Well, what a surprise.  Healthcare insurance is back in the news.

But, the problem is really how do we find ways to ensure (not insure) that citizens have adequate access to healthcare.  And, then how do we find ways to pay for that.

Consider this simple concept.  Health insurance is primarily a buying club- like joining Costco, BJ’s, or Sam’s Club.  By securing one’s  membership, one gets access to common goods at reasonable prices.  Not a member?  You have to buy those products at a higher price.

That’s the  same way things work in healthcare.  You have insurance?  Well, now, your doctor’s visit is now $10 or $ 25, according to your insurance coverage.  But, even if you don’t have a small co-pay, the insurance company has negotiated with her to guarantee your visit will cost $ 64.86, instead of the $ 200 walk-in fee.  Your blood pressure meds cost $ 5 or $ 10, not the $ 93 bucks the fool who has no insurance has to pay.

Obviously,  some 27 million folks didn’t consider the buying club concept.  Since in 2016, these folks  had no health insurance at all.  That’s despite the potential tax penalty (that is sure to disappear this year) for going bare.

But for most of us, having insurance is a necessary concept.  But, in a previous version of America (or maybe next year, too), before the Patient Protection and Affordable Care Act (PPACA, known colloquially as Obamacare), there were hitches to getting that health insurance.

You had to fill out 3, 4, or even 10 pages of forms.  Describing all the diseases and ailments you had. (Given the number of accidents and broken bones I encountered in my life, I also had to include about a dozen pieces of paper to cover the “if not adequate space, please attach explanation on a separate page” requests.)

Oh, and we sent in the first month’s premium.   And, about 18% of us were told…”Sorry, we won’t insure you”.   Actually, the number of (non-senior citizenry) folks that have such preexisting conditions comes to 133 million or so (more than 1/3 the US population), but a lot of them are still covered because their employer’s group plan lets a few sneak under the tent flap.   (These two statistics come from the Kaiser Health Foundation, by the way.)

(An aside:  Despite claims and counterclaims, the 133 million is an accurate figure. However, about 1/3 that number are eligible for Medicare and Medicaid.  So, pre-existing conditions creates no problems for them.  [Keep in mind that many of them would NOT be eligible for Medicaid without the expansion of the program under Obamacare, though.]  And, a significant number of these folks are covered by employer-provided plans.  For the larger firms, pre-existing conditions don’t matter either.   The smaller firms, like the the 10 person law firm I managed, was able to cover everyone, but the premiums jumped 25% for everyone(!!!), when a new employee was added with a pre-existing condition.)

That’s one of the fixes that Obamacare proffered.  No preexisting conditions could deny anyone coverage.  Another fix, kids weren’t kicked off their parents’ insurance when they turn 18 (or 22 if they were in college).  Of course, the only way the insurance companies can afford these demands is if everyone is required to have insurance.   Otherwise, a “smart” person would wait until s/he was diagnosed with a disease or ailment and run to the nearest vendor to get insured.

(No, don’t even tell me that a limited open season could contain that.  Because, “life cycle” events overrule them.  Get a new job, lose your job, get married, have a kid, etc.  All you need to do is get a second job (claiming you needed it to pay for the insurance) and you’re golden.)

One alternative to Obamacare is to require “continuous coverage”.  This means one had to have health insurance for a certain number of months to get benefits.  (Hmm.  That sounds like a new way of calling something “pre-existing conditions”, except that you can get coverage.)

But, what happens if you lose your job- or if your employer decides that everyone is now working 30 hours a week or is to receive 10% less pay.  (Welcome to the new USA, one where this is a legitimate business practice.)  These folks drop insurance (because they need to eat and pay rent), and now can’t get covered.

So, you can now see the problem.  It’s paying for the sick people, the ones with big illnesses that drains the coffers of the insurance plans (or Medicare, if one is over 65).

How big a problem is it?   How about 2/3 of the United States’ expenditures on health care accrue to 10% of the population.   As you can see in the graph above, the sickest 1% of the population soaks up almost 20% of all the health care dollars spent annually.   And, ½ of the American population only uses up 3% of the total health care expenditures.

Oh, sure, we can go back to “high risk” pools.  That’s the dead-end health insurance “unhealthy” folks get- at higher prices, with higher deductibles.  Prior to Obamacare, this was the norm in 70% of the states in the US.  And, the 35 states that had them found they ran short of money and needed cash infusions.  Even so, the insurance companies withheld insurance or raised rates (again) and increased deductibles.

Not a pretty sight, is it?   Maybe it’s time we really do start adopting the frailty index proposed by Rockwood and Mitnitski that I discussed years ago.   44 items and we can determine the likelihood of mortality, to a very high degree.   And, yes, it was designed for the aging population, but it’s pretty accurate across the board.

 

Oh, wait!  You don’t like that, because it’s like a death panel.  Well, do you think insurance companies don’t already have them ready for you?

I’d rather have an independent, scientifically centered program making those choices.