The conversation our country is having about healthcare right now is not honest. It’s not just the Republicans, the Democrats are just as dishonest, in a different way. Republicans talk about government death panels denying care. Democrats talk about insurance company death panels. Both positions are intellectually dishonest. Both Republicans and Democrats know that a part of insurance is drawing boundaries around the care that would be paid for by the group. Any care outside that boundary doesn’t get paid for. You can frame it any way you want, but this is a critical part of any insurance.
Insurance, whether healthcare or auto, is a risk pool. A group of people pay into the pool and hope they don’t have to use it – hope they don’t have a wreck on their car, don’t have to go into the hospital. Those few that do have to use it consume most of the money in the pool – the risk pool spends tens of thousands on the people that have serious car accidents, or hundreds of thousands of dollars on someone that has cancer. That means that everybody else in the pool helps pay for the costs of the unlucky few. Healthy me pays for the costs of tripped and broke his leg Bob.
The worst part of the Affordable Care Act that nobody talks about is its removal of caps on annual and lifetime awards. There is no limit to the risk that the risk pool assumes. Before the ACA, an annual cap for an insurance plan might be $500,000, with a lifetime cap of $2 million to $5 million. Now those caps are gone – there is no limit to the amount of money a risk pool has to pay to keep someone alive.
This is a great thing if I am the parent of a premature baby, with medical bills approaching $1 million dollars, or a person with cancer that doesn’t respond to the first or second treatment. But it’s also a choice. No nation has an unlimited amount of money to spend on healthcare. The more money we spend to keep the extreme cases alive, the less money we have to spend on wellness, or prenatal health. The more money we spend on healthcare, the less we spend on education and roads.
The Democrats like to pretend it is the cold hearted insurance companies denying claims for its own benefit, protecting its profits. Again, this is intellectually dishonest. Insurance company profits are less than 5%, and even if you add in the executive salaries only a couple of points higher. The insurance companies are trying to make sure that the amount of money contributed into the risk pool by all of the participants is enough to cover the cost of care. The insurance companies are trying to keep everybody’s premiums from having to go up next year.
As harsh as it is to say, we can’t afford to save every life. We can’t afford to pay for every $200,000 experimental treatment for a person on their deathbed. The Republicans of course, are too afraid to just come out and say this, to state the obvious that we can’t afford to spend an unlimited amount of money saving any one person. Instead they propose a strange bill that tries to limit how much government would pay but sidesteps the hard questions that our society has to answer, sidesteps a rational conversation on caps on healthcare spending.
It’s very possible that the Republican’s current bill will crumble under its own weight – it’s hard to bring real change without an honest conversation on the problem. Let’s hope the Republican Party eventually remembers that it was the Daddy Party, and starts a real conversation about healthcare tradeoffs and costs.
Blake Ashby, an entrepreneur living in Ferguson, MO, was involved in the healthcare industry for many years.
Categories: Uncategorized
No political process will EVER permit refusal of care to a non-payer. For any of these “castles in the air” insurance schemes to work, that is what is required, yet it is impossible.
Blake, thank you for the article. Unfortunately, I did not read it until now.
I will go out on a limb to say that the costs of delivery and financing of healthcare in America will remain unsustainable until we, as a society, redefine what it means to care for the sick amongst us. While both conceptual measures are necessary to some degree, they are insufficient.
As in other spheres of engagement, we have outsourced the care and nurturing of our sick to “professionals”. Informal caregivers have chosen to be relegated to the background with little to no influence over the nature, content, or quality of care provided to their near and dear ones. The result has been to organize care in a way that keeps our sick on the outside looking in.
Similarly, we have defined what health care financing looks like for each of us in terms of rational measures of “risk”. The rational human is a mythical creature. Emotions are now recognized as being socially constructed (see Lisa Feldman Barrett’s “How Emotions Are Made:The Secret Life of the Brain”). Discussions about our bodies and our well being are emotion laden topics, unlike those involving our cars. Mortality tables and risk segmentations notwithstanding, we shape the true cost of care. Algorithms can predict, but unlike humans who have the ability to correct prediction error on the fly as we negotiate our relationships with the healthcare system, we are not at a point where algorithms can ever correct for how our emotions shape premiums. The inherent bias in how the data are contextualized skews all attempts at correction.
Blake: Thank you for a very concise, straight-forward, easy to understand article. Resource allocation is never easy. I’ve thought (being over 65) that we spend too much on the elderly and not enough on the young. But that’s my predisposition. I’d say it’s society’s obligation to give the young (say up to 25) every opportunity to develop into responsible contributors to and participants in society. That’s healthcare, education, etc. We elderly have had our opportunity. We need safety nets, for sure, but…
Write more articles Blake!
