Tom Price Takes “The Center Seat” Last Night On Fox News

December 12, 2013 10:30 am

by Charlie · 68 comments

Updated with the Congressman’s appearance:

Per Congressman Tom Price’s Facebook page:

Tonight, I’ll be on Special Report with Bret Baier at 6:30 p.m. EST on the Fox News Channel. I’m excited to be their guest for “Center Seat,” a periodic feature for newsmakers to discuss an issue or two more deeply with Bret and the All-Star Panel. Tonight, we’ll be talking about my patient-centered alternative to Obamacare, the Empowering Patients First Act (H.R. 2300). Please do tune in and let me know what you think!

peachpundit (@peachpundit) December 11, 2013 at 4:02 pm

New post: Tom Price Takes “The Center Seat” Tonight On Fox News http://t.co/43V43VQFFM #gapol

Thomas Adams (@GeorgiaCRE) December 11, 2013 at 4:29 pm

Tom Price Takes “The Center Seat” Tonight On Fox News – Per Congressman Tom Price’s Facebook page: Tonight, I’ll b… http://t.co/lN6vak131K

gcp December 12, 2013 at 9:30 am

Did anyone ask Price why he, Chambliss, Graves, Bishop and David Scott took the federal subsidy to pay for their health care plan while others in the Ga. delegation did not take the subsidy?

2g Strategies (@2gstrategies) December 12, 2013 at 11:38 am

From @peachpundit Tom Price Takes “The Center Seat” Last Night On Fox News http://t.co/ol6bJdIb4b

Hardly December 12, 2013 at 11:43 am

Doomed to fail:

Washington Post article says the bill had some good ideas but that it would not work. Its version of the health insurance exchanges will collapse pretty quickly because the bill contains:

* no individual mandate ensuring that the pool includes both healthy and sick individuals
* no insurance market regulations stopping insurers from cherrypicking
* no risk adjustment rebalancing the scales when they do

So, everybody who gets dropped by their insurer for a pre-existing condition (still legal under Price’s plan) get put into a separate state-run high-risk pool with much more expensive insurance costs.

This looks much like the reforms that collapsed in Texas, and in California. Price isn’t learning from past policy mistakes, and so he means to repeat them.

TheEiger December 12, 2013 at 2:35 pm

So what you are saying in Price’s bill doesn’t have enough Washington bureaucratic regulations for your liking? And Obamacare is doing all the things you mention so well right?

Chris Huttman December 12, 2013 at 3:39 pm

Tried a longer comment, didn’t go through. Bottom line – why would anyone who can be individually rated (ie is young and healthy) join an insurance pool – or will it be mandated in which case guess what – obamacare. Other problems – tax credit to purchase your own insurance is $5k for a family – this is roughly 30% the cost of the average large group plan, which means minus fairy tale dust and magic unicorns, this will only purchase a high deductible plan (large group plans pay for about 85% of all medical costs by comparison and cost about $16k per family). I just checked and typical family of four under Obamacare in metro Atlanta can buy a high deductible plan for $7k/year, but presumably the essential health benefits under Price’s plan aren’t as generous, so…assuming Price’s plan works perfectly, why will people be happy to buy a high deductible plan that doesn’t cover pregnancy/chronic treatment for $5k when they are already unhappy about having to buy one that does for $7k?

TheEiger December 12, 2013 at 4:07 pm

Couple of things. Obamacare has a mandate to force the young and healthy to buy something that they don’t want. They aren’t purchasing health insurance even with a mandate. They will pay the $95 fine. Price’s plan use the carrot vs. the stick method. The stick is obviously not working in Obamacare. There are no mandates to purchase health insurance in Price’s bill. The same tax credits that business get to offer health insurance to their employees will be extended to the employees themselves. If a 27 year male who isn’t married wants to buy a high deductible catastrophic plan and pay out of pocket when he gets a cold he can buy a very cheap policy to do that under Price’s plan. Under Obamacare that plan is illegal. He is forced to buy a plan that covers his OBGYN visits (remember he is a 27 year old male) and vision and dental for a child he doesn’t have. Here are the facts. Obamacare forces people to purchase something that they may not want because the government says they know more than you do about your health care needs. Price’s plan says you should be able to shop around (including across state line, which is illegal right now) and find the plan that you want not what a Washington bureaucrat tells you to buy.

Chris Huttman December 12, 2013 at 5:27 pm

Actually, if a 27 year old male works for a large company and wants to purchase a healthcare plan now, he most likely has to buy one that covers OBGYN visits, vision and dental for a child he doesn’t have – if he wants to deduct the premiums. Pretty much every large group plans includes this stuff and they aren’t allowed to charge different people different amounts if you’re part of a group.

If he wants to buy a skimpy catastrophic plan in the individual market, he won’t be able to deduct the premiums. If he’s not part of a large group, he is free to buy a skimpy catastrophic plan as long as he’s healthy, and the costs will be about half what Obamacare costs. But if he’s not healthy, the costs could be more than Obamacare costs, or maybe no one will sell him even a catastrophic plan. Those are the breaks.

Buying across state lines is a crafty way to say we’re against popular mandates without saying it, obviously people who don’t need the mandates or aren’t sophisticated enough to look would just flock to whatever state has the least mandates and cheapest plans, although I’m not sure a Wyoming insurer would necessarily be eager to have to negotiate with Georgia providers for prices. And I’ve never seen a good answer to what I call the Lyme disease problem which I’ll sum up thusly: plans in CT are required to cover Lyme disease because that’s something people in CT get, plans in GA aren’t because it’s not something that’s common here. So when everyone in CT who doesn’t have lyme disease flocks to a Ga plan because it’s cheaper and it’s “not fair” for them to pay, what will happen to the CT plans that do cover it, other than either go out of business or stop covering it?

