Saturday, November 22, 2014

Government Subsidized Health Care Costs Vs Health Insurance

Many people interviewed on TV talk about the fact that they cannot afford their health insurance. What needs to be realized, is that these people are beyond health insurance, they can’t afford to pay for treatments they already need. Insurance is a concept of paying in small amounts for services you will need later and be able to pay for them fully over time.

Obamacare works if everyone is taxed for health care and pays into the system. The trouble is, that is not the way it is functioning. If you make no money as far as the Federal government is concerned, you avoid the tax all together. If your income changes, your health insurance costs change. Most people between the ages of 18 and 40 really don’t need health insurance (i.e. the most they would normally pay for health care treatment, is probably half of what their health insurance premiums would be). Figure average premium at about $300 per month extended out for about $3,600. Women look at this a tad different with child delivery. Why should a baby delivery cost 10K? -- ask a lawyer.

With Obamacare, many people presently cannot pay their medical bills and maintain their accustomed standard of living. These people want the program. Then there are those that have a pretty good idea that they need insurance, those over the age of 50 to the age of 65. Then we have those covered by an employer work sponsored program, where the employee pays part the employer pays the rest. In reality, the employee pays it all. What we have in the middle are a lot of people in the 18 to 50 age group that have no insurance at all or are employer insured. They really won't consume health care services, they are healthy.

Most people don’t buy car insurance because they need it, they buy it as a condition of the bank loan that they have made with their lender. Many buy it to comply with the law, but in some areas of Los Angles, half the people are driving without insurance. I’ve driven 30 years without an accident until last year and it was only a $1,500 fender bender that wasn’t even my fault. Over that same time, I spent probably close to $25,000 in auto insurance. On the other hand, I knew a person who had no auto insurance that had her car stolen, $12,000 went poof. If that’s all that happens to her in 30 years, she’ll be $13,000 ahead of me in the amount paid out.

The new health insurance is invisible to the 18 to 50 crowd. There are people in this group that are always cited by Obama as examples of those who need health insurance, like kids and single mom's. Give it a moment of thought, this group of people already know the cost of what they need and it falls outside of the realm of what they can afford or want to pay. Obama’s health insurance goes a long way to cover it by forcing the healthy to contribute to a plan they really do not need. The trouble is, the healthy are not waiting in line to sign up for it especially when the deductible is about $5,000.

The number of new cash paying customers that have opted to enroll in plan is the real issue. Did the numbers go up? I think not. There is still a tremendous number of people not enrolled in Obamacare. Open enrollment is for the people who have gotten really sick after the last open enrollment closed.

If you are young, without insurance, Urgent Care is where you go, show them a credit card and you might wait 15 minutes. Plus you know the total cost right then and there.

I'm sure that after winning a Nobel peace prize Obama believes that only he, knows what's best for our country, kind of makes you wonder who is in charge of those awards. Another Nobel prize winner was the doctor that perfected the ice pick lobotomy---I'd imagine that's the quickest way to turn a Republican into a Democrat, short of taxing them to death, and it's probably a covered procedure under Obamacare. Has anyone asked how much the "free" part of Obamacare is costing? Of course not, the government is paying for it- whoever that is.


dearieme said...

"Insurance is a concept of paying in small amounts for services you will need later and be able to pay for them fully over time." I disagree, Jim. Insurance is paying small, regular amounts against the risk that a rare, large amount may someday be payable by you. If that large amount is likely, rather than unlikely, then - as you say - you've got a savings scheme, not an insurance scheme.

For example, a nubile woman who already knows she'd like to have children can't truly insure against the costs of childbirth - it's just a savings scheme. But she can insure against some low probability of it going horribly, and expensively, wrong.

Jim in San Marcos said...

Hi dearieme

I am confused as to the insurance aspect of your post.

Insurance from my perspective is a limited form of protection. It does not involve unlimited liability by the insurer. No insurer could stay in business with unlimited liability.

Insurance is a way to limit your loss, and the more you want to limit your loss, the higher the premiums to be paid.

To assume that your insurance policy has unlimited liability pretty much suggests that Santa Claus is alive and well at the North Pole.

dearieme said...

Nothing turns on the question of a limited pay-out on the insurance. It's still a question of whether you are seeking to pay for highly likely, predictable expenses (e.g. routine dental treatment, the usual run of childhood ailments) or unlikely unpredictable events (e.g. heart attacks).

Anonymous said...

As usual, people tend to look at only half the story!

How about the fact that healthcare costs for a lot of procedures are coming down because of technology and innovation.

As an example, the cost of colon cancer screening has been cut down by 90% !!!!!

FDA just approved Cologuard, a test by Exact Sciences of san diego. The test is mailed to you at home and the results come back a few days later at a cost of $500.
Versus colonoscopy which is $5,000!

So all the baby boomers that the CBO estimated needed $5k colonoscopies are now going to need $500 tests, that a saving of 90%.
And the savings don't end there, when more people get tested sooner, colon cancer will go from the 2nd biggest cancer killer to the 10th, making hospitalization costs less for the disease. And yes, Cologaurd picks up precancerous growths as well.

How do such things change the picture of medicare running out of money? they change it lot because some of the assumptions made are proving to be wrong.

And yes, Affordable care act does have money going to companies that help make health care more efficient. But no one want to talk about that because you would actually have to read and learn something rather than repeating the same old tired rants.

Many more companies doing great things in your backyard Jim and making healthcare more efficient.

But such positive talk probably doesn't belong on a depression blog.

Have a wonderful thanksgiving.

michael said...

I agree with dearieme.
Insurance is: you pay everything yourself except the most expensive things. Plus you and the insurer have a strong interest that the insured case never happens.
What you did describe I would call a payment plan.
It is unsettling that even in the more sophisticated blogosphere that distinction is getting lost!

Jim in San Marcos said...

Hi Everyone

Maybe my concept of private insurance is the problem. I believe private company sells a product like life insurance, car insurance or home insurance and expects to make a profit on their endeavor. If it fails being profitable, the service ceases to exist.

My last article dealt with the fact that middle aged people did not need health insurance, is was a waste of money for them and those unused funds were used to pay those that did need it.

Now if you want to include government insurance like Medicare, I don't like the idea of even mixing the concept of insurance with a government program-- a government can't go broke. It is a tax plan not an insurance entitlement.

I don't think we are arguing over the word "insurance," rather the way we define it.