This is awesome:
Insurance brokers and benefits consultants say their small business clients are seeing premiums go up an average of about 15 percent for the coming year — double the rate of last year’s increases. That would mean an annual premium that was $4,500 per employee in 2008 and $4,800 this year would rise to $5,500 in 2010.
The higher premiums at least partly reflect the inexorable rise of medical costs, which is forcing Medicare to raise premiums, too. Health insurance bills are also rising for big employers, but because they have more negotiating clout, their increases are generally not as steep.
Higher medical costs aside, some experts say they think the insurance industry, under pressure from Wall Street, is raising premiums to get ahead of any legislative changes that might reduce their profits.
This really is one of those things I never really thought about before the last year or so, but I still have no idea what exactly the health insurance companies offer this country. All they seem to do is sponge money off the top of what we pay for health care, make life a living hell for their customers and the medical community in the form of reams of paperwork, hand out lavish bonuses to their management, invest recklessly in whatever the Wall Street bad idea du jour is, and then raise rates when the fur-bearing trout farms don’t pan out and they need to cover their bad investments. Meanwhile, they don’t answer to the consumer and control congress, and are under orders from the Wall Street brokerages.
Do I have this completely wrong? Is there an actual fact-based (and that means you need to look somewhere other than the NRO or glibertarian sites) argument in favor of health insurance agencies? What service do they really offer? Why are these people who it appears add nothing so in control of the debate. I know I have turned into a pinko-commie, but right now this looks like nothing more than an elaborate and legal protection racket.
jeffreyw
You are correct.
General Winfield Stuck
Yes. and because the Free Market is God in HIS Armani threads.
Yutsano
This is where I think it would be a good idea to look into how the Dutch and the Swiss got to universal health care without directly going government-run single payer. If we are so tied up in keeping health insurance private, we should at least figure out how their Commie asses do it.
Mark S.
They don’t offer anything, which is why no other industrialized country has for-profit insurance companies offering basic health care coverage. This is another case of American ignorance of other countries is really hurting us.
A Mom Anon
I honestly think it would be more sensible to just pay the family doctor and the dentist the 650 dollars a month taken out of my husband’s paycheck for insurance. Cut out the middle man.
TR
Anthony Weiner absolutely stumped Scarborough with that very point. He said something to the effect of “The real question isn’t whether we should have a public health insurance option, but why do we have any private insurance options? What value do they add? We have to pay for their marketing, and their exorbitant executive salaries, and all the rest, but that’s it. So why should we have private insurance at all?”
Scarborough couldn’t think of anything, and then muttered something about the traditions of the free market.
jeffreyw
@Yutsano:
I think it comes down to not permitting them to profit on the basic policies.
Yutsano
@TR: Scarborough couldn’t think of anything, and then muttered something about the traditions of the free market.
Those “traditions of the free market” are in fact an anachronism and honestly one of the last remaining public policy holdovers from WWII. It wasn’t seriously considered for change in the 1950’s because the system was quite different and actually specifically was not-for-profit. I’d have little issue with health insurers as long as they go back to being non-profit public service entites instead of sponging off the misfortune of others.
And since Scarborough is so nostalgic for those “traditions of the free market” maybe he’s okay with the Eisenhower tax rates.
bellatrys
Ayup. Wish I’d figured it out fifteen years ago, and put that money towards actual health *care* instead of lining Anthem BC/Harvard Pilgrim/Cigna’s pockets, so that now I can’t afford treatment for the ailments they wouldn’t cover, plus all the ones I’ve accrued since.
BTW, there might be some downsides to this as a landscaping plan, but a when long time back one of my cats apparently ran off, she turned up a day or so later, quite stoned, under a garden frame next door where a bunch of catnip had gone to seed…
lutton
Duncan (Atrios) just used the phrase the other day akin to ‘skimming a few points of GDP off the top…”
You’re right on the mark with that thought.
RandyH
The for-profit health insurance industry should not be allowed to exist. Period. They are just skimmers. They take 30% off the top of all premiums paid in to cover their bloated overhead costs, executive salaries/bonuses, shareholer dividends, etc. But they add absolutely no value to the system. Medicare does the same job (without rationing) for 3-5%.
mai naem
This country is getting undone by just plain greed. Even at that its short term greed. None of these people wonder about their grandkids. They truly think their short term millions are going to last for their grandkids. I wish they would also just immigrate to China, India or Nigeria and just leave this country.
neill
The only good thing about the medical insurance companies and their high-level executives is that they taste just like chicken…
The reason they are still cannibalizing American society is because Michael Moore is still fat and Jeebus aint come back yet… and we haven’t gotten angry enough to make the changes necessary for a decent society that does not feed people into the jaws of corporations — and call it a “free market.”
KC
And why is the rise in medical costs “inexorable”? Why does that get a pass? What, exactly, is making the costs rise so quickly?
bleh
Well, if there were real competition — not local monopoly (as we have many places ) and not oligopoly — EXEMPT FROM ANTITRUST! –(as we have pretty much everywhere else), then there would be the usual profit-incentive-drives-innovation-reducing-costs argument for free-market competition. And presumably some FASB-equivalent would emerge to standardize paperwork and keep medical offices from having to hire an army of assistants just to manage the paperwork for multiple different companies.
But … there isn’t. So I can’t really offer an argument other than in theory. And for sure what we have today is the worst of both worlds: heavy skimming that amounts to a deadweight burden AND lack of real competition that stifles innovation.
Single-payer, or its functional equivalent (think USPS, or regulated utilities), is really the only logical option. But I don’t think we’ll get there (nor will we get control of financial services, which are closely related) until we free Congress from the need to beg for money to pay for TV commercials.
par4
You finally nailed it.
P.S. Labor must control the means of production.
MattF
Group health insurance for employees of large companies actually sort of works the way it’s supposed to. Everyone gets insured at the same rate, risk is pooled and spread out over a large group, the employer has some leverage with the insurer because we’re talking here about a lot of money. But for smaller companies and for individuals, the insurers refuse to pool risk, so it doesn’t work. At all.
scarshapedstar
Yep. Scarborough, incidentally, answered John’s question:
They offer a way for their shareholders, employees and executives to make a buck. Sure, it’s a protection racket and a net loss for society, but this is Murica so suck on it. Also.
travist
You got that right. Sure, got that right.
liberal
@KC:
Damn good question.
Most people of my ilk focus on rent-collection by the health insurance sector, but very few take up rent collection by the health care providers themselves.
Brick Oven Bill
Insurance is designed to spread the risk of catastrophic illness or accident among a given risk pool, and allow Citizens to live their lives, protected from the risk of medical bankruptcy. This should cost maybe a hundred dollars a month.
Then these political pin-heads started mandating coverage for sex-change operations, eye-brow perkiness, and mental illness therapy, to name a few. Then we invent illnesses and create drugs for them.
Now insurance has morphed into a way of compelling responsible working people pay for free medical coverage for Illegal Aliens, and irresponsible bums. This is designed to increase the profit margin for large corporations that use illegal labor.
It is all about return on investment for some of these people.
Illegal Aliens and irresponsible bums should be made to be pay their own way. If they are unable or unwilling to do so, let them choose another country, and buy them a plane ticket. If they cannot find a country to take them, airlift them covertly and leave them with a care package, one-half ounce of gold, and a good-luck note.
People with terminal illnesses should be given pills or pay for their own life extension.
El Cid
Had it not been for the segregated South and the historical accident of the Southern wing of the Democratic party being the segregationist wing, we likely would have had a national health care system come out of the New Deal.
A big part of not having such a system was reassuring segregationists that federal laws couldn’t force segregated hospitals to admit black patients.
This is not to suggest that I have begun to doubt Free Market Jesus, and like Max Baucus I hold the interests of the insurance industry and Big Pharma to be the most important policy features EVAH.
Seanly
I understand the idea of actuarial-based insurance, but over the last few decades it has morphed into the stupid, useless enterprise that you describe.
Only tangentially related, but I’d like to predict that Wingnuttia will trot out stories of teh dread FEMA camps for this story: Obama declares H1N1 emergency
Just Some Fuckhead
The theory is that insurers will have more money available for expensive immediate care than an individual would be able to raise on their own. Additionally, an insurer will negotiate lower prices with doctors and hospitals and save the consumer (well, themselves) money that way. Without insurance, the consumer pays top dollar for health care services.
However, premium increases are tied to how much more an insurer paid out in claims than they collected in premiums the previous year so ultimately, they’re gonna get their money back. And, of course, they “win” with relatively young and healthy risk groups that pay their premiums and don’t use too much health care.
As egregious as insurer’s behavior is with rescission, not covering folks with a history of sickness, etc., fact is it’s actually doctors and hospitals charging too much for health care that is driving the cost of health insurance through the roof.
And the only thing I can see that will address that is a single-payer system that is able to dictate to health care providers what is an acceptable amount of money for various treatments and procedures, in much the same way Medicare does now (although doctor lobbying groups can push for beneficial legislation that effective raises their prices.)
liberal
Here’s a USENET post explaining why private markets in health care are doomed to fail.
cleek
sure: health care is expensive but rare. you don’t usually need it, but when you do need it you might need it immediately, without the delays associated with taking out a loan. so it’s a good idea to pay a little bit at a time, ahead of time. and, if you can get other people to go in with you, you’ll get a bigger pool of money which can be used to cover needs as they arise.
that’s exactly the situation insurance was invented to cover.
jeffreyw
@TR:
Here’s that video
cleek
what’s up with the comment editing ? sometimes i see it, sometimes i don’t.
