Understanding the US Healthcare System

A couple of weeks ago I was in Phoenix and got to spend a few days with my parents and enjoy some sun and heat; a welcome break from the long Minnesota winter. My dad and I got into a great discussion about why the current ‘half in’ republican approach to insurance coverage is not a solution to any of the current problems. Let me explain what I mean by “half-in.”

The biggest point of contention with the ACA is the requirement that everyone must buy insurance or pay a penalty. I hear over and over again that it is unconstitutional to make people buy insurance. I have read articles discussing the constitutional nature of this requirement and I am no lawyer, but it sure is interesting. The argument I hear about the car insurance requirement is that ‘no one is making you drive, but if you choose to buy a car and you choose to drive then it is ok to require you to buy insurance because driving is risky business’, but driving is optional. That all seems pretty true, however it is also true that living has lots of risk and health isn’t free, nor is healthcare –living is also very risky business.

The country is never going to agree on this issue, what I hear is that people just don’t want to buy insurance and shouldn’t be made to. The point I made to my dad is that, if we have a system that doesn’t require everyone to have insurance then we need to figure out how to handle those who have opted out. I am not sure what this option would be, as the cost of healthcare (not insurance) is unaffordable for probably 95% of the citizens of this country. Over 50% of the U.S. has less than $1,000 in their savings account right now. What kind of care do you think you could get for less than $1,000 today? I can tell you, maybe an office visit with a few minor blood tests. What if an issue was found that required treatment, how is treatment going to be paid when the $1,000 is already spent and there is no insurance to rely on? The bottom line is that the ideas of having people opt in or out of health coverage just isn’t feasible, because at some point everyone is going to use healthcare services and someone has to pay. What I have no other option to think is that people who want the ability to just opt out are really just saying they would like to have everyone else pay for their care, and that doesn’t work for most people and isn’t a fair solution.

An important point in this discussion is that health insurance isn’t cheap either and many people can’t afford it. Although the ACA has helped millions of people, and in half the states where Medicaid has expanded to cover those in lowest income brackets, there are still some people (but not the majority) that end up paying exorbitant premiums. Another factor to consider is that many plans have out of pockets costs that are rising at a rate that is not sustainable. This is why I wish the current conversation on healthcare would include more discussion about healthcare costs, instead of solely focusing on the cost of insurance. The cost of health insurance is directly related to the cost of healthcare. If we want to get real about this issue, we need to start addressing the cost of healthcare in this country (and in the world). Yes, we have treatments for many things and cures for some, but it is clear that we are at a breaking point where neither individuals nor insurance companies are going to able to pay the current and rising future costs of treatment.

I would love to hear from people who think people they should be able to opt out of insurance and what your solution is to the conundrum I have outlined here. How do you opt out yet not have the rest of us cover your healthcare costs? Only serious and respectful discussion please.

By now pretty much everyone has heard about the infamous terrorist attack in Sweden, which never happened. Thankfully, that story was easy and quick to debunk. The lesson learned from that and many similar stories recently is that we must begin to seek truth for ourselves – which isn’t always easy, it requires time and thought and most people just prefer to be spoon fed.

I was listening to Fox News this morning where the host was asking some healthcare ‘expert’ about how the current plan to replace the ACA will reduce the cost of healthcare. As I listened I realized that probably millions of other people were listening as well – and potentially taking what was being said at face value. No doubt healthcare is complicated, when new ideas are proposed even experts have to really spend time reading and thinking about the impacts. That being said it is nearly impossible for the American public to be able to put a critical lens on the proposals and ideas.

I decided to just take two of his claims and bring the light of truth to them for you.

The healthcare ‘expert’ said that the new proposal was going to cut costs in several important ways.

1. The “Essential Health Benefits” (EHB) that were required in the ACA insurance plans would no longer be required. The American people should decide for themselves what kind of coverage they would need, so they should be able to choose, cafeteria- style.

Let’s talk about this. Can anyone really predict when he or she will need outpatient medical care, an inpatient stay or an emergency room visit? The EHB’s are just that – essential benefits – insurance for illness and injury – because most times people can’t predict illness or accidents. Let’s say we allow this cafeteria-style insurance and folks decide not to buy insurance for inpatient care, and then a bus hits them. When that the bus hits the person, an ambulance will taken to him or her to the hospital and all of US will be paying the bill, not the person who decided they didn’t need that kind of insurance. I think what we will hear from this person is, “I paid for this insurance and then when I needed it, it didn’t work” – because they opted to not buy this type of coverage. This proposal will not decrease the cost of care in any way – it will decrease the price of the insurance because they are opting for ‘limited insurance’ and it will shift the cost of his or her care from the individual back to all of us. None of this has anything to do with reducing the cost of care – how will this cause the hospital and doctor to charge less for care or drug companies to charge less for medications? This is an illogical answer to the question asked. At best it will reduce the cost of insurance for the individual, but likely increase the uncompensated care (which is now at an all time low due to the ACA) and that cost will come out of our taxes. Personally, I think this is not a good proposal at all. If you think insurance is confusing now, imagine trying to pick out exactly what you want to buy coverage for – good luck with that.

