Healthcare/Health Insurance: what is the actual problem?

Discussion in 'West Mall' started by BrntOrngStmpeDe, Mar 27, 2017.

  1. BrntOrngStmpeDe

    BrntOrngStmpeDe 1,000+ Posts

    Not an expert by any means but it seems to me that when we talk "healthcare" we are really talking health insurance and the corresponding costs. It's not the quality of healthcare but the affordability and/or access. Has anyone seen a thoughtful proposal on a solution? I did a quick google and only found critique's of the other sides proposals.

    I'm not a fan of a new entitlement program nor a government run healthcare system but I'm also not a fan of so many people being without insurance or financially destroyed due to a medical event.

    Does anyone fully appreciate why more insurance companies are not available in more states? Why are there so many pockets where there are only 2-3 providers?

    Is it an actual "too much reg" problem or is it an artificial barrier to entry imposed by "friends of insurance"?
     
  2. Musburger1

    Musburger1 2,500+ Posts

    There are a lot of problems. Off the top of my head:

    1. Too much insurance. For virtually every transaction, part of the bill is going toward support staffs at both the medial facility and also the insurance company. It would be comparable to a trip at Jiffy Lube for an oil change and making a $20 co-pay. Jiffy-Lube then bills car your insurance company for $100. If you don't have car insurance and just walk in, Jiffy Lube charges $500 for the oil change. And if you have car insurance the monthly premium doubles in order to cover every possible bit of maintenance on the car.

    2. Cartels and Monopolies. This is how $3.00 epi-pins rise to $500 in just a few years.

    3. Copyright restrictions. That same medicine in India or Mexico that cost $10 cost $300 in the US. Why? Because it's illegal to produce or import a generic brand for X years.

    4. Not disclosing the price until after the fact. How much will it cost? We'll find out after the operation. Also, the price varies from person to person.

    5. Government capture. Health care is now 17% of GDP. Pharmaceuticals and Insurance companies have a lot more "free speech" (money) to lobby Congress than you do.

    6. Our demographics are aging and a high percentage of the population is too fat. Given those factors, more treatment is needed resulting in higher insurance costs.

    Two people that have written about health care costs would be Charles Hugh Smith and also Karl Denninger. Below are links to their most recent articles written yesterday.

    http://www.oftwominds.com/blogmar17/sickcare-broken3-17.html
    http://market-ticker.org/akcs-www?post=231941
     
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  3. Seattle Husker

    Seattle Husker 10,000+ Posts

    I don't understand it either. Clearly there are some insurance companies working in multiple states. Kaiser Permanente, based in CA just bought Group Health, based in WA.

    It makes sense that insurance companies in rural states would be fewer. For example, how profitable is it to service the State of Wyoming? Health care providers overall are probably challenged to reach profitability due to the sparse population. Or, how 'bout Mississippi with it's statistically obese and lower income population? How profitable is that? Don't insurance companies need to negotiate rates with hospitals/clinics/doctors? The cost of doing that in large sparse states must push beyond profitability.
     
  4. Musburger1

    Musburger1 2,500+ Posts

    I'm not sure what sparse population has to do with profitability. I do understand why a state like Mississippi would be a problem because there isn't any money there to suck out.

    As long as the insurance company can keep raising premiums to cover the escalating costs, they are going to be profitable. However, once a point is reached where that is no longer possible because there is no longer enough people with the means to pay (or enough government funds available to pay) then the game is over. We can't be far from that point now.
     
  5. mchammer

    mchammer 10,000+ Posts

    It's about covering poor and lower middle class without interfering the market for regular folks who have health care.
     
  6. iatrogenic

    iatrogenic 2,500+ Posts

    The biggest problem is the idea that everyone should "have" health insurance. This thinking ignores the fact that there are costs associated with providing a product or service, and "everyone" cannot afford that cost. There are no costless solutions to insuring those unwilling to pay for insurance, therefore, insuring those individuals will cause prices to increase. The same argument could easily be used with any product or service. For example, "everyone should own a home" is the thinking that lead us to the late 2008 economic collapse, which was due to government interference in the mortgage markets.

    If someone can't afford health insurance, a home, or a college education, the Democrats believe it is their duty to give them those services at no or little cost. They simply attach those that cannot afford the product or service to the productive members of society that must bear the cost, but fail to require the freeloaders to behave responsibly, share in the cost, or in some way compensate the paying members of society, which raises the costs Two examples; (1) hospitals must serve those with no health insurance regardless of the underlying reason they did not purchase insurance, and, (2) people have the right to forego buying health insurance until they have a pre-existing condition.

