Are Health Insurance Companies the Villains?

Hold the insurance companies accountable. Remove them from between you and your doctor. No discrimination for pre-existing conditions. No dropping your coverage because you get sick. No more job or life decisions made based on loss of coverage. No need to change doctors or plans. No co-pays for preventive care. No excessive out-of-pocket expenses, deductibles, or co-pays. No yearly or lifetime cost caps on what insurance companies cover.

— Nancy Pelosi, Speaker of the House of Representatives

So, when is the last time you heard about a life insurance company dropping someone's coverage because he got AIDS? Never happens. What about jacking up someone's life insurance premiums after the insured has a heart attack? Not a chance. How about dropping coverage just because a person changes jobs or retires? No way. Ever heard of a life insurer interfering with the doctor-patient relationship — say, pleading with the providers to keep the patient on life support so the company can delay paying the claim? Ridiculous.

Then why does the market for life insurance work so well while the health insurance market seems so dysfunctional — even when the same insurers are in both markets? Answer: because of politicians. Politicians who think just like Nancy Pelosi thinks.

Strange what desire will make foolish people do

For some reason (not well understood by me) politicians have largely left the life insurance market alone. As a result, in that market people face real premium prices that reflect real risks. The market is basically a free market and it works the way you would expect a real market to work. It meets peoples' needs and does so at minimum cost.

The health insurance market, by contrast, is so heavily regulated that it is a stretch to even call it a market. The small group market is a complete creation of government policy. It wouldn't exist at all were it not for government. Large companies basically can't buy health insurance. They're all effectively self-insured, whether they realize it or not. Basically, more than 90% of people with health insurance never even see a real premium reflecting real risks.

The closest thing to a real market is the individual market. But because the tax law discriminates against this type of insurance, people tend to be in this market for short periods of time. With a small market share to begin with and a transitory customer basis, insurers have weak incentives to innovate and experiment. And even in this market regulation is pervasive. (There are many mandated benefits and you can't buy across state lines, for example.)

The absence of real prices creates perverse incentives on both sides of the market. Buyers will tend to underinsure when they are healthy (and don't plan on using many services) and overinsure when they are sick (and plan on using a lot of services). On the seller side, insurers will try to attract the healthy (on whom they make a profit) and avoid the sick (on whom they incur losses). After enrollment, the plans will tend to overprovide to the healthy (in order to keep the ones they have and attract others) and underprovide to the sick (in order to encourage their exodus and discourage any new ones). When people pursue their own interests in this market they invariably impose costs on others and that leads to innumerable social problems.

Comments (76)

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  1. Brian says:

    Excuse me but the author is completely wrong on the life insurance/AIDS example. It happens regularly and I am just one example of that. If you develope HIV you will be dropped from both health insurance and life insurance, no appeal allowed. Anyone believing otherwise is simply being ignorant. I haver had HIV for 22+ years and when I was first diagnosed I was dropped immediatly. I am not allowed to get any lefew insurance what-so-ever. I am waiting until I turn 50 (another 6 years), so that I can get on one of those life insurance plans that asks no questions and demands no medical tests. BUT if you are not 50 then you are routinely refused coverage and if you have coverage when diagnosed you WILL be dropped. Just the facts of life.

    Not only will being diagnosed HIV/AIDS get you kicked off insurance (health and life insurance), but you can be fired from your job becauise of insurance. In 1995 BC/BS threatened tyo drop coverage for the entire buisness until they fired me and a few “un-desirables”. Completely legal and there is no re-course but to get fired and start from scratch. Never forget that insurance holds a legal monopoly, and without competition or regulation they can, and will continue with raising costs, dropping coverage, and running every facet of life.

  2. Richard Salomone says:

    If Brian bough a life inusrance policy befopre he contracted AIDS and neither concealed nor misrepresented his health then once the policy is in force after two years it is incontestable. Brian is simply mistating the reality of life insurance udnerwriting. If he gets his health insurance throgh his employer then there is no underwriting and he is nerolled in the plan and if he changes jobs he cannot be excluded for a preexisting condition aslong as he has had continuous insurance coverage with a break of no more than 63 days. Being diagnosed with HIV/AIDS will not get you “kicked off ” life insurance and if your employer colluded with a health care provider to fire you or just decided to fire you to get you off the plan then in most cases you do have COBRA as long as you can afford to pay for it. If you think Inuisrance holds a legal monopoly, just wait until the government “covers” you and “rations” your care by age, condition and “circumstance. There is no real free lunch. You should have access to health insurance but no one gets a guarantee of good health. You do not have to wait until age 50. There are non-med plans out there at your prsent age. Non Med does not mean that they will not ask you health questions on the application. You get less than optimum coverage and you pay more because it is non-med, meaning no medical exam or blood or urine analysis. Brian, go speak to a knowledgeable insurance rep.

  3. Devon Herrick says:

    It's not just politicians who misunderstand the role of insurance. Patients often complain when they are not allowed to buy insurance at a low cost despite having expected health care utilization that would far exceed the annual premiums. Consumers who would never expect Walmart to hand out free groceries somehow become annoyed when health insurers in the individual market won’t offer free maternity riders (worth $12,000) to would-be moms ready to start a family. In order for insurers to sustain a loss on some enrollees, insurers must have many more enrollees whose costs are less than the amount they pay in. Otherwise, it’s merely an income transfer scheme.

  4. Brian says:

    Been there and done that. Unfortunatly the reality of the experience with insurance far outweighs any “claims” to the opposite.
    I had life insurance before I was diagnosed, the length opf time between being enrolled and the diagnosis was over ten years, my parents started the policy when I was young, Yet not a month went between my diagnosis and my being dropped. I consulted a lawyer, and was told quite blatantly that there was no legal recourse against the insurance company.

    AND why should I have to wait for a government plan when I already am facing a monopoly block? The fear of the future is there but it holds nothing in comparison with the reality of right now. I would rather hope for the future than settle for the reality today. ALL evidence points to the strangle-hold of insurance over the lives of Americans. Economy, healthcare, life-insurance, jobs, housing, satelitte tv, and the list goes on and on. I would rather fight for the hope of millions that meekly allow the status quo to continue un-abated and un-abridged which will be the case if conservatives have their way. Remember that these people don’t pay a dime for their insurance, and they don’t have to worry about healthcare when losing their jobs scince that healthcare insurance is for life. These politicians have no personal stake and as long as the money keeps rolling in from insurance, they have no desire to change a thing. The sad part is that we, and they, are helping insurance to continue to ruin lives. Not just continue the status quo but applaud the insurance industry for tactics that got organized criminals put away for years.

  5. Woody Runner says:

    John, the reason politicians have stayed out of the life insurance business is simple…no amount of largess can curry favor with dead people.

    Keep up the fight!

  6. Steve says:

    DownsizeDC.org would like to get the Federal government to pass a law permitting you or your employer to buy insurance regulated by other states. This would at least end disparities between State insurance regulations. Individuals and employers would be able to shop for better deals across state lines, and in the long run, it would put pressure on state governments to liberalize their insurance regulations. It would obviously not fix some of the problems being discussed here, but at least it would make health insurance function more like a ‘market’ than it does right now.

  7. Marjorie says:

    Brian, I feel for you. But don’t expect many anti-health reform advocates to listen to you; they refuse to listen to the thousands of stories like yours. They want so much for the pure free-market solution to be the answer that the willfully ignore data that contradicts them.

    I had a friend who was diagnosed with stage 4 cancer at age 22. She had insurance, but still ended up in bankruptcy, because it was a policy with high copays and low maximum benefit.

    But she could have dealt with the bankruptcy at 22; what was really terrible was when she realized that she was not only uninsurable, she was unemployable. She started work at two different small businesses, and they both very sadly said they had to let her go, because keeping her on was driving everyone’s health insurance premiums so high that it was going to drive the business out of business. After beating cancer as a young woman, she wanted to be able to live a life, but realized that she was always going to be constricted under our current system.

    I work in my family’s business; we have an older work force and have had several people with chronic conditions. We are teetering on the edge because of health insurance costs. We cannot attract the employees we must have without benefits (top-drawer consultants won’t work without them), but the costs are atrocious.

    I am so tired of people ignoring the realities.

  8. Marjorie says:

    Steve, the problem with your solution is that state regulations are the only thing protecting many consumers from hidden gotcha clauses. Consumers are expected to navigate small tomes, filled with legalese and cross-references to hidden tables or other voluminous appendices. It is almost impossible for many people to figure out if it’s the coverage they need unless they have a medical degree.

