The problem is not how to pay for health care, the problem is why is health care so expensive. It really does not matter how you pay for it. If health care is priced so high that the average person can not afford it then whether it is paid for by the individual, by insurance or by the government does not matter, it is still to unaffordable. That is the current problem with the Unaffordable Health Care Act.
Under the current national system we have seen premiums skyrocket, have seen coverage shrink, have seen taxes skyrocket, have seen healthcare programs and benefits taken away, all because the cost of health care is out of control.
The question is not "how do we pay for health care?" the questions is "Why is health care so expensive?"
I will try to answer the real question, "why is health care so expensive." I only know what I see, hear and experience. My discussion is anecdotal but does not mean it is not correct.
1. Health care is burdened by red tape, government regulation, administrative cost, and layers upon layers of bureaucracy. When at the turn of the century Slim was kicked by his horse he went to the country doctor who set his broken arm. Slim said, "What do I owe you," and Doc said "One dollar." Slim said "I don't have a dollar but I have some laying hens." Doc responded, "Well, a dozen eggs sounds about right, bring in two dozen next time, one for this visit and one for the next." Now, Slim never comes back because he is never kicked again or he has a dozen kids and never can get 2 dozen eggs together. Doc has so many patients that he loses track of who owes him what and finally hires a bookkeeper. The bookkeeper says she wants free medical care for herself, her drunken spouse and her 8 kids as part of her salary. Doc reckons the only way this is going to work is to raise the price of an office visit to $2. Now we have 100% increase in the cost of health care.
Any rational inquiry into health care should start with the determination what is the cost of the care and what is the cost of the administration of paying for the care. Any reasonable person could have foretold that the Unaffordable Health Care Act would cause health care cost to skyrocket which it has. Premiums for insurance are up, taxes are up, benefits have been reduced, care has been denied. You only have to listen and you hear the horror stories.
A side note: I refuse to call black white and up down. The act passed without it even being read clearly was going to make health care unaffordable which it has. Calling something that raises costs affordable is like the recent trend by some to call a rise in taxes a decrease just because it is not as large of rise as expected. Up is not down, and black is not white just because you call it so.
There are those that equate health care with insurance coverage. That is not the same thing. Insurance is a method of payment and generally adds to the cost of health care. If Slim goes to the doctor once every five years at a cost of $1, his health care cost is $.20 per year. If Slim buys health insurance at $.10 per month his health care costs $1.20 per year. If his insurance has a $1 deductible his health care cost in the year he got kicked is $2.20 per year. Insurance is not health care.
I have a small company in an industry where none of the workers can afford health care if paid for by insurance. The earnings in the industry simply do not allow for health care by insurance. If the worker buys government mandated insurance, the deductibles are set so high to reduce the premiums that the insurance does not pay for any care. If the worker does not buy mandated insurance he has to pay the tax penalty. So the workers health care expense is the amount he pays out of his pocket (which includes all of the red tape and regulation costs mandated) plus the cost of insurance or the tax penalty. The system under the current federal system is truly unaffordable.
2. How did we ever get here, to a system that is so overburden with overhead and so expensive. A basic problem is that we have separated the consumer of the care from the payor of the care. Getting back to Slim, if Slim buys the insurance, gets kicked by his horse, pays the $1 and the $1.20 for the insurance, then all rest of his visits for year are free. He will come in for the rope burn, the cold, the sore back, the hangover, the sprain ankle, all at a $ 2 per visit. Slim's health insurance now goes to .15 per month to cover all the added visits. Slim's health probably is not any better but his health care costs have skyrocketed from $.20 per year to $2.80 per year in the year that he got kicked.
One may think that I am against insurance, I am not. Insurance is a good thing for disasters that we do not control. I am not sure that insurance works well for consumable things. How about insurance for food. We would all be eating steak and ice cream. Think also about the seller of the care. What is the limiting factor of the care. It is what the insurance will pay for, not necessarily what is needed. In what other industry does the seller of the product determine which product you buy and what the cost of the product is? We keep seeing bigger and better healthcare facilities. All you have to do is look at what is being built to know that the current system is a gold mine for the the health care industry.
Health insurance has been equated with health care partly because of what happened during World War II. During the war there were wage price controls in effect and in a effort to circumvent those controls employers began to offer health insurance to compensate their employees at a level that would get the required workers. Many people now seem to think that employers should provide health care.
Getting back to Slim, the Bar E ranch being a tough outfit, decides to offer health insurance with no deductible to attract the 100 or so cowboys it needs. Since there is no deductible the 100 cowboys flood Doc with visits, he needs to build a new office, hire another bookkeeper just to process claims, and raises his office visit price to $2.50, the amount the insurance will pay. The insurance company raises Slim's premium to $.30 per month. Slim's health care cost now is $4.60 per year in the year he gets kicked, $3.60 for insurance and $1 for the deductible for the now $2.50 office visit. He now goes to the doctor at least 12 times a year, got get the benefit of that insurance.
3. Patented Medicine: Who pays for those commercials you see on TV for all of those medicines which have side effects worst than the ailment. How about the cancer drug that has been shown to extend a cancer patient's life by 2 months. Who pays the cost of the commercial. We do. It is part of our health care cost paid for by either cost of medicine, insurance, or government taxes. I am not sure we should allow patents on medicine. I know the industry will say it is necessary for research, but maybe we should consider whether it is wise to have the industry pay for research. Maybe there is a better way to fund research. Getting back to Slim.
Slim is in the Long Branch telling Doc how he has discovered a salve for saddle sores. It is two parts Ma's lard and one part skunk oil. Doc says, "What does that do for your love life?" Slim answers, "Ma does not seem to mind, I don't use it the week before Christmas." Doc thinks Slim might be on to something so he tries it, but skunk oil being hard to get, he replaces it with some of linseed oil and adds a little of Miss Kitty's perfume. He finds it cost him a nickle a tin so he prices it at $.10 a tin, a months supply. The boys at the Bar E like it so much Doc does have time to doctor any more, so he sells the rights to it to Sam the Barkeep for $500. Sam needing to recover his investment begins making it and selling for $.25 a tin. Soon Acme Drug discovers it, buys the rights to it from Sam for $10,000, patents it, begins a national ad campaign promoting Slim's Salve and raise the price to $1.25 per tin. Boys at Bar E still love it and because Doc prescribes it, it is covered by insurance, thereby raising the drug expense of each by $15.00 per year. The company needs to make a profit so it raises premiums $1.50 per month. Slim's health care cost now has increased to $22.60 a year in the year that he got kicked.
Slim's health care is not any better. He is just paying $22.60 per year for health care that originally costs $.20 per year.
That folks is the Unaffordable Health Care Act, except added onto the costs is the burden of a bloated federal government.
I do have a solution that the liberals will love but that will be for another blog.
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