Health Insurance 44

[tbonebanjo]

I was just wondering how many companies still have good insurance and how many have gone the way of Obamacare. I am in a small MEP firm in Maryland. Our health insurance just changed, our premiums went up and our coverage went way down. I have maximum out of pocket expenses of $12,500 per year, $4000 deductable per person, tnen start the copay schedules. Should I start looking for other employment or are all companies being affected this way?

 

[CELinOttawa]

The idea that the US system is effectively the engine that drives medical research is total bollocks. The US contributes approximately the right amount of new research and innovation as would be expected for a Western nation of its size. In fact I recently read a paper that showed the US was falling behind in new and or innovative research per capita due to medical "tricks" such as changing a drug so that your body metabolises to form the active drug in order to extent a patent. This is not innovative, it is a business practice. The subsequent marketing blitz to keep people from buying the (now significantly cheaper generic) is something I would expect to be illegal in the French and multiple other European systems.

These drug research "games" also make it hard to measure real innovative drive, as this is frequently measured in large part through the number of research papers published. When a drug is "tweaked", manufacturers quickly conduct and publish as much info as possible, often of dubious merit, simply to have the latest drug research all be on their "new" drug.

I am the first person to point out that the US is a great nation, but also at the head of the line to condemn the tremendous wealth of your nation being concentrated into the smallest of minorities at the top. Many of the ills I see accross our southern boarder are extensions of the desire to become ever wealthier despite already being incredibly rich. Playing with drugs to keep them proprietary rather than working on new drugs is one such ill, and artificially inflates the research papers and apparent innovation without really being innovative.

 

[glass99]

beej67: agreed with your song and dance idea. That kind of thing is very expensive.

CELinOttawa: Americans pay way more for drugs than Canadians. Witness folks who live in Detroit sneaking across the border to Windsor to stock up. In terms of drug companies finances, American customers carry the load, and the rest of the world picks up the product at its marginal cost of production. In terms of public research spending, the US may be about the the same as Europe per capita, but a large portion of bringing drugs to market is non-academic, commercial work. Not just R+D, but marketing, distribution networks, etc. Remember also that many drug companies are not American. AstraZeneca, Beyer, GlaxoSmithKlein and other majors are European/global but make most of their money in the US. Absent these profits, who knows whether the publicly funded research would ever reach consumers.

 

[moltenmetal]

Oh, the poor drug companies- they can spend less money on marketing and they'll have plenty to spend on actual R&D, since as I already noted, they spend WAY more on the former than on the latter.

 

[KENAT]

Plus, my guess is the marketing expenses are probably a lot higher in the US than many countries.

In the UK before I moved to the US you rarely saw adds for prescription drugs - presumably due to the National Health Service deciding what drugs you got, not you going into the doctor and begging for a specific brand name drug. Maybe things have changed in the last 10 years, I don't know.

Don't get me wrong, Drug reps still lavished their largess on Doctors to some extent but I doubt it reaches the overall marketing budget in the US (pro rated for population of course).

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[TenPenny]

I expect that McDonalds makes a significant portion of its income in the US, too, so I suppose the world is supposed to thank US consumers for generously subsidising that export.

 

[glass99]

At my old bridge design firm, the Department of Transportation used to micromanage the fees down to the level of how much we were allowed to spend on office furniture and how much maximum profit we could make, kind of how Canada does with drug companies. The result was a relatively safe business which made a couple of percent profit, but one that was petrified to do anything remotely different or "risky". My bosses insisted that we design steel to 12ksi allowable stress because even though we specified 50ksi steel, it might get built with A36 so it was "better to be safe". The client got cheap engineering fees, but no innovation.

If you took the US profits out of the global marketplace, drugs would not disappear but would be ossified in time at 2014. I personally feel as though there is a lot of technical development yet to complete in the pharma world. Right now drugs are battle axe blunt tools that have 5 side effects for every primary effect.

 

[glass99]

What about Elizabeth Holmes and her cut rate blood testing technology? Kind of bad ass huh? She's a billionaire, and an engineer.

http://fortune.com/2014/06/12/theranos-blood-holmes/

 

[KENAT]

glass99, I have worked in Defense where again the govt was the customer but we did manage to squeeze in a little innovation now and then.

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[glass99]

Kenat: defense contractors have achieved some amazing technical things especially during the cold war (including the microchip), but they are no model for cost efficiency. Think of the famous $10,000 toilet seats. But your point it valid, it is possible to have innovation in a government funded environment.

 

[CELinOttawa]

Sometimes the yardstick used to measure the $10000 toilet seat includes all sunk costs (such as the salaries of all persons involved in the purchase). Just a flawed, but less creepy and black. Walmart's toilet seats would be just as expensive if measured in such a way.

That said, my tinfoil hat tells me that most $10000 toilet seats are actually $12 toilet seats and $9988 hidden procurement.

Hidden procurement isn't right, and I don't agree with it... But it is often what is really going on.

Besides these two alternative, there have been some boondoggles of mind-bending size, just not with the regularity people seem to believe. On the subject of stupidly crazy government waste, our Provincial government recently cost the tax payer $1Billion (yet, with a 'B') for TWO SEATS in the legislature. They were promptly rewarded with re-elect. As a larger proportion of the house. As a MAJORITY... My head nearly exploded. Frankly the Premier, former Premier, as well as the whole cabinet should have been ON TRIAL, not RE-ELECTED. *sigh* Okay, I'm done.

 

[glass99]

I spend my days in the construction industry doing things like finite element analysis and specifying precipitation hardened stainless steel and teflon for my glass structures, none of which would have been possible without the massive investment in military R+D during the cold war. The military R+D was never going to happen without the them having a spent a bunch of cash on troops, pentagon bureaucrats etc. And we are richer for it.

