You've probably heard about a possible "deal" in the Senate to do away with the public option.
I'm here to tell you that this is no deal: it's a gift to Big Insurance, plain and simple.
The details are sketchy. The only thing that's really clear is the deal would drop the public option from the bill. With no public option, there's no guarantee of real competition. And without real competition, health care costs will continue to be out of control.
[snip]
Without competition from a public option, insurance companies have no incentive to compete—just like now.
So if the government does not have subsidized agency competing with your business, you are receiving a “gift”. Furthermore, if the government is not competing with you, your industry has no competition.
How can this be? I shopped my health insurance twice over the past few years when my premiums increased. There were a lot of options, but ended up staying with BlueCross despite the premium hike. My rough estimate of the risk of someone in my family making a huge claim is that it’s consistent with premiums we’re paying. I would love to believe someone can do it for way less, but I think they would have done it by now if they could. You can monkey around with how the risk is spread, but one way or the other a percentage of the population is going to need expensive treatments costing well beyond a typical $5,000 deductible. Someone has to pay for that. The problem is not that some politically connected companies have a monopoly on insurance products.
All of this makes me wonder why they’re not going after other insurance products. For example, it “feels” like disability insurance is expensive considering my estimation of my chance of becoming disabled for longer than the exclusion period. I also can’t understand why the life insurance on my wife, who appears to be as healthy as I am or healthier, costs significantly more than mine. I can’t understand why my auto insurance was twice as expensive when I lived in Florida than it was when I moved back to Madison.
None of that calls for government intervention. People should keep track of their costs, shop them if they seem out of line, and focus on producing value in their own field. If they really think some industry is on the gravy train, why not compete with that industry instead of bringing the government into the business?
Consider how bizarre the claims are. Suppose the health insurance industry really were on the gravy train. That means large businesses or churches could create their own plan open to their members. They could do a quick underwriting assessment of their members and work out a premium for their own health insurance. They could adjust the premiums each year based on last year’s claims. In other words, they could become an improvised insurance company. All of this is nonsense because the original claim isn’t true. Premiums of real insurance companies are generally fair. An inexperienced organization would not be able to provide what insurance companies provide for the same price.
All of the nonsense takes away from the real problems: a) people who can’t buy insurance because they got a chronic condition and had to change insurance for a job change or other reason beyond their control and b) people who can’t afford to pay for their basic needs. These are real problems, but politicians keep talking as if we could solve this problem and save everyone money just by re-jiggering how we spread the risk and by getting the government in the insurance business.
If it weren’t so serious, it would be laughable. I would love to get inside the heads of people advocating for a gov’t-run insurance agency. Do they just think the government does things better in general? Or do they think claiming they’re working on a way to get people’s premiums down is the only way to sell a healthcare subsidy for the poor to the broad public?
CJ,
ReplyDeleteWe seem to have found common ground at last. Let me try to help you with a few of your questions.
The insurance industry works on statistical data to evaluate premiums. Florida has a very large senior population and a very large youth population. Statistical both groups have a higher average of accidents and related injuries while where you live the number of seniors and young drivers are closer or less than the over 30 to 50 year old generations, therefore the premiums are spread more evenly across the general population not because the accident risk is any less than in Florida but the percentage of 30 to 50 year old drivers is closer to or greater than those who are in the accident prone age groups. The other factor that is used is population density. Lets say that Florida which has a very dense population versus is compared to your state that has less density and the average US accident rate is 1,000 per every 100,000 drivers within an average 100 square mile. They compare that number to Florida and your state. Lets say that Florida rate is 4,000 accidents while the area you live in is only 500 accidents for the same area. Your rates are cheaper while Florida residents pay a higher rate. It also changes if you leave the US. If you are going to Canada for a week for vacation unless you notify your insurance company that you are leaving the US and going to Canada you may find that your insurance will not cover you.
For women life insurance is based on the US mortality rate.
The same rate is used for as a base for pensions as most employers buy an insurance policy based on your projected earning. The idea is that you are likely to die before you either collect your pension or that you will die before money in your insurance annuity is total gone. Health insurance is based almost the same way except they use catastrophic illness as the baseline. The deal here is a little different because women outlive men they have a tendency to need health care long with higher costs there is also illness that attack just women such as complications from pregnancy, abortions, breast and uterine cancer, and a whole host of others that usually require longer and more expensive treatments. Here a good one for you that has always mystified me. The government has maintained that people who smoke create cause the health insurance companies to raise their rates because the instances of cancer in smokers is higher than in non smokers. Not true, according to the statistics. The cancer rates are fairly close but what does change is the areas of the body that is and type of cancers differ between smokers and nonsmokers. In truth smokers generally are more susceptible to the more aggressive forms of cancer and because they affect hollow organs like the lungs, kidneys, pancreas, and brain they go undetected for a longer period of time so by the time cancer is detected it is usually found in its later stages which means it is untreatable and the morality rate is usually one to two years. Non smokers however usually contract slower growth forms of cancer that attack the some of the same organs but are usually detected sooner because the symptoms develop sooner and most are treatable and curable but expensive because the mortality rate is longer. So what the government has done in effect is to shift the added cost of health insurance onto the smokers to cover the cost of the non smokers since health insurance is now more expensive for smokers than it is to non smokers. I'm not debating the issue of smoking versus non smoking here or the issue of second hand smoke. That is a different debate. I'm just trying to help you understand how the system works.