Holte's corner

Fire Departments and health care

To my previous post Robin responded:

"There are some fundamental flaws. Insurance is, by definition, a transfer of a risk. You pay an insurer a premium; they assume your risk. Put another way, we buy insurance "just in case." Forty years ago, people bought health insurance 'just in case' they had an accident or caught as serious disease. It was intended to pay for hospitalization and the medical treatment of disease or injury."

and:

"I am not saying we should not finance routine care. I am saying that insurance is probably the most expensive possible way to finance it."

You are right on this. We went to insurance to provide health care because it is a public good that benefits society in manifold ways. Our conservatives have traditionally conflated 'public good' with socialism. It has been tremendously difficult for almost the entire history of our country post Civil War to accomplish anything for the public good. Private good no trouble. Public good verboten. Nevertheless we have accomplished setting up a few programs that actually benefit the public good. When our powerful interests can't sabotage such programs they generally seek to loot them.

"Consider some of the things we insure. We buy home owner's insurance just in case our house burns down. We buy liability insurance just in case we get sued and lose. We have unemployment insurance just in case we lose our job. We have disability insurance just in case we lose the ability to work. We insure a package just in case it gets lost or damaged during shipment. We buy life insurance just in case we die prematurely."

When we buy home owners insurance, it isn't meant to substitute for having a fire-house nearby. The problem with our current system is that we have a system analogous to the privatized fire-system that Crassus created in ancient Rome. His fire-houses were akin to modern Mafia. People had to buy "insurance" or the fire-department sometimes would never show up. Right now our insurance companies are treating medical insurance as a similar scam. Only even if people buy the "fire plaque" from the insurance mafias, it's not enough to guarantee the mafia will pay the fire company to show up and put out the fire.

"Consider some things we do not finance with insurance. We do not buy food insurance just in case we might need to eat. We do not buy clothing insurance just in case we need to get dressed. The needs for food and clothing are not insurable risks. Think about it. What would happen if we paid for food with an insurance card? You do not know the price of anything; you just get your food, give them a card, and they bill the insurance company."

However, for years we used to keep food costs with policies aimed at keeping down the cost of food. We used to tax imports of clothing so that we could make it domestically. We have programs for redistributing used clothing so the poor need not go naked. Medical services are as important as food and clothing, yet we have set up a system that pays for delivery in such a way that only a few people do well from it, and a lot of people are cut out of getting vital health care. People die from this system. People suffer and die from this system needlessly. It is a killer system.

"At some point, we decided that insurance should cover more than the risk of having an accident or getting sick. We decided it should cover pregnancy; which is not a sickness. We decided that it should pay for medical exams as preventive medical treatment. This probably started with pre-paid medical care; which evolved into the Health Maintenance Organization. That evolved into something real ugly called "managed care. " We have frigging insurance company bean counters rationing health care."

"I understand the rationale of an HMO. Preventive care was going to catch things early, and reduce costs in the long run. Has it worked out that way? Proper diet and exercise probably actually does as much or more to prevent disease than doctor visits. Maybe health insurance should cover spa memberships? I think it does or did in some European countries."

In most European countries private insurance is like the old "medigap" payments. It is designed to pay for those optional, non life-threatening things, that make life easier for the ill and hospitalized. The purpose of public health care is to ensure that people with infectious diseases are treated so they don't spread them around. To ensure that preventive care is delivered so that workers remain healthy, people are more productive, and folks live more secure and safe lives. That is security, not putting spy cameras in every living room.

The risk is in not providing prventive health care. The risk is that our society is committed to not letting people die of disease simply because they can't afford it; and therefore we either prevent disease, or we end up having full emergency rooms that bankrupt our remaining non-profit Hospitals and state Governments. If we don't ensure that routine care is provided for everybody the costs are magnified on a power curve.

If we pay for routine care with insurance, the cost is dollar for dollar; plus administration. Circa 1988, the first 1000 in a zero-deductible, fee for service, hospitalization & major medical plan, cost about $1200. That was the rational for deductibles. At that time, a $1000 deductible reduced the premium by $1200. Also, since we do not know the price or fee, they bill whatever they want. We wound up with five dollar charges for a Q-tip. That was the rationale for co-payments; to make the patient more cost conscious."

Well if we pay for routine care with private, for profit insurance, the cost is indeed as you say, with the administrative costs inflated by high executive salaries, and people whose job is to triage benefits and transfer them from one pot of cash to another. Since the real market is health care, not insurance, private for profit insurance just ads a layer of bureaucracy and administrative costs at best. At worst it actually creates dysfunction and allows a few well placed individuals to skim money off the system. For example, right now the health care companies are spending more money on advertizing and lobbying than on almost anything else. They want the current privateering system.

Later:

"I am not saying we should not finance routine care. I am saying that insurance is probably the most expensive possible way to finance it. The concept of what I used to call Medical Spending Accounts makes more sense. You set up a cash account to pay for preventive care, then pay as you go. That eliminates any possible reason for a co-pay. Then, you buy a high deductible catastrophic major med plan; 'just in case' you have an accident or catch a serious disease. You eliminate most claims processing costs. You are insuring a risk, not pre-paying for services. So the premium is relatively cheap."

If we still had a functional middle class in our country MSA's might make a good supplement to the system. But that assumes that Insurance makes sense in the first place, which you already argued it doesn't. Single Payer should function similar to MSA's as one is creating a pot out of which people can pay for routine expenses. We don't have a free market because we don't have an open market where doctors can come and go freely (they have to be licensed), and where consumers can come and go freely (when someone is sick one's specialist is a monopolist). This is a public good. Even better is to have Single Payer.

