Healthcare Case Study (A BG Social Experiment)

[Acturus]

The cost of the drugs isn't usually reflective of the actual current cost of production for said drug. Much of the cost goes to cover the development costs of said drug, the cost of FDA approval, the cost of all the failed drugs they tried to bring to market besides said drug, and the advertising for said drug and potentially other drugs.

What is left over, they usually pump into development of new drugs, sometimes completely unrelated to said drug. You aren't paying for the drug as much as you are paying to maintain the 'machine'.

Edit: Yeah, also, some percentage of the total cost will go to profits and the like as well. Sometimes outlandish, sometimes not.

This is a better description than what I said, and I forgot to mention recouping losses on failed trials.

[Absolutely Virtue]

Staying on topic, part of the high cost of Gleevec is, undoubtedly, the fact that so few people need it. It's a very rare cancer (it's amazing the drug was produced at all), so it's not like there is a big market for it. They're never going to sell a lot of it, so they will need to recoup their investment through high prices.

Some of you have touched on the pre-existing condition issue, and here's my take as I understand it, and as it has been explained to me. As long as I have existing coverage, including COBRA, which is a form of temporary insurance extended to those who have lost their insurance between jobs, I cannot be denied for a pre-existing condition. So if I transfered to my wife's insurance, I'd be fine so long as I was still under my plan or COBRA.

Acturus was skeptical of chiyio's hypothetical job loss scenario, but I think it's actually very valid. My wife works in law, and times are rough at her firm right now. They didn't receive any annual raise at all this year, and they have had a series of layoffs. If anything, I've got better job security than she does.

I will say, however, that our education and experience, coupled with the fact that we live in a town (Washington, DC) that typically weathers recessions well, makes our employment prospects better than most. But what if we worked in real estate? Or in Detroit?

[Seraph]

I think another issue is that with people living longer, and having the risk of accidental and random death greatly reduced, we are running into many diseases that have no real cures, but have found ways to essentially cheat with medications to either buy us time, or relieve symptoms.

In my opinion, I do think that overall that is a good thing, but like most band-aids it will not stick forever. I know the industry has evolved to seek treatments like this though, because a 'cure' for cancer isn't really profitible because society will not let you hold people ransom, but a treatment IS profitible because you can make 'reasonable' sums of money over very long periods of time. I don't like how it works, but I often wonder if people who are sick or need help would ever see new options otherwise.

Realistically though, I don't think that even with a wonderfully revised medical and insurance system we will be able to help everyone. Everyone eventually dies or has health problems, and many times through no fault of their own. Life just isn't fair. I still think we can try to optimize it though to have the best 'damage control' as possible.

[Absolutely Virtue]

One more bit about my wife's plan.

What if I wasn't married? Should my circumstances be different from a single person?

What if we get a divorce? Should see be obligated to stay with me because I need her for the medicine? If it's simply a marriage of convenience for the sake of healthcare, is that fair to her co-workers?

[Nynaeve]

There is also the unfortunate thing where some states tried to pass guaranteed-issue laws where an insurer cannot deny you if you apply and they can't charge "sicker" people more for using their plan, which while well intentioned, lead to ridiculously high rates across the board.

[Acturus]

You'll have to forgive me. My skepticism was based on a lack of ancillary information. I made the assumption that your wife's job was relatively secure.

To broaden the discussion, the fact that insurance is primarily handled through employers as a form of employment benefit is a very big part of what's hurting the current state of US health insurance. It demands that you are working, non-stop.

This made a lot more sense four decades ago when most people had one career their entire lives. I don't remember the source, but I read once that college graduates after 2000 could expect to have as many as five legitimate careers before they turn 65. Ironically, this is why many retirement investment plans allow you to roll your investments over from company to company.

*edit* to completely digress, I believe that the current reform being discussed, as long as it isn't botched greatly by extreme left policy designs (or extreme right stubbornness), will put a greater emphasis on individual insurance plans and place a greater ability for the individual to get covered. My hope is that this would pave the way to further reform in a couple more decades to move the insurance system out of the employer-based model we have today, by virtue of nothing more than a business shift.

[Nynaeve]

One more bit about my wife's plan.

What if I wasn't married? Should my circumstances be different from a single person?

What if we get a divorce? Should see be obligated to stay with me because I need her for the medicine? If it's simply a marriage of convenience for the sake of healthcare, is that fair to her co-workers?

By the same token, should people be obligated to keep working long into their golden years just because they need the insurance? It's sad that when people usually need their insurance most, the later years when you just start falling apart and want to maintain a good quality of life, is the time when insurance typically leaves you behind the most.

