To limit what they spend out-of-pocket, traditional Medicare enrollees typically sign up for supplemental insurance, such as employer coverage, or a private Medigap policy. If they are low income, Medicaid may provide that supplemental coverage.
But, Meyers says, there's a catch: While beneficiaries who enrolled first in traditional Medicare are guaranteed to qualify for a Medigap policy without pricing based on their medical history, Medigap insurers can deny coverage to beneficiaries transferring from Medicare Advantage plans or can base their prices on medical underwriting.
It's a fundamental problem with insurance: if you don't control for continuous coverage, rational customers will free-ride by paying (in this case, for the more expensive coverage) only when they know they're going to use it.
That’s not the preexisting condition scam, that’s the rationale behind enrollment periods. The pre existing condition scam is where you can’t change your insurance because you’re a human being and therefore experience poor health at some point. The rationale for the scam is they don’t want to insure people known to need care, and by denying coverage to people who experience being human, they can improve their profits by eliminating humans requiring care from their premium pool.
Except that’s not how insurance is supposed to work. If everyone is assured the ability to buy into the pool the pools premiums are supportive of everyone, even humans.
The issue though is we allow nonhumans like MBAs and accountants to decide who gets health care and who doesn’t.
The way insurance is supposed to work is by people pooling risk to mitigate rare or unexpected losses into predictable ones.
What you characterize as profit is rational acts of individual actors to join a risk pool similar to theirs in cost per unit risk. Only a lunatic would agree to buy into insurance pool that charges similar premiums for wildly different known risks. You are asking people to do the insane.
That’s where regulation comes in. In my country it’s mandatory for every citizen to have a base insurance package and it’s mandatory for every insurance company to accept every individual for that same base package, regardless of preexisting conditions. The minimum contents of the base package are determined by the government, the prices and extras are up to the insurance companies to decide. Every calendar year people are allowed to switch to a different insurance company, or make changes to their add-on packages and options, forcing the companies to compete while being able to lock in their clients for a year for some predictiveness. In effect that means that everyone is insured against rare and expensive diseases, while still keeping it relatively affordable, because the pool also includes healthy individuals with extremely low risk profiles. Add-on packages don’t have to follow the same rules, but the base package makes sure that people won’t go into massive debt for being unlucky, which is in my opinion essential for a humane society, no matter how this problem is solved, whether it’s commercial like here, or public like elsewhere. If all is left to the market without regulation, those benefits are lost. Some people might call that freedom, but I disagree.
More directly, yours is a wealth redistribution scheme from parents to elderly non-parents to produce healthy young people at the bottom of the pyramid mostly at their own cost so they can turn around and subsidize people who never raised up this distribution mechanism. An interesting system that is collapsing in much of Europe due to the free rider effect. Why have kids when some other schmuck will foot the bill and the output will lower my insurance premium in what becomes effectively a regressive tax.
Wouldn't it be the kids taking advantage? They fall into non-parents bucket, so yes they are free riders but since they are children I'll forgive them. I don't blame children for not paying their premiums, and since society is about to farm hard on them it's almost a half hearted quid pro quo.
> I doubt anyone in Europe is deciding to not have children based on this factor.
Why so few children in most of Europe then?
Of course they don't. They just know that they can have fleeting fun until 60 and then "somebody" will foot their old age bills. So why have children?
At the same time, people who have children has to pay for themselves, for their children, for their parents but also for "grasshoppers" who only use their country's coffers when in need, while barely contributing anything.
I'm confused by this statement, as the fertility rate in the European Union (1.5 in 2021) is similar to the fertility rate in the US (1.66 in 2021). But yes, countries in Europe do have issues with aging populations, especially when the net immigration is low. It depends on the system how big of an issue it is. For example, in my country the pension system is designed with this in mind, and for a big part people pay for their own pensions instead of for the pensions of the current pensioners. Of course population aging is also a hazard for the economy as a whole, but that's a bit of scope for this discussion, I'd say.
The problem exists in shades in the USA and pretty much everywhere with nation state robust social security that relies in tragedy of the commons of privatizing the lions share of cost of children while socializing the gains ( your health insurance scheme is perfect in scope example I think). The effect is so predictable it's stunning that it's rarely seen as an obvious focus of study.
