HEALTH CARE
I knocked on the trailer
door. An elderly man opened the door, and I introduced myself to him as his
caseworker. In 1960 I was a social worker assigned to Old Age Security in
Tulare County, and I needed to carry out an annual review on his case and perhaps
his wife’s case if they came due near enough to each other. In the course of
discussion, I asked after their health. He replied he had been having angina
attacks. He said he couldn’t afford to go to the doctor, buy medicine, and also
buy food. They chose to buy food. Social Security was just starting to kick in,
and there was no Medicare. I remember at the time thinking the man should get
as good a care for his heart as a wealthy man. Maybe the rich guy could get a
swanky room and food, but the actual medical care should not depend on how much
money he had.
Segue 55 years into the
future. Medicare and Medicaid have kicked in, but we still debate vociferously
the cost and availability of health care. I want to try to analyze this issue
to see whether we can find a more objective set of ideas.
1 – SOMEONE MUST PAY FOR
HEALTH CARE OR HEALTH CARE WILL NOT EXIST.
Actually, all the ruckus about the ACA, aka Obamacare, is
only about insurance: who pays who and how. The fuss has never actually dealt
with the cost. We repeatedly talk about reducing the cost of health care, but
we really mean reducing the cost of insurance. Let’s look first at the cost of
health care itself, then insurance.
In 1985 I went as pastor to
Hodge Baptist Church. In the congregation, there was a recently retired
physician. While visiting his wife in
the hospital I asked him whether he was completely retired or carrying a
smaller case load. He replied that he couldn’t afford to work part time. To do so,
he would have to pay for all the overhead: office, utilities, receptionist, and
nurse. As I remember he had estimated it would take $40,000 a year to break
even, and he didn’t want to work that much.
That was in 1985 dollars.
Most of my pastorates have
been in smaller towns with rural hospitals that struggle to stay afloat. People
prefer local hospitals for “normal” illnesses such as when flu or pneumonia
puts you in bed with an IV. But even in a 50 bed hospital, you can see how many
people must be paid and how many services offered. There’s at least one RN on
every shift on every unit (I know, they sometimes cheat), and LPN’s or aides to
give patient care. There will be a lab with at least one technician a shift,
plus an x-ray. Then most places have an ER, which is one raison-d-etre for local
citizens to demand a local hospital. Lots of lives get saved during heart
attacks and kids legs and arms splinted. Then there’s housekeeping, including
maids and floor moppers and waxers, and a maintenance guy or two. And you have
to keep up to date reasonably well with lab and x-ray equipment. Then you have
to pay utilities and insurance. On top of all that come the administrator and
clerks, perhaps more office personnel.
How do we pay for all that?
Well, the patient does. The
patients do. That’s why there’s a basic room fee. At the end of the day, we
have to collect enough money from all the patients to pay the salaries of
everyone plus all the other bills. If all these people and equipment total,
say, $350,000 a month, then we have to average that much in patient fees. Some
county hospitals may receive help from tax funds or various grants, but someone
somehow pays for it, or the hospital shuts down.
There is no free lunch.
There is no free health care.
No public figure I know has
discussed in the media how to reduce health care costs, only how to make
insurance affordable. That means we expect the insurance companies to pay for
our medical care. OK, but where do they get the money? We’ll talk more about
that in a minute, but right now let’s dive back in before the insurance comes
in.
How do we reduce the actual
cost? The actual amount charged each patient?
I’ve noticed only one thing
in the last 55 years, and you may not like it. Actually, I’ve only noticed in
the last 15 years since I became eligible for Medicare. I observe that every
bill I get has several columns.
First comes the charge for
the service. Example $150 office visit
Next a column headed
“Medicare allows” Ex - $100
Medicare will pay 80%
80
Patient may be charged
20
Note in the above example,
that the government set the prices. Now I am sure this triggers a game between
the med providers and the government – and other – insurance. If they will cut
my $150 fee to $100, what will I get if I charge $175? And this goes on all the
way up and down the line. Private insurance does the same thing, by the way. Plus,
they will add some to the cost for their profit, unless they are a mutual
insurance company. (That’s the theory anyway.)
