Affordable Health Care

This is a continuation of ideas raised in Garrett's SCHIP post.

Is there an affordable healthcare crisis in America? Yes. Is there a simple, root cause for this; i.e., "evil" insurance companies. No.

There are many factors that conspire to create an environment of spiraling healthcase insurance premiums which are growing, by some estimates, at 15% a year.

Note that a lot of the following constitutes my opinion based on many years of consulting to the insurance and emergency services industries. And some of it is conjecture. I have not seen "Sicko" nor wish to since "balance" and "Moore" are rarely on the same page.

• Medical liability. Doctors seem to fear making educated guesses about problems, probably due to the many liability lawsuits flying around. Therefore, it seems to me that a patient is subjected to much more expansive and expensive testing when being treated for CYA purposes. And medical liability premiums to protect from lawsuits are ridiculously expensive, forcing medical professionals to charge more for services. There's also my second point....
• ...federated services. Many doctors have stakes in testing facilities and send a patient to be tested even when not strictly necessary. Since there's a faceless insurance company paying, the expense is desensitized and the doctor does not have to worry about financial impact to his patient.
• Hidden true costs of treatment. Many people seek medical attention for trivial reasons because they are insured and are insulated from the actual cost of the services. If a policy covers a procedure than the patient is far more likely to undergo it, even if elective, than they would if paying for it directly. This drives up the cost of insurance premiums.
• Hospitals are required to treat all people, regardless of ability to pay. While admirable, the hospital must charge the people who can pay much more to cover these costs.
• Personal accountability. Many people gamble on not buying insurance because it would require limiting other expenditures. Folks are over-extended in credit not because they used their Visa to buy a root canal, but to buy a new HD TV. The insurance isn't prioritized. To these people, insurance is not "affordable" because it would require undesirable lifestyle adjustments.
• Choices. People do not, sometimes cannot, avail themselves of the choices of healthcare out there. For example, many employers offer healthcare benefits with low deductibles and a high benefit payout which increases premium costs. Sometimes, an individual would be better off with a high deductible policy and a small monthly investment into a Flexible Savings Account to cover that deductible.

Insurance companies do make a profit and that's why they are in business. Many of these companies are traded publicly, which means anyone can go over to the SEC Edgar website and get an Annual Report. What you will see, generally speaking, is that profits (and losses) are in line with corporations as a whole. Also, insurance companies are required to maintain huge cash reserves in case of catastrophic claims. This is money that, in general, they can't touch and setting reserves detracts from profits.

Insurance companies pay claims within the structure and guidelines of UCR (usual and customary) service costs which are determined by HICFA or other organizations annually. When a patient has a horror story it's usually due to one of several reasons:

• The service charged far outside the usual costs and is disallowed.
• The patient did not follow policy procedure before taking treatment.
• The service provider is not an approved provider.
• The insured's coverage had lapsed.

In you look analytically at some of these horror stories and not emotionally, you'll see a lot of "Yes, but's" coming from the claimant. And it's generally one of the reasons I listed. Insurance companies exist to service people and make a profit. Not rip people off.

The SCHIP efforts are a great effort to make healthcare coverage available to as many people as possible but there have to be stringent guidelines as to who can be accepted into the programs. It's unfair to the truly indigent to accept a family into the program who simply can't live without their HBO and that, I think, is one of the concerns alluded to in Garrett's post.

Finally, there are ripoff "healthcare clubs" out there who will sell you memberships that are nothing more than price negotiation services - but you'd never know until push comes to shove that they are not really selling insurance. These are the true slimeballs.