This post does not have the answer to the Medical Insurance Problem in the US. It is a situation beyond any easy answers, though I'd be willing to sit through any sort of bull session on the project.
But until we get to the problem, we have agree what the problem is. Indeed, we have to agree that there is a problem.
And in front of that realization are two barriers, or two different facets to the same barrier. The parties involved aren't talking about the same thing.
| 1. | the act, system, or business of insuring property, life, one's person, etc., against loss or harm arising in specified contingencies, as fire, accident, death, disablement, or the like, in consideration of a payment proportionate to the risk involved. |
| 2. | coverage by contract in which one party agrees to indemnify or reimburse another for loss that occurs under the terms of the contract. |
Taken like that, then it's all a matter of risks and statistics ("proportionate to the risk involved"). The chance of Person needing $X over the course of ten years is Y%. Therefore, a person needs to put in at least $(X*Y%) over that time frame -- maybe a bit more to add contingency, a bit more to add some profit.
The trick, of course, is what that Y% is. Over the years, insurance companies and actuaries came up with all sorts of ways to fine-tune Y%, based on age and race and health factors and location lived and lifestyle and all sorts of other things. (We'll assume, for sake of argument, that the insurance companies are good actors in all of this, i.e., they are interested both in providing a fair service and a reasonable profit for their investors, if a for-profit organization.)
Then two things happened in the medical industry (these factors have hit in the home insurance industry, too, but a bit less, and much less so in the auto and life insurance areas):
First, the value of $X -- the potential loss, and thus reimbursement -- started to vary wildly, because of rising medical costs. There are all sorts of reasons for this, good and bad and indifferent, but taking as a given that medical costs have risen far faster than, say, the inflation rate, it made the Y%s go up significantly. I might use very little health care money -- or I might suddenly need to draw on gazillions of dollars for long-term care using the very expensive machine that goes "ping." The chances of the latter would be small -- but if they were miscalculated even a hair, the impact on the insurance companies became much greater. As a result, insurance companies had to both increase rates and add much more contingency (up to and including simply excluding certain people from insurance).
But with the rising costs of medical care -- insured or not -- the second thing happened: insurance stopped being a simple investment, a fall-back, an assistance, and it became, essentially, a necessity. If you wanted medical care of anything beyond the "take some aspirin" variety, you needed insurance to pay for it (unless you were independently wealthy).
Insurance stopped being insurance -- it became a necessary subsidy. But we continued to try to fund it through the same business mechanic we used for insurance in the past. Indeed, we distorted that business model still further by putting in legal restrictions / requirements on coverage and service provision (companies have to do X or Y, and provide certain services Z to populations W; employers have to pay for A and B; folks who are a risk because of C must be given coverage; medical providers need to be paid D by the government for certain services, even if they charge others more; providers much allow a certain level of people to pay $0 if it's an emergency or an ER setting), The result is that insurance companies have to try to be even more restrictive of services provided, and to whom, in order to stay solvent, while medical service providers have to maintain formal or informal different rates of costs depending on who's paying, and, from a business perspective, need to find ways to cut corners, too.
So cost for everything kept going up, the upper limits climbed catastrophically, the risks became much more difficult to calculate, and that simple contract to indemnify someone based on payments proportional to risk became a Platonic idea; instead, everyone was simply trying to do everything they could to not lose money, whether it was defensibly about risk or not.
See? The problem is that we still think of it as insurance, when it's stopped being insurance in our current society. We're trying to maintain an illusion of a business model that no longer applies
I have no problem with a for-profit world -- such an economic model tends to be more robust, innovative, and ultimately less resource-wasting than otherwise, though it also has its limitations (and its extremes) that need to be recognized. I also realize that there are societal issues at work here -- "I deserve to have the most expensive treatment, just like Donald Trump" -- that are not necessarily rational or workable.
But the fact of the matter is, the system is pretty well broken unless you're one of the diminishing number who've not stumbled over the gaps and cracks in it. Donald Trump --- along with most of our Congresscritters -- don't have to worry about most medical care issues, either for themselves or their family and friends. There is, even with the kindest spin on it, a sort of "Let them eat cake" naiveté ("Let them go to the ER") on the part of the people who we ask to represent us regarding the challenges that so many people have with medical care issues.
(As noted, the house insurance industry has some similar issues -- usually around regional disasters and the cost of either insuring or being stuck without insurance. But the impact is, to date, smaller, and not -- yet -- out of control.)
There are a lot of ways we can go with this, as a country. But until we realize that insurance as a voluntary pool of contributors drawing money out when the occasional bad thing happens is no longer an accurate paradigm for our health care system, and realize instead that we need to find a way to make sure that all citizens have access to basic health care services (the definition of which, of course, is part of the debate), we're not going to get much further in the discussion. Insurance companies and medical care companies and the politicians and the populace will all point their fingers at each other, with justification, and individuals -- and society -- will remain the tragic losers.
Talking about health insurance policy just means we're not talking about the right thing.
(This isn't an easy topic for me to write about, since Margie works in the industry and has her own perspective. But, then, I think that KP, as a non-profit insurance and health care provider, does a remarkably good job of bridging the gap, and essentially shifting the paradigm, even as it's subject to the regulatory, economic, and societal issues that plague the overall health care system in the US. As an HMO in the classic form of the term, much of their focus remains on the service, not on just how to provide the minimal service for the maximal return)
(Inspired by this RLP post)
Filed under :: Big Business :: Health :: Politics & Law
Well, you all ready know my answer on the subject, and that is to go with a EU or Canadian model heath care system and be done with it. But since we have the “best” Government Money can buy it will never happen and things will finally fail and collapse with a bunch of folks standing around gobstruck claiming “No one could have ever predicted such a thing”.
See? The problem is that we still think of it as insurance, when it’s stopped being insurance in our current society. We’re trying to maintain an illusion of a business model that no longer applies.
Correct. But this is the same problem with the Music and Film industries as well with the stupid Copyright laws. In a lot of ways it is like watching the last buggy whip makers in a steel caged death match fighting it out.
But this is the case with the entire Insurance Industry. You NEED insurance on your home so that you can keep you house loan. You NEED full coverage on your car so that you can get a car loan. The entire system is broken and needs to be overhauled, but it won’t be fixed until Bribery of public officials is finally made illegal.
such an economic model tends to be more robust, innovative, and ultimately less resource-wasting
*snort*
Which is why every “Socialist***” country has better internet speeds, safer food, better cars, health care and phones…because our economic model is just so darn rebust and innovative, and less resource-wasting.
But until we realize that insurance as a voluntary pool of contributors drawing money out when the occasional bad thing happens is no longer an accurate paradigm for our health care system…
Since, as noted above, this no longer applies to anything involving the entire Insurance Industry, health care is just the Canary in the Coal mine as it were.
and realize instead that we need to find a way to make sure that all citizens have access to basic health care services (the definition of which, of course, is part of the debate), we’re not going to get much further in the discussion.
Correct, but this will never happen until there is a total and utter collapse of entire system, or the Insurance Industry (and every industry for that matter) is no longer considered a legal “person” and able to bribe our government representatives to work against our best interests. Nothing will be done until another 1929 scale collapse happens, and the Heathers in D.C. suddenly notice that all the safeguards that were put in place by FDR have been removed for the “Greed is Good” crowd to be able to freely plunder the nation. Maybe at that point things will turn around and finally be fixed.
***Using the GOP definition of socialist, which is every other industrialized country that is not the U.S.