The health insurance conundrum

In the early '60s, one could afford to pay medical providers what was billed — that is, medical providers were required to bill what their customers could afford, like all others in the economy.  Catastrophe insurance was available for major illnesses at a reasonable price.  This was the proper use of insurance.

Then, suddenly, catastrophe insurance was no longer available.  This occurred because insurance companies discovered the more lucrative employer-paid plans.  Still, the premiums were relatively low, which is to say affordable.

Enter Lyndon Baines Johnson and Medicare, and Social Security benefits.

Social Security was set up by Franklin Roosevelt to provide welfare for those who, through no fault of their own, were no longer able to work.  Since Medicare was available to all, Lyndon made Social Security benefits available to all, from a welfare program to a retirement program.

This upset both medical care and retirement.  Folks who turned 65 were quite happy with their private health insurance, but Lyndon mandated coverage under Medicare.  Folks who set aside money for retirement were now required to set aside money to finance a Ponzi scheme.

Problems: First, medical providers do all they can to avoid Medicare patients.  Reason: Medicare pays less for care than the care costs.  Because costs accelerated when providers were able to charge exorbitant fees.  After all, customers were now insurance companies who had incentive, or ability, to control costs.  Insurance companies responded by increasing premiums.

Second, most hospitals, and medical providers who associate with a hospital, must provide care for free to those not covered by insurance.  Many found this loophole and declined to buy health insurance.

Third, now what to do about said uninsured, those who decline to buy health insurance or those with pre-existing conditions?  The latter was a pretense.  Those with pre-existing conditions could still be insured, just not for the pre-existing condition, at least for a year — a feature that seemed a reasonable response to those who decline to purchase insurance until they have a heart attack.

The solution: Under the ACA, both populations were guaranteed coverage — hence the further escalation of health insurance premium costs to as much as $20,000 per year.

So we are now faced with the following scenarios:

1. Bert's employer pays $20,000 annually on his behalf for medical insurance.  Bert is angry.  He says he would rather health insurance premiums were $10,000, or $5,000, and he could put the difference in his pocket.  Additionally, taxpayers pay at least 20% of the $20,000.  Reason: The employee is not required to report the corresponding $20,000 as income.

2. Bert earns $300,000 per year, yet he receives Social Security benefits of $30,000 per year, and because he is married, his combined benefits with his wife increase to $45,000.

The current solution: Increase the annual deficit.  Not sustainable, we are told.  Who cares? we respond; after all the federal government has been operating with annual deficits for over 200 years.

It occurs to me that there is another solution:

In 2003, my wife and I were on our way road-tripping to Alaska for my 50th class reunion.  At Watson Lake, Canada, Sharon said she couldn't go farther — shortness of breath.  So we went to the hospital.  When we entered the emergency room, they looked at her, and two people rushed out with a wheelchair and rushed her back for triage.  A doctor soon appeared and diagnosed her with strep pneumonia and put her on IVs and oxygen.  Then I was directed to billing and gave them my credit card information.  Over the next week, we went in each morning, and they would put her on IV and oxygen.  The doctor said we could opt for hospitalization, but we opted for the former.  It was interesting — there was a waiting area, and we would sit with other incoming patients.  One guy came in with a cut on his arm.  Another came in and claimed a pain in his shoulder, needed pain meds.  And we all sat and visited.  After a week, the doctor said it would be safe to return home for further care.

The hospital billed $200.  The doctor billed $95.

I don't know the particulars of Canada's system other than that.  But my conclusion was that for situations like Sharon's, universal care works.  But for situations like the heart surgery ultimately done in Oklahoma, my understanding is that universal care does not cover such.  The same applies to research, as is done in our country's hospitals and research facilities.

So maybe there is room in our country for a two-level care system.  Routine care under a universal care system and major medical under an insurance-based system.

In the early '60s, one could afford to pay medical providers what was billed — that is, medical providers were required to bill what their customers could afford, like all others in the economy.  Catastrophe insurance was available for major illnesses at a reasonable price.  This was the proper use of insurance.

Then, suddenly, catastrophe insurance was no longer available.  This occurred because insurance companies discovered the more lucrative employer-paid plans.  Still, the premiums were relatively low, which is to say affordable.

Enter Lyndon Baines Johnson and Medicare, and Social Security benefits.

Social Security was set up by Franklin Roosevelt to provide welfare for those who, through no fault of their own, were no longer able to work.  Since Medicare was available to all, Lyndon made Social Security benefits available to all, from a welfare program to a retirement program.

This upset both medical care and retirement.  Folks who turned 65 were quite happy with their private health insurance, but Lyndon mandated coverage under Medicare.  Folks who set aside money for retirement were now required to set aside money to finance a Ponzi scheme.

Problems: First, medical providers do all they can to avoid Medicare patients.  Reason: Medicare pays less for care than the care costs.  Because costs accelerated when providers were able to charge exorbitant fees.  After all, customers were now insurance companies who had incentive, or ability, to control costs.  Insurance companies responded by increasing premiums.

Second, most hospitals, and medical providers who associate with a hospital, must provide care for free to those not covered by insurance.  Many found this loophole and declined to buy health insurance.

Third, now what to do about said uninsured, those who decline to buy health insurance or those with pre-existing conditions?  The latter was a pretense.  Those with pre-existing conditions could still be insured, just not for the pre-existing condition, at least for a year — a feature that seemed a reasonable response to those who decline to purchase insurance until they have a heart attack.

The solution: Under the ACA, both populations were guaranteed coverage — hence the further escalation of health insurance premium costs to as much as $20,000 per year.

So we are now faced with the following scenarios:

1. Bert's employer pays $20,000 annually on his behalf for medical insurance.  Bert is angry.  He says he would rather health insurance premiums were $10,000, or $5,000, and he could put the difference in his pocket.  Additionally, taxpayers pay at least 20% of the $20,000.  Reason: The employee is not required to report the corresponding $20,000 as income.

2. Bert earns $300,000 per year, yet he receives Social Security benefits of $30,000 per year, and because he is married, his combined benefits with his wife increase to $45,000.

The current solution: Increase the annual deficit.  Not sustainable, we are told.  Who cares? we respond; after all the federal government has been operating with annual deficits for over 200 years.

It occurs to me that there is another solution:

In 2003, my wife and I were on our way road-tripping to Alaska for my 50th class reunion.  At Watson Lake, Canada, Sharon said she couldn't go farther — shortness of breath.  So we went to the hospital.  When we entered the emergency room, they looked at her, and two people rushed out with a wheelchair and rushed her back for triage.  A doctor soon appeared and diagnosed her with strep pneumonia and put her on IVs and oxygen.  Then I was directed to billing and gave them my credit card information.  Over the next week, we went in each morning, and they would put her on IV and oxygen.  The doctor said we could opt for hospitalization, but we opted for the former.  It was interesting — there was a waiting area, and we would sit with other incoming patients.  One guy came in with a cut on his arm.  Another came in and claimed a pain in his shoulder, needed pain meds.  And we all sat and visited.  After a week, the doctor said it would be safe to return home for further care.

The hospital billed $200.  The doctor billed $95.

I don't know the particulars of Canada's system other than that.  But my conclusion was that for situations like Sharon's, universal care works.  But for situations like the heart surgery ultimately done in Oklahoma, my understanding is that universal care does not cover such.  The same applies to research, as is done in our country's hospitals and research facilities.

So maybe there is room in our country for a two-level care system.  Routine care under a universal care system and major medical under an insurance-based system.