    The fallacy that a few goobers in our government can somehow substitute their limited knowledge for the total direct knowledge of society that has been gained by millions of transactions in the health insurance marketplace is another big problem. Frankly, no one has the necessary knowledge that would effectively improve the results of the marketplace, although the Democrats are happy to act as if they do have that knowledge. Requiring some members of society to involuntarily pay for others is usually done with false language such as "rights" to health insurance or home ownership.

    Democrats are engaged in a never ending ideological crusade that involves correcting any discrepancy between the world as it exists, and the world they envision. They keep trying to bend reality into line with their thinking, but reality keeps proving to be too damn stubborn. A few examples of the results of their efforts are declining educational standards, slower economic growth, rising crime rates, greater unemployment, broken homes, and soaring rates of teenage pregnancy.

    In summary, the feasibility of any program is irrelevant, and personal responsibility is to be ignored.
     
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  7. Musburger1

    Musburger1 2,500+ Posts

    What other countries beside the US do not provide universal health care, but rely on a market system? Are their any? And if there are countries which provide health care using the free market, is insurance even part of the system? If not, I wager costs are a small fraction of what they are here for the same services. That's why people will pay for a flight to India in order to have a procedure they can't afford here.

    As far as health care not being a right and it being impractical to have a system that can provide for everyone, what does it say for the current state of affairs when not only socialist European countries provide universal health care, but also poor countries such as Cuba, which now has a longer life expectancy for its citizens than the US?

    Fifty years ago, medical costs in the US were in line with the rest of developed countries. Then, crony capitalism took hold and now medical costs are the leading cause of bankruptcy. What went haywire?
     
  8. ProdigalHorn

    ProdigalHorn 10,000+ Posts

    The problem is we're in a society now that's convinced we can medicate and treat our way to immortality. We have more treatments than we've ever had, we buy more drugs than we ever bought, and we still don't actually take care of ourselves because we medicate for that. So we spend massive amounts of money on health care, and we want all those things covered.

    If we were willing to break it down into a basic health insurance plan, a catastrophic plan, and provide more flexibility on what we wanted to cover in our insurance, we might be able to manage the cost. But as it is, the socialized models I've heard about basically are that you cover a bunch of stuff, deny coverage whenever you can (government plans have a higher denial rate than private plans, last I saw), and then when you run out of money, your doctors close up shop for the year and go camping.
     
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  9. UTChE96

    UTChE96 2,500+ Posts

    This is the biggest part of the problem IMO. If the majority of folks carried a high deductible plan it would help reduce costs while ensuring people were covered in case they got very sick. The market does not work very efficiently when there is a middle man (insurance companies) who only cares about taking his cut. I am a fan of taxing the hell out of any health insurance plans with low deductibles and co-pays to make them nearly obsolete. It's a necessary evil in order to get market competition back into play.

    I like point 4 as well about full disclosure of prices but I believe that will eventually happen if people start paying out of pocket for their routine medical charges. No one ever cares to ask up front how much a service costs because they just pay their co-pay.
     
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  10. Mr. Deez

    Mr. Deez Beer Prophet

    Like I've said in previous threads, we have conflicting and irreconcilable priorities. We want a free market to maintain competition and keep costs down, but we also don't want anyone to be denied care due to inability to pay. Pretty much every problem with our healthcare system arises from that conflict.
     
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  11. Phil Elliott

    Phil Elliott 2,500+ Posts

    The problem with health insurance that covers everything is that it makes people not care what any procedure costs. They pay for insurance, or their employer does, and then it's gimme gimme gimme they want it all and do not care what is cost. If people had to shop for each procedure, and pay out of pocket in the hopes of being reimbursed later, then perhaps they would shop and demand to know the cost up front, which they do not do now, as pointed out. When I start getting flyers in the mail saying we are having a special this month on knee replacements, then the market will be in play to bring down prices. To say we have a market system now is BS, there is no competition for my business going on.
     
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  12. Musburger1

    Musburger1 2,500+ Posts

    So you have to conclude health care cannot be a right in a free market economic system. Two factors that exclude even more people in the US health care system are:
    1. We have a society with a great deal of inequality which means a high number of poor people.
    2. By trying to include more people, we expand insurance coverage which raises costs astronomically.

    The same principle holds true in education. By allowing access via guaranteed loans to anybody who can breathe, the cost of education has skyrocket.

    Health care cost is the biggest stripper of wealth in the US. Student loans are second.
     
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  13. Musburger1

    Musburger1 2,500+ Posts

    I think what is becoming evident is that a hybrid system - one that tries to implement free market elements while simultaneously requiring the "state" to take care of everyone - is the worst system of all. Either go 100% market or 100% socialist. Health care and education are disasters in process.
     
