If there isn’t a stronger regulation over how much insurance companies can charge for premiums and how they come to that figure, some insurance companies can continue to raise premiums without explanation. As high as health care costs already high, increasing premiums will only make the load on expenses for the average citizen even higher.

Great post. This continues the debate whether health care should be run by market forces, or controlled by the state. Because the health care and insurance industry is usually dominated by a few large companies, competition does not result in price cutting. Instead, it has resulted in companies agreeing on fixed prices or altogether raising the prices. This will not be an issue with only one or two companies, but with the industry as a whole.

Lafayette,

Great post… and thanks for the RSAnimated link…I love that series.

Animated info-graphic: The Crises of Capitalism

Capitalism is in crisis, yet again.

But it is far from dead-as-a-doornail.

A MORAL ABSOLUTE

cul: Do you suppose such a system will occur more likely under private insurance schemes or from government regulated healthcare?

The system is broke because we treat health-care like any other market. But it is NOT just any other market, and for two reasons.
* HC-services is not like designing/commercializing iPads. It is not even like another service-industry, say, real estate or law. It takes a great long time to train and apprentice doctors, which changes substantially the nature of the market for HC-services.
* Making it an oligopoly with too many Consumers chasing too few Suppliers. Obesity simply aggravates the problem by inflating the Demand side of the economic equation. So, prices rise inexorably, which also produces the phenomenon whereby too many Consumers are sidelined - in fact that percentage has reached 16% in the US who have no insurance coverage whatsoever.

The Public Option thus becomes a Public Necessity, as it is for Policework, Firefighting, Defense of the nation - or any other Public Service that is of general utility (read also “necessity”) to all citizens.

We were duped by the Reaganite genuflection at the altar of Free Enterprise, which brought about such Ayn Randian notions that “markets are self-correcting”. We saw what the Sub-Prime Mess made of that idiocy. We are witnessing what it does for preventive/remedial Health Care.

In fact, in the past, it WAS a public option. Local hospitals and clinics were largely run as Public Services. All that changed in America’s head-long rush to seek the Almighty Dollar.

We have been worshiping at the altar of the God of Mammon. It’s time to get back to basics. Who is the central actor of both a nation’s economy and society if not its citizens? The collective need for adequate Health Care thus trumps the individual desire to achieve and enrich oneself.

MY POINT

Affordable and Accessible Health Care thus becomes a Moral Absolute. Going to the ER, when it is far too late, is just not on anymore.

European countries recognized this Moral Absolute half a century ago with its National Health Care systems - at a cost less than half or even a third of the US. Uncle Sam has been clearly out-to-lunch on Health Care services.

POST SCRIPTUM

Btw, it is also why - as a nation - we have lost 1.3 years off our expected life-span in the recent past. No other modern nation on earth has managed to achieve that Sad Statistic.

Lafayette,

“And here we are, as a nation, bickering over whether HC should be privatized or public?  When the menace from any illness listed above is wreaking havoc upon us?

Connect the dots ... ? “

Yes we do need it now and yes I do.

Do you suppose such a system will occur more likely under private insurance schemes or from government regulated healthcare?

Part of the problem in the US is that remedial carte trumps preventative care. In Canada the opposite is true. But overall the problem with obesity is more a question of refined food products pushed by the food industry and abetted by the USDA.

http://deeperwants.com/ratboys_anvil_2/2011/04/leptin-vs-grehlin-and-the-evil.html

I did not expect Fat Freddy to post an honest attempt to discuss his position. Thus I was not disappointed in his responses. Sad, yes, but his basic dishonesty was clearly evident I believe.

Of course, his premise, that govt cannot ever do things right and we should leave all things to private corporations, is refuted almost daily in our newspaper headlines.

By all means, Freddy, let us leave our governance to BP, Exxon-Mobil, Halliburton, Goldman Sachs et al. After all, they have proven to be so honest and trustworthy in the past, haven’t they?

Lastly, those things one may be critical of our current political system for are all, in the end, attributed to the poisonous influence of private corporations.

A MENU OF MALADIES

NYT: Even with a halting economic recovery, doctors and others say many people are still extremely budget-conscious, signaling the possibility of a fundamental change in Americans’ appetite for health care.

Appetite? Health Care is like ordering a BigMac?

Health Care is more a necessity than a whimsy. It is also a Public Service and should be both affordable and accessible by all members of the population - but particularly the older ones. Since HC-services, statistics show, are needed more by the older members of the population.

