Sunday, October 28, 2012

Health Insurance, Who is really “Jerking Us Around?”

If you look at an insurance company, it’s a group of people insuring against a certain risk. It could be your home, your car, your life or your health to cite a few. For these insurance companies, it is quite easy to gage the amount of risk involved and charge accordingly. The insurance company is willing to insure to a limited dollar amount, while the the insured and Congress are expecting unlimited coverage.

When the government steps in to fill the void at age 65, it may seem like the right thing to do, but you have to ask only one question, what does government bring to the table to make it affordable to offer it to everyone? Deep pockets are the answer (AKA the National Debt checkbook).

The real issue isn’t that apparent. Once you limit what health insurance companies can and cannot do, and you limit their profit margins, you eliminate their ability to survive. Obama might accuse the insurance companies of “Jerking people around,” but it is the President who is jerking private for-profit-businesses around. The net result, the private health insurance industry will fade out of existence. Profits are the driving engine of competition. Private health insurance cannot compete with Obamacare; the government doesn’t have to make a profit to survive.

People that never even gave a thought to health insurance, (those from the age of 18 to 45) would suddenly find themselves in a situation where health insurance is now mandatory. The question they may ask is; “Why am I forced to pay for something I don’t feel I need?”

What makes Obamacare so insidious is the fact that they are dictating what sort of profit margins are acceptable for insurance companies to have. Bill Gates at Microsoft probably has a profit margin of about 85 percent. Pill factories probably have a 400 percent profit margin. Blue Cross was having problems justifying a 5% profit margin during a recent Congressional investigation.

Forcing insurance companies to insure people with previous conditions is a death sentence. Rates are determined by the number insured without problems. The government is now saying that preexisting conditions have to be insured. This changes the risk for the underwriters and negates all actuary tables that have been used previously. The new risk cannot be calculated, when people can sign up with preexisting conditions.

What happens in this case? The health insurance investors realize that there is no profit in writing coverage and move their funds elsewhere for a better return.

The end result, the insurance industry will continue to write home, auto and life and let you go to the government for your health care insurance. Think about it for one moment, is anybody accusing the life insurance industry or the auto or home insurance industry of “jerking anyone around?” You aren't being forced to take the government insurance as long as you can find a private provider.

So what happens when the health insurance industry drops dead? The government will add it your paycheck deductions and they can adjust your rates for this new “health insurance,” without having to ask Congress. It won’t count as a tax; it’s your health insurance. You might think I am kidding, but it will be about $6,000 to $12,000 a year (Your employer pays half, guffaw, guffaw).

Obama claims that health insurers are "Jerking us around." Let’s rephrase it, health insurers are pointing out the real costs of health insurance, and we have to make decisions on how much of it, we can afford. Life will end for all of us, and for a politician to suggest that government health care insurance will solve our problems is wishful thinking. That is the person “jerking you around.” He wants your vote and that new health care revenue stream. There is no free ride. Of course if you have nothing, the "free ride" is better than nothing.

Obamacare could be the biggest tax increase to ever face our Republic. It is the death knell for private health insurance. I'd rather they force everyone to get car insurance instead. This government is going to harness the working young to pay all of our debts. After you get your first job, here is what the "Company Store" wants from your paycheck: State and Federal taxes, Social Security, Student loan payments and the new one, health insurance. I remember when I was young; I had a hard time trying to afford girls and car insurance. So what Obamacare really boils down to is a tax on being young and dumb.

As a concept, I have no objections to Obamacare. But if you understand how Congress works, this new found money will be spent on anything but health care and will destroy the private health insurance industry by dictating their rates. Show me one thing that the government can do better than private industry for less money. One thing is certain; we are being jerked around, by a bunch of politicians in Congress promising "Surf and Turf" and delivering "biscuits and gravy."

The irony of history (tongue in cheek) it took a Republican to free the slaves, and a Democrat to put the chains back on.

Copyright 2012 by Jim Brubaker


Anonymous said...

