Understanding the Uninsured Surcharge: What's in Your Wallet?
While the town hall meetings continue to devolve into shouting matches and fisticuffs and the rhetoric of socialized medicine has yielded to outrageous claims that Obama wants to euthanize the elderly and disabled examined by Ezra Klein, Democrats seem to be continuing their mild-mannered efforts to persuade the public that health reform is "the right thing to do" by presenting over and over the same list of facts as evidence supporting the need for reform. Guess what? It doesn't take the likes of Uwe Reinhardt to know that it isn't working. In another piece Klein laments this demise of democracy.
As I've previously written, however, when it comes to political debates, issue framing trumps facts every time. This isn't news. Nor are Democrats going to win in a shouting match. I just don't see anywhere near the same level of outrage on the left as I do on the right. Some are saying that the indignant masses are bordering on "crazy" and doing more harm than good, but I'm not so sure. In fact, I'm thinking that we ought to work with the UFC (that's Ultimate Fighting Championship to the uninitiated) to sponsor a series of health reform town hall cage matches as a way of embracing the madness. Here's a look at where we are so far:
All kidding aside, continuing to do the same thing while expecting different results is the definition of insanity. Democrats need to accept the fact that there are an awful lot of very outspoken people who are not going to be persuaded to accept health reform on the merits of its societal benefit.
While many of us talk of a "right to health care" or an "obligation" to our fellow man, I think appeals to "obligation" of any variety (moral, societal, political) are useless in this debate because of the difficulty presented in attempting first to identify the obligation and second to convince others that such an obligation does indeed exist and is sufficient to warrant action (e.g., health reform).
I prefer to accept the premise that men are motivated by self-interest, and I find, therefore, that appeals to self-interest are far more likely to be persuasive than appeals to our unspecified obligation to "make society better." Once we allow people to experience the facts for themselves, we won't have to do much persuading at all.
This is why I like to remind people that we are currently paying for all of the health care consumed in this country. When an uninsured person receives "charity care," the costs of that care are simply passed along, ultimately inflating the costs that all of us who are blessed with insurance coverage wind up paying. That means that your current insurance premiums are more expensive than they ought to be, because you are already subsidizing your "share" of uncompensated care.
People are--and have always been--very "anti-tax" in this country, and that, combined with self-interest, creates a huge push-back when people are made to believe that they will be paying a tax that will benefit someone else. What if, however, your monthly health insurance premium was itemized the way your auto insurance is? When GEICO sends me my invoice, I am able to see just exactly how my total premium is broken out. There is a certain amount for collision, a certain amount for bodily injury, a certain amount for property loss, and so forth. What if your health insurance was as transparent?
According to a 2005 Families USA report, the average individual health insurance premium includes an additional $341 because of uncompensated care, and the average family plan $922. By 2010, the report predicts that these figures will rise to $532 and $1,502, respectively. Now, imagine that your monthly premium for an individual policy was $509 (the national average). Of course, unless you have non-group coverage you aren't likely to know that you're paying that much. But you are. There's the portion you have deducted from your paycheck, which is probably somewhere around $100 a month, and there's the portion you never get in your paycheck at all, because your employer uses it to pay for the other $409 instead of increasing your wages.
Now imagine that instead of simply seeing one figure each month, you saw an itemized account that added up the total cost of your coverage (i.e., $509) labeled as follows:
Foregone wages: $409
- Health coverage: 376
- Uninsured surcharge: 33
Deducted benefits: $100
- Health coverage: 89
- Uninsured surcharge: 11
Total: $509
- Health coverage: 465
- Uninsured surcharge: 44
The "uninsured surcharge" amounts to 1% of annual income for individuals earning $53,200 a year and families earning $150,200 a year. For lower income families, it's an even greater proportion of income. Since half of all U.S. households earned less than $50,233 a year in 2007, we're not talking about a trivial amount of money or a small number of affected persons.
Don't you think people would be on the phone with Blue Cross immediately demanding to know what this extra uninsured surcharge fee was for? Of course they would. The lack of transparency about these costs allows us to ignore the problem. Ignorance, as they say, is bliss.
As Ezekiel Emanuel and Victor Fuchs write, the idea of shared responsibility (i.e., government, employers, and the public) for health care financing is a myth. You and I are the source of all of the money that pays for health care. It all comes out of our pocket in one way or another.
Whether you believe that the solution involves a public plan or not, whether you think tort reform is needed or not, you should be able to support the position that you should be paying as little as possible for the care others receive. That's going to require more transparency, and I don't think that the insurance industry is in much of a position to self-regulate. If they were, wouldn't they have done so already? It is in precisely such cases that government should intervene. The particular design of that intervention is debatable. The need for it is not.
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So, what this article tells me is that I can continue to pay for uncompensated care by the current method - the same way my car insurance premium reflects collisions with uninsured drivers amortized over all of my insurance company's policy holders through a market-based actuarial process - or I can pay through a tax that is determined by 535 members of congress whose only math skills seem to involve adding up campaign contributions from special interest groups. Thanks for pointing that out!
I agree so let's have transparency and break down why our premiums or tax dollars increase..
1)our money to support people who have chronic diseases and ignore doctors orders..
2)our money to support people who smoke who will end up with serious illnesses.
3)our money to support pre-natal care for teenagers who continue to get pregnant..
4)our money to support people who are receiving extensive medical care instead of hospice..
we could probably list a few more ...forget about pricing out the uninsured ..let's price out the cost of the government insured who use our tax dollars..i don't think this will happen because the reflection in the mirror will not look to good..
