Last week Blue Cross raised rates, some as high as 39 percent and now the nation is in an uproar; "How dare they raise rates." Nobody said anything when Lays Potato Chips went from $1.89 a bag to $3.79. If McDonald's wants to raise the price of a Big Mac 40% do you think anyone will care? Competition is the name of the game. If health insurance is such a lucrative field, how come there aren’t a half a million companies trying to sell us a plan better than the one we already have? We went from 10 mutual funds to over 10,000 today; why didn’t health insurers increase proportionally?
Our government whines and complains that it is not right to make large profits (Bill Gates and Warren Buffett's name never seem to be brought up). Congress reminds me of Claude Rains in “Casablanca” when advised that gambling was taking place, he said “I’m shocked—shocked to find out that gambling is going on in here.” Later a waiter handed him his winnings.
It is assumed that the rate raise by Blue Cross implies excessive future profits. Just maybe, the rate increases indicate what the government (by way of Congress), has done to the dollar by printing more of them. Plus with the bad economy, a lot of people are cutting corners on health insurance (if you’re not sick) it's optional—buy food and gas for work instead. The insurer's pool of young buyers is decreasing drastically.
Where does government get the power to tell private enterprise what they can charge? Obama today stated his party platform was not advocating Socialism. But “By God, everyone deserves health insurance!” Forget that “We the People,” can’t pay for it individually or as a group. If you want to see what government price controls do, examine what rent control does to local real estate. Someone once compared it to having an atomic bomb go off in the area, the damage was the same, there just wasn’t any explosion, it just took longer.
Figure that government in its evolution, has had 3,000 years to perfect itself. The basic products supplied by government turned out to be; roads, police, fire suppression, military defense, regulation of commerce, pretty basic stuff.
Solving problems sounds easy. But how come governments today, have the same problems as they had hundreds of years ago? Wouldn’t it seem logical that most of the serious problems facing man would have been solved by now? Let’s face it, the mind set is “We are smarter than the people from the past, now we can fix it.” I tend to doubt that premise.
As for the future, how can the government give us back everything we paid in taxes, as a retirement and health care benefit? Just maybe, the people that claim to have a solution to all of our problems, are part of the problem.
12 comments:
Jim- Love your blog and generally agree with you. However, this last one kind of overlooked something.
The government ALREADY tells private enterprise what they can charge in many cases. Property and casualty rates are controlled by the State Insurance commisioners. Private utilities, which are for profit corporations, have rates that are controlled by the government.Smog check for your car?
Rate that you can charge for the certificate is controlled.
Medical insurance is an oligarchy, nearly a monopoly. If anyone doubts that, spend a day shopping for medical insurance. When there are only a handful of providers,the same as utilities, it is reasonable for the government to cap annual increases.
As soon as one orients to the idea that the government is their worst enemy they will be much better off because they can begin to administer their life and affairs accordingly.
It used to be oppressive monarchs.
Then it went to oppressive landlords and serfs.
Then it went to government.
Then it went to the best form of government yet (in concept) when the USA came into existence.
Then government steamrolled over the concept that it was "by and for the people" and grew and took control.
We almost had a good thing going. Damn!
Time for another revolution. Hopefully a peaceful one. Better yet and evolution.
AIM
Man never had health insurance for 99% of his existence. What's the big deal?
Most all illness and disease is life style related and self-inflicted.
If one drinks pure water, eats organic meat and produce (mostly a raw diet), drinks fresh squeezed vegetable juice daily, takes high quality supplements (vit/min, probiotics, enzymes, antioxidants) gets sunshine and exercise daily, and changes the unwanted conditions in their lives in order to diminish stress, get off medication, stop eating processed or manmade foods... they will be healthy and not need doctors.
It is eveyone's responsibility to learn about and practice a healthy life style. Why should the government or anyone else be responsible for peoples ignorance and negligence about their health?
The reason government sticks their nose where it doesn't belong is because they claim to have simple solutions to complex problems. Anytime I hear someone say that they can fix something with the stroke of a pen I get nervous. Rent control is an excellent example of why government should let market work. Capping rents only decreases money available for up keep of properties. Result is people get their wish by living in low rent housing. Only problem is the neigbourhood turns into slum as the landlords abandon or burn down their buildings. Of course the supporters of big government driving around neighbourhood will point to it as a failure of capitalism.
My Dad told me once when I was worried about how I was going to support my family that hungry kids are a great motivator when it comes to finding work. The problem we have these days is the prospect of failure has been removed from the equation for alot of people.
