The inevitability of an American single-payer health system
Amidst the ideological back and forth that is the health care reform debate of 2009, recent studies reveal a growing reality that each of us can easily understand, no matter what our ideological point of view.
It will not be long until the private health insurance model will no longer work –for anybody.
It’s got nothing to do with public options or single payer advocates just as it will have nothing to do with those prepared to defend America from socialism at all costs.
The simple fact is that single-payer, government controlled health care is inevitable because the trajectory of the private health insurance system reveals that it is doomed to fail – and sooner than we might realize.
In 2009, health insurance premiums will grow at an annualized rate of 5%, just as it has done for the past two years. Despite the fact that the annual cost of living for 2009 is projected to decrease , this 5% premium increase is actually the good news when you consider that in the four years preceding the leveling off at 5% annual increases, the annual bumps ran between 10% to 13%.
So, how did we get so lucky in 2009? Did the private health insurance companies realize it was in their best interest to bring down profits in order to lower the costs to their customers? Did the costs of medical treatment stabilize with the downturn in the economy?
Sorry. None of the above.
The premium increase remained at 5% because the insurance companies cut a lot of meat from the bone, providing considerably less for the money they received.
According to the non-profit, non-political Kaiser Family Foundation and the Health Research and Educational Trust report published last week , the reduction in the annual premium increases can largely be traced to the increase of high-deductible insurance policies being offered by employers who simply can’t keep up with the out-of-control cost of providing their employees with health insurance benefits.
In 2009, the number of insured with high deductible plans will grow from 18% to 22%.
Let that sink into your brain for a moment.
Over 20% of all employees receiving health care coverage through employment now face out-of-pocket payments of at least $1,000 annually before their health insurance begins to pay their share of the medical bills. Of course, in addition to the deductible, there is the roughly $3,500 – 4,000 the average employee will contribute towards coverage for his or her family, plus the co-pays and other charges that come with American health insurance coverage.
The move to high deductible programs was most prevalent in small businesses where one in three covered workers have a deductible of $1,000 or more.
Let me be quick to point out that some might attribute this growth in high deductible policies to the institution of Health Savings Account programs that permit employees to contribute to tax advantaged savings accounts, usually with matched contributions from employers, and come with a legal requirement to maintain a high deductible , ‘catastrophic’ insurance policy . The purpose of these programs is to allow employees to save the money that they can use to fill in the costs incurred before reaching the high deductible. The money can be carried over each year, allowing younger savers to build a substantial savings account for their health costs and, arguably, give them more control over how they spend their healh care dollars.
This would certainly provide an argument for how the high deductible policies are a step in the direction of consumer driven health care, an approach some believe will serve to control the costs of health care in the long run.
And these consumer driven health care proponents might be right if it weren’t for the fact that the greatest growth in high deductible policies do not come with health insurance savings account programs – they are just high deductible insurance policies, period.
According to Drew Altman, president and CEO of the Kaiser Family Foundation,
We may be seeing the tip of the iceberg of a trend towards less comprehensive, skimpier health insurance coverage for many working people.
Via Kaiser Family Foundation and the Health Research and Educational Trust
Altman also pointed out that the slower growth in premium costs we’ve experienced over the past three years is not likely to last, predicting a return to more typical growth of 7% to 9% increases per year over the next decade. “We’ve historically seen these peaks and valleys before, and we always have a bounce back effect.”
So, if annual premiums for family coverage grows, as expected, by an average of 8.7 percent per year over the next decade – as they did from 1999 to 2009 – premium costs will increase from the current average of $13,000 for the average family to more than $30,000 for the average family. As employees pay, on average, 28% of their premium costs with their employer paying the rest, that means that employee costs will go from $3,640.00 per year to $8,400.00 per year.
How many families do you imagine can afford $8,500 per year in health insurance premium costs, plus the large out-of-pocket costs for high deductible insurance plans? And how many companies do you imagine will be able to afford $21,600 per year in employee health insurance for each of their employees with a family?
Clearly, the employer health insurance model that accounts for 60% of health insurance coverage in this country is completely and unarguably unsustainable.
The next question is where it gets weird. If the above is true – and the numbers make it pretty clear as to where this is going – wouldn’t the private health insurance companies adjust their model rather than commit suicide by pricing themselves out of business?
As counter-intuitive as it may seem, the answer is likely to be ‘no.’
Virtually all large health insurance companies are publicly held and public companies have a life force that is unlike any other. They are driven by the desire of current management to show improved profits of about 10% each year so as to sustain share price increases for the shareholders and compensation increases for management. Also understand that while public companies like to talk about the “long term”, the phrase has no true meaning to them.
Management and shareholders worry about this year’s numbers with an eye towards next year’s – and that is as far as it goes. Most shareholders and managers have no expectation of being around in the ‘long term.’
Thus, while current management of the large health insurance companies may very well realize that they cannot sustain their business model for the longer term, this is not something they can afford to worry about. Their shareholders want returns on their investment as management wants boosts to their compensation and they are looking for it now. The future will be someone else’s problem.
Take virtually any failed industry in America and you will see that the dynamic set forth above is inevitably true. Whoever ran General Motors before the CEO in charge when the industry fell apart probably knew what was down the road for the company. But it wasn’t his problem. An adept shareholder in GM who got out five years ago, really didn’t care where the industry was headed nor did a CEO who had no plans to be around when the balls in the air crashed to the ground.
So, when the price of health insurance reaches the point where most Americans truly cannot afford it – and the numbers make it more than clear that the point will be reached and reasonably soon – what then?
Will ‘free marketers’ be out there arguing that we should just let the health insurers fail? After all,that’s how a pure, capitalist system is designed to work, right?
This might be an argument they can make when it comes to the automobile companies because none of us really have to buy a car this year. And if we do, we all know that a devastated car industry means better prices for us when we appear in the showroom. As for the lost jobs? Very sad – but not our immediate problem.
Free marketers don’t care much for bank bailouts so long as they’ve gotten their money out the bank before it fails.
But when it’s health care? I think you will find that teabaggers everywhere will have a very different perspective when they find themselves out there alone with no way to pay for their family’s medical costs.
Who will need the save the day when this happens? The government will – and that means a single-payer system.
Whether the result fits your ideology or not, the numbers would seem to make clear that it is only a matter of time before private health insurance prices itself out of the market, leaving only the government with the capability to insure the nation’s health.
Given what appears to be a very dim future for the health insurance business model, one cannot help but conclude that the battle in Congress, while framed in ideological terms for public consumption, is really more about helping the insurance companies to earn as much money as they can before their inevitable collapse. After all, Congress is not unlike public companies in that elected officials tend not to worry beyond the next election cycle. When the insurance companies ultimately are priced out of the health business, and the government must take over, it will either be the next Congressman’s problem or enough time will have passed to allow constituents to forget the past ideologies of their representatives.
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You may be right, but I doubt that I will live long enough to see it. You see to presuppose that businesses and governments make rational decisions, that is rarely the case.
Americans may believe that we are a true democracy but that belief may be unfounded. We are in truth a capitalistic society that is becoming more and more out of balance. I don’t have the exact figures to quote and doubt that I could rely on my sources of information (the internet) but I believe that 1% of the population of the united states now controls over 85% of the total wealth. Who can trust the news when the news media is controlled by big business and wealthy individuals with their own agenda’s? Who can trust the politicians when they receive millions from the very businesses they pass laws to regulate.
Greed appears the be the overbearing factor driving the economy, and at some point will likely be it’s downfall. All societies end, I suspect we are drawing close to that inevitable outcome. I wish it wasn’t so.
In the meantime, a lot of people will suffer and die so that others can make even more money. This is the question that everyone is afraid to ask. Is it moral to make a profit off of other peoples suffering?
Willard- if you look at the article again, I think you will see that I pre-suppose that corporations will NOT make rational choices. If the health insurers were sensible, they would modify their business plan for survival. But, what I argue, is that they will not do this and, therefore, will become extinct.
In response to another comment. See in context »I used to agree with you that we would not see this happen in my lifetime- and I’m 58. I don’t think that any longer. I think the numbers make it somewhat clear that it is a much quicker time line to the insurers pricing themselves out of the market than I would have believed in the past.
[...] It’s Inevitable Comments (0) [...]
Rick,
For what it’s worth, I honestly cannot understand why people cannot accept a simple concept of capitalism — for profit corporations first and foremost serve the stockholders who have invested in the corporation. Those stockholders needs, often dictated by the very nature of the bylaws under which an entity is incorporated, charge that corporation with putting stockholder needs above those of any others.
How we as a nation can continue to believe that as long as our insurance companies can function as for profit entities while still servs the best health needs of those they cover is simply ludicrous. The two goals are diametrically opposed to each other and has been played out in boardrooms across the country as companies fail, yet their CEOs manage to recoup millions in bonuses.
While we may snicker at this concept when it comes to our jeans or our cars or even our homes, when it comes to our health, the concept is just purely pathetic.
justadrone – I think you’ve got it exactly right.
In response to another comment. See in context »It’s true that insurance premiums may continue to rise, but that just means that the underlying costs of healthcare are rising — not necessarily that prices are increasing solely for the purpose of enriching CEOs and shareholders.
If the latter were true, then at some point an entrepreneur would step in and offer the same quality care for half the profit of an existing insurer. That’s what’s great about a free market, there is price competition which leads to profit and cost minimization when competition is high. Note that right now, competition is not high, largely because insurers cannot compete across state lines.
Unfortunately, if there ends up being a single payer system, then all competition is eliminated and there is no financial incentive to minimize costs (there is political incentive to minimize budget impact, but those political processes operate on a much slower time scale than financial markets do).
openeconomist-
I don’t think I can agree. For starters, if you take the rising costs of health care and add the cost of living idex, you will see that profits for health insurance companies far exceed the combination of the two. This would explain the huge increase in profits experience by this industry over the past decade.
Further, the industry does not lend itself to entrepreneurial efforts. To make money requires huge sums of capital. This is why the industry is controlled by a handful of players.
While I too enjoy the idea of free market, the truth is that it simply does not work in every industry. If you think about it, it has never been used for services that the entire population requires – such as policing, fire protection, street maintenance, etc. Health care is one of those necessities that, if left to a pure free market, puts us exactly in the situation where we find ourselves. Cars can be free market – if one company doesn’t satisfy the needs of the public, there will always be someone else who can. Health care is not like that. A doctor can compete by being better than another doctor. If he has a nervous breakdown, there will be someone to step into the gap and become the new best doctor. Not so for a payment system like health insurance.