Napoleon
The wild card in the health reform process has always been that October is traditionally when a huge preparation of the population learns what their plan will cover/cost for the next year. This will just help the public plan.
Just Some Fuckhead
bounce
licensed to kill time
@cleek:
It’s a mystery. I’ve had edit all along on FF until yesterday, when it inexplicably vanished. Sometimes the little reply arrow gets replaced by text, also. Is the site being “worked on” again?
Yutsano
@cleek: Nothing in that definition precludes or even comes close to defeating a single-payer system. In fact, the logic of larger pool = less costs would seem to make the most sense.
Just Some Fuckhead
bounce
burnspbesq
@A Mom Anon:
No, it wouldn’t. Here’s why.
Suppose you paid your doctor $500 a month for five years. Suppose further that your doc invests your money prudently, and you have no need for his services. At the end of five years, your doc will be holding approximately $35k of your money to draw against when you need care.
Now suppose that you have a kid born at 34 weeks, and he or she spends a month in a NICU before they are able to come home. A conservative guess at the total cost of that month of NICU care would be $200k. And you only have $35k sitting with your doc. Simply put, either you or the hospital has a date with a bankruptcy judge.
But if 10,000 people agree to pitch in and cover each other’s expenses, instead of $35k in the fund at the end of five years, there is $350 million, and unless a whole bunch of folks have claims at the same time, your bills get paid.
That’s how insurance is supposed to work, and how it does work in most segments of the insurance market. The problems in the health insurance industry don’t reflect fundamental problems with the concept of insurance. They reflect an absence of effective regulation of the health insurance industry.
LoveMonkey
Speaking as one who has, in the past, had an immediate family member working within the highest levels of one fo the best-known big HMO’s in the country …. you have it exactly right, John. Health insurance in this country is a racket, plain and simple, and that is no exaggeration whatever. It’s a racket.
Donald G
Yes, John, you are correct. Private health insurance is a legally sanctioned protection racket. I’ve said so since I was a 23 year old pinko-commie liberal in 1989 (when it was quite unpopular to be one). Now that I’m 43 – after an eight year detour of being a “liberal hawk” in the GWOT – I’m glad to see that more people are coming to that conclusion, and that many of the beliefs of my youth when I was a DFH about so-called conservatism and the rapaciousness of the unrestrained free market have proved to have been correct, after all.
licensed to kill time
@Just Some Fuckhead:
Did you mean to bounce on this thread or the last one? ;-)
Just Some Fuckhead
*BOUNCE!*
demkat620
@KC: The additional costs of administration.
You gotta pay people to fight with the insurance companies.
RSA
Pretty much. I think an alternative would be great, but I want something to be there. Private health insurance companies are like a local crappy sports team–they’re the only game in town.
So I think I can see why glibertarians would favor private health insurance: I have private car and house insurance, for example, and it works pretty well. I see a qualitative difference, though, even if I can’t pin down exactly what it is. Maybe it’s because in those other areas of insurance there are fewer excesses; maybe it’s because of the complexity of modern medicine; maybe it’s been driven by expensive medical miracles; maybe it’s because health problems hit closer to home than, uh, even your house burning down; … I don’t know.
Artnoize
There should be legislation requiring health insurance companies to reimburse all previous payments made, to anybody whose claims are rejected.
How is one insured if the insurer is allowed to decide whether the claim is worthy or not?
geg6
From what I’ve read, the countries that have universal care and private insurers manage it by outlawing for-profit insurers. Take the profit motive out of it and there you go…affordable insurance for all with the poorest in public plans. Easy peasy. But this is Merika and if you can’t profit off of death, pain, and suffering, you’re a commie monster.
Cat Lady
@Napoleon:
QFT.
Cat Gentleman and I had this exact conversation yesterday.
Ron Beasley
You are right John, the insurance companies offer nothing – they are un-required middle men for the money. But they are not the major reason that costs are going up. For that you have to look at The Medical Industrial Complex.
Silver
I have private car and house insurance, for example, and it works pretty well. I see a qualitative difference, though, even if I can’t pin down exactly what it is.
Simple. A car gets into a big accident, and you write it off. You don’t spend more than the car is worth to fix it. You can’t do that with people, unless you want death panels.
Democrats are retards for no pointing out that the only way private insurance works is if you write off sick and old people like you do damaged and old cars. Well, they would be retards, except they don’t want too much change either…
TR
Well, that’s an explanation for how insurance works, sure.
But it does nothing to address the issue of why insurance should be offered by private enterprise rather than the government. If anything, it points to the strengths of a government program — the pool there would be much, much bigger than anything a private insurer could pull off.
Maxwel
John,
You need to get invited to one of Sally Quinn’s parties. She will straighten you out.
Xenos
I have been looking for a definitive history of the for-profit insurance companies but have not found one. So what follows is an approximate, non-academic history I have derived from some very basic understanding of the insurance business (I’m a FLMI in case any knows what that means or cares) and the history of corporate law. I welcome corrections from anyone who knows the subject better.
For-profit insurance of any kind is a relatively recent phenomenon. Originally Insurance schemes were barely legal, as even a basic life insurance product involves a certain amount of gambling. Given the possible moral hazard of someone insuring their spouse, for example, and then knocking them off in order to profit from the crime, they were usually not recognized as legal for-profit businesses. They were only allowed to operate as charities, mutual aid societies, or fraternal organizations. This was a fundamental principle of corporate law for the first 150 years of this country’s history.
In the 1920s certain mutual life insurance companies desired better capitalization, and prevailed on state governments to pass laws that would allow them to demutualize and become private corporations that sell stock on the exchanges and raise capital that way. The money raised by the public offering was paid to shareholders in a lump sum payment that compensated them for the loss of their mutual shares, and the new for-profit insurance company could proceed with merging and acquiring other financial companies, and the modern financial services conglomerates were born.
These companies did not, by and large, sell health insurance. I don’t think it would even be imagined, in those days, that regulators would allow a for-profit health insurance business to operate freely, and certainly not to make enough of a profit to be worth the trouble.
When health care costs started shooting up in the 1970s, some companies started experimenting with managed care. Thus, the HMO was born, but even then it was never anything but a charity, non-profit or mutual insurance company providing the insurance. One exception seems to be CIGNA, which was created by merging smaller, specialized for-profit insurance companies into a powerful company that targets small mutual insurers, pays off executives, lobbies for legislation that allows their takeovers, and then systematically removes the compensation by absorbing it.
In the heyday of neoliberal economics in the 1990s the remaining barriers to the privatization of the health insurance business all came down. Blue Cross Blue shield became Wellpoint, Cigna amoeba’d its way across the country, UHC was allowed to build for-profit hospitals in cherry-picked locations, and the health insurance industry became a Frankenstein’s monster of private enterprise. We, as a nation, decided to allow MBAs to run our medical system, and the result has been about as successful as our decision to put an MBA in charge of the Executive Branch.
The important thing to remind people of is that while this disaster has taken decades to develop, the most serious mistakes have been in the last 20 years. It is not an unsolvable situation, but one that simply requires that we apply the regulatory and corporate law principles that were well established more than 100 years ago. And that the great trust-buster, Teddy Roosevelt, saw this all coming one hundred years ago, and perhaps this was inevitable once the shit-eating Taft wing of the Republican party squeezed him out of power so long ago.
ThatLeftTurnInABQ
@scarshapedstar:
In other words, the private health insurance industry are Somali pirates with bigger and better boats and guns.
Why oh why
Thanks Xenos, that is one of the best comments I have read in a long time. It is hard to believe the history of for-profit corporate insurance companies has not been reported better.
bleh
There really is a lot of literature on this, but from what I know the reasons health costs are so high and rising so fast in the US are: (1) we pay doctors 50% more than other industrialized countries, (2) we have too many hospitals with too much expensive diagnostic equipment (induced demand), (3) we have many incentives to overuse expensive care but few incentives not to do so (CYA, induced demand per above, highly imperfect payer approval criteria in other than the largest nonprofit systems, e.g., Medicare, Kaiser).
But it’s important to remember that medical care DELIVERY — with all its costs — is different from medical care FINANCING. We can implement single-payer at a stroke if we wish, and deal with costs separately and over the longer term.
jcricket
@Silver: Don’t forget that people can also get by without houses and without cars (i.e. renting and buses). People can’t get by without health.
Plus, health care has become expensive enough that most people couldn’t afford to pay at purchase time (like we do for most non-accident related car and house purchases).
We have two choices, as I see it.
One, start saying “if you can’t afford a health care expense, too bad, you die”.
Or, health care is a public right, regardless of your income. so we spread the risk across the entire population and eliminate as much inefficient spending (both on the administrative side and the wasted spending on inefficient treatments too) as we can so we have money for actual health care that people need.
We essentially say #2 (we don’t turn people away from ERs, and we have Medicaid, for example) – but we accomplish this in the least efficient manner possible, with all the problems associated with the other possibility (healthcare bankruptcies, denial of care, wasted spending, etc).
For the same reason we don’t generally have private fire or police departments, haven’t generally made the roads private/toll and haven’t eliminated public schooling – we need public health insurance.
I favor single-payer (Medicare for all – simply eliminate the private insurers) along with good comparative-effectiveness-review boards (b/c doctors can’t possibly keep track of all the research to know what they should/shouldn’t recommend).
But I’d settle for swiss-style not-for-profit, heavily regulated private insurers and a public plan alongside it.