2. The ‘expert’ also claimed that under the ACA, people who became sick could go right from diagnosis to getting coverage without having paid into the system. He said this was the main reason insurance costs were going up.

In some cases this could happen but this is not completely accurate. Every year the health care exchanges have an open enrollment period, just like we have at work; we can sign up for insurance once a year unless a life changing event occurs such as a marriage, loss of a job, etc. I personally have been involved with people experiencing a life threatening condition who couldn’t get insurance, but who needed it to save their lives. In the end they couldn’t get an ACA plan. Do you know why? Because open enrollment was closed. So, not everyone who is diagnosed with an illness can just hop on an insurance plan. I personally know of people who are no longer on this earth precisely because they could NOT get insurance when they were diagnosed. They gambled, and they lost. So again, this is just not true. People don’t like the idea of being required to have insurance, but this is why it is needed to stabilize the system and allow people to survive these kinds of sudden illness. Many of us are required to buy car insurance – I don’t hear people screaming that it is unconstitutional. It is not fair to the rest of us is to be footing the bill for people who can afford insurance but just decide they aren’t going to buy it. I don’t understand this whole “you can’t make me do something” mentality. I would be fine with that if they had to pay for their own healthcare – but in this country that doesn’t happen, these people can refuse to buy insurance, yet get care and just walk away and let others pay it for them. That seems to me quite unfair and far more ‘un-American’ in my book.

Many people across the country are giving their representatives a piece of their mind this week at town halls. While there were people who were adversely impacted by the ACA, the vast majority of people benefitted in significant ways. I think everyone can agree fixes are needed (we have been tweaking Medicare since 1965 and I don’t hear anyone saying to repeal and replace), but to throw it away is purely revenge and should not be tolerated. The expense alone of starting over is staggering and I will say once again- the proposed plans will not improve anything, most people will be adversely impacted, including those of us on cushy employer plans.

Here is a good, short video of a focus group of Trump voters talking about their experience with the ACA and thoughts on insurance in general.

Trump voter focus groups

I write this blog because I know quite a bit about the healthcare system, as I have been a part of it from many angles over the span of 30 years. There isn’t much that I can’t figure out with a little elbow grease, until this week. This is a bit long, but it is an important story and I hope you will persevere.

Two weeks ago today my dad called and said his buddy, Roger, up here in Minneapolis was just diagnosed with a terminal brain tumor, was in the hospital and my dad asked me if I could help. Roger has no living family and very few (if any true) friends other than my parents. Unfortunately for Roger, my parents left Minneapolis for Phoenix at the end of November and at that time Roger was fine, he said he had been feeling great. After a sudden incident a couple of weeks ago, he found himself half-conscious on the floor in his condo. Medics broke his door down and he was admitted to a local hospital. Roger met the definition of a vulnerable adult – he had no one to fend for him and he was unable to communicate well for the first week in the hospital.

Even though Roger was diagnosed with a terminal brain tumor, of the kind that has never, ever been cured, the hospital went ahead did a craniotomy, one other surgery to keep blot clots from going to his lungs and colonoscopy that I guess nearly killed him. I am going to be interested to understand how consent was obtained for all of this. If you were 80, lived alone, had 1 good friend and a terminal brain tumor would YOU consent to a colonoscopy (let alone all of the other futile things they did to him)? I suspect not.

Upon meeting with Roger two weeks ago today in the hospital I found a mentally intact patient with little trouble expressing himself, who could communicate well enough to have a full conversation, but at times he just couldn’t find the right word. Roger looked like a homeless man, not the fastidious man he had always been. I asked the nurses to please shave him (which even in the ICU we did daily no matter the condition of the patient); he hadn’t been shaved in days if ever since he was admitted, it broke my heart.

Roger gave me permission to review his medical information – the plan was for chemo and radiation and who knows what else. I later found a card in his room from the radiation oncologist. Roger and I had a frank conversation about his wishes and what it came down to is that he wanted to ‘ride off into the sunset’. I told him I would make that happen and be by his side every step of the way. I became Roger’s healthcare Power of Attorney (POA) and we filled out the forms the hospital gave us so that I could act on his behalf when he no longer could. We completed his healthcare directive and he was assured nothing heroic would be done from that point forward. He said he wanted to go to Hospice. I promised him I would make that happen.

On the next day the doctor called to tell me that he spoke with Roger that morning and agreed that Roger did not want any further medical treatment, and that he seemed able to understand everything that was happening (was this a miracle or had they just not bothered to figure this out before I showed up?). He said that Roger’s case would be sent to the ‘ethics committee’ in the morning. I thought that it was a curious time to send his case now, and not right after admission before they started performing lucrative surgeries and tests for a terminal patient. For the next week I went back and forth to the hospital to get papers notarized, bring Roger every beautiful Danish and cookie I could get my hands on and ensure that he was going to have the best possible road to the ‘next side’ pain free and paved with peace. He looked very happy covered in chocolate from head to toe. The nurse and I agreed that dying covered in chocolate would not be a bad way to go. Roger and I had a great week of chatting, laughing and rolling our eyes about our new President and his shenanigans.

