I want to take a new look at health care in great detail now that we’ve had a good deal of public debate and screaming on the subject and see if we can arrive at some sort of fresh ideas. I’m going to try to redefine some terms for you along the way, and see what you think, and then maybe we’ll come up with a better idea of what we’re talking about.
Part of the point of this site is to extract a topic from the rhetoric and find a new light on it, and in this analysis, poke and prod it until we have a better understanding. I’m starting this from the near universal belief that the system as it stands is broken in that it does not cover enough people and is not financially sustainable, and therefore needs a fix. Anybody who thinks differently, I’ll laugh in your face, hand you the bill for medical debt incurred while I had health care, and walk away.
The first term I want to redefine is taxes. Opponents of a government plan say it will raise our taxes, even if we pass a law saying it must be paid for solely by premiums. There’s probably truth to that, social security and medicare are all running large spending deficits that are unsustainable. Some of these deficits are due to government waste, and some are due to the short sightedness of the programs in predicting the increase of average life spans, and people are just living longer and costing more. On the other hand the cost of conventional health care is rising at a rate far faster than inflation and wages.
So we come to taxes. I work a job, I get money. Some of that money goes to taxes, and other parts go to my health care. I get to spend the rest. Whether the healthcare costs go to the government versus to some health insurance company makes little difference to me financially. We’ll deal with other aspects of this in other essays for now I’m working on the notion that in all aspects social, medical and otherwise, my current health care provider is exactly the same as the coverage I would get under the government plan. This new definition is taken directly from the Republican playbook, specifically, “It’s my money, it isn’t yours to take.”
I know on the current trajectory, the costs of either are going to be increasing and I will be able to spend less and less of my paycheck, and isn’t that part of the opposition’s argument? It’s about the increase in our taxes? In my mind, either way, the amount of money I make that I don’t get to spend is increasing both in absolute dollar amount and in terms of percentage of income.
So really, what’s the difference? Putting aside the government hand, the socialism, whatever else the whackadoos want to claim, financially, the equation is the same.
But there is a difference. The government program doesn’t need to make a profit, and so it could be 20% less expensive, since the health insurance industry makes, on the average, 20% profit margin that is handed directly to shareholders. There are all sorts of abuses inherent in making this profit margin which I find ethically objectionable, but that’s for another essay. What I’m talking about is the money I make but don’t get to spend, and 20% of that is a hefty margin for the money I make that I don’t get to spend, and if I had 20% more of that money, I’d be happier. Really, a lot happier.
So in the best case scenario, the government run health plan would give me more money to spend, spend, spend, and invest, invest, invest.
But let’s face it, the government never runs according to the best case scenario. For one thing, it’s full of government workers, and I know how this goes, I’ve worked for the government. Were I Barack Obama, I wouldn’t stake my entire plan on the ability of the government to run efficiently. That’s naively optimistic. We’d probably spend 20% just on people stopping by to chat at somebody else’s desk on the way to a long lunch. Eventually we’d have to spend more of the money I make but don’t get to spend just to break even.
The third option are the co-ops. Co-ops would be independent operators who work in a not-for-profit manner to inject extra competition to the market. Since they are independent, all of their income would come from premiums, not tax dollars, and they would have to manage that well, or go out of business. No option of a cash injection, we’d insist on that, I’d hope. I understand that it would take some money to get these started, but a one-time set-up charge is preferable to a continued expense.
The co-ops are probably the best way to go financially in this line of thinking, which surprises me since I was all for the public option to begin with. As independent entities, they would responsible for their own fortunes, and just as credit co-ops inject competition in the market, so would health care co-ops (um, credit co-ops do bring competition, right? Your credit card rate is reasonable, oh…never mind, just another broken market). They would also be something like Fannie May and Freddi Mac. I know these are really bad words right now, but they did survive on their own for quite a long time, and their downfall was the result of outside market influences more so than the fault of their own operations.
Let me explain. Fanny and Freddy avoided the subprime market until it was cutting so far into their business they had to go into them to survive. Had the mainstream commercial markets not gotten themselves so overleveraged while appearing to make so much profit, they probably never would have made it into the subprime market, and would have been fine.
The tired argument that the markets know what’s best for them have been disproven time and again. As Americans we overpay for goods and services, we get taken advantage of by the free markets. The subprime market’s destruction of the economy is the most present example, but rolling blackouts in California because of a manufactured energy shortage designed to raise rates, cell phone service that sucks and is more expensive than in Europe all tell me the free market is worse than a myth, it’s a lie sold to dumb conservatives. It sounds good on paper, but in practice, humans are not altruistic enough in profit-based organizations to do what is good for everyone. The markets are sharks feeding off the corpse of a whale. They don’t share it out to the rest of the ocean, they swarm until they strip the carcass and swim off into the sunset.
Healthcare is like the credit card market, there is not enough competition to keep rates down. The industry has as much inbreeding as the Chicago music scene, and so you practically get collusion to raise rates. We need credit cards, and so there is no incentive to reduce the rates. What? Reduce rates? Wouldn’t that mean reducing their profits? At the expense of the money I make that I don’t get to spend? Well, there goes that idea. When markets aren’t competitive, a collusion effect happens where those making the profits want to make the profits of the industry leader, lest investors move. If your organization isn’t as effective or efficient, the only way to make equivalent profits is to raise the rates. And then somebody jumps on that train, and well, there you go.
Right now, 90% of health markets aren’t competitive, and working for the company I do, I get one choice of provider, so the companies aren’t competitive within employers. If I had a choice between two networks, and could flip at any open enrollment, they’d have to compete and get my business.
But what about the doctors themselves? They have to maintain practices, support families of their staff, maintain their licenses, there’s a lot of expenses. But the funny thing is, a poll recently found a majority of doctors want the public option. Where that leaves us, I don’t know.
Another consideration is the contributions our employers have to make to their health care fund. Our companies must compete in a global market. Why did GM fail? Healthcare costs. Most of the bailout money that is paid for with the money that we all make that we don’t get to spend, went to health care, not to product development or manufacturing. We send our jobs overseas because we don’t have to pay for the healthcare of those workers, or at least it doesn’t cost us as much, and so we see the American worker, you and me, losing jobs, struggling to get by. A completely socialized market would free our companies of this burden, and allow them to make more money. I’m not necessarily advocating this, and I want to put more research into employer contributions in other countries so that I can leanr and make a smart choice on what I want to back.
So what do you think? Talk to me let me know.