Thursday, October 01, 2009

Another Argument for Healthcare Reform Debunked

Someone (I suspect someone working for a political party) answered my short missive on healthcare yesterday:

Leesa your point is valid to a degree, however the debate is not simply that health care costs have increased it is that medical insurance premiums have increased some 119% over the last decade while wages have stagnated or fallen during the same time for the vast majority of Americans. According to the The National Coalition on Health Care, "Employer-based family insurance costs for a family of four will reach nearly $25,000 per year by 2018 absent health care reform." This is only for those who have employer based medical insurance.

Those without any insurance (which are rising) have only Emergency rooms or go without treatment as options. Of course the oldest and the poorest have Medicaid and Medicare so they are covered.

I appreciate your opinions on this issue, but cost increases are not solely due to advances in medicine and without some restructuring it will eventually bankrupt the country.

Thank you for your blog

Mike - NC

This brings us to another argument: look at Medicare/Medicaid. They provide healthcare far cheaper than traditional employee-based health insurance.

Hospital systems basically have three kinds of payers:

1. Those with health insurance. Most people with health insurance have one of just a few types in a given location. Some people refer to this as "Big Blue", as Blue Cross/Blue Shield is the biggest payer in many locations.

2. Medicare/Medicaid. These are government-paid claims. For certain locations, Medicaid goes by a different name, if the state subsidizes Federal money. Anyway, people have cards and the government is billed for the care.

3. Self-pay. These people don't have insurance and pay out of pocket. Most of them don't pay out of pocket; they just receive the care, and avoid the bills. These include members of certain religious sects – Amish and Mennonites, for instance, who believe that they should care for one another. The thing is, none of them are invasive radiologists or cardiovascular surgeons.

So hospitals get money from these three sources, and I have heard arguments that Medicare and Medicaid are so good because they are cheaper than health insurance. Well, traditional health insurance helps pay for Medicare/Medicaid and self-pay patients. Hospitals don't turn patients away – and even though most Medicare/Medicaid patients cost the hospital money on overall care, they get enough so that they take the patients.

A boring technical area of healthcare finance is dividing the cost of care into fixed and variable costs (they do this in all sorts of businesses and teach this at business schools). Generally, if your last customer covers variable costs, it makes sense to take the customer. And that's what hospitals do.

Traditional healthcare coverage is paying partially for the fixed costs of the Medicare/Medicaid patients as well as all of the costs of its uncollectables.

I am sorry that Mike did not leave a link to his blog, or I would have explained this to him.

In short, I believe that the healthcare issue is very complex, and we have a bunch of simpletons that have not even read the language of the bill. Even their staffs have not read the various bills.

And think of another thing – part of doing this is to bring the 46 million health insurance. Many of these people have made a choice not to purchase health insurance. They would rather purchase a big screen television than to purchase health insurance, perhaps because they have little assets to guard (yes, when I first got health insurance as a healthy 22-year-old, I almost did not get any because I had no assets). I decided for myself to get health insurance, not because I was altruistic, but because the $25/month (catastrophic only health insurance) guarded against me having to file for bankruptcy.

Tomorrow I will write about something more interesting.


Anonymous said...

I'm sorry Leesa I have no blog nor am I affiliated with any political party or special interest (registered to vote as an Independent). Basically I am just an ordinary citizen with an interest in erotica and have enjoyed and visited your blog but wanted to be your whipping boy for this issue I guess. I was simply trying to be the voice of a family that has been bankrupted by a single illness that unfortunately took someone close to me despite paying all we could to save her. After losing a job (and health care along with it), not qualifying for Medicaid we just paid what we could until she passed and we ran out resources (there was no blood left in the stone). You are absolutely right that there are many issues to work through, yet doing nothing has been what we have done in this country for a long time and I would just like to see something done to help A) drive down costs and B) prevent what happened to my family from happening to yours or any others. That's all. Insurance companies make a lot of profit on this, I think there somewhere has to be room to share to help prevent tragic medical issues from crippling undeserving families.

Thank you again for your blog as I said yesterday.

"Mike-NC" again

Leesa said...