We couldn’t get him moved to another level of care quickly as the ethics committee was now deeply involved with his case and I had no way to get access to Roger’s money to pay the cash they would need for a down payment. We were thinking it would be assisted living before hospice, as he seemed to be hanging tough for now. Several times during the week I asked the staff to call me back to let me know how Roger was and in at least 2 cases (in a one week…) I never got a call back.

Thursday night he looked a little tired and I noticed one pupil was bigger than the other and I remarked when I got home that I felt that wasn’t a good sign, but he still seemed really with it. On Friday I got a call from the social worker who was helping to find somewhere for Roger to go, and we had decided that I would move to get financial power of attorney so that I could make a down payment on assisted living for him. She said are you aware there has been a ‘condition change’ and I said no I was not, no one had called me. She said he was very out of it and only awake if you roused him and I panicked, as I didn’t have the financial POA done – so I left work and rushed to the hospital to find the notary and do more paperwork. I sat and cried at the nurse’s station and I said his decline was faster than we all thought. One nurse said “oh I am not surprised” and I said I WAS surprised as I had asked the prognosis more than 5 times and was told it could be 3 months to a year. Her response? “oh the oncologist and neurologist couldn’t agree”. Wonder why…you know the revenue from chemo?

Long story that I won’t go into but at this point I didn’t get access to Roger’s accounts. At this point we knew he needed to go straight to Hospice and we started to work on that plan. After a lot of gnashing of teeth, everything was set for Roger to be transferred to Hospice Saturday morning at 9:30 AM. I was thrilled.

Friday night I got a call from the Hospice at 9:20 PM saying that Roger could not be transferred to Hospice and would likely have to stay in the hospital (and die there) because the form they had me fill out was missing ONE piece of critical direction – that I would have responsibility for Roger’s body after death. I was incredulous. I just completely broke down in tears and said I felt like everyone was more interested in making sure they got paid that making sure a man’s dying wishes were followed. She said they would have taken him regardless of his ability to pay, but she said there was no way he could come without the missing directive. At this point I wasn’t sure Roger would be capable of notarizing this missing tidbit. I was beside myself.

Saturday morning I woke up and decided I was NOT going to let Roger die in the hospital, shabbily shaved in a hospital gown – I could not live with that outcome for this sweet old guy. I was on a tear. The social worker was willing to help and found a notary in the hospital who then refused to notarize this one missing tidbit – even though I had POA and every other power I needed. I broke down into tears again – I asked if there wasn’t someone else there who could notarize for us and did this person know that the only thing this signature was authorizing was the ability for us to move this patient to Hospice. Yes, she knew that. She said the hospital doesn’t always have a notary on over the weekend. I thought I was doomed, lest for the fast thinking of friends. I went online to find a mobile notary and for $50 this guy would drive over to the hospital and notarize this tiny tidbit for me. This was after probably 30 calls between the Hospice, the social worker and me. My nerves were frayed, my eyes swollen and I knew this was my last hope to get him moved. If you aren’t familiar with Hospice you won’t understand how important this was to me to get him moved, but hold on for a minute and you will see.

The notary texted me and said the job was done! I called the hospital and the social worker was thrilled – Roger had a ride to Hospice at 4pm that day! Next thing I heard Roger was in Hospice had already had a bath, a close shave, a backrub, a foot massage, tater tot hot dish and an ice cream sandwich. THIS is why I fought – I promised Roger I would take care of him and make sure he was comfortable and I cried…again, but this time in relief. Roger was comfortable and eating treats and I was felt ten tons of weight lift.

Over the next few days Roger started his transition to the other side, but he was clean and comfortable and loved. His last meal was a chocolate Glam Doll doughnut I brought him, and an ice cream sundae.

I visited Roger yesterday morning early and whispered in his ear that he could feel free to let go now, that I had taken care of everything and that he didn’t need to fight anymore. I told him “Roger, this is your time to ride off into the sunset, it is time to go”. I left thinking I would come back and see him the next day. I was just getting close to home when Hospice called and said Roger had just passed at 9:05. I left him at 8:57. More tears, but relief. The nurse said she saw him just take one big last breath, and that was it. Peaceful. Comfortable.

I have never been so frustrated with our system. In a nutshell what is wrong? How about an ethics review BEFORE you start making money performing expensive futile surgeries and inflicting pain on a vulnerable person? How can a hospital not have a notary available 24/7 who understands the importance of the role they play in the care of their patients? How can the staff not know what paperwork is needed in order to ensure a patient can move to Hospice – can’t they just have a folder of papers ready to go labeled ‘what you need for Hospice transfer’? How about a shave for a man so they don’t have to look homeless and have an itchy face while dying?