  9. Ray Gitmo says:

    John, many thanks for all the insightful articles on the Health Care debate.

    Apparently today the Obama administration has finally cast its fate in this whole debate. They have decided to go down Demagoguery Lane and shoot for the insurance companies since this seems to them to be the easiest target out there.

    The fellow who writes with the Brian handle would appear to be part of the effort. On the one hand, his arguments are so mindless and such gross deviations from reality that I kind of think they would not use such uninformed agents. On the other hand though, there is none other than Nancy Pelosi spouting total BS about insurance companies, calling them “the villains” and using the same easily checked untruths about people being dropped from coverage because they got sick.

    Well, I am at ease knowing that in this country a vigorous free press will not allow demagogic pols to get away with blatantly misleading the populace and…Oh s__t, we are in real trouble now!

  10. Marjorie says:

    Ray Gitmo, are you saying that Brian relating his story is an ‘argument’ that ‘deviates from reality.’

    Go to any place that treats AIDS patients and ask them how many were dropped from coverage or forced out of jobs. Before you talk about deviating from reality, try to look at the reality these people face–as well as people (and their families) with diabetes, Down Syndrome, cancer, and a score of other conditions.

    For these people, their only option is to descend into poverty so they can get Medicaid. There is no way to be middle class unless you can work for a government or a big business. No starting a business. No working in the small business you love. Those options are closed to you.

    The private market refuses to serve these people, and you will not acknowledge this reality. ‘Removing regulations’ will not induce insurance companies to take on riskier patients, and you are deluded if you think it will.

    The reason we don’t regulate life insurance is twofold: 1) we know plenty of people can’t get life insurance, but it’s no going to destroy all chance of their living a decent life, so our consciences are not stirred and 2) death is death, whereas the levels of complexity that can be built into medical insurance are astounding. If life insurance companies started writing policies that would only pay if an individual died on certain days of the month, you would see some regulation.

    The regulation responded to some very real abuses, and if we remove those regulations, more people who THINK they are insured will end up bankrupt. As it is, 2/3 of bankruptcies have medical bills at their root, and 70% of those people HAD INSURANCE.

  11. Bohn Allen says:

    John,
    Excellent observation. Health insurance is very over-regulated. In fact for the most part it is no longer insurance. If the current health care reform goes through with a public option and the current rules placed on the insurance exchange, we will no longer have insurance. If guanteed issuance, guaranteed renewal, mandated benefits, no exclusions and price controls are put in place, we are now talking about entitlements, not insurance. If the private companies can’t actuarially determine their risk, how in the world can they possibly price their policy to make sense? Over time they will have to be subsidized or go out of business. Guess where that leads us? You guessed, a single payer government run system! It will default through the back door.

    Your idea for individually selected, purchased and owned insurance using Health Savings Accounts with pre-funded long term savings is a much better idea.

  12. Bart Ingles says:

    “The closest thing to a real market is the individual market. But because the tax law discriminates against this type of insurance, people tend to be in this market for short periods of time.”

    This seems to me to be an over-generalization. If you’re healthy, and work for a large employer (or for many small employers), the tax incentive for accepting group coverage should just about match the cost differential between group and private coverage.

    It may be that N.C.P.A. is much healthier than the average small group and therefore has insurance costs closer to what could be obtained on the individual market. I suppose one could say that current tax law discriminates in favor of healthy small groups as a whole, as well as in favor of unhealthy employees belonging to large groups.

  13. Bart Ingles says:

    “The private market refuses to serve these people, and you will not acknowledge this reality.”

    The private market does what it’s required to do by law. If you favor guaranteed issue, then why not simply advocate for laws requiring this? Guaranteed issue is guaranteed issue whether the insurance is private or public. Privatization is neither necessary nor sufficient to achieve this end. It’s only being advocated as a way to obscure the fact that nobody knows how to pay for all the consumer-visible reforms that have been proposed.

  14. Patrick Skinner says:

    I’d like some details from Brian because his story isn’t possible in Texas. A life insurance policy is a unilateral contract – one sided. The insurance company CANNOT change it in any way without the owners persmission. The incontestible clause assures the owner-insured that even if they die of cancer years after the contract was issued, the ins company cannnot deny the claim stating the insured should known they had cancer 15 year earlier, etc.

    31 years in the insurance business and I’ve never had an insured dropped from coverage, never had a group cancelled, and with out legal system, any employee who felt discriminated against by their employer would be rich from the lawsuit.

    Without specifics, I’d say Brian isn’t telling the truth. I’m afraid Brian is making things up – does he have the courage to give verifiable facts in this forum, or is he afraid he’ll be found out to have fibbed? If I can verify his story, I’ll be happy to mea culpa in writing that I was wrong – will he?

  15. Kevin Delaney says:

    I am pro-free market. I’ve come to the conclusion that insurance is the problem.

    The insurance model bases care on the experience of a group over a year.

    What we really need is a system that gives people the ability to match resources to needs over their whole lifecycle.

    IMHO, the ideal structure is a thing called The Medical Savings and Loan which encourages people to save in times of health for spending in times of need along with loans to handle unexpected circumstances.

    http://www.MedicalSavingsAndLoan.com

  16. Val says:

    Brian…there is definitely more to your story than you are saying. I have been an insurance consultant for 17 years, and that type of scenario happened once in those years, when the client lied on the application in order to get the coverage. You can’t get insurance after you are diagnosed. those are the protections put in place for those of us who obtain it and pay for it before we get sick. If all insureds were like you, there would be no insurance at all.

  17. John R. Graham says:

    John Goodman asks why politicans have not intervened in life insurance (beyond regulating solvency and forms). If we accept/assume that politicians will run anything and everything if we let them, it’s a little mysterious that we allow them an almost perfect monopoly over K-12 education and are moving towards allowing them a monopoly over access to medical services.

    And it’s not just the U.S.: The same tendencies are in every democracy. And yet the government does not offer everyone “universal” public housing or a public food supply.

    I’ve come to believe, counter-intuitively, that the government finds it easier to take over complexity than simplicity. It is very difficult to discern cause and effect, inputs and outputs, in either K-12 education or health care. Both are ridden with uncertainty, and this allows politicians to scare us that we cannot manage them on our own.

    In the case of groceries or housing, for example, the correct response to hunger or exposure to the elements is easily determined, even by the least educated person: Get some food and a roof over your head. If the government tried to monopolize the food or housing supply in a democracy, its failure would be immediately obvious.

    Regrettably, it is not so easily observed in health care.

  18. John Seater says:

    Marjorie,

    You make a lot of assertions about the market not acting as you would like to see it act, but you neither explain why any of that happens nor tell us why your preferences should govern what the market does. In your last post, you say:

    “The private market refuses to serve these people,…”

    That simply makes no sense. There are literally dozens and dozens of insurance companies, entry into the market is close to free, competition seems to reign, yet you say that nobody is willing to exploit an unrealized profit opportunity. Health economics is not my specialty, but I nonetheless will bet you dollars to donuts that in fact there is no profit opportunity and that you have left out some important aspects of the picture, either hidden costs or a market failure.

    If the market is not serving some segment of the population, it because private companies find it optimal not to do so. In the absence of a market failure, private optimality is equivalent to social optimality (see the First Welfare Theorem), and you have no case. However, maybe here is a market failure. If so, you need to explain what it is so we can figure out the best way to fix it. Merely ranting against the market on the basis of factually unsupported sob stories is an inadequate approach to rational problem solving.

  19. Bob says:

    It is more to the point to compare Government Health Insurance Plans to commercial ones.

    As Malcolm Sparrow testified to the Senate sub-Committee on Crime, all Government run health care payments are based on meeting preset criteria and if all these “match” paying providers as fast as possible is the goal – no questions asked. In other words Government health plans work on the exact opposite payment criteria then commercial insurance plans do, causing the vast difference in claims cost of 3% for government plans and eigth times that percenatge for commercial plans that question claims. Mr. Sparrow testified fraud was somewhere between 12% [the last fraud amount claimed by Clinton in 1997] and 60% of total costs and most likely 20% to 30% [which Sparrow and HHS found to be in 1993].

    What if the difference between America’s GDP being twice that of other industrialized countries was shown to be caused simply due to waste, fraud and abuse? Wouldn’t anoher Government Program be savaged just lime the existing ones are well known to be? And with no ability to question risk, wouldn’t any new public option just focus on keeping everyone happy, happy, happy? That is until all insurance plans are bankrupt.

    But before that happens what programs, drugs, services would be cut first and to what degree? So the only question is one of time, for one more federal drug plan will quickly be scavaged by waste, Fraud and abuse as all the others now are.

