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Why Health Care "Reform" was a Colossal Blunder |
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How do I hate thee, health care “reform”? Let me count the ways:
Third way: Insurance is NOT the problem. Health insurance companies aren't exactly loveable. However, when someone starts demagoguing them, especially when that someone is a Chicago politician, your garden-variety critical thinker probably should start looking behind the curtains and thumping the walls for hidden doors. We all know how insurance works: a bunch of people pool their money, and when someone has a big need, it's paid out of the pool. The payments in have to exceed the needs. Higher needs mean higher payments in. Duh. The umbrage has developed over massive and consistent increases in health insurance premiums. We are assured that this is because of the vicious greed of the insurers. But think about it- if premiums went up 20-30% a year for several years, for no reason but greed, wouldn't their profit margins be up around 100 percent or more by now? I read on Coyote Blog that the industry average is 8%- not bad, not great. Carpe Diem says they are at 3.3%- 86th among industries. (http://mjperry.blogspot.com/2009/08/health-insurance-industry-ranks-86-by.html) There's also a lot of talk about price fixing and monopolies. But I actually shopped for health insurance recently. There is a lot of competition. If premiums really could be a fraction of what they are, then somebody could eat everybody else's lunch. It's not happening. Besides, if you were fixing prices, wouldn't it show in your profit margins? So what the Chicago politician doesn't want you to think about, for reasons I will leave to the student, is that the main driver of insurance increases is increasing costs. That's pretty simple. The underlying reasons for the increasing costs may not be simple, but the resultant reason is: increasing costs. Read yesterday's note for one reason that costs keep going up. Another hit on health insurance is their cruel refusal to insure pre-existing conditions. This is rather like Reuben Stoddard offering to live at your house and pay you ten dollars a month for food. Would you cruelly refuse to let him bankrupt you? Dern tootin' you would. (Just a note: forcing somebody else to take him, on their nickel, is not compassion on your part.) Our state insurance commissioner, about 10 years ago, decided she could usher in socialized medicine by capping insurance premiums and requiring insurers to take all applicants. People aren't stupid. We had people who were 8 months pregnant signing up, paying a $100 premium, getting a $10,000 C-section, and dropping the policy. All the insurers left the state. They had to. So she relented, or got religion, or whatever, and they came back. What we now have is the President making the same promise: to cap rates and require insurers to take pre-existing conditions. All critical thinkers who are also capable of simple arithmetic can see that there will be no health insurance companies within a few years. I suppose that, under the theory that the insurance companies are the problem, detroying them will be an improvement. A conspiracy theorist who cannot think critically, however, might observe that with all the insurance companies gone there is no option except the government. I assume no REASONABLE person would make that connection. It's probably not relevant anyway. Here's the problem, if it's not already jumping at you: if costs remain high, it will require just as much money (maybe 3.3% less, if you are a die-hard statist), insurers notwithstanding. Besides, no matter how phenomenally screwed up the insurers are, I bet Medicare and FICA are administered even worse. At the very least, you'd better not look for LESS waste and theft under government administration. What's more, if we throw in 30 million more people, many with pre-existing conditions, it will take a whole lot MORE money. Wasn't the problem that it is already taking too much money? Wasn't the problem that too much of our national wealth was diverted to health care? All this beating up on the health insurers does nothing at all about that. If we can't sustain the current spending, then doing it for 30 million more people will not be sustainable. There is NO hokus pokus anybody can cook up about preventive care to negate this hit. In fact, the disconect I described yesterday will make costs increase even faster than at present. THAT'S the problem, not insurance. |