In the post 1989 military wind down days, a bunch of defense engineers shifted over the the medical devise realm. I work with one now who switched from Pratt & Whitney to a hip implant maker. Who is going to pay for the development of the 3D printed human livers and genetic therapy? Bad ass engineering is expensive, and its also the primary driver of civilization. If not medical kit then what? We beat the Soviets so that motivation is gone, but we are old and sick, so lets write a big check to the nation's nerds and send them to the lab!

 

[moltenmetal]

CEL- everybody in Ontario should be indignant about the gas plant cancellations and their cost. But their indignance should be directed toward the flawed system that makes the location of a power plant a political issue. It is easily forgotten that ALL THREE political parties supported the cancellation of the Mississauga gas plant by election day- the Tories caved around 5 days before the election, a fact they now conveniently forget.

I'd have fixed that problem. I'd have given the people of Mississauga and Oakville a choice: either allow the plant to be built, or a) pay the cancellation charges with a special levy on THEIR property taxes, or b) disconnect them from the province's grid and force them to make their own power. That the entire province has to pay the cost of the NIMBYism of the highest-earning postal district in Canada should make anyone's blood boil- but that's useless if it's just used in a, "Don't blame me, I voted for Kodos" argument!

http://en.wikipedia.org/wiki/Treehouse_of_Horror_VII

If I was building ANYTHING even arms-length government-related in this province, I'd spend far more time negotiating cancellation terms than worrying about what it would cost to build. There are some people that no doubt never have to work another day in their lives as a result of writing a particularly good contract in this case- good for them, terrible for the entire rest of us in this case.

 

[CELinOttawa]

Good points Molten.

 

[Compositepro]

"Walmart's toilet seats would be just as expensive if measured in such a way."

Walmart's toilet seat ARE priced to cover all overhead in their manufacture and distribution. These companies have no other secret source of income. They work very hard at keeping general overhead costs down, and spreading the cost over very large sales volume.

Defense contractor's have exorbitant overhead, which just keeps growing, and that is spread over very low sales volume.

 

[CELinOttawa]

*sigh* I meant the toilets Walmart installs in their stores, not the ones they JIT from China to their shelves.

 

[IRstuff]

"Defense contractor's have exorbitant overhead, which just keeps growing, and that is spread over very low sales volume."

The overhead is because the public would be unwilling to accept product failures for their precious soldiers, but are willing to accept the failures for the products they pay for, because they can always take them back to the store. Kind of hard to do that sort of thing on the battlefield. This is all imposed by government contracts, so if you're complaining about the cost of military hardware, complain to the person in the mirror and your "representatives." As an example, consider the (in)famous MIL-STD-883B qualified integrated circuits, which are made on the exact same production line as the parts you'd find in your laptops. The difference in cost comes from the extensive testing, life testing, documentation, special handling, and yield loss from all the testing. When you drop your M14 equivalent in the mud, you stop, sit down, and clean it before trying to use it. The soldier using the M14 in the field often didn't have that option, and while US arms are known to be somewhat delicate, the Автомат Калашникова can be literally be manufactured in a barn and can work in pretty much any harsh conditions.

Much of this can be traced back to the False Claims Act of the Civil War, as well as the discovery during WWII that US fasteners weren't interchangeable with the British ones. Once the need for standardization became evident, it also became evident that the typical product and component is woefully under-specified. Contract law allows consumers to buy a product in a store based on a few sentences of description, and the understanding that such products are intended for, and designed for, a certain environment. However, the military has a much wider range of environments, including both temperatures, pressures, water immersion, vibration, etc. What is described in a few sentences on a placard in a store, or on the face of the product packaging, can be turned into 40 pages of single spaced specifications. These specifications protect both the consumer (the soldier) and the contractor, since the specifications are supposed to encompass almost all the conditions in which a soldier might use the product, and if the contractor has tested for compliance to the specifications, they are protected from the False Claims Act. The additional kicker is that the volumes that the military consume, while large in the military sense, are puny in the consumer sense. Trying to buy a part to a military specification from Samsung, or the like, and the first question they'll ask is, "how many are you going to order?" Your answer would be, "Well, we're only looking to buy about 100 now, but in 5 years, we might want 5000" They politely chuckle and point out that they sell millions of these things each month, and your business simply isn't profitable to them. This often forces custom designs, which are built to small production volumes, and which are then (over)extensively tested, all of which increases costs.

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[cranky108]

Best insurance I have had is with a company that was self insured (I assume they had some limit however). They did use a company to adminstrator it, but they did not play a bunch of games, because they would have to pay anyway, or find new employees and fight lawsuits. They also gave back the excess which encuraged everyone to keep medical costs reasonable.
Now with the goverment mandate, self insurance isen't allowed. So cost reduction never was the intent.

 

[glass99]

cranky - I am a huge fan of self insurance. Also for Errors & Omissions insurance. In traditional insurance you are literally paying a the salary of an insurance company administrator to justify denying paying your claim.

 

[TenPenny]

Self-insurance is an interesting idea, but how does one ensure that the self-insured has any, or enough, assets to provide the insurance? The concept evolves into the idea of NO health insurance whatsoever, everyone should 'self insure', but how do you do that?

 

[glass99]

In terms of health insurance and E+O, to self insure you need a lot of scale because the worst case risks are substantial. You can't do it as an individual or small firm. You can start to think about self insurance at the scale of 1000 people. My old firm self insured for E+O.

The one place you can "self insure" as an individual (i.e. go bare) is dental insurance. A root canal costs $3000 or so, which most of us have in our savings accounts. Why pay insurance company markups on that? The only things with it is you need a CAFE plan or similar so you can pay for it with pre-tax money.