Opinionated @ CFE

I Want Health Care Reform. Too Bad I'm Not Getting It.


Insanity is, by definition, doing the same thing over and over again expecting entirely different results. Nowhere is this insanity more obvious than in the current health care reform proposals coming before Congress where the proposals look far too much like more of the same. We’re apparently going to be content with treating symptoms instead of coming up with a real cure.

Let me say right off that I fully acknowledge that the current course is not sustainable. Costs have been runaway for years and both the quality and availability of health care is in the pits. Acknowledging that there is a problem is just the first step. We need to understand why health care stinks before we can take any sustainable action.

Let’s get one thing straight right now: insurance is not health care. Repeat, insurance is not health care. Again: INSURANCE. IS NOT. HEALTH CARE. Insurance companies have done a very good job at convincing you that without their product, you will surely never be able to see a doctor or obtain any kind of medical care. At the same time, they have used their size to push costs for the uninsured through the roof.

Here’s how it works: an insurance company goes to a doctor and says “we’ll pay you x% of what you normally charge patients in exchange for us steering customers to you.” The amount is a good bit less than what they normally charge, but they figure that the volume will make up for it. Then a few years later, the insurance company says that they’re going to start paying a smaller percentage of the going rate. The doctor, in an effort to blunt this pay cut, raises their normal rate to compensate, both to get more from the uninsured and from the insurance company. (That 15 years of med school and residency isn’t going to pay for itself, you know.) You can see how this rapidly turns into a vicious cycle of insurance companies cutting their payment rates and doctors raising their rates to compensate.

This wouldn’t be so much of a problem if insurance companies didn’t have such dominance over the industry as a whole. In many states, a single insurer can account for over 75% of the total insured. Some of them, such as IHC, even own many of the hospitals and primary care facilities in the markets they serve. Many doctors don’t have the option of pushing back without substantively reducing their client base.

Another dimension is how we treat insurance. Instead of purchasing health insurance to cover us in the event of a worst case scenario, like we do for auto insurance, we expect health insurance to be an end-to-end coverage of everything medical from annual checkups to getting a case of the sniffles. In some cases, including preventative measures makes sense. After all, insurance companies probably figured out that covering a few basic screening procedures drastically cut back on acute care costs. This availability, though, has lead to a lot of mis-utilization. Many of us underutilize the care available to us, going to the doctor at the drop of a hat. Many of us get subjected to myriad tests just because the doctor doesn’t want to get sued down the road in case he or she misses something. And, most annoyingly, is going to a doctor when you have an ear infection just so he can take a 5-second look inside and send you off with a prescription for amoxicillin.

With insurance causing so many of our pricing problems, why is President Obama pushing insurance as the solution? I can only imagine that he has bought into the lie that health insurance and health care are inseparable. The option being presented is a mandate that everyone buy insurance, subsidies for those who can’t afford it, and allowing individuals who do not quality for Medicaid to buy into it instead of a obtaining private insurance (aka “public option”). Now tell me, do these first two things sound like they create any incentive at all for insurance companies to mend their ways? Does a huge expansion of Medicaid solve any of the aforementioned problems? There are vague promises of “reduced costs”, but the public as a whole is skeptical that this monster can be paid for without more lines of credit from First National Bank of China. I have yet to see any concrete plan that actually shows overall reduced costs.

If we really want to untangle the problems that insurance companies have created, we need to attack it at the base. States need to man up and put on their trustbusting hats to break up the pricing oligarchy and dissolve any and all vertical monopolies. We also need to see additional insurers in the marketplace by removing any barriers preventing a company from competing across state lines. Lastly, we need to start treating insurance as insurance; it’s there for the worst-case scenario, not to cover every expense under the sun.

Those who can readily afford health insurance and are young and healthy should be encouraged to start a personal health savings account. Not only are contributions tax-free, interest earned is tax-free so long as the money goes towards medical expenses. That gets coupled with a high-deductible insurance policy that only covers the big stuff. The idea is to stash away a lot of money while you are young and healthy so that when you retire, you have a large pool of money to pay medical expenses. Wide-spread use of the HSA would diminish insurance influence in pricing, eliminate most defensive medicine, and, in the long term, solve our impending Medicare meltdown by replacing government aid with careful savings.

But what of those who can’t afford insurance? Certainly wide-spread price correction will help some, but it will not help all. Again, we need to look at causes when figuring out how to fix this problem. And there is no cause bigger than our waistlines. (Yes, terrible pun. Forgive me.) According to the CDC, four of the five top causes of death are conditions either caused by or worsened by obesity. Obesity is also significantly more prevalent amongst blacks and hispanics, ethnic groups that also have higher rates of poverty. Wait, what? Being poor means you’re more likely to be fat? Something in that correlation doesn’t make sense.

If, however, you start looking into our farm policy, it all matches up. Among the top 20 subsidies we have such offenders as corn, soybeans, canola, and sunflower. These foodstuffs are used to make highly refined sugars and oils that are calorie-dense and the subsidies make them dirt cheap. Don’t believe me? Go to your local megamart and calculate the cost per 100 calories for, say, a bag of carrots and compare to that package of Oreos. Unsurprisingly, you’ll find that the cookies beat the carrots handily when determining the most cost-effective way to get calories, yet we all know that the carrots are much better for you. It’s not hard to connect the dots: cheap, subsidized junk food is dragging down the health of those that can least afford to have health problems. It would seem logical, then, for us to end farm subsidies as a matter of public health and as a part of any comprehensive health care reform policy. To date, though, I haven’t seen anyone clamoring for such a change.

Really, that’s the core of the problem. Instead of instituting small, common-sense changes that can find wide-spread support, Congress is pushing a monster of a bill that attempts to eat the entire hippapotamus in one bite. (Yes, that spelling is a pun; bonus points if you know why.) This kind of dysfunction is precisely why they can’t come up with a solution much better than what we’ve been doing, insurance and Medicaid, just more of it.

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