Health insurance companies hire armies of people who's job it is to find a way to deny claims. It would be best if they (insurance companies) were taken out of the equation...and we get on with health care.

Jim in San Marcos said...

Hi Anon

Look at it a different way. If the government offered everyone a free car, what would they choose to drive? Or to nail it down, how much would this car cost?

Insurance doesn't help you beat the system, it helps you manage a major expense and spread payments over several years.

People can be very unreasonable when it comes to insurance claims. This country is full of lawyers that are poised to sue somebody at the drop of a hat.

Health care means different things depending on your age. At 20, health care is paying for a doctors visit. At 60, its a heart by-pass. At 75 is is a retirement home. Guess what retirement homes are not part of even Obamacare let alone Medicare.

I think the thing you need to realize, is that a lot of people in this country are fed up with the health care we are already indirectly forced to pay for (Medicare).

I don't see any reason to pick on the insurance industry. If they can't make a profit, they can't stay in business.

My point, Obama will run them out of business with unrealistic rates. Why? The government doesn't have to make a profit to survive.

Joseph Oppenheim said...

All I can say about the post is that I'm glad I'm not you.

It's called morality. There is a reason America ranks near last in healthcare among modern industrial countries.

It's called GREED.

Anonymous said...

Can Obamacare be considered a classic case of a democracy voting itself out of existance by demanding ever increasing benefits?

Jim in San Marcos said...

Hi Joseph

Ask yourself one question. If our health care is so bad, why do people from all over the world come here for surgery?

Is is because you can charge more for surgery skill and proficiency?

Socialized medicine will give you Chrysler-Fiat heart surgery. There is no incentive for a doctor if every patient is just a number and a designated dollar amount of renumeration.

You might want to call it greed, but think about it. If full health insurance is unaffordable to most consumers, having the government pick up the costs doesn't make it become affordable, you are gaming the system.

Our government over our life time could probably insure everyone for about 50K of benefits realistically. But when the claims start at 100K for heart surgery, we need to charge more than most people want to pay. Remember most people don't need health insurance until they get sick.

Health insurance is considered a rip by most people between the ages of 18 and 45, they don't need it.

I would bet, if you offered every 20 year old the option of health care for life or a Lamborghini, they'd take the car, and in the long run, that would cost the government less than full health care.

On the government's side, 5K a year from everyone is a hell of a lot more than they are getting right now, half the people in this country pay no federal tax. They will now, only it will be labeled "health insurance."

You might salute the new health care, but it's just a tax, and very little of it will be spent on health care. Congress will promise, but never deliver.

Jim in San Marcos said...

Hi Anon 5:16

I think your right, it's a slow process, but it will happen.

Gold silver,and platinum could be our salvation, along with owning a little real estate.

Our government has promised more than it can deliver. The trouble is, those ready to retire, assume that they are "entitled." This conflict will sort itself out and disappoint most if not all. And of course I could be wrong,---but for how long?

Joseph Oppenheim said...

Ask yourself one question. If our health care is so bad, why do people from all over the world come here for surgery?<<<<<

I feel sorry for you that you believe those bubble thinker talking points.

Even Margaret Thatcher while privatizing much of her government, didn't privatize the British healthcare system.

The most revered Canadian is the guy who made possible their healthcare system.

Best I can tell France is #1 and there, as anywhere, one can get premium care if they are wealthy and/or willing to travel to get it, plus France goes a step further where the French can get private healthcare also in France if they want it and pay for it. Even in the US, people of such means or desire travel distances to get treatment they can't get or don't want near where they live.

Obviously, there have to be priorities set to make ANY system work efficiently. In places where it seems to work just fine, I think Canada and Britain, is that all emergencies are handled fast and it is elective surgeries, etc which are put on a waiting list. And, yes, America caters to money, but on steroids (it's called GREED). I doubt very many of our wealthy or elite use HMOs. But, there was Jonas Salk, who refused to get a patent on his polio vaccine because he felt it wouldn't be moral to get one. I just started a book, "The Knockoff Economy." It argues that patents, copyrights, etc are probably necessary for some things, but they actually inhibit innovation in many many others. I am interested in hearing more of the details......but, I suspect GREED has made patents, etc overused in the US.

