Re: The PPACA Thread Part III - Let's have a healthy debate!
But isn't that true of health care before? That about 80% of the costs came from 20% of the people?
That's a good rule of thumb for
any insurance, and that's the whole point of insurance in the first place, generally speaking (the numbers might vary, for term life insurance for example 100% of the claims come from 1% of those insured).
The difference for people with chronic conditions is significant. "Insurance" spreads risk in the face of uncertainty: on the individual level, maybe something will trigger a claim, and maybe it won't; yet on the collective level, somewhere a certain number of claims is inevitable.
However, for people with chronic conditions, there is no uncertainty: we know for sure that they will have healthcare costs to treat those chronic conditions. The rational, practical response is to place those people into a so-called "special risk" pool so that their healthcare costs are covered differently than those who are traditionally insured under the risk-spread paradigm.
Unfortunately, the designers of PPACA somehow believed that the intensity of their fervent good intentions would cause reality to bow down before them. They mingled people with chronic conditions back into the general population again, with totally predictable and expected results.
When the states managed special-risk pools, they would overtly use general taxpayer funds to subsidize healthcare for people with chronic conditions, and most taxpayers were okay with that: it was humanitarian, and clearly identifiable and understandable how much money was being used where for what.
PPACA architects tried to fool people by disguising cross-subsidies, and, well, basically telling people things that weren't true. It took awhile, but now people are starting to see through the gauzy fairy tales that were spun at the outset to see how things really are working now. Once that happens, the funding instability only worsens.
It is only "insurance" when there is uncertainty and risk. Once certainty enters the equation, everything is thrown out of balance.
Here's an analogy that might help. Most people who own a home has homeowner's insurance that covers loss in event of a fire. Suppose that some people cannot afford homeowner's insurance, yet they were allowed to purchase homeowner's insurance retroactively after they had already suffered through a fire; and the costs of those claims was to be spread over all other homeowners' policies. The premiums on those policies would go up substantially, and many of those people who previously could have afforded homeowner's insurance now could no longer afford it. As they start to drop their policies, there are fewer people left insured, so that those premiums have to go up even more. Repeat the cycle. Repeat again. You have a really big mess on your hands. A mess that easily could be avoided merely by helping people who suffered a fire through direct payments from another source rather than try to finagle them into insurance retroactively.
