Real Conservatives, as opposed to "Trumpian's" believe in every part of their rational self that the consumer cost of Health Insurance will go down if you simply free up the market from government regulation of the product. They absolutely believe that if went down this path, health insurance would be affordable for every working person.
But insurance provided by the private sector insurance market only works if the insurance companies make a profit after they cover their costs. Life Insurance is the easiest for the industry to make a profit because the statistics, required overhead and investment returns work in a synergy that produces a product that can be constructed in a variety of ways to satisfy consumer demand and be affordable. It is a very useful product but one that many lower wage people do not buy because they don't have the money for it. And non-working people do not have any either. But both of those classes of people need and demand medical care from hospitals if their is no other place for them to go.
The unfortunate truth about insurance is there are systemic issues that effect the relationship between affordability and profitability. Car insurance illustrates this. Inflation drives the cost of car insurance. RSL has unfortunately over the last 10 years had 3 incidents with her car. She damaged the under section when she hit some black ice in Vermont and went into the ditch. Repair bill as I recall was $3,000. She damaged the bumper when she misjudged an icy pile of snow pulling out of street parking. Repair bill $1,500 as I recall. And last year, she lightly rear ended a van coming off the Saw Mill Parkway onto the Cross County. The van had little damage because it was moving forward. Our car had $6,000 of damage to the hood, grill and bumper. As a result of this her car insurance now costs $1,900 a year. I have no accidents, but my car insurance costs $1,100 a year. A few years ago we were both paying about $800 a year.
I know that if we had lower cost cars we would pay less in car insurance. And if we lived somewhere else we might have lower cost car insurance. But the fact remains that the damage in the 1st incident cost $3000 less to fix than the last incident because of inflation in the car repair business. Inflation can not be competed away and it drives up the cost of insurance because investment returns cover inflation everywhere in the process except in the actuarial necessity that premiums from the consumer cover the 95% to 100% of the expected losses. Shareholders would actually prefer that be 100% or 102%, and anything below 100% has to be covered by investment returns.
How is health insurance going to be affordable when almost any little illness causes $200 to $300 in Dr' bills plus another $100 in lab fees? Easy repairs to limbs cost $5,000 to $10,000 and sometimes more. Cancer, if treatment is successful, runs $50,000 to $100,000. And then there are the chronic illnesses like Diabetes, Lubus, MS, etc that cost at a minimum a few thousand $ a year.
We live in a society that had decided patients and Dr's get to decide on treatment. Even the current Head of HHS believes that. What that means is sick people get treated and the health insurance has to pay for it. And as I will lay out below, that is why competition will not lower the price of Health Insurance and if people cannot afford Health Insurance, they will end up in hospitals for treatment as uninsured people, and then we all pay for that somehow because hospitals need to be breakeven at worst.
My only insight into how the law of large numbers works on this dynamic is the state of the individual market in NYS before ObamaCare. No exclusion for pre-exsisting conditions and zero deductibles with the usual co-pays generated a $1,500 a month cost per person, which allowed the insurance company a profit. $3,000 a month for a couple equals $36,000 a year.
Now under ObamaCare, that cost is now roughly $5,800 a year with a $7,000 deductible/max-out-of-pocket per person with an insurance company profit. I expect to pay about $1,000 of that deductible so my total cost for one is $6,800 a year or $13,600 for a couple.
NYS has a fairly vibrant market for health insurance but that is the base line cost. How is competition going to reduce that when the insurance companies that are here are already working with the Dr's, Lab's, and hospitals to reduce the cost of visits for those with insurance. I know from speaking with Dr's that they are being squeezed and working to make up income on volume. The only way insurance competition can reduce costs is by reducing coverage or making some users pay more for what they want in their policies. And inflation in medical services can only be covered by increases in premiums. That is the way the private sector insurance market works.
And if the insurance companies want to manage that inflation they have to limit what they cover and that in particular puts a focus on new treatments that are very expensive, so the insurance companies essentially create death panels to limit their exposure to new treatments.
There is delicate balance that any insurer must manage when it comes to new treatments. But the reality is cancer is far more treatable today than it was 20 years ago. Who knows what improvements will come with other illnesses? Someone has to pay for new treatments or they will not develop to the point where they are useful to more people and covered.
That of course leads us to the issue of how can we as a society cover new treatments but keep the overall cost of health care within some budget. Conservatives like to focus on the growth in Medicaid rolls and tend to focus on the needs/cost of the poor. But the fact is that much of the growth in Medicaid costs comes from long term care for elderly dementia patients who spend down their resources and then go on Medicaid. I hate to be harsh, but as long as our society does not view euthanasia for dementia patients as acceptable, this will be an expense for Medicaid. So, either we pay this cost or we have to have a process for killing dementia patients. And dementia patients end up in hospitals costing money to be fixed up and sent back to the Long Term Care facility. There is circle of expense here that looks to me like a legal Ponzi Scheme for the Medical Treatment Business.
So,without euthanasia and death panels, private sector companies cannot control their costs and that is why competition will not make health insurance affordable for all levels of income.
Any Health Insurance Plan that wants to provide health insurance for everyone has to be Universal and if it is not, you either pass the cost of the uninsured receiving care onto the insured market or you have to deny such people any treatment that they cannot afford to pay for and you will have the poor dying in the streets as they did 200 years ago.
So, what do I support. Leave those with employer paid health insurance in the private insurance market. Leave Medicaid expanded for people who make 138% of the poverty level. And let anyone over the age of 26 who is in the individual market have access to a Medicare policy. If you are under 65, pay a premium equal to the full cost of the Medicaid policy for a basic level policy and if you want something better pay the full cost of the Medicare policy.
Thank you for reading this if you get this far.
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