And you still haven’t answered my questions. Why would a healthy person join an individual purchasing pool with unhealthy people if they could take a physical and do a background check on their medical history and buy a plan that was custom tailored to their health profile? Actually just answer this question. For Price’s plan to work, the individual pools would have to include healthy and non-healthy people (like the exchange), so what happens when healthy people figure out they can still buy policies on their own without being in the pool?

TheEiger December 12, 2013 at 6:10 pm

You are referring to the status quo and not what will occur under Price’s plan. Price’s plan would allow people to pool on their own. This is currently illegal. For instance, it is illegal for members of local rotary groups to pool together to purchase health insurance. His plan allows people to pool together and purchase what they want not what Washington tells them to buy.

Your response to my 27 year old male statement is not true. At all. The problem with getting people insured falls mainly with people in the individual market not people who work for companies like Coke, Home Depot, etc… Those people have the purchasing power of a large number of fellow employees. The problem is with the 18 million people in the individual market. That is where my example of a 27 year old male purchasing what he wants and not what the government or an HR person tells him to purchase happens under Price’s plan. Again this is illegal under Obamacare.

And you response to purchasing insurance across state lines is just dumb. Have you never hear of Florida, South Carolina, North Carolina, Alabama, the entire South East? Come on. No I don’t think someone would want to go to Wyoming to purchase health insurance, but I think they would buy something from FL or the Carolinas.

You still have addressed the issue of how horrible the stick idea is working for Obamacare. The mandate isn’t working in forcing healthy young people to buy something that they don’t want.

Chris Huttman December 12, 2013 at 6:51 pm

You have not answered my question. I’m a healthy 33 year old with no pre-existing conditions who has never even broken a bone. Under Price’s plan, if I were in the individual market, I don’t need to join a rotary club or other such pool to buy insurance. Any insurer in America is glad to write me a policy tailored just to what I want to buy.

Why would I join a rotary club pool or something similar?

TheEiger December 12, 2013 at 7:18 pm

You don’t have to. You could buy whatever you want. From wherever you want. And get your tax credit to help offset the cost. Unlike Obamacare, where you have to buy what Washington tells you to buy. The rotary example was to show you something that is currently illegal that would not be illegal under Price’s plan. If you aren’t in rotary that fine there are other ways for you to purchase the health insurance that you want and that your family wants. The point being it isn’t a one size fits all Washington mandated health insurance plan. It is a cafeteria style plan where you can pick and choose what you want and from whom you purchase it from. Currently, if you work somewhere that offers help insurance for you and your family you lose your insurance if you lose your job. Price’s plan is like a 401(k). If goes with you when you lose or change your job.

John Konop December 12, 2013 at 7:30 pm

Eiger,

Keeping a plan that can drop you for pre existing conditions does not solve the problem. Also the original comment by “Hardly” does point out the problems with his plan. People with no insurance are just using us who pay as an emergency health care policy. Finally, Price originally supported Romney and pushed the plan before Obama took it on.

Btw my opinion is the problems with, Romney and Obama plan did not deal with the cost issue enough. But hey, I am use to being one of the few fiscal conservatives in the room……not popular but it is what it is….

TheEiger December 12, 2013 at 7:39 pm

You need to recheck your notes John. Price may have supported Romney, but he didn’t support the mandate of purchasing something that the government tells you to buy . Price’s bill has been around since before this past election and Romney’s decision to run for president. And Hardly is wrong in his copy and paste assessment of the Price plan from the Washington Post.

You are right in that Obamacare does not address the cost drivers in healthcare. The largest being the practice of defensive medicine. The Price plan address this issue.

John Konop December 12, 2013 at 7:54 pm

Not true, I first heard about the obama/ romney plan from Chip Rogers and Tom the first time Romney ran years ago…… Btw the big cost drivers are end of life care, fraud, emergency rooms used as primary care, drug prices and people using us who play by the rules as emergency healthcare plans….I generally like your comments just keeping it real…..hope you take it that way……

TheEiger December 12, 2013 at 9:38 pm

There are many cost drivers John. Defensive medicine is the largest. Jackson Healthcare estimates it at $650 – $850 billion dollars a year.
http://www.jacksonhealthcare.com/media-room/news/jh-summary-release.aspx

Im not really into the word of mouth thing. I like facts and citations. Price’s bill does not have a mandate like Romney’s bill. Please show me where Price has publicly stated that he supports a mandate to buy health insurance and show me where he has said he supports the government telling an individual what to buy.

John Konop December 12, 2013 at 10:57 pm

Eiger,

We have had the tightest tort reform here in Georgia and nothing has changed on defensive medicine. Second the list I mention are real tangible areas that we can deal with not a pipe dream. If we used VA drug prices for exchanges, government workers and Medicare/ Medicaid we are are talking about a 50 to 60 percent savings on drugs. If we had people fill out end life directives, that could save about 60 percent per person of what they spend in a lifetime on healthcare. If we had dial doc service available over emergency rooms it would cost pennies on the dollar what we are spending on non emergency care. I am talking about real solutions……not pie in the sky……

It was not hear say…..I heard Tom Price and Chip Rogers both talk about the Romney plan years ago……latter a Cobb Senator tried to introduce a bill with mandatory insurance I for got his name…..

Finally you avoid the question about pre existing conditions and people who do not have health insurance and not enough cash when they get sick.