In response to another comment. See in context »Actually I think we do agree. I didn’t mean to suggest that our current system is actually a free market, but I think it can be. And like you, I don’t like how the industry consists of only a few large players which unfortunately can use their market power to drive profits up like you show.
So, how do we assist entrepreneurs to make health care insurance more competitive. There has to be a way right? The current system and state of things is just not working. I suppose that going to a single payer type system could be better than the status quo. In fact, in many ways I’m sure it would be. I guess I just worry about long term apathy and lack of competition.
In response to another comment. See in context »fair enough.
In response to another comment. See in context »“While I too enjoy the idea of free market, the truth is that it simply does not work in every industry. If you think about it, it has never been used for services that the entire population requires – such as policing, fire protection, street maintenance, etc.”
Yes! Thank you for posting this! This really has not been said enough during the greater debate. Critics of a government system treat the free market as some kind of silver bullet that can fix anything. Yet every freshman economics professor tells us this at some point; the free market does not work for everything.
That’s why the government has to tend to our highway system and create regulated monopolies for cable television and telephone services. Can you imagine if we had multiple telephone companies providing local service in a single area, each with their own sets of wires going up and down the road? There would be a set of poles and wires for every company in the market. Every time you’d switch your local phone service you would need to rip your old company’s wires off your house and have someone attach new ones. All this overhead would make it very costly and inefficient. It would be a nightmare. But that’s what we have in health care.
Also, the free market doesn’t work so well when you can still acquire the product or service without having pay for it. If walk into Best Buy and ask for a new plasma TV for free, they’ll tell me to take a hike. But if I go into an ER with a serious injury and no insurance, I can still get care. Sure, they’ll bill me – but if I can’t pay, those costs will end up getting passed on to those who can.
Good health care requires compassion and looking beyond a person’s finances. I think that alone makes it totally incompatible with profit-driven economics.
In response to another comment. See in context »I wonder at your logic of pointing out that we all pay for services through the government which we all require (ie police, fire, roads, etc.) as a reason we as Americans should support single payer health coverage. Our government has bankrupted every area it has assumed responsibility for! I’m curious how government employees are going to feel when they find out they will not be receiving all the benefits they have been promised because the government cannot afford to pay them. If the government does pay, it will be with useless dollars because our government leaders have spent without conscience and no one in the world will want to hold our currency. Our currency at our government’s direction has become the world’s largest Ponzi scheme. The world’s second biggest Ponzi scheme is the US Social Security Administration. To look at all their mismanagement and reckless financial “regulations” and state we should put them in charge of our health care or even health care insurance, is inconceivable. It is interesting that Health Savings Accounts, which puts the cost of paying for routine health care in the hands of individuals while providing catastrophic insurance coverage, will be illegal under current plans. Most people could not tell you the cost of their doctor’s visits or of various procedures because they don’t care – their insurance pays for it. Put the money in the individuals hands and watch costs go down.
Also, you cannot blame the free market for our health care cost problems when 85% of all hospitals are non-profit or government run and as such, are unconcerned about competition that could bring costs down. The health care industry is a also a web of already existing government regulations that raise costs and inefficiencies. And don’t get me started on Medicare and Medicaid! You cannot call them successful programs when all they bleed is red ink. Let the government clean up the billions in fraud and waste before they ask me to approve a “panel of experts” to decide on the procedures, medicine, and care my family will receive.
In a note to John may I point out that the deregulation that he spoke about so disapprovingly brought down the costs of both phone service and air service to the point that today we don’t even notice if we place a “long distance” call or hop on a plane for a weekend jaunt across the country. Let’s really deregulate the insurance industry so that true competition can flourish and we aren’t stuck with just a couple of choices probably owned by the same parent company.
In response to another comment. See in context »Everyone always comes back to pointing the finger at Medicare and Medicaid. While I agree that there is definitely some fraud, waste and inefficiencies that needs to be cleaned up in these programs they are not for profit companies.
I’m 25, I’m 5′10″ and weigh 155 pounds. I run every day and go to my yearly check-up. I have never had any medical problems to speak of in my life.I pay a little over 2,000 a year to blue cross blue shield for my medical coverage.
I am the lifeblood of my health insurance company. They make their millions due to people like me. Once people start getting ill and old they are shrugged off onto government programs.
I know several people my age who are on medicaid and have been denied coverage due to their illnesses. They all have MS, a few have glacaoma and one suffers from a blood disease.
No one my age is carried under Medicaid unless they are denied Health Insurance, READ:They are already ill.
Of coarse these programs will not be shining beacons of fiscal superiority, their rolls are packed to the hilt with people with seriously bad medical conditions that incur thousands and thousands of dollars a year.
The private sector sucks up people like me. They then spit out all the seriously sick people since they are not worth the investment.
Our nation’s health care should not be profit driven.
In response to another comment. See in context »After 45 years as an insurance executive (and actuary, I can assure you that baseball and insurance – the two areas where price fixing and other monoploy conduct is not illegal in the US – do not have to worry about competition. I have never seen a price reduction because of competition, or a new entry because the new company was willing to price for less and expected sales because of this. The famous North Eastern University Actuarial School business model of the 60’s to the 90’s showed that insurance is sold – not bought – so price does not matter – so control of brokers/agents and advertising was the only model that tracked growth in the industry. You have been listening a bit too much to CNBC, Fox Cable, and the other purveyors of the now discredited “demand side economics” of the 80’s – but these folks are very good at ignoring or excusing the bubble world of Greenspan and Reagan, so you are not alone.
In response to another comment. See in context »papau- interesting but I have absolutely no idea what your point is vis a vis the article. And, not for nothing, I rarely watch CNBC and, anyone who reads this post knows I wouldn’t be caught dead watching Fox!
What is the relevance of your being an actuarial to the point of the article? And what is the point about your competition point?
In response to another comment. See in context »I’m already experiencing what you’re describing. I’m a single father with health insurance provided through my family’s paving business. My deductible is $2400, yet the company I work for pays roughly $13,000 a year for my insurance. I’ve been to the doctor once, and my daughter has been once this year. The only prescription I do have is a generic so I can get it for 4 dollars at Walmart. I’m not getting my money’s worth, and my family’s company is losing money hand over fist because of paying so much for employees’ insurance. I fully support the public option because of this. I also find it ridiculous as to the claims of death panels, because quite frankly, private insurance companies already have these. Some have been investigated because of policies to automatically deny any claims the first time, and hope the person goes away out of frustration. How can one say, that a private insurance company has the best interest of their clientele at heart, when their highest goal, due to being publicly traded, is to make high profits to please their shareholders…
You are exactly right nidomus. It is really not possible for publicly traded for-profit companies to have the patients best interest in mind. They can’t when they are trying to make a profit!
But, they do have to compete on price with not-for-profit organizations in the same industry. Unfortunately I don’t think there is enough competition which is why generally healthy people like us end up spending $13,000 on insurance and probably only getting $5,000 out of it if that.
In response to another comment. See in context »open – I’m curious where you live? I live in California and there really are not any companies left in the non-profit health insurance business. There used to be, but those days are long over here. Do you still have them where you live?
In response to another comment. See in context »rick, I live in Boston and we are surrounded by non profit medical groups. I’m sure it is different in each state, but I can say that there has been a lot of competition between non-profits and for profits.
For instance, Beth Israel Deaconess Medical Center (BIDMC) used to charge way more for emergency room visits than Boston Medical Center (BMC), a non profit, did. Once those issues were brought to light, BIDMC was really forced into reworking their ER revenues.
In response to another comment. See in context »The reason why costs go up is government intervention, decreasing competition, providing money for some, increasing costs (by paying at artificially low rates for others). Single payer, which means your cost is zero, will be wonderful for the hypocondriacs, until they are cut off. Not so good for grandma who will be cut off. Not so good for healthy young people who don’t normally need much care. Not so good for doctors who have no incentive to go into medicine, and no incentive to be the best. Great windfall for shyster lawyers who now have no worries about their victims will choose suicide rather than pay.
If you want to see what the market would do without goverment intervention, look at plastic surgery, which has been blissfully free of most government regulation. Medical progress continually advances, prices drop, and customers compete for the best service.
Government is the problem, and more government causes more problems.
Don- what I really had hoped you would do is read this article leaving the anger stuff out of it. When you start talking about the whole “shyster lawyer’ thing, where does that lead us? And by the way, I’m a lawyer and not a shyster. I look after people getting screwed over by the insurance companies.
In response to another comment. See in context »If you have a moment, read the article again. I’m not advocating a government take-over. I’m simply saying that if you look at the real numbers, it is inevitable.
Now you may look at the numbers and come up with some thoughts and approaches I am not considering, but,really, isn’t the whole ideological stuff on both sides getting a bit old already? Maybe we should spend some time on the facts and see where we are?
nonsense – plastic surgery as to lasik eye surgery has indeed dropped in cost because the laser dropped in cost – nothing to do with competition, but where do you get the idea breast augmentation has dropped in price – price varies widely, not only based on “simple” versus more controlled variations, but also depending on factors such as the surgeon’s skill, the region where you have the surgery performed, whether the surgery takes place in the office or in a hospital, what type of surgery you choose and what type of anesthesia is used.
Breast implants also have a cost, which is typically part of the surgery fee.
The average total cost ranges from $4,000 to $10,000. The average cost for the implants is $1,000 to $1,300; the anesthesia fee is typically $600 to $800; the facility fee typically ranges from $800 to $1,200. The remaining cost is the surgeon’s fee.
The $10,000 per breast is higher than it was a few years ago. Capitalism without government regulation simply does not work as a safe economic system for the average person – for the “middle-class” – read Minsky – where have you been for the last 18 months?
In response to another comment. See in context »Well, I love the whole breast discussion and all, but, again, what does this have to do with insurance companies pricing themselves out of the market? You act as their prices are truly the result of increases in medical costs and profit has nothing to do with it. I would, with all due respect, suggest that you are spending too much time listening to the insurance company lobby and maybe a little Fox Cable & CNBC might do you some good (well, maybe not Fox.)
In response to another comment. See in context »If you believe that this is all about the costs of laser surgery going down when the equipment gets less expensive, how do you account for the huge increase in profits for health insurers over the past ten years when almost everything else has gone up in price?
No. 37 is where the United States’ health status was ranked by the World Health Organization. Here’s how U.S. health care stacks up in other ways (in most recent statistics available http://www.infoplease.com/ipa/A0934556.html our lousy system cost twice the per capita of the rest of the world):
· No. 1 in total health costs as a percentage of gross domestic product (almost twice the Per capita cost of the rest of the world).