I am exhausted, frustrated and thankful that I don’t give up easily. Roger was my best friend for 2 weeks and he left the world just the way he wanted. But let me ask you, if this were you in this situation, what would have happened? Chemo and radiation? More surgery? Remember the term ‘lucrative patient’ from my earlier blog, does that seem fitting here? I am embarrassed for my profession, my field and the entire system. We spend billions on systems and talk, talk, talk about what patients want and need and this is what we have to show for it? No wonder the cost of care and insurance is so high. In this case I could have saved probably close to $100,000 and ensured that Roger got exactly what he wanted, a peaceful and calm exit. Shame on this whole mess. WE MUST DO BETTER. We need to stop talking and focusing on how much money we can make and start to begin to take care of patients again. Our entire system has lost its way.

RIP Roger.

Writing a healthcare blog right now is a real challenge – I keep thinking the dust is going to settle a little, but it is clear that isn’t going to happen for a long time. I am going to talk about what I am hearing out there and bite off a piece at a time, but please know that it is subject to change!

Many of you are hearing about repeal of the ACA and thinking “well I get my insurance through work so I won’t be impacted by all of this.” I want to make sure you know that everyone will be impacted by the changes coming, if the changes being discussed get passed at some unknown point in the future. In this blog, I will outline four important things that individuals with ‘group’ health plans get through work and those group plans will likely (pretty much for sure) be impacted.

Many people don’t realize all of the positive changes that happened with your insurance as a result of the ACA, so let’s go over those (women are impacted more than men) and I’ll illuminate what it looks like will happen if the proposed new plans get adopted.

1. Insurance companies cannot charge women more than men for the same insurance – this is likely going away and women again will be charged more for their insurance.

2. Under the ACA preventive care has to be 100% covered without being subject to cost sharing – so you could run in and get that colonoscopy and pay NOTHING out of pocket. You can find a complete list here Preventive Service List. This will most likely go away and you will be subject to the same co-pays and deductibles you have for all other care.

3. Insurance companies have to cover maternity care – this will likely go away. You might not be aware that many plans did not cover this before the ACA.

4. The ACA no longer lets insurance companies deny you coverage if you already have an illness (pre-existing). For many people this was a big help, as people with chronic and expensive diseases like diabetes could not get insurance. Some the new proposals have ideas on how to address this, but most of them will cut back on what they cover and likely cover fewer people. I can’t see how the proposed solutions will offer the same coverage as people get under the ACA, but then it isn’t super clear yet either.

5. The ACA mandated what are called “essential health benefits” (EHB) – this made sure that every insurance plan had ‘full’ coverage for everybody and these EHB’s are things like outpatient care, hospitalization, lab test and emergency room visits. You can see the entire list here Essential Health Benefits. These are VERY likely going away. This means that when you shop for insurance post ACA you better ask EXACTLY what is covered as no two plans will cover the same things. This will allow insurance companies to offer fewer benefits, which will bring down the price of premiums. Selling across state boarders will likely cause people to flock to the cheapest plan offered which in the long run isn’t a good idea. If you have one of these plans and get sick or get into a car accident you will swiftly find that paying for care out of pocket isn’t the way you want go. More on that issue in a later blog.

We can take some comfort in knowing that changes are not likely to come quickly, as healthcare is incredibly complex and as you can see no one has come up with a good replacement plan. If the healthcare issue were easy to solve it would be fixed by now. In looking at all of at the proposals I don’t see any plan that will be as comprehensive as we have now. They may be ‘cheaper’ but they will cover less and put more cost back to the consumer.

Recent studies have pointed out that the vast majority of people do not understand basic insurance terms such a premium, co-pay, co-insurance or deductible and those who state that they do understand the terms usually cannot select the correct answer when asked to identify the correct definition. Here’s a good site to get more information on this: https://www.policygenius.com/blog/only-4-of-americans-understand-important-health-insurance-concepts/

This is interesting to me for a few reasons – first, if the majority of people in this country don’t understand the fundamental terms of health insurance, should we rely on these same people to be judging whether the ACA is working well? I would also guess that most of these same people have a hard time understanding why the cost of insurance is so high and going up. In this case I am not talking about the issue with increasing premiums on the exchange plans which impacts a small percent of people – around 50% of people continue to get their health insurance through their jobs. I am talking about why all of us are seeing premiums go up, our deductibles go up – everything is going up. I am not going to talk about from the insurance side – but from the care delivery side. In this blog I am just going to set the stage – this is a complicated issue and will take a few blogs to get through, but hang in there with me, this is going to be interesting and thought provoking (and no I don’t have the answer).

As I have said before, there is way too much talk about rising health insurance costs and too little (virtually no discussion) on the rising cost of actual health care which is what causes your health insurance cost to go up. We are finally now starting to hear discussion about the rising cost of drugs, but I am not sure how many people actually understand how these high drug costs impact what they pay in their health insurance.

Here is an interesting graph that shows the rise in drug costs by different payer types – you don’t need to see the detail, you just need to see the dramatic rise. The bottom line here is that no matter who covers your health insurance, a private insurer or Medicare or Medicaid they are paying A LOT more for these increasingly expensive drugs, but for the majority of people, the out of pocket costs for drugs is relatively flat (the red). What this doesn’t show is how the quickly rising portion, which is covered by your insurance, is causing your premiums and other out of pocket costs, like deductibles to go up. When costs go up, premiums quickly follow.