But, here’s the kicker: Due to the Obesity Pandemic in the US, the age at which serious maladies occur is lowering in the US. The illnesses that obesity provokes are serious:
  *High Blood pressure, hypertension - One-third of all cases of high blood pressure are associated with obesity High blood pressure is twice as common in adults who are obese than in those who are at a healthy weight.
  *High blood cholesterol - 50% more likely to have elevated blood cholesterol levels.
  *Diabetes Type 2 - non-insulin dependent accounts for nearly 90% of all cases of diabetes. Researchers estimate that 88 to 97% of type 2 diabetes cases diagnosed in overweight people are a direct result of obesity
  *Congestive heart failure - obesity increases the risk of congestive heart failure, a potentially fatal condition in which the heart muscle weakens, progressively losing the ability to pump blood.
  *Heart disease - heart attack, congestive heart failure, sudden cardiac death, angina or chest pain, and abnormal heart rhythm is increased in persons who are overweight or obese.
  *Stroke - There is a link between obesity and stroke; this is particularly the case for people whose fat is situated predominantly in the abdominal region. Overweight people are more likely to have high blood cholesterol levels and high blood pressure, but these associations are not the only explanations for the greater stroke rate.
  *Gallstones and gallbladder disorders.
  *Gout - the condition may develop in people with obesity incidents are remarkably higher, Gout is strongly associated with obesity.
  *Osteoarthritis - Obesity may be a major factor in the development of osteoarthritis, particularly of the knee and especially in women.
  *Some types of cancer -such as endometrial, breast, prostate, and colon
  *Complications of pregnancy.
  *Poor female reproductive health - examples would be menstrual irregularities, infertility, irregular ovulation.
  *Bladder control problems - such as stress incontinence.
  *Psychological disorders -such as depression, eating disorders, distorted body image, and low self- esteem.

How’s that for a menu of maladies?

MY POINT

And here we are, as a nation, bickering over whether HC should be privatized or public?  When the menace from any illness listed above is wreaking havoc upon us?

The illnesses listed will either kill or debilitate more Americans that Ossama bin Laden ever did or ever would. And we go on blithely chuffing down excess calories as if there were no tomorrow.

The baseline necessity of caloric intake per day is 2000 kcal. Americans consume around 3600 daily, which is 80% more than the baseline. (See here. )

We need a Public Option HC-system focusing on both Preventive and Remedial Care today, not tomorrow.

Connect the dots ... ?

FF:

How many brands of gas are in your neighborhood?
Exxon
Lukoil
Shell
Gulf
BP
Sunoco

Any others? (not the cheapos like Delta and RaceTrack).

Six companies and some, their prices move in total lock-step with each other, region by region and even neighborhood by neighborhood.  Near my house, Ex and Luk are 20 cents higher than where I work, but they are always within a cent of each other.  How DO they manage that without defacto price-fixing?

I stand by my argument on health care. Only United is seeking to actually deliver effective care at effective prices.

Fat Freddy, May 15 at 9:58 am,

The “free market” is no more than a device of sophistry that does not
exist.

If the “free market” does exist, or ever has existed, please provide
the sublative formulaic structure that represents the “free market”;
i.e., x=x, and the dialectical logic that expresses the “free market” as
an expression of mathematica.

What good does it do to force the common insured population to
take all the free or partially free exams to find out if you have breast
or colon cancer if the insurance you’re paying for will not pay for
cancer therapy and/or surgery and you can’t afford it yourself?  How
much good is that?  The only way it would be beneficial would be if
there is universal single payer health care, where all citizens are able
to get medical attention without cost, like in so many other civilized
countries and Vermont.

ardee,

I believe you are suffering from ‘The “Cult” of Progressivism’, wherein believers “think” that problems/disasters caused by a Govt program can be fixed by even more Govt programs and that problems caused by hundreds of thousands of pages of laws being broken and not enforced will be fixed by more 3,000-page laws that will be broken and not enforced. Sheer geniuses!

- the very definition of insanity!

Far better to work to make our government better at its job than to leave the field to rampant capitalism and expect roses to bloom!