  20. Marjorie says:

    John Seater, the private market refuses to insure people who had cancer as children or who have diabetes or epilepsy or a whole host of other conditions because there IS not profit in doing so. There is too much risk.

    However, it is nice to see you declare that private optimality is equivalent to social optimality. Clearly, since there is no profit in insuring the sick, that means it is socially optimal to let them die, or at the very least force them into the poorhouse with no hope of improving their lot. I never realized that. I feel so much better now!

  21. Gregory S. Isaacs says:

    I don’t know what reality you live in. You need to find out the reality that the rest of us live in. Once again, I urge you to send out mystery shoppers.

  22. Dallas Salisbury says:

    John.

    FYI. Five of the six largest health insurers are not in the life insurance business. The only one that I think is is CIGNA. Second FYI. The things you mention in the life area are illegal under state insurance laws. The things you mention in health insurance are legal in a majority of states. Gov’t is heavily involved in both insurance markets. Not meant as pro or con, just as a response to your question vis the two markets.

  23. Don Levit says:

    Bob:
    Your comments about government plans working on the exact opposite payment criteria of commercial insurance points out the difference between business and charity.
    What Marjorie seems to be advocating is charity in lieu of a win-win situation, a business-type arrangement.
    What I would like to see insurers do is to provide insurance to all comers, but to do so in a way that both the insurer and the insured benefit over the long run.
    If the benefits outweigh the contributions, to too great an exztent, this is where government (charity) comes in.
    Don Levit

  24. Christopher Gregory says:

    I tend to gag on government over-involvement in most areas. But insofar as the health care system in the U.S., my primary issue with the “free market” system stems from clearly demonstrable facts that the health insurance companies amply demonstrate that they are “profit-before-patients” motivated. This has facilitated many, many abuses as insurers pursue profits while making quality, affordable coverage unavailable or difficult to obtain. The individual marketplace is a pathetic joke. It offers no recourse for those who are self-employed, i.e. insurers cherry pick. I am for reform that doesn’t just try to employ the same tired old Republican mantra of using tax credits to make everything palatable, but instead reforms the egregious activities out there that create waste and obscene profits for avaricious private health insurers. At the same time, lest we demonize insurers into oblivion, we must recognize that far too many Americans are fat, lazy and over-indulgent to the point that our health care system is overburdened by those who are victims of their own excesses. That’s America and we shouldn’t cringe at the facts. We must find a way to put everyone’s skin into the game by making lifestyle choices count in how we allocate costs of insuring health – or better still, how we make costs reflect positively how individuals have obligated themselves to the pursuits of good health. Then, we must redesign the entire health care system into a new spectrum of delivery and accessibility to the lowest-cost, yet most effective places to receive care, tied together by an efficient information technology system that helps us avoid the rampant waste we are experiencing.

  25. John Seater says:

    Marjorie,

    I don’t have the time or the space here to teach you basic welfare economics, but here is the main result. In the absence of market failures, the market serves the needs of the public in exactly the same way that a benevolent social planner (which is what you fancy yourself to be) would. That is a well-established result for which Gerard Debreu won the Nobel prize. The result breaks down if there is a market failure, but then you need to tell us what it is, which you have not done so far. You also seem completely confused about what insurance is. It is not an entitlement scheme but rather a mechanism by which the fortunate (those who stay healthy) subsidize the unfortunate (those who get sick). People who choose not to join the risk pool early and then get sick are playing games with adverse selection. If you force society to subsidize those people later, you are rewarding them for their earlier selfish behavior. (It is ironic how often it is the well-meaning attempts to help that reward destructive selfish behavior.) What is the justice in that?

    Of course, your next reaction is going to be “the poor.” Poverty is a totally different issue and can be addressed with dismantling the private health market. The poor can be helped with health vouchers, as they are helped with food stamps. I have no problem with that. With their subsidy, they then can buy health insurance from the provider of their choice and with the options of their choice, thus joining the risk pool in a responsible way. The current liberal alternative of completely demolishing the private health market has no justification and is almost sure to make things worse rather than better (see, e.g., Canada or the UK, as well as the US Post Office and the ever so compassionate IRS).

    This is not a matter of left or right political ideology but of basic welfare economics. There isn’t anything particularly hard about it, except that the best solution is the one that happens to involve the government the least and so gives the politicians the fewest brownie points for their next election.

  26. Mike Bond says:

    With risk-based premiums health insurers will develop plans specifically for the sick.

    http://webreprints.djreprints.com/2067740571170.pdf

  27. Brian says:

    Marjorie-
    Thanks for the voice of support. Unfortunatly you are getting just a little taste of what anyone that isn’t a carbon copy of Limbaugh, Hannity, or Levin is subjected to.

    As for prooving that I was dropped because of a new diagnosis of HIV, I already know where that ends up. There is no evidence acceptable. A letter? Would be nice but after 22 years I don’t have that anymore and neither would most people. Remember that this was in 1987. Right at the end of the Reagan years in which internment camps for patients seriously considered, the life expectancy of newly diagnosed was at best 2 years, and before medicationsd were available.
    What if I produced the actual person that dropped coverage? The response is usually that this isn’t a matter of insurance failing but of human failing. The point being that there is no evidence which you or anyone else would consider.
    I happen to have experience and you have stats and opinions. I am not a lobbyist, I have no wealth to speak of other than personal relationships. I don’t have a pocket legislator and I certainly do not care for Pelosi who sticks her foot in her mouth every chance she gets. That does not change the reality of living with HIV and being un-insurable. That does not change the fact that people with HIV are dropped as a matter of routine by insurance.
    Besides thsis isn’t a matter of life insurance anyway,(I didn’t really care after finding out that there is no legal recourse against insurance companies for the most part because I felt my life over already and yet for some reason I have stayed alive, maybre to defend the lives and honor of other HIV patients who have been mistreated, turned out, and robbed by insurance). This is a matter of health-insurance which is completely different and operates differently.

    And the most important reason why this whole discussion doesn’t matter is that nothing will change and insurance will continue to raise premiums and lower coverage. There will be some sort of bill that is produced and conservatives will applaud it. What it will most likely contain is letting insurance companies handle the reforms and coverage issues themselves. That is to say that nothing will change and insurance will go on as they have always done These aren’t scare tactic predictions, (unlike the terrorism practised by conservatives), but are predictions based in historical reality. History shows that insurance will not “reform” their buisness models, history shows that the status quo will lead to more un-insured, higher cost (premiums), less coverage, and higher numbers of people falling below the poverty line.
    Insurance is a monopoly, protected against anti-trust laws nationwide, and any monopoly is against the free-market but conservatives won’t admit that fact because it is inconvenient for them to actually tell the truth for once in their lives.
    Insurance MUST be reformed and scince insurance companies will not do it themselves it isd up to either us the public, (unlikely because of the services involved which are nessessary for life), or government, (also unlikely because most politicians are bought and paid for regardless of their party affiliation).

    Talikng about the proof issue—- I showed at least 4 examples where conservatives had the chance to put their claim of wanting reform into action. An action called for by a conservative and the response every time? NOTHING!
    there are 3 possibilities for in-action
    1) The legislature felt that the iossue of reform was un-nessessary (they didn’t care to rock the boat)
    2) The problem of healthcare wasn’t that important (amercan lives are not important)
    3) The problem was not that big a deal (minimizing, and passing the buck)

    So either they didn’t care enough to change things, or they decided that the American publiuc were not important. Now when I hear conservatives claiming that they have wanted refporm and still want reform, I have to wonder where all the care they felt was 8 years ago? The only answer that makes any sense is that conservatives do not and have never wanted healthcare reform. As long as conservatives have their way—- reform will be meaningless and above all useless.

    I will admit when I am wrong but you’d sooner get blood from a rock as get a sincere apology from any conservative.
    I could really care less whether you think I am lying because I know what I have had to live through and live with. I went from middle upper class economically to sub-poverty in a matter of days, I have seen hundreds of friends die while waiting on healthcare and I have seen hundreds more destroyed financially by insurance. I have lived it and you can only talk about what you think or rather you can only parrot what you have been told to parrot.
    You may have 30 or 40 years insurance experience but are you serious when you say that if you don’t know, or haven’t heard of insurance dropping people over HIV issues, it can’t possibly happen—- not even once??

    Point being that from the beginning of this round of attempted healthcare reform, conservatives have lied, twisted facts, terrorized people, minimized the problem and if all else fails assasinate the character of your opponent. We have seen it all before in 93 and every time the issue of reform comes up you can bet your last penny that conservatives will stick to this script.