Chris Huttman December 12, 2013 at 7:31 pm

Look man, you don’t get it. I understand how a pool works. I am not arguing against pooling – that is how insurance works. I am trying to illustrate why Price’s plan largely won’t work.

Let’s say that there are 10 people on my softball team. 9 of us are healthy and incur about $2,000 / year each on healthcare on average (occasional broken bone, flu, vaccines etc). Our pitcher had cancer and incurs about $10,000 / year on healthcare.

If any of the 9 healthy players on the softball team go to an insurance company, the company will offer them a premium that costs about $2,000 / year. If the 1 unhealthy person goes to the insurance company, they will want to charge him $10,000.

Now, let’s say our softball team bands together, forms a group and now the total cost to insure us is $10,000 + (9 x $2,000) = $28,000, or about $2,800 / year. Why would I, one of the healthy 9 people, choose to be part of a pool where insurance costs me $2,800 if I could just go to the insurance company directly as a healthy individual and pay $2,000?

And if your answer is that I shouldn’t be part of that pool because it makes more sense to pay $2,000 instead of $2,800 (which it surely does) and it is legal to just go direct and not be part of a pool – how will one of these pools ever possibly form?

The reason that this works for large companies like Coke is that they generally pick up 75% of the tab – so even though everyone is in the $2,800 pooled plan, each individual person is only paying like $700 of it directly, the rest is in an untaxed benefit that you either use (by being part of the health plan) or you lose – in which case you then have to go and pay the $2,000 cost yourself. So the way the corporate market works, $700 for the $2,800 plan is a better bargain than $2,000 for the $2,000 plan.

But if given the choice to form these plans on their own, why would any healthy person be part of it. And if the pools only contain (or largely contain) people who are expensive to insure, how do those people afford insurance, since it will be priced a lot closer to $10,000/year than $2,000 or $2,800?

TheEiger December 12, 2013 at 7:40 pm

I know how insurance works. Tell me how Obamacare is addressing the issue.

Chris Huttman December 12, 2013 at 7:11 pm

Let’s talk about Alabama. Here are a few things that Georgia mandates its insurance plans to cover that Alabama doesn’t:
Bone marrow transplant, clinical cancer trials, diabetes self management, hearing aids for minors, heart transplant (!), mastectomy.

So let’s say because Alabama plans don’t have to cover those things, the premiums are lower. This is the way I think your law works: someone in Georgia could buy an Alabama policy that doesn’t cover these things, because that’s how they roll in Alabama.

So, let me see if you have even a basic understanding of how insurance markets work. Will anyone in Georgia who knows they might need a heart transplant sometime in the future be purchasing an Alabama plan that doesn’t cover it? No of course not. So everyone in Georgia who thinks they might need a heart transplant will purchase a Georgia plan.

And what will eventually happen is, Georgia plans will only contain people that need things like heart transplants and clinical trials for cancer, and they won’t include ANYONE who doesn’t, which means the losses for Georgia insurers will skyrocket, which means either very few people will be able to afford a Georgia plan or Georgia will have to get rid of the mandates that Alabama doesn’t offer, which means at that point NO ONE who needs a heart transplant will be able to cover it with private insurance in Georgia.

You reject the Lyme Disease example because Connecticut doesn’t border Georgia, but the whole point of the Lyme Disease problem is that it’s easy to understand – and it turns out in Georgia lyme disease is called heart transplants, or diabetes self management, or bone marrow transplants, or take your pick.

TheEiger December 12, 2013 at 7:31 pm

You are cherry picking scenarios to try to prove me wrong. It is obvious you do not believe in the power of the market to change with the will of the purchaser. That fine. That’s a flaw of being a liberal. You believe that the government knows best about making health care decisions for you and your family. I do not. I think the government is telling me to buy something that I don’t want and don’t need. The fact is Obamcare is not working and will not work. You still not have addressed the fact that Obamacare’s stick of a mandate is not forcing young healthy people to buy something they do not want.

Chris Huttman December 12, 2013 at 7:37 pm

Of course I’m cherry picking. Don’t you get that’s the entire point of mandates and buying insurance across state lines! You really seem to know absolutely nothing about this stuff.

Let me take your words and just show you another example.
You believe that the government knows best about making car insurance decisions for you and your family. I do not. I think the government is telling me to buy something that I don’t want and don’t need.

I believe myself to be a very safe driver that has very little risk of getting into a wreck that is my fault. Why does the government force me to buy car insurance and require car insurance plans to mandate certain coverages and levels? Are you against that too?

TheEiger December 12, 2013 at 7:44 pm

Car insurance is not the same. There are many people who don’t have care insurance. You know. Those people who don’t drive. To have the pleasure of driving in the state of Georgia the state says you have to have insurance. The President has said to have the pleasure of living in the USA you have to have health insurance and this is what you must buy. It isn’t necessarily the you need to have insurance part it’s the here is what you must buy that is wrong. Still have told me how Obamacare is fixing this with a mandate.

John Konop December 12, 2013 at 9:37 pm

Eiger,

Are you suggesting we let people die, spread disease……if they do not have insurance and or cash?

TheEiger December 12, 2013 at 9:53 pm

Not at all John. I think we should allow them to buy a insurance plan that they want and not what the government tells them to buy. I know what I want and need in my insurance plan. I do not need Washington telling me what to buy. The Price plan allows me to do that. Obamacare doesn’t.

John Konop December 12, 2013 at 11:04 pm

Eiger,

In all due resect you are being evasive……what do you do with a person who does not buy insurance and does not have the cash if they get sick?