If we’re worried about “innovation” take 1/2 of the money we’d save and redirect it to NIH and other grant-funded basic science research (instead of into the hands of for-profit insurers and the pharma companies)
Bill H
If it’s true that insurance companies “offer nothing to this country,”
Why are people without insurance dying?
Why are we pressing to be sure everyone has insurance?
Everyone just breezes pas that to resume demonizing insurance companies.
Numberwang
They don’t call it the FIRE economy for nothing. “Finance” and “Real Estate” can’t spell fire without Insurance. They’re enormous investors in all sorts of financial instruments, and I would expect they’re heavily financially engineered.
Numberwang
er, </strong>?
Xenos
@Bill H: Bill – the key thing is profit which is skimmed out of the system. A lack of competition is a big part of that.
If it were just a matter of costs, we could deal with that pretty easily, through regulation, subsidies, increased charitable support, and so on. But when we try to fix the system now we have a lot of very wealthy, very powerful, and very cynical greedheads who will stop at nothing to interfere with reform. These people should never have been allowed into the insurance business to begin with, and the necessary first step in dealing with costs is to put them out of business.
They are an abomination, they have no right, as corporate entities, to exist except to the degree we allow them to. Like with Arthur Anderson, the corporate death sentence is called for.
Omnes Omnibus
@Bill H:
People without insurance are not getting healthcare. People without healthcare are dying.
burnspbesq
@Bill H:
Wait – are you suggesting that there are no valid reasons to demonize insurance companies? Because that would be a silly thing to say.
geg6
Xenos and Omnes Omnibus: This.
ThatLeftTurnInABQ
This crux of the problem is to recognize that despite their name, so-called “health insurance” companies have nothing (at least nothing positive) to do with health care. They are financial services companies – a branch of Wall St. And unlike their brethern in kleptocracy (e.g. the investment banks), they can’t even make a sort of semi-plausible claim to be adding to the macro-level efficiency of the system on a daily basis. They are not helping us to better leverage under-utilized capital to generate more investment and liquidity, or cutting transactional costs via arbitrage, or any of the positive things the other parts of the FIRE sector claim to do (discounting the issue of long term systemic risk for the moment).
In fact the private “health insurance” industry does the exact opposite – they make everything they touch less efficient and more expensive. They are a monstrous drag on our whole economy and a substantial part of the reason for stagnant/declining middle class wages, with all of the anti-stimulus knock-on effects that implies. Every dollar that is sucked up into the private health insurance industry is a dollar that isn’t turning over in the broader economy, and as a consequence our private health insurance industry in inherantly deflationary in its effects.
semi-OT, but Yves Smith recently put up a pair of comments regarding re-regulation of Wall St. that are well worth the read: (Paul Volcker, Mervyn King, Glass Steagall, and the Real TBTF Problem), and The problem is not TBTF, but TDTR. This is probably going to be one of the next big legislative battle after health care reform and it is going to make the latter look simple and easy by comparison.
Anne Laurie
@Yutsano:
Bingo. During WWII, the government decided to let ‘big business’ offer health insurance rather than raise wages. Unfortunately, it’s always easier to establish a precedent like this than to revoke it. And right after WWII, technological improvements rocketed in both health care and computational power. So health care has become infinitely more costly, just as the ability to calculate risk by increasingly minute actuarial standards has become infinitely cheaper. Meanwhile, ‘big business’ has morphed from a few dozen American-based manufacturing corporations controlling the majority of GDP to an ever-shifting global network of mostly “finance” (i.e., imaginary money) based megacorporations. The Robber Barons basically spotted a growth niche where they could legally take money from millions of unsophisticated users and use that money to become Wall Street playas, while using ever-more-sophisticated methods to refuse to return any of those millions of suckers’ premiums, ever, for any reason.
Shorter: The American health insurance industry has become our own version of the Catholic Church in pre-Revolutionary France. And Bill Frist is Cardinal Richelieu.
Comrade Dread
Yeah. I honestly think we’d be better off if we eliminated the medical insurance companies and went back to consumers paying doctors directly with the government offering a catastrophic and chronic condition health insurance package.
Of course, at this point, I don’t see much reason why we shouldn’t just go ahead and offer a public option.
bleh
And now I think about it, add to the above: (4) overcompensation of specialists relative to generalists/internists/PCPs, and (5) undercompensation of preventive medicine relative to diagnosis and treatment.
Re posts above about “putting a little money away,” let’s remember that the whole reason collective insurance exists is that we all pay in recognizing that only a fraction of us will collect, so most of us will end up losing, but because we don’t know who will need it, we all happily pay in. It’s WAY more efficient that way than individual savings (and it’s also compatible with risk aversion, but that’s kind of math-y).
And as to the moral imperative for health care, it’s precisely because we ultimately end up bearing the burden — emergency rooms quite properly may not turn away patients in extreme need — that universal care (hopefully with preventive care and the correct emphasis on generalists) is ECONOMICALLY and not just morally sensible.
JenJen
Does anyone here remember what it was like before we had health insurance companies in this country? I’m too young, but wasn’t there a time in the not-so-distant past where they didn’t exist? How did families pay for their medical care and hospitalization then, just out-of-pocket? Were such costs more manageable then? A five-day hospitalization without insurance today could bankrupt your average single person without insurance.
I know, I know, a lot of queries. But I’ve been wondering about this for ages and can’t find an answer anywhere. What did it used to be like? And why did we stop?
comrade scott's agenda of rage
Planet Money (NPR of all people) did a great piece explaining why we have the craptacular health insurance system we currently have. One reason the piece is good is that it’s something they did with This American Life.
http://www.npr.org/templates/story/story.php?storyId=114045132&ft=1&f=94427042
It boils down to wage controls during WWII. Since companies couldn’t offer higher wages to get workers, they started offering more fringe benefits than you could shake a stick at. Health care was one. It stuck after the war.
JenJen
@comrade scott’s agenda of rage: Thank you! Looks like that will answer my question in #64. Off to read it now.
Anoniminous
@General Winfield Stuck:
Fixed.
The basic reason the US has private Health Insurance Companies is the US has private Health Insurance Companies to ensure the continuation of US private Health Insurance Companies so that US has private Health Insurance Companies to provide private Health Insurance.
See? It all makes sense.
eduardo
I keep wondering if it would be possible for we the people to start a health care collective, modelled after credit unions? Startup funding would be a big issue, but beyond that, why wouldn’t the concept work?
Anne Laurie
@Xenos:
Thank you for spelling out the history behind the health insurance industry so efficiently. You’re right, of course — the situation is fixable, and we don’t need any great new innovations to do so.
LoveMonkey
@Bill H:
Maybe the dumbest questions I have ever seen here, certainly a troll, unless you have an IQ under 90.
People die without insurance because the insurance racket has imposed itself between the consumers and the providers of care in such a way as to make those without the insurance basically screwed.
There are so many example scenarios out there, it is hard to know where to start. The obvious one, which is the middle class person or family that isn’t lucky enough to be covered well, suffering without adequate care because they simply can’t afford it.
Or you can take my example. I have pretty close to the best insurance you can get at any cost, by dint of good fortune and a job that happens to offer this benefit. But if I lose, or quit, that job, I am completely screwed. I have a list of preexisting conditions that will make it impossible for me to get good and affordable coverage. I will be quite literally On My Own, one bad lab test away from financial disaster and maybe even health disaster for lack of coverage. So I am trapped in a job that I might, and probably would, otherwise leave for various reasons, for fear of losing that coverage, until I am old enough to get Medicare. I am not nearly as screwed as many other people, but screwed I am, and completely screwed I would be if my job fell victim to the crappy economy, which is still a possibility as I write.
Why should citizens of the best country on earth have to live under conditions like these? I’ll tell you why we are, it’s because the health insurance racket has gained control of the government and stonewalled reforms. This racket, this cartel, adds no value and degrades democracy. It doesn’t get much worse than that.
Martin
Well, between single payer and broad regulation of domestic markets, every industry will happily sell the insurance guys out. That, too, is the free market at work, after all.
So, single payer will be the direct product of an unregulated free market – not by the will of big government but by the will of the market itself.
Omnes Omnibus
@JenJen: I am not old enough to know, but I think it would be hard to compare medicine today with medicine pre-WWII. The capabilities today are so much greater, heart transplants, chemo, brain surgery, high blood pressure meds, etc.; doctors could do less, sso wat they did was less expensive. This is not to say that thing are not completely out of control today; they are.
Xenos
@Comrade Dread: But there are some good insurance companies out there. Just like how I insist on getting life insurance and car insurance from mutuals, I would like to get my health insurance through a mutual. There are some out there, but after all the demutualizations and mergers they are not big players in the market.
If every for-profit medical insurance company were shut down tomorrow, we could expand existing non-profits within a few months to replace them. If we decided as a society to rid ourselves of these parasites, and did so in an orderly fashion, we could accomplish it with minimal disruption within a year. All we lack is the will to do it.
Omnes Omnibus
@Omnes Omnibus: Give me back my edit button or remind me to proofread!
Just Some Fuckhead
@JenJen: Health insurance has been around a long time, but it was basically structured as non-profit.
More importantly, doctors and hospitals didn’t charge nearly as much as they do now (even accounting for inflation.) In the 60s and 70s, my father-in-law could take his seven kids to the family doctor for a pittance, usually no more than a chicken and a couple dozen eggs, maybe some goats milk.
Yutsano
@eduardo: I think this was tried and didn’t get very far due to A) lack of purchasing power and scale and B) too many states with too many disparate insurance controls. Group Health in Washington is technically a cooperative like you’re describing (and is pretty good) but also operates for a profit and severely limits newcomers.
