The Public Option, Health Insurance, and the Monetary System
Some stuff you've heard before, and some stuff you haven't. by Walt Thiessen
(libertarian)
Friday, December 11, 2009
Anthem Blue Cross sent me and my wife that dreaded letter this month, telling us that our health insurance premiums would increase by 50% next year, starting in January. Fifty percent! And Obamacare hasn't even kicked into gear yet. If they increase our premiums by the same amount next year, my wife and I likely won't be able to afford to keep our insurance, and we don't even have doctor calls. Our insurance has a $10,000 deductible on it. It literally only protects us from being financially wiped out if one of us gets seriously ill. We haven't even seen a doctor between us in the past year, but our insurance premium went up 50%.
With a roughly $2.25 trillion health care system already as of 2007, 13 million people working in the industry in 2006 with an expected increase of 22% over the next 10 years (a very low estimate, in my opinion), the United States already has a heavily bloated health care system. Obamacare will probably double that, especially if he gets his "public option". Liberals protest that without a public option, "if Congress fails to pass health reforms that control health care costs, premiums are projected to rise to 24% of a family's income by 2020" from their current level of 18%, but they miss the point because they've bought into the President's line that a public option will reduce costs. In fact, it will balloon them into the stratosphere, because it will effectively double the current dollar volume of the current health care system, and it won't take 10 years for the price increases to happen. They will happen much quicker.
People forget that government has a long history of dramatically underestimating the cost and negative impact of its health care proposals. For instance, when Medicare was first proposed in the 1960s, "Anticipating a 3.5-percent annual inflation rate, government actuaries predicted that the cost of a day's hospital stay by 1985 would be $155 and that the hospital insurance portion of Medicare would cost $9 billion by 1990. The actual average cost of a hospital day by 1985 was over $600; instead of $9 billion, the hospital-insurance program cost $63 billion in 1990."
In other words, Medicare turned out to be seven times more expensive than anticipated. If the public option turns out to be similarly underestimated (and we have every reason to believe it IS underestimated), no one except the very rich will be able to afford health insurance anymore out-of-pocket.
Think it can't happen? That's what the House Ways and Means committee that reported the Medicare bill to the floor thought in 1965 when they wrote:
"It is inconceivable that hospital prices would rise indefinitely at a rate faster than earnings because eventually individuals, even currently employed workers, let alone older persons, could not afford to go to a hospital under such cost circumstances....Quite obviously, it is an untenable assumption that there can be a sizable differential between the increase in hospitalization costs and the increase in earnings levels that will continue for a long period into the future."
And yet, as inconceivable as they thought such a scenario might be, it's exactly what happened.
But there's one question no one on either side of the debate is raising, (except me, it sometimes seems). That question is: why do health care costs keep going up? The answer is as plain as the nose on your face. The costs keep going up because the government, through its endless stream of regulations and programs, keeps forcing more and more money into the health care system. As I previously noted in this column, it's simply supply and demand. Just force more money into the system, and the price will go up, every time, without exception.
Okay, so if government keeps forcing more money into the system, where does that money come from? Ultimately, it comes from us in the form of taxes paid directly by us or indirectly by health care providers, who pass the higher cost along to us as consumers of health care and insurance. But even so, that doesn't explain how government manages to spend more money than it raises immediately, even from taxes. After all, the government doesn't have ANY money available for a public option or any of the other grandiose plans they're proposing in their 1500 page bills. So where do they get it? They borrow it. And where does the money come from for them to borrow? It comes from the banking and monetary system and its easy credit system.
Health care isn't the only issue directly affected in this way by the monetary system. So also is every other issue we face today. Change the monetary system, and we'd change the entire face of American (and world) politics.
Walt Thiessen is the author of the new novel, The Money Suckers, currently available as a free e-book for download. Set at the beginning of the financial crisis in October 2008, it tells the tale of a top banker who faces a crisis of conscience as he wrestles with the question of whether to tell America what really caused the crisis. A printed version of the book is anticipated to become available for sale in 2010. Visit the book's website at www.themoneysuckers.com.
Did you like this article? If you did, Thumb It! 2
thumbs so far
The views expressed
in this article are those of Walt Thiessen only and
do not represent the views of Nolan Chart, LLC or its affiliates.
Walt Thiessen is solely responsible for the contents
of this article and is not an employee or otherwise affiliated
with Nolan Chart, LLC in his/her role as a columnist.
