Monday, August 10, 2009

Health Care.

One of the most noisy and contentious political and media events currently going on in the USA is the debate over health care reform.

To put it in a nutshell, most Americans these days get their health insurance through private companies such as Blue Cross/Blue Shield, CIGNA, Connecticare, etc. A smaller number, mostly people over 65 or who are disabled, get health care funding through government-run programs such as Medicare, Medicaid, or (in my state) MassHealth. Approximately forty-six million (46,000,000) people have no health insurance at all. The central problem with the lack of health care insurance is that health care expenses have skyrocketed to the point where it is difficult to get medical treatment without expensive insurance.

Speaking from personal experience, whenever I see my primary physician, I have to pay a copayment (which is a fancy term, I think, for a deductible), but the cost that is billed to my health insurance provider is about six times the copayment. If I had to pay over $200 in cash every time I had to see a doctor, the cost of such visits would rapidly become prohibitive, and I would be unable to afford health care. That is the exact situation that at least forty-odd million people are in right now.

The major reason for the high cost of health care in the United States is, in my opinion, not the cost of providing the care itself, or the medical research that goes into it, or even the (fiendishly high) insurance premiums doctors must pay. The reason is the administrative bloat, the vast overhead of bureaucrats, executives, accountants, claims processors, and support staff who manage a company such as Blue Cross/Blue Shield, and the outer manifestation of this is a system in which a health insurer can arbitrarily increase monthly premiums by 12%, with no warning or justification. As it is, health-care premiums for families have risen 119% since 1999, while inflation has risen 28.5% and real wages are essentially stagnant at about 3%.

I, for one, would gladly accept a federal tax that is stable from one year to the next instead of a private plan that could triple in costs by the end of a fiscal year, or drop my coverage entirely.

I compiled the following few salient points, which in my opinion shed a lot of light on the subject of the debate, as well as how the debate itself has been structured, managed, and skewed by business interests.

Under the current system, even if you pay your premiums all your life and are never late with a payment, the insurance company can still drop you like a hot potato if it becomes apparent to the insurer that you’re about to become an expense rather than a source of revenue—in other words, if you become sick enough to need to file an insurance claim. In fact, you're as likely to be dropped by a private insurance company when you need life-saving care as you are to get treated. Even if you aren't dropped, they have the ability to overrule your doctor's advice for life-saving treatment, and refuse to cover the proposed treatment. Translation: death sentence. Murder by spreadsheet. Life-and-death decisions made for people by faceless bureaucrats. This is the sort of thing the opponents of the proposed reforms are trumpeting, but this sort of thing is happening NOW, and as a business decision.

One-sixth of all government spending is on health care, twice as much (proportionally) as any other country spends out of its budget. This is more than four times what we spend on national defense, even while fighting two wars. Individually, many Americans spend 10% or more of their pre-tax income on health care alone. As a whole, the US annually spends $2.5 trillion on health care. I, for one, would love to know how much of that expenditure is swallowed up in profits and overhead, but it’s roughly six times (proportionally) what European countries spend.

So, the United States pays more per capita than any other country on the planet for the privilege of being thirtieth (out of 195) in life expectancy, after most of Europe, South Korea, Japan, Bosnia-Herzegovina, Canada, and Jordan. Although one of the frequent talking points of the opponents of public-option health care is that you can die waiting for care in Canada, the average Canadian family spends less than $2000 a year on health care with no waiting periods for life-saving care. The average American family spends $16,800 a year, waiting for private insurance companies to approve life-saving treatments (or to be callously dropped).

These costs accumulate. Nearly two-thirds of American personal bankruptcies are related to health care costs, largely in cases where massive medical bills pile up due to cancer or other serious illness or injury, which insurers do not (or will not) cover.

The costs accumulate for business, too. Businesses - particularly small businesses – increasingly cannot afford to provide health insurance for their employees under the current employer-based private insurance system, and will be forced to either drop their coverage or cut costs in other areas, such as laying off employees (who then lose their health coverage). In the case of Massachusetts, this burden is particularly acute. The Romney administration in 2006 signed into law a requirement that everyone must have health insurance. This plan had some teething troubles, but currently provides health coverage to almost half a million people who didn’t have it before.

