Fixing Health Care (Insurance)

Posted on | March 21, 2010 | 10 Comments

Scott raises a substantially important issue, while simultaneously illustrating a primary structural problem with the United States health care issue.  He has also done something very necessary in this current political climate by seriously addressing the reason he is supporting the bill.  And in a way that my go-to points don’t really address.  So, let me try to address this problem of extreme cost and coverage of existing conditions.

First, a number of the GOP’s market based cost reduction ideas would indeed be helpful for Scott’s situation.

Eliminating the government imposed restrictions on competition in the insurance market by permitting interstate insurance purchases is a good step.  That will increase options and reduce premiums.

Serious “tort” reform that includes everything from caps on malpractice awards and limitations on products liability awards against drug manufacturers who’s products have been approved by the FDA will substantially reduce the costs of prescription drugs and the expense of malpractice insurance that doctors are passing along to their patients.

But neither of these are in the “Health Insurance Reform Bill” or whatever they official name is.

Second, federal and state regulations must recognize that what we call Health Insurance, isn’t.  Insurance is a method for hedging against future risk.  You may a third party a certain amount in the expectation that if your house burns down, the insurance company will pay to rebuild your house.  But there’s no guarantee that your house will burn down, thank goodness, so you may never get a payout.

But everyone gets sick.  Everyone needs to see the doctor occasionally.  Not everyone gets a catastrophic illness.  Current health “insurance” is mostly a payment plan.  You may monthly and as a result, you get reduce pricing (effectively) for visits to the doctor when you have the sniffles and when you have a heart attack.  These need to be separated.

If you want a health payment plan, then you should be able to buy one that covers just the cold and the flu, or even one that covers chiropractors, tattoo removal and pregnancy.  If you want to insure yourself against the risk of coming down with a chronic and expensive illness, then you buy that.  So, if you have a health plan, you wouldn’t be turned down for existing conditions because it will be taken into account in determining your regular payments.  If you have real, risk insurance and the risk condition occurs – say, a chronic illness requiring expensive medication – then you can’t be “cut off” or denied – or even have to continue paying premiums because the risk condition triggers the insurance company’s liability.  Sure, we now have long term disability, but that’s a very different animal.  And remember, these various products exist as they do because of existing laws and guidelines.  As usual, government regulation has already destroyed the free market.

Merely separating the 2 concepts would make a significant difference.  Now, this doesn’t address the issue of what happens to those with chronic illnesses who did not insure themselves before hand?  Perhaps the same thing that happens to a family without life insurance on the breadwinner upon his or her untimely death.

It is my contention that an appropriately regulated free market would make a variety of health products available, that those products would be easily understandable, and that it would be a serious improvement over the status quo.

Instead, this current bill that’s about to pass the House will increase government regulation and control over what insurance products may be offered, what they MUST offer, all of which will be determined by the same lobbyists and special interests exercising their influence in the same manner that everyone bemoans today.  And more and more industries will lobby for their spots in the government mandated health plan.  You will insure yourself against risks that are not only remote, but impossible, all because of the government mandate.

I can speculate why the Democrats are so hell-bent on getting this ridiculous piece of legislation passed. But I do know the effects of this legislation will be continued accrual of power to the federal government and the Congress who passed it, the further institutionalizing of a culture of dependence on the government who is even now being encouraged to fill out their Census forms in order to get “your fare share of funding” from the government, more laws designed to lower health costs by controlling your choices and actions, and the utter destruction of American health care as we know it.

In short, we’re screwed.

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