People don't seem to have a problem with an auto insurance company charging someone who gets a lot of tickets or who gets in accidents more for being an unsafe driver. Would it be fair to charge someone like you more in premiums because you need ridiculously expensive drugs to live?

I'm not sure we could create a healthcare system that is truly fair to everyone.

[Seraph]

People don't seem to have a problem with an auto insurance company charging someone who gets a lot of tickets or who gets in accidents more for being an unsafe driver. Would it be fair to charge someone like you more in premiums because you need ridiculously expensive drugs to live?

I'm not sure we could create a healthcare system that is truly fair to everyone.

That's a hard comparison to make because many of the car related issues are based on driver choice (like speeding tickets, not necessarily accidents), where medical issues are not as overwhelmingly based on 'choice'. People have a very real ability to control whether they get a speeding ticket, but they have extremely little control whether they get blood cancer besides eating right, exercising, avoiding dangerous cancer causing substances, and avoiding falling into nuclear reactors.

Somewhere though, a balance would need to be struck between 'providing realistically complete coverage for everyone' and 'keeping coverage costs affordable'. This is where people with rare diseases, like Virtue, will be left behind. At what point can you say "it's just not worth treating him"? What if the pills cost $500 each? $5000 each? etc.

That is a very real issue that becomes extremely hard to answer. "What is the value of a human life." At what point do you pull the plug? At what point do you deny treatment? At what point do you stop trying to find ways to help people? I would not want to be the one who has to make that type of decision.

[Acturus]

Somewhere though, a balance would need to be struck between 'providing realistically complete coverage for everyone' and 'keeping coverage costs affordable'.

In at least one respect, the two are not mutually exclusive. A large driver of costs in hospitals specifically are self-pay and no-pay patients. Hospitals mark up cost of services to include bad debt. Reduce bad debt from the self-pay and no-pay people (the people who use the ER as their PCP), and you reduce what hospital's need to charge higher amounts over cost. The not-for-profit hospitals would be the first to decrease their charges, which would in some markets then force the for-profit hospitals to do the same to compete.

[Seraph]

In at least one respect, the two are not mutually exclusive. A large driver of costs in hospitals specifically are self-pay and no-pay patients. Hospitals mark up cost of services to include bad debt. Reduce bad debt from the self-pay and no-pay people (the people who use the ER as their PCP), and you reduce what hospital's need to charge higher amounts over cost. The not-for-profit hospitals would be the first to decrease their charges, which would in some markets then force the for-profit hospitals to do the same to compete.

My assumption was based on everyone having medical coverage, just to clarify.

Assuming there was no tier system, and everyone has to pick the same thing, at what point will people refuse to pay for additional coverage? "Private" insurance might live on as a supplement to the coverage everyone gets to cover things that most people wouldn't want to pay for, like some rare obscene form of cancer treatment.

That begs the question though: should some people be forced to suffer because their ailment is rare, inconvenient, or expensive to treat?

[zoobernut]

To broaden the discussion, the fact that insurance is primarily handled through employers as a form of employment benefit is a very big part of what's hurting the current state of US health insurance. It demands that you are working, non-stop.

I really agree with this statement. I think health insurance should be affordable enough to pay for without having to have your employer subsidize it. Insurance should not be an incentive.

[Absolutely Virtue]

It's true that actual cost of healthcare would be lower if we could eliminate or avoid certain costs, everything from preventive medicine and encourage people to eat better and exercise, to reducing paperwork, to removing all of the people clogging ERs.

But that wouldn't change the fact that, overall, my condition would still be more expensive than the average person. And that's where Seraph's point really hits home. There will always be sick outliers that cost a fortune, and healthy outliers that cost almost nothing. Should these people pay more, or less, depending on where they lie on the distribution? You could make an argument that I should pay a bit more. I mean, that's only fair, right? But at the same time, insurance is supposed to be there when you need it most, right? And we pride ourselves on helping each other out in our time of need, don't we?

Nynaeve brought up auto insurance, and we often compare those two in this debate. It's true that we have no problem charging bad drivers more, because we feel like they deserve it. And so by extension we could charge smokers, fat people, and drug addicts more because they're careless with their own health. But do we, as a society, want to be in the business of judging each other that way? Who decides how fat is too fat? How many cigarettes are too many? What about what do do with other preventable diseases, like AIDS? Would you want that job?

[kuronosan]

Don't forget that most employers only offer health insurance subsidies if you are working more than a certain number of hours, which means if you're forced to work part-time or your hours drop below average full-time hours, you aren't eligible in the first place.

[Trajan]

Don't forget that most employers only offer health insurance subsidies if you are working more than a certain number of hours, which means if you're forced to work part-time or your hours drop below average full-time hours, you aren't eligible in the first place.

