I've received the following questions about my HDH lectures on the ACA. Please find the questions and answers below.
(1) Can you distinguish costs in the public insurance sector vs. private? So...obviously fed and state governments want to keep costs down for health programs. These costs come from taxes, right? But in private insurance, costs are different, right? in that, the company wants to make money and keep expenses down, right? I mean, in both public and private, the consumer is pouring in money to both sectors. Then, both sectors have to allocate that money in such a way that it covers everyone and at the same time makes some money in the end, right? Maybe it's because we didn't cover the theory behind it - that this question came up. Essentially, public and private insurers are making (extra) money because the total sum of money flowing into the insurer is greater than the total amount of money used to cover the consumer, right? What's your take on this...
Essentially, the causes of costs are the same between the same. For the lectures, the distinction between "public" and "private" is a distinction made in the law between the insurance provided through employers and exchanges (private) and insurance provided through Medicare, Medicaid, etc. (public). Under the ACA both systems are being regulated in some way to control costs. As we said though, the initial costs of ACA implementation will likely come with overall cost increases with savings coming later.
(2) It seems to me that some things in the Bill are contradictory...that -- the Bill is trying to cut costs but at the same time is increasing costs? For example, a goal of the Bill is to cut down costs, by lets say, paying for vaccines, so that later on, expenses won't be as high for treatment of the actual disease. But at the same time, the Bill says people can't be excluded based on pre-existing conditions, or lifetime caps are eliminated....so doesn't that introduce bulky costs to the insurers (gov or private) to treat people that come in with a disease or continually treat a chronic disease with no cap? So is this a contradiction would you think? - or do you think the insurers know that these bulky costs will actually save them money in the long run?
The system is predicated on working because (1) everyone will be enrolled and (2) having everyone enrolled will allow insurance providers and institutions to take into account all of these costs over the long term. There is also, as we discussed, a lot of subsidy and tax systems, cost control systems and other institutions put into place to attempt to control costs. We won't know a lot more until we get to the regulations.
(3) Lastly, you said that this will work best/ideally if everyone joins in. You said it is because insurers can calculate risk more accurately. But is that the MAIN reason? Because I think you also said that it reduces costs (a main theme in the Bill). But then my question is -- how does it reduce costs of health care, if everyone has to be insured? - meaning that more money has to be spent to treat MORE people with preexisting conditions, or provide MORE preventive treatments? I'm trying to think back to that new insurance tree model you showed in lecture. Would preexisting conditions be categorized on the left side of the tree (indemnity) or on the right (preventive)? I mean, I know the goal of the Bill is to increase funds into the right side of the tree, and reduce funds going into the left side, right?
It is not the main reason but one of the reasons. Preexisting conditions would be on the indemnity (left) side of the tree and perhaps the service side (right side) as well. For pre-existing conditions, remember there are complex subsidy systems, high-risk pools and reinsurance systems being put into place.
(4) From your final lecture, it wasn't clear to me how medical liability will be affected by the health reform. Can you please explain that a little?
In terms of traditional malpractice and tort, the bill provides for initial demonstration projects in states who want to explore alternatives to the tort system. This is not a requirement though.
I have a question about your first lecture regarding insurance. You said that preventative medicine (wellness programs, vaccinations, gym memberships) pose an issue under the "known loss doctrine" because these programs cost money and constitute a loss for the insurance company. When you were talking about indemnity and services insurance though, you said that these services are encouraged because they limit the losses for the indemnity insurance.
You should draw a distinction between the first lecture and the other three lectures. The first lecture was to provide an overview of the insurance industry, insurance law and the difficulties of integrating medical care into the insurance model. You should rely on the Mariner article. In our current system, these known losses (preventative care) may be encouraged.
I've also received a question about what the ACA requires in terms of mental health parity. The ACA requires qualified health plans to comply with existing mental health parity requirements contained in the Public Health Service Act and ERISA.