How does this scheme socialize the gains of children if children don't pay premiums? In my country it's actually free to have children (as there are no hospital and healthcare costs involved for the parents) and having children gets subsidized in various forms (allowances, education, etc). Sure, it's still expensive to have children, but it's expensive to have children in any country. And mind you, there is no country in the world where the per capita healthcare expenditure (private and public combined) is higher than in the US.
Because of the premiums they have to pay, you mean? The premiums are currently about $150 a month, or less if you accept a higher out-of-pocket payment. If you don’t earn much, it’s almost 100% subsidized by the government, which is mostly paid for by people with higher incomes who pay more taxes (in absolute numbers as well as relatively, due to the progressive tax system).
I think one of the most important factors for not having children early is the sky-high housing market, definitely not the healthcare insurance system.
I guess what you're referring to is the long-term benefit of having children, as in: the benefit of having adult children to support you when you're old. Yes, that has been socialized to an extent, which does indeed come with a risk. Maybe I'm too European, but I don't see how a system devoid of public safety nets is superior, though. Everybody benefits from a society that where most people are relative well-off and worry-free, including those that don't need it, and over time it surely needs to adjust to new realities, which is unavoidable.
I think it's achievable with a nation state net but more challenging. Given kids at least up to replacement rates are usually net positive, society will have to economically reflect them as a profit center rather than hogging most of the gains and artificially shunting them as cost center to producers of children.
Although if it were me, well, I'd just leave the kids the hell alone and let them decide who they want to help.
It is not about healthcare, it is about pensions. European social tax is split into multiple separate funds - one goes to support pensions and another to support healthcare, small part also goes to support unemployment benefits.
Pensions is the mechanism that creates an illusion that children are not necessary anymore to support you in your old age if you have "worked enough" - that is the main argument I have heard in support of not having children - but I have worked enough and saved for my pension.
“Known” is the operative word. If you blind the insurer to risks and require them to accept everyone then the pool stays a random distribution. Allowing the insurer to cherry pick is the problem. Once you’ve blinded the insurer no one is doing the insane.
The whole idea of medical insurance is insane. It is OK for scheduled issues but not for covering shots to the moon.
Like, I have a voluntary insurance for my children which covers periodic health checks and doctor appointments and maybe even ambulances, but it definitely does not cover surgery. That's what state medicine is for.
It's nowhere near as much of a problem when there can be a specific cause of loss with a well-defined date. I'd say the fundamental problem is that healthcare consumption doesn't really lend itself to being insurable due to this and a few other qualities. So as the government keeps pushing more nonsensical top-down policies trying to make healthcare fit into an inappropriate model, the market gets ever more distorted and the perverse incentives continue to grow.
Which doesn't explain why insurance companies are allowed to charge more for preexisting conditions in this situation, even though they aren't generally allowed to.
They are. Try to buy insurance outside of open enrollment without a qualifying life event; you can, but only from insurers who underwrite against preexisting conditions. That's for the same reason: because otherwise, people would just forego insurance until they needed it.
Wouldn't that be the rational approach? Otherwise, insurance is still a tax on young and fit to finance the medical treatment of the old and unfit. At which point it's socialism but less efficient.
It's like if your car insurance covered getting a new one if the old one is at EOL. Imagine a cost of that and also the level of willingness to participate by the ones who just bought their first car with cash.
Congratulations to the US people for discovering a model less efficient than socialism.
You're spot on, but it's even worse than that - since these pools are administered/owned by private companies, their incentive is to collect money from people while they're young and healthy, only to push them out once they're no longer young and healthy!
I'd say that any sensible reform must intrinsically be based on some combination of a whole-society pool and individual payers. These highly broken approaches of provider networks and custom negotiated pricing need to be completely eliminated. Insurance should then be an optional thing only meant for people who prefer to financialize their life (like pet insurance), and should cover a formulaic amount of any bill from any licensed provider.
At the youngest adult ages that contribute most to premium reductions productivity is largely a function of investment of the parent, so it may be even more dire than you phrase it. Its effectively a transfer of wealth of investment from parents who have just spent 18 years producing a taxpayer to unhealthy non-parents who comparatively took little of the risk and cost but equally gobble up gains to the risk pool. Another words, it is a regressive tax that rewards goading others into taking on parental responsibilities while taking on none yourself.
