Which market segment is being targeted by Kaiser in California?

Megan McArdle updates us:

Kaiser Permanente is one of the places that always gets cited as a model by health care reformers.  It’s the biggest insurer in California, using a model that ended up being the basis for the HMO revolution.  Kaiser owns its own hospitals, pays its doctors a salary, and provides the “continuum of care” that everyone says they want from our fragmented health care system–and does it at a reasonable price.  So it’s a bit surprising to see the LA Times report that this model citizen submitted some of the highest bids for California’s health care exchanges.

…California is headed for two-tier service on the Exchanges.  The carriage trade will head for full-service networks like Kaiser, with full access to the whole network of doctors and hospitals.  The price conscious buyers–likely to be a sizeable majority–will crowd into plans with restrictive networks.  And those networks will be very, very crowded.  Effectively, they may end up as quasi-catastrophic insurance, simply because it will be difficult to actually access care outside of the emergency room.

Lower down the income scale, the new Medicaid patients–about half the expected additional coverage in states like California–will be similarly crowded, simply because Medicaid’s low reimbursement rates make doctors reluctant to take it.

Note that, for reasons explained in the post, this may not apply outside of California in every other state.


ACA does, of course, increase payments for primary care in Medicaid, raising to the same rate paid by Medicare.

What's primary care?

"The regulation provides federal funding for an increase in Medicaid payment rates to at least Medicare rates for certain Evaluation and Management (E&M) and Vaccine Administration codes billed by qualifying providers in calendar years 2013 and 2014.
E&M codes 99201 – 99499 and vaccine administration codes 90460, 90461, 90471, 90472, 90473, and 90474 must be paid at rates that are at least equivalent to the Medicare rates for those services, as long as the state’s Medicaid program currently pays for the codes. The codes include primary care E&M codes not paid by Medicare, and the increase applies in fee-for-service as well as in managed care arrangements.
The regulation also raises regional maximum vaccine administration fees in the Vaccines for Children (VFC) program."

Great!. Except medicare's rates are too low as well-hence many physicians are limiting their medicare case load as well. So enjoy the ER! Not only will the young be there but granny as well.

Obama won't let us buy catastrophic!

Obama's forcing poor people into catastrophic!

paying normal rates for catastrophic coverage? Genius!

You seem to be assuming these quasi-catastrophic plans will cost what "normal" full coverage plans cost. I have no idea why you are assuming this though.

Because they aren't supposed to be catastrophic -- in fact by law they aren't alowed to be -- but they may end up being quasi-catastrophic because the service is so bad. And the 13th Amendment makes it hard to fix that problem.

So, not being able to afford insurance and not having enough money to see a doctor (outside waiting in an overloaded ER) who wants to know you have at least the credit to pay means you get great service?

And you get care in an ER only because Reagan agreed that it was unacceptable for ERs to turn people away to die on the street simply because they could not pay. Just another reason, out of about 50, Ronald Reagan was too leftist to be a Republican since 1995. Don't you think EMTALA violates the 13th Amendment?

You've confused "it's great now" with "it's going to get worse later."

They're not - they're full-cost insurance plans that effectively provide only catastrophic care because the provider networks are so overloaded that policy holders don't have meaningful access to health care, outside the emergency room.

An insurance policy is a number on a shiny plastic card -- it's not health care. If no in-network doctor in the patient's area is taking new patients or if practices are so overloaded that patients spend an hour on hold to find that the next available appointment is in 8 weeks even if they're sick that day... In theory, these patients have (and are paying for!) full-coverage health insurance, but in reality what they get is emergency-room/catastrophic care.

I think this is a problem that people fail to appreciate when they talk about European systems that provide universal health insurance: It often falls a long way short of universal health care. People in the UK, Sweden, etc. buy private health insurance exactly because there can be months and year long waiting times even for serious procedures. These systems are keeping costs down, but are simply beginning to crumble under the load...

They buy private insurance because the universal coverage "for free" is basic, yet way more comprehensive than the US "universal coverage". So, what you are saying is either:
- we must have government provided universal health coverage equal to what Google and Apple employees
- or you are better off being denied access to health care because you have no money, unless you sit in an overload ER where the government dictates they must treat you, and then bill you outrageously high amounts and send collection agencies after you to collect for decades in the future

You know, I hope, that Medicare is a catastrophic plan because out of pocket costs can easily reach tens of thousands of dollars each year unless you buy private insurance. The benchmark "silver" plans are more comprehensive than Part A (funded by FICA) + Part B funded on means tested basis by 75% to 25% government funding plus 25% to 75% premium. Together they have deductibles of over a thousands and then you pay 20% of covered costs and 100% of what is not covered, like most drugs, dental, vision.
Virtually everyone buys private drug benefit policies, and private supplemental coverage to reduce the deductible and pay the 20% not paid by Parts A+B.

But tell me, which doctors take patients who have no money, no insurance, and provide health care as good as Google and Apple employees, or even as terrible as the care they get for free under those terrible European universal coverage plans??

Or do you believe that by not having money or insurance from someone else you are automatically never sick and never maimed by a random bombing on the streets of Boston?

I don't get the assumption that doctors will not accept new patients under the ACA. I understand the issue with Medicaid patients, but not with people covered by exchange policies. Doctors need business after all, why exclude patients? An established practice may have all the patients it can handle, but there are still new practices and new doctors hungry for patient traffic.
I've moved long distance four times in the last 13 years, and i have never had a problem finding a new doctor.

@jon: The assumption leading to it is that these cheaper policies will only work with doctors willing to take unusually low levels of compensation. And we don't have a lot of unemployed MDs ready to jump on that group of consumers.

If the cheap plans find a way to also have compensation rates that doctors generally find tolerable, shouldn't be a problem.

"Obama won’t let us buy catastrophic!"

