Health Care and the Elderly

[Jnyusa]

[Note: I moved this from the campaign thread. Jn, feel free to change the name - VtF]

Um ... there seems to be some confusion about how insurance works.

Adverse selection (only those who need insurance the most want to buy it) has always been a problem for insurers. It affects private insurers and it would affect a public insurance program in exactly the same way.

The solution to this is being called a "penalty" and that is a very misleading term because it is not a punishment pulled from the sky but rather a rated premium charged to those who wait until they are sick to obtain health insurance. People have always done this and insurance companies have always known how to charge accordingly. Actuarial departments know to the penny how much to charge based on probability and expected cost of illnesses. They have their little magic formulae that they have always used and will continue to use.

What we got used to was the idea that insurers had figured out how to get around this problem, and now the fear-mongers are saying that this is a new kind of problem that will visit us if we go to a national insurance plan, but that's nonsense. Insurers never actually overcame this problem except by charging higher premiums. What happened to make the problem seem to disappear was that as group insurance became the norm - when companies were providing competitive benefits - so that the pool of people covered by insurers was selected on some basis other than their desire for insurance, the probabilities were smoothed over this non-adversely-selected group. But that actually drives UP the cost of insurance for the healthy, because now they are paying an averaged premium that covers the smokers in their company, the diabetics, the ones who were not vaccinated as children and so on. When people have to obtain their own insurance as individuals and not as part of a group, then their individual risk is taken into account and the premium reflects that risk.

If someone waits to obtain health insurance and under national law the insurance company cannot turn them down, they simply pay a higher premium. They should not be eligible for any more government subsidy of their premium than a healthy person would be. In other words, the crime of not obtaining coverage when you are healthy is self-punishing; you pay more at the margin for your coverage. Society as a whole should not be punished for the stupidity of individuals. But we have to talk frankly with one another about individual responsibility in a circumstance like this. We can't be bleeding hearts and try to save everyone from their own high risk choices. If someone behaves stupidly, then they should rightfully pay more than those who behave prudently.

[Faramond]

Um ... there seems to be some confusion about how insurance works.

The confusion I have is with how insurance would work if the government started telling insurance companies what they could charge and who they had to cover.

The solution to this is being called a "penalty" and that is a very misleading term because it is not a punishment pulled from the sky but rather a rated premium charged to those who wait until they are sick to obtain health insurance. People have always done this and insurance companies have always known how to charge accordingly. Actuarial departments know to the penny how much to charge based on probability and expected cost of illnesses. They have their little magic formulae that they have always used and will continue to use.

But I don't get the idea that insurance companies would be allowed to do this under universal coverage. Because in practice wouldn't some of the premiums offered to sick people be too high to afford?

Who is the fear-monger here?

[axordil]

The pricing of premiums is indeed Byzantine, and includes everything Jny mentions and more. However, I do want to tweak a few things she said about the group vs. individual risk.

First--While a perfectly healthy male individual might pay more for insurance through a group than on their own, woman of childbearing years are another story. The insurance companies factor in possible pregnancy and attendant costs for individuals, because that's a whole class of costs a man won't have, and there's a known average chance of it applying.

Second--as the groups get larger, the impact of adverse selection on the healthy members starts dropping. In a group of 100, for example, the potential impact of the skydivers, smokers and such on costs is less predictable than for a group of 100,000 (big company size), or a group of 100,000,000 (national health care size). The higher possible deviation means more of a bump for smaller groups, because less predictable risk = more risk for an insurance company.

I can see a national health scheme where certain lifestyle choices would bump premiums up 10%. But determining the exact contents of that list would be ugly.

ETA: xposted with Faramond.

[Jnyusa]

as the groups get larger, the impact of adverse selection on the healthy members starts dropping.

Yes, that's exactly right, and one of the best arguments for providing insurance on a national basis.

The confusion I have is with how insurance would work if the government started telling insurance companies what they could charge and who they had to cover.

They couldn't do it, Faramond. Risk is actuarial and the determination of cost associated with risk has to be politically neutral. No, if the government tried to set the premium, then I would be absolutely opposed to government involvement in health insurance.

But I don't get the idea that insurance companies would be allowed to do this under universal coverage. Because in practice wouldn't some of the premiums offered to sick people be too high to afford?

They have to be able to do this. The only way to subsidize the very sick would be by independent program - deciding for example to create some secondary fund by which we subsidize the permanently disabled. You could not scale down premiums just to 'help out' people who needed it. That's why companies have disability insurance as well as health and life insurance.