Can you see any other way to
reduce the actual cost of medical care apart from government regulation? I know
the whole idea of regulation is anathema to the business world, because it
limits profits. In many areas I would agree, but medical care to me is an
exception. I still don’t think a homeless guy having a heart attack on the
street should get less quality care than a millionaire who lives in a
penthouse.
And yet – if we have
regulation, it must be intelligent regulation. I hear all the time people
having to postpone surgery while their doctors hassle the insurance companies
to get the surgery approved. I envision some high school graduate at a computer
feeding in the data of the patient and the condition and the surgeon’s
recommendation, then waiting for the computer to say yes or no. Few doctors
will prescribe antibiotics for a sore throat over the phone without having the
patient come in for an examination. And we make potentially life or death
decisions a thousand miles away by computer? Saying the surgeon on site with
years of training and experience doesn’t know?
We must have intelligent
regulation.
LOUISIANA DETOUR – Adjust this
discussion for your state. In Louisiana, we have what’s left of a state
hospital system that has been radically cut the last ten years along with
colleges, because of repeated budget crises. The theory is that the indigent
can go to one of several state hospitals scattered in major cities for health
care. These are generally attached to med schools or at least staffed by
residents from med schools. Every general hospital in the state must have an
Emergency Room, and each ER must treat any emergency who comes in. In actual
practice they must treat anyone who comes in, emergency or not, for fear of
lawsuit if they turn away a patient who subsequently dies or has a major
complication bring him back. As a result, many poor use ER’s as their primary
care because they can afford nothing else, or they don’t want to spend the
money when they can get it free. As a result, private ER’s do enough treatment
to make sure the patient is not critical, then ship them off to a state
hospital. Still, the high volume in the ER makes it very difficult to make the
hospital operate in the black.
But other issues affect costs
as well. So let’s turn now to pharmaceuticals and equipment.
DRUG COSTS
A guy bought a pharmaceutical
company that owned a critical drug for cancer care. He raised the price from a
barely affordable $100 or so to several thousand! In physics “every action has
an equal and opposite reaction.” I’m not sure if it was equal, but there was
definitely a major reaction, not to say explosion, from the entire country. Did
he assume insurance would cover the outrageous price? Did he believe that being
the only curative drug for that disease would force people to round up the
money? I don’t know. The last I heard the price went down, but not as low as at
first.
Personally, I take three meds
that total $5-600 a month. Medicare reduces the cost to be affordable, except
when it lands me in the coverage gap, aka “the donut hole.” Other drugs I take
have generics that cost only $2-10 a rx. Drugs are patented when they first come
out to protect them from other companies and generics, so the inventors can pay
for the research and developments costs which can be quite high.
A patent lasts for 20 years,
but may be issued at any point during the development process. Exclusivity comes
after FDA approval and prevents others from marketing the drug for, usually,
3-7 years depending on the type of drug. A company can spend hundreds of
thousands of dollars on research to discover new drugs, but after that
discovery, must spend sometimes more to test the drug in three stages, each of
which must be completed before moving on to the next phase. Only after the
third round of trials are successful will the FDA approve the drug to go on the
market.
It is reasonable for a
company to use its exclusive marketing opportunity to recover the cost of all
those scientists and lab work to bring the new drug to market. A problem
arises, however. Even though these companies are publicly traded, they do not
publish the cost of developing and testing the drugs. The funding of R&D is
largely hidden as a trade secret. That means we have no way of determining when
they have met the overhead on that particular rx and gone into profit. Nor can
we say what amount of profit is reasonable. Certainly as an end user paying
$300 for a script I might have a different idea than those who invest in that
company, not to mention the major owners and managers.
