American Elephants

Confused about Health Insurance? Who isn’t. by The Elephant's Child

Back during World War II, the Roosevelt administration instituted wage and price controls, as well as rationing of gasoline, tires, meat, cheese, butter (margarine appeared on the market for the first time — a sealed bag of a pure white substance something like Crisco with a gelatin capsule of yellow food color and butter flavor — you kneaded it to break the capsule and turn the stuff yellow) and all sorts of other things were just unavailable.

Since businesses could not offer their employees raises, employer-paid health insurance was offered.  Health insurance itself was a brand new thing. As with most government interference in the marketplace, it had some advantages and a lot of disadvantages.

Since health insurance was — at first — free, people got into the habit of seeing their doctor for more and more things. Over the years, more drugs were developed to cure or alleviate disease, and often competing pharmaceutical companies developed competing drugs. As the marketplace became more crowded, advertising became more common. With the advent of more media, there was of course more advertising. More over-the-counter vitamins, drugs, herbs. More discussion in the media about what to do about this condition and that. More semi-medical advice, more warnings of dangerous pesticides, metals, electricity.  Is it any wonder that we have become, to a certain extent, a nation of hypochondriacs. And you were asking why health insurance has become so expensive?

State legislators are happy to add mandates to health insurance. An aunt that is into acupuncture, naturopathy, a depressed spouse, a child that has special needs.  Legislators are very open to lobbying by friends, relatives, representatives of uncovered health care providers, drug makers, people with life threatening conditions, or rare conditions.  Each mandate added, in the well-meaning intent to be kind, adds to the cost of insurance.  In my state a pharmacist sued successfully to have birth-control pill coverage added.  Shouldn’t people have to pay for something themselves?

Miraculous new machines that allow doctors to conduct lifesaving tests, people living longer, more specialists, joint replacements, artificial hearts, pacemakers, bypasses, organ replacement.  And you complain because your co-payment has gone up.

But there are 45.7 million people officially classified by the Census Bureau as uninsured in 2007.  That’s a crisis, isn’t it?  If 15% of the population is uninsured, then the current system must be failing.

The Census Bureau doesn’t tell us that 45.7 million people are chronically uninsured for the entire year. It only approximates the number who are uninsured at a moment in time. When workers quit or lose their job they may experience only a very temporary interruption in their insurance, sometimes only a few days.

Many people are uninsured for reasons that are not related to cost. Census data show that many of the uninsured are relatively affluent.  Over 17.5 million —38% — of the uninsured make more than $50,000 a year, and 9.1 million make over $75,000 a year.  Many financially comfortable young Americans choose not to purchase health insurance.  They would rather keep their money than shell out for premiums made expensive by many mandates added by states.

There are roughly 8 million working poor who are chronically uninsured.  Folks who earn less than $50,000, and simply cannot afford insurance. These are the people we should be focusing on, straightforward coverage that will cover them in the case of a catastrophe.

Barack Obama’s health-care plan features a favorite ploy of politicians. He says he would cut the average family’s annual health-insurance premiums by $2,500 and everyone would get coverage as good as his congressional plan. Obama would spend $50 billion (you will notice that Obama’s programs always start with spending  X billion dollars) to promote health IT.  A well-known RAND study claims Health IT would save $77 billion after 15 years of putting the infrastructure in place. The Congressional Budget Office says health IT will not produce significant savings in the near term, but would push costs up.

Joseph Antos, Wilson H. Taylor Scholar in health-care and retirement policy at the American Enterprise Institute says that $46 billion could be saved if the insurance industry’s overhead costs were lowered to levels seen in Germany, but we would still be short $240 billion of promised savings.

John McCain has a different approach.  He will remove part of the tax-credit that your employer receives for providing your insurance.  That will encourage employers to return to you the amount of salary that you did not receive because it went to the cost of health care.  Instead, you will get the tax-credit for your own insurance.  The tax credit, as I understand it, goes to your insurance company.  With the tax credit and the additional salary, you will be able to buy your own insurance easily and more cheaply.  McCain wants to open the market for health insurance across state lines.

Increased competition will allow you to get the particular policy that is best for you, and it will follow you to any job.  You will no longer have to worry about losing your insurance if you lose your job.  Increased competition will bring down the cost of insurance as well as increasing choice.  There is no industry, business or product that competition has not improved.  Freedom from state mandates will improve your choices.  McCain does not want to eliminate employer-paid health insurance, but rather offer more options and more freedom.

I have written before about socialized medicine, and why it is a disaster everywhere it is tried, here.  The State of Massachusetts adopted a state universal health insurance program.  It would be the test ground to see how well universal health care would work here in the United States.  You don’t hear much about it, but here’s a report on how it’s going.  I would urge you to read the whole thing.

These are things that affect the coming election, and it is important to cast an informed vote. The Democrats have long hoped for universal health care.  Once adopted, it is almost impossible to get rid of.  But many people refuse to do their homework, study how it is working in England and Canada.  You may not be able to control what our servants in Washington do, but it is possible to be well informed, and that is the best protection you can have.

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