Exactly. Why on Earth should people be allowed to freely exchange goods and services? [/sarcasm]. Unfortunately, ardee, you confuse Capitalism with Mercantilism. If we had a decent courts system that actually enforced the non-aggression principle, we could have free markets, including a free market in health insurance and delivery. But the government knows what’s best for us. They won’t allow free markets, because they would lose control over us. Rand Paul was right that we are slaves, but for the wrong reasons. We are slaves to the government and their cronies. The insurance companies exploit the coercive power of government. Without the legalized use of force, authorized by the government, they would have no choice but to compete on a level playing field, and actually be ‘forced’ to meet the real demands of consumers.

That’s econ for dummies, ardee. Here’s a lesson in basic economics so a 4th grader can understand it.

http://www.youtube.com/watch?v=u6H63CD7uQA&feature=player_embedded

But they don’t teach econ or finance to students, so they remain ignorant of the facts, and clueless to the machinations of corporations and the government, and in fact, learn how to be a good little slave.

http://www.elfors.org/index.php?option=com_content&view=article&id=65&Itemid=50

The Story of Your Enslavement Stefan Molyneux:

http://www.youtube.com/watch?v=Xbp6umQT58A

And, BTW, I am not “right-wing”. They are statists, just like liberals. I am an anarchist. Please make a note of it.

Another reason to change the medical insurance profession to a cost plus industry.

Sorry ardee, but your link is about 3 years too old. Here’s one from last week, and actually from a Boston news source.

http://bostonherald.com/news/opinion/op_ed/view.bg?articleid=1336822

The problem is that if you use the insurance you buy, you can’t be
sure that the insurance company will pay what they say they will
pay, as medical practice may not be exactly as written after the fact,
and the insured is the responsible party not the insurance companies. 

The cost of surgery is outrageously expensive; if the insurance
company decides due to a technicality not to pay, the insured is
stuck with the debt, which causes people to put off medical
treatment as long as possible to keep from going into debt, as
private insurance companies are out to make a profit and are not
concerned about the expense to the insured, which is a great risk
for the insured, which is why I support single payer universal
health care where the need of medical care will no longer be a
strategy of whether or not one can afford another stressful debt.

@ DaveZx3,

boiling down your rather comprehensive reply to my query regarding whether private insurance companies enhance the health care system or impede it : “I would rather live 50 years a free man than 100 years with the govt telling me when to eat my spinach.”

I lived under the Canadian universal single-payer system for over 35 yrs and not once did the gov’t ever make a request of me, or more importantly, demand, that I eat more spinach. The problem as I see in the US is that Americans have a difficult time seeing how to manage health care and other social needs outside of a capitalist/business model.
Americans tend to want to view government itself as something that should be subject to and managed through business economic paradigms, which is really a poor idea since government is not in business to make profit. Government is the expense and methods of doing civilization. Business cannot print or create money, governments can. Businesses can go broke, a government that creates its own money cannot.

Only in the US, propagandized and mesmerized by business and profit model thought as its population has so thoroughly been, is health care reasonably seen as a market commodity, rather than as a necessary cultural utility benefiting and paid for by all. There is absolutely nothing free about the American health care for profit industry markets.

I submit that the risk management market in the US is exactly what needs to be removed in order to actually make US health care manageable.

Part deux

I would only add, to avoid the post becoming a treatise, that the history of Big Business in these United States is replete with stories of price fixing, bought off legislators, inferior products and too high prices. There is not one major industry that has not been found to engage in such practices when govt. regulation is suspended or otherwise found wanting.

Can our govt do a better job of regulating industry? Certainly they can and should. Are there instances when intersession by govt. have made things worse. Of course they can be found. That these instances are used to promote the dangerous absurdity that ,if left to their own devices, our CEO’s will choose honesty over profit, will work diligently to make a good product at a good price, is just another in a long list of right wing absurdities. Further it is a very dangerous path to tread.

Far better to work to make our government better at its job than to leave the field to rampant capitalism and expect roses to bloom!

Despite the well posed argument against Health Care Industry regulation posed by Freddy there are some needed corrections, or to be more exact, better definitions.

The thrust of his argument is that govt. intercession in the health care industry, or, presumably, any industry by default, leads only to a worsening of both quality and cost. An argument that the right wing parses so often as to almost ensure it becomes as fact. As he calls the Mass. plan a disaster I guess leading off with that canard might be proper:

http://prospect.org/cs/articles?article=a_limited_health_care_success_in_massachussetts_

A Limited Health-Care Success in Massachussetts

Everyone who looks at the Massachusetts health reform plan sees what they want to see. But evaluated on its own terms, the plan says much about the pitfalls and promises of reform.

