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Sunday, December 6, 2015

Now Is the Time To Make Health Insurance Illegal- The Sunday Collage

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.

Have you ever looked at a problem and thought...."A complete moron could do a better job of managing this?" That's how I feel about healthcare in the United States. Getting rid of health insurers would be a huge leap in the right direction.

The idea is not mine. I culled it from the comments on a daily financial blog. The commenter failed to elaborate on the point yet I began to mull over the possibility that he was on to something. Let's call it a radical reform idea and preface it with a brief history of what happened within the entire health care arena prior to the controversial installation of the Affordable Care Act.

For the purposes of this piece I am going to try and write this as politically non-partisan as possible because politics and who did what are little more than distractions to be studied in some future history class. Interesting, but no longer useful.

A good starting point for our healthcare dilemma begins with the installation of Medicare in 1966. It is important to start here for two reasons. This is the beach head, that moment when government edged itself into the arena and set the precedent. It is also important to note there was no trust fund or savings set up prior to the installation of Medicare- thus it started out in the hole from the very beginning. People were receiving benefits without even having paid anything into the system.

Throughout the remainder of the 60's, 70's, and 80's, health care in the United States was satisfactory and mostly affordable although the slow drip of rising costs had already begun. Costs in medicare were quickly over run. Parts C and D were added. The program expanded allowing new treatments and new providers. The medical device industry and big pharma were demanding and receiving 20 year patent protection which truly amounts to a license to steal. Lawyers refused to cap awards in litigation, malpractice suits were costly and rampant. Malpractice insurance was also outrageous, sometimes forcing doctors to fold up shop. Insurers were busy maintaining margins, paying stockholders, and making all sorts of demands upon insureds and providers seeking to contain costs rather than take care of their customers. Customers became some third party conduit- largely left out of cost containment. Rarely is the actual consumer a part of the cost containment process where insurance is involved. Insurance and risk management in turn forced extended and specialized education with it's associated rising costs and credentialing. Within the provider world, a full third of hospital expenses were administrative. Non tax paying hospitals or non profits- have built empires rather than pay taxes. The demographics are just as bad. It seems that everyone in the health care arena was positioning themselves to take full advantage of the aging and largest generation ever. By the early 90's, the meteoric rise of healthcare costs was just beginning and it would take the financial meltdown of 2008 to bring it to critical mass. It was and still is- the perfect storm. The ACA was hastily written by a desperate healthcare industry and bullied through Congress because millions upon millions of healthy, young workers had left the work force and they weren't coming back to pay premiums. This left an over supply of unhealthy plan participants sucking the assets out of healthcare insurers.

The Affordable Care Act was simply a health insurer bailout. That is all it ever was.

Max Baucus, the former Montana Senator likes to take credit for the two years he spent writing the ACA. The truth is, that's simplistic and inaccurate. The ACA was largely modeled after the Massachusetts health care system. The ACA bill was actually written by a number of people, some in the House and Senate, but others who were advisers to President Obama (like Ezekiel J. Emmanuel), and some who advised members of congress (like Elizabeth Fowler).  Other influences included lobbyists from the health care industry; the former governor of Massachusetts (and Republican presidential candidate) Mitt Romney; MIT Economics professor Jonathan Gruber (a former aid to Mr. Romney and later an adviser to the Obama Administration); and Harvard Professor of Public Health John McDonough (also a former adviser to Mr. Romney, and later an adviser to several US senators).

Here's the key. Nobody sat in on the process and protected the interests of consumers. The actual consumers, the people paying for this, were completely left out of the process. For over a year, I have been unable to uncover any evidence or minutes that might suggest that the number one, most interested party to this entire mess- the actual tax paying and insurance consumer- had any voice whatsoever in the ACA process.

Can you imagine passing any kind of legislation, let alone this behemoth, with zero advocacy from the people responsible for paying it? I can't even begin to imagine a process where the overwhelming  majority were simply ignored. It actually smacks of collusion.rather than public service.

Remember the "taxation without representation" cry that rang out among colonists when a foreign King tried to tax us? Where are you now? What about that fourth amendment that allegedly protects me from unlawful search and seizure? Is the ACA not a seizure of my work product and therefore my property? Can the government simply seize, under color of law, anything it chooses and then hide behind the Commerce Clause? Maybe. I'm wondering who's going to stop them and when.

The Solution(s)

The mother of invention is necessity. We have arrived at that moment in time when we have to re-think everything we do in terms of health and health care. We will never be able to eliminate unforeseen events or congenital disease; however we can estimate numbers and curtail risk. This is not rocket science, actuaries and risk managers have been doing this for eons.

If I had an employee charged with reducing accidents, risk, and curtailing employee losses at my company and his solution every year for decades was to simply raise my costs, failing to provide any innovative solutions- at some point I would ask, "Why am I employing this guy?" I'd fire him. That is the situation with health insurance companies. They have become a parasitic one trick pony with only one solution. Raise rates. No price breaks for people who abstain from alcohol and drugs, no financial incentives for people who submit to regularly scheduled health check ups. No bonus for maintaining a physical fitness regimen. They simply don't care to reward people for reducing risk. Indeed, those healthy types swell their margins. They are busy sweeping every last crumb off the table.

Why is that? Insurers are focused on the short term. They have an entirely different focus. They want to make the most money right now- in this quarter. They don't care about individual lives, outcomes, or quality of life. They care about margins. Cutting their costs. Forcing you to see doctors that have agreed to their terms. They do not have a 20 year cultural plan or vision of a changing society in charge of their own health care needs. Indeed, they would see that as their enemy.

We need comprehensive reform at the cultural, grass roots level. We need education in our school system and we need to substantially incentivize people to eliminate risks and improve their health. I'm talking about rewarding people thousands of dollars in premium cuts for maintaining their health supported by annual exams and blood tests. Individuals, people, are not sheep to be fleeced in some corporate boardroom. We have never been a society that can't innovate or solve our own problems- unfortunately we have been led by the wrong people for far too long. We really do need to innovate and re-invent the wheel.

Originally, I listed about 25 reforms that need to happen- a list which doubled the size of this piece- but in the interests of brevity I have deleted them. Instead, I would like to leave you with an intermediate solution for those of us without insurance.

Last month, while searching for alternatives to 500 dollar a month Obamacare plans, I came across a Christian based health sharing innovation. It is Obamacare exempt- meaning that the uninsured will not have to pay fines for being uninsured. For 199 bucks a month, you can obtain a million dollars worth of coverage. There are some hoops to jump through- no tobacco or booze- and they may not cover pre-existing conditions. They have a completely different model- no stockholders and no ridiculous administrative costs. If you know of somebody that is uninsured, reasonably healthy, with an income stream that can support 200 bucks a month- this link might be worth sharing.

Health insurance no longer does what it was intended to do. Rather than hedge against a catastrophic has become a catastrophic loss. The only answer health insurance companies have had- for the past 50 years- is to raise prices. They have essentially done nothing for their customers except take our checks and redistribute them.

Cutting out the insurance middleman would save billions. Consumers would no longer be forced to pay for marketing, advertising, stock holders, and all of the other expenses of insurance companies. We would save billions in administrative expenses, billions in government subsidies and backstops.

Health care providers would come face to face with their patients again. It would force providers to become competitive and it would also make for better outcomes.

Alternatives to insurers such as the liberty health share plan would be developed. In fact, I think so much money could be saved that plans could be developed according to income- where all but the terminally unemployable would participate and start putting a little skin in the game.

Making health insurance illegal is not as crazy as it sounds. It's time to find alternatives. A nation full of innovative people can surely do better than this.