This may be hard to believe but here in Nova Scotia the government sets the price of a litre of gasoline every Friday. Now everyone has to drive 20 minutes out of the way because the small local garage doesn't pump gas anymore. I guess my point is that the government tells private enterprise to do things it would rather not because the majority of people in society have no faith in free markets. I just hope twenty years from now I can find a gas station, I'll be too old by then to learn how to ride a horse to work.
rob in ns
Let's not forget some of the reasons health care costs are rising, which leads to higher insurance prices. Now that hospitals are forced to provide free care to anyone who cares to walk into an emergency room, they are passing these costs on to the insured. Who was responsible for that? Our government. Now that the elderly have slick new health plans provided by the government, which don't pay the health care providers anywhere near what it really costs to provide the service, the providers have to recoup their costs by raising rates on the insured. When P.J. O'Rourke said "If you think health care is expensive now, just wait until it's free", he was dead-on.
Hi Anon 7:24
The government appears to be controlling certain aspects of insurance, but controlling rates is not really one of them. The states have tried to enforce rates and all the insurance company does is stop selling in that state. The insurance commissioners do run roughshod on consumer complaints. That can be a very unpleasant experience for an insurer.
My wife and I changed our insurance provider from USAA to Geico because they offer us a better deal. It wasn't government threats that got us a lower premium.
The cable companies are one of the biggest monopoly "government regulated" rip offs around. Their prices are outrageous--so much for government control.
I won't go into the worthless smog check.
The thing to realize about medical or any other insurance, is that if the company can't make a reasonable profit, they close up shop. It matters little what the state demands, investors want to see a profit; these people vote with their feet.
Thank you for your comments
Hi AIM
I think when people look to government for the solution to their problems, that where things start to fall apart.
Most problems will solve themselves given enough time. You might not like the solution, and thats where the problem lies.
Hi Anon 9:12
You raise an interesting point about insurance. Would you believe that probably 90% of the world doesn't even comprehend the concept of insurance. They can't point to it so it doesn't exist. It's us educated people that understand abstractions like "Democracy" and "insurance."
When it comes to getting real about our lives, it is old age that makes us wish we had been kinder to our bodies, while we are young, we are immortal.
The Big Mac and fries will stay with you forever. That almost sounds patriotic for some odd reason!
Thank you for your comments.
Hi Rob
Your thoughts reaffirm my belief in the saying "The road to hell is paved with good intensions."
The unanticipated consequences of our reactions to government laws, can sure mess up a way of life, that worked OK in the past.
Take care.
Hi Anon 2:35
Another thing not mentioned is that in bad times, medical procedures are put on the back burner.
My wife went in for a hysterectomy a few weeks back. The hospital was empty. She got a private room without asking. These places have fixed costs and I don't think that they were even close on breaking even.
We could see many hospitals go into bankruptcy for lack of patients in these lean times. And that is with health care charges increasing. It is kind of a confusing contradicting set of circumstances.
Thank you for your comments.
The ideal profit situation for an insurer is to collect premiums (insuring against a catastrophe) until 1 day before a catastrophe - and then cancel every policy and never pay out. The ideal for the consumer is to take out a policy the day before the catastrophe and then collect a fat check. That's why the industry is heavily regulated. If the consumer commits insurance fraud, it's a felony; if the insurer fails to honor legit claims, they can be put out of business. Insurance is almost as central to our economic well-being as banking is.
The problem with Anthem is that we mandate that companies pay out x% of premiums in health care and administrative overhead. So overhead becomes multi-million dollar "retreats" and the company has no incentive to hold down costs. If doctors double their rates, most large businesses will still buy insurance, so the insurer effectively doubles their profit (a fixed % of premiums), blamelessly ("it's not us, it's the greedy doctors").
The incentives are all wrong. Doctors' incentive is to keep the patient coming back - wrong diagnosis, wrong treatment, cure worse than the symptoms - these all generate repeat visits and recurring revenue while reducing office visits to minutes per patient. Patients don't know what care costs, so they can't be smart consumers. Doctors have a regulatory monopoly, so the only competition is other doctors. I can vaccinate my dog at home, but god forbid I try to buy antihistamines.
The free market IS failing here. "Free" health insurance doesn't attempt to solve the underlying problems. I'm all in favor of reform, but simply forcing more people into the pool doesn't do a darn thing to scoop the feces out of the water.
Hi Anon 11:09
Thank you for the input. It was very informative and demonstrates that Health Insurance is a complex issue.
I don't see an easy solution. I did notice that some HMO's are giving the doctors a set amount of dollars for each patient per year. It kind of eliminates all of the preventive medical tests.
I think you hit upon the key. The insured patient has no idea of the costs and could care less. This has to change, and that is easier said than done.
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