Tuesday, October 2, 2007

What's Wrong With "Health Care"

I had the opportunity to shoot the bull yesterday with my new boss. He's an upper-crust lib, and I'm a working-class conservative (how's that for shaking up the stereotypes?). Yet we agreed on one thing, at least in principle: SOMETHING ought to change about "health care." I know it's supposed to be verboten for a conservative to mention anything other than free-market answers to health care reform, but I'm at the end of my rope with the current system.

First, some diagnosis. Don't tell me that "47 million Americans don't have health care." There may be 47 million who don't have a health insurance policy, but there's nobody who can't go to an emergency room and get treated. The trick is, what they do in the ER isn't free (news flash--nothing is). So the costs of treating those who can't, or won't, buy insurance is passed along to those who do, and that makes health insurance much more expensive. Indeed, many of the people who don't have health insurance are not the very poor (who have medicaid). It's the non-poor who find the cost of what's out there prohibitive.

Another thing that makes health insurance crazily expensive is the fact that it's not REALLY insurance, at all. Insurance is sharing the risk of a potential catastrophe. Your house is likely NOT going to burn down. But some small percentage of houses will. If we divide the risk of that happening among the right number of houses, as determined by the actuaries with slide-rules, and add a few bucks to each bill to provide profit to the insurance company and the agent who services the policy, that amounts to a genuine insurance policy. You hope you never have a claim, but the relatively small premium is a smart thing to pay. But if a house were already burning, that would jack the premium up to the cost of the house! Likewise health insurance. You can insure against hospitalization, serious injury, cancer, or a variety of other relatively unlikely events. But when we demand that every physical, well-child-checkup, and tylenol be paid for through our insurance, the company is going to have to charge us for all of that guaranteed cost ON TOP of the shared risk of the unexpected.

Then there's the role played by employers. My employer pays for my insurance (I have to pay for dependents). If I were single, I wouldn't have any incentive to care what it cost them. So I'm free to demand a cadillac plan. Of course, if you think about it, whatever your employer pays for health insurance could go straight to your salary if they made you buy it yourself. So it still affects my bottom line. But most of us with company benefits persist in the illusion that our health care costs are cheap or free.

On the other hand, those who buy their own policy (or have to pay through the nose for dependent coverage) have to make a decision based on opportunity cost. Paying several hundred to a thousand or more dollars a month for insurance directly impacts where you can live, what you can drive, how much you can spend on gas and groceries. For the healthy person, it's arguably smarter to pay your own way at the doc-in-the-box for routine stuff and take your chances on the more rare losses, knowing that no hospital is going to let you die anyway.

So, what to do about all of that? I think the biggest trick is to see to it that everybody has (and pays at least something for) a major medical plan with a high deductible, sort of like the "minimum limits" on your car policy. I don't care if this is done privately or publicly in the long run, or in combination somehow. But expanding the pool of the minimally insured is a good start. This can't be a cadillac policy--I envision something similar to the plans that go with the current HSA accounts--maybe $2500 deductible, 100% thereafter. If everybody had this, the larger pool would mean pretty low costs relative to what we have now. Care under such a plan would be somewhat rationed, in the sense that these things would likely not pay for Lasik and boob jobs. But lack of access to a 38DD is not a health care crisis. And besides, what we have now is rationed--a buddy of mine who pays a gazillion dollars a month for blue cross just found out his plan won't cover lap band weight loss surgery.

Of course, what to do about first-dollar care is the hard part. Here's a novel idea: how about pay your own way? Sure, if you'd like to pay somebody $500 a month so they can dole $5000 in annual costs back to you for low copays and still make a profit, I'm sure somebody will oblige you. But if you didn't have to pay the $500, you could pay a little a couple of times a year for a medical exam, or a doc visit, or a prescription. If you hit your deductible, it would be covered by the major medical plan. What a thought--people might even choose less-expensive options than they now do if it actually hit them in the pocketbook!

Perfect? No. Full of details? Not so much, but neither is Hillarycare 2.0. Discuss amongst yourselves and comment.

9 comments:

Philip Murphy said...

This is such a big mess, I've deleted my comment at least a half dozen times.

Why aren't the GOP candidates making this a bigger issue? Have they given up? Have they conceded they can't win on this issue?

I may just throw a vote to the first non-hillary, non-edwards candidate that places health care at the top of their stump speech.

Goode Design said...

one problem with the premise: it isn't that most Americans CAN'T afford good health insurance... The fact of the matter is: most Americans spend way too much money on servicing debt, new cars, payments, McDonalds & buying junk they don't need and have no emergency fund. Y'see, an emergency fund is for (help me out here, Larry) EMERGENCIES. If people did just one tenth more planning, we could solve a ton of our own personal problems... like who's gonna pay for the first $500 – 5,000 of the doctor visit... I like to call this radical idea: "Personal Responsibility."

