Healthcare Vs. Insurance

I am so pissed off over the current state of healthcare in this country. Those on the right seem to want to close their eyes and pretend that we still have the "greatest healthcare system in the world." So if it's so great, why are 40% of Americans completely, or partially locked out of it?

My answer is simple, INSURANCE.

Just what value does insurance add to the healthcare of Americans? Let's take a step back and look at what insurance is:

Wikipedia defines insurance as: "Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss."

The modern concept of insurance (although there were variants prior) probably started in the coffee shop of Edward Lloyd. The British Empire was built on the concept of materials coming from the colonies and finished goods going back to the colonies. However, shipping is fraught with dangers and many ships went down in bad weather, due to mutinies, and from piracy. To spread the loss out, Lloyd came up with the concept of syndicates that would "insure" ships against loss. They would pool money together and take a percentage of the shipments returning to England if the ships arrived safely. If they didn't, Lloyd's syndicate would pay the ship owner for his loss. The concept was built on the idea that the majority of ships would arrive safely, so that the risk was less than the profits from the insurance. Thus was the founding of the first insurance company, Lloyd's London.

How Insurance Works

Life insurance is probably the easiest example of insurance to understand. You purchase insurance. The insurance company figures out how long you'll probably live (actuarial tables) and calculate the risk against you dying earlier. A cost for the insurance is set based on the idea that you will pay into the insurance more than you will get out of it. You only "win" if you die before you've paid in the amount that they will pay you (the benefit). Yes, it's kind of like Vegas gambling and the analogy is quite apt. If there are too many "winners" then the risk is considered greater and the costs of the insurance go up. You try to limit those risks as much as possible. With life insurance, you make sure that the insured doesn't have an illness or condition that will cause them to die earlier than expected or that they don't have a dangerous occupation or hobby (demolition derby?). In addition, the insurance company gets to use your money for all of the years that you're still alive. They invest that money and receive additional profits on those investments. So they not only do the gambling thing, but they also double-dip.

Healthcare insurance is based on the idea that investors can make money by charging for insurance against getting sick. They limit their risk by denying insurance to unhealthy people. The whole idea is that you need to deny services because it will negatively affect the "bottom line" and investors will lose money. Again, it's gambling. And the house always gets their cut.

Again, what value does insurance add to healthcare?

Insurance has to pay not only for those who become ill, they also have to pay for salesmen to sell the policies, bureaucrats (yes government would have bureaucrats, but we also get them with insurance) to make sure that people aren't getting more than what they're paying for, executives to run the whole process (and this is VERY expensive), actuarials to determine the amount of risk, and, most importantly, the investors.

It is estimated that our current healthcare system (private insurance, government, employer insurance, etc.) amounts to about $3 trillion a year. Of that, about 31% goes to administrative costs. That's almost $1 trillion that doesn't cure anyone, help anyone, or go for medicine, medical equipment, or anything else except for the profit of stakeholders (salesmen, employees, etc.) and investors.

We spend 16% of our gross domestic product (GDP) on healthcare according to McKinsey & Company. More than any other country. And again, what do we get for it. All the other industrialized countries cover every person who gets sick while we only cover about 60% of our population.

Costs to Business

100 years ago, large companies would hire doctors and nurses to staff healthcare facilities for their employees. These "company hospitals" ensured that a company's workforce was healthy and able to contribute to the work being done. Because this was such a great benefit, employees wanted to work for companies that offered such a wonderful benefit so, just like Lloyd, syndicates (insurance companies) were formed to offer something similar.

At first, this was great because the cost was negligible and the benefits were great. The population was young and the young who were healthy could maintain the cost for the older folks who got sick and the investors made lots of profit. Then the population started to age and many more people demanded that their employers also add this benefit.

The costs started to skyrocket and the businesses, who had now "promised" their employees (or in the case of unions had negotiated contracts) coverage for healthcare, saw that a very large percentage of their costs were involved in providing healthcare, a business that they know nothing about and that they have trouble controlling. But why is healthcare actually the burden of business? In other industrial countries, the government takes care of healthcare and business doesn't have to contribute except through their taxes (I'm sure that someone will note that the taxes increase. Yes, but not nearly as much, or as fast as insurance). If we take the costs of insurance out of the healthcare, then it becomes much more affordable. So much for any chance of American business being on an equal footing with their foreign competitors.

The Effect of Health Insurance on Individul Workers

Also, the main reason that people stay in dead-end jobs that they hate is that they're afraid to lose their healtcare. This makes for an unmotivated, miserable workforce and society. Without the threat of losing healthcare, many more individuals might even decide to become entrepreneurs and start new businesses.

The arguments against healthcare reform (especially single payer)

Long lines/waits: so when is the last time you didn't have to wait for a doctor? I'm fully insured and I have to wait days/weeks to see my GP and even longer if I want to see a specialist

Rationed Healthcare: Yes, now we all have equal access to healthcare (yeah, right). Without insurance, kiss the idea of seeing a doctor goodbye. In current America the rationing is based on how much money you have. So the rich get the greater rations and the poor (uninsured) get nothing. But lordy don't ration healthcare!!

We just can't afford it: So we let the wealthy get treated and the poor get left to rot and die miserably without any care at all (is this what America is really about?).

People from other countries with free healtcare come here for treatment: Of course. In their home countries they are treated for what they need to be treated for with the sickest getting priority. Some time ago the Daily Bulletin had a story about a Canadian resident who got a groundbreaking treatment at Loma Linda. The story noted that they would have had to wait in Canada for about a year to 18 months to receive such treatment. A letter writer noted that this is proof that our system is better. BUT: What it really proves is that if you have the cash, you get the treatment. How many of OUR citizens could even get the treatment, let alone wait 18 months for it. So the great benefit of our healthcare system is that we let people with money "cut in line."

Let's look at the facts

For all the right wing's horror at the concept of universal, single payer healthcare, there is not a single country in the world who has tried it and abandoned it. There are some systems that are better than others, but all countries that have it, and have had it for a long period of time (England since shortly after WWI) are sticking to it.

The costs would be spread out among all taxpayers. The amount of money you're paying for healthcare now would go toward the program as would the money going into government programs such as Medicare, VA, Congressional healthcare, Medicaid/cal, Well Children programs, etc. So the costs are already there. What will the increased costs be to include those not currently covered? Probably not that great as we get rid of payments to investors, insurance companies and their executives, etc. AND if we can negotiate prescription prices such as other countries do, we can probably also reduce additional costs as well.

So, basically I'm for getting insurance out of the healthcare field (they can insure for lost income in the case of accidents or illness, or for "additional services" such as the upgrade costs for private rooms, or elective treatments. But get them completely out of standard/baseline healthcare, where they don't belong in the first place.