Insurance for all?
Healthcare reform is probably the hottest buzzword as of late but what is it all about? I’ve written before on healthcare and have exposed the reality that people with cash will get hit harder than a piñata at a 6 year olds birthday. Still some people continue to think that by insuring everyone somehow this is going to save money. I have no idea why they think this will work but I’m game. So let’s jump in and see what is going on here.
How does insurance actually work? Well it more or less works by the limiting of risk vs. reward. This is a bit of a challenge but can be accomplished one of four ways avoidance, reduction, retention or transfer. Health insurance basically falls under the transfer strategy. Currently most health insurance is group health which basically is about taking everyone and hoping that you get enough good without getting too much bad. The cash problem that I previously highlighted is a significant incentive to purchase insurance. Simply put failure to have insurance means the potential risk of having to pay 900% more for something you can’t possibly be sure you need.
Doctors basically work for the CYA institute. They do plenty of things just because they might get sued. The entire discussion about the authoritative “Standard of Care” simply means failure to perform this means you’ll get sued. You had a minor car accident and you are fine but they order an $800 CT scan “just in case” you broke your neck… even though $100 x-rays said you didn’t. The doctor sternly says your neck might be broken and we can’t see it any other way… you would be crazy to say I’ll take the risk. There are thousands of cases where they do tests because of an urban legend that while sounding exciting is total nonsense. I’m sure everyone has heard of the story where the guy gets into the car accident and feels fine so he gets out of the car and somewhere between 5 and 10 minutes later suddenly drops dead of a broken neck. I probably heard that story at least monthly for my entire career and I feel bad for that guy because he probably died at least 100 different times in front of 100 different people. He was probably a Buddhist and learned slowly. That guy is responsible for so many CT scans that Siemens should elect him to the board. Oddly enough I can find no evidence that he even exists but still he’s making the world a safer place. Actually he’s causing the medical community to soak the insurance companies as frequently as possible.
Ok back to the insurance situation. Since mostly the people who shouldn’t have it basically seek health insurance the companies need to get some profitable clients into the mix to reduce risk. This is the retention angle. Selling private insurance is tough because how many people want to spend $500-$700 a month to mitigate risk. People do the math and say well I’m healthy so no way am I spending that per month. People who really need the insurance won’t be offered it. So that leads to the group insurance debacle. The insurance companies try to tie in everyone at a company and the company gets a better pool of clients. The company pays some benefits and gets the write off and apparently someone is happy with this. Hint… it’s the insurance company. If you think for one second your employer offers these benefits because they are benevolent… check into the reimbursement you get for not taking insurance. I think my company offers a robust $25 or so. So you save them $2500 or more and they offer you $25 surely there must be something happening in the background. Now the states are making these awesome moves to INSURE EVERYONE. Does this help everyone? No it doesn’t. Will it make insurance companies richer… yep. Will it likely make Doctors richer? Yes it sure will. Will it make hospitals richer…. Sure will. Will it make healthy uninsured people richer… no but why do they care about that. Will it cost anywhere near what the government wants you to believe? Hahahahaahhaahaha nope. I’ll be going long the health insurers on that one. Don’t worry it will pass why because they are lobbying hard to get it done. What have we learned about politics? Politicians love to do things that have immediate value to get them reelected and line their pockets. It’s even better when those solutions have costs that are difficult to trace and appear much later.
Healthcare insurance reform is currently a joke. The current situation is a mess with the U.S. spending roughly 15.3% of GDP and should only increase. The Organization for Economic Co-Operation and Development (OECD) indicated in their Factbook for 2006
In terms of total health spending per capita, the United States spends almost 50% more than the next highest-spending countries, Norway and Switzerland, and well over double the unweighted average of all OECD countries. At the other end of the scale, the Slovak Republic, Poland, Mexico and Turkey spend well below half the OECD average.
So we spend significantly more money than anyone else and therefore our system must me absolutely superior. Well the Rand corporation has something to say about that.
The United States spends approximately 15 percent of its gross domestic product on health care, making health care the largest single sector of the U.S. economy. Despite these levels of expenditure, Americans are not healthier and do not live longer than citizens in many other nations (World Health Report 2000—Health Systems: Improving Performance, online at http://w3.whosea.org/healthreport/ main.htm). Nearly 45 million Americans are uninsured—about 18 percent of Americans under 65. American adults receive just half of recommended health care services. And we find that quality of care does not vary much by socioeconomic factors: Quality is similar in cities with higher and lower rates of those without insurance, poverty, penetration of managed care, and supply of hospital beds and doctors.
Hold everything… so what I am seeing here is that we aren’t healthier? We don’t live longer? All that money doesn’t buy quality? Just in case you have any doubt that the healthcare system is a total joke.
That’s a link to a study that will make you nauseous. If that doesn’t make you think about things differently then nothing will. A study from the Journal of Health Affairs indicated that about 21% of healthcare spending goes to paperwork. So approximately 3.3% of GDP goes into healthcare paperwork. Somehow insuring everyone is going to make that better? It is only going to get so much worse. Healthcare is scary. There is no horror movie that can compete with it. Hopefully someone will propose a reasonable fix for it. Wait hasn’t the Libertarian Party already attempted to do that… wait they don’t get elected so nothing to worry about there. Healthcare simply makes me sad. Maybe tomorrow.