Anyone who thinks the Government and washinton has a solution to this "crisis," has been smoking fun-herbs.

OK, there are going to be those who somehow are destitute... Where did our Creator tell us that the Government should be the "care for the poor & dying" institution?

NO FRIGGEN WHERE!

So people need to stop listening to idiotic democrats and even the GOP for solutions to this issue...

Lack of health insurance is not the issue... it's a symptom. Lack of personal & financial responsibility is the broader issue. If we could stop idiots from using credit cards and financing every thing (including boob jobs) we might be able to turn this health care issue around. This is the reason my company hasn't hired the first W2 employee. I don't want to pay their taxes for them... make them write the check... it'll cause 2 things: personal responsibility (those words, again!) & changing voting.

I'd even challenge you to ask Uncle Dave Ramsey this same question. I have a feeling he'd come down closer to my answer than to some stupid Socialist solution.

(Why did John Edwards have to be from NC?)

I hope I didn't give away my political leanings. Granted, both parties are money grubbing hoes! (is that an ok thing to say? what if they were all hoes w/ boob jobs?) anyway... Who was it that said: A statesman is concerned about the next generation while a politician is concerned about the next election.

bekster said...

I agree that lack of "personal & financial responsibility" is the broader issue, but I don't know how we can change the overall perspective of the entire country. I wish that people would see through the foolishness of debt and that they would realize that eating at McDonald's frequently only increases the chances of them needing to use some of that insurance money at the hospital. Unfortunately, the whole "instant gratification" thing is a root ideal of most Americans now. It shames me to see how we have lost the "pioneering spirit" of our ancestors--not that everything they thought and did was right, but at least they knew that nothing in this life is guaranteed. Now, on the whole, our country has an entitlement complex. As soft as we have become, socialized medicine would seem to be the next logical step. BUT, I feel, that would make us even worse pansies than we already are, not to mention that we see how ineffective it is in other countries. I wish that the American people would wake up and take responsibility for themselves, BUT I really doubt that is going to happen any time soon. The whole idea of insurance really irks me. I think it is a scam... but what can you do? Since it is there, we might as well use it unless we can figure out a way to revolutionize the way every American thinks. If anyone can think of anything better, I would LOVE to hear it!

Coach Sal said...

The trick is, we can't just lament the current situation. That solves nothing. I think we often fall into the habit of thinking that if we admit there is a problem with a political issue, it somehow obligates us to support bad ideas that purport to fix that problem. You can point out the flaws in the current health-insurance system without necessarily being in favor of nationalizing 1/7th of the economy. You can admit the war on drugs doesn't work without having to buy in to the idea of legalization. People are NOT going to spontaneously do the mature, financially responsible thing in the 21st century. Fine. That's why I suggest (as both Romney and Hillary do) making health insurance mandatory. But the larger problem of what that "minimum coverage" should look like, and how to subsidize those who genuinely can't afford it is open to LOTS of discussion.

Bekster, I don't know why you would say insurance is a scam. It's actually a very smart business practice that has been developing since the middle ages. If you are financially wise, you can "self-insure" against many bad things through an emergency fund. But it is impossible to save enough to cover a total loss of a house, or something like cancer, or even against the effects of a potential lawsuit in today's world. Entering into a partnership with thousands of other people to share that risk is just smart. Admittedly, SOME insurance policies are scams (like most whole life insurance). But the entire premise of this discussion is that we need more people shouldering the load when it comes to shared health risk in this country.

Goode Design said...

I just don't think that the "government" nationalizing and mandating certain levels of health insurance is the best solution... or even a good solution.

What if (and i mean IFF)
• the Gov were to require a financial education supplied by the employers & school systems that would teach people how to handle money (LOL!!! government teaching how to handle money. that's laughable!)
• Churches starte acting more like the hands of Christ and actually help those who are sick, hurting and dying. Health insurance provided at my/our tax increase is forced charity... so why don't we begin just doing charity. Especially when 80% of the tax increase that would go to provide healthcare for a 2 year old is going to be eaten up in admin costs?
• In other countries, people die or live with their illnesses... i think we've got a better system than many... not that it cannot improve

If we merely give healthcare-welfare, we'll create another addictive crutch on which our population will be gradually socialized. Healthcare is a political football. The best thing to do with politicians are to lock them in Alcatraz and throw away the key. I cannot believe we actually still vote for these idiots...

Why is it that voting now feels like choosing which semi-automatic weapon to play russian roullett with? Glock 9mm? or Smith & Wesson .45 cal?

What if we do socialize the medical/insurnace industry... even only 1/7th? What if we begin paying a little more in taxes to create this system? Will Washington ever stop asking us to pay them to badly administer our every choice?

Socialized Insurance = NO THANK YOU!

Next thing you see, they'll come to my house and ask to remove my guns. And i'll let them.

