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The coming depression blog | May 23, 2019

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Health care for the poor: Who wants it and whose responsibility is it?

In the United States of America, many people cannot afford even basic health insurance. They suffer severely under the present system and have to live under the constant fear of not knowing what they will do if they or their loved ones ever fall seriously ill.

Public programs to help poor Americans obtain medical care have evolved as the country has grown richer and medical advances have increased life expectancy and improved quality of life but the evolution has not been a direct path of increased generosity towards poor people. Instead, it reflects a mix of philosophical beliefs, greater understanding of the links between health and ability to work, and swings in the economy. Trillions of tax dollars have been spent fighting poverty, but instead of encouraging people to get jobs and get themselves out of a financial rut, the welfare system creates conditions favorable to pregnancy, childbirth and illegitimacy.  The “safety net” has become a hammock for the laziest people in our society.

Another aspect of this issue is not just the cost of healthcare, but who is paying for it, where does the money come from, and where does it go?  It seems a truism that somehow, the burden of healthcare costs is on all of us here in the US, but how is this burden divided?  And if there is money to be saved, who will reap the benefits? Taxpayers? Employers contributing to healthcare coverage? Employees share premium costs themselves? Insurance company stockholders? Not so clear.

Healthy lives. We have known for years that America has a high infant mortality rate, so it is no surprise that we rank last among 23 nations by that yardstick. But the problem is much broader. We rank near the bottom in healthy life expectancy at age 60, and 15th among 19 countries in deaths from a wide range of illnesses that would not have been fatal if treated with timely and effective care. The good news is that we have done a better job than other industrialized nations in reducing smoking. The bad news is that our obesity epidemic is the worst in the world.

Healthcare system isn’t really the fault, the insurance system is. The current insurance system is geared toward selling insurance to the corporations and not to the people. Kind of like how Dell lost its market share by focusing too much on corporate sales and not enough on the private sales. All in all current insurance companies are enjoying the state of oligopoly. Not enough competition and absolutely no incentives to become efficient or provide better service.

Real health care reform is the thing we’ve fought for from the start.  It is desperately needed. But this bill falls short on many levels, and hurts many people more than it helps.

A middle class family of four making $66,370 will be forced to pay $5,243 per year for insurance. After basic necessities, this leaves them with $8,307 in discretionary income — out of which they would have to cover clothing, credit card and other debt, child care and education costs, in addition to $5,882 in annual out-of-pocket medical expenses for which families will be responsible.  Many families who are already struggling to get by would be better off saving the $5,243 in insurance costs and paying their medical expenses directly, rather than being forced to by coverage they can’t afford to pay, to the insurance companies.

Now, before you eat me alive and tell me that private insurance companies in America are corrupt and perverse, let me cut you off at the pass and tell you that I am inclined to agree. Insurance companies are in business to make money, and they generate the most profits by taking in the highest premiums paying out the fewest claims.

Assuming that all 45 million people are in working shape and healthy enough to be insured and that it’ll only cost $100 a month to insure them, it’ll cost $54 billion a year. This redirected capital could put a strain on already traumatized commercial market. Remember until very recently United States had 0% savings rate and when it increased by 1-2 %, people were in fear of companies losing big money and possibly bigger effect on the economy. All in all, this underestimated insurance cost in the private sector will boost the health insurance companies and squeeze a lot of other businesses and could translate into potentially devastating effect on the already strained economy.

With health care emerging as a major issue in the presidential campaign and in Congress, it will be important to get beyond empty boasts that this country has “the best health care system in the world” and turn instead to fixing its very real defects. The main goal should be to reduce the huge number of uninsured, who are a major reason for our poor standing globally. But there is also plenty of room to improve our coordination of care, our use of computerized records, communications between doctors and patients, and dozens of other factors that impair the quality of care. The world’s most powerful economy should be able to provide a health care system that really is the best.

There are few points to the plan

First, the plan is administered by the states using their already existing Departments of Insurance.  No need to create eighty plus new government bureaucracies, as proposed in House and Senate bills.  The already existing National Association of Insurance Commissioners (NAIC) will create uniform regulations to govern health insurance programs.  Exceptions would be allowed in certain states.

Eliminate all licensing requirements for medical schools, hospitals, pharmacies, and medical doctors and other health care personnel. Their supply would almost instantly increase, prices would fall, and a greater variety of health care services would appear on the market.

costs would be reduced by:  Reforming medical malpractice lawsuits, establishing peer approved practice protocols to reduce unnecessary tests, allowing incentives to be paid to those who uncover Medicare and Medicaid fraud, encouraging hospitals to review management of their operations and finances (share cost saving ideas) and encouraging competition between providers of medical devices.

Health policy experts know a lot more about the economics of health care now than they did when Bill Clinton tried to remake the US health care system. And there’s overwhelming evidence that the United States could get better health care at lower cost if we were willing to put that knowledge into practice. But the political obstacles remain daunting.

Eliminate all subsidies to the sick or unhealthy. Subsidies create more of whatever is being subsidized. Subsidies for the ill and diseased breed illness and disease, and promote carelessness, indigence, and dependency. If we eliminate them, we would strengthen the will to live healthy lives and to work for a living. In the first instance, that means abolishing Medicare and Medicaid.

Allow health insurance companies to sell across state lines. One of our biggest obstacles to lowering costs, and one of the biggest examples of how government screws things up, is the requirement that insurance companies can only sell policies within their own state. A change in this would increase flexibility and decrease costs in a number of ways. First of all, it increases competition. More companies would be able to compete for your business. The high-priced, low-efficiency companies would have to close up shop. Low-priced, well-run companies would minimize overhead and better take advantage of economies of scale. Paperwork would be reduced, and technology-savvy companies would increasingly dominate the market.

So what will really happen to American health care? Many people in this field believe that in the end America will end up with national health insurance, and perhaps with a lot of direct government provision of health care, simply because nothing else works. But things may have to get much worse before reality can break through the combination of powerful interest groups and free-market ideology.

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