| Posted: 27 February 2010 at 3:25pm | IP Logged | 11
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Jodi wrote: The health care system is broke and we the people are having to make decisions, "Do we go to the doctor or do we eat?" all the while insurance companies get filthy rich. They are unchecked and their greed is showing. This isn't an industry that provides non essential products on the shelves, this is an industry that holds us hostage.
This is a claim we hear all the time, Jodi. But do you know what the profit margin is for those health insurance companies that you claim are filthy rich, unchecked and greedy? The pure health insurance companies -- Aetna, United Healthcare, Humana, and Cigna -- had net profits in 2008 of 4.4%, 3.6%, 2.6% and 2.3% respectively. Those are pretty slim margins. I'll see if I can find 2009 data, but the current margins should still be pretty close. (Using data from the other companies that provide healthcare insurance is trickier because you have to abstract their more profitable life insurance products out of the mix.)
Living the first 30 years of my life in a country with socialized medicine (Canada), I'm well acquainted with what we have to expect with government-run healthcare and the single-payer system in the absence of market forces.
The medical transaction is between a doctor and patient. With an employer pay system (i.e. you have health insurance coverage through work) the financial transactions are now between employer and the insurance company, and then the insurance company and the medical provider. After you pay your deductible, everything is "free" and there is no incentive for the consumer to use health care resources wisely.
A good analogy is to compare healthcare insurance to auto insurance (which in most states is mandatory), but we need to add a little bit to the auto insurance package to be apples-to-apples. So, let's assume that after you cover your annual deductible that your auto insurance pays for any vehicle repairs: oil changes, new tires, windshield wipers, in short all the costs of servicing and maintaining your vehicle save gasoline (which I would equate to food for the car). Further, let's assume that your auto insurance is provided by your employer, so there is no out-of-pocket costs beyond that annual deductible. In that scenario, beyond buying cheap gas (food), what incentive do you have to drive your vehicle in a cost effective manner? I say "none." The financial incentive for good behaviour is removed from the consumer by a third party payer.
Moreover, let's think about the cheap gas (food) for a moment. Cheap gas may harm all the other systems in your car. It may lead to greater wear and tear on your vehicle, cause functions to run less efficiently, lead parts to wear out sooner and need replacement more frequently. But, since you don't have to PAY for any of those elements because they are covered by insurance, what incentive do you have to fill-up with high-test at the pump? Again, none.
Now, we know that the insurance companies will restrict the reimbursement for the cost of services provided in the marketplace to control costs. Every dealer would get the same compensation for an oil change or a tire rotation. And, if the insurance companies had it within their power to mandate that you only use high test gasoline when filling up your vehicle because it would help lower their downstream costs, they most certainly would. They're footing the bill, after all, and it's good for business.
And thus, leaving our analogy, we come to the heart of the government-run healthcare challenge: the demand side versus the supply side. When a service is "free" -- in this context, "free" means not immediately out of pocket to the user and instead a shared cost distributed across the population -- it is very difficult to quell the demand side. (The Alberta government ran an ad campaign in the 1990s about visiting your doctor less to save government healthcare expenses. Visits actually increased during the campaign.) Instead, you control costs on the supply side (as Canada does by restricting doctor reimbursements and rationing services so there are waiting lists for non-critical procedures). And you introduce laws in an effort to steer people to change their behaviours so they become more cost effective.
Healthcare in this country is far from broken, and the things that threaten to break it -- specifically, a rapidly aging population that will demand more services -- aren't going to be solved by the government providing universal coverage to x number of uninsured residents, most of whom are young, healthy and could afford healthcare insurance but choose not to purchase it.
Our choice is not the House/Senate bills or nothing. We are not going over the cliff and we have to turn the wheel NOW. Both the Democrats and Republicans are playing politics. (We should be surprised?) We could instead have a series of bills. Enact the changes that both parties agree on today. Get the fixes started today. Work on building consensus on the more challenging points and pass them tomorrow. Or, since the Democrats control the Legislative and the Executive, they could move forward with their bill if truly believe in it and suffer the consequences (if any) next fall. What's more important: acting on your principles or re-election?
Instead, we watch them play the Poisoned Coke game:
"Drink the Coke."
"I don't want to. I think there's poison in it. Can I have a new glass?"
"You don't like Coke?"
"I do like Coke, but I don't want to drink one with poison in it. I'd like a new glass, please."
"A lot of people wish they had a Coke."
"Fresh Coke, yes. I don't think they should have a poisoned one. Like this one..."
"You're upsetting a lot of people who work at Coke bottling plants all across this country by snubbing that Coke. Good, hard working people who make Coke."
"I have nothing against Coke or the people who make Coke. Just don't want to drink one with poison in it."
"Look, if you're that concerned, how about we filter that Coke for you?"
"Um, I think the poison is pretty well diffused by now. I don't know if a filter would be all that effective in getting rid of the poison. Can't we just pour a new glass?"
"Boy, you're difficult. Okay, tell you what, come over to my place with your friends and tell me and my friends about your problem with the Coke. Then, after we're all done talking, you can drink the Coke."
"You don't seem to understand. P-O-I-S-O-N. I don't want to drink poison. Love Coke, don't like poison. Why don't we open that brand new bottle over there and pour out a fresh glass?"
"There you have it, ladies and gentlemen. My friend here doesn't like Coke and refuses all my reasonable efforts to change his mind. He obviously hates Coke, hates everyone who bottles Coke, and hates anyone who wishes they had a Coke."
Edited by Matthew McCallum on 27 February 2010 at 4:04pm
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Topic Closed)