The issue isn’t Medicare Advantage, it’s Medigap regulations. If a person can demonstrate continuous coverage, there’s no reason that they shouldn’t qualify (I mean, ideally, obviously they aren’t in reality).
I’d also note that MA plans are absolutely not incentivized to deny necessary care. If they refuse to grant a PA to treat your actual cancer, they will lose a ton of money when you go to the hospital. It’s part of the entire point of MA incentive structures. They are incentivized to deny unnecessary care (low back scans and a lot of other unnecessary radiology, for instance, that traditional fee-for-service incents providers to order needlessly).
I mean look at beaglebeaches. He seems more concerned with the hypothetical fairness or unfairness of "redistribution" rather than whether he will get effective care for a reasonable price.
I go to the wild West of Mexico when I need healthcare. Because it is basically unregulated, I don't need to use my shitty health insurance, and because private doctors are available I'm not subject to whims from goons from the state.
Needing to use insurance or state care on a regular basis for normal care is symptom of a disease, that the system is so over regulated a normal person can't just pay cash for regular care like I can do in Mexico. When you can buy a Z-pak or penicillin OTC with a yo quero you've reached the first level of medical nirvana.
Sure but the regulatory barriers are so high it's not fiscally practical for a normal person. I can walk into a pharmacy in Mexico and buy a Z-pak for strep; even for a poor Mexican that's easily obtainable all without insurance or state care.
I make a good wage but in USA with good insurance it would take me a days pay for same here after passing all the regulatory hurdles and costs and being billed for a doctor and that doctors malpractice risk overhead etc ad nauseum.
I'm not sure what you mean by high regulatory barriers. I make an appointment, the very next question is "do you have insurance?" When the answer is no they inform me what it will cost, I pay with a credit card at thet time services are rendered and thats all there is to it.
Whats regs got to do with it?
Medicare Advantage plans have to provide at least a government defined baseline of service, but they can jiggle things around to offer better coverage for some things (like lower copay on medicine for chronic conditions) at the expense of others (doctors in network).
So basically what happened is these seniors wanted the better benefits when younger and then didn’t want them when they were older because their health status changed.
To me it seems like a bit “get your cake and eat it too”. What they want to do is get the benefits that traditional Medicare doesn’t provide, then later switch and get the benefits that Medicare Advantage doesn’t provide.
Problem is that it’s two different insurers, so the risk pool is separate. The 2nd insurer (Medigap) is basically saying “hey, you haven’t been paying into our plan all this time, so we can’t take you on now, with much higher expected payouts, without increasing your premium substantially”.
It’s not that different than Americans who elect NOT to get Medicare when they hit 65 (thus saving on premiums) then later on complain they have to pay a penalty when they decide they suddenly want it at 75.
I mean this seems like a “buyer beware” situation. When you’re selecting Medicare Advantage or traditional Medicare, plan for the long haul. Don’t just think about which one is better for you right now.
This doesn’t seem like a “Medicare Advantage” problem. It seems like these folks didn’t want to pay the 20% co-insurance for government Medicare and now don’t like the trade off they made.
My parents are on a Medicare Advantage plan. They like it fine, but I wouldn’t do it to save a few bucks on the front end. They also recommended we get an ARM when we refinanced in 2021 (we didn’t obviously). Goddamn boomers.
The medical underwriting on Medigap plans also affects people who have the foresight to choose Original Medicare with Medigap.
Once you have a disqualifying health condition (and since Medicare is for the old and disabled, this is most people), you are stuck. If your Medigap provider raises their premiums above the rest of the market, you can’t switch to another one. If you miss a premium payment and get dropped by the plan, too bad, so sad, Medicare Advantage is your only practical option now.
But, Meyers says, there's a catch: While beneficiaries who enrolled first in traditional Medicare are guaranteed to qualify for a Medigap policy without pricing based on their medical history, Medigap insurers can deny coverage to beneficiaries transferring from Medicare Advantage plans or can base their prices on medical underwriting.