” it must control costs through a mechanism other than free market competition. I’m all for competition in the right markets, but it necessarily and inherently results in vast inequality.”
The problem is that you are suggesting a political solution over a market solution and those solutions are not sustainable. Classes remain, even moreso. They have mechanisms to prevent rising costs (not totally successful and therefore the unsustainability) and that includes limiting the amount of care provided. Political solutions don’t last. Look at the ACA. Here today gone tomorrow. The Republican plan, here today gone tomorrow. Better to have a marketplace and subsidize those in need outside of that particular marketplace.
Along with the economic problems created by a political solution comes the loss of innovation with static responses to new problems where solutions exist. It’s bad for politicians that are not well informed to pick winners and losers.
To judge something as, “new” sets a remarkably high standard for publication. We often rehash, rethink, re-communicate our ideas. I like this, Blake. There is a straightforwardness to your comments. But, like others are saying, we are dancing around, perhaps, some miss communicated ideas and concepts. There is no relationship between cost and outcome; benefit is a surreal and unmeasurable, at present, entity. In fact, I would argue that the entire philosophy of economics and insurance is superficial and a lie; we like money and no one want to shut off the spigot. Perhaps we have entered the final phase of the ponzi scheme we set up. It will change, promise you, because the public can no longer tolerate us. Keep up the pushing, but push on our lack of shared ideas about value.
Blake,
Your article highlights the need for the healthcare debate to include acceptance, or at least recognition, of hard truths. However, I think the hard truth you identify – “We can’t afford to save every life.” – is just one of many. How do you address this hard truth: if health insurance benefits are capped, some people will literally die in their homes or on the streets without the benefit of health care that could prolong their life or ameliorate their suffering? Is this something that we should have to accept? Would you advocate for no lifetime caps on spending for Medicare beneficiaries? If not, why not? Does it make sense that America can afford uncapped care costs for people over 65, but not for people under 65?
I think the first logical fallacy in this debate is the characterization of what constitutes a “truth.” I believe that America can afford to provide necessary health care to people of all ages, so that no one needs to die a premature death. American just can’t afford to pay what hospitals, doctors, and pharmaceutical companies currently charge for that care. If American is going to have health care for everyone, it must control costs through a mechanism other than free market competition. I’m all for competition in the right markets, but it necessarily and inherently results in vast inequality.
The second logical fallacy is assuming that health insurance is even remotely similar to auto insurance. People can and do go many years, or their entire lives, without an auto accident or insurance claim. Many people choose not to own a car, and thus don’t need to buy auto insurance at all. Auto insurance allows people to manage a largely controllable risk. The need for health care is only minimally controllable, but mostly inevitable. Everyone gets sick, hurt, and eventually dies, mostly due to no fault of their own, and always at great expense. The need for health care is not a “risk” that can be effectively managed in a risk pool, at least not without excluding a significant portion of the population. This “hard truth” is why we have Medicare, because without it, many people over 65, and probably everyone over 75 or 80, would almost certainly be uninsurable.
Getting to a solution will require that America accept hard truths, but it must accept the right hard truths. Rather than putting a cap on the amount that government will pay (or require others to pay) for healthcare, perhaps the answer is to put a lifetime cap on the amount that providers may charge for such care. Some might call such a solution “socialist,” but I disagree. I believe in freedom as much as any American, but freedom doesn’t mean much if you are dead, because you hit the lifetime cap on your insurance policy.
How do you assess premiums on unlimited risk?
Instead of trying to cover all today for infinite benefits,we should be concerned about future bills exceeding $50,000 up to certain limits such as $1million which covers 99 percent of the population
Charity is recommended for the other one percent
We all know how much of a drag it is with the Obama healthcare. When searching for care plans i found this site, and i am loving my monthly premium rate.
http://familyforhealth.net/
If health care is still required by law even for the next few years. I would recommend going to this site for finding the best rates.
Is any of all this news, Bobby?
“we can’t afford to save every life. We can’t afford to pay for every $200,000 experimental treatment for a person on their deathbed.”
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This is news?
See Elhauge, 1994 “Allocating Health Care Morally.”
Moreover, just as no amount of calling heterogeneous data exchange “interoperability” will make it so, no amount of calling dubious-value-add 3rd party intermediated pre-payment of health care services “insurance” will make IT so. Only part of health insurance is actual “insurance.”