Chris Huttman December 13, 2013 at 12:47 am

John I will save you the suspense: I’ve read Price’s bill. They have no answer for this. At least the mandate tries to represent some of these costs – yes it is less than the cost of the cheapest plan but that’s the point. In a perfect world, the mandate would cost what the taxpayer expects to lose in written off care from the uninsured. These costs are most likely to be borne at hospitals, and they write off about 2% of their actual revenue each year. If you truly self-insure and you will pay your whole bill then you’re out of luck, some people will end up in bankruptcy and maybe the mandate is a “good deal” but I think most people will eventually weigh the additional cost of a bronze plan and decide to pay for the insurance that caps their out of pocket liability. But if not, at least Obamacare has the penalty.

Chris Huttman December 12, 2013 at 8:23 pm

You said above: I know how insurance works. Tell me how Obamacare is addressing the issue.

Obamacare addresses the problem of some people being able to pay $2,000 and some people being forced to pay $10,000 by making everyone pay $2,800. I never said it doesn’t.

The whole point of my skepticism of the Price plan is that without being forced to be part of an individual pool (what do you think an exchange is?) no one who has higher than average healthcare costs that an insurance company can predict ahead of time will ever be able to be part of a pool that would save them any money.

TheEiger December 12, 2013 at 9:43 pm

But what I’m saying is that it isn’t working. Obamacare was to have 7 million people signed up by now. We are at just over 350,000 as of today. It is not working. I understand how a pool works and forcing people to buy something that costs more than the penalty as in Obamacare will never work. So your skepticism with the Price plan is understood, but the reality of what is currently occurring under Obamacare is fact and not an assumption any more.

Chris Huttman December 12, 2013 at 10:45 pm

Well I believe the 7 million number is the goal by March, not now, but I don’t want to quibble on that point. You say above that you know what you want and need in your insurance plan. That’s good for you. Price also says that he wants people to be able to buy the same kind of plans for themselves that they get in the group market. Are you aware that the average group healthcare plan costs something like $6,000/year for an individual and $15,000/year for a family?

And also that people in group plans (or their employers) are not buying “what they want and need”. They are pooling and subsidizing a lot of things they don’t want and need, and others are doing the same for them. The plans in the exchanges are based on the actuarial value and benefit level of the average large employer plans in the states. Guess what – once people find out how much these things cost and have to pay for them themselves, they don’t want to pay – but guess what else? They’d still like to get one of these plans for themselves if an employer was paying for it.

Here’s the problem with the Price plan, minus some sort of forced pooling mechanism or individual mandate. I’ll take it that you’re a relatively young and healthy individual who wants a skimpy plan that may be fine for YOU. There’s nothing wrong with that. But what does the Price plan do for someone who has had cancer and has to continually treat it each year.

People like this are out there – they have over $15,000 / year in medical expenses in a good year, and in a bad year it could top $50,000. Imagine that you are an insurance executive – would you sell them a policy they could afford? That’s what THEY WANT AND NEED – a policy that will cover enormous expenses due to treating a chronic condition.

Of course you wouldn’t. Very few people can afford an insurance policy that assumes they’ll be spending upwards of $20,000 / year on medical care each and every year. The Price answer is that people can pool together. But again, you say in your instance that you know exactly what you need. I presume you don’t need a plan that is priced as if $15-$20,000 of annual healthcare spending expenses are to be expected, and you’d rather have one based more on your own experience – which is perfectly natural behavior.

So again I ask – how will you get healthy people to join the pools to balance out the unhealthy people? It works for employers because Coke will employ some people who have had cancer and some people who haven’t, some who have diabetes and some who don’t, some who are going to have a baby this year and some who won’t. That’s because Coke forms its pool based on things like how well you can drive a delivery truck, or operate Microsoft Excel or whatever.

But here’s the thing, if healthcare pools are explicitly being formed to pool healthcare costs, then it won’t matter how well you can drive a truck or work Excel. The only reason you’d join a pool where you bought more of an “average” plan instead of going it on your own and buying “exactly what you want and need” is because you thought you were more expensive than the average. It makes perfect sense that the guy with cancer, or someone that thinks they might need a heart transplant, or someone treating diabetes might want to join a pool. These are the types of people you hear about already that say stuff like “I got a job for the healthcare.”

You still haven’t answered my question – why would anyone who is healthy enough to get cheap insurance on their own join one of these pools, and how would the pools reduce insurance costs and make insurance affordable to the unhealthy if the healthy don’t have any reason to join?

TheEiger December 13, 2013 at 7:11 am

You still haven’t addressed the same question when it comes to Obamacare. Paying a $95 penalty isn’t going to force a young healthy person to buy something they don’t want. It’s not working in Obamacare.

John Konop December 14, 2013 at 9:15 am

You hit a key point…..many young people think they are taking the risk, but in reality all who pay are taking the risk…..you keep avoiding the key issue….do we refuse service if people do not have the money?

TheEiger December 14, 2013 at 10:26 am

No. And no one is saying that.

John Konop December 14, 2013 at 3:49 pm

What is your solution for people who so called take the risk and do not buy health insurance and have major medical issues?

Dave Bearse December 14, 2013 at 1:35 pm

Many may not purchase in 2014 when the alternative is a$95 penalty, but that argument ought to be based on the seven time greater $695 penalty in 2016 when the law is in full effect.

TheEiger December 14, 2013 at 5:08 pm

The cheapest plan is around $100 a month. So $1200 for the year. It will still be more cost affective to pay the the penalty for the young and dumb.

mpierce December 16, 2013 at 9:44 am

No, it’s a false comparison to use the $695 number. Rates are likely to be much higher by 2016 when the $695 penalty will be in effect.

