Gaming Obamacare


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Finding out what’s in it: The Obama administration and health insurers are discovering that, because of the high cost of health insurance forced on consumers due to Obamacare, those consumers are improvising ways to “game the system”.

The article describes a whole range of tricks citizens are discovering that allow them to get insurance companies to pay for their health costs while paying those same insurance companies as little as possible. This example, which is not the focus of the story, encapsulates for me the entire insane nature of this monstrous law, forced upon us by Obama and the Democratic Party:

[Insurance companies] note many people have figured out they need pay for only nine months to get a full year of coverage. An enrollee might buy an ACA policy, get their health needs addressed and then let their coverage lapse — without having to pay the penalty for being uninsured.

It is only going to get worse. By not letting the free market function, the government is forced to ration care and impose restrictive rules, which people naturally try to improvise their way around, either legally or in a black market. The solution proposed in the article is even more restrictive rules and rationing.

The only real solution is to dump the whole thing and go back to the basic American principle of a free market. Such a system carries risk, but it forces the industry and the citizenry to find the most efficient solutions. It also depends on a very radical concept: personal responsibility.

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18 comments

  • ‘ . . . insane nature . . .”

    That rather describes the entire Progressive worldview, doesn’t it?

    I wrote a fair amount on the ACA in 2009 and 2010, and I noted (as did many, many others), that there were several low – or – no cost measures that would have made health insurance more accessible, efficient, and cheaper. Plan portability was one idea. I believe the passage of the law had much less to do with individual responsibility (or lack thereof), than it was about politicians grandstanding. “Look! Look what I did for you!” Now we have the worst of all worlds: A massively inflated bureaucracy that does the exact opposite of what it’s proponents promised, and a law that few politicians want to be identified with.

  • Desmond

    The free market doesn’t work well in healthcare. America spends more per head than western European countries but has worse health outcomes in term of life expectancy and levels of chronic disease. Young healthy people will take the risk of not taking insurance. Only the old and ill desperately need it and so premiums in general are very high. In general market forces are great, but people do not shop around when they are diagnosed with cancer.

  • Re: Desmond

    You are conflating a number of different issues, more than are beyond the scope of a comments reply. Healthcare, both the specific and general forms, are way beyond ‘sound bite’ analysis. Like most other complex issues, you have to delve into the minutia and control for variables.

    The last half of your comments are statements, not indictments. And why wouldn’t you shop around if you have cancer? Some cancers (prostate, for example) are so slow-growing that it’s not uncommon to be left untreated. There are very few few cancers (or other diseases, for that matter) that wouldn’t allow time to get the best healthcare deal.

  • Desmond

    Re: Blair Ivey
    I agree completely that the problems of healthcare is extremely difficult and are way beyond ‘sound bite’ analysis. But the same criticism could be made of Bob’s contention that only a truly free market is the solution. As you agree with his view you don’t condemn him for ‘sound bite’ analysis.
    >> The last half of your comments are statements, not indictments.
    I never said they were indictments, I’m not sure what your point is here?
    In a pure, free market approach you can’t shop around for health insurance after you receive a diagnosis of a serious disease like cancer. It will be treated as a pre-existing condition and almost certainly excluded from cover. The cost of treatment for many serious diseases for a typical middle income American who doesn’t have insurance is more than they can afford no matter how carefully they shop around and will often lead to bankruptcy.

  • “In a pure, free market approach you can’t shop around for health insurance after you receive a diagnosis of a serious disease like cancer. It will be treated as a pre-existing condition and almost certainly excluded from cover.”

    Absolutely right. This is the way insurance and freedom works. Lots of healthy people, being personally responsible for their lives and their families, buy insurance (at a relatively low rate), thus providing insurance companies the capital to pay the costs for those few sick people who, after many years of health, now need the insurance they paid for. Reasonable people who understand economics understand this. They realize that if they want insurance they have to buy it when they are healthy, and that it is unreasonable and unprofitable for insurance companies to sell insurance to sick people.

    To force an insurance company to take on sick people who did not buy insurance when they were healthy means that no one will buy insurance when they are healthy. Instead, everyone will wait until they are sick so they don’t have to pay any premiums for the years they are healthy, and will only get the insurance when they finally get ill. Under that situation, the insurance model is un-viable and will go bankrupt.