The same principle applies to
all medical equipment companies – AND THE DISTRIBUTERS AND PHARMACIES. A drug
store has to pay for the meds, plus the salaries of one or more pharmacist,
clerks, rent, utilities, and the like. The same is true of medical supply
houses. You can see there are several levels that must first break even then
make at least some kind of profit to stay in business. Each level from
Pharmaceutical company to wholesaler to pharmacy must make a profit, or the
owners would shut the business down.
What’s a reasonable profit?
How do you decide?
Who decides?
Market based economics would
answer that we should allow supply and demand to work. That works fine in many
industries where competition keeps prices down and responsive to market demand.
But what about the guy who jacked up a price out of sight because he had
exclusivity and NO competition.
Medicare Part D providers
deal with the situation by dividing drugs into different categories. Generics
they will mostly cover. Then there are “Preferred Drugs,” determined by the
company to be reasonable, so they discount these quite well. At least to the
donut hole. Then there are other drugs that the Med D people are reluctant to
cover. If there is a generic drug that does the same thing as a newer one, they
will pay for the generic, but not the newer one – or at least with a smaller
discount on the new one.
What this practice says is
the doctor cannot treat with the latest meds. If the patient wants the lowest
prices, he or she will have to accept five-year-old quality medical care. The
insurance position is understandable, and we’ll look at it in more detail in a
bit, but getting the cheapest medicine comes at a cost of quality care.
A little over a year ago I
had an attack of A-fib. Twelve years before that I had a heart attack and was
taking meds to manage cardio-vascular disease. The doc shocked my heart back
into rhythm and then changed me meds from a generic to two new meds to prevent
the new risk of stroke. These are two of the high-priced ones that Med D
doesn’t want to pay for. (Yes, there are
work-arounds, but this is already a complex discussion, so let’s not complicate
it further.) There are cheaper meds they used before these two came out, but I
can afford these, so should I take less than cutting edge treatment?
HEALTH INSURANCE
Now let’s look at how we pay
for all this medical care and drug costs. The really old-fashioned way, going
back 150 years or so, is the simplest. Cash. Or in the famed cases of country
doctors with chicken, eggs, vegetables and the like. Does anyone do that
anymore? If so very few. Enter insurance.
The concept of insurance
depends on spreading the risk and the cost. Let’s assume a random collection of
100 people of varying ages. In most years, only a small percentage will go into
a hospital. Maybe half will see a doctor and two thirds take some kind of meds.
So if each of the 100 pays $1000, there will be a pool of $100,000 which will
pay for, or at least help pay for the expenses of those who use medical care
that year.
An insurance company will
develop “actuarial tables” that take into consideration the population they
serve and the cost of their medical care. Then they take that overall cost and
divide that cost among all those they serve as premiums. My understanding is
that in good years, where less people are treated and at less total cost, the
company increases its profits, but does not drop the cost of the meds. That’s
why people buy stocks. They want dividends coming back from profits, and buying
the stock is what gives the drub company the money to create and manufacture
drugs. If government restricts profits, stock sales will fall off. That means
the pharms will have less money to develop drugs, so new drugs may not appear
as quickly.
Obviously, those who seek
“single payer” insurance are correct that this form of insurance will be the
cheapest. Why? Because the pool of people covered include the whole nation. If
every individual is paying into the pool, that includes millions of young
adults who may go years without seeing a doctor, taking meds, or needing a
hospital. Their premiums make up for the older folks who are always having
stuff go wrong and running up bills steadily.
The problem with this form of
care, as we find in Canada, England, most of Europe, is the cost. Proponents
think it can be done by taxing the rich, but at least in the above countries
the tax is much more widespread. A Canadian physical therapist where I work out
has a “green card,” which he showed me. Talk about being disconcerted: it was
white! Like a credit card. White! Nevertheless, I asked him what the taxes were
like up there on average, and he replied around 35%. I googled European taxes
and found they were indeed much higher than in the US.
