Wednesday, June 4, 2008

The Proper Role of Health Insurance

Poll a hundred Americans and ask them what the purpose of health insurance is. The majority will tell you that it is important to have health insurance in case something happens to them medically that they can’t afford.

The general understanding of insurance is as follows: A large number of people make periodic, relatively small payments (insurance premiums) to a common fund. The payers do so with the understanding that, in the off-chance that physical hardship should strike, they will have access to the common fund so they won’t be ruined financially. Each payer must anticipate that they will probably not ever get back the money they put into the system. They are paying for insurance- the assurance or security that should something really bad ever happen to them, there will be funds to cover the medical care necessary.

The system makes sense. Each individual payer parts with the money paid as periodic insurance premiums, knowing that they will probably never see that money again. They are paying for the “just in case.” Their payment leaves them with enough income to cover their standard of living, and it is worth a small sacrifice to prepare for the future. They feel they are doing something responsible and they probably are.

Contrast the generally understood, common-sense version of insurance with what Americans are doing in practice. Americans forfeit significant percentages of their income, either personally or through their employers, to cover a different kind of medical insurance. The money paid is not dedicated to in-case-of-a-rainy-day medical problems. It is paid to insurance companies to cover routine prescriptions, health screenings, runny noses, ear aches, and allergies- health situations not in the least bit unexpected or catastrophic.

Comprehensive insurance moves beyond covering just the rainy-day emergencies. It expands beyond- is more comprehensive- than a catastrophic plan. It serves to allocate and manage routine medical payments and spread those medical costs among the customer base. Comprehensive insurance buyers pay insurance companies to manage their funds and even make some medical decisions for them. These managerial decisions include which medications they can purchase, which doctors they can see, and even how much money they can spend on medical expenses in a year.

The majority of Americans have bought into the comprehensive insurance system. But it is apparent that Americans are not happy with the system they are practicing. They gripe about the costs of their premiums. They mutter as they pay hundreds of dollars per person per month for health insurance. They rage when after paying a hefty premium, they are stuck with a co-pay at the end of each doctors visit. They complain when their insurance will not allow them to buy their medications of choice. Why, after dropping $250 as an insurance premium, should the payer still have to pay out $40 out of pocket as a co-pay for a $150 visit?

Americans have forgotten that they are no longer paying for the insurance of possible catastrophic problems. They are paying for comprehensive management of their every-day health problems and every-day health expenditures. That comprehensive management costs money. That comprehensive management requires extensive manpower. In fact, Americans are paying the salaries of nearly 500,000 health insurance personnel with their insurance premiums. That is the salary of 500,000 individuals that they are covering in addition to the cost of their medical care with each monthly payment.

Comprehensive insurance is not for all Americans. In fact it probably isn’t for most Americans that are now on it. Many Americans pay for a policy, thinking that it will somehow save them money. The brutal truth of the matter is that the average American MUST by all the laws of logic, mathematics, and physics pay more money for their health insurance than they would otherwise pay if they directly managed their health care. In using comprehensive health insurance they are paying to have medical decisions made and their medical funds managed, a service most Americans would probably rather perform themselves. In so doing, they are covering the salaries of nearly 500,000 health insurance employees (see reference). How could they save money in the process?

In addition, we should not forget what the insurance industry costs the clinics. To maintain contact with insurance companies and maintain a current understanding of the ever-changing policies, medical practices must hire individuals especially for working with insurance companies. Primary care clinics often must hire MULTIPLE “insurance people” per physician to work with insurance companies. Thus American consumers are doubly charged for their health insurance: once when they pay for comprehensive services with their premiums, and a second time when clinics raise their rates to cover the manpower to correspond with insurance companies.

And so, in a time when America looks to decrease spending on health care, suggestions to legislatively increase the numbers covered by comprehensive insurance should appear absolutely ridiculous. Assertions that comprehensive health care should become mandatory should appear perfectly insane. Those who make such suggestions either do not understand the nature of health insurance or have sinister and damning plans for America’s future.

Rusty Scalpel

Monday, June 2, 2008

Free Market Physician's Response to an Invitation to Investigate the Wyden-Bennett Bipartisan Universal Health Care Bill

My thought- a terrible idea.

Why? It doesn't address the real issues in health care. The real issue is the rising cost of health care itself. America is fixated on health insurance, thinking that solving insurance problems somehow fixes problems in the medical system.

It doesn't, though. Increasing the number of individuals covered by insurances simply continues to bloat the insurance industry. That's just another level of administrators to pay- another hand reaching into the pocket. The addition of a another level of bureacracy can in no way reduce the cost of health care. The rising costs of medical care cannot be blunted by the insurance industry- it can only be further accentuated by the salaries of insurance employees.

In addition, making the insurance required limits individuals' control of their own health care and limits automony of physicians and other health professionals.

Consider the money spent by physicians performing unnecessary tests and procedures covering them from liability and conforming to insurance companies requirments. Now imagine them conforming to the requirments of a government subsidized and controlled insurance industry by which every American citizen is covered. I foresee an astronomical and loss of autonomy and money. I would consider the autonomy (both of patients and physicians) the most shameful of the two losses, since it would be the loss of the true means for solving health care problems.

The plan to maintain employers' contribtutions to 2006 levels is all fine and well, except it presents the prospect of either the federal government (and thus the taxpayers) coughing up the difference between 2006 rates and future inflated insurance costs OR the now federally-funded and embraced insurance industries locking down their reimbursments rates to health care providers. Since medical market economics have been legislated out of the picture, that is a very real possiblity.

Providers are already in a fix as the federal government does not fully reimburse them for Medicaid patients. If the plan goes through, essentially all patients are medicaid, and providers find themselves subject to the whims of insurances companies and senators as to whether they will actually be fully reimbursed. We think, poor physicians, they won't be able to make any money. But the real problem will be, poor America, it no longer has any health care.

The plan is simply a numbers game. The senators from Utah and Oregon say that they can make 2+2=3. But at some point 2+2 must equal 4. That difference will have to be made up.

Rusty Scalpel

Canada, 30th in the World Heath Care Ranking

While Canada ranks 30th in the world for health care according to the World Health Organization, United States ranks only 37th.

World Health Organization's Health Care System Rankings

1 France 2 Italy
3 San Marino 4 Andorra
5 Malta 6 Singapore
7 Spain 8 Oman
9 Austria 10 Japan
11 Norway 12 Portugal
13 Monaco 14 Greece
15 Iceland 16 Luxembourg
17 Netherlands 18 United Kingdom
19 Ireland 20 Switzerland
21 Belgium 22 Colombia
23 Sweden 24 Cyprus
25 Germany 26 Saudi Arabia
27 United Arab Emirates 28 Israel
29 Morocco 30 Canada
31 Finland 32 Australia
33 Chile 34 Denmark
35 Dominica 36 Costa Rica
37 United States of America 38 Slovenia
39 Cuba 40 Brunei
41 New Zealand 42 Bahrain
43 Croatia 44 Qatar
45 Kuwait 46 Barbados
47 Thailand 48 Czech Republic
49 Malaysia 50 Poland
51 Dominican Republic 52 Tunisia
53 Jamaica 54 Venezuela
55 Albania