    Which is exactly what is happening with Obamacare, as noted by the article I linked to. You might wish for things to be different, but that is reality. And to ignore reality guarantees that any policy you propose will fail, as has Obamacare.

    I meanwhile prefer to look at reality and use that as my guide.

  • pzatchok

    Personally I think insurance of all types is a scam.

    But.

    Lets assume the average person will need 300000 dollars worth of healthcare during their life. If they life till 80.
    That gives the average person 60years to make those payments. Years 20 through 80.
    That is about 420 bucks a month.

    Why am I paying twice that if you count in my employers side? Plus I have deductibles which means I am still paying for each visit.

    And as for Europes medical system. Its highly rationed by ability, they just can’t give everyone who wants one an MRI. the US system is not rationed except by price and we can give everyone an MRI and do.
    Plus when was the last time doctors went on strike in the US? They just did in England. Protesting the work hours.(which I agree with them, are to long)

  • Des

    Re pzatchok
    There is private medical insurance in the UK as well as the National Health Service. If you have health insurance you can skip the queue and get any test/treatment required as soon as you would with insurance in the states. I believe typical private health insurance premiums here in the UK are much lower than those in the US because for most people the National Health service is good enough. If private insurance in the UK charged the same as typical US rates hardly anyone would bother with it.

  • pzatchok

    what are the rates?

  • Edward

    The article starts: “Obamacare customers are gaming the system, buying coverage only after they find out they’re ill and need expensive care …”

    How is that “gaming” the system when that is the expected behavior of the system? Virtually everyone predicted this behavior, as it is written for this to be the least expensive method for a family or individual to get healthcare coverage. This is my own method; I don’t buy (amazingly expensive and shockingly poor coverage) Obamacare insurance, and I don’t expect to buy it until I get to be old enough to actually need it on a regular basis. The system is just too expensive for individual or family coverage as it is currently set up.

    It is as though we were all required to purchase expensive flood insurance, whether or not we live in flood zones. Indeed, if we were required to purchase all the various insurances that are available, then young people would have very little left over to pay the rent and purchase their groceries. Do young people who have no dependents really need life insurance? And if I am healthy and have plenty of money in retirement savings and a house to sell, do I really have to buy expensive healthcare insurance to cover inexpensive doctor visits?

    A free market allows us to make our own determinations as to what we want or need to purchase. My higher priorities have been food and housing. Various insurances eventually become necessary or desired. And I resent that my previous choice of relatively inexpensive catastrophic-care insurance is no longer available. That would have allowed me to spend less money overall, because I can pay for an ordinary (and rare) doctor’s visit, but I would be covered for that expensive case of cancer.

    Why am I not allowed to be personally responsible to choose the insurance that I need, and why do you, Desmond, think that I am not responsible enough to choose it? *This* is how free markets work. Any other way reduces the freedom of the market and of those citizens in the market. As you said: “Reasonable people who understand economics understand this.”

    Desmond also wrote: “There is private medical insurance in the UK as well as the National Health Service.”

    So what you are saying is that the NHS’s healthcare is so miserable that people are willing to pay *extra* to get the good care?

    Desmond also wrote: “If private insurance in the UK charged the same as typical US rates hardly anyone would bother with it.”

    Which makes our point. Obamacare is too expensive and gives back too little. And many of us wouldn’t (read: “don’t”) bother with it. Instead, they find ways to “game” the system in order to get the most from it while still having enough money left over to pay the rent and buy the groceries. And save enough for retirement.

  • Des

    Re pzatchok
    I get medical insurance through my work which is worth approx 1000 dollars a year. I think that’s a typical figure.

    Re Edward
    Basic health care in the UK would be equivalent to health insurance costing a couple of thousand dollars in the US I would think. Private insurance, which only a small minority of people get, allows you to jump the queue. Having an effective basic safety net for everyone and having the option to pay but not the necessity is probably the best way to get efficient market operation in the health sector.

  • Edward

    Oh, Des. How you do not understand economics or free markets. When you say, “Having an effective basic safety net for everyone and having the option to pay but not the necessity is probably the best way to get efficient market operation in the health sector,” you have missed how to get efficiency in market operations.

    1) Basic safety net for everyone. Once you eliminate competition, you also eliminate the incentive for improved efficiency. When government runs the operation, there is absolutely no incentive for improved efficiency.

