Trying to understand Obamacare

[Jebus]

I'm not exactly sure how Obamacare works, although I question why it has to be so complicated at all. Why not simply get rid of the insurance companies and start a European style health care system? I'm guessing it's because of lobbyists and strong interest groups.

[miniboes]

You probably guessed about right, if you include 'Republicans' in 'strong interest groups'. Without a majority in congress, Obama can only do so much. Due to the dynamics of politics in democracies, change is incremental most of the time.

The Dutch model of private mandatory insurance may be more achievable for the US, as it leaves insurance companies in place.

The Netherlands has a dual-level system. All primary and curative care (i.e. the family doctor service and hospitals and clinics) is financed from private mandatory insurance. Long term care for the elderly, the dying, the long term mentally ill etc. is covered by social insurance funded from earmarked taxation under the provisions of the [General Law on Special Medical Expenses], which came into effect in 1968.

Private insurance companies must offer a core universal insurance package for the universal primary curative care, which includes the cost of all prescription medicines. They must do this at a fixed price for all. The same premium is paid whether young or old, healthy or sick. It is illegal in The Netherlands for insurers to refuse an application for health insurance or to impose special conditions (e.g. exclusions, deductibles, co-payments, or refuse to fund doctor-ordered treatments). The system is 50% financed from payroll taxes paid by employers to a fund controlled by the Health regulator. The government contributes an additional 5% to the regulator's fund. The remaining 45% is collected as premiums paid by the insured directly to the insurance company. Some employers negotiate bulk deals with health insurers and some even pay the employees' premiums as an employment benefit. All insurance companies receive additional funding from the regulator's fund.

The regulator has sight of the claims made by policyholders and therefore can redistribute the funds it holds on the basis of relative claims made by policy holders. Thus insurers with high payouts receive more from the regulator than those with low payouts. Thus insurance companies have no incentive to deter high cost individuals from taking insurance and are compensated if they have to pay out more than a threshold. This threshold is set above the expected costs. Insurance companies compete with each other on price for the 45% direct premium part of the funding and should try to negotiate deals with hospitals to keep costs low and quality high. The competition regulator is charged with checking for abuse of dominant market positions and the creation of cartels that act against the consumer interests. An insurance regulator ensures that all basic policies have identical coverage rules so that no person is medically disadvantaged by his or her choice of insurer.

Insurance companies can offer additional services at extra cost over and above the universal system laid down by the regulator, e.g. for dental care. The standard monthly premium for health care paid by individual adults is about €100 per month. People on low incomes can get assistance from the government if they cannot afford these payments. Children under 18 are insured by the system at no additional cost to them or their families, because the insurance company receives the cost of this from the regulator's fund.

I'm actually not sure what the pro's and cons are of our system compared to other European models, but it seems to work just fine.

[brimstoneSalad]

The Democrats (at least many of them) wanted a single payer system, and Obama just couldn't get it to pass. There wasn't enough political support. So, there's a mess instead. Although that mess has helped: uninsured U.S. tax payers are at pretty much the lowest number ever, and millions of people with preexisting conditions no longer live in fear of losing their insurance due to being fired or changing jobs, etc.