Insurance or Entitlement?

The current debate about health care reform wavers from insurance to entitlement. Is healthcare an entitlement to be provided by government or is healthcare insurance an obligation to be mandated by government? The topic of debate changes so frequently that it is impossible to determine the real agenda.

First; we have already determined that health care is not an inalienable right granted by the creator, nor is it a right granted by the constitution, nor is it a biblical mandate. (Link)

It would be appropriate to ask if health care should be an entitlement paid by the government. We would point out that virtually nobody is denied at least a minimal level of essential health care services. Medicare, Medicaid, the Veteran's Administration, and federal government employee insurance pay for medical services for over 40% of the population today. In addition, all hospitals are mandated by law to treat anyone who comes to their emergency room regardless of their ability to pay. Therefore, healthcare has become an entitlement in spite of the fact that this may be unconstitutional.

Political posturing notwithstanding; it seems that the progressives in congress and the President are determined to increase government involvement from 40% to 100%. It is all about revenue enhancement. (Link)

This effort is so unpopular that the proponents have shifted their focus from entitlement to insurance.

Insurance is when a group of people pool their resources to indemnify each member against a future occurrence of an uncertain event. Our culture has done a severe disservice to us by allowing us to believe that we should insure against first dollar loss.

For example: Everybody needs to go to the doctor from time to time, just as everybody needs to eat and drive to work. We don't expect someone else to pay for our food or our commute to work. Why do we expect someone else to pay for every penny that we spend on healthcare? It is a colossal waste of money to insure against every little expense.

We should insure against the future occurence of an uncertain event. Visiting the doctor is certain. Hiring a surgeon to remove our colon is uncertain. Not everyone requires such surgery (praise God) so this is an uncertain event against which one could purchase insurance.

The most cost efficient method is to purchase insurance against something that would cause a severe financial loss. One should purchase insurance against catrastrophic losses and budget for ordinary expected expenses. Unfortunately, our culture gives employers and insurance companies incentives to provide more and more perks so that we have lost our perspective of the role of insurance.

My uncle was a sales manager for an international distribution company. As he interviewed a prospective sales representative he said, "You pay your own expenses. They are lower that way."

When a third party, like your insurance company, pays for your medical expenses; you have no interest in what they are. A redundant test? No problem, bring it on. A tummy tuck, breast implant, or viagra? YOU BET. My self esteem demands it. Premium or generic drugs? Hey, I deserve the best.

My wife and I subscribe to our employer's flex spending accounts that allow us to divert pretax money into a medical flex spending account. This is not insurance but tax advantaged forced savings which allows us to set aside funds for day to day medical needs. This system has several flaws; but it is a good start.

There is limited access to Health Savings Accounts. These too are nothing more than tax advantaged forced savings accounts that allow participants to save for their medical expenses. The HSA includes a provision for high deductible health insurance to pay for catastrophic health expenses. The progressives in congress hate HSA's and have deliberately placed restrictions on these to limit access to a common sense approach to health care reform.

The progressives and their synchophants in the mainstream media will not tell you that the Republican party has proposed a number of creative healthcare reform innovations that would lower costs, improve access, and put the responsibility for your healthcare in your control. Follow this link for more information.

My personal preferrence is a Health Savings Account coupled with the Wal Drug Plan (Walgreens, Walmart, and others offering generic prescription drugs for $4).

It is NOT in the public interest nor is it constitutional to require everyone to have health insurance. This is not the same thing as driving a car. Driving is a priviledge. All states require that you demonstrate financial responsibility before you can exercise the priviledge of operating a motor vehicle on public roads. The key here is "demonstrate financial responsibility";i.e., carry liability insurance or post a bond with the government.

Health care is a personal responsibility and you have a constitutional right (10th Amendment) and a biblical right to behave irresponsibly (Romans 1:28 through 32).

It is estimated that as few as 70% of licensed drivers carry liability insurance. Those that get caught are fined or imprisoned.

What evidence do you have that mandated health insurance will be any different? What are you going to do when someone gets caught without health insurance? Put them in jail? This is reminiscent of the debtors prisons from the eighteenth century.

We need to keep health insurance in it's proper perspective in our society. We need to allow insurance companies to offer innovative health coverage plans. We need to find a way to allow them to offer these plans in multiple states.

We do not need to:

Demonize insurance companies

Place the federal government in competition with insurance companies.

Place more mandates on insurance coverage.

Irrational Pricing Increases Health Care Cost

I have reached a certain age where my primary care physician recommended a colonoscopy. He referred me to an outpatient facility owned and operated by an LLC whose primary shareholders are the physicians. The appointment was scheduled in three weeks on the Monday of my choice. In and out before lunch missing only one day of work.

The bill for these services was $3400. The insurance company paid $875, my share was $75, and the physician group wrote off the rest. If the physician would do it for me for $950 I wouldn't need the insurance company. One must ask: WHY?? What has created this irrational billing system? What is the lowest price they would accept? Why do we need a layer of bureacracy/cost to get the best price?

It all started with Medicare in the mid sixties. The federal government created a health insurance plan for citizens over the age of 65. The government was bringing a large group of patients and demanded anyone providing health service to these patients accept a discount. Medicare covered less than 10% of the population so that was accepted.

Succeeding Congresses established Medicaid for poor people; then raised the definition of poor to include families earning up to $80,000 annually. Every congress has saved money by increasing the discount.