· $878 per person spent on pharmaceuticals — the most among the world’s 30 largest economies.
· 2.4 practicing physicians per 1,000 people in the United States. Countries with fewer physicians per 1,000 are Canada, Japan, Mexico, New Zealand, Poland, South Korea and Turkey.
· 3.1 hospital beds per 1,000 people — the fewest beds per 1,000 among the world’s 30 largest economies, except for Mexico, where there are 1.7 beds per 1,000.
· 34.3 percent of Americans are obese (with a body mass index of 30 or higher), the most of any developed country.
· 25.9 magnetic resonance imaging units per million people makes the United States No. 1 among the world’s largest economies. The United Kingdom, in contrast, has about one third the number of the U.S.
· 84.5 coronary bypasses per 100,000 people makes the U.S. the second most bypassed among developed nations, topped by Germany which has 131.8 bypasses for every 100,000 people.
· 15.4 percent of the U.S. population are daily smokers — the second smallest percentage among the world’s 30 largest economies (only the Swedes smoke less).
SOURCES: World Health Organization, Organisation for Economic Co-operation and Development
The above leads one to think the protectors of the current system – from Ben Nelson and Baucus on the Democratic Party side, to the entire GOP, to the talking heads on CNBC and Fox Cable, are actually folks that hate America and want to destroy our economy and our country. The tea baggers are good people who are so totally mis-informed that the are on the wrong side as to patriotism and their own self interest. If there is no strong public plan option from day one, the Congress should kill the health reform bill as it will amount to a massive corporate welfare check to the insurance companies via the subsidies on premium, plus a massive free of sales/marketing cost increase in the number of policies on their books via the mandate. As it is, the public option – and the rest – do not go into effect until 2013 – and by then we will have passed single payer with a salaried doctor/fixed price per capitia hospital/clinic national system – or we will be unable to sell our products due to the high health costs and unemployment will be hitting 25% as the depression that will go on for 50 years enters its 2 nd year. Meanwhile we (Fox Cable) will say what is happening is just the creative destruction process of capitalism as wage drops adjust demand in preparation for the next great economic boom in the best of all systems in the best of all worlds (with a nod to Voltaire).
The model for private health insurance in the US (an accidental result of politically motivated tax incentives) is definitely broken, but it could conceivably be fixed. It’s absurd to expect a profit-making corporation to take on a new patient for less than $10000 a year when the patient already consumes five or ten times that in medical expenses each year, yet proponents of just about any health “reforms” being proposed expect insurers to do just that. It’s like taking out fire insurance on a burning house. Tho only models that make sense are based on lifetime contracts, with options for the children of the insured to sign up for similar contracts. Of course, the government would have to guarantee that the contracts get honored (a notion that Republicans have forgotten in recent years, without much attempt by Democrats to remind them). I suspect that the lack of interest in a model that makes sense is due mostly to cluelessness; few players in this game have much interest in riding this train wreck into the ditch, but both parties seem helpless to stop it. A single payer system would be better in some ways, lousy in many other ways, but the author may be right about its inevitability. I would like to see someone propose a two-tiered system, with a cheap single payer plan for routine care and supplemental long-term private plans (with incentives for prevention and wellness that wouldn’t be possible with term plans) to cover controversial and expensive treatments. That would allow pro-lifers to keep their extended-coma-care without making people like me pay for it.
pel1- that is a pretty interesting approach you have there. Isn’t it kind of like Medicare for everyone in the sense that it is guaranteed, only it starts from birth and is run by private companies? While I really do think it is interesting, I don’t know that a private insurance company could ever take this risk. Had they done so going back to when I was born (I’m 58), they would all be broke now. Their only option would be to really keep a clamp on what they provide which would probably mean I’d be dead given some of my own health issues. Why not just remover the private insurer and let the government do exactly what you propose?
In response to another comment. See in context »So, I don’t know if i think your concept completely works, but I absolutely love hearing a new approach I hadn’t thought of before. Well done! Hope you will visit this page more often as you’re obviously someone who is thinking.
The system pcl1 mentions (single payer for basic health care needs and private insurers to supplement coverage) actually exists and it works well. This is how the system works in Spain, for example, which is modeled after the English. I think other countries have that too. Your taxes go to pay for the universal health care coverage (which actually covers practically every need and it is of excellent quality), but you can get private insurance is you want to have a private hospital room, a bit less wait time for elective surgery, fancier glasses, etc. It took some time for the system to get some inefficiencies weeded out but it now works quite nicely. Wouldn’t change it for the one in the US for anything.
In response to another comment. See in context »You have a good point, it would be challenge coming up with a system that could adapt to changes in technology; it would probably have to involve some cost indexing and it would definitely need more government oversight (and some FDIC type mechanism) than most markets-based industries need. The same problems have come up in the banking and non-health insurance sectors, which have worked reliably in cases where the regulators were not asleep at the switch, bought off or just plain hypnotized. One advantage for a plan conceived today is that health costs have much less room to grow now than they did when you and I were kids, though I don’t believe either side of the political spectrum has publicly accepted the implications of that fact. My problem with having the government control the whole thing is that what should be individual decisions based on personal beliefs (and willingness to pay) become politicized. From fat-acceptance groups to pro-lifers, there are too many interests that would love to mandate some coverages and prohibit others. Unless it’s banned, some supplemental private coverage would probably be an inevitable consequence of whatever shortcomings a given government system had. But I’d like to avoid both the flim-flamming that results from our broken private insurance model and some of the evils of the government plans that exist in other countries: waiting lists (a disingenuous, cowardly way to ration care), indifferent bureaucrats (like the ones in France who killed hundreds be refusing to use an American test for AIDS in banked blood), and the tendency to force anyone who wants to escape from the restrictions of a public plan to “pay twice” rather than just paying the added cost of the coverage they want.
In response to another comment. See in context »Bingo – what you describe is the Canadian system – which they bravely went to in the 60’s despite having our current system of insurance company rule – and political influence – at the time. I note that the Canadian system was the one adopted by nations emerging from 3rd world status last year based based on recommendations from some very smart international health consultants. I wish we could make decisions based on logic.
In response to another comment. See in context »It seems to me that the only way to avoid or stall the inevitable the insurance companies need the government to require health care and let the private sector run it. Then we could have a daily double in irrational decisions.
libtree- yeah. you pretty much just described Medicare Advantage and that has not worked out so well!
In response to another comment. See in context »“So, if annual premiums for family coverage grows, as expected, by an average of 8.7 percent per year over the next decade – as they did from 1999 to 2009 – premium costs will increase from the current average of $13,000 for the average family to more than $30,000 for the average family. As employees pay, on average, 28% of their premium costs with their employer paying the rest, that means that employee costs will go from $3,640.00 per year to $8,400.00 per year.”
I seriously doubt that your hypothetical scenario will happen if we allow the health insurance companies to compete across the state lines. I do not believe the health insurers would price themselves out of the market like the homebuilders did last few years. On the other hand, if Americans are willing to pay up to 20% of their annual
income (in addition to our regular income tax) for the government-run single payer health system, then we are ready for the single payer system. Visit this link to find out.
http://www.tribstar.com/business/local_story_253211032.html
commonsense- help me out here. I often hear people argue that the answer rests in allowing insurance companies to compete across state lines, but I honestly don’t get why this is going to make such a big difference. There are really but a handful of serious competitors in the health care insurance business. If they cross state-lines, it will still be, for the most part, the same companies competing. Help me to understand how this is going to result in lower costs? Each of those companies are already free to register in any state they like and conduct their business. United Health Care in New York is the same United Health Care in California – different corporations, identical owner.
In response to another comment. See in context »So, help me to understand how this is going to make things better because i’ve never been able to follow the argument to this conclusion.
At the same time, if it won’t hurt anything, why not use it to get the support of some blue dogs and pass a plan with the public option, tort reform, and interstate competition?
In response to another comment. See in context »Rick,
In response to another comment. See in context »Have you ever made a decision to choose which health insurance plans to buy for your employees (provided that you have a choice of multiple insurance companies with various premium-determined coverage plans). If you had, then you should not have any problem understanding how competition could drive down the costs to ACCESS health care (NOT the costs of providing care).
There is a physician who has an excellent idea for health care reform in which he calls for ending fee-for-service medicine. Just follow this link.
http://www.csmonitor.com/2009/0910/p09s01-coop.html
However, if our government wants to take over the health care industry and, at the same time, keeps the costs under control, it must be ready to employ all physicians (as public servants like police officers, firefighters, etc.) and the physicians must be willing to become government employees. In addition, we, as taxpayers, must be willing to pay higher taxes for this new (health care) government service. Realisticly, I doubt that most physicians would want to be employed by the government (due to lower income and loss of autonomy) and I believe that few Americans want to pay higher taxes.
common- I understand how competition should drive down the price – particularly when negotiating a group plan. What I’m not getting is why we should expect the huge wave of competition when we allow insurers to cross state lines when, in most cases, the insurance company will just be bidding against itself (see my earlier comment.) This is the question I need answered if you would.
In response to another comment. See in context »Rick, you could be very correct. I honestly have no idea how much competition would occur were insurers allowed to compete across state lines (and I support the idea, so I confess I should know!).
This is where we need some real data to analyze in order to help us figure out what works and what doesn’t.
I’m enjoying reading your article and the interesting comments.
In response to another comment. See in context »commonsensedoc, I don’t think it would be a requirement that doctors be employed in the same manner as other civil servants — there are many different hybrid models to choose from.
In response to another comment. See in context »“across state line” is code for removing what little regulation there is of health insurance. There is no Federal agency enforcing regulations as what goes into a policy or what the minimum claims ratio (the measure of the value of the contract to the policyholder) is permitted. The Baucus bill was designed with “across state line” provisions in it – which caused the claims ratio assumption to drop from the current 70% individual(15% group, 97% Medicare) to 65% – indeed the 65% was at one point going to be written into the bill, but Baucus got embarrassed. The only consumer protection currently is your State Insurance Department and your state’s laws – the Baucus bill allows that to be killed via “compacts” between the states – and what you are suggesting is that we forget even the “compact” procedure – just over-ride state law and allow it. Again a great GOP talking point – that has no basis in reality. Price competition does not exist within a state, and going across state lines will not change that.
In response to another comment. See in context »Ok. I’m starting to get a fix on what you think – and I think we pretty much agree. But, since you do obviously know the insurance business as you are an executive, I really would love to hear if you think the insurance companies must, inevitably, price themselves out of the business?
