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Health Care

Health care symptoms

- high costs
- uninsured, denial of coverage (due to high costs)
- uneven quality (due to both under treatment and over treatment, and lack of unified records).
- rationing of care (employer health care - by insurance companies; Government health care - by the government)

The problems

There are 2 main problems:

Insurance man with pile of money  1.  Health insurance is the biggest problem.  It is the wrong vehicle.  The incentives are in the wrong place.  Insurance companies have an incentive to make a profit, not deliver the best care at the lowest cost.  To truly have the free market drive down prices and improve quality, doctors should make profits and compete and patients decide as customers.  Instead, middlemen (insurance) compete and make customer decisions.  True, they originally drove down doctor fees, but to continue making profits they increase our premiums and deny care.  Plus driving down doctors fees [results in less] drives down quality improvements and discourages the best students from becoming doctors.

fat smoker and drinker  2.  Chronic users and bad habits are the second biggest problem.  Most costs are due to a small number of patients who use a huge amount of health care.  These are those with chronic problems and those with bad habits (smoking, overeating).  There is significant overlap (being overweight leads to diabetes).  A major problem with adoption of HSAs (Health Savings Accounts) is that although the typical person has $2000 in medical expenses each year, and most HSAs set this as the amount to be paid before the HSA high deductible insurance kicks in, those insurance premiums aren’t much better than the HMO premiums – and you also have to pay the $2000?  What gives?  The reason is that you are subsidizing the chronic users, and also funding the insurance company profits.
 
Here are some more reasons Insurance is the problem

choosing from line

Adverse selection – Private insurance companies (& HMOs), by their nature, only want to sell to healthy individuals or large groups where most are healthy and thus claims will be low, so they can make a profit.  The only way those with problems get insurance is if they get group coverage where everyone in the group is covered.

Separation of payment from consumer of services - Because the consumer (patient) isn't paying the bill, costs balloon.  Insurance company decisions on how to cut costs conflict with how patients would make those decisions.  The insurance companies themselves, or a small group, are usually selected by an employer, making decisions two steps removed from the consumer.

Consumer -> employer -> insurance company ->doctor

This separation also means that the consumer has no financial incentive to alter bad health habits.  The vague notion one might die several years earlier sometime in the distant future is not as motivating as having to pay twice as much for insurance.

The insurance company has only an insulated incentive to obtain quality and lower consumer cost.

Over insurance. - Insurance is a poor mechanism for covering all health care.  In other areas it only covers catastrophic loss, not everyday costs (regular doctor visits, etc.).  For example, auto insurance covers collisions, not oil changes.  Homeowners insurance covers fires, not painting.  When everything is covered, it becomes exorbitantly expensive.  Insurance companies become the middleman for all medical treatments.  Tax deductions and group coverage encourage coverage of everything anyone in the group could possibly need.  Imagine the effect on the auto painting and auto insurance business if auto painting were insured, it was tax deductible and paid for by your employer.  Wouldn’t those businesses fight hard to keep that tax deduction?

 

Who’s paying?

Under any scheme, you pay.  Currently, if you are lucky enough to have employer coverage, you pay for it in 3 ways:

- The amount paid by your employer reduces the salary [link] you can be paid.
- You pay the deductibles and [pay again] when [maximum coverage] dollar limits are exhausted.
- Your tax dollars pay for the deduction your employer gets (you pay this even if you don't have health coverage).

History

complex machine

Employer based insurance system created by fluke. The US health care system is a complex, Rube Goldberg system that was created by accident.  When other countries went to universal care in the 30’s, corporations, insurers and doctors resisted such efforts in the U.S. The World War II wage restriction laws exempted benefits.  Companies began to compete for scarce labor by offering benefits such as health insurance.

Solutions

Liberal - Government health care.   You get the same health care as your comrades.  Profit overhead is cut, everyone is covered, but instead of the wrong incentive, it's a system with no incentive - the government.  Plus we pay for it in taxes.

Conservative - Health Savings Accounts.   Those in good with the Godfather (with money and good jobs) get covered.  The incentives are right, since the patient is in control.  But everyone isn't covered since the poor and those with pre-existing conditions can't afford it.

Compromise, Hybrid Solution. A grand compromise would use the best of both liberal and conservative ideas (and in fact we seem to be stumbling in this direction):  (1) The government would pay directly for preventive care and the poor, (2) patients would take care of their own everyday expenses with a health savings account, and (3) insurance would only be used for its normal role – catastrophic coverage (with a requirement that everyone buy insurance, in return for insurance companies covering everyone, with subsidies where appropriate for pre-existing conditions).  

Schwarzenegger Health Plan

Health Care Costs

Unfairness of Current System

Myths about Health Care

Yogi

Yogi says

 

Health costs increase yearly under the government-subsidized, company provided insurance system we have. Yet procedures not covered by insurance, such as Lasik eye surgery, have seen dramatic increases in quality and decreases in cost. Consumer Driven Health Care.

 

 

The poor and middle class subsidize health care for the rich.

 

 

People with healthy lifestyles subsidize those with bad habits.

Insurance companies lobby to protect their profits, and voters buy their propaganda because they are afraid things will get worse.

 

 

A California ballot measure would expand coverage to most of the uninsured, paying for it with a tax on companies not providing insurance, and requiring insurance companies to cover those with pre-existing condition. While not addressing costs, it seems a needed first step. Schwarzenegger Health Plan

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