I think the heart of the problem - the part of the problem that we must address as a society - is the fact that healthy working people and their children are going without basic preventative health care. This is something that government can mandate, private insurers can provide, and people in general could afford if it were built into our tax structure as social security and medicare are. The people with expensive illnesses are a red herring, as far as I'm concerned. Health care for people who are productive now and will be productive in the future (children) - this is the real issue. We don't have it, and we need it, and it isn't going to come from private sector initiative. It has enormous impact on our productivity as a nation.

Remember that we are already spending 40% of our federal budget to provide unlimited health care for people who will never be productive again. I say, shoot them and insure the kids and the labor force instead.

Who is the fear-monger here?

It is the medical industry that has fought against this most vehemently, and I don't know why, to tell you the truth. Those guys who went into geriatric care when the government started providing respirators to an entire generation at taxpayer expense, they're all driving jaguars and sailing yachts on your dollar and mine. Think I'm kidding? After sports medicine geriatric care is the most lucrative medical field to be in. And none of those elderly people are paying for their care out of pocket. Not one of them.

[Primula Baggins]

Not everyone seriously ill would be entering the system at that point. Many would, as I did, "cash in big" after 25 years of paying full-sized premiums for only incidental and minor medical needs. Would major illnesses and injuries be that big of a stress on the system if most people who have them have been paying in as essentially healthy people for years or decades?

[ToshoftheWuffingas]

I continue to thank our Labour Party for introducing the National Health Service. Soviet as I'm told it is, it celebrates its 60th birthday this year and we have none of these worries.

[Ellienor]

Health care for people who are productive now and will be productive in the future (children) - this is the real issue. We don't have it, and we need it, and it isn't going to come from private sector initiative. It has enormous impact on our productivity as a nation.

I deeply ticked off my husband for saying this to him, but I think this is a bad use of resources--his 95 year old father has been retired from the federal govt for more than 30 years and is making a huge pension (more than what I make as an attorney due to cost of living increases), not to mention top-drawer health care. My husband says that his dad's pension and benefits were "earned", and I suppose it is true, but the amount of resource that is being poured into one old man is a lot, for a man who is many years past his productive years, and further, is in no financial hardship (up until the last year, he was going on at least one cruise a year on Silversea--google it--it is one of the most expensive cruise lines around). In some respects, all of this government largesse is going to subsidize my husband's eventual inheritance. Which is good for us, obviously, but .....

This doesn't mean that I have any idea what the solution is, of course.

[vison]

We have universal health care in Canada. We don't have "socialized medicine", but we do have a government operated insurance scheme. Each province has its own. In BC, our family of 4 pays $108 a month. It does not cover prescriptions, dentists, or eyeglasses. If you don't bother signing on for Medicare (as it was first known) you will not be turned away by doctors or hospitals, nor will you be billed at the non-insured rate that visiting Americans pay: you will be required to pay premiums. And if you can't, it will be because you are too poor and your coverage will be provided. Thousands of young people don't bother to sign up, and run into the issue the first time they need medical care, but it all gets worked out in the end.

I really think a nation-wide scheme in the US is a terrible, terrible idea. The required bureaucracy would be horrendous. Well, not the "required" bureaucracy, but the "inevitable" bureaucracy. I haven't paid much attention to what Mr. Obama proposes on the subject, because it makes my head spin to even imagine what a task this is going to be. Too many vested interests opposed to it, for one thing. Are the profit-making insurance companies just going to roll over and go out of business? If not, what happens? Will everyone be covered, regardless, as is the case here? Who will make what decisions about who gets what in the way of surgery or treatments?

Gack. That's what I say, "Gack".


As for gay marriage, I think Mr. Obama is being honest about his convictions but honesty is not allowed for in these little bunfights.

[Ellienor]

We have universal health care in Canada. We don't have "socialized medicine", but we do have a government operated insurance scheme. Each province has its own. In BC, our family of 4 pays $108 a month. It does not cover prescriptions, dentists, or eyeglasses.

This is astounding. As a worker, I paid almost $900 a month to cover myself and family at my old firm. My new firm, I pay approximately $300 a month. The firm picks up the rest, the total cost is something like $1100 a month.

$108 a month!!!!!!!

I agree, we need to take the profit-takers out of the equation, and have a govt-operated insurance scheme. But I agree, it seems hard to imagine that we would ever move over to the least expensive system.

[Ethel]

It is the medical industry that has fought against this most vehemently, and I don't know why, to tell you the truth. Those guys who went into geriatric care when the government started providing respirators to an entire generation at taxpayer expense, they're all driving jaguars and sailing yachts on your dollar and mine. Think I'm kidding? After sports medicine geriatric care is the most lucrative medical field to be in. And none of those elderly people are paying for their care out of pocket. Not one of them.

