Holte's corner

Debating Health care continued

Robin:

"This has been my theme; which I have tried to explain many ways. The thing is, people do not want health insurance. They want a health care warranty."

In that you are right. To put it in clear terms. Most of us think that basic health care should be a right. That doesn't mean that it can't be provided using insurance. We call Social Security an insurance program even though it really is a similar kind of warranty to what is wanted for medical insurance.

I know the use of the term "insurance" drives righties up the wall, but it is still an adequate word. It's root is "insure" which is sometimes a synonym for ensure, which means:

Ensure:

1. to make sure or certain; guarantee; secure measures to ensure accuracy

2. to make safe; protect safety devices to ensure workers against accidents

3. Obsolete insure"

Source http://www.yourdictionary.com/ensure

Continues: 005696.html

Robin:"Insurance is good at providing protection against unexpected loss. It covers us "just in case." A Home Owners Policy covers us in just in case of a loss from theft, liability, fire, or storm, and so on. Pretty much everyone is covered. Realtively very few incur those losses. Therefore, homeowners insurance is real cheap. We do not expect homeowners insurance to pay for paint, siding, new wiring, a new furnace, a new water heater, carpets, light bulbs, and so on. If homeowners insurance did pay for that; then, obviously, the cost of the insurance would rise dramatically. In fact, the base increase in cost would have to be dollar for dollar what we already pay for maintenance. Then, there would be another layer of unnecessary administrative costs added for claims processing.

Actually, when we buy a house in Maryland, there is a company that offers just that kind of coverage. It is worth paying for during the first few years in a home. We had a policy called "American Home Shield" that offered to cover just that sort of thing.

Robin;Moreover, everyone would want the best furnace, the best light bulbs, and so on, regardless of cost. They might even want new stuff before the old is worn out. Plus, market pressure on pricing is eroded. So the price of house paint, siding, new wiring, a new furnace, a new water heater, carpets, light bulbs, and so on would begin to to inflate at a much higher than seen in the general economy.

The problem with this argument is that it sets out the worst case for the consumer, while neglecting that what is warrantied by someone offering ensurance is always going to be less than the ideal result. My American Home Shield account would warrant the furnace if it burned out. If I paid for a new roof that way, the warranty would be for when that roof needs replacing. This is an absurd argument which reduces the subject to an unreal scenario. Which you continue in the next paragraph as your argument descends into utter absurdity and abusive fantasy:

Robin;The mean old insurance companies would have to start rationing home maintenance. The left would start wringing their hands over the fact the rich had better maintained homes than the poor. Laws would be written to encourage managed home maintenance plans.

Aside from the fact that this is an absurd formulation that nobody on the left would get involved in, the difference is that nobody is going to die from an ugly roof, but people can, and do regularly, die from bad healthcare. Treating house ownership as a right is not the best way to implement the notion of every person should own their home anyway. But even given that people bought policies such as "American Home shield" to protect them, they aren't looking for "the best", and the policies are usually constructed so that if they ask for unrealistic things they won't get them. Indeed in our for profit world, that is the problem. The insurance providers, for profit people that they are, deny even the most rational claims with only the thinnest excuses. The more likely situation in the case you describe is that people would calculate that it is not worth them buying for profit insurance if the insurance companies are not going to pay off when their furnace breaks down and kicks the ghost. While there is no such thing as a rational market, there are rational choices involved.

Robin:The point is that insurance is just a bad way to finance most of health care. If we use insurance to pay for "wellness care;" then the added cost of the insurance has to be dollar for dollar, plus an extra layer of redundant administration. Insurance is a good way to hedge against the risk of a serious accident or illness. Even there, it is not very effective if the condition becomes chronic and high cost.

I think you are confusing the parsed language that distinguishes "ensure" from "insure" even though they come from the same root, and that causes Insurance companies to claim that "insurance" is not meant to ensure that people are protected from disaster. When society ensures something, it uses insurance as one vehicle to accomplish/execute that ensurance. The principle behind insurance is to spread risk and costs by taxing (charging) everyone who is part of a commons for the costs of that commons. The purpose of spreading costs and risks is to allow for society as a whole to pay for medicine, something we could do as a society with the combination of ensuring that there are physicians available to everybody, ensuring that there are clinics available, and ensuring that there are sufficient quantities of hospitals and emergency facilities to serve everybody in an emergency. This doesn't have to add an "extra layer of redundant administration" if the administration is done as a public good.

I agree that this is a reason for not letting the private for profit insurance companies get involved in this. If the Government ensures that everyone will get paid, the insurance companies will make sure they are standing in line at least three times for each bill.

Robin: Just an aside. I bought a new TV in 1998, for about 600 bucks. I took the three year warranty; it was like 80 bucks or so, Exactly one day before the warranty expired, it quit, I got a brand new TV free. Meanwhile, they had wanted me to renew the warranty for another three years, at a price of 800 dollars. I turned that down. The TV lasted three more years. I then bought a new one, same size screen, better picture, a lot trimmer and lighter, for 200 bucks. Five years later, it has not had a problem.

Well you've been lucky. Generally when I've bought warranties either the item expired after the warranty expired, or there was a loophole in the contract.

Robin: Obviously, we can not trade in a sick body for a new one. So some are going to need high cost care for chronic conditions. Also, we want everyone to have access to preventive & screening care. I am just saying that insurance is the most expensive possible way to pay for those things. Those things do not really even reduce the long term cost of insurance, not in cold dollars and sense.