    To illustrate, there is a quota on ambulances arriving at each ER over the course of a certain time (4 hours?), in Britain. This results in ambulances sitting a block away from hospitals awaiting the time when another ambulance is allowed to arrive without violating the quota. Where is the efficiency (or effectiveness) in that?

    Free markets and competition drives each competitor to improve so that they are more efficient and thus more desirable as a provider. The profit that they earn is the reward for improving efficiency and is the incentive for the next competitor to improve his efficiency so that *he* gets a reward.

    2) Health insurance costing a couple of thousand dollars US. I used to have this price on my insurance, but it only covered catastrophic healthcare or multiple care events, and it had a $1,500 deductible, which kept it from covering mere routine doctor visits (which I could cover myself). Plus, I did not have to wait so long in a queue that I wanted to buy additional insurance so that I could be a queue jumper. The quality of care and the timeliness of care were very good.

    $2,000 US in Obamacare insurance (per family member) would be very basic care, indeed. It would hardly cover anything that a family would need each year, but at least there is not a long queue to see a doctor (yet). Covering more — even more than we need, as we are now insured as though we are hermaphrodites — is one of many reasons why Obamacare prices are skyrocketing.

    I now would have to pay $7,000 per year, with a $6,000 deductible before the insurance started to cover any costs (even then, I have to pay a co-pay of about half of the additional healthcare costs, up to some other high amount, either $500 or $6,500 additional “out of pocket,” it is unclear to me which it is), which is why I am now an Obamacare scofflaw: I have yet to need anywhere near $6,000 worth of medical care (or the $14,000 or $26,000 annual break-even point, depending on the co-pay), so the purchase of Obamacare is a complete waste of my hard-earned money (and for the “subsidized” US poor, it is a complete waste of my hard-earned taxes). I certainly hope that the additional taxes paid by the British are not anywhere near that cost.

    3) Speaking of queue jumping and efficiency, how efficient are such long queues that people will pay extra to jump them? Long queues suggest inefficient operations, not efficient ones.

    Indeed, “the good care,” as I wrote earlier, apparently is in the timeliness of care, since you suggest that private British health insurance provides no improvement in the quality of care over the government-supplied care.

    Obamacare gave control of US healthcare to the US government, and now I cannot get the insurance that I want to have.

    When you give control to the government, all you will get is what the government will allow you to have. If you keep control, then you get what you wanted to have.

  • Des

    Edward, efficient market theory assumes well informed consumers and perfect exchange of information. Neither condition applies to the health sector. In the vast majority of cases a free market is much more efficient than government bureaucracy. This does not seem to be the case with Health care, to say that the market is always better than bureaucracy is to elevate ideology over empirical evidence. A relatively efficient bureaucracy can be more efficient than an inefficient market place.
    In many towns there is only one major hospital, in a completely free market approach to health care this would result in a monopoly and the ability to charge as much as the market will bear. An efficient market requires low barriers of entry, something that doesn’t apply to building a major hospital.
    A single payer system does have some advantages from a market standpoint if your aim is to minimize cost of health coverage for consumers. The single payer can negotiate from a position of strength with suppliers.

  • “Efficient market theory assumes well informed consumers and perfect exchange of information.”

    This is false and a strawman argument. Under no condition does free market theory ever assume or require well informed consumers and a perfect exchange of information. What market theory assumes is that freedom and competition will allow those with the best (but not perfect) information to rise to the top. What they learn will in turn benefit those who are less well informed.

    Government control squelches this freedom, so that no one is well informed. The result is rationing, dissatisfaction (witness the doctor strikes in the UK), and eventual collapse. (Remember the Soviet Union?)

    “An efficient market requires low barriers of entry, something that doesn’t apply to building a major hospital.”

    This is also false and a strawman argument. Prior to the existence of our large and oppressive federal government, the private market was remarkably successful in building many large and successful private hospitals in the United States. Moreover, what makes you think that a medical industry controlled by a monopolistic federal government will result in more hospitals? In truth the lack of competition will likely force a consolidation, which is exactly what is happening right now under Obamacare.

  • Steve

    Des said: “A relatively efficient bureaucracy can be more efficient than an inefficient market place.”

    Here is the heart of the matter and a common mantra dear to big government addicts.

    Only a fool (..or a Democrat, but I repeat myself…) believes that by adding layers of Federal and State bureaucracy to an already inefficient market will make it more efficient somehow.