Did it succeed? We don’t know yet. The plan has a three-year implementation process and we’re about halfway through. The early evidence suggests that the plan is on track to achieve its goals. But even if it were to prove fully successful, it wouldn’t be enough to solve Massachusetts’ health-care problems, much less the nation’s. Without solving cost, you can’t solve health care. The question is whether expanding coverage helps create the political incentives to face down cost.

Much more to read there should you be interested. The emboldened sentences are mine….

But as the HC and HI companies continue to
consolidate, there won’t be competitive choices in
your free market world either.

Of course. There never has been, thanks to the
‘employer-based system’ we have. Why? There’s a long
history of government intervention in the health
insurance industry dating back to FDR. More
government intervention will only make things worse. (See my link below.)

How are gas prices monopoly based? Oil is traded on a
world commodities system. There are literally
thousands of players involved. Sure, the CME and ICE
can be manipulated by large players like JP Morgan
and Goldman Sachs, and the individual exchanges can
hike or reduce margin requirements, but there are
just too many firms and individuals involved for any
manipulation scheme to last for any extended period
of time. Sure, people complain about speculators when
the price is too high, but they sure-as-shit don’t
thank them when the price is low. If enough investors
think the price of oil is too high, they will short
the market, which will bring the prices down. It
works both ways. If you want to know why the price of oil is high, look at supply, demand, and more importantly, the value of the US Dollar.

FF:

Of course it’s a failure. The health insurance companies’ goal is to only insure healthy people so they don’t have to actually pay for care.

The health care companies’ goal is to maximize things to charge for, from Medicare, Medicaid and the insurance companies.

Neither is interested in whether you or I get the health care we need or even pay for beyond what they are forced to cover by government regulation or fear of lawsuits.  As the courts make it harder and harder to sue corporations, the latter will disappear.

But as the HC and HI companies continue to consolidate, there won’t be competitive choices in your free market world either. 

Monopoly/oligopoly pricing theory is quite different than competitive pricing theory. Why? Because consumers are faced with one choice: Pay or do without.  At some price point they must do without. So monopoly pricing is based on finding that balance point.  Kind of a monopoly Laffer’s curve.

We are already seeing it in gas usage, where pricing is effectively monopoly based.  People are simply cutting back on driving.  They have to.

DaveZx3

I agree that insurance, in general, is “simply one of
many risk management options”. However, health
insurance is not like other types of insurance.

Unlike other forms of insurance, the
primary purpose of these [early] plans was not to protect
consumers from large, unforeseen expenses, but rather
to keep hospitals in business by guaranteeing them a
regular income. While these plans benefited consumers by giving them a predictable method of paying for their medical care, they contained serious flaws that would become increasingly apparent as our health care system developed.  This multiple hospital plan served as a model for Blue Cross, established in 1932 in Sacramento, California. These hospital plans changed the concept of insurance and forever changed the American health care system

http://findarticles.com/p/articles/mi_m1094/is_n2_v28
/ai_13834930/

Historically, health insurance companies have operated
on a 7-8% profit margin. Very modest, indeed. Thanks to the new healthcare
Bill, those profit margins are expected to climb to as
much as 20% according to Goldman Sachs. Well, what did you expect? The first thing
that happened in Mass. after Romneycare was passed was
all the rates went up, across the board. The plan I buy
in NJ that costs me about $250/month, would cost me
over $500 in Mass. Yes, I did check into it. Romneycare
is a failure, as Obamacare will be a failure, as well.

So, how’s that Hope and Change working out for you? Americans can’t even get a little pocket change

I heard Vermont is working on passing a single-payer system. I would love to see how that works out.

By culheath, May 14 at 9:21 pm Link to this comment

“What benefit or service do private health insurance companies provide patients or health care providers? Do they enhance the health care system or impede it?”
————————————————————————————
Insurance is simply one of many risk management options.
Risk is obviously the potential for a loss of some sort, economic or otherwise. Since everyone faces small and large risks everyday, they must determine how to best minimize or completely avoid these risks.

Sometimes you can easily avoid a risk, such as not being liable for an auto accident by simply not driving.  But if you must drive, then you may CHOOSE to use insurance as the risk management option. 

Insurance simply transfers your risk of loss to the insurance company.  You trade an unknown (as to severity and/or frequency) risk of loss, for a fixed loss, ie: the cost of the annual premium. 