In response to another comment. See in context »Yes, the insurance sold across state line would effectively be unregulated unless there were some mechanism in the bill for assigning that responsibility. State regulation has been a double-edged sword though. Legislatures have a habit of mandating coverage without considering the cost implications, knowing that insurance companies will take the heat when the bill comes due. Fertility treatment is the best example I’ve heard, but I’m sure that’s just the tip of the iceberg. It’s a little like declaring that all car buyers have a “God given right” to a sunroof, then blaming GM, Toyota, etc. when those who would rather have the $1000 complain.
In response to another comment. See in context »[...] Politics The inevitability of an American single-payer health system. – True/Slant – http://trueslant.com/rickung…; 22 minutes [...]
Rick,
It was wonderful to see some very common sense writing on the case for a single payer Health payer system. It seems that the American public, the media,the current administration all seem to have forgotten that the profit motives of any corporation is going to make profits and these corporations do not have any long term plans to reduce either the insurance premiums nor incentivize improved quality of care. Maybe, it is not in the corporate DNA.
I was surprised to see that Senator Snowe has requested a public option to be set in place, which kicks off under certain conditions. The single payor systems does seem to be the best option, but till the time the common Americans walk in to the town halls and shout – I NEED A SINGLE PAYOR system, make huge congregations where they say – I NEED A SINGLE PAYOR system, the System won’t change.
To me, it seems that the politics of bringing both the republican and democratic parties together to sign on a bill can only mean that the American system of single payor system must wait for another generation.
thanks nlngrevrldd!
In response to another comment. See in context »I think you are a new name I haven’t seen before so welcome – and I hope you’ll come back!
Snowe’s proposal caught my attention because, all through this, I’ve been predicting that the insurance industry would eventually learn to love the public option. If one is included, they will, no doubt, be lobbying to use it as a dumping ground for unprofitable (aka sick) patients. The Snowe proposal seems to get them halfway to that goal.
In response to another comment. See in context »I blame Chris Claremont, the loquacious unprincipled hack. Did you know he’s still writing? The man has no shame.
Good piece Mr. Ungar.
So will it bend, or will it break? Will it adapt, or will it die?
Your article points out a wider social issue. Will we be able to adapt our political system so that it becomes flexible enough to respond to social and environmental challenges? Clearly it cannot do so in its present configuration.
thank you, malagodi.
In response to another comment. See in context »My sense is that the politics will be what it always is….those who are beholden to the health insurance companies will keep them afloat and highly profitable until they price themselves out of the market. then-and only then- a new system will replace the old as the old will be dead.
Rick, you are exactly right about how public corporation function. Long-term means until the end-of-the-year bonus.
This is how Fannie Mae executives have been running the company – I have been there and saw that from inside: they bullied lower levels to go along and purchase billions of Alta loans, those who resisted have been thrown out. These folks are very good in making money … for themselves… and that what matters here.
Exactly the same people are running Aetna and HealthPoint – no doubt in my mind. And it end in the same way — government take over.
erik2- I couldn’t agree with you more.
In response to another comment. See in context »“Clearly, the employer health insurance model that accounts for 60% of health insurance coverage in this country is completely and unarguably unsustainable.”
This statement made you lose all credibility. Contact any health econ professor for an argument promptly.
Answer me this:
If health care at our current quantity and quality cost THAT much per person in a private system, how can you POSSIBLY argue that it will be CHEAPER per person if we increase the quantity?
You mentioned you see cases of people getting screwed over my insurance companies. You are zooming in too close!! What do laywers say, “hard cases make bad law?”
I do realize you are not advocating the system, but I disagree with your cost projections. There are people that spend their entire lives studying these things that don’t get it right.
I actually think health care is the next bubble to burst. The premium increases you are talking about are, in my opinion, the result of hyperinvestment in health care. I think this investment is tied into the real estate boom/bust.
For instance, my hometown hospital recently ended a construction spree. Guess what? So did their competitor. Oh, and theres another hospital that is being built. So, over the past 5 years we’ve probably had a 30% increase in capacity without any real increase in demand. So in the short run, their costs per patient are increasing, and they able to pass these down to the customer. In the long run, the bottom will fall out.
Don’t rely on prices of anything over the past 8 years as a predictor on future prices. With the war, post 9/11 housing bust, everythings shot for now.
agrieconomics- oh well, you can’t please all the people all the time. However, I have to say I am aware of quite few health economist whom would disagree with you.
And yes, there is certainly no surety that the number projections will hold true – there is only history to rely upon and experts upon whom I tend to depend because they have a track record of being right. But you are staking an awful lot on the fact that I can’t guarantee these numbers when, using history as a base (and that’s pretty much all we have), the evidence would certainly appear to support the argument more than deny it.
As for the rest of your comments, they don’t appear to be particularly relevant to the piece, so I won’t comment.
In response to another comment. See in context »It becomes cheaper due to quantity because of the mass market, and with one primary insurer, in this scenario that of the government, by having less hands in the pot you can greatly reduce administrative costs. Yes, any Econ Prof will tell you that the greater the demand the lower the supply thereby the prices go up, etc, etc, but Private insurance is in part failing because they put roughly half their money into administrative costs and towards making profit. You remove the need for profit and the even greater need (apparently) for CEO bonuses and you will immediately see a greater increase in the amount of money available for public care. You put all these claims under one banner, again the government, and you remove some of the paperwork costs – like, say, the claims investigators who spends just as much time trying to loophole their way out of helping you as much as they do trying to get you your coverage money, if not more – and your Admin costs drop even greater still.
The reason health care has become so unwieldy is because we like to think it works like a normal business, which it doesn’t. Even crappy insurance is better than no insurance, which puts the buyer in a no win situation because they have to own it and hope it works in their favor when they finally call upon it to do so. There is no normal “Supply and Demand” model at work here, there’s Need and Occasional supply. We need insurance in case something catastrophic happens to ourselves or our family. Occasionally the Insurers supply it if they can do so and keep their profit margins where they need to be to satiate shareholders and so the guys at the top can make millions in incentives come the end of the fiscal year. This need on their end for cash may not lead to a complete collapse and a Single Payer system like Rick alludes to, but something drastic will have to happen, whether it be a man made solution to prevent it from doing so, or something raised out of the ashes of another Capitalistic system that has crashed and burned.
In response to another comment. See in context »Mr. Ungar,
An alternative suggestion. I would break the problem into three parts:
1. The total “all-in” cost of health care in the US is too high and at the current rate of increase, will break the bank.
2. These medical costs are unfairly allocated. The exact same procedure in a hospital can vary by a factor of 8 depending who the patient is. For many people medical insurance costs are a tax free benefit. Others have to pay for insurance with after tax dollars.
3. Some 5% of the population (18,000,000) is not getting “adequate” health care.
Solutions:
0. Single payer will not necessarily bring down the total cost of health care.
1. Americans are over-medicated, over-treated, and over litigated.
2. Out law medical mal-practice suits.
b. This will stop “defensive medicine”
3. Phase out the income tax exemption for employer paid health insurance.
a. The current system encourages people to go to the doctor when it is not needed and agree to procedures that are not needed.
b. It causes much of the problem with “pre-existing conditions”
c. Employers bring no value added to medicine. It is also a major cost and management distraction.
4. Medical research has given us with technology that we cannot afford.
a. Cut government funded medical research by 75%.
5. No hospital will be required to treat indigent patients or get reimbursed by the government for treating indigent patients. Except for real life threatening emergencies.
a. Put one government owned and government employee staffed medical facility in each congressional district to treat the indigents that make up 5% of the population (approx 30,000 in each congressional district.)
b. Fund each facility with a strict annual budget of $35 million or a total national of budget of $18 billion per year.
6. Allow insurance companies to offer insurance nationwide.
7. Rein in Workers Comp. Right now Workers Comp pays over twice what Medicare pays for the exact same procedure.
8. Cap Medicare benefits. Send those who cannot afford treatment after the cap to the government medical facilities for the indigent.
I agree with much of what you have to say and your analysis – however, it is a bit off point from the piece.
One major point of disagreement – you want to outlaw medical malpractice suits? I happen to agree that there are phony baloney suits in the system that we have to get rid of in a sensible way. I personally like the idea of medical board review as a pre-requisite to court action. But outlaw them? I don’t know if you have a family, but consider this…what if, God forbid, your child was the victim of gross negligence on the part of a physician which leaves you with a child with very special needs, that will cost you millions of dollars to fulfill over his or her lifetime? Are you really okay with being left with this terrible financial problem – not to mention the emotional horror- for something someone else did to your child?
In response to another comment. See in context »Additionally, you should know that 33 states have put caps on what can be collected in a medical malpractice suit for pain and suffering – which is where the huge verdicts used to come from. California, where I live, allows a successful plaintiff to get the actual damages that they will incur ecnomically (like in the hypothetical I gave you above) but only up to a maximum for $250,000 for pain and suffering.
Might also be interesting for you to know that current estimates put the percentage of the health care dollar due to med. malpractice at somewhere between .5% and 2%, depending on what numbers you choose to believe. I’m not saying that this is nothing, but it certainly does not account for our health care system crisis.
Mr. Ungar,
Thank you for your thoughtful response. I agree that malpractice is not the major factor in the cost of health care, but it is significant and something that most everyone except the trial lawyers could agree upon.
When one considers the personal financial risk of supporting a child with special needs, one should consider the overall situation. A child’s special needs could be the result of “gross negligence on the part of a physician” or it could be the result of an honest mistake on the part of a physician, or a birth defect, or an accident in the home, or disease. In any of those cases the financial cost to the parent can be the enormous. Having the possibility of bringing a successful malpractice suit makes little difference in the overall financial risk of having to support a special needs child. Since the cost of malpractice insurance is passed on to the patient, the patient would be better off with his own insurance that covered all the potential causes disability or special needs.
In response to another comment. See in context »While I certainly don’t know what the solution to our current health care dilemma is, I can say this: Since my daughter became ineligible for my husband’s company insurance we have been paying for her private insurance while she pursues a graduate degree. This is how this rip-off works: As a single-payer policyholder you are only allowed to pay for three months at a time. I thought this was odd at first. Now I know why. This set up leaves the insurance company free to raise your rates at three month intervals. Two and a half years ago her policy started at $476 for three months, it’s now at $798 for three months. That’s over a 50% increase for a $2,000 deductible on a 25 year old, nonsmoker, no preexisting conditions. Then I read an article that demonstrates how health insurance companies are more likely to cancel single-payer policies when that person becomes expensively ill simply because they can. A policy is also less likely to be canceled if you are part of a company’s health insurance because they don’t want to risk the money coming from a larger source. What’s the point of buying insurance if, when you really need it, the insurance company can simply deny coverage and cancel your policy? What you are saying is absolutely true from where I stand because they have nearly priced my daughter out of the market. This is why I am backing reform in the insurance industry. I don’t believe the view that “if insurance companies can compete across state lines” our insurance rates would come down. They already compete across state lines as far as I know. I don’t know what the answer is, but I do know something has to give in favor of the people needing the services or we are all doomed.
dgallegos – it never fails. the people who are living the problem always understand the problem. I completely get what is happening to you. I’m sure you’ve already looked into this but does your daughter’s school have a better policy available to students? It might be a lot better than what you are getting at this point.
