Health Care Redux

Health insurance isn't health care. We've linked together two systems that really don't have anything to do with one another. Insurance is financial risk management based on risk pools and statistical analysis. Health care is what goes on between you and medical professionals. The only link is who writes the actual checks to whom.

Over the last 70 years, since allowing companies to offer pre-tax comprehensive health "insurance" as a benefit in a period of wartime wage and price freezes, the two have become so entangled that most people think they're the same thing.

The big companies that offered it during WWII were highly unionized and the unions, in their post war heyday, found it to be a popular bargaining tool. Still, it took over 20 years for it to start making its way into being a general employment benefit outside of union jobs.

Then we had the whole Social Security/Medicare mashup. Social Security was promoted as the equivalent of a retirement account that you were "owed" a return from. With plenty of workers and retirement ages not long past expected lifespans it was a cheap way to get more tax money (No - you don't have any legal right to one penny of SS. If Congress were to end it tomorrow, we're just out of luck).

Tacking on Medicare was just another way to take care of dear old Mom and Dad. It was touted as being the same as insurance. But it wasn't and isn't.

In the early days, just like SS, there were lots of people paying in and only a few taking out. They could afford to cover more and more things. It didn't hurt that the most consistent voting demographic is retirees either. Geriatrics was *the* medical specialty to go into.

But then reality started catching up. The population bulge passed. More expensive and better treatments were extending lifetimes far past what had been the case initially and that cost estimates were predicated on.

Then we added Medicaid as part of the "Great Society" and "War on Poverty" programs. The claim was that if we just spent enough money on taking care of everyone in poverty now, when they needed it, we would get them over their problem time and then they would no longer need assistance. Problem solved. The end of poverty. Needless to say, that didn't work either.

By the 90's over half of all medical costs were being paid directly by the government at various levels. Most of the rest was being paid by insurance company third parties. Almost no one paid for medical care out of their own pockets. And if you're not paying for something, you use a whole lot more of it and don't even bother asking the price, because, who cares, you're not paying for it anyway.

Over the same time span malpractice awards went astronomical. Anything less than a perfect outcome was grounds for a lawsuit. Since the lawyers took a percentage of the payout instead of having to pay them up front, we had another component where people weren't having to pay anything out of their own pocket. Juries know it's the big bad insurance companies that would have to pay, so huge settlements became the norm. My OB/GYN in the mid 80's was paying half of his *gross* for malpractice insurance because babies and pregnant women were especially favored for big jury settlements.

Then the third leg also kicks in ... So much money was being paid out to medical professionals (rightly or, in too many cases, wrongly) both the government and insurance companies started digging in their heels and denying claims on any basis they could find so they didn't have to raise premiums and taxes even higher. Doctors started spending as much or more time on paperwork as actually treating patients. Office staff levels exploded as did clerical workers at the insurance companies and government workers.

All of this additional expense has absolutely nothing to do with the actual delivery of health care, yet it all has to be charged as such. Is it any wonder that health care costs have exploded? Bloat and waste everywhere you look, all supported by what is called the generic health care "system."

The current course is unsustainable, but no one wants to go through the the time it would take to re-tool the whole mess. Free clinics and charity hospitals aren't going to immediately open up the day Medicaid ends. Voting seniors aren't going to give up their benefits willingly. Medical specialists won't be happy to see their clientele shrink. Doctors won't immediately go back to doing more pro bono work. Armies of clerical workers aren't going to be happy to find their services are no longer needed. Lawyers, especially lawyers, wouldn't be at all happy with what tort reform would do to their bottom line (and lawyers are, by far and away, the most common original profession of politicians).

There are no good solutions. One way or another there are going to be some really tough times ahead when it come to "the health care system."

People are going to get hurt. Those who lose their cushy jobs or benefits and those who can no longer get the timely care, if at all, they need, or some combination of the above, during the changeover in a return to a free market.

Otherwise it will be a loss of some cushy jobs and benefits and those who can no longer get the timely care, if at all, they need or some combination of the above from that point on if the government takes full control and resorts to rationing, which they've already admitted would have to happen and has and is happening elsewhere.

At least the first option has an end in sight. The latter doesn't.

Report This Post

Socialized Health Care Candy

Excellent post today at the Mises Institute making an excellent analogy between “free” sweets in socialized Yugoslavia, when he was there as a boy, and “free” emergency care in socialized heath care in other countries.

Here’s the link: Health Care and the Candy Store Called Socialism

 

In the US, if you wake up with a sore throat and call the doctor, they will usually be able to get you in to see him today. So you go in, pay your co-pay, see the doctor, and maybe get a prescription and told to call back if it isn’t cleared up in a few days. You’re happy, the doctor’s made money, the pharmacy’s made money and you get better in a few days. Problem solved.

If you call your doctor in most of the socialized health care countries, you might be able to get in sometime in the next month. So you don’t bother calling the doctor and the sore throat usually goes away in a few days anyway. No money spent, but you still get better.

US health care costs more with the same outcome. But since we’re not paying much directly out of our own pocket, we way overuse it. Sounds more like an over-insured problem to me, not the lack of available care. Insurance is for risk management, not every day or expected maintenance.

Let’s take a more serious example now. Say you’re in a friendly game of basketball and overextend an arm and get hit at the same time. Your shoulder hurts like hell and you can’t hardly move it. Either place, you go to the ER and get a cold pack and prescription for pain meds with instructions to call the doctor if it’s not better in a few days.

A few days go by and it’s not any better.

Here, we call the doctor and either get in that day or the next. The doctor sets you up for a CT scan that afternoon and finds a nasty rotator cuff tear. Two days later you’re in surgery and get it fixed. It costs you a good $500 or so all told, but you’re not hurting any more, the doctor’s happy, the hospital’s happy, big smiles all around.

Elsewhere, you call the doctor and get in a month or so down the road. Then you get scheduled for the CT scan, but the next opening isn’t for another 6 weeks. You get the scan and they find the same rotator cuff tear and put you on the waiting list for the surgery. That’s another few months. But hey, it didn’t cost you a penny and, long term, you have the same health outcome. The tear is fixed.

How much is all those months waiting in pain worth to you? You have to decide that for yourself. If you find yourself on Medicaid or one of the new “narrow” providers pool, you might be finding yourself in effectively socialized health care waiting lines already.

Report This Post