Mike: Insurance companies are buffers between consumers (patients) and healthcare providers (suppliers of healthcare). Insurance companies make some profit, but remember that when the Federal government artificially surpress the cost of healthcare, it puts pressure on hospitals and physicians to raise costs to support these lower reimbursements. Many hospitals are non-profit institutions - and I have no problem with the government auditing them to see if the intent is to stay non-profit. They should provide a certain amount of free care in order to maintain non-profit status. Insurance companies are for profit entities. They gage risk, etc. But unlike Life Insurance - where the insurered is either alive or dead, easy to make the determination - health insurance plans have influence over the hospital and the consumer. They can not cover pre-existing conditions and they can not approve paying physicians/hospitals if they are not also working towards a goal of reducing healthcare costs.

I am not saying that healthcare reform is not needed. Something is needed, but this issue is extremely complex, and what I hear in the news leads me to believe that current legislation is inadequate. Yeah, I have not read the 1000 page bill, but neither have most members in Congress. And it is their freakin' jobs to make an informed opinion.

And I am not making you a "whipping boy." Just giving you my opinion.

Anonymous said...

Whipping boy was probably the wrong words, I apologize. I'm probably over sensitive to this issue at the moment. Thank you for your opinion and for not writing me off.


Malach the Merciless said...

I LOVE MEDICAID, or as it's called round here MassHealth.

Better and cheaper than my Blue Cross Blue Sheild!

richmanwisco said...

"Many of these people have made a choice not to purchase health insurance."

Really? Just how many, exactly, made a choice to not be covered by health care? All 46 million uninsured citizens of these United States? The answer doesn't matter, because if even one person in this country was deprived of insurance not by their own choice, that is ibe person too many. If one person dies because of lack of health insurance, that would be a bad thing, right? Well, one HUNDRED men, women, and children are dying EVERY SINGLE DAY for lack of adequate health care due to not being insured.

Some country we live in.

Anonymous said...

Great post! This is very helpful. I'm sure I'd visit your site more often. Anyway, you can drop by my favorite online hang out too, at UK Student Community. Thanks!

Leesa said...

malach: yeah, the docs and nurses prescribe the same medicine, you get the same accomidations, etc. And you don't pay a dime and the government gets a deal. Win all around.

richmanwiseco: if the goal is to save human lives, then instead of insuring the 46 million, ban all fast food restaurants. It would do more for the health of the country. Both posts did not say that healthcare reform was not needed - what I did was point out falsehoods in two common arguments. If you were to argue that healthcare is a right and not a privelege, that is an entirely different argument which may have more validity that what is being said in Washington. But this is not the argument that is being put forth.

seb: thanks for the spam.

Gary Baker said...

If you want to strip away the garbage, the debate is not really about universal health coverage. Everyone in the US does have through access to emergency rooms. The debate is over what level of benefits that everyone is entitled to and who pays what costs. The left seems to be making the case that those who contribute the most to society and receive more in return should be obligated to pay for those who contribute and receive less. That's basically the direction that they've taken in Canada and England. Both systems are strained to the breaking point.

As Leesa has pointed out, no one that I no of is saying that no kind of reform is needed. I am saying that the type of reform currently being considered would be disastrous for the country in general and our health care system in particular.

As for richmanwisco's assertion that if even one person dies due to lack of health coverage not by their own choice, it is one person too many borders on irrationality. People die. It doesn't matter whether they have health coverage or not. Everyone in Britain has coverage. Still dying. In fact, cancer patients are dying in greater numbers over there than they are over here from a percentage basis. Same in Canada. It seems that many on the left are of the opinion that it would be fine to have more people die as long as they spread it more evenly across the racial and economic groupings, an proposition I flatly reject.

The hard facts - Health care is expensive. Government can't change that. Exposing it to more market forces, not less, can slow the growth, but it can't change it either. It simply is. Ann Coulter was quite correct when she wrote that everything that does not exist in infinite quantity will be rationed somehow, and that's the real sticking point. Right now, the rationing is done based on cost. It is harsh, no doubt about it, but in the long run it is also the least destructive.

Leesa said...

gary: said much better than I could have stated the argument.