    Bureaucracies are made of humans, humans are deeply flawed and corrupt, there is no overcoming that.

    Free Individuals make far better choices in the aggregate than a faceless, corrupt, obscenely expensive agency will ever do.

    Read John Stossel for a well written set of examples: http://www.amazon.com/They-Cant-Government-Fails-But-Individuals/dp/1451640951/ref=sr_1_1?ie=UTF8&qid=1452787322&sr=8-1&keywords=john+stossel

    The solution is not to make the problem worse, but to remove obstacles to a free market.

  • Steve

    Robert Zimmerman said: “This is also false and a strawman argument. Prior to the existence of our large and oppressive federal government, the private market was remarkably successful in building many large and successful private hospitals in the United States. Moreover, what makes you think that a medical industry controlled by a monopolistic federal government will result in more hospitals? In truth the lack of competition will likely force a consolidation, which is exactly what is happening right now under Obamacare.”

    Well said! Here in NewEngland local hospitals that have existed for decades are either closing or merging. Those that are left are getting bigger and bigger. Doctors are being forced into larger and larger group practices and Nurses are being used in place of Doctors in more and more areas.

    And yet the free market still fights against the tide with Walk In clinics started by for-profit companies like CVS. They see a demand left unmet and are filling that demand while still making a profit.

    If left unmolested by the government the market will sooner or later respond with the best possible result, no committee required….

  • Edward

    Des wrote: “efficient market theory assumes well informed consumers and perfect exchange of information.”

    Even if this *were* true, a government run system, such as “single payer,” does less to inform consumers than a free-market system. When there is only one supplier, there is very little incentive to exchange information; even the consumer has little incentive to question the system. You pay what you pay, and you get what you get. Period.

    Des wrote: “Neither condition applies to the health sector.”

    Yes it does. It absolutely does. This is how I know just how bleeping bad the available insurance is under Obamacare. Since it isn’t a “single payer” system, there are insurance company web sites that tell us all kinds of things about prices and available services. Other sites offer analyses of quality, and still other sites criticize the care that people received. We get plenty of information about the poor quality, limited offerings, and high prices available to us, and this is why we Americans are so p***ed off that our healthcare system has degraded under the government-controlled Obamacare.

    Des wrote: “A relatively efficient bureaucracy can be more efficient than an inefficient market place.”

    Bureaucracies are designed to give a sense of fairness (whatever that is*) and to cover the a**es of the bureaucrats. There is no attempt at efficiency, which is why Des failed to point to a single efficient bureaucracy.

    Des wrote: “A single payer system does have some advantages from a market standpoint if your aim is to minimize cost of health coverage for consumers. The single payer can negotiate from a position of strength with suppliers.”

    An unfair advantage does not do anyone well. Indeed, that is why industries and utilities that are monopolies in a given area are regulated — and that regulation does little to encourage efficiency. Otherwise monopolies would charge as much as they can (like governments do with their taxes); provide as little as they can, with as little cost as possible going to consumer service (like governments do with there services); pay as little as they can (which is why so many British doctors are foreign born); and gain the most advantage that they can (as political parties do when they pass out funds to people on the dole — garner votes for themselves). If you replace the phrase “single payer” to “corrupt government” then you will get a better understanding of the system you call “single payer.”

    A “single payer” system controls costs by limiting the available supply, which either creates scarcity (not enough to go around) or drives up prices (as in queue jumping by buying private medical insurance, as in the UK).

    And what do it mean: “to minimize cost of health coverage for consumers”? Somebody has to pay for the health coverage, and if the “single payer” is extorting low prices for goods or services, then it is the provider who is paying for it. Perhaps the doctors are being underpaid for their work (Robert mentioned a doctor strike in the UK), or the pharmaceutical company is not compensated by non-US countries (e.g. Canada) for drug development , leaving the US healthcare consumers to pay for the development. In the UK, the consumer pays in higher taxes, which reduces the available money to spend on other goods and services, so British jobs become rarer and unemployment becomes higher, leaving even more people on the dole, and taxes have to go even higher. Somebody pays, even for a “free lunch.”

    * What is fair, anyway? Is it fair that some people live well while others live in squalor? Or is it fair that the productivity of the hard working, innovative, and talented is forcibly taken from them (rather than freely donated) and given to the unproductive so that they can live in unearned ease, which just encourages non-productivity? I would choose the former, as it encourages people to *earn* their livings rather than take from those who do.