50% INCREASE!!!!! that's ridiculous!!! What is worst is that with your $10,000 deductible you are paying your premium to NOT USE your insurace. This is the same way as with your car insurance and homeowners insurance where you are paying NOT to use it. Actually insurance is supposed to be that way so that you put a claim when you need to. Nevertheless 50% increase and you haven't put no claims is completey absurd. With the car and homeowner's insurance every year you can shop for prices and acutally get LOWER premiums than the previous year if no claims were placed. But you are getting screwed with a 50% increase!
Why can't health insurance be as efficient as car and homeowners insurance?
I guess health insurance is not as efficient as car and homeowners insurance because there is LESS government intrusion in the car and homeowner's insurance. That could be one of the reasons.Â
The reason why car and homeowners' insurance don't have the same dynamics as health insurance is that the car & home insurance companies do not determine/set/influence the price tag of the loss. If a car got totally damaged in an accident, the price of the replacement car comes from an independent market for buying and selling of cars. In contrast, in the case of health services:
i. the insurance providers themselves "negotiate" the prices of services they are insuring.
ii. higher prices of the services implies they can justify higher premia and deductibles: High deductibles keep us from actually going to the doctor, while high prices dissuade us from  leaving the insurance company's "protection" should a medical catastrophy strike. Elsewhere, this scenario is called "Extortion". From Wiki: "Refraining from doing harm is sometimes euphemistically called protection. Extortion is commonly practiced by organized crimegroups." The only difference is that here the insurance mafia is not selling protection against its own actions (fancy bills) but those of service providers that the insurance companies have themselves brought about!
iii. High provider prices "negotiated" by medical insurance companies simply prevent a direct market pricing from getting established, as everyone is herded into the insurance umbrella.
The gaming has really reached a point of no return. It can only be stopped one of the following ways:
Govt controlled/scrutinized pricing at providers, and of insurance policies (premia-coverage, as well as the deductibles and self-coinsurance rates)
OR
Outlawing of Medical Insurance altogether, allowing a Direct Freemarket to operate between service providers and the consumers (patients).
OR
Instituting a competing Public Option + Removal of the Employer Mandate to provide Health Insurance. Employers should be instead asked to pay out what they spent on the Employees' health insurance last year as a salary hike, and let the employees buy health insurance on their own. There should be no individual mandate to buying health insurance as a consumer's power to withdraw from the transaction is a bedrock of the market and free-pricing mechanism.
Posted By: Walt Thiessen
Date: 2009-12-11 17:48:37
Unfortunately, ohm, none of your solutions will work. Let's go back to basics. The problem is that government forces money into the health care system, and the amount they force into the system increases each year. Therefore, the only solution is for government to stop forcing money in, or at least to reduce the amount they force in each year. Only then can health care prices decline, which will also lead to insurance premiums declining.
Prices go up because government forces money into the system. Therefore, taking money out of the system by removing government force is the only solution.
Walt,there's another side of the reasons costs keep going up that you haven't touched on that most people don't even know about. Things like fraud, misdirected billings, and most of all reclaimations.
Fraud is the biggie -- it eats about 15% (!!!!) of the expeditures pushed into public health, either through bad billing and diagnosis codes, bundled and unnessary "services", or flat out and out old fashioned fraud (like filing claims on dead people).
Misappropiations are almost as bad. In fact, just to make sure payments go where they're supposed to and medical records don't get sent where they don't need to, most companies and hospitals have to spend millions and millions in IT infrastrucure and ANSI protcols to send the equivilent of a bill from your doctor to your insurance company.
But the big winner is reclaimation billing and disallowance -- believe it or not, billions of dollars is paid out by Medicaid on claims for people who HAVE their OWN COMMERCIAL insurance. Sometimes this money isn't recovered for months, and when Medicaid does take it back it does so in the stupidest possible manner,not paying additional claims until the shortfall for that hospital or doctor is met. So hospitals stuff the bills with needless crap , and the insurers end up paying the full amounts instead of the reduced amount Medicaid pays, and our rates go up.
Anthem Blue Cross is a particular sore spot for me -- Anthem of California just recently managed to start coordinating it's own records with the state,and so far almost 15% of what is found just falls off the radar completely. Where these members claims go is flat out unknown. Anthem is raising rates as a result, and yes, it will get worse soon.
Posted By: Walt Thiessen
Date: 2009-12-13 12:00:47
Logical Premise, you dramatically underestimate the fraud problem, and it ties in directly with what I wrote. You refer to illegal fraud within the health care system, but I refer to legalized fraud, which is a much, much bigger problem, with a far greater impact. Legalized fraud is what lies behind the entire financial mess, as it has lain behind such messes for generations. It comes in three forms: (1) banks lending money that doesn't belong to them; (2) banks lending long-term using short-term funds; and (3) banks and governments issuing money backed by nothing except more debt.