  28. Mark Kellen says:

    The problem you have all described is that our money is transferred to third parties (Govt or Insurance) and then we lose control. To regain control we must allow as many people as possible to retain control over their money and pay their own day to day medical bills. Insurance should be for the large problems.

    The second problem is our employer based insurance system. We need a system where people own their own policies through non-employment based groups such as civic clubs or churches. Employment based insurance and tax laws are relics from the 1940′s and as is painfully obvious, no longer function. Mr. Obama fails to see this.

    Insurance regulation should be greatly reduced except for the following. If you have owned your policy for at least two years, it can never be cancelled. Children are automatically covered if the parent has insurance and as soon as the child becomes an adult, has to be accepted provided the parents have maintained coverage. Rate increases would have to be addressed somehow to prevent excessive charges to someone who has faithfully paid premiums for 30 years and suddenly gets very ill. This could be done with a secondary policy insuring you or your family’s premium in the event you develop a severe chronic illness. It is called Health Status Insurance.

    If you force insurance companies to sell policies to people regardless of illness (guaranteed issue), this rewards bad behavior as people would not buy insurance until after they get sick.

    Mandatory insurance plus guaranteed issue guarantees a single payer government system within 10 years and is, I fear, Mr. Obama’s back up plan as is evidenced by his new verbiage about insurance reform. If insurance is mandatory, then my high deductible plan will cease to exist as the government will increase required benefits so much that none of us can afford private coverage and are left with only the government. The worst of all possible worlds as most of our present health care costs are due to government rules and regulations including easy lottery mentality tort rules.

  29. Brian says:

    Mark-
    you said-
    “The problem you have all described is that our money is transferred to third parties (Govt or Insurance) and then we lose control. To regain control we must allow as many people as possible to retain control over their money and pay their own day to day medical bills. Insurance should be for the large problems.”

    I would agree and also add that insurance for “large problems” cannot be canceled unilaterally by insurance in the event of catastrophic illness, rather than the present “drop like a rock” model of buisness.

    You later talked about more insurance to pay premiums. So in fact you are espousing paying TWO premiums, (one for the original policy and another to insure the insurance”. Why should we pay twice or three times for what we should recieve from a single payment? It is a sad commentary when someone needs to buy insurance to insure that their original insurance actually works as promised by insuranbce companies. It speaks volumes about how crooked the system is right now. Its another example of insurance “nickle and diming” every facet of life. The optimum would be for health insurance to act responsibly and with caring rather than a profit-only model, that health insurance could be owned by the purchaser rather than remaining the property of the seller (like every other kind of insurance policy around), that health insurance gets out of the doctor’s office (those accountants didn’t go to med school so how do they know what treatments/medications are needed or nessessary), that health insurance would actually fulfill their half of what boils down to a buisness contract and not seek to escape from their obligations at the first chance they get, that health insurance truly be the security that it was always designed to be rather than an excersise in legal theft.

    It would be great for people to manage the “day-to-day” medical costs, and most do. But with the bills concerning even minor illnesses and trewatments, day-to-day costs ARE the equivalent of major illnesses. When bills are routinely in the hundreds for a doctor check-up or a doctor visit for those inbetween check-up times. Costs are even higher, in the thousands, for a minor hospital issue. The hospital claims that they are charging for the care of the un-insured but what they don’t mention is that MOST of the “un-covered” or “un-paid” medical costs of the un-insured are paid by the government, yet another example of overcharging.
    Pharmacuetical companies state that part of their high pricing includes the cost of R&D when the fact is that 95-100% of R&D research costs are covered already through taxpayer funded grants. There is little to no buisness cost and yet they charge you for it anyway! Yet another example of overpricing. These are some of the areas where corporate decisions directly drive the costs up. Does overhead and admin costs have an effect? yes they certainly do but why not focus on the criminal activity and the fraud against the public? You hear about de-regulation and the savings that would create. Yet what is not saud is that the savings are to buisness— to the insurance or pharma company and NOT to the consumer. History shows that neither health insurance nor Pharma have ever passed savings on to their consumers. They have pocketed those savings and raised prices anyway. that is why de-regulation will not convert to lower costs to the consumer. Unless they have a mandate to change their buisness– they won’t. Profit is the only consideration in corporate America. It has been yet another lesson in the mis-direction by insurance and spouted by their employees….. congress.

  30. John Seater says:

    Brian,

    I don’t feel like wading through your diatribes to figure out what in them makes sense and what doesn’t. However, your whole string of diatribes is rendered suspect when you make wildly false assertions such as the following, which appeared in your last contribution:

    “Insurance is a monopoly,…”

    With several score insurance companies and nearly free entry, there is no way in the world that insurance is a monopoly or anything like it.

    Also, you are guilty of the same mistake as Marjorie, namely, railing against the market without offering any explanation at all of any market failure. The fact that the market does things you don’t happen to care for is not evidence that the market has failed in any useful sense.

    Finally, contrary to your last post, my disagreeing with Marjorie’s weak analysis is in no way disrespectful of her (and, by the way, she *still* has not offered any example of a market failure in the health market that would justify her assessment of it or of President Obama’s plan to remake it). If a little rational counterargument upsets you so much, perhaps it is you who has a problem with knee-jerk characterizations of other people.

  31. John R. Graham says:

    My question for Brian is: How would your life insurer even know you had HIV/AIDS? I got married at 42 and bought term life insurance for the first time because my wife does not work outside the home. I’ve paid my premiums for 5 years. I could have had a heart attack, HIV/AIDS, cancer, and been hit by a truck within the past five years and the life insurer would not be any the wiser.

  32. Ken says:

    Good question by John Graham. There is something a bit fishy about Brian’s story.

  33. Marjorie says:

    Mike Bond-

    You realize that article is talking about a Medicare program, right? That the money is all coming from the government? These are not fully private plans, they are public plans operated by private insurance companies.

  34. Marjorie says:

    John Seater-

    Your solution has several failures. First, what of people who are born with severe illnesses or develop them as children? They don’t have a chance to buy into the risk pool early. Or if their parents are just irresponsible…do we condemn a child to a life of poverty, no matter what their choices, because of the irresponsibility of their parents?

    And for now–what of the people who aren’t ‘poor’, but are still unable to afford health insurance? I know a woman who pays $36,000 a year for her family’s health insurance.

    Also, what is the appropriate punishment for a 22-year old who thins they can go without coverage for a few months while they are looking for their first job out of college, and gets diagnosed with a chronic disease? Is a life of poverty with no chance of climbing out really the best idea?

    There are many reasons a person may have to drop coverage briefly–the dire consequences those people face are not just, not good for our economy, and not the mark of a civilized society.

    And how do you address the fact that people WITH insurance are currently forced into bankruptcy. My family has had a string of serious though not catastrophic health issues (two childbirths and a partial colectomy after a bowel perforation). We HAVE insurance, the kind many people in small business have–high premiums, high deductibles, high copays. We have been in perpetual medical debt for the last three years, even though we both make well above the median income and were financially sound before this all began (put 20% down on a modest home, no credit card debt, no car loan, padded savings account).

    I am tired of conservatives sticking their head in the sand and giving these feel-good, utopian, solving-all-our-problems-is-easy-as-pie solutions.

  35. Bob Kramer says:

    John,

    I think your comments are a bit off base. You cannot equate Life Insurance to Health Insurance. One is a dynamic and the other is a static. Most of my fellow physicians are fed up with the health insurance companies practicing medicine; what doctors you can see, what hospitals you can go to, what medicines you can take and what procedures you can have. It can’t be clearer than that. However it is not JUST the insurance industry; as physicians we are responsible for some of the damage, the pharmaceutical industry is also guilty, and the hospitals must share the blame. And the government is in no position to play a role in the health care business EXCEPT for finding a way for every uninsured person, excluding those here illegally who don’t pay taxes, and have no commitment to the US, to have adequate coverage.

    We must develop a system that is win-win. Everything up to now has had winners and losers.

  36. Bob Kramer says:

    John,

    A little addendum. Life insurance can be as devious as health insurance. If someone tries to change or upgrade a policy, the insurance company has the right which they exercise freely to reject coverage, alter premiums, or put exclusionary riders on policies.

  37. Mike Bond says:

    Hi Marjorie,

    I am aware that Advantage Plans are for Medicare beneficiaries. My point is that these private carriers embrace the chronically ill when there is risk-adjustment in premiums. The aversion to signing up sick folks comes from community rating of premiums. This is one of John’s points in the blog. Are you arguing that these plans would not solicit business in the private sector from the chronically ill if private premiums were risk rated?