I do know open source coding has its place. So, likely others, even in medicine/drugs, etc.

BusinessWeek magazine several years ago, rated our VA healthcare system, totally run by the government, the best in the US.

As for waste and fraud, there will always be that, but just the cost of doing the right thing.

BTW, in the San Diego mayor's race, Rep. Filner was one of the original Freedom Riders who spent a few months in jail as a college kid to help in the civil rights movement in the South. He also has a PhD from Cornell. It will be interesting to me if San Diego prefers him or a guy whose main function in life seems to be to basically privatize San Diego's pension system to 401K's, which have been described by some as the world's biggest skimming operation.

Joseph Oppenheim said...

Guess what retirement homes are not part of even Obamacare<<<<<<

Guess what? The government (and therefore, taxpayers) already pays for free retirement homes through Medicaid for people who are broke, basically forcing them into poverty even if they weren't. Same with all other healthcare....except use of emergency hospital rooms, etc which inflate all healthcare costs.

Instead of all those Luddites who are scared of anything new or invented elsewhere, it would behoove them to look for ways to improve Obamacare along the way as it is implemented (it is already partially implemented - pre-existing conditions,etc), rather than blindly wanting to revert to the most expensive and just moderately effective healthcare system. Medicaid is already indirectly part of Obamacare. Better to fold it in directly to Obamacare and improve the whole system.

Obamacare is a step in the right direction.

Jim in San Marcos said...

Hi Joseph

I've got no problem with the government programs. They can promise what ever they want.

The problem is the government spends twice as much as it takes in in taxes. They are going to have to choose which programs to support and which ones to cut.

There isn't enough funds to support Social Security, Medicare, and Obamacare and still run the government.

The government can promise anything, and you'd be a fool to believe them. Go use a public rest room, and see how well the government maintains them. Their standards are lower than what you and I consider acceptable.

If we the people (the government) can't afford to foot the bill for full health care, where does the money come from to pay for the program?

We are at a point now, where the government can't borrow or print much more.

You might raise 100 billion by taxing the rich. I doubt you'd even get half of that. The problem is we need 10 times that per year just to keep the boat afloat.

Joseph Oppenheim said...

I never expect to change your mind, Jim, but I guess just because I like to write.....

The problem is the government spends twice as much as it takes in in taxes.<<<<<<

There simply are some things which really can be only done or done best by government. Businesses #1 goal are profits...which is great for many things, but completely stupid for others.

Believe it or not, the US, especially CA, is WEALTHY. I ran the numbers awhile back and CA could pay off its deficit in an instant by just a one time tax of about 7% on just CA's billionaires. Why are there so many billionaires in CA? Figure it out.

There isn't enough funds to support Social Security, Medicare, and Obamacare and still run the government.<<<<<<<<

BS. SS is solvable in an instant , just raise the level of income taxed and means test the recipients - everyone benefits if it is solvent, even the wealthy....costs of poverty cost more. Even Milton Friedman advocated a negative income tax to get everyone above poverty...and I do like that better than welfare, BTW.

Plus, costs of Medicare and Obamacare (healthcare) can be handled as I mentioned before, Obamacare being a step in the right direction.

Especially at a time when the world is begging us to borrow money from them at below inflation rates (paying us to borrow) - even free market wonks should see the markets know we are WEALTHY..........only someone completely ignorant on finances/economics wouldn't see it's such a great time for gov't investment. Plus, good times are a time to cut debt and bad times (recessions,etc) are a time to borrow/invest.


The government can promise anything, and you'd be a fool to believe them. Go use a public rest room, and see how well the government maintains them.<<<<<

You should have told that to JFK about promising to get to the moon.

