Tuesday, March 09, 2010

Home Economics--health care

Perhaps never before in my life has the economic state of our country been as relevant to me as it it currently is. I floated through college without much thought about economics, health care, or recession.

Insurance? What do I need that for?

Job security? There are plenty of jobs around.

Home prices? I live in an apartment.

The funny thing is that every sector of the economy has had a very direct impact on our family over the last few years.

Before my cancer diagnosis and treatment, things were tight enough financially that there was the slightest moment of considering dropping coverage for me. DH is covered through his employer at little to no cost. Adding the kids into his policy cost extra. Adding me into the policy doubled, almost tripled, the "extra".

So, like most lower middle class families, we considered whether the money was better spent on insurance we hardly ever used, or paying off debt and making ends meet in a less stressful way. We wisely chose to continue insuring me.

Every year our premiums have increased. At this point, when the next fiscal year's rates go into effect in April, we will paying over $800 per month for insurance. That's $9600 in one year.

Government health care starts to sound like a great idea to average families like ours.

Here's why.

Every year rates have increased for us. By next year, if rates trend as they have every other year, those rates will be closer to $880...then $960....then $1055...and so forth. Rates soon sky-rocket out of control. Keep in mind that those rates are what we pay. The insurance company gets even more money from DH's employer, making the insurance company's take about $1,000 per month for our family of four.

Having gone though extensive medical treatment, one would think that I would recognize how crucial insurance is in paying for expensive, life-saving medical care....and I do. However, when I sit down and add up all of my medical bills and subtract the amount actually paid by the insurance company versus what was actually billed by various hospitals, surgeons, and imaging centers...there isn't a single penny that was paid that we hadn't already paid in the form of insurance premiums. The insurance company still came out ahead, which is mind-boggling when considering all the treatment I had.

They do this by having negotiated rates with hospitals and doctors. That negotiated rate is about 20%-25% of what is actually billed. So, a hospital stay of $20,000 dollars only earns about $4,000-$5,000.

In order to increase their earnings, hospitals and doctors begin to raise the list prices of their services. 20% of $1500 is more than 20% of $1,000. List prices continue to climb in an effort to recover more from insurance companies.

In theory, this doesn't really matter. As long as everyone is playing the same game, the inflated prices have no real meaning. What happens, though, is that the uninsured go into a hospital, get a bill for $20,000 and the hospital staff is nice enough to offer an uninsured rate that cuts the bill in half...to $10,000.

How generous of them.

The usually unknowledgeable patient thinks the hospital is doing them a huge favor when it is really making them pay twice as much for the same services for which they charged an insurance company $4,000.

It's scandalous.....at least for those uninsured who wind up paying it. For the uninsured that don't pay, or can't pay, it's simply a bill that gets ignored and goes unpaid.....until the hospital sends its collectors after them.

For those who don't pay, the cost is absorbed through higher prices by those who do pay and by government subsidies; local, state, and federal.

The question......is this really a better solution than a national health care system?

It is if you are an insurance company.

It isn't if you are a patient, a doctor, or a hospital.

Economically, it's a crazy scheme with little regulation and a boatload of money to be made by the insurance companies.

Not being a communist, I don't have anything against corporations making money. And from that perspective, I do think that a point is coming when insurance companies will simply price themselves out of the market. They will reach a saturation point, not only with people who can't pay the premiums they are demanding, but also with people who will begin to think that the government can do it better with less overall financial impact on families.

How much will be too much? At what point will the middle class being hurting enough that they will reject insurance companies in favor of nationalized health care?

If things continue just as they are, it won't be too long at all.

2 comments:

Anonymous said...

To answer your question, no, there isn't a better system than single-payer. People in the U.S. pay 50% more for health care per capita than any other nation and double or more of other developed countries on health care. Yet those other nations cover their entire populations and we don't.

What's more, the US is ranked 37th in the quality of care by the World Health Organization based on a series of quantifiable measures.

But that's the rational analysis. Politics isn't rational. And the media isn't designed to treat issues rationally. That's why huge numbers of people can be whipped up by ridiculous threats of "death panels" and "socialism."

And the scenario you mention about the impact of the economy -- it has already happened. It's not a situation where one day the whole thing will break (although it probably will). All that excess money we spend on health care makes the US that much less competitive than other countries.

Foreign carmakers don't have to account for healthcare costs in the prices of their cars, and so on.

That we are struggling to pass rational improvements, as limited as they are, to our health care system says a lot about this country.

pf

Assistant Village Idiot said...

Anonymous. Bent statistics. WHO "quantifiable measures" include Responsiveness, Distribution of Financing, and Fairness of Financial Contribution. Those are circular logic in terms of rating the single-payer systems as higher. They prove what they have assumed, no more. On the actual objective health measures, such as who lives longer after a particular diagnosis regardless of insurance, or who gets more accurate diagnoses and prescription, the US leads.

As to Americans spending more, the amount that they spend on elective health care, such as useless naturopathic treatment and cosmetic surgery, are included in that number.

Terri's positions require more plus/minus, cost/benefit discussion to argue against. (And I might, but not today.) Yours are simply deceitful. One can be in favor of single-payer health insurance for a variety of legitimate reasons. But people who take a condescending moral tone to those who disagree, and use this trash to back up their arguments are simply dishonest.

If you want to know why we poor benighted souls can't approach your moral elevation and support your policies, it is not that you haven't explained yourself well enough. It is that your best arguments are often grounds for not trusting you at all.

(Mindreading... mindreading... you are now considering me the insulting, divisive person when all I have done is called out your divisive, insulting statements.)