  38. John Seater says:

    Marjorie,

    I am not “sticking my head in the sand.” I am just informed about how the economy works, whereas you clearly are not.

    Children cannot join the risk pool. They also cannot fix their own meals, buy their own clothes, earn their own income, etc., etc. They rely on their parents to do those things. The failure of parents to insure their children is not a market failure. Taking care of the children of irresponsible parents requires some kind of social work, not the dismantling of the health care market. Indeed, the organization of the health care market has nothing at all to do with the remedy for irresponsible parents.

    I don’t know the woman you know who pays $36,000 a year for health insurance. That number is way out of line for most health insurance policy costs, which in any case are estimated to be about double what they would be if the government would stop imposing mandates on insurance companies to provide services that are not true insurance at all. Here are the facts that you may find inconvenient. Of the roughly 45 million US residents without health insurance, approximately 1/3 have incomes over $50,000, which puts them in the *upper half* of the income distribution. They can afford health insurance but *choose* not to buy it. No problem with them. Another 1/3 are poor enough to qualify for Medicaid but have not registered for the program. Because there is no need to pre-register to receive Medicaid benefits, they are actually insured even though they are reported otherwise. No problem with them. Of the remaining 1/3, approximately 1/2 are between jobs and go without insurance for less than a year, usually far less because in normal times the average spell of unemployment between jobs is about 4 months. No problem with them. That leaves a total of 1/6 of the original 45 million, or about 7.5 million. Do you really want to dismantle the private market that adequately serves 292.5 million people for the sake of those 7.5 million? Can you really not think of any other solution? Do you know that a large fraction of those 7.5 million (1/2 by some estimates) are illegal aliens? Do you want them to dictate policy?

    Your example of the 22 year old is really telling. You say he goofs up by not getting insurance, and then you wonder why I am not willing to destroy the health care market on his behalf. Are there any actions for which you will hold individuals accountable? Do you not understand that subsidizing irresponsible behavior encourages it?

    Finally, I was unaware that two childbirths constitute catastrophic health issues. My wife had two childbirths, and I did not notice any catastrophe either time. You seem very confused about what insurance is supposed to cover.

    By the way, you still have not provided a single example of a market failure in the health industry, much less one that justifies the kinds of changes you advocate.

  39. John Seater says:

    Bob Kramer,

    I agree that health insurance as it now exists is a mess and does all kinds of undesirable things. The reason, however, is not a failure of the market but a failure of government intervention in the market. Insurers are required to do all sorts of things by the government that they would not do if they could practice their trade freely. They also typically are highly restricted by state regulators in the premiums they can charge, both in terms of general level and also in terms of discriminating among different kinds of people. Brian, who complains he was dropped because he was diagnosed with AIDS, almost certainly was dropped because insurance companies in his state are prevented by law from charging him a sufficiently high premium to cover the risks he carries. It is the same with all these other restrictions. Insurance companies typically cannot charge what they must to make a profit, so they ration in other ways, including by telling doctors what to do. I agree wholeheartedly that it is a serious problem. The problem did not exist 50 years ago, so what has changed to make it appear now? The only change is that government at all levels has increased its interference in the health market and in so doing has made a real mess of things.

  40. John R. Graham says:

    With respect to children born with pre-existing conditions, there is no reason why health status insurance or incentive compatible guaranteed issue insurance (as described by Prof. John Cochrane and independently by Prof. Mark Pauly and colleagues) cannot be multi-generational.

    Right now we don’t think about this very much because we accept whatever health “benefits” our employers offer. However, if you were free to buy your own health insurance, you’d ask “What if I have a baby next year who is born with spinal bifida?” (or something like that) and you would not buy the policy unless the guaranteed renewability carried over to the next generation.

    There is no reason why actuaries cannot value this. Indeed, I understand that it exists already. Although I have never been in the health-insurance business, broker Bev Gossage of HSA Benefits Consulting in the Kansas City area informs me that the individual policies she sells have a “generation to generation” feature. I haven’t seen any data on how common such features are, and I’m happy to be educated by anyone who has.

    In a reformed system, with individual insurance as the market of first resort, I have zero doubt that they would be standard.

  41. Brian says:

    John seater-
    Insurance IS a monopoly and is protected from lawsuits dependant on anti-trust laws. (monopolies). is that simple and direct enpough?

    As for how my HIV diagnosis came to be knowledge, I called the insurance company to get an early payout of life insurance scince, at the time, my life expectancy was measured in a couple of years. It is a normal thing for those living with terminal illness to cash out their policy. does that also clear that up? I was honest and paid the price for that honesty.

  42. Brian says:

    As for failings….
    I don’t see how it can be any clearer.
    People pay a premium to insure that when they get ill, their whole financial health is not destroyed along with their physical health. Yet the failing is that insurance unilaterally cancels insurance and avoids paying out money for what is contracted. That is a failing.

    Another failing is pre-existing conditions. Many policies now accept pre-existing conditions. They will not cover any medical costs but they will certainly take a full year’s premiums. That is a failing.

    Another failing has to do with small buisness. Small buisness are being driven out of providing any health coverage at all. I’m not talking about those buisnesses that don’t meet the standards for healthcare, but those that provide benefits and everyyear have more overhead and finally the time comes where it is either go out of buisness or drop coverage altogether, forcing people to deal on a personal basis with insurance companies, pay higher premiums or live on cobra, (what a joke cobra is).

    These are 3 “failings” that I can think of right now. but even one failing is one too many.

  43. Marjorie says:

    John-

    When people have to switch insurance after changing jobs, they often end up paying policies that are’ way out of line for most health insurance policy costs.’

    Of the one third of people making $50,000 or more who ‘can afford health insurance’, many are people who have preexisting conditions, making their policies as expensive as nearly half their income. Even if they aren’t people have to pay $36,000 a year for insurance, a typical family policy is $12,000, close to 25% of a family’s income if they are making $50,000.

    Just because they make 50k doesn’t mean they can afford it. I know that is an ESPECIALLY inconvenient fact for the people like you who want to whistle past the graveyard.

    Also, by focusing on the uninsured, you are completely ignoring the massive number of ‘uninsured’–or the ones that are only insured until they make a claim and their company rescinds their insurance. 2/3 of bankruptcies are due in large part to medical bills. Of those, 80% HAD INSURANCE.

    The uninsured are just a part of the problem.

    You really think a 22 year old should be condemned to a lifetime of poverty because he went through a few months without insurance? Jeez, get some perspective. Someone who jaywalks may be showing bad judgment, but we don’t execute him. By not executing him, do we encourage jaywalking? There may be a hell of a lot less jaywalkers if we shot them all, but I don’t think any of us want to live in that unjust of a society. Your careless disregard for any small mistake or bad judgment shows a chilling disregard for your fellow man.

    Read my post again. I said the childbirths were NOT catastrophic. Didn’t even have a C-section. Yet the births costs $16,000 each. With my insurance, our part was $4500. I know I’m just some dirty little peon to you, and you laugh at the idea that $4500 is a big deal and many people can’t cover it, but when someone is already have to go without 2 months of pay while they recover, it IS a big deal.

    I don’t know why I am arguing, though. You clearly don’t really care what happens to anyone as long as you and yours are fine. The rest of us should just be happy with whatever scraps we can get.

  44. Marjorie says:

    Mike

    I am saying that if they were risk rated many people who need them couldn’t afford them, especially since many chronic illnesses interfere with people’s ability to generate income.

  45. John Seater says:

    Brian,

    In reply to your question:

    “Insurance IS a monopoly and is protected from lawsuits dependant on anti-trust laws. (monopolies). is that simple and direct enpough?

    No, it is simply wrong. Monopoly is the situation of a single seller. There are over 140 insurance companies operating in my state alone, and new companies can enter the market any time they choose. I used to live in three other states, all of which had lots of insurance companies and free entry. That is not monopoly or anything remotely like it.

  46. John Seater says:

    Marjorie,

    First, you are making some really wild statements. You now are saying that those with insurance actually are uninsured. You also are arguing that something that is unaffordable even to people in the upper half of the income distribution is somehow a merit good. With definitions like that, rational discourse is impossible.

    I do not regard you as a dirty little peon. I just disagree with you. Your assertions about what I care about are unfounded ravings. We have not met, so you have no basis for such accusations. I care a lot about poor people. My mother grew up in poverty. Your whole series of posts is shot through with such emotional attacks on those who disagree with you or take the time to debate the issue with you. You do not deserve further reply. I would suggest that you go jump in a lake except that you probably would accuse me of urging you to commit suicide.