You mean you can't piss OK at work at Pendleton? Sorry.

Seems to me you complain a lot about government, but are all about living your life because of gov't - work for the gov't, live where your town benefits mainly from gov't, including providing jobs - CSUSM, Palomar CC, public schools, etc. And, I think you said your son goes to a public university - CA does have perhaps the best public university system in the world - greatness costs money.

Jim in San Marcos said...

Hi Joseph

Bernie Maddoff had a 69 billion dollar Ponzi scheme. He had no trouble managing it until more funds were going out than coming in. That's when it collapsed.

The Federal government has a 17 trillion dollar Ponzi scheme going. As long as more goes in than goes out no problem. In this case, the amount borrowed is more that all of the money in savings in the United States.

The 17 trillion has been spent. In order for the government to pay it back, it has to not consume 17 trillion plus interest in taxes collected--and that's highly unlikely.

The concept that all of this borrowed and spent money has to be paid back doesn't seem to register with the average citizen. Just pay the interest and borrow more.

We are broke. There is no saving in the bank or IRA's. They are just numbers. Wait till you go to retire and try to draw it out.

The government thinks that they can borrow and print their way out of this mess. It appears to be working right now, don't be surprised when it doesn't.

Joseph Oppenheim said...

We are broke. There is no saving in the bank or IRA's. They are just numbers. Wait till you go to retire and try to draw it out.<<<<<

The US is not broke. It is why so many people want to come to the US. Opportunities galore plus hard assets like natural resources (oil, gas, coal, gold, silver, land for homes, agriculture, etc, etc plus maybe the most advanced workforce and consumers in the world where foreign companies would be willing to pay a lot to the US just to access its consumers and workforce(plus regulations and laws which make them more valuable). Go to Afghanistan if you like complete freedom from government. The world's greatest collection of universities and colleges are here which already attract many foreigners who are willing to pay premium tuition's to get it. Also, a vacation travel destination.

The politicians and pseudo economists who make that claim that America is broke and inflation is imminent have been wrong, wrong, wrong ever since the recovery began about 3 years ago. I'm not saying another recession or a depression can't still happen soon since there are so many who actually want it to happen or are so deluded in understanding the economics which IS ACTUALLY happening.

There is value in understanding history, but it NEVER repeats exactly. It is a mathematical impossibility.

America has an opportunity not just to keep the recovery continuing, but to enter a booming economy as corporations have NEVER been so well off. But, it can also choose worse times ahead.

BTW, I hate debt...I have never taken out a mortgage (just assumed a couple of mortgages to facilitate the deals), but then paid them off in a few years. The only other debt I ever had was to buy a car once, but just for convenience and paid it off in a few months. My theory has always been that I want to be my own bank and I trust myself as its customer since banking is one of the most profitable professions.

That said, during a crisis, if I need to help get by the crisis I would borrow, but only where it is an investment, where it returns more than it for health, education or necessities. And, like I said, now is the time for the US to borrow. In 2000, with a balanced budget and the national debt on the road to being paid off in ten years, and the greatest economy the planet has ever known, was the time to continue to pay off the remaining debt, but we chose the opposite and a way to crash the economy while also doing no real investment.....but, now is NOT the time to pay it off, though I do think the economy is healthy enough to trim some things and get a plan in place to ease in debt reduction on some things, but like I did as a private person, to pay off the debt by raising taxes (as I did on myself).

As for me, retirement has been great. Been retired since 1990, in fact my net worth has continued growing during all the years....I just always was good with money, even as a kid, plus I learned a long time ago that it really are the little things in life which mean so much...I just never desired many material things and always lived beneath my means. I found it much more fun that way to me meant independence, to others it often means different things. Many years ago lobster was cheap, when it went up in price, I didn't need lobster....same with other things, even potato chips, I'll just eat less or go on to something else instead.

Jim in San Marcos said...

Hi Joseph

After reading your last paragraph, we are a lot alike. The only difference I can see, is that I haven't retired yet.