COMPREHENSIVE HEALTH INSURANCE PRODUCES HUGE WASTE

The biggest problem is too much insurance rather than too little

If preventative, first-dollar health plans work, why isn't the cost of health care going down instead of up? We know that hospitals and health providers are merging into ever-larger firms, presumably to achieve economy of scale, but premiums aren't going down. We know that doctors and clinics are working harder and making less money, so where is all that money going? The answer, as I described yesterday, is administration... paper-shuffling. Where health care was once a matter between a doctor and a patient, that relationship is now divided by a mountain of clerical workers, managers (almost 4 of them for each doctor), and paperwork ... in clinics, companies who manage health plans, and insurance companies. Doctors and patients are now as isolated from each other as farmers are from grocery shoppers.

There are about 44 million Americans who aren't covered by a health care plan. In 2002, 17.3% of non-elderly people were uninsured. That's up from 13.7% in 1987. The "problem" is getting worse. There is an abnormal percentage of racial minorities, especially Hispanics. About 20% are children. 83% are under 35 years of age, and 34% are ages 21-24. 80% of uninsured people are part of working families. They're employed heavily in service jobs and blue-collar jobs. Over half of the uninsured adults who are working are working full-time. National surveys consistently show that the high cost of health insurance is the primary reason people are uninsured.

Statistically, uninsured people go longer between recommended tests, such as Pap smears, mammograms, and prostate exams. I would wager that they have much lower rates of unnecessary surgery too.

Uninsured people do become hospitalized and accumulate costs they can't pay, and a substantial part of that will end up being reimbursed by the federal government. About $41 billion won't be paid for, and the feds will pick up about 2/3 of that. I don't know why they will, but I imagine it's for the benefit of the providers.

Those who raise a fuss about the uninsured imply that being insured reduces total health care cost. Even forgetting that costs have ballooned, that argument doesn't hold water: Even counting the $41 billion in uncompensated care, uninsured people STILL spend 45% less than insured people do. To me, that's an indication of just how wasteful and ineffective health care plans really are... or does it mean that uninsured people are just healthier?

Well... mandatory insurance is often touted as the solution. We'll just force everyone to have insurance, and there won't be any more uninsured folks. All employers, presumably including self-employed people, would have to purchase a plan. Another case of "magic money"; where is the money employers have to spend on health care plans going to come from? From reducing the employees' pay? From laying off some people? Mandatory insurance would undoubtedly put some firms out of business immediately, and it would have a chilling effect on new business startups.

Of course, it would also mean that total health care costs will go even higher, health care providers will get bigger still, the health care industry will expand even more, providing even more unneeded services at still higher rates. At least we'll all be in the SAME sinking ship. There is a place for insurance in covering health care costs, but it isn't in the sort of plans that have become common. Insurance should be used to cover catastrophic losses, not routine expenditures, which are no more than a way to put more money into the coffers of providers.

Americans must realize that money an employer puts into a health plan is money that would otherwise go into their paychecks. From your paycheck, it can be used for a variety of things, depending on circumstances. When it's going down the health care toilet, you're forced to "use" it or lose it, so you tend to use it, even if you don't need to. The incentives lead to overuse and waste. The average cost of single coverage is $3,695/year. For family coverage it's $9,950. If an average family needs that much expenditure in health care, then we've become a very sickly society.

The California Chamber of Commerce produced an ANALYSIS OF THE ECONOMIC IMPACTS OF MANDATORY HEALTH COVERAGE IN CALIFORNIA (pdf) and reached these conclusions:

"Research suggests that mandated employer-provided health insurance does not curb the upward spiral of health-care spending and insurance premiums. In fact, it may have the opposite effect because it does little to inhibit administrative overhead or unnecessary tests and utilization of services. Research also suggests that mandated employer-provided health insurance programs are not necessarily an efficient, targeted vehicle for insuring the uninsured. Nor do such programs necessarily help the most disadvantaged and vulnerable workers."

Like all other plans based on the use of force, mandatory health care coverage is not only immoral, but it won't work, and it will have many negative consequences. There ARE some good ideas around that CAN solve the problems in health care, but they don't use force, so they're not political solutions. Mandates are force, and when force is used, other, better solutions are simply eliminated. The recent history of American health care is filled with forceful measures that have changed the best health care system in the world into one that has become nothing but a monstrous money vacuum. Despite ever-increasing technology, ever-increasing expenditures, and widespread "preventative" health care, we don't seem to be healthier. Obesity is up, asthma is up, and none of the other problems have disappeared. Somebody's getting rich from health care, but it damned sure isn't American workers.

More here

***************************

For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation.

Comments? Email me here. If there are no recent posts here, the mirror site may be more up to date. My Home Page is here or here.

***************************