Here's the other aspect of the government intervention in health care that I see and that is that unless government is more directly involved in public health there is no motivation on the part of government to enforce environmental protection laws. I totally agree with you that self-interest is what has to be appealed to in order to frame the debate in a way that gets it into focus for the general population. What I think is more likely to happen is that cooler heads will prevail and a decent piece of legislation will get passed, maybe even single payer. Because the people showing up ready for a shouting match will not be voting on the legislation. The way the "news" cycle works these days, by the time the voting booth really comes into play again they'll be on to something else.
If you are uninsured, you have to be bleeding to death before a hospital treats you. The hospitals will bill the uninsured and garnish their wages should the person not pay. I wonder how much of that surcharge really go towards treating the uninsured and how much of it end up in the pocket of the CEOs?
You are exactly correct and let me make it clear that as an uninsured person, you will be billed and expected to pay more than if the bill was sent to an insurance company. The insurance company will pay what they think is fair. If you are uninsured you will be sued for what the hospital wants, not what is fair!
Very persuasive, but you buried the lede. What is scaring people about health care reform is the fear that the government will take things over and their taxes will go up -- in other words, that health care reform means we will have to pay more money. But we are already on the path to paying more money than we should in the current system. This is the message that will win the debate. Health care reform will save you money. Doing nothing will cost you money. It already is.
I agree that people are scared about taxes going up....but the point is that we are already paying a "hidden tax" with our premiums. With reform that hidden tax will be go down for most everyone and be converted to federal taxes for a very, very wealthy few....eve
Interesting calculations but they are only based on employer supplied health insurance. The numbers for the self employed are much worse and way beyond the reach for most individuals. Over $12k a year. Thus, many opting to go with out.
Medicare for seniors actually is minimal coverage and most seniors carry supplemental insurance to make up the difference.
I and my wife are one of these. However, we save the money we would spend on insurance and it is available when necessary. And because we pay cash most medical providers actually charge about half for services than if we were insured. Ironic? No?
Thought, if the price of health insurance is overwhelming in this country and large corporations are making billions on health care? What would happen to premiums and drug prices, if everyone boycotted the insurance for six months to a year and paid cash for services?.
Like I said in previous replies...
So, What would be your solution? Complete government control, with insurance companies, Rx, and the AMA pulling the strings? (as is in the currently debated health care "reform" bill)
Go to a completely socialized system, with doctors on salaries and they get paid monthly and not per patient?
Drop insurance altogether and return to a system where the Hippocratic Oath is enforced and patients pay what they can and doctors donate part of their time to free services?
You are unclear in your post as to your solution to the problem (and by your own admission do not have all the numbers necessary for answering even the questions posted here) and merely saying that all health care is paid for by citizens. I think that is quite obvious. It is, also, quite obvious that no matter what happens, it will be paid for by citizens.
Citizens can easily shut down the system and make reform a breeze. Stop paying for health insurance. Insurers are public corporations. Six months without income, their stock value would be useless. I imagine they would take a different stance on how they approach the business.
Charging less if you pay cash instead of through an insurance company is illegal in some states. Bizarre, no?
If we re-frame healthcare as a potential tool of oppression:
Who are the oppressed?
Who are the oppressors?
What does either side seek in change or the status quo?
Aren't we indirectly subsidizing healthcare in England, Germany, Japan by having military bases there? Can we at least send the bill for services?
If we go the oppression route: all of "us" are the oppressed to one degree or another. Either we are paying more than we should, are underinsured, and/or are uninsured. The oppressors are more nebulous. I don't think providers are oppressors, and I'm getting close, but not quite ready, to call insurers evil. More than that, though, I think we just have a poorly regulated system. Health care doesn't behave well on the assumption that patients are rational economic actors. And the profit motives on the supply side are exacerbated by the number of players in the game and the way in which medicine is paid for (primarily fee-for-service). What we need is a 30,000 foot effort to coordinate these pieces of an enormous puzzle to make sure that it runs more efficiently.
Wright is right (or should I say *correct?) about this one.
People who are so rigidly against "paying someone else's way" need to understand that they already are doing so. If they can't be motivated by empathy, "Christian" values or that wavering moral compass, they may be motivated by their money.
This should become part of the discussion about health care.
Thanks for agreeing with me. I do think money is the centerpiece of all of this. Always has been. Always will be.
If AARP does not endorse the Health Bill I will not renew my AARP when it runs out
So, thanks to Rep. Anthony Weiner (D-NY), Speaker Pelosi says she will bring a vote to the floor on single-payer after the recess. Are you all ready to make those phone calls and write those letters?
Nancy's contact http://spe
Send our speaker an e-mail of encouragement.
Ok, I can understand the numbers; can I get one other number?
How much of that $509 goes to Health Care Industry Profit?
What kind of percentage does the CEO of my insurance company get?
How about the amount the Medical Group my Doctor works for receives from my insurance company is pure profit?
Drug companies make what kind of profit off of my insurance premiums?
Don’t get me wrong I believe in capitalism but the idea that every business is always after ever increasing profits is leaving me in quite a pinch.
Well, this is back of the envelope, but it's something like 20 to 30% that go to overhead so you're looking at roughly $100 to $150 of that $509 going to administrative costs. What share of that is CEO pay, I can't say. Likewise for the rest of it.
The question I think we need to be asking is: who should be profiting from medicine? I think it's fair for providers to make a profit....
Wasn’t there a time that a company that made 3 to 5% profit per year was Blue Chip?
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