This means that in
single-payer societies, the patients still pay for their health care. It also
means you close all the private insurance companies, throwing millions out of
work and greatly restrict the profit of all other medical entities. American doctors
are already complaining about the limits Medicare and Medicaid pay them. The
Canadian system puts most doctors on a salary except for the few who hold out
for the wealthy who can afford private care.
But with a total actuarial
pool, you do have the lowest possible rate. In a profit based system, the
insurance companies juggle the costs for their own particular pool. For
example, they may refuse to cover pre-existing conditions. By ruling these
people out, you are automatically omitting certain costs because of their
on-going illness. So it’s not surprising that even many who don’t like the
Affordable Care Act do approve of the provision requiring the insurance to
cover pre-existing conditions. But as I write this at the end of 2016, much
publicity has gone out that the costs of insurance, even under the ACA, is
going up as much as 25% next year. Why? I’m sure one reason is that adding all
those people to the pool who were destined to high medical cost from
pre-existing conditions ran those companies into losses. Also, not nearly as
many young and healthy adults signed up as were expected. Why is this a
surprise? They’d much prefer to pay a comparatively small fine than the larger
premium. But this healthy group is what gives the insurance providers the money
to pay for the chronically ill bunch.
THE TAKEAWAYS
1 – Someone must pay for medical care. We mostly do
that through insurance. The national argument has been on what kind of
insurance set up is best for the most people.
2 – At this point, the only way I personally can see
to reduce the actual cost of medical care is regulation. We’ve had that for a
long time both with private insurance and Medicare.
3 – This raises the question of what is a fair profit
in medicine. That carries with it the problem of who is to decide that?
4 – What can you do personally to keep your medical
costs down? First, stay in front of your health. Get checkups and begin
treatment, following your doc’s advice, as soon as a problem pops up. Plus
you’ve heard over and over: exercise, keep your weight down, eat right.
I recognize this is incomplete and needs much more
thought. I will add to it as I learn more and change my mind here and there. If
it sounds technical and difficult, you are beginning to grasp the problem!
HEALTH CARE
I knocked on the trailer
door. An elderly man opened the door, and I introduced myself to him as his
caseworker. In 1960 I was a social worker assigned to Old Age Security in
Tulare County, and I needed to carry out an annual review on his case and perhaps
his wife’s case if they came due near enough to each other. In the course of
discussion, I asked after their health. He replied he had been having angina
attacks. He said he couldn’t afford to go to the doctor, buy medicine, and also
buy food. They chose to buy food. Social Security was just starting to kick in,
and there was no Medicare. I remember at the time thinking the man should get
as good a care for his heart as a wealthy man. Maybe the rich guy could get a
swanky room and food, but the actual medical care should not depend on how much
money he had.
Segue 55 years into the
future. Medicare and Medicaid have kicked in, but we still debate vociferously
the cost and availability of health care. I want to try to analyze this issue
to see whether we can find a more objective set of ideas.
1 – SOMEONE MUST PAY FOR
HEALTH CARE OR HEALTH CARE WILL NOT EXIST.
Actually, all the ruckus about the ACA, aka Obamacare, is
only about insurance: who pays who and how. The fuss has never actually dealt
with the cost. We repeatedly talk about reducing the cost of health care, but
we really mean reducing the cost of insurance. Let’s look first at the cost of
health care itself, then insurance.
In 1985 I went as pastor to
Hodge Baptist Church. In the congregation, there was a recently retired
physician. While visiting his wife in
the hospital I asked him whether he was completely retired or carrying a
smaller case load. He replied that he couldn’t afford to work part time. To do so,
he would have to pay for all the overhead: office, utilities, receptionist, and
nurse. As I remember he had estimated it would take $40,000 a year to break
even, and he didn’t want to work that much.
That was in 1985 dollars.