Chris Huttman December 16, 2013 at 10:22 am

That’s the minimum penalty. The maximum penalty is 1% of income in 2014 up to 2.5% of income by 2016. So someone who makes $30k/year may be looking at $750 penalty for going without or not much more to just take the subsidy and buy the insurance.

As for whether it makes sense. Consider that a 27 year old in Atlanta earning $20,000/year would be facing a $200 penalty or paying $544 (after subsidy) to enroll in the cheapest bronze plan. A bronze plan will have out of pocket max’s of $6300 and will provide preventative care and cheaper co-pays and drug coverage. In economics you focus on the marginal difference. $200 is the real $0. At $200, you have no preventative care, no copays, and no deductible to protect you against real catastrophic risk. At $344 more, you get preventative care (like flu shot and updated vaccines if your wife has a baby), co-pays when you do go to the doctor or urgent care, and in the event of going to the emergency room for an actual emergency, you get some buy down and a maximum liability of $6300.

$6300 isn’t great, but this isn’t an old-style catastrophic only plan, there is value below $6300, ER copays, doctor copays, preventive care, etc. For $344/year, it’s not a bad plan. Now, it’s not necessarily that great of a plan for someone making a lot more and paying full price, but why would this person opt out at this price point, especially when you look forward to a $695/2.5% penalty which is greater than the actual plan’s cost?

mpierce December 16, 2013 at 3:09 pm

Maybe I read it wrong, but it looks like the cheapest bronze plan did NOT provide copay benefits before reaching the $6300 deductible.
https://www.healthcare.gov/find-premium-estimates/#results/&aud=indv&type=med&state=GA&county=Fulton&age0=27&employerCoverage=no&householdSize=1&income=20000

Also penalties are on income above threshold to file ($10000 for individual), so the penalty would be $100.

mpierce December 16, 2013 at 4:31 pm

but why would this person opt out at this price point, especially when you look forward to a $695/2.5% penalty which is greater than the actual plan’s cost?

Again comparing today’s costs again penalties years out? Are the current plan prices guaranteed not to increase along with the penalties?

protect you against real catastrophic risk

You still get some protection against catastrophic risk by paying the penalty:
1)Hospitals will still treat the uninsured
2)Pre-existing conditions are now covered, so you can get coverage after getting sick.

Chris Huttman December 13, 2013 at 12:35 am

Doing some research, here’s a good conservative article from a few years ago about how much adequately funded high risk pools would cost. The TL;DR is that it’s a problem that affects about 4 million people and the cost to fund the high risk pools would be between $15b-$20b/year.
http://nationalaffairs.com/publications/detail/how-to-cover-pre-existing-conditions

Now, how much does the Price bill appropriate for these high risk pools? $300m. It underfunds what conservative intellectuals estimate their proposed solution would require by about 98%. In other words, it is a joke. It is not a serious proposal.

It offers people below 200% of the FPL a tax credit equal to the average value of a plan in the old individual market. The problem with that is even with a tax credit that partially or wholly pays for a plan like this, the actuarial value of these plans averages about 55%. Per capita healthcare spending in Georgia is nearly $6,000 – meaning a $2,000 tax credit to someone at 200% of the poverty level still exposes them to an average of nearly $4,000 of healthcare expenses, which is a risk equal to 18% of their income and remember that is just the average.

The CBO has not scored the Price plan. He says it won’t cost any money. There’s no such thing as a free lunch but let’s take him at his word. How could it not cost any money? It’s because he knows that under his scheme, employers will eventually reduce their contributions to be closer in line with the individual market, meaning the things in his bill that cost money are paid for by the lower subsidization of healthcare plans. And when the government reduces subsidies, plans will cost more. If you make a lot of money, you can afford to prepay for a more generous plan than the tax credits pay for, because you can take an above the line deduction for the difference in cost. But if you don’t make a lot of money, above the line deductions aren’t really worth anything to you, so you’ll be stuck with a lower value plan and a lot of personal financial risk if you get sick.

The bottom line is, Obamacare costs about $109b/year to implement. If Price’s plan were serious, it would cost at least $2k * 30,000,000 new health care recipients = $60 billion + $20 billion / year to subsidize high risk pools. Total cost, roughly $80b/year. In other words, not that much cheaper than Obamacare. In fact, average actuarial value in the existing individual market roughly 55% target for Ocare 70%, $109b * 55/70 = $85b.

So if Price’s plan were honest, it would end up being a cheaper version of Obamacare subsidizing insurance policies that aren’t as valuable as Obamacare’s. But Price isn’t honest. He says his bill will cost nothing. And the two major reasons are that instead of funding high risk pools at a level conservative intellectuals say is adequate, he is essentially providing no funding. That is $20b in annual “savings”. And if we believe his math that it doesn’t cost anything, those $60b of new tax incentives to cover new coverage will be paid for with a reduction of an equal amount for people already getting subsidies. In other words, if you like the (subsidized) coverage that you have now through your employer, it will either be partially going away or you’ll be paying more for it under Tom Price’s plan.

Wouldn’t it be nice if he’d be honest about that?

TheEiger December 13, 2013 at 7:19 am

It has been scored. It saves $2.3 trillion. http://americanactionforum.org/insights/budgetary-and-coverage-impact-of-the-empowering-patients-first-act-h.r.-230

You are so eager to prove how a market won’t work yet you can not defend the fact that Obamacare forcing people to buy something they do not want does nothing to address the examples you are giving.

And John, you saying Price supports a mandate and the government telling you what to buy is hearsay. Until you can give proof to the contrary. Stopping defensive medicine is more that just tort reform and putting caps on non economic damages. The Price plan does far more than that. I would encourage you to read. It looks nothing like Romneycare or Obamacare.