A simple thing to understand here is that if your insurance company is spending more money on the costs of your care and medication, they have to find a way to fund these increasing costs – so they HAVE to raise premiums. They need you to help pay for these rising costs otherwise they will go bankrupt.

Because we live in a capitalist society, we believe that private companies should and need to make profits – this is the reality of our system.

A few questions to get you thinking:

In the majority of states do insurance companies have to make profits for their shareholders (all but MN I believe)? YES. Is there a focus on keeping their corporate costs low and having quarter over quarter profit? YES. Is this what a capitalist society is all about? YES. Are there price regulations on medical care, medical devices or drugs? NO. Can pharmacy companies and medical device companies charge whatever they want? Well, we have seen that in recent months, YES, they can and they are. Can insurance companies charge whatever they want? NO. Insurance companies are one of the most regulated industries, their processes are regulated and their prices are regulated, not so with other sectors in health care.

This all becomes a tough balancing act that is not very well balanced at the moment. How do we as a society balance the desire to remain a free market, yet ensure that the pressure for profits (I call it greed) for corporations don’t get so out of hand that it puts the costs of insurance out of the reach of the citizens of our country?

In my next blog I will explore more deeply the tension between for profit health care and the need to reign in costs for the citizens of this country so we can maintain a healthy and strong workforce, which is key to create a thriving economy.

Post election, in the healthcare circles we are all trying to read between the lines and speculate about what is going to happen – the changes, whatever they will be, will impact the jobs of all people in healthcare, and will eventually impact all you – and I mean everyone. If you are on Medicare, expect change, if you are on employer insurance, expect change, if you bought a plan on the exchange, expect change, if you are on any type of public plan, such as Medicaid, be ready for big change.

Dr. Otis Brawley – the Chief Medical Officer for the American Cancer Society, who I think is a very wise man wrote in his book “How We Do Harm” that he would tell patients “here is what I know, here is what I don’t know, and here is what I believe” – I try to live by this now – it is a brilliant way for discussions of any type. This is how I will approach the blog today.

This book is a tremendously important read and I encourage you to read it – it is very easy to read and will blow your mind and change how you think about how things are done in our ‘system’:

http://well.blogs.nytimes.com/2012/04/20/how-doctors-and-patients-do-harm/

Here is what I know:

• No matter how or where you get your health insurance it is likely to change in the next year to two years
• You will have increasing ‘skin in the game’ – including Medicare beneficiaries
• If you are low income, the likelihood that you will be uninsured is going to be much higher and if you remain on Medicaid your benefits will be reduced
• What was promised along the campaign trail is not what will be implemented – promises such as “you will be able to buy drugs from other countries” disappeared from the transition plan this week – things are being added and deleted from the plan daily
• Not everyone is going to have a ‘great plan’ when this is all over and all of these changes are going to be very expensive to implement (which I rarely hear people talking about) these changes touch every corner of the healthcare system
• Medicare is performing well (it is not going bankrupt), beneficiaries love it and aren’t asking for a change (including my parents – I asked them if they have heard anyone complaining about Medicare and the answer was a resounding NO – people love it)
• The days of Medicare supplemental plans are numbered – so start saving your pennies you will be paying for your full cost sharing just like we all do in our plans now
• States that were about to expand Medicaid are not now – leaving low income adults with no indication of when or how they will be able to gain insurance

Here is what I don’t know

• How fast changes will happen – there is lots of speculation and talk about getting changes put through fast before the next elections in 2018
• How big the changes will be and how disruptive they will be, or how many people will end up uninsured
• If the republicans, who don’t all like or agree with Trump or his agenda will back his plan or if Trump will adopt the republican plan that has been in the making over the past 6 years

Here is what I believe:

• Medicare is going to be privatized and quickly – this has been on Paul Ryan’s agenda for years – the government will give us some money or a tax break and tell us to go buy our own insurance. Seems like a good idea until you recall that these plans have high deductible and out of pocket max amounts and these are going in one direction, UP. Because you won’t be able to buy a supplement these will be costs you now have to plan for in your retirement.
• Medicaid is going to be cut in several ways – the types of care/services covered and the number of people it will serve. One quote I have read said: “if there aren’t fewer people on Medicaid than when we started, we haven’t done a good job with reform.” Parts of Medicaid will be privatized.
• The changes to Medicaid, and the new increasing number of uninsured (again) will cause job losses in the healthcare sector (see recent hospital stock trends and healthcare sector jobs numbers over the past 8 years)
• There will be big corporate winners in all of this (see pharma and medical device stock trends) on the backs of all of us – again
• Employer plans will be taxed and there will even more of a push to low premium high deductible plans (remember my old plan had a $6,000 deductible and $13,000 annual out of pocket max? this will start to be the norm)
• I believe that we will look back at this time as the good old days

You might say ‘wow this is a bleak outlook’ – but for some this is giving people exactly what they want, and what they asked for – to reduce the amount of money that the US government spends on health care. Period. These plans do not focus on helping people or the value of healthy workers on the economy. The goal of these plans is to reduce the cost of government – to get away from ‘big government’ –that is what is this is all intended to do. As I find articles around this topic I will post them, but this is a clear goal for many people and those people may or may not like how this all works out. I would love to spend less but ultimately we are only curbing ‘government’ spending – we will all be spending more out of our pockets, and low income Americans will be left out again.

