With a greater share of workers in high deductible health plans, small businesses had lower premium growth than larger firms, reports Rob Mandelbaum (NYT). “[T]he average premium to insure a family of four grew 9 percent, to just over $15,073. For single coverage, premiums rose 8 percent, to $5,429. But for small firms […] premiums rose only 6 percent for family plans, to $14,098. For single coverage, the average cost at small companies was $5,326, again up about 6 percent.” The difference is due, in part, to a greater proportion of enrollment in high deductible plans and in plans with less generous benefits. Austin’s comment: This is what one would expect if the proportion of enrollment in plans with less generous coverage is growing. This is not what one would expect once the distribution of enrollment by generosity and deductible level stabilizes. That’s a counter-intuitive statement I will allude to again later today and explain in detail tomorrow.
Richard Wolf (USA Today) summarizes five broad ways to address Medicare’s troubled finances. “(1) Target ‘rich people’ […] (2) Give beneficiaries skin in the game […] (3) Raise the eligibility age […] (4) Reduce providers’ profit margins […] (5) Root out waste and inefficiency.” Austin’s comment: Overlooked is the role that private prices, particularly for hospital services, play in our health system, mediated by market power. Medicare payments are “low” only in the sense that they are below private payments. Broadening the policy focus to the entire system may, paradoxically, help resolve Medicare’s financing issues.