Health Insurance in the USA: A Cheeky Explanation


Surprise! your monthly health insurance premium just increased 600% You call your friendly health insurance company and receive the consoling explanation: “It’s Market Forces.”

Market Forces are capitalism at its best. The relationship of supply and demand, free of government meddling, will fix all economic problems. For instance when you go to buy a car, you can choose a Lexus, a Corolla, or if necessary a used Yugo. If many people want one model but there aren’t many of them, the price goes up appropriately. The system works.

But obtaining health isn’t like buying a car. Is there a real choice between good health, fair health and poor health? Good health generally means good medical care. Only one kind of medical care is available, and it is expensive. There are no healthcare Dollar Stores or cut rate Heart Surgery Outlets. Going back to the automobile analogy, you need transportation and the only car in the lot is a Lexus.

Good health isn’t even a product you can buy. It’s a probability. Good medical care just improves the odds. The market in its wisdom has devised insurance to deal such uncertainty. Insurance works because lots of low risk people pay in but few people take money out. The difference is profit for the company. It’s like auto insurance. The many people who will never be hit by a truck contribute to a pool that pays your claim when your car gets totaled by a semi.

The chances of needing healthcare is too high for insurance to work. Even the young get into nasty accidents. When you get older and sicker your risk of coming down with a costly condition rises inexorably. Of course, if you already have a chronic disease, your chance of having a medical problem is 100% and the insurance model hits the skids. The profit pool is fed by a trickle of premiums but drained by a river of claims. You can’t insure a car that has no brakes.

To make matters worse, the price of American health care is the world’s highest. Expenses for a heart attack easily buy a Lexus. The price of a catastrophic illness is enough to acquire an entire car dealership. The river of claims going out swells to a torrent and the pool of profits becomes a puddle.

To maintain profits premiums must soar. They become unaffordable. If you make $15 an hour, your $600 per month premium devours a third of your take-home pay. If you’re healthy you may choose to take your chances and forgo insurance. Fewer low risk enrollees means that the company’s profit pool disappears like a watering hole in the dry season.

Premiums are maxed out. Money going out keeps rising. What’s a poor CEO to do? The answer: reduce claims by cutting coverage! It’s as simple as that.

So you, the consumer, may not be paid at all for the first $5,000 of medical expenses. That’s called a deductible - it deducts from the your pocketbook and adds to the company’s. Or the company covers only part of the cost. That’s a co-pay - meaning you pay. Or to be reimbursed medical services must be pre-approved. Say you get scary chest pain and go to the ER. It turns out to be just a muscle strain. Afterward they say “Visit not approved. You should have known.” Or whole areas of care may be nixed. No preventive medicine: you aren’t sick; no maternity care: birth is a natural process; no drug or alcohol treatment: addiction is a character defect, not a sickness.

Most obviously you can’t be insured if you have a pre-existing condition like diabetes. Diabetics need expensive drugs like insulin. Their chances are too high for costly complications like amputation, kidney failure, or impending blindness. Your vehicle is already falling off the overpass.

Some insurance products are cheap but not adequate, They’re like a car that lacks a few minor things, perhaps seats or a speedometer or windshield wipers. Not to mention you can’t drive it for 6 months or a year after you pay for it. You may not be aware of limitations of this vehicle..

The insurers continue to plead, “Please don’t lose faith in market forces. Consumer choice still will foster competition between offered plans.” Of course, all plans are either extravagantly expensive or simply inadequate. You may not know what you are buying because the 50-page plan brochure is undecipherable.  

As for the basic cost of health care, competition can’t do much because the consumer doesn’t know costs or prices. Third party payment negotiated in the dark between insurance companies and gargantuan health care conglomerates hides true expenditures.   Who can say what a service really costs? Not you, not your doctor, often not even the government. Only your insurance company knows for sure. That auto showroom has no price tags and the salesman says “don’t ask me how much it costs.” Pop goes the market.

If the private sector can’t pull a decent profit through market forces alone perhaps the government should step in. “NO!! ANYTHING BUT THAT!” the insurers cry. ‘We must not expand Medicaid, subsidize premiums, or mandate coverage. This proposition is unsustainable, unconstitutional and like Obamacare, doomed to fail,” they aver. “It fosters a culture of dependency. Public sector intrusion undermines the core of our economy and the legacy of the founding fathers. It is not the American Way.”

In spite of these arguments from the private sector, the government is already hip-deep in the health care market. It provides health insurance through Medicare and Medicaid. It forbids government negotiation of drug prices and importation of drugs from “shady” countries like Canada. It forces consumers to buy home insurance and car insurance.

So you shop around for policies. You try to understand the plans that are pushed at you. Finally you decide that food is more important than medical care. What now? Take heart from the words of a U.S Congressman “nobody dies from lack of health care.” Perhaps not today or tomorrow, but maybe in a week, a month, or a year. What doesn’t kill you will make you weaker, not stronger. Still, there are many options for those who can’t pay for medical services:

  1. Stay well. Stop smoking, lose weight, exercise. If you can. Most people can’t. Unfortunately, a healthy lifestyle will only decrease your risk. It will not protect against every disease waiting to get you, or freak accidents like a piano dropping on your head.
  2. If you do get sick there is a safety net, of sorts. The mesh is 5 feet wide and there are gaping holes, but with luck and agility you can grab a rope and not plummet to the ground.
  3. Find a free clinic. You may be treated by a medical student on her first rotation. You might not receive medications, tests, or follow-up. Be grateful. It’s better than nothing.
  4. Appeal to corporate charity. Many hospitals give free care that proves they are non-profit. Pharmaceutical companies salve their guilt over high drug prices by donating some medications. Heads up! You’ll need a social worker to help you navigate the sea of paperwork.
  5. Take advantage of one time bursts of free health care. Going blind from cataracts? There is a bus that periodically comes up from Chicago carrying ophthalmologists to perform cataract surgery for third world Milwaukee. These angels also go to other poor countries like Guatemala and Haiti.
  6. Be prepared for waits that put the British Health services to shame. Is your hip arthritis bone-on bone? Find a second hand walker and bear the pain. Don’t worry that your cancer may be progressing faster than you are.
  7. You can try to pay out of pocket. That is, if any doctor accepts you without insurance. Max out your credit cards. An MRI scan costs $4,000, a hospitalization easily $25,000, and a really serious illness hundreds of thousands or even millions. You can always declare bankruptcy. That Lexus was just too much for your bank account. Of course there wasn’t another model on the floor.
  8. One last choice. Pretend you don’t have a medical condition. Stop taking your insulin. Ignore that funny black mole that’s growing like Clifford. You’ll feel fine for a while.

Is American health care the best in the world? It depends on your perspective. If you’re in the wealthy top 5% or have excellent insurance like our elected officials, it’s unbeatable. Might such folks might be out of touch with the consequences of our system? However, if you’re poor and can’t afford any care, it’s unbearable. On the other hand, perhaps we should consider the bigger picture: more profits for corporations, more jobs for administrators, more unaffordable innovation. Maybe I’m just old-fashioned, but I think the point of a health care system is to provide health care.

Some believe that health is a privilege not a right. Those uncovered are too lazy to afford it. Does it matter that the majority of those without coverage are the WORKING poor? Free market forces take from the poor and give to corporations.

Enough of this. You need to figure out a way to pay for that 600% increase in your health insurance premium.

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  • mark Gennis
    followed this page 2019-10-12 10:25:20 -0500