With all of the talk being focused on insurance, the American public is being lead to be angry at the insurance companies for raising rates. Let me remind all of you again, the reason the insurance rates go up is because the COST of care and medications. So to only be mad about the costs of insurance is really misplacing your anger – we should be fighting for better efficiency and lower prices for things like drugs and new technologies that don’t improve outcomes but cost 10X more than existing treatments. If the cost of care could be reduced, you would see your premiums go down but that is not the direction we are headed. We are going to be continuing the climb up – cost of care up, premiums up, out of pocket amounts UP. Everyone is going to learn what I explained in my first blog – this is a lot like running a household budget (although way more complicated) – you can’t have increasing costs and lower premiums and cost sharing, it doesn’t work that way. So if someone is promising you things are going to magically get better, be skeptical. Unless we have suddenly found a way to decrease the cost of care, you won’t be seeing a better plan than you have today –your premiums may go down or stay the same but your overall out of pocket costs are going up.

I try not to be political in this blog – and I am trying to stay factual, so all of this is based on my experience, my reading and plain old common sense. Put your seatbelt on folks, this is going to be a bumpy ride for all of us.

I was talking to my mom and dad this week, we were trying to remember when it was that people started having insurance like we have today. When they were young, if you got sick and went the doctor you paid cash. Everyone could afford a doctor visit, as it wasn’t hundreds of dollars like it is today; it was affordable for the common person to see the doctor. My how times have changed.

In this blog I want to talk about what goes into your insurance premiums.  This is a complicated process but there are some key points everyone should be aware of so they don’t get mislead by the media headlines which as of late are mostly charged political messages.

Premiums are the amount you pay every month for your health insurance, and premiums have been rising steadily really for the past 20 years. You hear every day about the healthcare exchange plans and their skyrocketing premiums –they have gone up more than insurance you get from your employer, but both are rising. The media rarely discuss the reasons behind the rising premiums and frankly most people don’t understand it well enough to report on it.

Let’s explore come key areas that impact the cost of health insurance:

• Experience – one of the key ways insurers determine how much to charge for premiums each year is based on the previous years’ experience of the covered group. Underwriters study the costs for different groups over many years and are able to very accurately predict the next years cost for that group. If the underwriters determine the group is likely to have higher use of services, or know about a new expensive technology coming, they will raise the premiums in order to ensure the insurance company can cover the costs of the members without losing money. Because the exchange plans never existed before the ACA, it has proven tricky to predict the costs for those plans, the estimates were wildly off, hence the increases. The increases are due to several factors, not as many young people joined these plans as expected, and we had no data on the past costs for this group – the insurers had no experience with which to understand these groups’ cost, among other things.
• Cost of care – everything in the healthcare world is getting more expensive. This is not discussed in most articles. New treatments are in the pipeline that will make the cost of current treatment look reasonable. Due to consolidation of providers and health systems, costs are going up as more care is being delivered in the hospital which costs way more than the same care given in an outpatient setting (i.e. cost of MRI in the hospital building could cost 5 times more than an MRI center at a strip mall). Another important piece of the cost of care is the amount of profit made by physicians and hospital executives – believe me there is lots happening right now to protect these profits. The cost of care directly impacts YOUR premiums.
• Costs of drugs – we all know what is happening here and I will go in depth in a different blog. Suffice it to say drugs are the fastest growing cost in healthcare right now. The pharma CEO’s are doing pretty well as you can see here:

• Utilization of services – the more services that are utilized the more costs there are for your insurance company to cover, and the more you end up paying. For example, you are likely hearing about the many overdoses happening across the country, and people addicted to drugs, this is an epidemic crossing class, race, gender, etc. I think about how this epidemic impacts each of us every time I see a story about overdoses in the news (we had six yesterday in the Minneapolis area – yes SIX). Many of these people are not insured, and all of that care – the ambulance to bring them to the ER, the ER care, the long term care when they remain comatose – that all goes into the cost of our premiums. This is why it matters that we help solve this problem! People are dying and it is costing our society on every level. We all must work to solve the issues as it impacts all of us.
• Most insurance companies are for-profit – because we live in a capitalist society, we believe that corporations needs to provide value to shareholders. This means that when insurance companies make progress at slowing medical cost trend and saving money, this is good news to their shareholders and not necessarily the rest of us. Also, we must consider the salary and bonuses to the CEO’s and leaders of the large insurers. The salaries of these folks could provide coverage to hundreds if not thousands of people across the country.