  47. John Seater says:

    Brian,

    You clearly do not know what a market failure is. You also seem to be unaware that most of the “failures” you have been talking about in your posts either are merely outcomes that are not what you would prefer or, more importantly, the result of existing government interventions in the health market. None of those constitute market failures and so do not provide grounds for even more government interventions.

  48. Marjorie says:

    First of all, I am not writing ‘wild ravings.’ The statement that a large number of bankruptcies are due to people who had medical insurance emanates from a Harvard Law School Study published in the American Journal of Medicine.
    http://www.reuters.com/article/newsOne/idUSTRE5530Y020090604

    So don’t call my ravings wild, tell it to AJM.

    John, you are hiding behind economic terms so that it is not as obvious what you are saying, because you know what you are saying is odious. You say that it is ‘wild’ to assert that protection from financial ruin in the case of serious illness is something that everyone in society deserves. I don’t think the average person would call that a wild idea.

    Sorry if I overreacted, but after 3 years of struggling with medical bills, even though I pay close to $6000 a year in insurance premiums, it is annoying to have someone say that I am simply ‘confused’ because I think that insurance should be expected to cover a $16,000 hospitalization. Again, I think I am in the majority on that matter.

  49. Don Levit says:

    Bob:
    I agree with you that insurers face a lot of regulations and restrictions.
    However, there are 2 exceptions which insurers have not appropriately utilized.
    First, is the experimental policy.
    In Texas (where i live) and several other states’ insurance laws I have reviewed, insurers are allowed to develop experimental policies, policies which are not commercially available.
    The second exception is for 501(c)(9) insurers; part of their tax-exempt mission is to offer policies nor available commercially.
    Where is the innovation and creativity?
    Don Levit

  50. Miles says:

    ONe major reason that health insurance costs have gone up so much in recent years, is that the government has required them to cover more and more conditions, one cannot simply buy a catastrophic policy. This gets away from the whole concept of insurance. Insurance should not be designed to pay all of your health care costs, but should be there to pay for those situations that are catastrophic. There has been the comparison to auto insurance, that people are required to have auto insurance, and it isn’t very costly. That is for two main reasons, first, you can tailor the coverage to your needs, and secondly it is to cover other parties in the accident. Just think what auto insurance would cost, if you wanted it to pay everytime you had an oil change or other repair. The same principle applies here. Insurance should not have to pay every time you visit a doctor, or at least the co-payment should be raised so people have the sense that there is a cost involved in the process. This is the same reason people don’t know what they really pay in tax, since it comes out little by little from their checks. Try writing the check to the government once in a while and you will know. Finally, get the lawyers out, get tort reform now, this would drive costs down substantially.

  51. Brian says:

    John Seater-

    Okay so I looked up the definition of market failure and the definition is:

    “Market failure is a term used by economists to describe the condition where the allocation of goods and services by a market is not efficient.”
    Source: Market failure
    http://en.wikipedia.org/wiki/Market_failure

    Now I will take my 3 examples and match themn against this definition.
    1) Unilateral cancellation of policies when illness occurs.
    Well this may be expedient on a profit-only level but it is highly in-efficient to the consumer, the doctor that now has a loss on the books. Payments to physicians and hospitals by insurance runs in the months and years, this increases a downward force on healthcare and the providers, exerts a downward force on consumers without which, profits concerns don’t really come into play.
    In-efficient thus it meets the market failure test.

    2) pre-existing conditions.
    Is it really efficient, other than a profit only concern, to deny coverage while accepting premiums? The person in question may have real health issues that are not related to their pre-existing condition that left un-treated only get worse. That incurs higher costs to both consumer and inbsurance and every other person holding that insurance, (supposedly they cover costs for everyone thius the continuous need to raise premiums). It is highly in-efficient for insurance to link every single health issue to a pre-existing condition. It hurts doctors, hospitals, consum,ers, AND insurance itself.
    In-efficient thus meeting the “market failure” test.

    3) driving small buisnesses out of buisness.
    This is a win for the insurance companies who charge individuals more than they do buisness. However it is in-efficient to drive out small buisness because, according to economists, small buisness is the largest driving force behind job creation and our economic heath. To support driving buisnesses into bank-ruptcy is in-efficient so that also mneets the “market failure” criteria.

    So in essence I have proven my side and you have not.
    Insurance fails in both market failures and also in failure to meet contractual obligations. Yes I don’t like it and I do have a bias against insurance, I freely admit that. Having said that doesn’t change the reality that insurance is an in-efficient buisness that destroys both consumers and buisnesses as standard operating procedure.

  52. Brian says:

    As for the monopoly arguement, I wopuld ask you if these “140″ companies are actually seperate companies or are they rather subsidiaries of a parent company. Insurance groups boil down to very few actual companies.
    Evben if there were just one parent company— it is still legally protected against anti-trust laws. Insurance OWNS government, it OWNS the hospital, it OWNS the doctors.
    There are 50 BC/BS companies but they all answer to one entity. That one entity also owns other health insurance providers. Insurance IS a monopoly.

  53. John Seater says:

    Brian,

    No, you have proven nothing of the kind, but I do commend your initiative in making an effort to learn the concepts involved. Unfortunately, the definition you found, though correct, does not clarify anything because it does not explain the meaning of “economic efficiency.”

    It is far beyond the scope of this forum for me to give a complete explanation of the meaning of economic efficiency, but here is brief attempt at some issues pertaining to the health market.

    Believe it or not, I recognize that the private insurance market actually *is* inefficient because it inevitably faces one and possibly two market failures: it is imperfectly competitive because of adverse selection and moral hazard, which mean that information is asymmetric, and it is subject to an externality because of communicable diseases, which means that people are imposing costs on others without compensation (in particular, by passing diseases on to others). Those defects means the market will do an imperfect job of setting price and quantity and that government intervention that correct the defects in question is socially optimal. HOWEVER, those defects do *not* mean that anything else is wrong with health care or health insurance, and they offer no justification for the kinds of proposals in the current health care proposals being debated in Congress. An imperfect market is not necessarily a badly functioning market. (Do you always bake a perfect cake?)

    I don’t recall all your supposed examples of market failure, but if memory serves none of them has been an example of a true market failure except exclusion for preexising conditions, a phenomenon that many people misunderstand. Exclusion on the basis of preexisting conditions arises for two reasons: adverse selection and government caps on premiums. The adverse selection problem is that some people refrain from buying insurance when healthy and then when they get sick they would like to buy insurance to pay the bills. The problem with that is that they have not previously paid premiums and so have not shouldered their fair share of the risk. It is obvious that the insurance companies would go broke almost instantly if they could not exclude such people from coverage. Otherwise, nobody would buy insurance until they got sick, which would mean the companies would operate at a loss at all times and so could not survive. Government caps on premiums make it impossible to charge an appropriate premium from people with certain conditions that raise their risk of getting seriously ill in the future, as in your AIDS case.

    The latter problem is easily fixed by getting the government out of the health insurance business, not further in. Requiring everyone to buy health insurance seemingly would address the problem, but even such an extreme measure would be difficult to implement. What does it mean to “require people to buy health insurance?” How much insurance? Covering what conditions? Also, is the problem of adverse selection so severe that it justifies a universal insurance requirement? Just how many people are denied health insurance because of preexisting conditions? Not many because most people under 65 are insured through their employers (which, by the way, is a phenomenon originating in the private market, not as a result of government mandate). It makes no sense to me to destroy a market that serves the vast majority quite well to fix an imperfection affecting very few people. Moreover, most preexisting conditions would not prevent people from buying insurance in a free market but instead would mean only that such people would have to pay more than healthy people. My wife had cancer. In an unregulated market, that would mean that she would have to pay a higher premium if I were to change employers, not that she could not get insurance at all. That doesn’t even come close to justifying Obama-style socialization of the health industry.

    You probably won’t believe this, but most of us who oppose socialized medicine do so because we believe that the private market will do a better job than a government-run system at meeting the needs of the people, including the poor. We very much care about the welfare of everyone, not just the rich.

  54. Brad says:

    Marjorie,

    Unfortunately the AJM article you referenced is terribly biased. It also does not find 80% of bankruptcies by people with coverage a result of medical bills. From memory I want to say it was 67%. Here’s the fallacy in their finding…

    No where in the study was the question asked of the resondents if they lived within their means prior to the medical expenses being incurred.

    My bet is the majority of the people had bought homes they couldn’t afford, drove cars they couldn’t afford and had credit card debt prior to incurring the medical expenses they claim “caused” them to declare bankruptcy. I have no inclination to feel sorry for someone that lives beyond their means, gets sick and cries foul because they do not have any money to pay their medical debts.