Karmakin
It’s actually pretty simple. Markets only work when it’s possible, or even realistic to say no and walk away. Markets work for food for example, because if the price of steak is too high, then I can buy chicken. Or corn.
But there’s a handful of markets currently in private hands that require either some sort of public mechanism, or to be very tightly regulated, because walking away simply isn’t realistic.
You don’t have to buy a new car, you can go buy a beater, or take public transit, or live close to work and walk, etc. There’s quite a few options. (I do think that basic car insurance should be a public good, where government mandates it. Over and above that, there can be real competition)
But things such as electricity, basic telephone coverage, internet, and yes, health care, are things that really should be ensured in one way or another to be friendly to consumers.
The other side of the coin, is that Wall Street isn’t into long term stability, it’s into short term razing and burning. And the quicker that the powers that be realize this, the better we’ll all be.
Anoniminous
@eduardo:
They were called “Mutual Insurance Companies” and damned if I know what happened to them.
LD50
People say lots of mean things about heroin dealers, too, but they sure seem awfully popular, don’t they?
Omnes Omnibus
@LD50: I think another aspect of this is that health insurance companies as they currently function add nothing positive to the equation. If the way they function is changed so that they provide a public benefit, well then… Other insurers do provide a public benefit, and, as I understand it, health insurers once did.
Martin
And I just want to shout-out for Kaiser Permanente Southern Cal – they’re awesome. If the industry was run by HMO/Insurers like Kaiser, we wouldn’t even be having a debate.
Reason60
“So why should we have private insurance at all?”
funny, I thought I was the only one thinking this. Even as a fairly conservative free market champion, I see the insurance “market” as being fundamentally flawed.
Auto and homeowner insurance works because car crashes and house fires are things that almost never happen to normal people; most people go their entire lives and exercise their insurance once, maybe twice, and usually for only modest claims.
Insurance is based on an adversarial system; you must prove your car was totaled, or your house burned down. usually this works very well in weeding out fraud and negligence.
Health insurance, by contrast is universal. Almost everyone will get old and sick or get pregnant.. We use something like 90% of all our medical care in the last year of our life.
So basing health care on the adversarial system of insurance is foolish, because it creates a perverse incentive for companies to deny claims.
In addition, there is a lag between purchase and product- you pay premiums and only years later find out if what you paid for is worth anything.
Further, since we really can’t be “smart consumers” in insurance- it is highly technical, requiring specialized medical and lawyerly knowledge- (can anyone here actually read several different policies, and correctly deduce which one is best?) the consumer is unable to exercise the power of comparison shopping.
And what if I pick wrong? What if I pick one that excludes certain illnesses, and I happen to get that one? or need a specialized treatment that is excluded? If I get stuck with a shoddy car, I can always walk; if I don’t get the treatment I need, I die.
Finally, the patient-doctor relationship is fiduciary, not “arms length”; I can negotiate as an equal with a car salesman, and be a savvy consumer; but when I get sick, I can’t comparison shop among doctors and hospitals; I pretty much have to rely on the trust and confidence that he is acting in my best interest.
So ultimately, trying to use the marketplace to solve healthcare is counterproductive. It smacks of a rigid doctrinaire sort of thinking that the market is a magic cure-all.
Government solutions will likely be inefficient and sluggish; but waiting for treatment is better than not getting it at all.
General Winfield Stuck
@Anoniminous:
You speaketh my language and I think I’m in love.
Just Some Fuckhead
Fact is, it’s easy to take after insurance companies because they are literally the masked bandits standing in the bank lobby stealing depositors’ money at gunpoint.
And we should restrict or severely curtail their ability to do so with whatever legislation we come up with.
But – and this is the important part – health care costs are going to continue to go up. Doctors are going to want more than two thousand dollars an hour for a surgery and otherwise make more money for less hours and still be able to afford their lavish lifestyles (ever checked out the doctor’s parking lot in a hospital, nice cars!)
Hospitals are going to need to raise prices to pay quarterly dividends to shareholders and allow their governing corporations to continue to gobble up other area hospitals and eliminate competition. Here in my area, one hospital corporation – Sentara – owns all but a couple of the hospitals.
None of the reforms offered by the current HCR legislation addresses skyrocketing health care prices. In fact, one of the reforms bandied about – digital records – can at least in the short term be expected to help health care prices go up.
RSA
Like Omnes Omnibus, my impression is that in the not-so-distant past medical care for serious disease was largely palliative. When doctors couldn’t do much aside from ease the pain of dying, the incentives were different.
LoveMonkey
@Martin:
I assume that you are being sarcastic?
From the linked article.
We could narrow this thread down to nothing but Kaiser horror stories, and never ever run out of material.
Napoleon
@Martin:
Its worth noting that they are not just the insurer but also the provider, and operate on a similar basis as the Mayo Clinic or Cleveland Clinic, a team based approach.
different church-lady
@Brick Oven Bill: well, you got the first paragraph right, at any rate…
Anoniminous
@General Winfield Stuck:
LOL
Omnes Omnibus
@different church-lady: Six paragraphs, one more or less correct. It might just be a record for BoB.
Demo Woman
@General Winfield Stuck: you know I am stealing this comment
Yes. and because the Free Market is God in HIS Armani threads.
Health care is a basic need and should never, ever have been left to the free market. Where would we be as a society without public education?
John Cole
It is clear I was not specific enough in my question- I understand the concepts of pooled risk and insurance. What I mean is- can anyone give me a fact based reason for our health insurance as it currently is, where 20 to 30 cents on every dollar goes to line someone’s pockets or cover their bad investments?
Anoniminous
And just as a side note – typed while waiting for FireFox to crash so I’ll know what to fix – how the heck did we get from Health CARE Reform to Health INSURANCE Reform? If the US Health Care system is broken, as I would maintain, a national debate (Read: Shouting Match) over how to pay for a broken system is somewhat pointless.
ThatLeftTurnInABQ
@RSA:
So why not have a 2-tier system. Have a universal single payer system for basic, circa 1970s level health care, like the British NHS. If you need that kind of care, just walk into the nearest clinic/hospital/doctor’s office. No questions, no paperwork, you don’t pay a dime out of pocket.
Then let the private insurance market cover anything which is above that baseline in terms of technology/expense. If you can afford to purchase this kind of insurance, you can get the more expensive and cutting edge treatments. If you can’t, at least you can count on basic care and you aren’t much worse off than in the perverse incentive lottery system we have now.
Lastly, have a system for reviewing where the line is drawn between the two tiers so it moves upwards when formerly cutting edge medical technology comes down in cost as it scales up in volume and the bugs are worked out over time. And make sure that anything which falls in the area of preventive care that tends to decrease long term costs for the system as a whole is included in the basic package so everybody gets it.
Demo Woman
John, I was one of the commenters worried about your health this morning and I feel insulted that you ridiculed me. It is possible that some day Tunch will suffocate you and now I for one won’t care.
Omnes Omnibus
@ThatLeftTurnInABQ: Because, shut up, that’s why.
LoveMonkey
Even if you double the lowest claim denial rate in this story, which is Aetna’s 6.5%, you have the big plans like Kaiser rejecting claims at a 30%+ clip, approaching three times a rate that is double that of the lowest rate out there.
Come on, HMO apologists, explain to me how a for-profit system that games the system this way and can reject 1 of 3 or 1 of 4 claims routinely, is adding value to the healthcare access of Americans, and is not just running a racket?
And even if a coherent argument can be made to support a 30% claims rejection rate, then I question a system that creates 30% bad claims and pours money down a claims administration rathole and STILL leaves enough money left over to make its owners filthy rich. Explain that to me please.
Omnes Omnibus
@LoveMonkey:
Well, it does leave its owners filthy rich, so it works for them.
LoveMonkey
@Omnes Omnibus:
Good point.
Heh.
Just Some Fuckhead
@Demo Woman:
How did I miss this beautiousness?
General Winfield Stuck
@John Cole:
Fact based? Only if you believe a market economy exists first and foremost to create jobs and wealth. Which I believe in, basically. But that is the wrong question for health care providence. The correct question is. Does a vital service that allows people to keep breathing above ground belong in a for profit free market arena? The answer is, NO, for the simple reason of moral hazard, or that the “free” part has to great a social cost for a people claiming to be moral is too great. So the requirements for supply and demand in the Capitalism model is turned on it’s head by basic right and wrong. We have laws on the books saying so, and to pretend that HC belongs as such in that system is a lie coming from folks claiming to be moral. IE gawd fearin’ wingnuts/
Martin
There are no claims at Kaiser, unless you are out-of-network. Inside the network, you have 100% guaranteed coverage. My guess is that people went out of network for non-emergency items and some of those got denied.
But comparing an industry with no claims system to one with a claims system on the basis of claims is, well, stupid. Toyota has a much higher hybrid vehicle failure rate than Cadillac. Toyota must suck right?
Demo Woman
@Just Some Fuckhead: It was indirect ridicule but since I was in a sensitive mood thought that I would throw it out there.
RSA
@ThatLeftTurnInABQ:
I’m fine with a two-tier system, especially given that there’s no practical (even ethical) way to prevent people who have the money to spend it on whatever boutique medical services they want, just as you say. For some reason we have trouble getting the lower tier in place…
jl
Lot of good comments here. I will add a few comments from an perspective of an economist who works in the health care field.
I do think Cole, who has a very cranky side in common with his co-dependent house mate Tunch, is being a little Commie here in bashing the insurance companies. They do bad things, but that does not mean they have bad intentions.
