by Denys Picard
Now that the AHCA is dead, we can start to have a serious discussions about VIABLE solutions for the health care dilemma Americans are facing. In fact, a minority of American are uninsured, but Medicaid and Medicare are both facing long-term hurdles since their costs are growing faster than nominal GDP.
In my previous article, I discussed my repulsion for the AHCA, which progressively fell out of favor. But don’t think I am a fan of ACA, it is also something that cannot survive the long-term.
As usual, the Billions of readers consulting my comments have already remarked that I am wrong, that Medicaid is much more expensive than ACA. But obviously, it is because no one thinks anymore, they delegate thinking to Group retarded-ness, Twitter and facebook…even DC doesn’t think for itself anymore, except when comes the time to create corrupt shenanigans…
Naturally, I won’t sink everyone in details, it would be the best way to lose an argument, and an audience. But let’s just rough out some numbers for the sake f it.
From the Congressional Budget Office (CBO) The Budget and Economic Outlook 2015-2016, Apendix B (Updated Estimates of the Insurance Coverage provisions of the Affordable Care Act (ACA)) we get a few numbers on the cost of Obamacare.
P. 117 Table 1:
and P.120 Table 2:
From the ACA law, we get the Table of Maximum Premium Contribution by Family percentages:
and from The 2016 Actuarial Report on the Financial Outlook of Medicaid, Table 19, page 62:
And Finally, from the “Brief summary of Medicaid and Medicare” November 2016, page 31 and prepared by the Office of the Actuary, Centers for Medicare & Medicaid Services, Department of Health and Human Services, we get the following:
“As with all health insurance programs, most Medicaid beneficiaries incur relatively small average expenditures per person each year, and a relatively small proportion incurs very large costs. Moreover, the average cost varies substantially by type of beneficiary. Estimates for 2015, for example, show that Medicaid payments for services for 28.0 million children, who constituted 40.8 percent of all Medicaid beneficiaries, averaged $3,316 per child; for 24.5 million non-disabled non-aged adults, who represented 35.7 percent of beneficiaries, payments averaged $5,421 per person. Of these adults, 9.1 million were newly eligible under the Medicaid expansion, with average per enrollee costs of $6,351. Still, other groups had much larger per-person expenditures. Medicaid payments for services for 5.5 million aged, who constituted 8.1 percent of all Medicaid beneficiaries, averaged $15,099 per person; for 10.5 million disabled, who represented 15.4 percent of beneficiaries, payments averaged $19,355 per person. When expenditures for 32 these high- and lower-cost beneficiaries are combined, the 2015 payments to health care vendors for 68.5 million Medicaid beneficiaries averaged $7,487 per person.“
Now, most people believe that Medicaid is so costly, that extending a paying form of medicaid to the non-insured would be exorbitant, that the private sector offers much better solutions. Well, nothing could be further from the truth.
The reason that Medicaid, if one looks at a general average of per covered extended Medicaid enrollee might look expensive is due to 2 main factors. Medicaid covers the riskiest “clientèle” profile of the market. Less wealthy individuals are usually less healthy, and as analysed by health conditions, the current Medicaid population is the riskiest. Secondly, the current demographic of Medicaid is populated by services extended to costly demographics because of the nature of the services, these are Nursing care patients (often referred to dual status patients, because the greater majority is over 64 and is also covered by medicare, and the Handicapped, which have traditionally been more costly to carry. And I say this with no prejudice. If I point to this, is that these 2 groups are not present in the current uninsured, or recently insured through the ACA exchange.
The currently uninsured are healthier adults and very few children. Therefore a potential “clientèle” in majority between the ages of 18 and 64. The recent enrollees in ACA exchange have also mostly been adults, 9 million, against 2 million children.
In the previous tables, the one, Table 19, produced by the Actuarial Report, you can see that the newly enrolled Medicaid recipients carried implementation costs in 2016, making their average per enrollee costs to the program 6,300$. But in the next 3 years, this amounts drops to 5,300$ per enrollee, in fact lower than the comparable “Adults” category, the only difference being the average health.