    As for people with pre-existing conditions not being able to obtain health coverage, i’d suggest finding a good consultant or broker. Most states run high risk pools for people that do not qualify for medicaid, but also cannot obtain coverage in the private market. The reason that coverage costs so much is the insurer (your State in this instance) has to collect enough premium to pay the claims.

    The fallacy of a government run healthplan being offered alongside the private market is…it’s not going to be an even playing field. Private plans will end up subsidizing the public option to the point that experience (claims vs premium)get so out of whack the private market will crumble. In a nutshell, the private market has to run at the very least at break even. The public option can be run at a deficit [see our current government and all the programs it administers] through an unfunded mandate. So let’s see…the government will end up being the decider or who, what, when, where and how you are treated. No thank you.

  55. Brian says:

    John Seater-
    This is meant civilly and scincerely,

    You have really confused me
    You said in closing that
    “You probably won’t believe this, but most of us who oppose socialized medicine do so because we believe that the private market will do a better job than a government-run system at meeting the needs of the people, including the poor. We very much care about the welfare of everyone, not just the rich.”

    But yet in your statement you say-
    “It makes no sense to me to destroy a market that serves the vast majority quite well to fix an imperfection affecting very few people.”

    Now the last quote imlies that it would be better to do nothing and allow these “few” to go without, die off (as in my case), simply because we are poor, sick, or un-desirable.
    The fact that this is a main way of defending private insurance is grossly offensive. Not just from you, (and I again remind you that this is inquiry and the need for clarification rather than a personal attack), but from conservatives in general. How can you claim to care and then show through every action that you actually would rather we didn’t bother you with such petty needs. Even though I pay the same taxes, get no tax returns so its pure and one-way payment (tax-credits can never help me or the majority of the un-insured becuase we GET no tax returns), but I am not worthy of basic simple healthcare that doesn’t drive me further into a finacial abyss.
    Medicare???
    Great program and yes I probably qualify for it financially, but does that mean it is affordable? Not really, that is the part conservatives don’t understand. The requirements to KEEP medicare, earnings wise is extremely low. Usually so low that you cannot work more than 5 hours a week. That kills rent, food, and is a push ONTO a welfare life. That only deepens the hole, deepens poverty. In essence it is NOT affordable for the working, and those like me who WANT to work. I have had HIV for over 22 years. I have been full-blown now for over 15 years. Early, I was on social security, I lived on the government and taxpayer, food-stamps and all that. I didn’t want that. I am a productive individual who has fought for every thing I have. I have done it aagainst society’s pressures and biases. I have done it while racking up what amounts to close to 3/4 of a million on hospital and medication bills. I will never get out of debt, bankruptcy is a joke, it wopn’t change a single thing, the only thing it would change is yet more years of debt accumulation and more derision from society. Work insurance never covers me, private insurance never covers me, I work for minimum wage, and a bill of $5000, (a very tiny hospitalization and your there), is over half my anual income.(I’m glad I finally got a raise yet republicans are screaming over that fact seeing as how they fought so hard to keep minimum wages as low as possible and even tried to REDUCE that wage).
    This whole thing isn’t describing an “inefficiency”, it describes a disaster now and building. This IS a failure, it is better called an intentional raping of american consumers. This isn’t just about me but about MILLIONS of hard-working, decent people who are just trying to get by and who desperatly need care that doesn’t cost them. I know I can go to the ER anytime I have to but I also know that That will mean another 3-5 thousand and more harrasment and more times I get sued and have to face a judge and be embarrased just because I am sick! Just becuase some republican whines about socialism or communism or anti-free market BULL! The system isn’t just in-effiecient is is flat out broke and the warnings are ther that the number of un-insured will only rise if buisness continue as normal, that un-insurance leads directly and swiftly to poverty which creates a viscious downward spiral. Do nothing and you can very well become me, and in a heartbeat you and your children are bound into a poverty existance. Insurance will only continue raising prices— that makes sense profit-wise. They will never alter their model of buisness until forced to. Regular old me has no power against insurance companies, and I am being deserted by my government. If I could get the money to move to canada or GB I would in a heartbeat. Maybe then and only then could I ever hope to be secure health and wealth and barrel.

    The most hurtful thing though is to know the reality of life and be called the idiot, or too emotional. Another case of blame the victim. (I am not a victim its just a saying to illustrate the point, I mean I have lived for over 22 years after being goven 2 years max).

  56. Marjorie says:

    ‘Patients with multiple sclerosis paid a mean of $34,167 out of pocket in 2007, diabetics paid $26,971, and those with injuries paid $25,096, the researchers found.’

    That’s for people with insurance.

    A family making the median income, and living within their means, could easily be driven into bankruptcy by those costs.

    I stand by my statement; under our current system, insurance does not protect most middle class people from financial ruin if they get sick.

    Also, you says Pelosi is making it up that people’s policies are cancelled when they get sick.
    But I am sure these people are biased. Or they lied to Congress. These are uncomfortable things to believe, so let’s just not believe them, right.

  57. Mike Bond says:

    Marjorie is correct that under risk-adjusted premiums the chronically ill will pay very high insurance premiums. The solution to this is to subsidize the sick, not to overcharge the healthy. We know that the chronically ill often have numerous health problems. They are probably best dealt with by the “special needs plans” that allow groups of specialists to coordinate care for these people. You will get better health outcomes and more economical costs. The question is where to get the subsidy money from? A good start is to take the $200 plus billion in subsidy from employer premiums being tax free and reallocate that to individuals/families. Sicker individuals with lower incomes would receive large credits and the healthy folks with high incomes would get very little.

  58. Mark says:

    I’ve been reading a lot of claims on both sides of the health care debate.

    a synopsis of many comments

    Maintain status quo:
    “American has the best health care system in the world. Countries with universal care are unhappy with their system”

    Change health insurance policy:
    ” The health care system is inefficent, broken and many people are uninsured. Uninsured people use the emergency room when care is need and this increases costs.”

    So, I decided to gather data. As I was taught a long time ago… “without data, you are just another person with an opinion”.

    I decided to focus on (4) things:
    per capita spending on health care
    life expectancy
    infant mortality
    universal coverage (yes/no)

    See below for my findings. Let me know if my numbers are wrong.

  59. Mark says:

    Infant Mortality: US ranks 25th of 30 countries

    Rank Country Infant mortality rate (deaths/1,000 live births) Universal Health Care
    1 Sweden 2.76 YES
    2 Japan 2.8 YES
    3 Iceland 3.27 YES
    4 France 3.41 YES
    5 Finland 3.52 YES
    6 Norway 3.64 YES
    7 Germany 4.08 YES
    8 Switzerland 4.28 YES
    9 Spain 4.31 YES
    10 Slovenia 4.35 YES
    11 Denmark 4.45 YES
    12 Austria 4.54 YES
    13 Belgium 4.56 YES
    14 Australia 4.57 YES
    15 Canada 4.63 YES
    16 Luxembourg 4.68 YES
    17 Netherlands 4.88 YES
    18 Portugal 4.92 YES
    19 United Kingdom 5.01 YES
    20 Ireland 5.22 YES
    21 Greece 5.34 YES
    22 New Zealand 5.67 YES
    23 Italy 5.72 YES
    24 South Korea 6.05 YES
    25 United States 6.37 NO
    26 Poland 7.07 YES
    27 Slovakia 7.12 YES
    28 Hungary 8.21 YES
    29 Mexico 19.63 YES
    30 Turkey 38.33 YES

  60. Mark says:

    US ranks 20th of 30 countries

    Rank Country Life Expectancy Universal Health Care
    1 Japan 82.02 YES
    2 Sweden 80.63 YES
    3 Australia 80.62 YES
    4 Switzerland 80.62 YES
    5 France 80.59 YES
    6 Iceland 80.43 YES
    7 Canada 80.34 YES
    8 Italy 79.94 YES
    9 Spain 79.78 YES
    10 Norway 79.67 YES
    11 Greece 79.38 YES
    12 Austria 79.21 YES
    13 Netherlands 79.11 YES
    14 Luxembourg 79.03 YES
    15 New Zealand 78.96 YES
    16 Germany 78.95 YES
    17 Belgium 78.92 YES
    18 United Kingdom 78.7 YES
    19 Finland 78.66 YES
    20 United States 78 NO
    21 Denmark 77.96 YES
    22 Ireland 77.9 YES
    23 Portugal 77.87 YES
    24 South Korea 77.23 YES
    25 Slovenia 76.53 YES
    26 Mexico 75.63 YES
    27 Poland 75.19 YES
    28 Slovakia 74.95 YES
    29 Hungary 72.92 YES
    30 Turkey 72.88 YES