Risk management attempts to minimize or reduce your risks of loss by many means, insurance being the last option, mainly because insurance is always the most expensive.  Insurance can be a more reasonable expense where the actuarial frequency and severity of loss can be very accurately determined.

Insurance becomes a very, very expensive option when actuaries cannot adequately determine frequency and severity.  An insurance company attempts to maintain adequate reserves for the catastrophic loss, and if the potential for this loss cannot be adequately determined, very high premiums must be charged to cover unknown potentials. 

This is one of the reasons health insurance is a very stupid way to handle the risk of medical loss.  For one thing, people want their insurance to pay for things which are not really risks, such as routine care.  This would be like asking an insurance company to pay for your oil change, a known expense, and definitely not a risk.  Do you think that funneling your oil change expenses through a large insurance company would lower your oil change expenses? 

The same holds true for senior citizens.  It is practically a certainty, and not a risk, that senior citizens will need significant medical care in their old age.  So insurance becomes an extremely ignorant management technique for these costs. 

The problem with government dealing with these health issues, is that they operate from a political standpoint, trying to legislate an industry to do something which it is not really fit to do simply because it is perceived to have deep pockets, while not fully understanding the function of those pockets. 

Also the legislation of health insurance benefits makes the loss scenario a moving target to the insurance company so premiums must rise to cover losses which are changing at the whim of government, like legislating coverage for pre-existing conditions.  That is like insuring your house after it burns down.  This legislation transfers your risk without the payment of premium.  The problem with that should be obvious. 

The bottom line is this:  if insurance premiums seem too high, then it is time to use another risk management technique.  From the standpoint of the health of the average American, a good start would be to simply get fit and eat better food and give up excessive drug abuse, and other bad habits.  Beyond that, there have been literally hundreds of risk management techniques identified which communties can use to handle the legitimate higher medical risks of its people. 

The fact that these are never considered tells me that health is not the real issue but control.  You can control people by mandating them into the one-size-fits-all risk pool where premiums (taxes) and benefits are legislated, and at some point, habits will start to be legislated in the name of reducing costs. 

I would rather live 50 years a free man than 100 years with the govt telling me when to eat my spinach.

What benefit or service do private health insurance companies provide patients or health care providers? Do they enhance the health care system or impede it?

Fixing the “free rider” problem is not the purpose of
the individual mandate

http://washingtonexaminer.com/blogs/beltway-confidential/2011/05/fixing-free-rider-problem-not-purpose-individual-mandate

In summary, the mandate is not about confronting
uncompensated care, because it casts a much wider net
than actual free riders by treating everybody who
chooses to go without insurance as a deadbeat. And
while we can debate ways to treat those with pre-
existing conditions, dealing with the issue by
forcing millions of people to each pay thousands of
dollars more for health care every year than they
actually need to is neither fair nor just. And
hopefully, the courts will recognize that the federal
mandate isn’t constitutional, either.

That’s becase we are suckers.

If you’re tired of being treated like a sucker, stop acting like a lolli-pop.

FIGHT THE CAUSE - NOT THE SYMPTOM
Wake up America. It’s time…
 
“THE REVOLUTION HAS STARTED”
Read “Common Sense 3.1” at ( http://www.revolution2.osixs.org )
 
“Spread the News”

The money spent by insurers bribing congress and the president with multimillion dollar
campaign contributions was well spent. Health care reform was a smashing success,
and president Obama will take full credit for it. Soon all will be required to pay, with the
IRS acting as the enforcer. Can’t wait to see their profits then. Soon congress will
succeed in outlawing supplements and vitamins, along with supplements. Guaranteeing
the revenue streams of the insurance companies with a steady stream of sick and dying
Americans, forced into eating poisonous food and drugs. Our miseries will be unending,
as long as Sauron rules.

Actually, the Health Insurers profits are much lower than they could be, by some analyses. The bonuses they pay to their medical managers are growing rapidly. They now pay bonuses up to $50K for each insured they manage who dies of stroke, by avoiding paying for bypasses, $100K for each client who dies of cardiac arrest, as a result of the insurers refusing to pay for transplants, while maintaining the standard bonus rate of $5K for each infant mortality as a result of disapproval of adequate pre-natal care.

The insurers assure their stockholders that their financial decisions provide the maximum corporate profit, because the bonuses for their health care ‘decision-makers’, while substantial, ‘Are much less than the costs of providing adequate medical care for the insured’.