John Konop December 13, 2013 at 7:58 am

I never said Price supports the current Obama/Romney care today. What I said when Romney ran the first time about 6 years ago he endorsed him and introduced the concept in a positive light.

As someone who understands risk polling concept fairly well, the Price plan does not deal with the issue. And once again it does not deal with what to do with uninsured and or underinsured who do not have the cash and get sick. Finally if you were right about defensive medicine solution one would of seen some sorta of reduction trend here in Georgia after the tough tort laws were passed.

The irony is Obama ran on the anti mandate concept and Hillary ran on everyone must pay ie Romney/Newt/ Heritage concept…..Now Tom Price moved to Obama position voluntary pay and Obama moved to the conservative position from Romney/Newt/ Heritage …..my head spins…..

TheEiger December 13, 2013 at 9:07 am

Okay John, You obviously have not read Price’s plan. Again I would encourage you to do so.

For the tenth time. Price’s plan does not have a mandate or force you to buy something that a Washington bureaucrat tells you to buy. He may have supported Romney, but you have yet to show me where Price endorsed Romneycare. Was when you think you may have heard this around the time you were running against Congressman Price? Forgive me if I believe what is written in legislation and not a what you think may have been said on the campaign trail.

I’m repeating my self here, but here it goes anyway. The extreamly poor or the people who you say don’t have the cash when they get sick are covered by medicaid. The folks just above that are able to purchase a plan that covers what they want with the assistance of tax credits. Currently, it is illegal to purchase across state lines and to pool with whom ever you desire. Again, both illegal. The Price plan does away with these restrictions. This is how you drive down the cost of health insurance and get people insured. The stick of Obamacare does not work. Price uses a carrot.

And here is where I know you haven’t read Price’s plan. I specifically stated in an early post that there is more than just tort reform in the plan. Price allows specialty societies for specific groups of doctors to make a set of guidelines for caring for a patient. If a doctor is taken to court (which the Price plan allows and does not try to stop) a physician can point to their specialty societies guidelines and show that they did everything they could for the specific patient. Again John, read the plan and then come talk about it. This is how you stop the practice of defensive medicine.

John Konop December 13, 2013 at 9:33 am

1) ….Was when you think you may have heard this around the time you were running against Congressman Price?…

No it was post me running…as I said during the time Romney was running for President the first time in a heated battle…….It was around the time Romney was running against McCain…..Price just spoke of it being an innovative idea….and Chip Rogers made the same point……and asked what people thought……I than started researching the concept more….I think it was Judson Hill who was the senator at the time pushing a mandatory insurance bill around that time.

2)….. This is how you drive down the cost of health insurance and get people insured….

This issue is 3 fold first, many think they are taking the risk who can afford insurance….when in fact they are using us who pay as an emergency healthcare policy….which we all pay for.

Second the poor use emergency room care which we all pay for…..And many times if they just called dial doc they would not need to go to the emergency room.

Finally the cost of health care skyrockets when people do not sick initial treatment via no insurance and finally show up in emergency rooms…once again a simple sickness becomes a major bill which we all pay for it one way or another.

3) …..Price allows specialty societies for specific groups of doctors to make a set of guidelines for caring for a patient. If a doctor is taken to court (which the Price plan allows and does not try to stop) a physician can point to their specialty societies guidelines and show that they did everything they could for the specific patient…

Once again this could help but the savings are way over exaggerated…..the above issues I have posted on multiple comments are real hardcore savings. Soft savings are stuff in theory….VA drug pricing, dial a doc…….are real hard dollars, not if this……Not saying stuff like the above, fraud reduction in Medicare, Medicaid…..are not good ideas….but in business we call it the what if stuff…..But real dollar savings we can project…..

TheEiger December 13, 2013 at 9:39 am

No where in your response do you say you have read the plan. So you are commenting on something you have not read or completely understand.

John Konop December 13, 2013 at 9:49 am

I apologize, I have read the plan years ago when Tom presented at a GOP event I was at, and he was key speaker……the plan has been debated on the PP before….and the pooling issues, as well as no mandatory pay…..were key issues……I brought with friends after the presentation….I do think he has some good ideas….but once again like the Obama plan it avoids tough cost cutting calls….I get the issue, nobody wants to hear about belt tightening…..Nobody gets the problem more than me…..When I talked the lending crisis before it hit when I ran for office it was obviously not a popular message…similar to this people want things like nice cars and houses even if they cannot afford it…..same with healthcare, everyone wants a Cadillac plan if they can afford it or not……

Like end of life care, drug prices, emergency room care, people using tax payers as an emergency healthcare policy, Elective products covered by Medicare…….

John Konop December 13, 2013 at 9:39 am

4)……… The extreamly poor or the people who you say don’t have the cash when they get sick are covered by Medicaid…….

One more we all know this concept is going broke……

Chris Huttman December 13, 2013 at 10:21 am

Eiger – please pretend for purposes of this answer that Obamacare has already been repealed and the Price plan has been passed and put into law. How will purchasing pools lower costs for those with high insurance costs if the young and healthy can buy insurance on their own outside of a purchasing pool?

In other words, consider my church. The priest announces that some of the members are interested in creating a pool of churchgoers to lower insurance costs. The priest says they took a membership list to an insurance agent who told them that if church members randomly join the pool, the average cost should be $X. I call up an insurance agent and he says if you just buy a policy directly from me, because you are young and healthy the cost for you will be 80% of $X.

