Revamping Health Insurance
Health insurance is a pet peeve of mine. The so-called "free market" allows insurance companies to decline me as an individual (thanks, GOP), while federal regulation prevents the creation of groups outside an employment relationship (thanks, Dems). In short, neither party has had my best interests at heart.
I've been skeptically optimistic as the Obama administration moves its health care agenda through Congress: optimistic because Obama has the momentum and political capital to get something done, skeptical because in general Obama has favored an employer-based health plan. Such an approach would do little for small businesses except either leave them uninsured or force them out of business. And the public cost of the ideas bandied about— trillions more dollars we don't have— is more than I believe our indebted economy can handle.
So it was with some interest that I read reports of a proposed Senate bill that offers some faiurly interesting solutions at a miuch lower price. It would:
- Create a public health insurance system to compete with private insurance (either government-run or non-proifit cooperative).
- Prevent health insurance companies from denying policies or increasing premiums based on pre-existing conditions.
- Fine (tax) those who failed to buy health insurance.
- Fine (tax) large employers who fail to offer health insurance.
- Provide additional Medicaid for the poor.
It's an interesting mixture of market interventions. On the one hand, it forces insurance companies to treat all insureds equally regardless of prior history. Ordinarily this would be expected to raise rates across the board. However, forcing private insurance companies to compete with a nationwide non-profit option would help prevent that from happening. (Kaiser, where available, provides generally excellent care for far less money than the insurance companies. If Kaiser was available here, I'd dump Humana in a flash.)
This is clearly a move toward socialized medicine. Yet I no longer argue that medicine shouldn't be socialized— if we as a society can afford to pay for it. One of my doctors charges $80 for a 10 minute appointment. That's almost $500 per hour. And that's obscene.
Market control should bring lower administrative costs. Much of doctors' overhead comes from billing insurance companies anbd collecting from the uninsured, and much of the health insurance companies' overhead comes from processing and denying claims. Those should both decline, reducing the overall cost of care (to us and our public and private insurers).
As the health care market becomes more controlled, there will be complaints. (Kaiser is "the one everyone loves to hate.") Still, I'm reminded of the view of health care expressed by some of my British friends— they love to complain about how bad their socialized medicine is. But when they need care, they get on a plane and fly home.
it does not make strict actuarial sense for health insurance companies to not be able to take individual clients. computers should have taken away (about 25 years ago) the economy of scales of having enormous pools of employees signing up for the same plan.
what "group" plans through an employer can do is compel or coerce the health insurance company to have to take nearly every employee.
since health insurance companies practically dictate terms to healthcare providers, health insurance is a coercion on every free american.
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Economist Charles Wheelan argues that insurance is by definition "pooled risk." But by considering pre-existing conditions, health insurance has been able to greatly reduce the risk that they pool, in essence insuring only those who need it least. He equates it to a homeowners insurance company knowing in advance whose house will burn down-- and refusing to insure those customers.
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a yearly checkup and very mundane illnesses and injuries will cost more than the yearly premiums most people pay. it is a boondoggle. the question needs to switch from "how do we pay for insurance" to "how can we get healthcare back to being as affordable as it was before most people had insurance".
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I don't know which is worse: insurance or no insurance. I did two years of treatment with Kaiser that got me $5,000 worth of meds every month for an out-of-pocket cost of only $125. That treatment would have been impossible without insurance (> $75,000). And Kaiser encouraged me to do the treatment, and didn;t jack up my rates because of it. But Kaiser (a non-profit) isn't available everywhere. Out here my rates went up to $550 per month last year, for just me. That's $6,600 a year, far more than I typically spend on health care in an average year.
Now I'm in a group that costs much less. The deductible is high, $5K per year, but even so I save money over my previous plan-- whether I use it or not. And if I ever need another major treatment (I had a pacemaker put in year before last), my max out of pocket is still $5K.
I know people that got to Mexico or even Sri Lanka for treatment, where surgery by a good doctor is 10% or less of what it costs here. Without market controls of some kind, our costs are only headed north. That's because (1) health insurance adds overhead on both ends, (2) litigiousness adds to the cost of malpractice insurance and (3) some doctors think they deserve to live the high life.
The market can't fix this. And health care (like education or food) is not something we can afford to have unaffordable.
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