Arman's stuff
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Healthcare and Insurance

(Wed Mar 24 17:38:30 2010)

So, the healthcare bull (sorry, bill), H.R. 3962, passed. What does this mean for me?

Answer: Higher taxes, more bills, and a lot more government interference. And all this because the healthcare system is "broken."

Healthcare

Last week, I could have stopped by the emergency room for anything from a headache or a sore throat to a broken arm or a heart attack, gotten medical treatment, gave them false information, and been on my merry way. I wouldn't owe a dime; they wouldn't even know who I was.

Hospitals lose millions of dollars a year to "charity cases" and "bad debt" (that is, people who just don't pay their bills), and the vast majority is through the ER. According to a few news articles I've read (and you'd be amazed how hard it is to Google for this stuff), loss through the ER is about 60%, and everything else put together is about 40%. So, as I asked before, who pays for these bills? Everyone who pays bills, actually. Obviously, hospitals need to recoup those losses, otherwise they close; so, they raise costs to everyone else.

Say the average cost for some particular test was $100. In a given month, 4 people get that test, but only 3 of them pay for it. That means that 3 people pay $133, and one person pays nothing. In other words, if you pay your bill, you pay their bill. Oversimplified, sure, but that's the basic system. If you can get away with not getting your name on the bill, you can get away with not paying it.

It's pretty obvious there's a problem with that system; if you don't want to pay your bill, just hand it to the person behind you and walk out. So why is this system in place? Because the government mandated that hospitals treat any emergency patient. Remember this - I'll get back to it later.

Insurance

The second broken bit is insurance. Insurance is basically betting. You are betting that you will get sick, and the company is betting that you won't. If you don't get sick, they get to keep the monthly insurance cost; if you do get sick, the company pays for your bills (to some extent). All in all, it's a decent system, at least to start with. Of course, if you look at the numbers (as I have), you'll realize that you're paying quite a bit of money, just in case something happens.

Say that you're a young, healthy guy, and you're pretty sure that you're not going to need insurance unless something terrible happens. So, you get a policy that has a huge deductible, but pays for everything after that. It's pretty cheap, because very few people get sick enough that they ever need to pay out, so they can lower their rates down pretty low. Now you still have insurance, but it costs a lot less, and lasts a lot longer than other "full coverage" insurance.

Or, say that you don't mind paying a high fee every month for insurance, but you don't want to lose that money; if you cancel a policy, they don't care that you've been covered for 20 years; if you get sick the next week, they won't send you a dime. So, instead, you get a Health Savings Account, and every dollar you put in stays there. Sure, the first month you only have a months worth, but five years down the road, you'll have a pretty hefty sum. After ten years, you might opt to stop paying any more money in; suddenly, you have no insurance payments, but you are still covered by a pretty hefty amount - and there are no deductibles, either.

Of course, if you use cash or an HSA, you don't get an insurance agent arguing the price down. As it is, a $6000 ER bill gets argued down to half that by the insurance company; they end up paying less, which saves them money, so they can give you better rates. If you don't have insurance, you have to go and argue that price down yourself, which can be quite a hassle.

There are other problems, too; insurance companies don't want to give you more money than you pay them, so if you have an existing condition, they will want you to pay more, because chances are, they'll have to give more back. If you are diagnosed with diabetes, and switch insurance, your rates are going to jump.

Most companies will have some form of insurance; instead of you paying the whole monthly bill, they'll pay some portion of it for you. Of course, if you switch jobs, that insurance goes away. And if you end up at a company that decided not to offer insurance, you're going to have to get your (much more expensive) own insurance.

Fix Me... please?
So how can we fix it? Well, honestly, you can't. If you impose restrictions, it's like telling someone they can't move their foot. They can still stand, but if you bump them, they're going to fall. The more restrictions, the easier it is for the system to collapse.

what you want to do is impose those restrictions in areas that will actually have the most impact on what's going wrong, but the least impact you can on the rest of the system. As it is, the president decided to lock down the entire system; healthcare is no longer a matter of personal choice, private companies, or public freedom. It's a closed system, where the government makes your decisions for you.

A much better plan would be to separate emergency medical care and everything else; instead of forcing everyone to have insurance, instead make laws that are more like car insurance - you have to have insurance to cover emergencies, but non-ER stuff must be covered by something else. And, instead of using private (or government-owned) insurance, make the billing office more like the financial assistance section of a university. If someone can't pay a bill up front, offer tax-free grants and loans.
Stop forcing companies to pay for medical benefits per employee, and instead give them the option of paying an "ER tax."
Make the ER a completely separate entity; the main hospital may lend the use of rooms (operating, etc.), but the ER covers all its own costs. Instead, the hospital can have an urgent care facility. It wouldn't have the resources to deal with a gunshot or a heart attack, but it could take care of sprains, stitches, and broken arms. Since it doesn't need all the equipment or staff an ER needs, it would be a lot cheaper - plus, it would give hospitals the ability to make the decision to turn away patients. "I'm sorry, you don't have insurance, and you can't pay for this up front; if you really need an X-Ray, go to the ER."

Even better, you could put in the same clauses auto insurance has - if you are in a lot of wrecks that are your fault, your rates go up; so, if you end up in the ER a lot, your ER insurance rates go up.

The decision made Sunday will, inevitably, damage the entire system. Done correctly, the healthcare system could have been propped up with minimal damage, but the bill that did go through was less "minimal damage," and more "wide-pattern shotgun blast." Forcing a partial system rarely works; forcing a complete system is doomed for failure. We used to have the best healthcare in the world, but at this rate, we're going to be stuck with the same long waits and terrible quality that Canada and the UK already suffer through.

Some people have claimed it as a victory, but I can't be one of them. I've run the numbers. I've observed human nature. I know that a system like what is supposed to be put in place can never work. Today, the system is broken because a service is forced to be offered, but payment is not; when the bill goes into effect, the entire system will be forced under the same control.

Since when did making a broken system bigger fix anything? Ever?

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This blag is tagged: Government, Healthcare, Hospital, Hr3962, Insurance, All