Feeling Lucky?
I’ve been listening a lot about the whole healthcare issue that is currently passing through our government, and I started really thinking about what it is that we are trying to do, verses what it is we SHOULD be trying to do.
You see, there’s just something about the whole idea of health insurance that is really really wrong. In essence, we, the buyers are gambling that we will get sick or injured and that the cost of that care will be more than the amount we put into our insurance, thus saving us money in the long run. The insurance company, on the other hand, is betting that we won’t get sick or injured, and that the money we put in will be higher than our medical costs, and, that the profit they make while investing our money will be high.
There are several things wrong with this model. The first, obvious one is that we are gambling against ourselves. Never a good idea. We only benefit if we get sick. It’s not like we get to invest the money we have given to the insurance company, in fact, we are saying, “here, you take it and invest it, keeping all the profits.” It’s gone. And if we stay healthy, we get nothing in return. You might as well have burned it. On the other hand, if we do get sick, much of that cost will be taken up by the insurance company… But here’s where things break down. You see, insurance only works in our favor if we are seriously injured or sick. Why? Because most insurance plans have both a deductible and a co-pay. That means that if you are only a little sick, then you may very well still end up footing the entire bill, and if you only need a single cheap medication to fix your ills, then it’s very likely that you will pay for it with your co-pay.
The other problem with this system is that there is absolutely no incentive for the medical industry to keep it’s costs down, in fact, there is every incentive NOT to. They get more money from the insurance companies if they can charge more for services and supplies, and in most cases, the consumer NEVER sees what those costs are. More and more we don’t even get a line item on our bill, just a grand total. The really scary thing is that if you ask most doctors and hospitals, they have different rates for insurance companies compared to those who self pay. Over time, what we have is astronomical medical costs, with everyone saying that they are just barely making a profit, when in reality, it’s only the end user that ultimately gets reamed (sometimes literally). The person receiving services gets the worst possible return for their money no matter how you slice it. Unless they have a catastrophic injury, the benefit they receive will never be more than they ultimately put into the system, and it’s designed so that costs will only go up over time. It’s a lose lose system.
Here are some rather sobering facts from a Vanity Fair article I googled:
With median annual compensation of more than $12.4 million, C.E.O.’s at the big health-care companies make two-thirds more than their counterparts in finance and are the highest paid of any industry. The health-care industry’s total annual profit has grown to an estimated $200 billion, and it doled out nearly $170 million in campaign contributions in 2007 and 2008. It now spends more than any other industry lobbying the federal government—$3.5 billion over the past decade and a record $263 million in the first six months of this year. That’s six lobbyists and nearly half a million dollars for each member of Congress. It’s been a good year on K Street, too.
It should come as no surprise, then, that we spend 17 percent of our G.D.P. and more than $7,500 per American per year on health care. That’s 50% more than any other industrialized nation. Meanwhile, the quality of care we get in return has fallen to embarrassing lows. According to the World Health Organization, our health-care system ranks 37th in overall quality and fairness, placing us between Costa Rica and Slovenia. We rank 41st in infant-mortality rates, alongside Slovakia and Serbia, and dead last among 19 leading industrialized countries in preventable deaths. Nearly two-thirds of personal bankruptcies in the U.S. are caused by illness, yet more than three-quarters of those people actually had health insurance when they fell ill. In other words, we’re all getting ripped off.
And now our government is trying to make it a law that you must have health insurance, or face a penalty. I can understand their intentions, which are to make it mandatory so that those without insurance (who are still getting sick and receiving care at somebodies expense) don’t bring the system down for those that do. But let me put it another way… The government is trying to make it a law that you must gamble. In fact, they might as well have said that you need to gamble at least $7,500 a year, minimum, per person. Got a family of three? Your contribution to this broken system each year will be $22,500, that’s more than many people’s ANNUAL total income, and is regardless of your financial or social status. And guess what? You’re chances of a payoff are probably going to be better had you taken that money to an actual casino and played slots.
The problem with all of this is that we have stopped looking at insurance as a gamble, and accepted it as a discount system. We only see the end bill, which says that you must pay $20,000 for something that would have been $300 if you had only had the magic “insurance” coupon. If we really wanted to fix our healthcare system, we should be taking insurance right out of the picture. But instead, we are only adding MORE insurance. We talk about a “public option”, the government’s casino. Step right in, our blackjack tables aren’t nearly as rigged to the house as the rest of the industry, and the buy-in is low low low!
Remove insurance, and healthcare is no longer a gamble. Costs would have an incentive to go back down in the form of competition, and we, the people footing the bill, would only have to pay when we were actually sick. Want to hedge your bets and gamble against getting cancer? Fine, put your $7,500 a year into a Treasury bill or a 401k, or almost ANY other investment. If you don’t get sick, then at least your money is well spent and not simply thrown away.
And what happens to those that don’t or won’t put away funds for a rainy day? Nothing. Literally. If they need a new liver… sorry. I’m sure this seems cruel, and I might feel completely differently if it was my own daughter that needed that liver, but life simply isn’t fair, and those with money get to have more toys. Less than two generations ago, if you didn’t have the money for an expensive procedure, then you died. But today, we view top-notch healthcare as a right, not a privilege. If we discovered a fantastic miracle drug that would cure ANYTHING short of old age, but it cost a million dollars a dose, should it be a right that ANYONE could have it anyway, at the government’s expense? What about half a million? $250,000? Where do you draw the line?