In response to another comment. See in context »Wish your daughter good luck with her studies and thanks for your comment. I find that when someone tells the story from their own personal experience, the ‘theortics’ which dominate this debate become less important as there is absolutely nothing theoretical about what is happening to you. It’s very real indeed.
Yes, her school does offer insurance. It is less expensive, but neither her current GP nor her OB/GYN accepts it. A whole other can of worms there. I’ll find a way. You know how it is, as a parent you will do anything to help your children pursue their dreams and keep them safe and healthy.
In response to another comment. See in context »The comment you made concerning the personal vs. theoretical is very perceptive. It was quite a smart move for the President to have the First Lady out there getting the real stories from real people. Taking this debate from theoretical to real people with real stories makes it less of a debate about money and policy, which I think tends to put people to sleep.
What’s your take on the insurance companies publicly saying they support reform, but working like mad behind the scenes to influence the outcome in their favor?
Believe me, I do understand what people will do for their kids!
In response to another comment. See in context »As for the insurance company behavior, really par for the course. They know that all that matter is what is in the final legislation and, so far, it very much appears to be going their way.
Thanks for the interesting commentary. As always, the politicians will look only as far as the next election cycle and always, always follow the money.
In response to another comment. See in context »[...] payer chew on this. The inevitability of an American single-payer health system some snipets: In 2009, health insurance premiums will grow at an annualized rate of 5%, just as [...]
TinyURL.com/PKB8ZH – is a primer/resource page I maintain for Single-Payer. Good place to start.
Health Savings Accounts do not carry over year to year but can be used only in one year. We must contribute an amount that we set prior to the start of the year, and that amount is then set aside out of our pre-tax salary. If we do not use all the account, then we lose what we did not use. There is no carry-over.
My health plan has a $3,500 deductible.
Bruce, actually HSA’s do permit you to carry over your balance year to year. They also allow you to withdraw without incurring a tax event. So its tax free both in and out. I think you might be confusing it with employer provided Flexible Savings Accounts which do require you to forfeit what is unused in your account each year. This is because the full contribution is made by the employer, which makes it non-protable. If you would like some additional information on the various permutations, I’d be happy to send it along.
In response to another comment. See in context »I had an HSA a couple years ago. The most hilarious thing to me was that it’d pay for tylenol, accupuncture, aromatherapy, my tab at GNC, my Flintstones chewables… but I couldn’t use it to pay for a damn gym membership. I could use my employers’ money to buy weed in California, but God forbid I use it to pay for something to help me keep my heart, lungs, back, and pancreas healthy. I could take it to a “massage parlor” in Houston and buy a good time for me and all my friends, but it wouldn’t pay for a gym membership.
What, did 24 Hour Fitness lose its lobbyist in the Abramoff scandal?
In response to another comment. See in context »[...] Our current health insurance industry model is broken. The necessary profits these INSURANCE companies take are killing us all. This system is killing our incomes and destroying our ability to get affordable health care. A single-payer health system is inevitable and Rick Unger’s policy page at True/Slant tells why: LINK [...]
You are correct in your analysis, as usual, and the comments follow a pattern we see at our clinic. Many patients are outraged we want $1000 or $1500 before surgery. “I never had to pay up front in the past” is the usual comment. Patients only realise “they” are responsible for almost all of their surgical fee after we point out this is their “deductible” on the policy. The insurers are paying out less and less over the past 5 years because the cost is being shifted directly to the patient, but they have been getting double digit increases in premiums; wonder who is keeping this money? People who have good insurance or that do not need to use it seem to be the ones fighting to keep the current system for as long as possible. The people who use healthcare are seeing they are the ones paying for it personally and unfortunately it sometimes is costing them everything they own and pushes them into bankruptcy. What a country!!
fleetlee- again,nothing like hearing it from someone in the trenches to bring the point home.
In response to another comment. See in context »thanks
Rick,
While it may be true that it is inevitable, but I can’t afford it nor want it.
What you really don’t address (no offense, no one else will):
1) It is in no way “Health” Care, as such care it will never get your health back. It is Catastrophic Illness or Injury Care. Most “health” costs are incurred in the last 18 months of one’s life. And at least 70% of all illness or disease is nutritionally related or caused. One hundred years ago heart disease, cancer and diabetes were rare or unheard of. Handle our food producers first to make healthy food our bodies were designed to use and cut your diseases dramatically. So what will end up happening is I get taxed for eating right, not smoking, not drinking alcohol and caffeine. Once you’ve lost your health you can’t get it back with drugs and surgery, those things will only make you feel slightly better until you need the next drug or surgery which lead to the next point…
2) I have no choice to choose the type of medical care I want, the AMA has outlawed my free choice in the USA. I can go to Mexico, Europe or elsewhere and get any type of care I want. Here, it is the AMA’s way or the highway. If that bit of competition was introduced, that in and of itself would reduce costs. The AMA knows when it has a monopoly (by law), either by market or by government. So my taxes will end up subsidizing the Medical/Pharmaceutical industry. That is something I can’t afford either.
What I want is a tax deduction for doing the right thing health wise and taking my medical dollar elsewhere.
Yeah, I know, I dream.
Mark – it’s not that I disagree with many of your points, its just that it is kind of off-point from the article as I really don’t discuss these issues in this piece (I hope you will read some of my others because I do.)
In response to another comment. See in context »While I very much agree that our lifestyle results in our health care system, I do think you take it a bit off course when you say cancer, heart disease and diabetes were rare or unheard of 100 years ago. They may have been unheard of because that’s because we didn’t know enough about them to call them cancer, heart disease and diabetes. We did hear about lots of people dying from infection, because they understood that. I don’t really believe that these conditions were less prevalent 100 years ago-its not like people hadn’t discovered tobacco, sugar, etc!
Mr. Ungar’s piece is so badly argued one does not know where to start. So I won’t.
nidomus: You are saying you are paying too much, around $1000/mo with $2400 deductable, and you seldom go to the doctor.
YOU HAVE THE WRONG POLICY.
Take 10,000 and put it into an interest bearing account. Consider it untouchable — it is there for disaster relief. But it is your money to keep forever.
Then, switch to a $10,000 deductable with top-shelf coverage above that amount. Your premiums will shoot WAY down. Then, be prepared to pay out of pocket for the ocassional visit to the doctor, checkups, shots, whatever. Do not use the $10,000 for that. Do the math. This plan will drop your unrecovarable WAY down and give you spectacular coverage!
People, you don’t need a “goverment” program to make this happen. Just do it.
Of course there is one problem on the horizon: Mr. Obama may make it illegal.
johndonaohue – another satisfied customer!
In response to another comment. See in context »Let me try and argue this point a bit better for you – your advice to nidomus is to put 10k into an interest bearing account. Excellent advice..except for the part that very few Americans have 10k lying around and available to put into an untouchable account.
Clearly, you’ve got your finger right on the pulse of the average guy in America. Well done!
[...] Health , Insurance , Living , Seniors Leave a Comment Tags: single payer health insurance Rick Ungar – The Policy Page – The inevitability of an American single-payer health system &… Given what appears to be a very dim future for the health insurance business model, one cannot help [...]
I just re-read the post of nidomus and now see he will not take my advice. He wants someone else to pay for his family’s health security.
I re-direct my suggestion to other people who actually take personal responsibility for their health costs and are looking for an idea.
donmeaker you get it. Especially the hypo comment, right on. My best friend who works in ER says 1/2 of medicare goes to useless complaints (i won’t even dignify it with the word heypochondria)’just because they can.’
well, we know how you feel but its all off point-and I’d still like to know how you figure that most people can plop that 10k into a bank account.
In response to another comment. See in context »Right Mr. Ungar. So you say Americans cannot pay for their own health care. Execept a few. Who are expected to pay for all the rest.
The air of entitlement around this issue is rank and revolting. When did American’s get so dismissive of paying their own way?
To any other person with more guts than our host….if you can’t start with $10,000, put away $1000 per year and build up to it.
Now you’re talking! Of course, should that person get, like, cancer within that ten years…himmm…that could pose a bit of a problem, no?
In response to another comment. See in context »And what does my “guts’ have to do with it. I realize you are new here, but we try to keep it intelligent and skip the personal BS. Nobody at this page gets particularly impressed with the anger nonsense.
I do not actually advocate this: it would be more economical for the government to take wealth from the famous %50 and deposit $10,000 in an interrest bearing account for families and tell them to take it from there, than to finish destroying the free market in medicine with various collectivist schemes such as “single-payer.”
5% of top producers I meant to say
I think its pretty clear that you don’t have much of a grip on what you are advocating. When you come up with something constructive, we’re all ears.
In response to another comment. See in context »What assurance is there that any Government run program will last over time? Government run programs have their own set of issues. Social Security is not going to last for ever. The scariest part of this is that something like social security provides one tangible thing, money. $1 in Nevada is still a $1 in Texas. Take a look at our school systems which are run by the government. Our schools are producing poorly educated compared to the rest of the free world. How can we think a governement run program will be getter?
jazz – don’t know that we can depend on the government. My point in this piece is that the private insurance companies will inevitably price themselves out of the business and the only one who will have the capital to step in will be the government. Whether or not it will work, who can say? But, you have to admit that if the government can’t finance it, nobody can.
In response to another comment. See in context »I think the *real* issue here is the shift in priorities among Americans regarding their health. In the early 1900’s, putting food on the table and a roof over your head still took some real effort. Now, everybody is obsessing over the ‘next most important thing’, their lifespan and quality. Yet somehow we still expect to have the same miniscule portion of our income dedicated to ‘health care’ that we always have before.
Whether we pay for it through ‘health insurance premiums’ or a new ‘health care tax’, if we are going to continue focusing on ‘obtaining good health’, particularly without reforming personal habits, our percentage of income dedicated to health care *must* increase.