Most of my pastorates have
been in smaller towns with rural hospitals that struggle to stay afloat. People
prefer local hospitals for “normal” illnesses such as when flu or pneumonia
puts you in bed with an IV. But even in a 50 bed hospital, you can see how many
people must be paid and how many services offered. There’s at least one RN on
every shift on every unit (I know, they sometimes cheat), and LPN’s or aides to
give patient care. There will be a lab with at least one technician a shift,
plus an x-ray. Then most places have an ER, which is one raison-d-etre for local
citizens to demand a local hospital. Lots of lives get saved during heart
attacks and kids legs and arms splinted. Then there’s housekeeping, including
maids and floor moppers and waxers, and a maintenance guy or two. And you have
to keep up to date reasonably well with lab and x-ray equipment. Then you have
to pay utilities and insurance. On top of all that come the administrator and
clerks, perhaps more office personnel.
How do we pay for all that?
Well, the patient does. The
patients do. That’s why there’s a basic room fee. At the end of the day, we
have to collect enough money from all the patients to pay the salaries of
everyone plus all the other bills. If all these people and equipment total,
say, $350,000 a month, then we have to average that much in patient fees. Some
county hospitals may receive help from tax funds or various grants, but someone
somehow pays for it, or the hospital shuts down.
There is no free lunch.
There is no free health care.
No public figure I know has
discussed in the media how to reduce health care costs, only how to make
insurance affordable. That means we expect the insurance companies to pay for
our medical care. OK, but where do they get the money? We’ll talk more about
that in a minute, but right now let’s dive back in before the insurance comes
in.
How do we reduce the actual
cost? The actual amount charged each patient?
I’ve noticed only one thing
in the last 55 years, and you may not like it. Actually, I’ve only noticed in
the last 15 years since I became eligible for Medicare. I observe that every
bill I get has several columns.
First comes the charge for
the service. Example $150 office visit
Next a column headed
“Medicare allows” Ex - $100
Medicare will pay 80%
80
Patient may be charged
20
Note in the above example,
that the government set the prices. Now I am sure this triggers a game between
the med providers and the government – and other – insurance. If they will cut
my $150 fee to $100, what will I get if I charge $175? And this goes on all the
way up and down the line. Private insurance does the same thing, by the way. Plus,
they will add some to the cost for their profit, unless they are a mutual
insurance company. (That’s the theory anyway.)
Can you see any other way to
reduce the actual cost of medical care apart from government regulation? I know
the whole idea of regulation is anathema to the business world, because it
limits profits. In many areas I would agree, but medical care to me is an
exception. I still don’t think a homeless guy having a heart attack on the
street should get less quality care than a millionaire who lives in a
penthouse.
And yet – if we have
regulation, it must be intelligent regulation. I hear all the time people
having to postpone surgery while their doctors hassle the insurance companies
to get the surgery approved. I envision some high school graduate at a computer
feeding in the data of the patient and the condition and the surgeon’s
recommendation, then waiting for the computer to say yes or no. Few doctors
will prescribe antibiotics for a sore throat over the phone without having the
patient come in for an examination. And we make potentially life or death
decisions a thousand miles away by computer? Saying the surgeon on site with
years of training and experience doesn’t know?
We must have intelligent
regulation.
LOUISIANA DETOUR – Adjust this
discussion for your state. In Louisiana, we have what’s left of a state
hospital system that has been radically cut the last ten years along with
colleges, because of repeated budget crises. The theory is that the indigent
can go to one of several state hospitals scattered in major cities for health
care. These are generally attached to med schools or at least staffed by
residents from med schools. Every general hospital in the state must have an
Emergency Room, and each ER must treat any emergency who comes in. In actual
practice they must treat anyone who comes in, emergency or not, for fear of
lawsuit if they turn away a patient who subsequently dies or has a major
complication bring him back. As a result, many poor use ER’s as their primary
care because they can afford nothing else, or they don’t want to spend the
money when they can get it free. As a result, private ER’s do enough treatment
to make sure the patient is not critical, then ship them off to a state
hospital. Still, the high volume in the ER makes it very difficult to make the
hospital operate in the black.