Why would I then buy it through church? Maybe I’m charitable and I decide it is the right thing to do. But there are only so many charitable people, and what if $X is $8,000 for a family policy and 20% is $2,000 = do I really have that kind of money to be charitable with each and every year?

Right now the carrot for being part of a work plan is that you and your employer can both use pretax money to pay for the premiums. That’s why the young and the healthy, when they have to buy insurance on their own gravitate to catastrophic plans but when work buys it for them are in much more generous plans than what they need. Game out the Price plan. Not only will purchasing pools not work because they depend on the young and healthy being a part of it and there’s no incentive for them to do so that outweighs the higher costs, but large group plans will probably eventually fall apart too.

Please give me one single example of why someone who is young and healthy and doesn’t need much insurance will voluntarily take part in a group pool that will feature sicker people and higher average costs as well as more comprehensive plans that include more coverage than they need.

TheEiger December 13, 2013 at 10:33 am

Price’s plan would allow not only your church with a couple hundred people to form their own pool, but the whole Southern Baptist Convention with hundreds of thousands of people to shop for an insurance provider. (sorry if you aren’t baptist. we are hypothetical here.) Look. I’m not saying there won’t be the young and dumb that think they are invincible. That will always be an issue. I believe the solution is to have incentives to purchase health insurance and not penalties. The penalties don’t work. Just because you are in a pool with other people that does not mean you should have to purchase the exact same plan. What a 27 year male wants and needs is not the same as a family of four. Those people can be in the same pool, but with different plans.

Chris Huttman December 13, 2013 at 12:05 pm

Here is the thing. Roughly 80% of healthcare users are responsible for 20% of the costs, and 20% are responsible for 80% of the costs. In Georgia, the average annual healthcare spending per person is about $6,000. That means that on average, 4 out of 5 Georgians use about $1,500 in care each year, and the remaining 1 Georgian uses $24,000.

I don’t think you understand how a large group plan works. In a large group plan, like Coke or SunTrust offers, all 5 of those employees are in a plan that costs the employer $6,000 each. If the employee pays 25% of the premium, then his share is $1,500 whether he is one of the 4 people who is not expensive or the 1 person who is. For the 4 people – the plan is more generous than they need. If they are healthy and went to an insurance agent, he could sell them a plan they need without the stuff they don’t for $1,500. But the employee says well, $1,500 is what I already pay, I’m not getting the other $4,500 no matter what, so I might as well stay and contribute to the more generous plan, all things being equal. The four healthy people are paying $4,500/year to help make up the costs of the 1 sick person. They are all in it together, and they all have to be in the SAME PLAN, even if they might only need something less.

Now take these same 5 people and put them in the Baptist Church. They pool together. The four healthy people say hey, all we need is the $1,500 plan thank you very much. The insurer looks at the 5th unhealthy person and says for the plan you need, the cost will be $24,000. Well, that’s not going to work, so what if we compromise a little. The average cost of this insurance is $6,000, so how about the healthy people pay 40% less than the sick people. OK, so the healthy people’s premium will be $5,555 and the sick person pays $7778. This is a great deal for the sick person – $7778 is a lot less than the $24,000 he actually costs the insurance plan. But for the healthy people – why would they stick around and be part of this pool when it costs over $4,000 more than they could pay if they just got underwritten on their own outside of the pool?

Do you not understand this? For any pool to exist and work, individual underwriting can’t still be an option or there won’t be any healthy people in the pool, because they will have to subsidize the costs of the unhealthy in the pool even if they are buying a lesser plan. The reason that Coke’s pool works is that the employee’s share of premiums is typically lower than he can get in the individual market even if he is healthy because the employer is paying most of the cost tax free.

For an individual pool to work, you’d basically have to have the Baptists tell people be part of our pool, we’ll pay 75% of the cost. Because at that point the healthy person would say well $1,500 is cheaper or the same price as I can get it on my own, why not? Assuming the Baptists or the Rotary club or whatever is not going to be paying 75% of even 1% of the costs, they will not work for the kind of people whose existence is the reason we are trying to do reform – the sick, old and those who can’t afford insurance right now.

John Konop December 13, 2013 at 12:34 pm

Good job Chris! We do this in lending the difference being it is not about you living or dying if you cannot afford the pool you are in…..

TheEiger December 13, 2013 at 3:31 pm

Listen, I understand how insurance works. I understand how an insurance pool works. I prefer a plan where I can shop across state lines and pick and choose a plan that works best for me and my family and not what a government employee tells me to buy.

I think it is important that I not lose my health insurance if I lose my job or change my job. I want my health insurance plan treated like a 401(k). I pay into it and my employer pays into it. So instead of paying a portion of the premium that an hr person or a government bureaucrat picked out my employer could treat my insurance like a 401(k). It goes where ever I go. This is currently illegal.

These are the types of things that I want, but what have I gotten? I lost my health insurance plan because it did not meet the essential benefits package in the ACA. The President lied to me. Under Price’s plan I would not have lost my insurance plan that I liked.

Under Price’s plan I can buy a cheaper plan from another state. Under the ACA this is illegal.

Under Price’s plan I can pick a cafeteria style plan where I get to choose what is cover. Under Obamacare this is illegal.

Under Price’s plan you can pool with whom ever you like. Illegal under Obamacare.

This is a fundamental disagreement on who knows best when making health care decisions. You believe the president and Washington knows how best to give care and what should be in an insurance plan. You believe that a mandate and a $95 penalty will force a young healthy person to buy something they don’t want.

I think a tax credit and the ability to pick and choose what is in my health insurance plan is the best course. I think the Price plan offers young people more choices and “carrots” to get insured. I believe that markets work and can shift with a shift in what the purchaser wants. You obviously do not.