Yep, Obama staged a total takeover of the US and anointed himself dictator by the divine right of kings because he was chosen by god.

The law was written and passed by a Congress elected by voters, and the law is some complex because the committees and their leaders and others took the consensus starting point of the Republican alternative on health reform, that had also been endorsed by Heritage and Newt Gingrich, and then added amendment after amendment in efforts to get Republican votes.

The law does not define a national program because Republicans argue each State should define the plan for their State. But when it comes to certain issues, the law is attacked because it doesn't override State laws with Federal dictates on torts. Of course, if the law did define a Federal tort law, the law would be attacked for that.

Obama has asserted "executive power" the least because he believes in the Constitution that gives the power to Congress as the representatives of the people. Bush ordered in secret a bunch of programs based on his claim of unstated inherent power as president - Obama and others objected. Bush did so because he did not trust the people through their representatives in Congress to make the right decisions so he acted unilaterally. But Congress has since debated and redebated and redebated the PATRIOT Act which was hotly debated in 2001, and Congress has with each new debate expanded the authority to spy. And when Obama sought to stop things Bush did without debate, like gitmo, Congress, acting for the people, made law saying they wanted to keep gitmo. Obama has been attacked from all sides for failing to defy Congress and act unilaterally to close gitmo. Obama is attacked for going after leakers, and for failing to stop leakers, by members of Congress and in hearings.

I get it. Obama signed into law the laws passed by Congress elected by We the People. Obama has not vetoed a single action by Congress acting for We the People. In the matters that passed Congress, they were hotly debated and compromises reached and you lost to the majority and you are frustrated and wanted a dictator who would overrule the will of We the People.

But hey, why not lay out your proposal for a replacement to Obamacare and let's have a debate. If your replacement is out of control health insurance premium increases, like we had during the Bush years, make the case for out of control premium increases and for millions of people being denied access to health care. Hey, why not do a study where you prove that the uninsured never get sick or have accidents so the best solution to make the US healthier is to eliminate not just insurance, but also doctors and hospitals.

But let's be clear, you win debates only in Congress, not by being president. Bush argued that Calpers proved in the 90s that investing Social Security taxes in Wall Street would provide higher benefits and require less contributions. But in Congress where the power is, the debate overwhelmingly went against the president. And one reason was a sense that Calpers was not delivering better results in Wall Street than the "terrible returns" on Social Security.

Of course, if you can't attack Obama, you are left only with attacking your stupid fellow citizens who are in the majority all wrong.

Go on, mulp, I'm sure if you extend that post to 10,000 words a bill written and passed exclusively by Democrats (and an ex-Democrats and a Socialist, I guess) will eventually become the fault of the Republicans.

Wow, just saw the end of your post. Did you actually convince yourself?

Re Kaiser: Think of this as a two period game: first period, if before you played, you were operating efficiently at capacity, and the other players were residual suppliers and inefficient players, would you bid high or bid low? In the next period, those who bid low and were inefficient, how do you think they would bid later?

Megan's comment that the low cost people will flock to low cost managed plans--great! That should be the goal, not something that we should discourage, but embrace.

"Megan’s comment that the low cost people will flock to low cost managed plans–great! That should be the goal, not something that we should discourage, but embrace."

'Twould be the end of insurance and the beginning of pre-paid medicine.

Better the high cost people go into low cost managed plans, and the low cost people do whatever the hell they like.

Since both high cost and low cost people are in the same market, the act of the low cost person benefits the high cost person, unless there is some mechanism to price discriminate.

And this is problem why exactly? Markets are supposed to distributive, not punitive, after all.

Effectively, they may end up as quasi-catastrophic insurance, simply because it will be difficult to actually access care outside of the emergency room

That's always been the myth of "universal health care." Sure, you can have that lifesaving operation, if you live the two years it takes to get an appointment.

Attractive section of content. I simply stumbled upon your blog and in accession capital to
claim that I get actually enjoyed account your blog posts.
Any way I'll be subscribing for your augment or even I achievement you get entry to consistently fast.

Er, this is a bad thing why?

I’m not that much of a internet reader to be honest but your sites really nice,
keep it up! I'll go ahead and bookmark your site to come back later. Cheers

Kaiser is simply going to let the other insurers learn that the young and healthy still won't buy at lower rates being offered by the competitors- even with their manipulations of what parts of their networks are being offered to the prospective customers. It is a smart move, in my opinion.

One possible explanation is that Kaiser is running close to capacity and is being conservative about expanding capacity to avoid affecting existing customers. Hiring doctors and building hospitals takes time. It's easier to start with a higher price and drop it later as they become confident that they can handle the load from increased usage.

Contrast with businesses that can expand more quickly like Internet services and restaurant franchises.

The pool of customers being expanded into consist of those for whom premiums are unlikely to cover the costs and those for which premiums will cover the costs. There is no reason at the moment to expect the latter to actually participate given the toothless nature of the mandate. Again, Kaiser is doing exactly what they should do given their market position.

Re: Effectively, they may end up as quasi-catastrophic insurance, simply because it will be difficult to actually access care outside of the emergency room.

Um, urgent care clinics? They will generally accept you, no appointment required, if you have any sort of health insurance, and most are pretty promiscuous in their network-joining since the business model is to be as available to as many covered (therefore paying) patients as possible. The ACA will probably result in further growth for these sorts of healthcare facilities, as well as "doc in box" minute clinics and the like for lesser problems.

More realistically, they will amount to quasi-catastrophic because the co-pays will cover costs for anything less. No real reason to limit access when it is already paid for and no real incentive to use much more.

Thanks for any other informative website. The place else could
I am getting that kind of information written in such a perfect
approach? I've a mission that I'm just now running on, and I
have been at the look out for such info.

Comments for this post are closed