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bekster said...

I agree about the "shouldering the load" thing. What you say about that does make sense. It does make things worse for people who do have insurance when other people do not. But, even (especially) if everybody had insurance, hospitals, doctor's offices, and drug companies could just continue to jack up their prices. With insurance "paying" for a lot of it (actually, the people are still paying for it when they pay the insurance companies) the medical industry can continue to make things more expensive, since people don't feel the sting of it that much. Especially if everyone were REQUIRED to have insurance, wouldn't the medical industry seize their chance to milk more money out of the system? The way I see it, paying money to insurance companies is just like paying taxes to the government. A person may not ever drive over a certain bridge, but part of their tax money still goes to help maintain that bridge. They may not ever get cancer, but their insurance money goes to help other insured people who do have cancer. Then again, the person might get cancer, and one day they might have to drive over the bridge. There is no way to know that. But, I thought that part of the whole Conservative/Republican value system was that we want more control in the hands of the people and less control in the government. Sometimes I would rather pay a toll to use a bridge instead of having the money demanded of me against my will in taxes. Insurance bothers me because I feel like I have no choice about it. Either pay for insurance, or pay a ridiculous amount to the medical industry if something should happen to me. I guess it just makes me mad that either way I'm having to pay more than I feel like I should, just like with taxes. If I knew that the money were put to good use I might feel better about it, but I know that insurance companies are businesses. They really just want to do what any good business does... make money. On their side, they want to get as much of people's money as they can and give back as little of that money as possible. No offense to these people, but look at the cars that insurance salesmen are able to drive. Also, we all know how much money doctors make. Somehow, that seems a little unbalanced to me. Ideally, the common man would be able to pay a fair price for his medical bills without the use of insurance. But, the way things are, that is not possible. You're right, it does no good just to lament the current situation, and, in truth, I'm sure you know more about the "current situation" than I do because you pay more attention to these things. I'm just frustrated by the whole thing and I wish I or somebody could come up with a solution that is fair all the way around, but I don't know if that is possible.

DK said...

Wow, too bad I showed up late to this party.

As someone who has a vested interest in the future of our health care system, I have some comments.

1. Health care cannot be a right. One cannot have a right to someone else's labor.

2. The "47 million" uninsured statistic that everyone throws around is not all it's cracked up to be.
This
is a good article laying out some of the problems with that figure.

2a. Children in poor families that truly have no access to insurance generally have access to medicaid. The great thing about medicaid is that even if you are too lazy to sign up for it before you or your child gets sick, it will pick up the tab retroactively if you need it.

3. EMTALA is the true safety net. Don't have insurance? Go to the ER and you'll be seen. Can't pay the bill? Either A) ignore it and take the hit on your credit report or B) sign up for state aid. Sure this is a bad solution but it works to keep sick people from dying in the streets. Because of EMTALA our poorest people get better care than the middle class in countries with universal or state-sponsored health systems (ie: Canada, UK). In the US, a homeless person can go to an ER, be seen, receive treatment, and most likely be referred for follow up and free medication assistance all in a timely manner.

So what's the solution to our current health care problems? Well, medicare (the government) is part of the reason for the current state of affairs. You see, medicare is the blueprint for modern health insurance. Private insurers basically do whatever medicare is doing. However, generally private insurers are less restrictive than medicare. The other problem is that health insurance is not a true free market system. Consumers are generally restricted to whatever health plan they get from their employer. (let me note that this is also a direct result of government intervention and the law of unintended consequences) Thus, consumers are less able to vote with their feet concerning what is or is not good coverage/pricing/etc...

The system can't be fixed until consumers have more control. IMO decoupling insurance from employment and giving tax incentives for providing indigent care (currently, health care providers just have to suck up the losses) will go much farther than to do good than government intervention.

Lori Fitzgerald said...

You guys are all way smarter than me, but my family personally LOVES medical insurance. With a husband who has had 11 brain surgeries in the past 7 years, plus maintenance medication for everyone in our family (1 kid with autism, 1 kid with ADHD, mom with epilepsy, dad with hydrocephalus, RLS, asthma and hearing aids) and 3/4 of us in glasses, our best friend is our insurance card. Of course, we might not be your typical family.

Goode Design said...

DK: Abso-friggen-lutely!!! Yet people all over the US are perceiving that certain priviledges are now "rights" to our entitled US population.

I'm proud to be American. But there are too many people who believe that they should be GIVEN an education, they should be GIVEN an A, they should be GIVEN free health care.

Were we the only people on earth who had their mom or dad say: "Ain't nothin' free in this ole world?"

So, no... i don't think the GOP nor the Dems nor the independents need to "come up with a solution" to our healthcare problems... It turns out that one's heathcare problems are THEIR health care problems...

That said, I think that Christ followers should be there to help and be Christ's hands to the needy.