Everyone should check out the NPR story on the history of insurance. The beginnings of comprehensive health insurance did begin in the 1920s and 1930s when medicine developed enough to be able to provide a reliably useful service, but the bills for service began to become to big for average people to afford. The Great Depression was a watershed, since people were going untreated and doctors were going broke, so comprehensive insurance began.
People with originally good intentions can and do go bad when put into an impossible and unworkable system. I think this is what has happened with health insurers and health plans, IMHO.
It has been known since the late 18th and early 19th century that insurance markets needed special regulations tailored to each type of insurance, otherwise they would periodically blow up. The history of life insurance is an example.
We have understood one source of the problem for over 30 years. In the mid 1970s, two economists, Rothschild and Stiglitz (that Nobel Memorial Prize Winner Stiglitz) showed that if the proportion of high risk high cost people were too high no competitive equilibrium would exist in insurance markets (read that last bit again and consider the wisdom of Scarborough’s argument by slogan based on ‘free market traditions’).
After 30 years there is still no general solution to this problem. One way to finesse it is to allow firms to have substantial market power. This little problem with unregulated free markets (that no competitive equilibrium exists whenever there are too many high risk people) is the source of a lot of the pathologies noted by commenters above. The cause of the lack of a stable competitive solution is ‘cream skimming’: each insurer trying to reduce rates by tailoring policies to have low risk low cost insured population.
A lot of the supposedly ‘lefty’ and ‘anti-market’ solutions proposed for health care reform that are likely to work, such as one uniform benefit package, public interference with the market a la Swiss and Netherlands regulation and public-private stakeholder negotiations (respectively) stem from this lack of competitive equilibrium.
Health insurers are doing increasingly harmful and socially destructive things in an search for an equilibrium solution that does not exist, and those with market power are exercising it to maximize their profits, but they maximize profits and maintain market power by keeping a low risk an low cost insured population. I have dealt with these people, and they rationalize everything they do, as being necessary to their survival in the system. Since changing the system means the end of their way of doing business, they cannot face that prospect.
Little Dreamer
@LoveMonkey:
They can reject all the claims they want, so long as they don’t reject MY claim.
/snark
debbie
@JenJen:
Does anyone here remember what it was like before we had health insurance companies in this country? I’m too young, but wasn’t there a time in the not-so-distant past where they didn’t exist? How did families pay for their medical care and hospitalization then, just out-of-pocket? Were such costs more manageable then? A five-day hospitalization without insurance today could bankrupt your average single person without insurance.
I’m 56. Going through my mom’s things after she died a few years ago, I came across the hospital bill when she gave birth to me (she saved a lot!).
The total bill for a 5-day stay was $133.82. Among the charges: $85 for her room and care; $18.50 for the delivery room; $1.50 for drugs; $.75 for dressings; $2.50 for phone; and my favorite: me for $20.00. Sales tax was $.07.
Martin
The argument for 20-30% profits for insurance companies is reasonable *if* they are uniquely able to reduce costs to the policyholder by more than that amount, or deliver new services to policyholders as a result.
Can anyone argue that such a thing is happening? I don’t think so.
burnspbesq
OT:
No baseball tonight.
Fuck the Tennessee Volunteers.
Nutella
@bleh:
True that many doctors, specialists in particular, are overpaid but some part of that overpayment goes to the many, many employees the doctors must have to handle all the insurance forms. This is one reason why 3/4 of doctors surveyed recently favored either a public option or public only system.
The answer to the question of what value the health insurance companies offer to the economy is that they provide a way to make small businesses subsidize large companies(*) and all companies subsidize the finance sector.(**) I see that as detrimental but our corporate masters think it’s swell.
(*) Small companies, where almost all new jobs are created, pay much much higher rates for the same health coverage as large companies.
(**) Health insurance companies are in the finance sector, not the medical industry. All the do is shuffle money around.
Martin
Isn’t this exactly why flood insurance is nationalized?
Tsulagi
Greedy arrogant bastards. At least Big Pharma waited until after the Medicare prescription drug bill passed before raising drug prices about an average percentage amount equal to what seniors were expected to save after they enrolled in the program.
Not controlling costs, that program was/is just a trillion dollar giveaway to pharmaceuticals and insurance carriers. They get a great ROI from their lobby dollars.
LoveMonkey
@jl:
Sorry, no sale. First of all, why are most of the other modern countries in the world able to solve this problem you which you declare has “no general solution?”
Secondly, and as follow to my first question, why does this industry resort to massive lobbying efforts, and a continual smokescreen of lies and manipulations, to sway public opinion in its favor? We’re not talking about an industry that sits back and LETS idiots talk about death panels and socialism. We are talking about an industry that PROMOTES the lies and the twisted views of reality in order to prop up support for its cartel and its stranglehold on our healthcare system.
Does bad things but doesn’t have bad intentions? Bull-shit. That is just bullshit, and you know it. Their intentions are entirely bad: Capture the revenue stream, force out all competition, buy the lawmakers, lie to the public, and make enourmous fortunes. And if this industry isn’t doing those things because it is bad, then it is doing one hell of an imitation of a bad, corrupt and venal industry and should be shut down for that reason alone.
linda
you really wonder what is going on in business schools to turn out such a greedy, amoral class of people who are responsible for the destruction of the economic stability of this country.
they can certainly see what their policies are doing to families and communities across the country — that testimony this week of the mother who’d lost her son to cystic fibrosis all the while be hounded by bill collectors; and the woman from the aei who sat stone faced and unmoved when she was confronted with that suffering. or the remarks of that vile jeff sessions.
but, then, this is the group who considers ’empathy’ a dirty word.
LoveMonkey
dGoddam your blog and your stupid soci-a-lism filter.
Fucking fix it for crissakes.
I will repost every goddam time this happens to me:
@jl:
Sorry, no sale. First of all, why are most of the other modern countries in the world able to solve this problem you which you declare has “no general solution?”
Secondly, and as follow to my first question, why does this industry resort to massive lobbying efforts, and a continual smokescreen of lies and manipulations, to sway public opinion in its favor? We’re not talking about an industry that sits back and LETS idiots talk about death panels and soci@-lism. We are talking about an industry that PROMOTES the lies and the twisted views of reality in order to prop up support for its cartel and its stranglehold on our healthcare system.
Does bad things but doesn’t have bad intentions? Bull-shit. That is just bullshit, and you know it. Their intentions are entirely bad: Capture the revenue stream, force out all competition, buy the lawmakers, lie to the public, and make enourmous fortunes. And if this industry isn’t doing those things because it is bad, then it is doing one hell of an imitation of a bad, corrupt and venal industry and should be shut down for that reason alone.
Demo Woman
@jl: Your comments are great. Aetna was one of the lowest in California for denial in coverage. I imagine that they are also the first not to renew coverage. The reason that I say that is this year I have Aetna but they are no longer offering the plan that I have for my age group next year. I paid $7000 this year and have a thousand dollar deductible that I haven’t come close to using so it’s not me.
I thought this line was great.. The cause of the lack of a stable competitive solution is ‘cream skimming’: each insurer trying to reduce rates by tailoring policies to have low risk low cost insured population.
burnspbesq
@John Cole:
A reason? Yes. Two, in fact. No antitrust enforcement and lousy regulation.
A coherent and defensible justification? Sorry. AFAIK, no such thing exists.
linda
OT:
No baseball tonight.
that shiny new billion dollar yankee stadium has some severe cracks in the ramps — just in time for the playoffs.
http://www.nytimes.com/2009/10/24/nyregion/24stadium.html?hp
Martin
It has no general solution *to competitive equilibrium*. The other modern countries solved the problem by eliminating the competition from the market – they nationalized it, either in whole, or by regulating it until competition was effectively non-existent.
Name one other modern country (with acceptable quality care) that has a competitive healthcare system?
linda
@debbie:
what a cool thing to have.
Martin
They have perfectly good intentions, but their defined objectives don’t match our defined objectives. For-profit companies – be they insurance or auto or news outfits – have as a sole objective to earn profits for their shareholders. Providing health care is only an objective inasmuch as it furthers the other objective. From the standpoint of the shareholder, they’re doing a great job and doing precisely what they are expected.
burnspbesq
@linda:
No surprises here. I would be willing to bet a substantial amount of money that in the entire history of New York City, there has never been one cubic yard of concrete poured by a contractor that actually met specifications. It is the easiest corner to cut in the entire construction process, and the cost reductions from cutting that corner go straight to the bottom line.
General Winfield Stuck
@Martin:
Thank you. This is the term I’ve been searching for to describe HC in a free market situation.
Martin
@General Winfield Stuck:
Thank jl. I was just providing the reading comprehension of his post to LoveMonkey.
LoveMonkey
@Martin:
I am not interested in selling out Americans’ healthcare for something called a “competitive healthcare system.”
That’s what you have now, a system and and economy being held hostage to a crummy slogan like yours.
We don’t have a privatized competitive military, for obvious reasons. Healthcare is not going to work as a primarily monetized and corporatized institution. Our system proves that beyond a shadow of a doubt.
“Competitive” is HMO lie-talk for “make the laws so that we can do whatever we want.” Anything that threatens that real agenda is called anti-competitive. It’s a word game, and it’s bullshit.
Furthermore, if you look at the reality of healthcare access in the United States, what you see is state after state where a tiny number of firms control the vast majority of the access and the revenue streams. That is not competive, at all. It’s a cartel, and a racket, as I said earlier.