"If we had gone to that twenty years ago, we might not have the mess we have now. The costs are so high now, it is hard, maybe impossible, to design anything affordable for mass markets. There are some limited, poorly structured, Health Savings Account {HSA} plans available. Finally, using insurance to finance routine care is not the only thing that drove costs up; but I think it was the biggest factor. "

That is "mallarky" Robin. If we'd gone to MSA's 20 years ago, all that would have done would have been to drive up costs and drive poor people out of the market. What has driven up costs are a number of things:

1. Compensating Doctors on a fee for procedure basis instead of salaries and outcome incentives.
2. Allowing private companies to control health care and jack up prices.
3. "Reforms" to medicaid and medicare which socialized the costs of medicine at taxpayer expense while driving up costs such as the cost of ordering drugs.
4. Creating for profit hospitals and clinics that jack up medicaid and medicare costs and otherwise game the system.
5. Employer administration which creates excessive admin costs.

>>>We band together as a society to provide for the general good; ... community swimming pools, ..., in order to afford things for the public good that most individuals (except economic barons) can't afford on their own. We buy fire insurance, but we also provide for the public good of fire-departments.

If you think about it, you have understood the point. We go not pay for the swimming pool with insurance.

No we pay for it with taxes and/or membership fees.

>>>As you note, insurance is inadequate to provide for what should be a general public good,

"No, that was not what I noted. The point is that insurance is the wrong way to pay for routine services. Insurance is to protect against risks.

Most Government sponsored programs and activities (regulation is a great example) are also aimed at protecting against risk. As I noted in the example of the fire department. We build fire stations in order to guard against the risk of fire in a proactive way. A tax is appropriate.

>>> You have made my point; "I am not saying we should not finance routine care. I am saying that insurance is probably the most expensive possible way to finance it." But not because the concept is bad. On the contrary, the concept of spreading risks and costs across the broadest spectrum of people is the best way to finance health care.

"Your point, my point. Is it who or what? This not about me. The concept is bad. Preventive Health care is simply not a risk. It is a routine service."

The risk is in not providing it.

One thing we could do, is to set up some kind of universal socialized medicine to cover routine and preventive care. Then we could allow insurance companies to get back to their proper business of insuring against the risk of an accident or serious sickness. A health insurance policy, in this economy, should probably have at least a $10,000 deductible. Riders could be added to reduce or eliminate the deductible for accidents only. Basic, universal care would also reduce burdens on companies that are supposed to make and sell things; not provide employee health & welfare benefits.

Again you have the right idea with 'universal socialized medicine' but your idea of a 10,000$ deductable discriminates against, about 95% of Americans -- and if instrumented would simply be another way to fleece and bankrupt working people -- even ones with medical insurance. Right now some (approximate) 50% of bankrupsies are driven by people with insurance not being able to pay medical bills.

That might require federal legislation to regulate insurers. Trouble is, the States regulate them. So we have 51 sets of regulations. The most practical way to fix that is 'open borders.' The only other ways would be federal mandates {ugh}, stretching the commerce clause even further {ugh}, or a constitutional amendment {tough to do}.

If insurers only operated in the state they were chartered in, then this might be a constitutional question. But this question was settled by the courts years ago. There is no reason the Feds can't regulate State Insurers. The question is do we really want them to. I think the best thing to do is to set up 51 State Medical Service non-profit Trusts and put them in the business of collecting and paying for basic medicine.

It will be interesting to see what kind of mess the Democrats come up with.

Right now the Democrats are working with the insurance companies, so whatever they come up with will probably be a frankenstein monster.

* Maybe a federal mandate requiring parents to insure their children. * A sliding scale medicare buy in. * Removing the childless adults medicaid exclusion, * Some kind of cap on what is a double tax exemption for employer paid health care benefits.

Mandates don't create a free market. That is why this is a public good and has to be managed as a utility. Universalizing Medicaid might be the answer. At least we'd have some minimum coverages and catastrophic coverages. The mandate should be that all persons working have medical insurance; that nobody be excluded from such insurance arbitrarly, and that those not working should either be covered by someone who is working. I'd also make employers pay the insurance for people they lay off as part of unemployment insurance. But I don't think private insurers are competant to administer such a system.

Single Payor will not pass now. Obama's 'public option' is a back door, incremental approach to Single Payer. I do not see how private insurers can compete with a public option.

I'm crying crocadile tears. Considering that they are in a kept Government sponsored market now, they shouldn't have been providing that service in the first place. They've had a good run. They'll find other ways to fleece consumers. We should have done this back in 1947. We'd be in better economic shape. Health care drains billions of dollars from ordinary folks to the very wealthy every year --- and kills people.

I doubt that President Obama can even ram through a new public option. A combo of Medicare buy-in and Medicaid expansion does the same thing. I might be wrong on that. It might make sense to consolidate Medicaid, Medicare, & the Federal Employee plan into a public option? There might be constitutional issues. Medicare is tied to Social Security. Medicaid is technically a state program.

I don't expect this fight to be won in one year. Right now they are simply going to impose some changes on the general public that won't make anybody very happy because the insurance lobby, the AMA, and the big boys are opposing any real change. I expect to have to fight about this for the next 10 to twenty years, and I'm not giving up until I die or we see an equitable system.

I also doubt he can get mandatory insurance for adults, we shall see. Way back when, during the Hillary Care debate, I predicted that Democrats would eventually call for mandatory health insurance, and was laughed at. I made the same prediction in 2007, and was laughed at again. Obama might get it for kids.

During the effort by Hillary Clinton to get a debate going, a massive advertising campaign painted white as black and black as white and demonized her every word. There was no alternative offered, it was just an attempt to demonize any plan the Democrats might come up with. We are already seeing the same kind of campaign. I hope people are starting to see through all the tasmanian Devil spinning by the corporate media and Faux news.