The adage I hate most in this discussion is: “Nobody should go broke just because they got sick.” First off, I much appreciate that this article did not repeat it. If we’re not supposed to go broke paying everything we’ve got to maintain our health, what *are* we allowed to go broke doing? Buying houses? To be honest, nobody ought to go broke ‘gambling’ either. Perhaps we can create a tax to bail out addicted gamblers? My apologies for the hyperbole, but one thing I *want* to be able to go broke doing, is saving my own skin and the skins of my relatives.
Is our new single payer bureaucracy (I’ll probably get ‘moderated’ if I call it a the dreaded DP here?
) going to distinguish between the slacker who ate chips and soda for 30 years and is now fighting diabetes and the lady who was born with cerebral palsy? Unfortunately it pretty much *would* be right for the slacker to go broke just cuz he ‘got sick’.
Note:
There’s seems to have been a common misreading of the purpose of companies here. They are not necessarily taxed with ‘maximizing shareholder value’. A lot of good companies have a mandate to “be profitable”, but not a mandate to maximize profits (HP comes to mind, but there are others). This is done obviously because a profit maximization directive can easily lead to short term thinking.
Note2:
I’m not really concerned about the profits insurance companies are making at this point. If I were very concerned, I’d buy stock in such companies I guess. If there is insufficient competition in the insurance racket, perhaps we need to provide tax incentives for other companies to get *into* the mix. There are investment bankers out of jobs who’ve been playing games carving up risk, why aren’t they starting these ‘massively profitable’ health insurance businesses? Saying “I don’t know” to the question of “why isn’t the market working here” is kind of a cop out, but that seems to be the standard statement from single payer promoters.
my solution:
Tax corporate health insurance packages.
Shift that tax deduction to individuals/families.
Increased tax deduction for electing high-deductible coverage.
Increased tax deduction for electing long term coverage agreements.
The easily identifiable problem with this solution is dealing with the handicapped and those who are truly ‘uninsurable’ on an individual basis from birth or accident. Currently there are some gaps in coverage here which need to be addressed, but should not be addressed in conflation with the more general health care debate. We need higher deductibles and longer term guarantees. I’d have the government do this only as a very last resort, and I really don’t think we’re there yet.
Interesting points – but a bit off topic.
In response to another comment. See in context »I don’t share your approach to ‘nobody should go broke because of illness’. The things you chose to compare it to are really not applicable. It is somewhat intuitive that if someone gambles their money, they might go broke. They don’t have to gamble. When someone gets cancer, it’s quite a bit different don’t you think? I’m guessing you are young. After you’ve worked hard throughout your career, done your best to save your money and if , God forbid, you should get cancer when you are 55, you might see this very differently. In fact, unless you are able to grow very wealthy, and i certainly hope you do, you will not find it right that you should lose all you worked for just to stay alive.
The only alternative available, is to not make the life-saving (cancer fighting) treatment you refer to available.
From a statistical perspective, it’s a shell game. On one side, we have government spending our money wastefully, on the other, profits for insurance companies. The question is who is better at putting that waste/profit elsewhere, a government bureaucrat?
In response to another comment. See in context »Are you saying that a parent would not come up with a deductable somewhere between $2400 and $10,000 if their child had cancer? I would.
You are aware that in this example the person’s EMPLOYER is paying the premium? And that he is ‘complaining’ that he does not get his money’s worth because he has to pay directly for everything up to $2400? That’s $200 per month out of pocket BUT ONLY IF NEEDED!
Let me put it another way: how far/ how much IS the average family willing to come up with to pay for coverage for their family?
[...] argument from Rick Ungar at True/Slant that single-payer is on it’s way regardless of what happens with the current reform effort: [...]
Rick,
You write an interesting article and some of the comments are spot on! I received your link via a google alert. It has sparked some discussions at this site:
http://orangejuiceblog.com/2009/09/an-american-single-payer-health-system-is-inevitable-heres-why/
thanks, rev. I’ll go have a look at the site you linked.
In response to another comment. See in context »Rick, you are incorrect about inevitability, on the assumption that the (largely focused on, and as you correctly asserted unsustainable) symptom is a constant, and not variable based on another more fundamental problem.
Health care costs is the fundamental problem, not insurance costs or access to insurance. Health care costs are propped up by moral hazard in a bloated inefficient system which doesn’t have the consumer/patient the one who is actually receiving the product driving the wheel making decisions or driving the wheel.
If insurance is unsustainable, it will fail, and something more efficient will be there to take its place. Hopefully we will get the government out of it instead of trying to take its place. With the placing of all sorts of regulations on what insurance is supposed to be and who what where when how it can be sold. Maybe then insurance can actually be sold as what it should be, a hedge against risk, not a fund for every little check up. Medical “insurance” is a misnomer at this point, and its become so ingrained into the health care system, that its hard to imagine a system where it’s significantly scaled back.
A single payer system will only trade problems to decreased service quality. It will still leave intact the same sort of moral hazards.
And if you believe a single payer system would be so be perfectly and sustainably run by our amazingly inefficient, political, bureaucratic government, maybe you should look into the sustainability of the 2 big government run health care programs we currently have. I’m pretty sure there’s been quite a bit written about their ‘inevitable’ fate.
Bring the consumer/producer relationship back to the doctor/patient. Let them make the best decisions for their own particular situations. And get as much moral hazard and price manipulations and middlemen cushioning out of the picture as possible.
Treat the problem, not the symptom.
I don’t disagree that the underlying problem is the out of control costs of health care – to a point. If the rise in costs, when added to the cost of living increases over the past number of years roughly equalled the increase in premium charges, I would see your point. But this is not the case as premium costs have far outpaced the combination of underlying health care plus cost of living. What accounts for the remainder of the premium charges- profits. Of course, I wouldn’t take issue with profits if they were within reason – but they are not. In order to meet shareholder needs, the profit mark-ups (and I’m not even getting into unnecessary overhead) are well beyond the cost increases. This is why I believe pricing themselves out of the market is inevitable for the insurers.
In response to another comment. See in context »Right, and we are on the same page about health insurance.
My point was that a government run single payers system is not likely to be more sustainable, if the 2 programs we already have in practice are any indication.
I’d rather see us try to get the middleman out of the situation as much as possible. Both government, and what passes of as “insurance” these days. Bring back competition, and cut out moral hazard, and the fees and inefficiencies the middleman brings to the table. The middleman is propping up the price of health care.
The closer we can bring the system to the simple doctor-patient relationship the better. The doctor-patient relationship is what really matters. They know what is going to be the best result for any given situation, and its the most direct line of transaction.
Health care is a completely backwards industry, as we watch prices soar, in contrast to just about any other. It’s also one of the most heavily regulated and subsidized. The real problem is that we’ve created this corporatist beast through massive amounts regulation and driving responsibility away from the doctor-patient into the hands of a third party. Which is absurd, not only does it bloat prices, but they are blocking the doctor-patient decision making process with a detrimental layer. People are going to make very different decisions about their own health and the health of their family than someone looking at their ID numbers on a piece of paper.
Personally I don’t really want either the Government OR a Corporation Insurance in charge of my health. I’d rather see prices drop to their natural state, and deal with my doctor as directly as possible.
In response to another comment. See in context »I think your approach works, until you hit a speed bump, ie. serious disease. This is where it gets away from you. It’s like why you have house insurance. You don’t need someone else making those repairs to the house that always come up. But, if the house burns down, the likelihood that you could replace the house out-of-pockiet tend to be pretty slim.
In response to another comment. See in context »But if most of the unexplained increases could be attributed to profits, wouldn’t you expect health insurance stocks to have gone through the roof over the past decade? Most haven’t. One of the most hated insurers, Cigna, reported higher profits last year only because of the income from their non-health related business (though I should add that most of their corporate customers self-insure, so they wouldn’t directly profit from premium increases anyway). I would expect premiums (and overall costs) to increase faster than the cost of individual procedures because each year more procedures are available to cure conditions that were previously less treatable totally untreatable, though the “pool cost death spiral” syndrome(in which healthy people avoid the insurance market altogether) is also a factor. The former will affect the costs of public insurance the same way unless medical “progress” grinds to a halt. Of course, with much of the R&D for drugs and equipment (by both US and foreign companies)financed by US consumers (while the rest of the world gets the fruits of this development at prices much closer to production costs), a US single payer plan could well result in such a halt, unless other rich countries agree a more equitable distribution of R&D expenses.
In response to another comment. See in context »Here are the five year numbers:
In response to another comment. See in context »Cigna is up 21.03% in the past five years
The total health insurance industry is up 20.55% in the last five years.
The DJ total US market for all stocks is down -0.76% for the last five years.
So, I’m not seeing your point. I’d say the health insurance industry has done unbelievably well vis a vis the entire US stock market!
The health care system is in meltdown when it reaches a point where a majority of people can afford neither health care nor health insurance. The point where the average wage earner cannot afford health care arrived long ago. The point where we can no longer afford insurance has arrived for some of us sooner than others depending on our employment circumstances. I was self employed for 40 years in a modest service related business. With no employer to pay a percentage of my insurance I went with a high deductible major medical policy that was affordable in the beginning. Unfortunately, the local company was bought out by Blue Cross or Blue Shield and the premiums doubled overnight. I qualified for the Oregon Health Plan. In the beginning it was a state run federal subsidized model for a national health plan. The plan nearly bankrupt the state of Oregon and the state froze the enrollment. I was in a accident and went on SSA disability. I support reform but how can you trust a government that denies 85 percent of all disability claims forcing the ill, injured, mentally handicapped and elderly to go through a humiliating and unethical appeals process that may take years in order to obtain disability benefits. I have had a medicare advantage policy for three years and I have to switch companies every year because the benefits are altered. It’s nothing but a bait and switch. I am kind of disappointed that we haven’t had a second Great Depression so we could start over from scratch.
After much soul searching, I’ve come up with a public option that Republicans can get behind. It’s called the Platinum Public Program (PPP), and it provides 100% coverage for the top 0.5% of income earners.
Though they can already afford the best healthcare in the world, that simply isn’t good enough. For instance, take your average $2M/yr hedge fund manager. Suppose he notices a tightening of his sinuses. If he went to the ER – as he should – to try to head off any hugely costly sick days, you’ll be surprised to know that even though he’s one of the lynchpins of our financial system, he’d still have to wait behind homeless people, brick layers, cooks, and crying babies. And all the while, other hedge fund managers are making the money that he should make. He’s not there to help make the market perfect, and the market – nee, the World! – suffers.
I think it’s clear we need to improve the healthcare of our very best, our top 0.5% of job-creating capitalists, who work so hard laying the golden eggs we peons so often turn into shit omelettes. Those covered by PPP will enjoy the special privileges they deserve but are currently denied, including:
- Skipping to the front of the line at the ER.