  14. Mr. Deez

    Mr. Deez Beer Prophet

    They have a lot in common. You have a commodity in which there's a third-party payer (or effectively a third-party payer in higher education) with unlimited resources (the insurer or the government), and the ultimate purchaser (the patient or the student) thinks he has no choice but to purchase the commodity. That's a toxic combination for creating a very inelastic demand and therefore high prices. Throw the government into the mix to enable preferred interests to exploit the system to make a lot of money for little effort or risk, and it gets even worse.
     
  15. iatrogenic

    iatrogenic 2,500+ Posts

    So we have come back to the fact that the government screws up everything it sticks its nose into. Hopefully, that is not a surprise to anyone.
     
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  16. iatrogenic

    iatrogenic 2,500+ Posts

    It says the same thing that it says about the state of affairs in Russia whose citizens "enjoy" Universal Health Care but live an average of six-years less than Americans.

    If having a "middle man" doesn't work, why don't all health providers bypass them? Possibly because the middlemen with a profit incentive are more efficient at what they do than the health providers could ever think about being. Why are there "middlemen" in virtually every product market that exists? The answer is "efficiency". The outcry against middlemen is not new. It is, in fact, true that middlemen serve the poorer members of society more so than the wealthy because they can aggregate the demands and preferences of the poor to bid against the wishes of the wealthy.


    What is a "great deal"? You have always ignored the transient nature of income and constantly shifting income levels of the populace in your statements. You also ignore causation.

    This ignores the fact that such plans are much more expensive for the purchaser, who has made a decision to buy such a plan. Why tax someone already willing to voluntarily buy a better insurance program? You should be more concerned with allowing people to buy the exact coverages they want, and not, as Prodigal Horn stated, be forced to buy a "package" of coverage the buyer does not want, as is the case in Obamacare.
     
  17. UTChE96

    UTChE96 2,500+ Posts

    Depends on what you mean by "work". Health providers probably do not mind insurance companies at all. A middle man allows them to continue negotiating higher prices and profit margins since all insurance companies do is pass the cost on to the consumer in the form of higher premiums. My goal is to reduce the escalating costs in the health care industry. The best way to do that is to have the consumer pay for most services out of pocket.

    There are benign middlemen in a supply chain such as retailers which are not a problem. They provide a service and receive a fair compensation for that. However, middlemen that actually replace the consumer at the point of purchase such as health insurance companies result in inflation. Can you imagine if we had food and grocery insurance companies. What would be the impact to prices if everyone just had a "copay" at a restaurant or supermarket? Not a perfect example but the principle is exactly the same.
     
  18. iatrogenic

    iatrogenic 2,500+ Posts

    If you had 100 middlemen competing for business, do you think prices would go up or down? Do you think you, as an individual, could negotiate a better price for a particular surgery than a middleman that represents thousands of individuals?
     
  19. UTChE96

    UTChE96 2,500+ Posts

    Definitely individuals because at the end of the day its their money. Also, several individuals may decide that the surgery is actually not needed when they see the true cost of it. But if you just pay a low deductible plus your copay then why not take advantage.

    Insurance companies have their place but its not to pay for routine health care costs.
     
  20. Musburger1

    Musburger1 2,500+ Posts

    Several things.
    First, the lifespan of Americans has begun to decline, whereas in Russia, it is now increasing. This is partly because the economic level in America for the bottom 50% has worsened whereas the Russian economy bottomed out in the 90's. Other developed countries aren't seeing the decline in lifespan that we are because they don't have the degree of inequality. If you don't believe that equality gaps are greater in the US and increasing, try researching under terms inequality or genie coefficients.

    By a "great deal" of poor people, I mean a high percentage of the population, much higher than in Japan and Western Europe, that is subsidized, thus transferring costs to policy holders as well as to "the state."
     
  21. iatrogenic

    iatrogenic 2,500+ Posts

    You certainly make some unusual statements, and yet again ignore the transient nature of being poor. You also don't define a "great deal" of poor by using the term "high percentage", which is subjective. Also, to what "gap" are you referring? The top 50% vs the bottom 50%, or some other statistic that fits nicely with your claim? Go ahead and post the evidence, especially about the U.S. lifespan getting shorter.
     
  22. Musburger1

    Musburger1 2,500+ Posts

    Type "percent in poverty" in a google search and you get the paragraph below. Transient or not, at any given time this is the percentage or absolute number of people that strain the system. Whether these figures are representative of a rotation of people or a static number isn't relative in the context of the discussion. Hopefully you can comprehend the significance of my point.

    Current estimates on poverty in the U.S. The official poverty rate is 13.5 percent, based on the U.S. Census Bureau's 2015 estimates. That year, an estimated 43.1 million Americans lived in poverty according to the official measure. According to supplemental poverty measure, the poverty rate was 14.3 percent.

