Good risk, bad risk

Americans puzzle me in respect to taking risks. We are notoriously poor savers, running up personal debts that put many in precarious danger of financial failure. In spite of high bankruptcy rates, we continue to live close to the edge, spending almost all of what we can earn... spending far beyond our needs... a nation of rabid consumers. We seem to believe that prosperity cannot be stopped, no matter what we do.

I don't remember our Great Depression, but I grew up knowing people who lived through it, including my father. Dad's life was completely upset by the depression, as was common throughout the country. It's fair to say that he never really recovered fully after starting life from scratch again in his late 30's. World War II followed shortly after that, putting recovery on hold for another 5 years.

If you've had the opportunity to spend any time with anyone who lived through the depression and WWII, you likely found them to be quite frugal, and adamant, almost fanatical, about savings... about spending less than they earned, putting it aside for emergencies and opportunities. That attitude seems to have been completely lost through succeeding generations.

When I was young it was difficult to borrow money. Credit was anything but easy. There were no credit cards. Most working people bought goods on a layaway plan, paying a little each week, not getting the goods until they were paid for. Getting a home mortgage required that one have a substantial cash amount to put down on the purchase, so most people saved for years before buying a house.

Huge risk debt load

We've become an easy-credit society. Credit is a nice alternative to have access to, but it IS risky, and Americans don't seem to have learned to judge that risk well. The past ease of declaring bankruptcy and getting rid of old debts may have taught us to underestimate the risk. The rapidly-rising value of houses for so long also contributed to a feeling that we were making money just by owning property, and led many to ignore the ever-rising debt they carried via multiple refinancing of mortgages. Americans have become used to carrying large amounts of credit card debt as well.

Been there, done that too... and it can be nerve-wracking. Carrying debt is a RISK that Americans have become accustomed to dealing with, and it is a BIG risk for a great many people. Far too many people are one or two paychecks away from complete economic failure, and they know it, and they live with that risk.

The other risk that people won't take on

Health insurance programs have only been around a few decades. The idea of paying premiums to an insurance company who will then cover most of the costs you incur for health care is a pretty recent development. I remind you, as I used to remind insurance clients, that insurance companies will make a profit on the risks they underwrite. If they don't, they'll be out of business. So, health insurance is like a lottery... lots of people will pay extra for the care they receive and a few will get more care than they've paid for. But, with insured health care, there is also a lot of complication that once didn't exist between doctor and patient. Paperwork in huge amounts... simply because there is a third party involved, between doctor and patient. Add in government programs like Medicare and Medicaid, and the paperwork increases far more. For each doctor, there are 4 other workers involved in the process.

I don't want to deal here with all of the complications that have been added on top of third-party payment of health care, but it has gotten completely out of hand. Government stuck its ugly nose in and made it far worse by mandating many coverages, and by over-regulating everyone involved. When it became unmanageable for insurance companies, they sought to control the caregivers... doctors, hospitals, and suppliers. Health care has become a mess... a terribly expensive mess.

The average cost for a business to cover an individual worker's health care coverage is now at least $6,700/year... $558 per month. All of the factors stuffed into what once was, and still amounts to, a doctor helping you with a problem, has created mass insanity. The costs of the massively complex system have risen to the point that people have become deathly afraid of doing without it.

A recent survey showed that 75 percent of respondents said they would rather have a company health plan than a pay raise of $6,700. Thirteen percent said no pay raise would be big enough to get them to part with employer coverage.

The bulk of the American working population has become so unwilling to accept ANY responsibility for their own health care that they're willing to pay far, far more in prepaid premiums than the cost of likely health care costs. I've known many people who stay in jobs they hate, or dead-end jobs, just to keep their health coverage. That is living in slavery to health insurance coverage.

Zero-risk health care

For all those people under job-related health plans, they're paying exorbitant premiums, that could be taken in wages, for what amounts to taking no personal risk on their own health. I cannot help but believe that being in that situation contributes to increasing health problems. Isn't there less incentive to be careful with your health if your health care is guaranteed?

The real intent of insurance is to protect against catastrophic loss; loss that could not be covered out of savings or current income. Of course, covering small losses rather than overpaying an insurance company to do it means that we do need savings or disposable income. Therein may lay the rub.

As long as Americans insist on spending all they earn, and carrying heavy debt, it will seem sensible to take zero risk on health care, because there is little or no savings or disposable income. Many people who pride themselves on shopping for low prices are somehow able to ignore their overblown health insurance premiums. Others will even invest money while wasting other dollars on zero-risk health care coverage... wise enough to save and invest, but not wise enough to recognize how much they're throwing down a health care rathole.

So... health care continues to become more convoluted by paperwork, driving small providers out of business and forcing doctors and clinics to become part of ever-bigger paper-shuffling corporations. Care becomes more impersonal and less trusting as stress builds in the system. Increased patient load leads to more mistakes, causing providers to cover their potential liability with more tests and precautions, driving costs still higher.

Insurance has an extremely valuable place in our lives, but when it is used to provide zero-risk rather than as a safety net, it can warp everything connected to it. Politically, the result has been for Americans to look to government to protect them against losses caused by their own failure to control their personal risks. That is a path toward becoming dependent slaves to government.

Source

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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. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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