- Skipping to the top of organ donor recipient queues (c/o Steve Jobs Amendment)
- Annual two-day vacations from being subject to traffic laws
- The option to compel everyone (who isn’t on the PPP) in a movie theater to don a surgical mask
- Legal right to bed an employee or employee’s bride before her wedding night
I know you’re wondering, “Who is going to pay for this? It’s sure going to cost a ton! They’re going to over-utilize! This will cause significant psychological harm to the nation! Our workforce will destabilize, and crime will go up! What Godless monster thinks this shit up!”
All good points. But who really benefits here? You do. The healthier, more relaxed (hence the sex provision), and les stressed our top 0.5% is, the more they’ll be able to focus on creating jobs. Sure, they’ll make money while doing it. But the real ones who benefit from this are the soon-to-be-employed. Thus, they should be the ones to foot the bill. It’s only fair that the bottom 40% of income earners, starting with panhandlers who file with the IRS and social security recipients (welfare bums), incur a 10% income tax increase.
Surplus funds will be donated to Africa, because the AIDS epidemic becomes the biggest threat to our 0.5%, what with all the fucking they’ll be doing because of the PPP.
Mr. Ungar: Enjoyed reading your opinion and perspective on the inevitability of a single-payer health care system. I am a decade older than you and I am a capitalist. I spent 50 years of my life in telecommunications and invested almost everybit of my savings in that industry. Why? Because this industry paid dividends through the great depression and my grandmother survived comfortably after my grandfather’s early death without much help from her 12 children. I am an only child of the depression. My parents did not have any health insurance until after I was 18. My father paid for my mother’s surgery by working an extra job. We did not go see a doctor unless we broke a leg or an arm. We didn’t go there for the sniffles. I you had a bad cut, you cleaned the wound and used plenty of that burning iodine to treat it. After the initial pain, the wound healed without infection, and the scars on my arms and legs have disappeared. From my perspective no one owes me health coverage. Yes it is nice to have and I have paid some large premiums over the years and the insurance companies have paid the hospitals for the maternity care for all six of my children. They didn’t cover all the expenses, but at least 80% and I found that very reasonable. Without the health insurance, I would have found a way to pay my bills as that is the way I was trained when growing up. If it meant finding another part-time job then that is what I would have done. When my second child was born, he suffered from congential damage which resulted in Cerebral Palsey. My insurance provider did not pay for 90% of the costs of his health care. I found a surgical specialist on my own and paid most of the costs to see that he was able to walk and in high school he lettered in track. Back to my telephone stock portfolio. I believed in the future of telecommunications as it was a form of capitalism that survived under regulation. Most people don’t know that telephone companies up until 1933 were totally unregulated and the competition was fierce. In 1934 there were 18,000 competing telephone companies in the U.S. The problem was they were competing in cities that were easy and profitable to serve and ignoring the suburbs and rural farmers. They did not interconnect so the public did not have universal service. In 1934, the House and Senate wrote the greatest piece of legislation every conceived which not only survived for 50 years, but gave us the greatest telephone system in the world. By 1950, 83 persons out of 100 had telephone service. The closest country with that number was Germany with 51 telephones per 100 capita. Most countries had less than 25 telephones per 100 capita. What was the secret behind this legislation. The philosophy was based on the concept that the service was to provide for the common good. Stiff regulation said that only one company could operate within a geographical territory and the rate of return could not exceed 3% on the investment. The government did not care how many companies provided telephone service but they had to provide seamless coverage throughout the U.S. After the Communications Reform Act was implemented, there were only 1,300 companies left in the U.S. Why would any company want to operate on a 3% maximum profit you ask? Well this is where our natural ingenuity in a free market excels. The more subscribers that you could add to the installed base, the greater the gross sales and more importantly, the more efficiently the company could operate, the quicker the rate of return would expand. Better yet, as the efficiency grew the rates began to decline and population benefited from the lower rates. Further, the regulated structure created an environment that produced innovation. For example Bell Labs scientists developed the transistor, the basis for all ICs manufactured today. Westrex divsion of AT&T developed stereo sound and talking motion pictures. During WWII Bell Labs scientists took the first ground based radar systems to England to track the buzz bombs that Hitler unleashed on London. in the 70’s Bell Labs and Motorola pioneered the first Cellular Telephone systmem and 10 years later it became a standard. In the early 80’s greedy individuals lobbied congress to deregulate the telephone industry. Most of the competitors are now bankrupt and telephone service and innovation has gone downhill. We pay more today for less than the best. Another example of Government manipulation of an industry that ultimately does not serve the greater good of the populace. It should be noted that AT&T Executives were not paid outrageous salaries and bonuses. Another example is the airline industry. After WWII, congress realized that they had created the greatest bomber production lines in history and now with the war ended, than industry would fail leaving thousands without jobs. It was determined that regulation could provide the aviation industry with a boost by fostering commercial aviation. The fledgling airline industry could not survive in a all-out competitive environment. Congress created the Civil Aeronautics Board and regulated aviation routes. Premium profitable routes were distributed fairly to each carrier, however, if a carrier was given a profitable route between New York and Miami, they were forced to serve Macon, GA and Columbia S.C. To keep the airline from failing, they were give a 33% passenger subsidy if they carried U.S. Air Mail. This 33% subsidy was not profitable, but created an airline industry that was the envy of the entire world. This incentive created a base that gave the airlines the opportunity to sell tickets from Yakima, WA to Macon, Ga using two or more carriers. With the loss of the CAB and strong regulation of a basic utility like the telephone network and air transportation, the carriers are in financial trouble and safety is going downhill. My point to these two stories is this. We have fifty years of empirical evidence that good regulation in the health industry, could create a playing field where insurance companies could be profitable, but not excessively profitable. If rates were subjected to regulation along with basic service requirements, the market would figure it out. Regulated competition I think is the answer.
John – wow. Over the life of this blog, I’ve gotten who knows how many comments. Yours is, without question, one of the best I’ve ever seen.
In response to another comment. See in context »I hardly know where to begin – so I don’t think I will quite yet. I want to read your comment a few more times, just because it’s packed some awfully cool history. I’ll come back and comment on specifics later, but, in the meantime, thanks for the extraordinary note.
Rick,
In response to another comment. See in context »Let me echo John. I believe that a regulated monopoly on underwriting would provide the benefits of single-payer while including the attention to the bottom line of private enterprise.
I would have used exactly the same example (throwing in that Bell Labs invented Unix, the basis of all modern computer operating systems and generator of over a trillion dollars of new wealth)
Governments can be good for many things, but they aren’t good at picking winners – John’s suggestion takes care of that.
I agree that it is an interesting approach.
In response to another comment. See in context »I sure do wish you’d use some paragraph breaks, but oh well.
I think you make a good point in that regulation of the giants (or a managed breakup ala Ma Bell) is more the rule. I can find no instances of ‘nationalization’ in this country, which is what Mr. Ungar seems to be suggesting is inevitable.
I wish it were the case. Regulation seems to be working really well in the financial sector, right?
In response to another comment. See in context »Medicare is nationalized healthcare for those over 65.
In response to another comment. See in context »Rick,
Well, good points and I disagree that cancer and diabetes were as common 100 years ago as they are now, but the whole point is “health” costs and the solution to them.
My point is that we see an increase of heart disease, cancer and diabetes to levels unseen before. That is unarguable. Hence rising costs for Medical treatment for such. To address the symptom of Medial costs ignores the cause and I don’t see government doing anything but protecting the big corporate interests. I’m not being protected from that but made to pay my hard earned dollars to subsidize them.
mark-
I just don’t know what you could be basing your belief that there were less of these chronic diseases 100 years ago, but the truth is we will never know, will we?
You second point is, in truth, arguable. Heart disease is on the decrease thanks to some serious breakthroughs in drug treatment. I keep up on this having had the pleasure of a triple bypass! As for cancer, the focus is less on increases – because nobody knows how much the numbers are skewed by improved technology that does a far better job of discovering the disease. I will agree with you that Tyoe 2 diabetes is on the rise, primarily because it is affecting younger and younger people.
The remainder of your comment I completely agree with. Chronic disease, such as those you raise, account for 95% of Medicare spending – 75% of all health care spending. The best way to solve this is for people to take care of themselves, which is, I believe, the point you are seeking to make. I couldn’t agree more -which is why I’m a big fan on the sugar tax on sweetened drinks!
In response to another comment. See in context ».
[...] The inevitability of a single-payer health system Rick Ungar – The Policy Page – The inevitability of an American single-payer health system &…. [...]
John,
Your comment was amazing. Welcome, and please stay a while.
Rick,
This post has garnered the most comments on any of yours I have ever seen. Why do you think this is?
As to the actual content of the post, I think there is a future in which a single payer system is inevitable, but there is also a future in which the insurance companies (and the entire healthcare complex) get their respective acts together, and make some good choices. The service (or is it a good?) that they offer is so vital, particularly in a large nation, where someone is always in need of complicated care, they will never go out of business. What needs to happen now is a realization that making less money will allow them to make more money. That is a tough realization, and I don’t see it coming anytime soon.
Probably the most comments because its also the most readers one of my pieces has received. And it is, I think, a bit provocative, no?
In response to another comment. See in context »Great piece, Rick! Isn’t it amazing that among the 90+ comments are many different ways to solve the health care crisis which are nothing other than attempts to save the insurance companies from the fate you believe them to be heading towards (sooner rather than later, I hope)? Not one of them, nor anyone else I’ve seen, even attempts to address the vital questions raised by Rep. Anthony Weiner, that being – What do the insurance companies contribute to our health care system? What do they do for their 30% of our health care dollars? They do no exams, they produce no innovative treatments or technologies. They simply take money from us, take their unreasonably large cut, and pass the rest to the providers. All the while thinking of new ways to keep more for themselves. WHY ARE WE TRYING TO SAVE THEM? Personally, I hope their obsession with the short-term continues to guide them right off the friggin’ cliff!
Mark – you noticed that too? What I find interesting is that so many people have a pre-arranged “script” in their head when it comes to the health care issue. So many chose not even speak to the point of the piece, rather just to use the opportunity to repeat their perspective on how to solve the problem – although there were a couple of creative ideas in the mix.
In response to another comment. See in context »People to need to think it through. Forget the ideology and the nonsense and just try to make it real. Considering how incredibly real it is, you would think this would not be a particularly difficult exercise.
It’s my firm belief that if we had made a head-on single-payer argument to the American people, we’d be well on our way to kicking the private insurers out of the system altogether. Yet fear of being too “socialist” plus hesitancy to take on the health industry head-on kept the Dems. from doing that.