    See also this:
    https://www.google.com/amp/s/www.wa...pare-on-child-poverty-the-u-s-is-ranked-34th/

    And this:
    http://www.prb.org/Publications/Articles/2002/PovertyintheUnitedStatesandOtherWesternCountries.aspx
     
  23. iatrogenic

    iatrogenic 2,500+ Posts

    I cannot think of a example of any company in America that sells services and products on a large scale that would not reduce their price to sell more volume. The reason that is true is the profit to be gained. An individual just doesn't have the buying power to negotiate significant discounts. Just look at your medical bills. They break out the normal hospital charges for a surgery, and the price they are charging the insurance carrier. A recent, factual example I have seen was a normal hospital charge of $70,000 for a nephrectomy that was reduced to less than $10,000 via insurance company negotiation.
     
  24. iatrogenic

    iatrogenic 2,500+ Posts

    I will address this, but what about the other claims you made?
     
  25. Musburger1

    Musburger1 2,500+ Posts

    In India, the cost for this operation ranges from $4000-$7000.
    https://www.medicaltourismco.com/nephrectomy-surgery-abroad/

    Your statement that lowering price to create more sales means mor profit is often erroneous. Once your per unit cost (in this case the average cost to insure someone) falls below the per unit premium, you begin losing additional money for each person you add on.

    In the case of health care, the more broad the coverage, the more sickly (less insurable) the additional people are likely to be and the more I'll need to hike the price for the entire pool to allow profit.
     
  26. UTChE96

    UTChE96 2,500+ Posts

    With all due respect, that's just incorrect. Companies care about profits and profit margins. If reducing price reduces profit then no rational company would do so. Furthermore, the key point is one of value drivers. Who has the strongest value driver to reduce costs - insurance companies or the consumer. This really is not even a close call.
     
  27. Monahorns

    Monahorns 5,000+ Posts

    UTChE96, I think iatrogenic's mistake is that he doesn't realize that consumers don't have to negotiate cost as a collective to drive prices down. All we have to do is make informed buying decisions individually and when enough people do, competition for the market comes into play.

    But he is right middlemen do often identify inefficiencies in market allocation or access and perform a valuable task. But I agree with you, health insurance companies as they operate today don't seem to me to be traditional market facilitators.
     
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  28. UTChE96

    UTChE96 2,500+ Posts

    Well said Monahorns.
     
  29. iatrogenic

    iatrogenic 2,500+ Posts

    This would be true if there were no competition, but that world doesn't exist. Mass purchasing power is what made Walmart. I see, and have seen, price cuts everyday for many years in efforts to make big sales. If you spend $15million a year buying concrete from supplier "x", your per yard price will be substantially lower than if you only spend $1million. The same transactions occur in every industry. It is just basic economics, and you are right, it isn't a close call.

    Concerning healthcare costs, you act as if insurance companies don't have incentives to reduce their pricing. It is possible that you have never sat in an insurance renewal meeting and been presented with multiple health insurance company quotes from multiple insurance agents, but you surely understand that the lowest price will win the business subject to coverage being similar. I can state for a fact that large brokers, in an effort to win business, will take zero commissions (i.e. write the business net of commissions) on very large insurance programs with the sole hope that they will get a profit sharing check from the insurance company after the expiration of the policy. There are literally thousands of insurance brokers and companies competing for business, and that competition drives costs down.

    Actually, I do agree with this statement (well, not the mistake part). In other words, buying products from competitors due to price differential will bring the price of competing products down. However, this process does not exclude the fact that I will be still able to buy products at a lower price if I buy in bulk regardless of the industry.
     
  30. Run Pincher

    Run Pincher 2,500+ Posts

    Yes, the system is far too complicated for simple answers but we could start with some basics. First, health insurance should be rated like car insurance. You have a few tickets and/or accidents you get put in a high risk pool and pay out your azz. You're 100 lbs overweight with diabetes and high cholesterol the same should apply. Rate on BMI, cholesterol, blood pressure, etc. This would also serve as motivation to get yourself in shape and that alone could reduce costs significantly.

    Also, I've never understood what makes people think that even people are required to purchase health insurance that they will do so. It certainly hasn't made everyone carry auto insurance.

    Second, simplify transactions such as eliminating co-pays and only having about 3 choices of coverage. Gold plan pays 90%, Silver plan pays 80%, Bronze plan pays 60% and nothing outside of that. The drug monopolies must be eliminated also. Pharmacy has the highest profit margins of any industry. Patent life needs to be cut in half.

    The ideological attitudes that everyone deserves what some have busted their butts for all their life will have to change too, but it won't. Not only does giving everyone something only some have earned discourage effort, but it also drives up the quantity demanded and thus shifts costs upward. Of course personal accountability is something the left disdains so much actually implementing something that would require accountability and reduce costs is virtually hopeless.
     
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