I know you're not kidding. I was the IT manager at a hospital at one time. I saw it. I saw it in my personal life too. My grandfather, a lifelong alcoholic and smoker, who had survived several heart attacks, spent about six weeks in the hospital at the end of his life. He was "coded" twenty times while he was in the hospital. This means, essentially, that he died and was revived. There was never any possibility that he would recover or have any quality of life, but the people in the hospital did what they were trained to do--revive the dying old man.

I don't imagine it was very pleasant for my grandfather-- I mean, honestly, what a horrible way to die. In the ICU, with no hope of ever escaping, and being brought back "to life" on an almost daily basis by electrical shocks to his heart. Barely conscious, in pain, miserable. It didn't make sense on any level. But Medicare pays for hospital care, so it happened.

This is a crazy way to run a health-care system. The bill for my grandfather's hospitalization must have been well over $100,000. Taxpayers paid for it. And everyone knew he would never be even slightly functional again. Would never even be well enough to go home to die. But just try to get your kid vaccinated against childhood diseases if you can't pay out of pocket. Yeah, the government does offer it for free--once a month, for a few hours, at a place poor people can't get to on the bus.

[vison]

I have to admit that this whole issue of how old people are just burning up the nation's wealth is a touchy one for me. I'm a little closer to the ICU and the electric shocks than the rest of you, you see. It's not how I want to end my days, but it might be, nonetheless. What's the alternative? The kids get together and say, " Well, ma, time to go, eh?" Or, better yet, a Committee somewhere says "You have used up your share, vison, and it's curtains for you."

I am not an economist, but there is one among us. Jnyusa, how much does a working person contribute to Social Security and other pension schemes in a life time? Do these retirees REALLY get more back than they pay in, allowing for the interest compounding over decades?

[Jnyusa]

Last count I looked at, they were getting back 3 times the amount they were entitled to based on principle + interest. And that was about 10 years ago so I suspect it must be even higher now because the over 80 age group is the fastest growing age group in the country, mainly because they're not allowed to die, I suppose.

[Ethel]

I have to admit that this whole issue of how old people are just burning up the nation's wealth is a touchy one for me. I'm a little closer to the ICU and the electric shocks than the rest of you, you see.

Not really all that much closer than I am, and you're Canadian, so I don't see why the hideous American way of death need affect you. Medicare won't pay for hospice or palliative care, only for hospital care. That's why old people here end up in a hospital, being tortured by endless resuscitations.

It's not how I want to end my days, but it might be, nonetheless. What's the alternative? The kids get together and say, " Well, ma, time to go, eh?" Or, better yet, a Committee somewhere says "You have used up your share, vison, and it's curtains for you."

It won't be the way I end up if I'm aware enough to have anything to say about it. What happened to my grandfather was... graceless and cruel. My plan is to just not let anyone who loves me know about it when I am failing. I want to die in my bed. I don't want to cost the taxpayers of my nation $100,000 to pay for my torture-by-repeated-resuscitation in my final weeks. It is crazy. Jn is right. We should be spending these health-care dollars on the young.

I'm not quite sure I understand your concern. Is there a committee in Canada that makes such judgments? I doubt it. In the US, Medicare law means that the elderly are guaranteed hospital care, but no other kind of care. And more than 40 million people, many of them "working poor", have no guarantee of care at all.

[Frelga]

I find it a strange echo of the Respect thread that people who are no longer employed are therefore considered not productive or useful. It's a cultural thing, I suppose.

[Jnyusa]

I wish it were a matter of respect, Frelga, but it's a matter of physics. For everyone who eats without working there must be someone else willing to work without eating. You can do that up to a point, but beyond that point they both starve.

If my generation expects to receive the same benefits paid out to my parents' generation, it will cost 120% of our GDP. Even if no one who works eats, it still won't be enough.

My grandparents did not receive benefits of such magnitude. They were not only the generation that was expected to support a family during the Great Depression, but also the generation expected to eat cat food once they retired, that's how meager their social security benefits were. There was no medicare or medicaid for them. If they caught a cold, they died. They just died. And no one considered my parents disrespectful for expecting their parents to die on time. It wasn't an issue. Once you passed the point where you were able to chip in, no more was invested in you. End of story.

[vison]

Last count I looked at, they were getting back 3 times the amount they were entitled to based on principle + interest. And that was about 10 years ago so I suspect it must be even higher now because the over 80 age group is the fastest growing age group in the country, mainly because they're not allowed to die, I suppose.

Thanks, Jnyusa. I wonder if those figures are the same for Canada? I don't know where I could find out. If I have time later I'll see what I can find.

Although in Canada we have universal health care, it does not deal well with these "end of life" issues. First, there is housing for the elderly. If you have plenty of money you get to live in a swell place as you can pay but if you have only your Old Age Pension and your Canada Pension, you get to be warehoused somewhere. There are many problems with this and I ought to be making breakfast rather than sitting here typing!