Calling a turd a rose does not make a dozen of them desirable, if you get my drift.
jl
@LoveMonkey: When I said ‘no general solution’ I meant ‘no general unregulated free market solution’. No matter how hard they try, a set of competitive insurance companies cannot grope their way through market competition to a set of contracts, or premiums, or segment the market to a stable situation where the demand for contracts equals the supply of contracts, and everyone who wants insurance and is willing and able to pay for it can buy it.
Other high income countries have in fact ‘solved’ the problem through strick regulation (Swiss), legally binding publi-private stakeholder negotiations (Dutch), setting up social insurance system (Germany, France), Medicare-for-al demand driven public insurance (Australia), top-down planned single payer system (Canada) or providing ‘gummint run’ national health care service (UK).
All of those work in providing good and affordable care to the population. None of them are a free market solution.
LoveMonkey
@Martin:
Yeah, from the stupid asshole that props up Kaiser Permanente as the model of choice in healthcare!
KP is a model of a cartel that runs healthcare as a for-profit enterprise at the expense of its clientele. If you think KP should be the future of American healthcare, then you should vote for Sarah Palin for president next time.
Demo Woman
@burnspbesq: lol, lol, lol from the NYTimes article
I hate the Yankees!
burnspbesq
@Demo Woman:
So do I, but I have some misguided friends who are Yankee fans, and all other things being equal I’d rather that the stadium didn’t fall on their heads.
LoveMonkey
@jl:
Unless I am missing something, you are saying that those “other countries” solved the problem that has no general solution because they realized that so-called “free market” solutions were not workable. Which they are not, which is why we have the current crisis.
“Free market” is the slogan on the other side of the “Socialized Medicine” token. It’s a lie. There is no compelling reason to believe that free market is the answer to healthcare access. There is a giant clusterfuck called the American healthcare system which provides a compelling reason to believe that is not the answer.
There’s a reason why we are having the current movement to fix it. It is not because liberals want to take over your life. Most liberals I know would love to let the South secede and let them be their own failed country. Fuck them very much, who cares? Meanwhile let the rest of us live in a world where healthcare is affordable and available to everyone. And fuck “free market” solutions. If the previous 8 years have not taught us what a rathole that idea is, then nothing ever will.
Martin
Um, Kaiser is non-profit.
And they aren’t an insurer – they’re a full care agency, so if you don’t like Kaiser then you’re going to hate doctors and hospitals, because that’s their comparison.
Kaiser has no claims system and no administrative staff to deal with claims. Physicians are paid salary, so there is no incentive for them to order tests that aren’t necessary, or to avoid tests that are. There’s no calculus on what will be best for them personally, because the care they give patients has no financial consequence (good or bad) for them. Kaiser is the closest private model to the VA, to the UK system.
Kaiser’s biggest shortcoming is that they have to compete against others in the state – so they have to pay relatively high salaries to attract and keep good staff, and they have to offer policies that are comparable to Anthem and Aetna to get employers to buy in.
My praise for Kaiser is praise for the VA/UK model where not only are there no insurers (like Medicare) but no private physicians either. Kaiser is just the closest to that model than someone like me can buy into.
Martin
I don’t know them, but in my experience having lived in NY, you’re probably better off if it did fall on their heads.
LoveMonkey
Gotta go, but just in case anyone is not paying attention, the anti-competitive forces at work in this situation are the HMO’s themselves. Their insistence on a marketplace free of real competition such as a Medicare-like solution, otherwise known as the Public Option, is what is keeping us from getting reform. They are the ones who want trompe l’oeil (phony) “competition” in order to live in an anti-competitive environment, suck up all the money, and control your access to healthcare.
Letting our HMOs call their model “free market” is like letting the burglars be in charge of your home security.
tc125231
It’s an attitude like that that got Jesus booted from right ring Christianity. Those with with more money are both evolutionarily superior AND God’s chosen.
Back to Leibnitz. “All things for best in the best all possible worlds!” Or wait — I mean Efficient Market Hypothesis!
Is there even a difference?
jl
@LoveMonkey: I am not advocating an unregulated competitive free market solution for health care at all. And I do not agree that the alternative to an unregulated competitive free market solution to providing health care is ‘socialism’. I am talking as an economist who is willing to face that the fact that if there is no competitive free market solution to a problem, then it is time to give up on the unregulated free market to solve that problem for the simple reason that the solution it can provide to social problems in some cases does not exist for health care.
I think for health care, society should decide how to handle the problem through some kind of public program (very strict regulation of private markets, social insurance, whatever), and not worry about whether the solution is inconsistent with something that does not exist.
I do not want the South to secede, and if they do secede, I do care whether or not it becomes a failed state.
LoveMonkey
@Martin:
Kaiser is nonprofit? Then what is their excuse for operating such a crummy system?
Sorry, I am a California native, and have lived in both the north and south of the state, and have been watching KP for half a century. They are the poster child for the shitty problem we are faced with today, AFAIC.
Other than hoping that the state imposes fines on them when they kill people, what is the path of accountability that keeps Kaiser honest?
I know, it must be the Free Market.
Anne Laurie
@Omnes Omnibus:
Hell, just antibiotics — a big reason behind all the cool medical technology that’s become available in the past half-century is that doctors finally had a dependable weapon against infection! Of course now we’re starting to lose the battle to the “superbugs”, but it’s amazing how quickly people have forgotten that dying of an infection, or the complications of such infections, was considered normal.
Lex
@KC: A significant part of it is doctors steering patients toward treatment modes in which they have a financial interest. Info here.
linda
@burnspbesq:
No surprises here. I would be willing to bet a substantial amount of money that in the entire history of New York City, there has never been one cubic yard of concrete poured by a contractor that actually met specifications.
that friggin stadium just opened.. did you see that photo of the crumbling walkway. i wouldn’t go near that place in the coming weeks.
LoveMonkey
@jl:
On your latter point, I disagree forever. Let the South go. It does nothing but drag the rest of the country down. It’s an intellectual and political train wreck.
General Winfield Stuck
@jl:
Just as a layman it seems to me that “regulation” of the HC insurance system will not work to our moral satisfaction until it reaches the point of telling private companies who to cover and at what price. Or, the government fixing prices and dictating well past what for profit companies can absorb and still act like competitive entities. Experience has taught that that doesn’t work.
In theory, a robust public option or government devised non profit insurance provider would help to keep companies “honest” as Obama says, but in reality will it work that way for long. I seriously doubt it. It is a stop gap measure, a compromise, imo, to eventually get to single payer for a country hyper frightened by the dread shoshulism that they are hammered with daily by the right wing, who really don’t care or believe that is what single payer is, but want to keep a cash cow alive for their own reasons, which is always for plutocrats to extract as much wealth as possible from the citizens. It’s what they do, and all they do. And this is what republicans also do, give voice to old money in this country, and replenish the ranks of the wealthy with new rich people. They see the writing on the wall, that profiteering from the sick and injured has about run it’s course and the national conscience is rebelling, and they just want to milk that cash cow a little more before it dies.
I just don’t believe in the long run we can pretend a for profit system can coexist with a moral requirement we profess for treating sick people. It is a lie that it can imo. , but a lie with political teeth, so we do it the long and hard way as usual, by placating unfounded fears with doing stuff the longest and hardest way possible. This is America after all.
Mark S.
@Anne Laurie:
That’s the truth. I’ve heard a lot of old timers say that back in the good old days, hospitals were where you went to die.
JenJen
@debbie: That’s amazing. And I was specifically thinking, how did parents pay for the hospital when their children were born, if they didn’t have insurance or insurance didn’t exist?
Thanks so much everyone, for responding. I’m with John and Rep. Weiner, firmly ensconced in the “what the f do we need insurance companies for” camp.
Tim in SF
Hey John Cole,
You might find this useful. It made me sympathize, for at least a moment, with the insurance companies.
http://www.thisamericanlife.org/Radio_Episode.aspx?episode=392
It’s really all a lot more complicated than they are making it out to be.
jl
@General Winfield Stuck: I think most health care economists would agree with your intuition. Allowing too much variation in the basic comprehensive policies offered by private companies invites too much cream skimming and cherry picking, and even that regulated free market equilibrium starts to fall apart. And creating a workable risk adjustment system for those insurers who end up with a sicker insured population is much more difficult.
Switzerland with its private system for example, has one (1) (ONE) basic comprehensive mandatory policy that all private insurers must offer. People can get more coverage if they want, but it has to be purchased on a separate much less regulated supplemental policy market.
For comprehensive policies, private insurers compete solely on the basis of more efficient provision of administrative services of that one basic contract for the national mandatory comprehensive policy.
Having one mandatory policy helps with reimbursement reform, since less fights and fiddling with details of benefit packages.
There is reason to worry that the weak proposed reform will not produce a stable system and we will have to fix it again somehow in a few years.
Yutsano
@jl: There is reason to worry that the weak proposed reform will not produce a stable system and we will have to fix it again somehow in a few years.
This I have zero doubt about, and getting everything right the first time isn’t the point. The point is to improve the situation as much as possible NOW, then change what needs to be changed as time goes by. We’re not and never were going to get a perfect system right out of the gate, and anyone who thought we were is massively deluding themselves.
General Winfield Stuck
@jl:
Of this I have little doubt
Yutsano
@General Winfield Stuck: GMTA. Should I be scared?
arguingwithsignposts
@Just Some Fuckhead:
Hospitals should be non-profit, as many were in the past. Drs. should not be independent contractors, but paid employees like the other serfs who do their bidding (my mom worked with drs. for 30 years, so I can say that). Let them require tests that are actually required, and not just more tests for more money.