But other issues affect costs
as well. So let’s turn now to pharmaceuticals and equipment.
DRUG COSTS
A guy bought a pharmaceutical
company that owned a critical drug for cancer care. He raised the price from a
barely affordable $100 or so to several thousand! In physics “every action has
an equal and opposite reaction.” I’m not sure if it was equal, but there was
definitely a major reaction, not to say explosion, from the entire country. Did
he assume insurance would cover the outrageous price? Did he believe that being
the only curative drug for that disease would force people to round up the
money? I don’t know. The last I heard the price went down, but not as low as at
first.
Personally, I take three meds
that total $5-600 a month. Medicare reduces the cost to be affordable, except
when it lands me in the coverage gap, aka “the donut hole.” Other drugs I take
have generics that cost only $2-10 a rx. Drugs are patented when they first come
out to protect them from other companies and generics, so the inventors can pay
for the research and developments costs which can be quite high.
A patent lasts for 20 years,
but may be issued at any point during the development process. Exclusivity comes
after FDA approval and prevents others from marketing the drug for, usually,
3-7 years depending on the type of drug. A company can spend hundreds of
thousands of dollars on research to discover new drugs, but after that
discovery, must spend sometimes more to test the drug in three stages, each of
which must be completed before moving on to the next phase. Only after the
third round of trials are successful will the FDA approve the drug to go on the
market.
It is reasonable for a
company to use its exclusive marketing opportunity to recover the cost of all
those scientists and lab work to bring the new drug to market. A problem
arises, however. Even though these companies are publicly traded, they do not
publish the cost of developing and testing the drugs. The funding of R&D is
largely hidden as a trade secret. That means we have no way of determining when
they have met the overhead on that particular rx and gone into profit. Nor can
we say what amount of profit is reasonable. Certainly as an end user paying
$300 for a script I might have a different idea than those who invest in that
company, not to mention the major owners and managers.
The same principle applies to
all medical equipment companies – AND THE DISTRIBUTERS AND PHARMACIES. A drug
store has to pay for the meds, plus the salaries of one or more pharmacist,
clerks, rent, utilities, and the like. The same is true of medical supply
houses. You can see there are several levels that must first break even then
make at least some kind of profit to stay in business. Each level from
Pharmaceutical company to wholesaler to pharmacy must make a profit, or the
owners would shut the business down.
What’s a reasonable profit?
How do you decide?
Who decides?
Market based economics would
answer that we should allow supply and demand to work. That works fine in many
industries where competition keeps prices down and responsive to market demand.
But what about the guy who jacked up a price out of sight because he had
exclusivity and NO competition.
Medicare Part D providers
deal with the situation by dividing drugs into different categories. Generics
they will mostly cover. Then there are “Preferred Drugs,” determined by the
company to be reasonable, so they discount these quite well. At least to the
donut hole. Then there are other drugs that the Med D people are reluctant to
cover. If there is a generic drug that does the same thing as a newer one, they
will pay for the generic, but not the newer one – or at least with a smaller
discount on the new one.
What this practice says is
the doctor cannot treat with the latest meds. If the patient wants the lowest
prices, he or she will have to accept five-year-old quality medical care. The
insurance position is understandable, and we’ll look at it in more detail in a
bit, but getting the cheapest medicine comes at a cost of quality care.
A little over a year ago I
had an attack of A-fib. Twelve years before that I had a heart attack and was
taking meds to manage cardio-vascular disease. The doc shocked my heart back
into rhythm and then changed me meds from a generic to two new meds to prevent
the new risk of stroke. These are two of the high-priced ones that Med D
doesn’t want to pay for. (Yes, there are
work-arounds, but this is already a complex discussion, so let’s not complicate
it further.) There are cheaper meds they used before these two came out, but I
can afford these, so should I take less than cutting edge treatment?