Your lectures on getting young people insured is noted. Again, I understand how insurance pools work. You believe that the Obamacare model works and Washington can force them to buy something they want. I don’t believe that because it isn’t working. We should incentivize young people to purchase health insurance that fits their needs not punish them for not buying something they do not want.

Chris Huttman December 13, 2013 at 4:49 pm

God, enough with the lectures about how the free market works.

Answer a simple question: why would a healthy person join a pool?

TheEiger December 13, 2013 at 4:59 pm

I don’t know how many different ways I can say it.

Chris Huttman December 13, 2013 at 5:04 pm

Just one would do.

And if I can join a pool, but still get underwritten based just on my needs and health profile, then how does that help the older and sicker people in the pool?

John Konop December 13, 2013 at 6:01 pm

You are right…..this just like the lending industry….if you have healthy credit and solid equity ratios you get cheap money…..if not you pay based on risk…,,this is capitalism when we do it right…,,but applying that logic to healthcare means you let people die or get sicker if they do not have the cash….,obviously most people do not want that…..so it is really a balance of what we can afford and the cheapest way to share the risk…you have done a good job of laying it out..,the difference between us I think we need way more cost reduction……and if not this will be just like the lending crisis I warned about years ago…..

TheEiger December 13, 2013 at 6:23 pm

Two individuals do not have to have the same exact plan to be in the same pool.

Chris Huttman December 14, 2013 at 12:09 am

OK we get it. They can have different plans. But don’t you understand that the whole point of pooling, whether a company or a group like the Rotary club is that they can POOL some of the costs?

With health insurance, the costs are administrative/sales, catastrophic risk and medical loss due to treating chronic conditions. Let’s just stipulate that the administrative costs and catastrophic risk for each individual are roughly the same, as it costs about the same to sell you a policy, cash your premium checks and insure you against having a broken bone, a visit to the trauma center if you get in a car accident or treating you if you get the flu.

Now, the other major component of health insurance costs is treating chronic conditions. One common one is diabetes. On average, it costs about $8,000/year to manage diabetes.

Now you tell me how a pool works:
1 – People join a pool, but the 10% of pool participants who have diabetes pay about $8,000 more per year for insurance than the people who don’t. In other words, people who have diabetes choose a plan that covers diabetes and people who don’t choose a different plan that doesn’t.
2 – Everyone in the pool POOLS their costs and pays $800 more each, thus providing diabetes coverage for the people who need it (and providing the option for those who don’t need it if they develop it). <— BTW this is how work plans work, everyone's employer pays roughly the same for essential benefits whether they need them or not.

If scenario 1 – what benefit does the person with diabetes have for being in the pool? They aren't pooling their costs except with other people who have diabetes, which means they won't be able to afford health care since they're only getting a $2,000 tax credit and no insurance company in their right mind will sell them a $2,000 plan that is guaranteed to lose $8,000 treating their illness each year.

If scenario 2 – why would the people who don't have diabetes choose to pay $800 more in a pooled plan when they could simply go to a insurance agent on their own and pay $800 less since they don't need diabetes coverage?

Look – the answer is that the Price plan thinks if you have an expensive chronic condition, you should have to pay for it yourself instead of forcing gauranteed issue. The pools thing is an illusion, it sounds great, but either scenario 1 is true in which case someone who is difficult to insure is out of luck (and why the $300 million for high risk pools needs to be something like $20 billion instead to help these people, because the pools that would form would all be high risk pools) or it's scenario 2 and no one whose cost to insure is less than the average cost of the pool would ever join it or stay in it for more than one year.

TheEiger December 14, 2013 at 8:16 am

And how is Obamacare fixing the issues you listed above? It isn’t.

John Konop December 14, 2013 at 9:27 am

Eiger,

First, if people have coverage you do understand preventive care saves money? Second, we do need a dial a doc solution to save on non emergency care done in emergency rooms. If you pool people by high risk they will contribute nothing on a macro via payment being to high, and insurance companies not wanting to take the risk without the yield. Once again we tax payers pay for it at the highest cost point via no preventive care without insurance they cannot afford. Finally we do need to tackle the other real cost savings…..ie va drug pricing for all, end of life directives, Medicare/ medicaid fraud……..

drzachary December 13, 2013 at 5:05 pm

You haven’t said it even one way yet, man.

(Been following this debate with interest.)

TheEiger December 13, 2013 at 6:21 pm

With tax credits, tax deductions, refundable tax credits and a cafeteria stlye approach to pick a cheap plan that fits their needs.

John Konop December 13, 2013 at 6:39 pm

That is like extra favors that could help but still avoids the key issue…..you need the ice cream, before we talk flavors……

Harry December 14, 2013 at 9:03 am

Why not let the cosmetic fix be that insolvent uninsurable get Medicaid? That’s more or less where we were, and it more or less worked. But what’s really killing the system is the high delivery cost due to inbred special interests, absence of competition, unfunded mandates, and lack of reform overall. For healthy and intelligent young people emigration looks better every day. This is no country for young people.

Harry December 14, 2013 at 9:11 am

Meant to say, the indigent and/or uninsurable get Medicaid…

John Konop December 14, 2013 at 9:12 am

Harry,

The problem is the core debate is how to move the furniture around not dealing with the fact we cannot afford the house. When people like I propose real tangible cost reduction both sides play politics over solving the problem ie killing gramma, death panel, keep your doctor….it all makes for great sound bites…..but does not deal with the issue….I am just business guy who knows math…..

Dave Bearse December 14, 2013 at 2:08 pm

Thanks for the debate and the effort put into it.

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