  61. Mark says:

    finallly, per capita spending on health care

    Rank Country Health Care Expenditure per person Universal Health Care
    1 United States 20,400 NO
    2 Luxembourg 19,381 YES
    3 Norway 16,366 YES
    4 Switzerland 15,367 YES
    5 Iceland 14,732 YES
    6 Germany 14,497 YES
    7 Canada 13,462 YES
    8 France 13,426 YES
    9 Sweden 13,232 YES
    10 Austria 12,900 YES
    11 Australia 12,146 YES
    12 Netherlands 11,683 YES
    13 Belgium 11,140 YES
    14 Italy 11,036 YES
    15 Denmark 10,650 YES
    16 United Kingdom 10,438 YES
    17 Japan 10,223 YES
    18 Finland 10,129 YES
    19 Ireland 9,691 YES
    20 New Zealand 8,884 YES
    21 Spain 8,215 YES
    22 Portugal 7,492 YES
    23 Greece 7,476 YES
    24 Hungary 5,077 YES
    25 Slovenia 4,720 YES
    26 South Korea 3,565 YES
    27 Poland 3,112 YES
    28 Slovakia 2,726 YES
    29 Mexico 2,266 YES
    30 Turkey 2,119 YES

  62. Mark says:

    so I gathered this data by myself; mainly through online government sources.

    Feel free to point me to more accurate data.

    If you feel like ignoring data, than you are also “just another person with an opinion”

    So, to both sides:

    Is our present system the best in the world?

    Conclusions
    ————
    30 countries were analyzed, all but the US had universal coverage

    1. Did the US system have the lowest infant mortality?
    No, US was 25th of 30 countries

    2. Did the US system have the longest life expectancy?
    No, US was 20th of 30 countries

    3. Did the US have the lowest cost per capita?
    No, the US had the highest cost.

  63. Joanna Carrol says:

    Most people have term life through their employer. It is not covered under COBRA so there is no continuation; it can be converted but not at the employer discounted rate. So, portable? No. I’ve never seen a case where an employee can convert, upon retirement, to whole life thru company plans. Maybe it happens, I’ve never seen it. Now, the tricky part with company paid life insurance for employees, is that if an employee is hospitalized and not “actively at work” and he dies, the life insurance company does not pay. Maybe in some plans they do, maybe it’s in the fine print somewhere, but I’ve never seen a carrier pay when an employee who has not been actively at work, dies. In my experience, most carriers do offer an optional ‘individual’ policy where the employee pays the full premium, via payroll deduction, for additional insurance, and I always encourage employees to do so. Thankfully, I’m citing only 2 cases where co-workers died due to illness and the employer sponsored portion of their life insurance was not paid because they were not actively at work, in spite of premiums being paid. My point, life insurance does have its own problems, and they are never ridiculous.

  64. Mike M says:

    Insurance reform has emerged as the flashpoint of the week in health care reform. Unfortunately the two sides are polarized into the status quo vs replace or compete factions. REFORM is necessary and possible but requires compromise as well as a paradigm shift.

    For Profit health insurers contribute significantly to the increased costs of health care in the United States and to ignore this issue only caters to their nearly omnipotent lobby. On the other hand private insurers are much more skilled at providing options for individuals and groups as well as promoting efficiency than is the government.

    The Medical Loss Ratio for insurance companies is 70-75% compared to about 95%% for medicare. According to Regina Herzlinger 5% overhead is typical for companies in Switzerland where a competitive highly regulated market exists. All working citizens are required to carry some form of insurance ranging from “catastrophic only” to policies with “all the bells and whistles”.

    I would suggest that regulated health care insurance similar to the Swiss system with costs overseen by health care equivalents of a Public Utility Commission could improve access and affordability without incurring excessive taxpayer burden.

  65. Neil H. says:

    Mark:

    You are wrong. Or at least you are relying on a study that is interpreting the data wrong. Check out the NCPA study “Do Other Countries Have the Answers?

    I don’t have the link handy, but it’s at this web site on the CDHC home page.

  66. KeepnItSimple says:

    This is a perfect example why everything run in this country is effed up and done with no common sense at all… only greed and profit… been saying for years that the people who run things in this country have more greed than intelligence ( no matter how many lame degrees they don’t or do have)… they’ve got the money to start a business but no common sense to run it… greed

    the person who wrote this thing just gave everyone the visual of it… he looks just like the same low life critters who run everything else in this country that’s effed up because they have a lack of common sense and intelligence over “me want more money”

    first thing i thought when i saw his picture was “he’s all about money” and not about anybody’s well being (and as usual im an easy reader call em right every time). That’s what health CARE really is, but NOT ABOUT in this country…. being physically and mentally healthy

    short and simple… THEY -WANT-YOUR -MONEY (premiums)

    anything else that actually has t do with the word HEALTH and requires the littlest common sense to figure out.. won’t happen

    perfect example?.. this guy that wrote this thing just asked why doesn’t health insurance work as good as life insurance? an answer i’d bet a 5th grader could give you… really simple… can’t believe i even have to break something this simple down – but not surised at all

    SIMPLE ANSWER: add the amount of people using their life insurance everyday compared to the amount of people using their health insurance… (even simplier) how many people are dying everyday on their life insurance policies compared to the amount of people who are getting sick on their health insurance policies

    you buy a life insurance policy and pay it every month of your life and then the company doesn’t have to pay out one claim later until 10 – 50 years down the road on most of their customers

    COMPARED TO

    you buy a health insurance policy and the next day the company has to pay a claim… the week after that they have to pay another claim…. every month after that they’re still putting money out for claims… they can’t PROFIT

    SIMPLE. BUT NO CRITTER ON THIS PAGE HAD ANY COMMON SESNE TO FIGURE THAT OUT

    my health is not your financial business (more lack of simple common sesne) and why we’re in the mess we’re in now…. Health “Insurance” should be called Health Business/ Profits instead… just ask this guy with the suit on in the pic… even he’d admit to that… unless he’s doing that “Deny Delay Defend” thing again they have to always do

    SIMPLE AS IT GETS: You – Can’t – Make – Peoples – Health – a – Business – They – Get – Sick – Too – Much. A business is supposed to make money, not give it out. (duh)

    Get out of my Health “services” Plain AND simple.

  67. KeepnItSimple says:

    The next dumb question out of this guy’s mouth is gonna be, “UMM UHH… Why does Car Insurance work better than Health Insurance… HUH tell me?” “UH HUH thats the politicians fault too”

    lol

    Something I’ll probably never need to make a claim for in my life but I’ll definitely be paying for ( going 15 plus years strong now and counting with no payouts from the company having to be made yet) now that’s a good BUSINESS

  68. KeepnItSimple says:

    My health and well being IS NOT your financial business.

    That SImple.

  69. Don Mehus says:

    Marjory is isolating chronic disease related to 75% of the nations 2.6 trillion dollars, from 25% of the population . which is a huge problem, but there need to be a rational dialogue to handle these seperate issues

  70. Ravi says:

    As a fmreor medical transcriptionist, I had to sign a statement of confidenciality every year, being told that this protected me from any lawsuit in case I made a mistake on a medical report. After typing and editing hundreds of thousands of reports over the years, I became appalled at the audacity of doctors who made requests to change wording, or ask for previous reports to be adjusted to cover themselves because they administered medications to patients who subsequently had allergic reactions, leading to infections, sepsis and sometimes even death. Attorneys for insurance companies, hospitals, drug manufacturers and doctors are part of the budget. This is a system without regulations or controls. We are a nation under the thumb of this conglomerate of greedheads and their lobbyists, so do not expect change. I am soon to be without any healthcare, now disabled, and soon to be evicted because my medical bills will force me into bankruptcy. I am looking forward to a retirement of debt, depression, and degenerative arthritis due to this greatest healthcare system in the world. My only hope is to sell everything and flee to Mexico, where houses are $700 a month, and visitors healthcare is $300 a year. Hasta la vista, Arnold!

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  73. samantha says:

    Some might and some may not becuase there are plenty of insurance companies in the market who provide Ideal medical care coverage which carry several different packages to connect the proper insurance policy with those who need them.

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  74. Julie says:

    Insurance companies may not be the Villains but am sure at one point of time they totally act as the villains by forcing us to pay the extra premiums without informing us about these thing at the beginning !

    http://www.medicaremichigan.com/

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