Also, drs. training should be opened up to more applicants who are qualified, thus raising the number of drs. who are available. The AMA is part of the problem (supply/demand and all that).
It’s not that difficult, actually. But we keep believing in that “invisible hand” that isn’t actually there.
jl
I agree with Stuck and Yustano. My only concern is that the initial reform will produce good enough results that once it starts to fall apart, the pressure will be to move it forward rather than junk it.
Demo Woman
OT… Last time to vote for Bitsy.
General Winfield Stuck
@Yutsano:
Not unless things start to go smoothly
monkeyboy
Putative added value of Insurance Companies is really a form of tax fraud
On putative advantage of a large insurance company is that they have enough market clout so that they can negotiate with health care providers and get demand lower prices for services.
For example, for someone without insurance, a hospital might bill them directly 3X what they would charge an insurance company.
However insurance companies engaged in this don’t seem to be driving down the cost of health care. Insted this practice tends to drive people to insurance because care is so much more expensive on the “open market”.
Hospiitals like this practice because many unsured paitients simply do not pay their bills which is fine because rather than writing off 1X as a loss against their profits, they get to write off 3X – essentially every unpaid bill represents a 2X profit.
arguingwithsignposts
@Demo Woman:
voted early today. Go Bitsy!
arguingwithsignposts
BTW, we need a national insurance market if nothing else.
I’ve worked for small employers in small states, and most of the employees glommed onto their spouse’s insurance (gov’t jobs, education, etc.), thus reducing the number of employees available in the tiny pool we had. I’ve seen a single individual with a pregnancy or a long-term illness drive up rates ridiculously. But these small employers couldn’t pool together into a state-wide, or even a national pool, to reduce insurance costs.
Yeah, it’s a racket. I got a raise which meant I received less salary because of higher insurance premiums. F–k that.
Mark S.
@General Winfield Stuck:
Neither do I. The system is so fucked up it needs more than just a couple of band-aids.
Anne Laurie
Going to the hospital to have a baby has only been “normal” for a couple of generations. Don’t know if you remember the original Cheaper by the Dozen, but that most professionally efficient and modern couple (i.e., technology-besotted) couple still chose to birth all 12 kids at home! Up through the first third of the 20th century, “lying-in” (maternity) hospitals were only for desperately poor or sick women with no other resources. Even after poor Dr. Semmelweiss’s crazy DFH theories about hand-washing were finally popularized, healthy women & their babies were more likely to die from a hospital-based infection than they were to die from complications during labor… and even for “complicated” situations, it was safer to have a doctor with forceps or c-section experience working in the mother’s own home. Incubators/isolettes are another post-antibiotic improvement — when even full-term healthy infants routinely died from diarrhea or respiratory infections, there wasn’t much point to coddling preemies.
Fern
@Mark S.:
There are a couple of other points about how people managed without health insurance.
Families were larger and tended to live not far from each other. Often family members would care for sick people. And doctors made house calls, which would reduce the need for hospital care.
Fergus Wooster
@Brick Oven Bill:
Seriously, I know I shouldn’t take the bait, but Fuck You.
Martin
Considering that you’ve admitted to having watched Kaiser for a few decades without retaining the most fundamentally basic knowledge that it’s a non-profit, I’d say that your opinions on this have no credibility whatsoever. And a website that nutpicks horror stories, and relies on Nixon White House tapes to prove that Kaiser is for-profit doesn’t help your case at all.
In case you were confused on this point, almost nobody here is arguing for a free market system, but you’ve been so black/white and fanatically wrong on so many points, you’re now attacking people trying to correct you.
The argument for changing the system is easy enough to make without fabricating facts.
David
The only value any insurance (life, car, health, etc.) is for risk mitigation.
If the insurance doesn’t pay off because the trigger is “gray” (such as health insurance arbitrarily deciding not to cover cancer as a “pre-existing condition”), then insurance is without value. Life insurance is only valuable to the extent that it maintains a lifestyle for the beneficiaries of an individual who dies; auto insurance is only valuable to the extent that it mitigates financial risk of auto repair/replacement.
Health insurance has morphed from a mechanism for risk mitigation to profit skimming. I actually don’t care as much about whether the main payer for health care is the government or individuals as I do that health insurance is an incredibly bad investment that is sucking the life out of this country and screwing its citizens. If health insurance companies were well regulated or if they had the appropriate competition, they would be unable to skim so much money out of the economy.
Bring on the public option, remove their anti-trust loophole, and regulate them appropriately, and their 15% increases per year will be reined in. Health care costs will go down.
If not, just open free government-run health clinics everywhere to provide preventative care for free to any citizen. Let the insurers suck on that, because then they will only be needed for catastrophic coverage, and they cannot very well treat those things as pre-existing conditions or they lose their value proposition as catastrophic insurance.
jim
This increase has been in the pipeline for months. Several benefit and compensation analysts have predicted that small biz would see a 10-15% increase in health insurance costs.
Mandates and universal coverage is meaningless unless the costs of health care are not brought under control. It is the cost that’s killing us.
MelodyMaker
I hear a Roger Waters ref in the title.
I’ll offer another Brit song: “We Will, We Will Fuck You”
now I’ll read some comments. Maybe DougJ’s in here with some Declan. He loves that shit. keep your finger on important issues… the helicopters are laughing.
LD50
@Fergus Wooster: Just BOB. Your life will be better.
LD50
@LD50: That should say
“Just ignore BOB. Your life will be better.”
Fucking missing editing button.
MelodyMaker
being a non-profit doesn’t mean you don’t have profits.
being a non-profit doesn’t mean you don’t have profits.
being a non-profit doesn’t mean you don’t have profits.
being a non-profit doesn’t mean you don’t have profits.
being a non-profit doesn’t mean you don’t have profits.
Rosali
Last week’s This American Lifehad a very informative segment on how our health insurance developed into an employer-provided system. It stated after WWII when Baylor University decided to offer health insurance to a specific group of workers likely to be healthy: teachers. That eveolved into Blue Cross. A couple of IRS decisions later, many employers were offering health ins plans to their employees.
jl
@Tim in SF: thanks for the link. The program was good overall, but had some misleading parts.
Worst was a few moments where they attributed all increases in health care utilization to presence of comprehensive health insurance. This is, IMHO, BS. They did not mention the conflict of interest that is currently permitted in doctor owned labs, clinics and hospitals. Doctors can own, or have a financial interest, in labs, and then refer their patients to them for tests. Same with clinics and hospitals, they can refer you there for treatments. This is clear self-dealing that leads to overuse of tests.
The report also didn’t mention defensive medicine to avoid lawsuits in demand for tests and procedures (I think this is much less important factor than GOP and docs admit, but to some extent it is there).
The report also did not mention the very outdated system the US uses for medical records, and difficulty of getting test results from one office to another. Since care is more fragmented in the US than other places (people see more docs for same general treatment process) many duplicate tests happen because a doc cannot access recent results in a timely way.
I think people should listen to the end to hear Uwe Reinhardt, who is a very good health economists. His comments on how Maryland has solved the problem of price discrimination and cost shifting by hospitals is interesting.
While listening, I wrote a Grand Vent on the role the US economics establishment has had in giving bad advice on health care. Which I now paste in below, for nerds only. It deals with some of the aspects of the NPR report that I feel were misleading.
First, it is important to remember the classical ‘insurance premium cycle’ in discussing premium increases. Whenever rates of return on assets are low, insurance companies tend to increase their premiums because they cannot make much money on investment income. This may explain the recent large increases, since we have had a low interest rates regime for quite a while now.
Second, I am wary of simple minded moral hazard arguments that say comprehensive insurance induces too much care. There is empirical research showing that moral hazard cuts several ways for people who have comprehensive insurance.
Remember that the term ‘moral hazard’ simply refers to the fact that the probability of an insurable event changes after a person gets insured. There is moral hazard of the insured increasing their claims for consumption-type medical care, such as frivolous cosmetic surgery. There is moral hazard in people slacking off on good health and prevention because they are insured. There is also evidence of a ‘good’ moral hazard in people increasing their utilization for preventive care and check-ups in order to optimize their chances of living a long and healthy life. There is empirical research that shows that the latter two kinds of moral hazard roughly cancel out.
Third, in the US, I think the case can be made that the very ideologically driven unregulated free market wing of the US economics profession has not been helpful. There were originally two different camps on health care insurance among US economists. Economists like Mark Pauly and Martin Feldstein modeled health insurance as if medical insurance was a good like any other, for example, snow cones.
For example, they assumed that people without comprehensive health insurance would invest in preventive care optimally and no insurance was needed for that. Their model did not distinguish between healthy and sick people very much. They thought comprehensive policies would just cause more of the first type of moral hazard described above, as well as inefficient preventive care. Comprehensive health insuranc policies were mostly like a subsidized snow cones, and everyone would run to buy more snow cones.
Economists like Kenneth Arrow (another Nobel Memorial Prize winner, and also one of the people who proved that an unregulated free market competitive equilibrium on all markets at the same time was even possible) thought that for the most part, comprehensive health insurance would work like accident insurance, and the first kind of moral hazard would not be a big factor. The probabilities of catastrophic disease drove demand for care, not the frivolous consumption type of health care.
But this brought up a fourth kind of moral hazard: that comprehensive insurance would spur R&D on disease to provide more cures. Economists who think that health insurance causes ‘too much’ R&D in medicine and healthcare is a bad distortion of the free market are careful to disguise their disapproval, for obvious reasons (most people would dismiss them as insane or wicked).