This is a good point, as I know someone who is currently working 40 hours a week but is labeled as "part time" and is therefore ineligible for benefits.

[Cantih]

This is a good point, as I know someone who is currently working 40 hours a week but is labeled as "part time" and is therefore ineligible for benefits.

I can beat that. I know people who are restricted to 38/39 hours a week in order to deny them any benefits.
I even have somewhere around here a Gamestop binder that flat out states that if a non-manager employee ends up working 40/w over an extended period of time, that they be scheduled in a way so they end up working under 40 for long enough to make them not qualify for benefits.

[guartz]

Do you think the current healthcare system adequately meets my current and future needs? Do you think there is room for improvement? If yes, what would you improve, and how would you do it?

Currently, your needs are met. For future needs, it all depends on what happens. Say as you suggest, your symptoms get worse and you are unable to work, disability benefits will provide medicare and the drugs you need.

If you loose your job simply because of economics or whatever and are still able to work, or hell, you just loose insurance, you can apply for medicaid if your medical bills reach a certain income/medical expense ratio.

The social safety nets, are all in place, and have been for awhile.

[MaachaQ]

I can beat that. I know people who are restricted to 38/39 hours a week in order to deny them any benefits.
I even have somewhere around here a Gamestop binder that flat out states that if a non-manager employee ends up working 40/w over an extended period of time, that they be scheduled in a way so they end up working under 40 for long enough to make them not qualify for benefits.

I actually barely managed to qualify to be changed to Full-time at my job several years ago by averaging over 36 hours for 2 quarters in a row (it was over the back-to school and holiday seasons in retail, and we were short staffed), and thus qualify for the first time to put my family on my insurance. My employer initially refused to upgrade me to full-time status, but luckily I worked at a Union store and was able to file an appeal and force them to honor the contract. My boss who allowed me to earn those hours I believe got in alot of trouble for it as well, because she wasn't my boss for much longer after that.

It's too bad that even being full-time I only made ~$10 per hour, and taking out taxes and insurance we could not live on my income from that job alone. My husband was unable to even get an interview in the US, so we ended up moving to Korea just to be able for him to work and be able to afford to live without aid from our families. He now works and I stay home with the kids, we have more money than ever to survive on, and our healthcare is much cheaper here as well.

[Acturus]

My assumption was based on everyone having medical coverage, just to clarify.

Assuming there was no tier system, and everyone has to pick the same thing, at what point will people refuse to pay for additional coverage? "Private" insurance might live on as a supplement to the coverage everyone gets to cover things that most people wouldn't want to pay for, like some rare obscene form of cancer treatment.

That begs the question though: should some people be forced to suffer because their ailment is rare, inconvenient, or expensive to treat?

Ignoring the political implications of such a suggestion, this is a very good argument for a single-payer system in the US. Having a single-payer system where everyone must be covered would ensure that the American people are all covered to the best of the country's ability.

After all, risk-based insurance does this with their populations already. Everyone under Policy ABC pays a premium, and that premium is based on previous years' utilization. That number is marked up some to account for statistical outliers and unforseeable circumstances (car accidents and cancer diagnosis sorta thing), and then further markups to account for administrative costs, overhead, and profits* are tacked on. This is another reason why current private insurers like the ability to deny coverage on pre-X. They can keep their risk pool homogonous, easy to track, and easy to predict.

Now, in countries where a government plan is primary and private insurance can be secondary, I do hear a common complaint that the secondary insurance is "very expensive". My assumption is that, if the government plan covers normal stuff, then the secondary plan can only cover the unusual stuff, and that is what tends to be expensive.

When looking at a risk pool, it stands to reason that the larger the pool is, the less of an impact each person has in absorbing the statistical outliers. The cancer that the OP has is present in maybe 86,000 people in the US. If the OP works for a company that pays for 5000 employees (a major corporation), he's still most likely the only one with this illness and being covered for it. 5000 people covering for one is almost fair, playing only with numbers, but the danger is if his plan only covers 50 or 100 lives. This is when his utilization becomes a "burden" on his coworkers.

I'm really diverging at this point into things that might go well outside of the scope of discussion, and I need a second cup of coffee...

*Off-topic

Spoiler: show

I did some research on the article posted a while back in the massive thread where it was stated that insurance companies operate on a 3-5% profit margin. It's mostly accurate. That margin does tend to take into account both revenue from premiums and investments. It reminded me of something I was told when I worked at a grocery story, where the profit margins in that industry are actually 1-3%. I'm not defending insurance providers by admitting this, merely making an account for the statement I made above regarding markups.