HEALTH INSURANCE
Now let’s look at how we pay
for all this medical care and drug costs. The really old-fashioned way, going
back 150 years or so, is the simplest. Cash. Or in the famed cases of country
doctors with chicken, eggs, vegetables and the like. Does anyone do that
anymore? If so very few. Enter insurance.
The concept of insurance
depends on spreading the risk and the cost. Let’s assume a random collection of
100 people of varying ages. In most years, only a small percentage will go into
a hospital. Maybe half will see a doctor and two thirds take some kind of meds.
So if each of the 100 pays $1000, there will be a pool of $100,000 which will
pay for, or at least help pay for the expenses of those who use medical care
that year.
An insurance company will
develop “actuarial tables” that take into consideration the population they
serve and the cost of their medical care. Then they take that overall cost and
divide that cost among all those they serve as premiums. My understanding is
that in good years, where less people are treated and at less total cost, the
company increases its profits, but does not drop the cost of the meds. That’s
why people buy stocks. They want dividends coming back from profits, and buying
the stock is what gives the drub company the money to create and manufacture
drugs. If government restricts profits, stock sales will fall off. That means
the pharms will have less money to develop drugs, so new drugs may not appear
as quickly.
Obviously, those who seek
“single payer” insurance are correct that this form of insurance will be the
cheapest. Why? Because the pool of people covered include the whole nation. If
every individual is paying into the pool, that includes millions of young
adults who may go years without seeing a doctor, taking meds, or needing a
hospital. Their premiums make up for the older folks who are always having
stuff go wrong and running up bills steadily.
The problem with this form of
care, as we find in Canada, England, most of Europe, is the cost. Proponents
think it can be done by taxing the rich, but at least in the above countries
the tax is much more widespread. A Canadian physical therapist where I work out
has a “green card,” which he showed me. Talk about being disconcerted: it was
white! Like a credit card. White! Nevertheless, I asked him what the taxes were
like up there on average, and he replied around 35%. I googled European taxes
and found they were indeed much higher than in the US.
This means that in
single-payer societies, the patients still pay for their health care. It also
means you close all the private insurance companies, throwing millions out of
work and greatly restrict the profit of all other medical entities. American doctors
are already complaining about the limits Medicare and Medicaid pay them. The
Canadian system puts most doctors on a salary except for the few who hold out
for the wealthy who can afford private care.
But with a total actuarial
pool, you do have the lowest possible rate. In a profit based system, the
insurance companies juggle the costs for their own particular pool. For
example, they may refuse to cover pre-existing conditions. By ruling these
people out, you are automatically omitting certain costs because of their
on-going illness. So it’s not surprising that even many who don’t like the
Affordable Care Act do approve of the provision requiring the insurance to
cover pre-existing conditions. But as I write this at the end of 2016, much
publicity has gone out that the costs of insurance, even under the ACA, is
going up as much as 25% next year. Why? I’m sure one reason is that adding all
those people to the pool who were destined to high medical cost from
pre-existing conditions ran those companies into losses. Also, not nearly as
many young and healthy adults signed up as were expected. Why is this a
surprise? They’d much prefer to pay a comparatively small fine than the larger
premium. But this healthy group is what gives the insurance providers the money
to pay for the chronically ill bunch.
THE TAKEAWAYS
1 – Someone must pay for medical care. We mostly do
that through insurance. The national argument has been on what kind of
insurance set up is best for the most people.
2 – At this point, the only way I personally can see
to reduce the actual cost of medical care is regulation. We’ve had that for a
long time both with private insurance and Medicare.
3 – This raises the question of what is a fair profit
in medicine. That carries with it the problem of who is to decide that?
4 – What can you do personally to keep your medical
costs down? First, stay in front of your health. Get checkups and begin
treatment, following your doc’s advice, as soon as a problem pops up. Plus
you’ve heard over and over: exercise, keep your weight down, eat right.
I recognize this is incomplete and needs much more
thought. I will add to it as I learn more and change my mind here and there. If
it sounds technical and difficult, you are beginning to grasp the problem!