When you hear about insurance companies raising premiums and how bad insurance companies are to do this, you need to take a step back and realize you can’t point a finger just in the direction of the insurance companies, they are one part of the equation, but on the other hand isn’t that what capitalism is all about, making a profit? I personally really struggle with how well capitalism is working for the majority of people when it comes to healthcare. I don’t mean to be provocative or political – I just mean, think about it for a minute.  At least insurance companies are regulated as to how much profit they can make, drug companies and others are not. Plenty of people are making great profits in healthcare, but the majority of people are suffering from the high costs and threatening Middle America’s ability to receive good, affordable healthcare. Increases in healthcare spending are increasing much faster than earnings and that should be a concern to everyone.

Insurance works a lot like a household budget, but unlike a household budget, insurance companies work hard to anticipate the next year’s costs and can adjust premiums, deductibles, co-pays and co-insurance to cover the anticipated costs.  Ultimately the insurance company must work within a budget, just like we do at home. Imagine if you bought everything you ever wanted without regard for how much money you actually made!  Theoretically insurance companies could pay for everything everyone ever asked for, but in reality none of us would be able to afford those premiums and co-pay’s, we have trouble covering all of our out of pocket costs today.

Do you realize we all pay for the care of others insured by our insurance company? All of our monthly premiums, and other out of pocket payments go into a bucket of money that is used to pay for all of the care of the entire group.  Whether you purchase your insurance through a healthcare exchange, or you get it through your job, your premium is paying to cover the services and care used by you, your family and everyone else covered by that insurance entity. For instance, if your company is ‘self-insured’ (most large companies are self-insured) and many people in your company get very sick or have expensive treatment, you can be pretty sure your premiums will go up the next year. It is the same story if you purchase your insurance directly from an insurance company, you might just have a larger group of people putting money into the bucket (spreading the risk). If you work in a small office that is self-insured and one or two people get very sick, your premiums could go up a great deal in one year because the premiums from your co-worker aren’t enough to cover the costs of your very sick co-workers.

This is why it is SO important that everyone, especially young healthy people buy health insurance – because they will put in premium dollars, but likely won’t require a lot of care; those dollars will be used to cover those that do need more care. When the young and healthy get sick, or get older and require more care, then they will start to reap the benefits of having paid premiums all these years. The problem that we have now is that many people are focused just on their own needs, and think “why should I have to pay so much when I don’t need care”.  Insurance can’t work this way, if you just buy insurance when you are sick then the entire system will fail; you must pay into the system over time so that you have paid your share when you do need care. You can’t just walk into the bank and say you want to withdraw a million dollars when you have only deposited $1,000.  The math just doesn’t work out.

I realize there are other ways to solve this issue, and many other countries have very different systems, but this is how it works in our current system. No matter what system is used the reality is we all have to pay our share to the make the system work, either taxes or premiums. No one has figured out how to get free care for all.

It is a very hard lesson to learn when you have been one of those people who has not purchased insurance and you get into a bad car accident or suddenly get a terrible illness. In this day and age of very expensive treatments,  if you don’t have insurance when you get sick it is possible that the care you need won’t be available to you because hospitals can’t afford to give people very expensive treatment when they know they won’t ever get paid back for it, they can’t afford that risk. This is a sad situation, but it is the risk people take and must face when they don’t purchase insurance – you don’t pay in, you don’t get paid out. If you get sick and are uninsured it will be hard if not impossible to get insured, unless you happen to get sick during an open enrollment period.

I didn’t cover how deductibles, co-pays and annual maximums work, but will cover it in a later blog.  I found this helpful little video that does a good job of explaining it in simple terms.

http://obamacarefacts.com/health-insurance/how-does-health-insurance-work/

Here is another helpful link where you can find definitions for common insurance terms:

Glossary of terms: https://www.healthcare.gov/glossary/

Next week I will talk about how insurance companies determine what to cover.

America is ambivalent about healthcare insurance – as a country we are not in agreement about whether or not all people are entitled to healthcare insurance. I hear many opposing views and beliefs; over the years I have seen some unfortunate outcomes of the ambivalence (such as people getting very sick or getting into an accident and having no insurance). I know many people won’t agree with what I see as “unfortunate” as these can be very values-based and political issues. It is important to note that the U.S. is the only developed country that does not cover basic healthcare for all people and no we don’t have the greatest healthcare system in the world (we can talk about that another time).

Let me start by clarifying what the terms mean in the title of this piece. First, they all refer basically to the same law, what people not so lovingly refer to as “Obamacare”. Healthcare reform however is a more broad term and refers to the many laws introduced after the original ACA. New reform laws are now released on a regular basis and introduce new creative ideas as well as address parts of the law that maybe aren’t working the best; the healthcare field is constantly evolving. Medicare has been changing since it was created in the 1960’s. Going forward I will refer to the original law (Obamacare) as the “ACA”, and laws after that as “healthcare reform”.

Prior to the implementation of the ACA there were an estimated 52 million people in the U.S. without health insurance. The population in the U.S in 2010 was around 309 million people. Most people would agree this is a problem (but definitely not everyone agreed that this was a problem). In the 2008 depression we saw a big spike in un-insured’s because in this country we have always tied access to insurance to our employment (other countries do not do this). Those that lost their jobs also lost their health care insurance and had limited ways to get insurance. If you lost your job, your coverage options were to stay on your existing plan using something called Cobra, which is prohibitively expensive, or buy what is called an individual plan that may not accept you if they thought you had a pre-existing condition, or some other reason that they could find. Many times neither option was a good solution.

