The central problem with health care in the United States is its cost. That’s the cost of health care, not the cost of health insurance. The high and growing cost of health insurance as it affects each of us is what we all talk about. The cost of the care itself is the elephant in the room that many seem unable to see and no one talks about. Most of us interact with the cost of health care through insurance companies, so it is natural to focus on the cost of health insurance…kvetch about its cost…and kvetch even louder over the remainder of the bill the insurance doesn’t cover.
Step back for a moment. Private insurance companies, like any company in the “free market,” exist to make money, whether for shareholders (in the case of for profit companies) or for the salaries of people who work there (in the case of not-for-profit insurance companies). They should make money by providing a service that is pretty straightforward: they smooth out the risk of a devastating bill. That is the fundamental mission of insurance of any kind.
Consider this: If the annual cost of routine health care per person in the United States were a manageable number relative to income, health insurance companies would have a simple task. People might be content to pay their day to day health care costs out of pocket while also paying a modest monthly premium to a health insurance company’s financial pool. In the event of a devastating bill affecting a few subscribers the bill gets paid out of the pool. No one goes bankrupt and everyone sleeps better.
But that is not where we’re at with the cost of health care in this country. In aggregate the money spent on health care per every man, woman, and child in this country is now more than $10,000 per year. Family of four? $40,000. Consider how ridiculous that is. If there were one breadwinner in a family of four and we shared national health care expenses equally (everyone paid the average cost) that breadwinner would need a $20/hour full time job (and pay no taxes) JUST to pay for health costs, no food, no housing, no car, no nothing else. Of course, absent a medical catastrophe, the actual medical bills for this hypothetical family of four wouldn’t be $40,000 per year every year, but SOME FAMILY will have a catastrophe, THAT family will face bills far higher than $40,000—and that family will face bankruptcy.
In Canada that cost per person figure is less than half, around $5000—and the Canadians are healthier and happier than we are. This is the elephant in the room that most cannot see and others intentionally ignore (or try to dismiss as fake news).
So are health insurance companies to blame for the cost? Consider what our screwed up system asks them to do. If a health insurance company is to make any money it doesn’t just have to administer the spreading of risk (the traditional function of insurance), it is asked to control the cost of the health care provided, that is, to bargain with a whole array of health care providers over cost. What gets considered? The bargaining chips (before the ACA) were caps on total annual and lifetime expenditures, exclusive provider networks, numbers of patients (insurance subscribers) offered, limitations of services offered, etc., etc. After all this bargaining a policy containing acres of fine print was offered to insurance subscribers to puzzle over. (All this bargaining requires armies of employees who are paid to spar with providers over what gets paid and how much. That’s a major part of insurance company overhead.)
The authors of the Affordable Care Act saw and addressed most of the fine print problems with health insurance (but not with the cost of health care, the main driver of health insurance premiums). The ACA standardized health insurance coverage and in so doing greatly simplified the fine print. Gone were lifetime and annual caps on coverage, gone were weaselly words that excluded pre-existing conditions. In exchange the insurance companies got the “Individual Mandate,” simply a mandate for more people to participate, to spread the risk, the thing insurance companies are supposed to do. What the ACA did NOT do well was tackle the actual cost of health care. Legislative reality and concerted lobbying prevented efforts to allow government to bargain over drug prices and scotched the attempt to offer a “public option.”
The Republican/Libertarian response? Regardless of the intent of the ACA (to provide health insurance for the entire population), the Libertarians saw another government controlled and tax funded social program to be resisted, not improved. They seized on the rising cost of health insurance for the still healthy insurance buyer and completely ignored the ridiculous total and average cost per person of health care. They set to work immediately by every legal and legislative means available to them to dismember the Affordable Care Act. They voted time and time again to repeal the ACA in its entirety, while offering no solution at all for the problems the ACA was designed to fix. They railed endlessly about personal choice, free markets, and government overreach. With all this they assured the cost of health insurance would rise and then they pointed to that rise in cost as yet another reason to dismantle the ACA rather than work on it’s problems.
And now they’ve hacked away, citing, as McMorris Rodgers has, things like the repeal of the Individual Mandate (as part of their Tax Law) as a crowning achievement of the Republicans under Trump. They’ve hacked away until now they own the mess they’ve created. The complexity of pre-ACA health insurance is looming once again and they don’t have the first clue how to fix it. As I will show you tomorrow, judging by her own words, McMorris Rodgers doesn’t even understand how insurance works.
Keep to the high ground,
Jerry