There are people who will argue either way. There are substantial numbers of experts who can demonstrate statistically that controlling wellness is cost effective, and even more who can demonstrate qualitatively that it would be worth doing even at cost. I know it is hard to quantify, but the financial benefits are beginning to be proven. This is sort of like the arguments for Telehealth and electronic records from a few years ago. In the short run electronic records are mostly a cost for providers and the immediate benefit is limited. But they enable other synergetic capabilities, and those do cut medical costs. Similarly wellness programs directly benefit employers and in the long run directly benefit those who participate in them.

http://www.infinitehealthcoach.com/benefits-of-corporate-wellness-programs.html

# Preventable illness makes up at least 70 percent of all illness and the associated costs

# The total cost of obesity to U.S. employers is $13 billion per year

# Obese Americans spend about 36 percent more on health services and 77 percent more on medications than people of healthy weight. That’s more than heavy smokers or heavy drinkers

# Workplace alcohol, tobacco, and other drug use costs over $100 billion each year

# Job stress is estimated to cost $200 to $300 billion annually in absenteeism, tardiness, and lost productivity

# Workers’ compensation costs for a smoker averages $2,189 compared to only $176 for a nonsmoker

Robin: The thing is, most people want umbrella health insurance. Basically, we want to prepay for health care at a huge discount. We expect insurance companies to buy claims; to assume all of our risks and present costs, at a loss to themselves. It dont woik dat way.

As Moe would say "Speak for yourself" Who are you kidding? Most people do want umbrella health ensurance, something that most democratic societies can provide as a right of citizenship with considerably less cost than what it costs us, and with consistently better delivery. We don't expect a "huge discount." Nobody is expecting companies to operate insurance at a loss. That is the purpose of "reinsurance," State involvement, and why nobody got too upset until the Insurance companies started their orgy of mergers, acquisitions, taking hospitals private, and turning previously non profit organizations into for profit ones.

But we do expect that insurance companies, if they provide insurance, will invest their surpluses so that they can reduce costs down the road rather than paying out their surpluses as top executive benefits and Golden Parachutes for the privateers running their for profit companies. We are flabbergasted when they invest their reserves in speculative investments and then raise rates and deny coverage simply because they made bad Wall Street Debts. And we find it astounding that for profit insurance companies, increasingly, promise health care they have no intentions of delivering. It is also astounding that the for profit medical companies should be engaging in such flagrant medicaid, insurance and triple billing fraud, much of which is legal. Between people gaming each other in the billing game, and insurance companies playing the "denial of coverage game" it is no wonder we have a crisis of costs. All the incentives are perverse.

BTW, a public option likely can do that. If a private company did that, they would be seized for irresponsible underwriting. That is why private insurers can not compete with the public option. Not even "not for profit" insurers can operate "for loss."

True, a public option can do this. However, the rest of your argument in this paragraph is nonsense. At one time Blue Cross Blue Shield provided very decent care for reasonable prices to most people. And underwriting rules are written by Governing boards, nobody is going to get punished for following a sane policy. When the HMO's came out they could provide "wellness care" at a discount, both groups eventually became for profit and discovered that it was easier to game the system than to simply pay the claims and be boring payers of medical bills. Now we have something like 8 healthcare companies who often are both insurance companies and providers. Too big to fail is too big to exist. The problem is that the for profit health care companies lost sight of their original mission; health care, and got caught up in the Wall-Street "New Jersey" conceptual model which puts individual profits and profiteering above any other consideration and has hollowed out, degraded, or destroyed industry after industry in this country.

Robin: That is why public option is a back door to single payor. Mandates could help. The privateers will try to cherry pick the young and healthy who are presently uninsured. That would offset the risks of loss from open enrollment.

I consider that the best outcome and I don't deny that my own goal is single payer. I'll accept the public option only if the system is designed intelligently. I think that all persons working for a living should be required to pay into a single fund, administered at a Local, County/City, and State level. That they should be covered at a minimal level whether they can pay or not. And that individuals should pick which coverage they get. Personally I think that for profit companies should be barred from the open enrollments, but making the choice of provider a consumer decision and eliminating the ability of insurers to cherry pick coverage would go a long way to accomplishing the same end.

Robin: Do we provide premium subsidies to low income legal permanent resident aliens or make then cough up the 600 bucks for citizenship? How about illegals and their children?"

Anyone living in the USA should be covered by and required to pay into the system if they are working here. If they are visiting for a long time, they should be required to get an identity card on entry so that they can use the system. We should be civilized enough to have reciprocal agreements with other civilized countries so that if, say a Frenchman, comes here; he can get as decent care as he'd get in France. That is how those other countries handle that presently.

As for subsidies, any subsidies should be charged against either employers, the wealthy of this country, or the States who think it is worth their while to pay people a substandard wage. We don't have an illegal alien problem, we have a scofflaw employer problem. We have working poor for the same reason. Employers employing illegal aliens should be fined ten times the annual salary of those aliens for each alien identified; and shut down. If an employer can't afford to pay his/her employers over the long run he has no business being in business and is engaging in Corporate Socialism at the public expense. If there are to be exceptions those should be paid for by the States. I am tired of subsidizing employers who pay starvation wages and then try to put people I know out of work in other States so they can spread the misery. Any exceptions to this principle should be legal from the get go and a long term sustainment plan built in. I can see subsidizing agricultural worker pay, or startup businesses, but not the way we do it now. A healthy minimum wage would take care of most of the rest of this. And making employers pay premiums on layoffs would probably take care of the rest.

If a person is of such low income that they can't afford to pay into the plan, it is worth it to cover them anyway as that will limit the casualties in the form of pools of infection, Hospital use, low grades in school, stunted growth, etc... It also will enable people to start businesses.

If we would do something about the speculation, gambling, and stupidity of Wall-street (which is increasingly not so much a place as a state of mind) then we wouldn't have to worry about affording these subsidies.

Posted by cholte at July 5, 2009 10:40 PM