Healthcare providers increased the price of their services to offset the losses from treating Medicare and Medicaid patients. Congress then demanded they prove that they have made a good faith effort to collect their posted fees.

So Congress increases the discount and health care providers raise their prices in self defense.

Insurance carriers got into the game in the late seventies by creating managed care. Billions of dollars were made by middlemen whose only contribution was giving healthcare providers a means to provide discounts to their patients. Those who do not qualify for one of the federal programs or private managed care plans are trapped in paying full price for services. Government rules require them to pay inflated prices so providers can get acceptable reimbursement from the government. The healthcare providers write off the unpaid bills as uncollectible or the local government pays the costs.

NOTE: NOBODY IS DENIED NECESSARY TREATMENT FOR LIFE THREATENING ILLNESS. The treatment may be delayed or scaled back; but TREATMENT IS NOT DENIED.

Today the government pays for over 40% of the health care provided in the US and the progressive politicians in congress are maneuvering to increase that to 100%. The apparent purpose is to enhance the revenue of the federal government to cover the trillions of unfunded liabilities from Social Security, Medicare, TARP, and the economic stimulus.

Insurance companies are supplementing the income shortfall to healthcare providers created by the government. When (not if; WHEN) the government becomes the sole provider there will be nobody to cover the losses imposed on healthcare providers by congress. This will cause them to cutback on services or go out of business altogether.

Lower reimbursement = fewer healthcare providers. Fewer healthcare providers = long waits. Long waits = National Coordinator of Health Information Technology (aka Death Panels). National Coordinator of Health Information Technology = rationing. Rationing = denial of care.

BONUS: Sick people will just die, thereby reducing the unfunded liability of Social Security and Medicare. Remember, when they are talking about pulling the plug on Grandma; someday we will all be Grandma.

Here are three things that would reduce the costs of healthcare.

1) Charge for procedures and not fees for service. For example:birthing has been bundled into one price from prenatal through year one and includes professional services and hospital charges in many locations.

2) Allow people to purchase pharmacuticals in Canada or Mexico. Drugs are cheaper in those countries because of government price controls and consumers in America pay more to subsidize this practice. Big pharma will stop playing that game if we could purchase our drugs in these countries too.

3) Put a cap on damages for pain and suffering in malpractice cases. It has worked in Texas and would work nationwide.

Here is the one thing that will NOT reduce the costs of healthcare:

Allowing the government sell insurance in competition with private insurance companies. The government will most certainly engage in predatory pricing as they tax private insurers to pay for the cost of providing health insurance at a loss. This will force private companies out of business and then the government will have a monopoly on health care.

Monopolies NEVER work. Never.

What is Wrong with Health Care Now

Progressive Democrats have wanted to impose nationalized health care on the United States for as long as we can remember. It has always been posed as compassion for sick people; but it looks suspiciously like the human need to control other people in an effort to provide meaning to one’s existence. This drive for control has taken on an unusual urgency because the progressives now control both houses of congress and the presidency and this is viewed as a way to salvage the bankrupt Social Security and Medicare programs.

We have already shown how the public option will allow the government to increase revenue by skimming money from 1/6 of the economy, control costs by dictating reimbursement and access to treatment, and reduce demand by accelerating attrition.

Congressional committees have been introducing legislation written by progressive organizations with no thought to the real problems of our current healthcare system. One can only conclude that there is no real interest in solving problems. Congressional committees used to hold public hearings to solicit testimony on what problems exist and possible solutions; but that is not the case in this congress. This congress seems intent on simply jamming down a progressive agenda to grab private wealth and enhance the power of an elite corps.

Members of Congress and Federal employees will be exempt from the constraints of these programs because, as George Orwell wrote in ‘Animal Farm’, “some are more equal than others”.

Let us assume this is a perfect world and congress will hold public hearings to discover what, if any, problems are endemic to the health care system as currently constituted.
We would testify to the following problems that congress could address to the benefit of everyone.

Access to affordable health insurance is tied to one’s employment. It makes absolutely no sense. The reason for this custom wage and price controls imposed by the Federal Government during World War II. Companies could not pay competitive wages for superior employees; but they were allowed to offer benefits at no cost to employees and deduct those costs from the company’s income. Bonus: government contracts were based on cost plus profit so the higher the costs, the higher the profit.

The prices of health care services are not based on the cost of delivery. Prices are determined by Medicare reimbursement. When Medicare was introduced, it was a small percentage of the total health care industry and reimbursement was based on a percentage of local reasonable and ordinary charges. Over the years, the percentage of reimbursement has declined; so service providers simply raised their fees. The result is private insurers are subsidizing Medicare and Medicaid. These two programs pay nearly half the income received by health care providers. We will explore the negative effects of these policies in a separate blog. The most informative article we have found on this subject was written by Loren Steffy in the Houston Chronicle on Sunday, September 13 and linked here.

Federal and State laws mandating certain services. For example, hospitals must treat anyone who comes to the emergency room. This is by far the most expensive means of health care delivery and most people who go to the emergency room do not pay full price for the services received. The result is the local taxpayer, through the hospital district, pays the cost shortfall for operating the emergency room thereby subsidizing the cost of healthcare for uninsured and indigent clients.

You will notice that the top three problems with the delivery of health care in our country were caused by government. It seems incongruous to expect more government involvement to solve the problems that government involvement has caused.