Monday, October 16, 2017

Rand Paul's group discount scheme: Single Premiums: $6,251 a year; Family Premiums $17,545 a year. Cheap?

Media Swings at Republican curve balls, and miss again: Just like the discussion around the Affordable Care Act, reporters and media pundits didn't know squat about health care, and that ignorance helped Republicans spread all the lies so many people believed today.

It's happening all over again, this time with Rand Paul's bizarre "group" health insurance idea. He wants every American to leave the individual insurance market and join a group association plan, pay their dues as a member (added cost), and get a similar group policy break that big businesses get. Sweet, it doesn't simplify buying insurance, it adds a whole new mind boggling level of bureaucracy.

What a deal...but there's a bigger problem.

The inconvenient truth #1; health insurance for employers is really really expensive too (according to Kaiser Family Foundation, 2015): 
This type of coverage is commonly called a “group health insurance plan” or “employer-sponsored health insurance.” In 2015, the average premium for single coverage is $521 per month, or $6,251 per year. The average premium for family coverage is $1,462 per month or $17,545 per year (source).Sep 28, 2015.
The inconvenient truth #2; worse still, group associations don't kick in the employer contribution side of the premium they normally give to employees:
On average, employers paid 83 percent of the premium, or $5,179 a year. Employees paid the remaining 17 percent, or $1,071 a year. For family coverage, the average policy totaled $17,545 a year with employers contributing, on average, 72 percent or $12,591. Employees paid the remaining 28 percent or $4,955 a year. Feb 16, 2016.
Group associations do no such thing, since they just provide a group buying discount for it's dues paying members. And then there are the high deductibles...etc.

The above figures are from 2015, and show pretty generous employee contributions. But the latest numbers from the Bureau of Labor Statistics show employers shifting their costs onto their employees ("Civilian" includes both private and government):


The fact is, Rand Paul is oblivious to previous attempts to do just what he thinks is the big solution:
A version of these self-insured association health plans first became widespread in the 1980s, but they failed in droves because many were undercapitalized. More troubling, these earlier association plans had a history of becoming what the Labor Department termed “scam artists” and the Government Accountability Office reported were “bogus entities [that] have exploited employers and individuals seeking affordable coverage.” More than two dozen states reported in 1992 that these early association plans had committed “fraud, embezzlement or other criminal law” violations.

The more ominous aspect of association health plans: market destabilization.People who don’t need to cover preexisting conditions or don’t want to pay community rates gravitate to the better deals offered by associations, leaving sicker people in the regulated markets. Naturally, regulated insurance prices increase as a result, sometimes causing a death spiral that crashes the market.

So Rand Paul really doesn't know what he's talking about, and yet, he sounds so confident. Note: Not one of the 2 morning show pundits asked about these two major points, which is why I didn't include them:

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