Every independent estimate says the public option will save us—the government and private citizens alike—lots of money. The most conservative estimate, from the Congressional Budget Office, estimates a savings of $150 billion.

It’s well worth repeating. As of 2006, forty-six million Americans were uninsured. An estimated fourteen thousand more lose their health insurance every day. Most of those who lose it, lose it either because they lose their jobs, or because they can’t keep up with the premiums. It’s actually pretty hard, in this richest nation on earth, to get health care if you don’t have expensive health insurance.

Eighteen thousand Americans die each year due to lack of health care. That works out to fifty people per day, who die because the system is structured so that they can’t get what they need. This doesn’t count the number of people who get their only health care from charitable clinics or emergency rooms, because they can’t get it anywhere else.

$2.5 trillion is a lot of money. In fact, it’s more than the 2008 gross domestic product (the market value of all final goods and services from a nation in a given year) of Russia. That’s right. If you managed to agglomerate all the value of everything created, sold, or done in Russia in 2008, from caviar to oil wells to dry-cleaning, it wouldn’t suffice to pay the United States’ medical bills. With that much at stake, it’s only to be expected that the health care insurance industry has launched a frenzied counterattack to protect their captive market.

As has become usual in the United States, political and corporate interests are trying to structure the public debate, even to the point of introducing blatant lies as facts. Private insurance companies are spending over a million dollars a day to kill the public option by inventing phony citizen groups and sending letters on behalf of retirees who’ve never heard of them, busing in people to protest at town meetings. Sarah Palin’s “death panel” comments only make things worse—though, to be sure, one should simply Google Natalee Sarkisian.

Would public-option healthcare be better than the private sector? Maybe. Maybe not. I just don’t see how it could be any worse. Medicare and Medicaid have provided high-quality care (or rather, the funding for it) for decades.

At least if I die while on a government plan, I’d know it wasn’t a profit/loss decision.

The role of the government is not to make money. That’s what private enterprise is for. The role of the government is to do what private industry either cannot or will not do—to provide essential services and to do things that are so big or so obnoxious that no non-governmental entity will tackle them, or to do things where (as in this case) the financial incentive runs contrary to the public good.

Consider the Manhattan Project. The federal government poured the equivalent of $24 billion and the man hours of 130,000 people for several years into a project to produce a nuclear weapon, which was by no means certain to work. In fact, it wasn’t certain whether the A-bomb would work at all until three weeks before the first one used in anger (and thankfully, as of this writing, the second to last) was dropped on Hiroshima. No private venture would ever have undertaken that sort of venture.

There is a persistent myth in the history of the United States that the greatness of this country is the product of free enterprise and unbridled capitalism alone. This is flatly untrue. Most of the events, undertakings, or other things that made the US what it is today have been brought about with no small government involvement, though in many instances the government’s role consists of offering subsides or reduced regulations as incentives to encourage private industry to undertake something for the common good, but for which (without government intervention) there would not have been a market. The drawback to a profit-centered system, you see, is that if there is no profit in it, it will not happen.

Even the transcontinental railroads of the late 19th Century, which were relatively simple works of civil engineering by comparison, were subsidized with huge (yes, I know, Python fans take not) tracts of land, granted by the federal government, which the railroad concerns could then sell off as they chose.

The extraction of the vast (but, it needs to be emphasized, not limitless) resources of the West, which fueled such juggernauts of industry as Andrew Carnegie’s US Steel, were made possible by artificially low rates for leases on government-owned lands. The General Mining Act of 1872 fixed the per-acre cost of leasing federal lands for resource extraction at $1.25 annually, half of what the real value was in 1872. Thanks in large part to resistance from members of Congress from states such as Colorado and Wyoming, this cost has never been adjusted to keep pace with the times, in effect creating a federal subsidy for mining companies who get the land essentially for free.

So yes. I’m in favor of the public option plan.

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