The Feldstein/Pauly wing of the US economics profession ruled policy for a long time in the US. They were deathly afraid that the average person in the US was consuming ‘too much’ medical care, and this wing even approved of measures to restrict access and increase prices as a way to reduce the first kind of moral hazard mentioned above.
One would think that Arrow would get more respect, since he was one of the economists who showed that a totally unregulated set of free markets could work at all, but since he was careful enough to look into when such a system might not work. But his policy advice for situations where unregulated free market competition would not work has not been respected much in the US, and I think this may be because of ideological reasons.
Some years ago, Mark Pauly admitted that his analysis may have been too limited, and that it may need to be combined with the Arrow model. He said there needs to be a synthesis of the two approaches. Feldstein still stubbornly sticks to the Pauly model, as shown in is recent proposal for public assistance for a very high deductable and very high co-pay catastrophic insurance only approach. Eveyone should pay for every penny of the first few thousand dollars of health care, and maybe over 30% of the total cost, until they are catastrophically ill.
Joseph Newhouse ran the famous Rand insurance experiment, which randomized people to different types of policies, from almost free comprehensive care to very high deductable/high co-pay. This research has I think been sloppily misused, even by ‘lefty bloggers’ such as Ezra Klein and Matthew Yglesias (who I thought would take care to check that they knew what they are talkinga about). It has been a myth that the Rand health insurance experiment showed that high deductable insurance did not hurt population health, and has been misused to argue that the GOP/Feldstein approach could work, and to misleadlingly argue that comprehensive health insurance is a bad thing overall. This position is simply wrong. Newhouse himself has repeatedly pointed out that there is good evidence that lower income people who were randomized into very high deductable/high co-pay policies had a higher death rates due to the policy design itself. They died because they could not or did not get enough preventive and primary care. This was true even though the policies in the Rand experiment had more generous provisions than the kinds of policies Feldstein and the GOP are proposing now.
BTW, Newhouse, who analyzed the behavior of people who were randomized into the different types of health care plans in great detail in his experiment, takes very seriously the possibility that there is no unregulated competitive free market equilibrium in the health insurance market. He cannot reconcile the behavior of the people in the experiment with what has happened with health insurance policies as the result of any reasonable competitive equilibrium. Read his book ‘Pricing the Priceless’ for details.
Newhouse looked into the Rand experiment results in detail, and found evidence that comprehensive policies can be economically efficient if designed properly. Subsidies for preventive health and access to primary care are needed to head off serious illnesses that begin with chronic conditions that have no symptoms, such as high blood pressure. But for some reason no one seems to be aware of what Newhouse says about his own experiment that he ran, perhaps because it is ideologically unacceptable. But he was the principle investigator and is more familiar with the results than anyone else, so maybe people should listen to him.
Newhouse has advocated the ‘regulated public utility’ model of health care industry.
An ideologically driven segment of the US economics policy establishment does not seem to be able to admit it made some big mistakes on health care. It was wrong to dismiss the possibility that an unregulated free market equilibrium does not exist. It has clung to a mistaken or incomplete model of the demand for health insurance. It could not admit that their belief that people had the information needed to optimally plan and purchase their own preventive and primary care. Their policy advice to restrict access and to acquiesce in rapidly increasing prices for health care may have encourage the mess we are now in.
jl
Sorry, there was a bad typo in the last paragraph”
They next to the last sentence should have been:
It could not admit that its belief that people had the information needed to optimally plan and purchase their own preventive and primary care WAS WRONG.
MelodyMaker
I don’t remember if it was local or national public radio I was listening to at the time, but it was a few days ago when a caller asked something like “when did we decide that gambling on our individual and/or collective health was a good enough way to work it?”
The expert guest didn’t answer that question, but it’s pretty clear to me that it’s just happened because nobody’s been able to make it work otherwise for most of us. Truly fucked and bleeding. A happy accident and a feedback loop for the US Senate. (yea!)
DougL (frmrly: Conservatively Liberal)
The reason? Because some of those “someone’s” are key politicians who are handsomely compensated from those 20 to 30 cents on the dollar the insurance companies skim off the top to assure the industry that their interests come before those of the American people.
It’s called paid protection, something the Mafia gets in trouble for but our politicians and courts have legalized and legitimized. If you want to play the game then you better pay your protection.
It’s that or else the politicians might actually have to do something that would benefit their constituents. Heaven forbid something like that happening because this would mean that the politicians would be raking in less cash.
Mr Furious
@Brick Oven Bill: Quite probably the stupidest BOB comment yet.
And that’s saying something.
That is all.
Mr Furious
@Martin: Martin, your whole “defense” rests on cherrypicking the one company that’s theoretically a non-profit, and does nothing to address the other companies rejecting claims at a 20-30% clip…
Got an explanation/rationale for that?
Bill H
@LoveMonkey:
So the fact that hospitals won’t treat you unless you are rich is irrelevant.
The statement that insurance premium increases are “due in part to health care cost increase costs” is irrelevant.
Hospitals, doctors and drug companies are blameless angels, lets all join in and howl about how evil insurance is. That will surely solve the problem.
mclaren
KC asked:
Sad to say, there’s a solid logical reason for this. Medical costs keep skyrocketing because new medical technology keeps coming along. Moreover, the rate of progress in medical technology is expontential, similar to Moore’s Law.
Examples of some of the wilder recent medical technology include: regrowing rats’ severed spinal columns, repairing brain damage with stem cells, using living rat neurons grownon a glass substrate and interfaced with a computer to control a robot (that sounds like insane science fiction, but it happens to be true), a prosthetic hand hooked into living nerves that transmits sensations of feeling, thought-controlled robotic arms and legs (monkeys wired up to these things can no each out with mechanical hands and grab objects just by thinking about it), silicon chips implanted in peoples’ retinas that transmit sensation of crude light and dark to the optic nerve and into the brain, growing entire functioning organs outside the body using stem cells, regrowing limbs in mammals (salamandars can do it, but not mammals — unless the right biochemical pathways are switched on, which scientists are now learning how to do), using DNA analysis to analyze patients’ genomes and custom-design special medicines to work specifically for that patient and that disease, nanoparticles which target cancer cells and are then zapped with x rays to destroy them…and so on.
None of these medical advances was possible even 10 years ago, much less 20 or 30.
So one of the big reasons why medical costs have skyrocketed is that we can do a whole hell of a lot more to cure diseases and fix injuries than when I was a kid.
When I was a kid, if you were born deaf, tough. You learned sign language. Today, you can get a cochlear implant. When I was a kid, if your aorta got severed in a traffic accident, you bled out and that was it, you died. Today, you get rushed to a hospital in a LIfeFlight helicopter and surgeons use a dacron graft to repair your aorta and you live. When I was a kid, if you got cervical cancer you died and that was that. Today, girls can take a vaccine for HPV, the virus that causes cervical cancer, a vaccine that didn’t exist back then.
Little Macayla's Friend
@jl:
Thanks for all your efforts in this thread; to me it’s been hard the last few months trying to piece together all the problems with U.S. health care, proposed solutions that turn out to not be solutions, political maneuvering, other countries systems, etc.
To anybody: The article excerpt said
” some experts say they think the insurance industry, under pressure from Wall Street, is raising premiums to get ahead of any legislative changes that might reduce their profits.”
Aren’t state insurance commissioners (even if every one of them is using different laws) supposed to prevent this sort of thing? Are they that toothless? Or corrupt?
Did health insurance companies have investments ‘on Wall Street’ that lost a lot in the last year, and does that affect premiums this year?
Even if health care is a special case, how can premiums go up this year at twice the rate of the previous year (NYT article) when this past year’s inflation has been low or negative in places (construction)?
Twice the rate in a year that euphemistically is called the Great Recession? 15% in any year?
NYT article and insurance commissioners need to produce a breakdown of the reasons by the numbers.
CalD
I’ve been thinking for a while now, ever since we got the news at my company on how much our health insurance was going up next year, that Democrats might be smart to delay a vote on any healthcare reform bill until after the first of the year. My guess is that’s when a lot of people will get the news about their own.
Right now, poll after poll finds most Americans are pretty satisfied with their current health care plan. But when most Americans find out how much the bill for their current plan is going up, single-payer might start looking a whole lot better.
bob h
This pre-emptive gouging is probably a sure sign that reform is going to go thru and that things are going to get tough for them very soon.
J in WA
The difference should be fairly clear: health is not insurable. Period.
Car and home insurers are making the reasonable gamble that accidents are rare. I’m not going to get rear-ended every year, nor will a meteor destroy my roof on a regular basis.
Health care is not like this. We get sick, regularly. And inevitably, we age, grow frail, and die. This is 100% guaranteed, and it’s always costly. Hence the insurers are always going to lose… unless they reduce coverage and charge exorbitant amounts, exactly as they are doing.
The only solution is a Social Security-like single payer system. Yes, it’s just that simple.
RememberNovember
Greed is inherent in human nature in all facets- even in online mmo gaming. What happens is that previous to any expansion change- people will inflate auction prices of crafting materials to insane levels, knowing that others will pay for the price of “leveling up” a trade skill (Happens in World of Warcraft, Lord of the RIngs, just about any MMO) Sad, really that it has infected the virtual world. Then there are the Chinese Gold farmers…sweatshop players that sell gold for cut rates thus disturbing the economy of the game.
Bonzoix in WI
Google Wendell Potter. Watch him with Bill Moyers. ‘Nuff said.