The CBO estimates that each subsidized Exchange enrollee (those who qualified for a private sector Health Insurance Tax credit) will get a 5,300$ tax credit in 2018. This is the cost to government. But the Enrollees must pay an amount, which is the difference between the premium cost and the subsidy from government. This is the only number I could not yet get an estimate of. But the HHS estimates that the average (but distribution asymmetric tilted towards the left) enrollee had a 275% Federal Poverty Line (FPL) Ajusted Gross Income (AGI). If this is so, one can estimate that in 2018, the average contribution of enrollees should be around 2,400$ to 2,600$ (let’s round this up to 2,500$). If this is the case, it means that the average cost of insurance was 7,800$ (5,300$ + 2,500$).
But if one follows my proposition, and extend to future enrollees a Modified Medicaid (where one would pay to get a Medicaid Health Insurance Coverage). Then, one must subtract the 2,500$ that an enrollee pays to the private insurance company, and will now pay to government. the 2018 5,300$ estimate costs (based on the cost of current new enrollees in the Medicaid program) minus the 2,500$ enrollee personal contribution, results in a net cost to government of 2,800$ per enrollee. And this coverage, the coverage of Medicaid is unlike private coverage in the sense that they are no real significant co-pay, co-insurance or deductibles. But since current enrollees, which appear very satisfied to get Silver Low Cost Plans which are 30/70 co-pay, co-insurance with a deductible around 4,000 to 6,000$ annualy…governemtn could impose to these new enrollees a Platinum Low Cost Plan structure which is 10/90 co-pay, co-insurance. Government could even have the largess of limiting deductible to 1,500$ annually. A plan like this should be a lot more interesting to any potential future enrollees. This is half the price of ACA.
What are the great disadvantagesof this proposition:…well for one thing, with Medicaid, it is true that you cannot: ” I Cancelled my appointments 10 times with no Penalty…”; and they may not offer expresso in the waiting room, the decor may not be as glorious as Entertainment Tonight stage set…but you will get very good medical care.
Now, since DC and wall street and the Media all want to fix the problem with the private sector, we will have to make them a little gift as to “Shut them off”. So we could do without all the special taxes that ACA has imposed. But the get funding revenue, we could, and this will be the least popular element of my proposition instigate a federal slaes tax. Since we cannot trust our leadership to pay for “Health Care for Everyone”, we should have a 2% national federal Sales Taxes on Product and Services (with the exception of essentials such as food, medical services, education and the likes). I estimate that such a tax could bring in around 180 Billion$, this could be split in half, half for Medicaid, half for Medicare.
So, if you transfer the recent ACA enrollees, and project that all uninsured (that is the 16 millions currently subsidized enrollees, plus the remainder 27 millions no insured) get covered in the future, the cost to government should be around 43 Millions * 2,800$ = 120 Billion$ (against the 240 Billiob$ of the ACA to cover everyone). But this cost could be less, because these new enrollees have a lower risk profile, they will consolidate the Medicaid Services provider network, which should bring in economies of scales. With other small charges (charging for the dental services and eyes medical services, which are traditionally covered by Medicaid, but not by the Private sector) and by putting a Platinum Deductible structure, this whole program could be funded and not being kidnapped by Wall Street of private interests.
Therefore, this program would be self-funded, and have some staying power, instead of being kidnapped by private sector appetite.
Naturally, people would have the choice of Joining a Paying Medicaid program (we could call it MedicaidTOO (for Medicaid’s Trump Other Offer), the card could be Purple, for Product differentiation and cultural adequacy, creating a 2 class Medicaid system (free for the really needy, and somewhat less free for the somewhat less needy but deserving). And the Choice would be: MedicaidToo or Private Insurer, but if you go private, you don’t get any government subsidy, you are on your own.
Now is time to bring in the Tomatoes…