    Frankly, I am tired of working 60 and 70 hour weeks, with very little personal time, just so some layabouts can sit on their fannies all day and on my dime. I’d declare myself retired right now(!) if the aerospace industry weren’t getting to the point I had hoped to participate in when I graduated college. Being (currently) unemployed has shown me just how nice it is to be a layabout, sitting on my fanny all day — and, having saved all my life, I don’t have to suck off the taxpayer’s teat to do it.

    If I sound angry, it is because I am. I used to have barely-affordable healthcare insurance that provided what I needed, but now I am self insured — a condition not legally allowed under the Obamacare tyranny — because there is no way that I can afford the cost of Obamacare coverage**. Being self insured is a bit scary, because instead of sharing the risk, I take on the entire risk.

    And, yes, I am angry that so many people have become wards of the state rather than be productive. This means that even more of my productivity must be confiscated to cover the layabouts, and it means that there are fewer goods and services available to all of us — making everything even more expensive. (Remember your basic third-grade economics lesson of supply, demand, and price, Des? I didn’t think so.)

    Wouldn’t everything be so much better if the US had far fewer than 94 million people out of the workforce but were instead producing, innovating, and sharing their talents, increasing the supply more than they increase the demand?

    ** The US Congress and their staffs have been exempted by presidential decree, because even *they* cannot afford Obamacare health coverage. If they cannot afford it with their high salaries, then what chance do the rest of us have? If Obamacare is too expensive with the competition that it allows, then just how expensive would a monopolistic “single payer” plan be? Not just in monetary price, as in even higher taxes, but could it literally cost us an arm or a leg, as it did this Canadian woman’s mother?
    https://www.youtube.com/watch?v=q2jijuj1ysw#t=614

  • Edward

    I still think that the NHS’s healthcare is so miserable that people are willing to pay *extra* to get the good care. The care in the UK, once received, may be top notch (I wouldn’t know), but if you have to wait so long that your condition becomes worse or even incurable, as happened to the Canadian woman in my previous comment, then the net care is miserable. Only the queue jumpers get the high quality, top notch care, the others lose two legs instead of one (I know, the Canadian system is different from NHS, but the concept is the same. And why was the lady’s first leg incurable, anyway?).

    Single payer definitely leads to lower quality care. Free market creates incentives for higher quality, more timely, and less expensive healthcare over time, as those are the attributes that the customers are drawn toward as they look for caregivers. These are the things that the customers want to have. Thus the caregivers must improve over timein order to remain in business.

    “Single payer” care only provides what the government deigns to provide, and that usually is not what the customer wants. I seriously doubt that UK citizens want long queues, because enough are willing to pay extra for the better care that they keep that market in business.

    In the UK, almost everyone is on the government dole, where healthcare is concerned.

    In a free market system, it is the consumer — not an uncaring government — that chooses the level of care paid for. If the consumer chooses to buy insurance or to sell his house or go into debt in order to survive that case of cancer, then that is *his* choice.

    Under Obamacare or any “single payer” system, a bureaucrat, regulation, or law makes that choice. Obamacare even has a “death equation” that determines the maximum cost the system will spend on someone’s care, based upon actuarial life expectancy. When it was first implemented, this was $26,000 X Life-Expectancy.

  • pzatchoko

    ” Des
    January 13, 2016 at 4:38 pm

    Re pzatchok
    I get medical insurance through my work which is worth approx 1000 dollars a year. I think that’s a typical figure.”

    What are you paying through your taxes for the national health system you have?

    The costs people in the US are quoting are in addition to the taxes we already pay for our medicare/medicaid system to help the poor and retired.
    Plus we still have to pay for most of the costs of drugs and office visits. And in MANY cases we still have a deductible of several thousand a year to pay if we run up large bills like operations.

    I do believe you also have a government health system in that the hospitals are government owned and operated. So the staff must take the pay the government is willing to give them. Otherwise they can payback the money the government spent on educating them and they can then go private.

    We do not have a government owned and payed for system, thats illegal here. We have a government pay for it system. The government can negotiate price and payments to an extent but in the end the hospitals can turn down their patients for non-emergency care. And in fact many are doing just that, delaying care until it is an emergency.

    The English system can’t be all peaches and cream. they just had a doctor walkout over long hours and no extra pay for the extra hours worked.

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