The ACA was created to allow for an affordable insurance option that does not have to be connected to your job (although it can be offered to employees by small companies). Many people initially were afraid that the ACA would replace insurance offered through their employer, which to date has not happened as most employers find that offering insurance helps them attract a talented workforce. These new ACA insurance plans are sold over the Internet on healthcare.gov, or through a few websites built by individual states. I am going to just call these “exchanges” going forward, but what I mean is a website where people can purchase insurance.

I want to cover the main elements of the ACA that the public could benefit from understanding. There are thousands of pages of law and nuance that are important but I want to start with the basics and we’ll cover other issues as they become important to a topic later.

Here are SIX important things that EVERYONE should know:

1. You can’t be denied coverage, or be asked to pay more just because you have an existing illness or condition. Prior to the ACA insurance companies could deny coverage to people who might have high insurance costs.
2. Students can be kept on a parents plan until they turn 26. After they turn 26 they can get insurance through an employer or go on the exchange and purchase insurance. Before the ACA many young people had no way to get insurance.
3. Very few people pay full price for health insurance on the exchange. 85% of people who bought insurance on the exchange get tax credits that help reduce the cost of the insurance. You hear about the huge premium increases for 2017 – while this is not good for many reasons, most people will not see the actual cost of their insurance go up very much. The people who are hardest hit with premium increases are those with high incomes who don’t qualify for the tax credits.
4. In 2016 only about 5% of people get health insurance on the exchanges. Most people still get insurance through their job, or through Medicare and/or Medicaid. So while you hear a lot of media coverage about the exchanges, proportionally these issues impact a small minority of people. How many people do you know who are insured on the exchange?
5. The ACA expanded Medicaid to cover low-income adults. Prior to the ACA, most state Medicaid programs covered very low-income parents and their children under age 18. Most states do a good job of covering kids. You may hear that only some states expanded Medicaid to cover low-income adults – that is because it was supposed to be mandatory to cover low-income adults but many states fought that law and won, so then it became optional. States that did not expand Medicaid lost hundreds of millions of dollars as the federal government heavily subsidized coverage. As a result some states still have large amounts of people with no insurance, Texas tops the list with around 25% of the population having no health insurance. As you will see in the next point, not only did these states lose the hundreds of millions of dollars in funding, they are also paying the highest possible amount for care received by the uninsured.
6. We are all paying for the care of uninsured people already. All states, even after all of these new options for coverage still have plenty of un-insured. People who lack healthcare insurance still need healthcare. These people rely on the emergency room for care because the ER cannot turn them away. However, when faced with the need for expensive care to cure a condition like cancer, many times they have no access to treatment and have no options to get care. When the uninsured get care in the emergency room we all pay for that care through our monthly premiums. So, if you think you are not paying for care for uninsured people, you definitely are, we all are just paying a much higher amount for it because an insurer hasn’t negotiated a discount. Basically we are paying full price for their care.

While this is a lot of information, every person in our country should understand these basic points. In my next blog I will explore how health insurance works. I know many smart people and I bet 80% of them know very little about how insurance works. Don’t forget to hit follow on my site so you automatically get notified of my new post!

In the past several years I have said to myself and my family many times “I want to tour around the country hosting town halls and explain how our healthcare system and insurance coverage works because 90% of our country doesn’t understand even the basics, let alone the complexities.” While I don’t know everything about our system and believe me no one does, I do have a wide variety of experiences starting with my nursing career that commenced at the ripe age of 21  – I am many years and many experiences from those days.  Click HERE to find out a little bit more about me.

With all of the changes to the system introduced by reform (Obamacare), the media is covering stories in the healthcare sector like never before. Everyday (between election squabbles) there are several new headlines about the failing healthcare exchanges, skyrocketing drug prices and average people who can’t afford the high premiums, deductibles and those darn epi-pens. The media is fighting to be the first to publish tantalizing headlines, but most people don’t understand the content in the stories or how the issue impacts them, their families and the greater community.  Heck, many people I know struggle to understand the EOB (explanation of benefits) from their insurance, let alone what is causing the issues we are facing in healthcare today.

Since I can’t quit my job and take my roadshow out to the masses directly, I am taking it to the blogosphere.  My goal here is to help people understand a few new things about this crazy complex system, and to help them understand their own coverage and be able to think about what they read and hear in the media from a more informed perspective.

I recently read a story about an Arizona University professor who used his sabbatical to bike across the country and listen to the public’s thoughts on healthcare, read about his findings HERE. He was surprised by what he learned and he got some great information with which to publish.

Healthcare is a lot like politics, nothing is ever as simple as it appears, everyone has their own views and understanding, and there is plenty of finger pointing. I am hoping this blog can be less political and more about discussing and understanding.   In my next blog I will explain the basics of the Affordable Care Act (Obamacare) for the everyday person. Welcome to the wild world of the U.S. healthcare system.