In response to another comment. See in context »Rick,
Nice article. However, as others here have pointed out, many people will fight tooth and nail against the government “taking over” health care. For many, it is based on ideology. They will prefer to go bankrupt (or worse) than being part of any program that borrows from the socialist philosophy or principles. Interestingly, I already discussed many points you raised in various posts I wrote on the health care systems here and in Canada. Those have been very well received. A sample can be found here:
http://open.salon.com/blog/kanuk/2009/05/15/lets_compare_public_and_private_health_care_costs_eh
http://www.open.salon.com/blog/kanuk/2009/05/21/lets_spread_the_risk_i_mean_health_care_not_flu
http://open.salon.com/blog/kanuk/2009/09/19/death_panel_results_45000_annual_deaths
http://open.salon.com/blog/kanuk/2009/03/29/health_care_comparison_universal_vs_us_-_part_ii
kanuk – I know people say that they would rather go BK then give in to a socialist medical system in the US. But they don’t. It is one thing to say you would be willing to allow your financial life to be ruined in pursuit of ideology but it is quite another thing to actually do it.
In response to another comment. See in context »I kind of chalk up these folks to being the same ones who promise to leave the country if the candidate they do not favor should win. They never do leave, no matter who wins. It’s just more of ideology making people feel good that they stand for something- even if it doesn’t actually make sense.
I agree that for many, those are empty threats. However, on this subject, I am sure some people are more serious about it, especially given what I observed in our local townhall meetings and my interactions with some of them. In the past, I knew one or two people who had jobs lined up outside the US around last fall. Thanks for your reply.
In response to another comment. See in context »Oops, I meant to write “before the presidential election last fall.”
In response to another comment. See in context »Hi Rick, this is a great piece! I certainly agree that if single-payer were on the horizon, that people would not rather go bankrupt than have it happen. And lots of Americans want it anyway (too bad it’s barely discussed in the media).
My question, though, is whether or not, as costs get more and more prohibitive, the U.S. government would bail out the health insurance companies for a time, pouring good money after bad in order to subsidize them and keep premiums down. Following your logic, the high costs of insurance will eventually usher in single-payer, but might there not be a ‘corporate socialism’ for a significant time that comes into play, bailing out insurance companies to keep them from collapsing in order to ’save’ the health care system?
As we all know, this is what has happened for many other industries, and both the Democrats and Republicans are highly beholden to the health insurance companies.
http://www.dumpthesick.com
In response to another comment. See in context »I suppose it could happen but, given the trajectory we are on and the deep feelings of dislike by Americans toward the insurance companies, I don’t think it would happen that way.
In response to another comment. See in context »I posted earlier on why Mr. Ungar is dead wrong. I would like to further explain why.
Ungar has decided to take a position that would rewrite public choice economics. His fundamental argument is that health care is a natural public good like road service. His fallacy is comparing the two.
TEXTBOOK DEFINITION OF A NATURAL PUBLIC GOOD
A natural public good is one that has FALLING VARIABLE COSTS. You explicitly stated the reason you believe it is a natural public good is because it has HIGH VARIABLE COSTS. If your statement is correct, we will shortly see your name up there with Nash and Giffen and all the other groundbreaking economic theorists.
Mr. Ungar, do you REALLY think that you alone can contradict what EVERY public choice textbook says?
You need to be a physist to write about physics, a mathematician to write about math, a laywer to write about law, but the problem with economics is everyone thinks they understand it. I know some very smart people that still cling on to ideas that have been disproven since Adam Smith. Mr. Ungar is one of them, a smart person that thinks he knows about something he doesn’t. I will never ever comment about law because I am not a lawyer. But I am an economist, and you are dead wrong.
Uh…it seems that because you are allegedly an economist, you have all the answers, eh? I’m cool if you want to disagree with me – it happens all the time. But, for being an economist, you haven’t made one cogent argument yet. Why don’t you write something that helps us all learn something rather than attempting to make points by using large, capital letters (always a dead give-away that you’re much more about the emotion than actual knowledge and facts.)
In response to another comment. See in context »You never cite references for what you tell us is a ‘given”. Why don’t you give us the benefit of having the opportunity to research these things that you claim to be only understandable by an economist. And where are you an economist? The economists I know – and, for better or worse, I know quite a few, don’t make their points by printing in bold letters. They don’t have to.
johnleboutillier, health care is not like other industries–because people’s lives and economic security are directly hinged to their ability to access treatment. People can do without a lot of things (flights, even phones and electricity) for at least a period of time while things are sorted out. Not true with health care. 45K are dying per year in the US as a result our broken system. How long can we wait for regulation and the free market to do their thing? Profit must be removed first and foremost before any regulation or other measures are put in place. As long corporations can make money from people’s misery, they will.
The thing is, other first world democracies have figured this out and put systems in place. And the systems vary but they ALL work better than ours and are cheaper. Many are not government run, only regulated. BUT THEY ARE ALL NON-PROFIT.
Aside from that, your view of what can be done today regarding government regulation is a bit quaint. Now, commerce regulates the government, not the other way around. A paradigm shift is needed to save this republic and I don’t see one on the horizon.
ayan- I hope this economist who likes to print in bold letters to make us think he knows what he’s talking about sees your comment. Apparently, according to him, health care isn’t a matter of public good because of some definition that he has in his mind that only applies to economists. So- take notice- economics apparently tells us that the health of our citizens has nothing to do with public good. Go figure? I was sure that it would have.
In response to another comment. See in context »What about capitation? I am referring to the early 1990’s notion that fee-for-service would soon be replaced by “shared risk and reward” between the insurers and care providers. The threat of capitation spawned hospitals and group practices forming “cradle to grave” healthcare networks in all the major cities. That appeased insurers with better discounted fee-for-service and quality metrics and effectively squashed capitation.
What if capitation re-emerged? I’m imaging the insurance co’s morphing into glorified third party administrators, preserving themselves like credit card companies through consolidation and taking a little bit on every transaction or covered life. By accepting risk physicians win the authorization war and climb back on the pedestal of revered all-knowing healer and decision-maker. Patients win because we all love and trust our docs. Costs are controlled (maybe) so payers (employers) win. The government’s role is regulatory: rating plans, collecting data and adjudicating claims of wrongfully withheld care. You’re a west coaster where capitation began. Whadayathink?
ef
beep – it’s an interesting idea. The good news is that it would certainly curb the practice of unnecessary testing. However, in an age of medical technology, it might also be the bad news.
If you are proposing it on the “cradle to grave” formula, it is highly unlikely it would work as technology changes so quickly that such a formula would be unworkable as we could never foresee what might be available in the future. However, using capitation on a per illness basis is something worth considering and is being considered in legislation.
In response to another comment. See in context »[...] Shared Rick Ungar – The Policy Page – The inevitability of an American single-payer health system &…. [...]
The problems with the current health care system seem to stem from many issues that include:
1. Exorbitant settlements in lawsuits that may or may not be the fault of the doctor or the hospital
2. Doctors and hospitals that charge one fee to the insurance company and a fee many times larger than the insured fee if a person has no insurance.
3. State governments that require inclusion of such services as acupuncture, physical therapy, massage therapy, etc. as part of what insurance companies must provide in any given state.
4. Federal or State government regulations that prohibit insurance companies from offering insurance nationwide.
5. The presently lucrative insurance industry who can charge whatever they want.
The first four items would appear to be definitely in the area where government can change things for the better: by limiting the size of settlements; by making it mandatory that those with and without insurance get charged the same fee (If patients only had to pay what the insurance company pays, we might choose to not have insurance except for the truly catastrophic medical condition); limiting the requirements to purchase insurance that you do not want; and allowing national competition for insurance.
For the fifth item- high insurance premiums, let’s say that you are correct, and that the majority of the current health insurers that are “for-profit” price themselves out of clients because they are too expensive for the majority of the people in the USA. Is it bad that such companies cannot continue in business, or is it good because it will open the door to more “not-for-profit”, and even “low-profit” insurance companies to fill the void that will be left? At least one of the problems with insurance companies seems to be that the health insurance business is too profitable at this point, and that it needs a correction to bring the cost of health care back into line with available resources. Perhaps that correction is many people not buying the offered insurance and instead forming their own not-for-profit or low cost alternatives (all this after fixing the first four items I mention in my opening paragraph. If the first four items I mention were fixed by government, then I believe that the cost of insurance would be significantly cheaper. It is no different than the competition between airlines. If someone who meets all the safety standards required by the government can provide a service at a lower cost to the consumer than another airline, then they will get more business and eventually force the other airline to lower their fares or go out of business.
If we can get the first four items I mention in my opening paragraph fixed by the government then the transition to less expensive insurance companies should not be too perilous. Those under Medicare will fare no worse as a result of a change in the private sector. And if those who cannot afford, or choose not to purchase insurance are charged the same as those with insurance, then no insurance, except catastrophic event insurance becomes more reasonable. An added benefit of insurance that only covers a catastrophic event is that such an arrangement will force us to be more careful in all ways related to our health and will also make us be more thoughtful about selecting and seeing a doctor for a minor sniffle or a major problem.
“1. Exorbitant settlements in lawsuits that may or may not be the fault of the doctor or the hospital.”
I have no problem with tort reform, but it isn’t the core problem you think it is. Presently, about 1/2% of the health care dollar is due to malpractice claims. Some are funky – most are not. Further 33 states limit the amount a plaintiff can win.
“2. Doctors and hospitals that charge one fee to the insurance company and a fee many times larger than the insured fee if a person has no insurance.”
Nobody likes this but that person who comes in without insurance has nobody negotiating a big group deal for them. This could largely go away if we could get everyone covered, right?
“3. State governments that require inclusion of such services as acupuncture, physical therapy, massage therapy, etc. as part of what insurance companies must provide in any given state.”
An interesting point with some merit – but certainly not in the top four of what is causing our problems in health care.
“4. Federal or State government regulations that prohibit insurance
companies from offering insurance nationwide.”
I don’t have a problem with insurers crossing state lines – but I don’t believe it is much of a solution. The four or five big health insurance companies own the large state based insurers. So why would Blue Cross of Michigan be much different when they price a policy for someone in California? The price is going to be pretty darn close to what Blue Cross of California chatges. This is not the solution it is cracked up to be.
5. The presently lucrative insurance industry who can charge whatever they want.”
Well, they can’t charge whatever they want but they do pretty darn well. Don’t you think this number 5 belongs somewhere like number 1?
In response to another comment. See in context »