Bloom Health Corp. will begin offering defined-contribution exchanges in 2012. Bloom, based in Minneapolis describes itself as “a leader in the defined-contribution health benefits marketplace,” and says it is “committed to assisting employers of all sizes move toward an employer-sponsored system that has effective cost predictability for employers and increased choice and personalization for employees.” In September, the company announced that Health Care Service Corp., Blue Cross Blue Shield ofMichigan and WellPoint (WLP) Inc. had purchased a majority of its equity.
Health-Care Reform
The inevitable transition to defined-contribution health insurance may get a little push from the new health-care-reform law. Indeed, the legislation may have a larger impact on the type of health-insurance plan that employers offer than on their decision about whether to drop health-care benefits altogether.
A misleading survey by McKinsey & Co. has suggested the potential for huge declines in employer-based health insurance. But projections from the Congressional Budget Office and other respected researchers generally point to only a modest net decrease. And the experience to date in Massachusetts, which has a health-care law similar to the Affordable Care Act, is consistent with this prediction. (All such estimates are highly uncertain, and what actually happens will probably depend, in no small measure, on herd behavior. Employer surveys indicate that most companies will consider dropping their health plans only if other firms do.)
If most employers do retain their health plans, the state insurance exchanges created under the new federal health-care law will make the basic idea of a defined-contribution health plan more prevalent, and thus may speed its adoption. The regulations written to carry out the new law will determine how things play out. If defined-contribution plans that are sufficiently generous count as employer-based coverage -- as is generally expected -- the trend toward such plans will probably accelerate.
Whether this turns out to be a good thing will depend in no small part on whether the defined-contribution model helps to constrain overall health-care costs. There’s little point (and much potential harm in terms of risk-sharing) in having individuals, rather than businesses, take on the responsibility of paying for health care if there is no change in the total cost.
I have written elsewhere that although consumer-driven plans could help somewhat, they are unlikely to be a crucial step toward reducing health-care spending over the long term. The evidence to date, with a few exceptions, suggests that such plans reduce costs only modestly. After all, the majority of costs come from the expensive cases that are still generously insured by catastrophic-care provisions in consumer-driven plans.
Full-blown defined-contribution plans could perhaps generate better results, though it will still be crucial to get doctors and other providers to deliver more efficient care especially for high-cost cases.
In any case, the bottom line is that a shift toward defined-contribution plans seems likely. I’d be willing to bet $1 that most large U.S. employer health-care offerings in 2020 will be defined-contribution plans. Any takers?
(Peter Orszag is vice chairman of global banking at Citigroup Inc. and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)
To contact the writer of this article: Peter Orszag at orszagbloomberg@gmail.com
The maddening thing is that nothing is being done to actually fix our broken, opaque, backwards, insurance-saturated, shamefully wasteful healthcare system. Let me throw up some charts again to push home the point of just how much the healthcare system has sucked oxygen out of the American economy:
Federal Government Spending Over Time - 23.1% is now healthcare spending. This is enough to provide universal coverage to everyone in every other first world country. And the costs are growing faster than in any other first world country. There's an additional 30% of all 50 state's budgets that goes towards the other half of Medicaid too that's not shown on this chart:
Personal Spending - This Is Only Out of Pocket for the Median Payer And Does Not Include What Employers Pay Towards Healthcare. Personal Expenditures More than Double Even with Insurance. Employers Pay an Additional 6.6% for individuals and a whopping 18.7% for families:
We spend an Obama Stimulus every year more than the next highest spending country on healthcare costs for worse results.
Originally posted by dcarrigg
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Medicare is ruining the Federal Budget. Medicaid is ruining all states' budgets. Health insurance is ruining employers' and employees' budgets. At this point we have lost 5-6% of our cumulative national wealth per year chasing some healthcare fantasy in the US. That's about one Obama Stimulus per year. Wasted. Health outcomes are no better.
Think about that.
A stimulus every year.
$14TGDP * 5% = $700B.
A stimulus every year.
Just to avoid the single payer solution that even Mexico is putting in place.
Every other nation has a path to do it cheaper. There are many choices to copy. This should be a no-brainer.
When will the country wake up, I wonder? When it is 2 stimuluses per year? Three? Four? The total cost is doubling every 10 years. We'll get there within many of our lifetimes should we not end the "insurance" charade.
And now the average citizen will be asked to navigate complicated, high deductible, likely not-even-quite-catastrophic healthcare plans, the likes of which most, if not all, will not understand. After all, it is clear that the working class in general didn't undertand mutual funds when they got thrust into them. It was clear they didn't understand housing bubbles. They have lost 40% of their net worth over five years. Clearly the median American doesn't understand the game and is getting screwed by it. How should we expect them not to have catastrophic health bills when left to their own devices? How many small business owners here at iTulip who have had to buy their own plans ran into horror stories? Imagine some teenage kid trying to figure this out at his/her first job.
Ultimately, it's nothing more than another sham. But it will be very, very profitable for the health insurance companies. And it will take some risk off employers. So it will happen.
I just wonder, how much more blood can be squeezed from the middle class stone?
What else can we make a "defined contribution" to without knowing what we'll receive for our money?
Imagine a world of "defined contribution" haircuts, where you go in, pay for a haircut, and then maybe get half of your head trimmed, depending on how many customers came through that day and how much the hairdresser owed on a car loan. The details would all be spelled out in size 7 font on a piece of tissue paper in incomprehensible legalese.
Or we could have "defined contribution" funerals. Just pay $5,000 bucks and maybe a priest will show up.
First they came for the pensions,
and I didn't speak out because I didn't have a pension.
Then they came for the unions,
and I didn't speak out because I wasn't in a union.
Then they came for health care,
and I didn't speak out because I didn't have a health plan.
How long until they come for you?
Comment