What does monetary system legalized fraud have to do with health care? Everything. Without it, "easy credit", government spending at current levels, and government regulation in all its forms would be impossible. Garganutan levels of "investment" in health care would be impossible, because pricing could not support it. Literally, removing those three forms of fraud would cut health care costs over the course of a few years by 80-90% or more. Your 15% figure pales by comparison.
The fact you don't seem to understand is that misappropriation is merely an abstract way to say that health care companies of all forms don't have to restrict their pricing because the monetary system, combined with government spending and regulation, allows them to get away with ignoring the laws of supply and demand (to a large extent), something that small business people do not dare to ever ignore.
Ah, yes, of course, how stupid of me to ignore that kind of "fraud". *rolls eyes*
As I've said before many times in the past, Libertarians have two paths before them. You can focus on the things that are achievable and fixable, that have concrete solutions and clearly defined aftermaths, and fix the problems slowly and carefully, or you can advocate taking apart the entire financial system and then be left to wonder why your platform has not made any traction in the past century.
You ask the question of why health care costs go up , and of course you have an "answer" and a "solution". Yoru solution, as detailed, is basically to remove what you call "easy credit" and that will reduce health care costs by 80%.
You do realize that this will also result in
The losses of literally tens of millions of jobs directly in the medical industry, and indirectly in insurance, support, medical billing and what not, with NO WAY to replace or reintegrate those lost jobs.
The destruction of many small businesses such as the one I currently work for doing their best to mitigate the actual fraud
The shutting down of all medical and pharamecutial R&D funded by the money
Elimination of most of your high tier medical and surgery equipment, which only became available at most hospitals and to the public because of the "money-flooded" system. Without replacements and a stream of buyers, most manufacturers of this equipment would shut down and only the most wealthy hospitals could afford such
A focus on "cash on hand" payment, and kicking to the curb any kind of actual public health care of any kind (without all that extra cash ER's cannot afford to treat those without insurance)
I know you people like to believe that you can solve everything, but I'm going to have to draw a line somewhere. It's one thing to rant on and on about the tax systems because they really are jacked up and shutting down the IRS would probably be a good idea. On this, though, you simply do not know what you are talking about, and the ramifications of your actions (which would end up worse than this) woudl end up making BASIC care very cheap and anything beyond that hundreds of times more expensive.
I know you and no one else will listen, because your concept of solutions relies on simplying a problem far, far beyond reality into a magical happyland caracature where a single change can make everything Happy Ever After, and anything to the contrary is communist/fasicst/sheeple.
Posted By: Walt Thiessen
Date: 2009-12-16 12:26:08
Ah, LP, the voice of fear! Your pen name is poorly chosen. You don't argue from logical premises. You argue from fear, and you urge everyone else to be afraid. Remove the source of corruption, and the entire economy will collapse, you warn! Stop allowing wealthy power brokers to feed at the trough of humanity and the entire wheels of production will come screeching to a halt, you cry! Woe is he who demands a sound currency, for he shall be left destitute, you preach! Harken to the voice of statism!
What you don't realize (or rather, what you don't want to admit) is that the entire medical industry won't go away if we eliminate legalized fraud. Instead, it will reform itself into a lean, efficient service machine, affordable to all, thereby rendering your statist visions unnecessary.
You accuse libertarians of being pie-in-the-sky dreamers, but in fact we're all, libertarians and non-libertarians, living your dream right now...and it's a nightmare.
Posted By: Scott McMorran
Date: 2009-12-26 22:41:29
Walt:
A very quick comment on the main reason Anthem raised your premium 50%. Insurance companies always over react when they are faced with the "unknown". The unknown in this case, of course, is the pending health care legislation. They are contractually committing themselves to you for a year and they have no idea what the government might impose on them during that year. There are other factors too, that could have caused this increase but I assure you that is the paramount reason.
Case in point. When the AIDS scare exploded in the late 1980's the Life Insurance Companies over reacted in their pricing of life insurance on males aged 18-35. Rates for that age group should be about $.25-.35/$1,000 of coverage, suddenly, they were $3.00-3.50/$1,000. It was simply a protective reaction. Within a year they realised there was not going to be wholesale carnage among men in that age range and overnight the rates came back down. Now I realise that doesn't help you any but this was not at all unexpected.
Want to comment on
this article? Leave your comment
here. Your email address is required to track your
comment. However, we will neither publish your email
address nor distribute it to other organizations or
persons. The only reason we might use it would be if
we needed to contact you regarding your comment. All
comments are subject to our
terms of use policy.