Second, the last days, where you're in hospital and taking weeks or months to die, it's the same here. Someone has to make these decisions. Some friends of mine recently went through a dreadful family row over the death of their Mum. Three of the children said, "pull the plug" but one child refused to sign the order and created a horrible fuss and got a lawyer and the matter took days to resolve.

I have spent a lot of time thinking about this lately, not the Death part, but the "when do you become useless?" part. I'm not being snarky or sarcastic, believe me. I really want to know at what point do I go from being "me" as I am now, to a useless and readily discarded old woman? As long as I have work to do, I think I'm of value. OK. My work is being a grandmother raising 2 boys. If I wasn't doing that, but was merely a farmer's wife, would I be so useful? And if we retire, and I live in a 2 bedroom condo, and don't work, etc., am I still useful? When does the useful part of my life end and the "waste of resources" part begin? Please, believe me. I am not trying to start a fight here, nor am I being disingenuous. I want to figure this out. There IS a point, I know. That's the point that a merciful creator would have provided a switch for.


My own Mum is 83. She has plenty of money and lives nicely in her own house. She's very capable. She enjoys her life. But she's fraying around the edges and I know that one of these days we children are going to have to intervene in some way. I am NOT looking forward to it.

But I don't regard my Mum as being useless, although she does nothing but enjoy life and spend the money she and my Dad accumulated, including Dad's pension from work and the 2 Canadian government pensions. She also has income from the money from the sale of the farm. That's hers, free and clear. But I suppose she's in the red on the pensions.

This is disheartening and I better get upstairs and get people moving. It's after 7:30!!!!

[Griffon64]

Pensions were paid for while one was working, right? I know that it is not that clear-cut because you essentially spend the money the generation following you are paying in for their own pensions, but pensions seem separate from medical care in that they tend to be a fixed amount computed from what you put in, instead of an "all-paid" like medical care as mentioned in this thread. Or do Canadian pensions work differently?

[BrianIsSmilingAtYou]

Pensions were paid for while one was working, right? I know that it is not that clear-cut because you essentially spend the money the generation following you are paying in for their own pensions, but pensions seem separate from medical care in that they tend to be a fixed amount computed from what you put in, instead of an "all-paid" like medical care as mentioned in this thread. Or do Canadian pensions work differently?

Pensions are "defined-benefit", not based on what you put in; therefore, the cost of providing that defined benefit can be greater or less than what was put in. Whether the defined benefit can be covered often depends on how the money was invested in the interim. In many cases, the defined benefit is greater than the amount put in (plus investment return) since the life span of folks covered under such plans has increased, which is why many companies (such as GM, Ford) have underfunded liabilities. The original actuarial estimates in these cases underestimated the expected life span, and hence the size of the future liability for the level of benefit.

This is one of the reasons most companies have switched to 401K or similar plans, since these are "defined contribution" plans. In this case the amount you will receive is not pre-set, it depends on the combination of what you put in and how it is invested.

Something like Social Security in the U.S. is a kind of hybrid. Nominally, your level of benefit is based on what you contribute, but the level of benefit is set at a certain level such that what you contributed will be exhausted in a short time. (This is because the original retirement age and level of benefit set up when it started had the expectation that many people would die without receiving any benefit, and many more would die much sooner than they do now. This is the same kind of problem noted above for defined benefit pensions.) Also, since Social Security funds are "invested" in treasury bonds the risk is low, but the reward is also low. That is why there is, from time to time, brought up the possibility of investing the funds in other things (at least in part), such as stock indexes.

I don't know how Canada works their system.

BrianIs AtYou

[WampusCat]

I find this discussion disturbing, in large part because I do not consider a person's value to be defined by how much work she can do. Even the old and "worthless" are worthy of respect and love. They deserve humane care.

By this I do not mean that every extreme medical intervention is necessary. We need to make sure the aging population is educated about the benefits of hospice care and more gentle, natural death. It would help if Medicare did pay for non-hospital care at the end of life.

Most of all, we need to fight the cultural assumption that it's a horrible thing to stop fighting tooth and nail against terminal illness. Acceptance that death is near can make the final months or years much more full of life than constant, painful interventions can.

[Frelga]

Wampus,
I really do think elder care a cultural issue, not just the issue of policy. It grows from the fractured families - fractured between generation lines, children who see their grandparents once a year, environment where experience doesn't count, only stamina does, and the entire attitude of revulsion toward aging and death.

Personally, I come from a culture where it was taken for granted that most of the childcare would be done by grandparents. Retirement age for women was set at 55 at least in part for that reason. To me, it is extremely strange to hear that dropping out of workforce equals end of contribution to society.