Thursday, June 25, 2009

Why It Won't Happen

An eye-opening (for those with closed eyes) interview with a former executive in the health insurance industry.

As long as there is an enormous industry whose aim it is to make money from insurance premiums, and as long as that industry is able to influence politicians and credulous reporters, and as long as that industry remains between money spent and money received to deliver health care, we'll always have care that is too expensive and which fails to serve those who need it most.

Simple as that.


egomosperficio said...

and i think we can lump insurances companies in general with the basic gist of the problem you've outlined.

here's what i don't get about insurance companies:
if you dutifully pay your insurance company and make no claims, they essentially have free money from you. if you make a claim [let's talk auto insurance here], chances are you've already paid in more than you're claiming, so they are still ahead. yet, when you make a claim they raise your rates, so you end up not only paying back what they doled out to you, but you typically end up over time paying more over-and-above your regular rate then what they paid you. um, ok, isn't it better for me to simply pay out of pocket for my repairs? this of course, excludes something like being sued by someone, but again, that is not the typical scenario, and not the reason my rates go up when my car gets dinged and i make a claim.

how does this sense? oh right, it makes them money. . . sort of like how i pay the bank so i can lend them my money for them to invest so they can make money. . . huh???

Anonymous said...

I think as long as Obama admits that he wouldn't subject his own family to the limitations he proposes for everyone else, his plan will fail.

A Better Angel

Sid Schwab said...

Maybe. On the other hand, there is an argument to be made for guaranteeing coverage for everyone at a certain level, while allowing those who wish to pay more to have different coverage. In fact, I'd think that would be the Republican view.

And, as usual, your comment ignores the point of my post.

NE1 said...

Yes, it seems like cancellation is not a fair result of this process--even a retroactive premium adjustment for only the omission still doesn't seem fair, as it could be substantial over many years.

The problem... is... that there is an incentive to drop expensive clients as opposed to treating them in the most efficient manner? I would like to see your "Republican" plan put into action--for children and seniors, obviously, then somehow for adults. But first I'd like to know that something has really Changed about us, and that We are willing to accept rationed (horror!) health care.

Here's a report that's been making some noise recently. Concluding paragraph:
"Slowing the growth in health care costs requires a transformation in the delivery of health care delivery—from the fragmented delivery of discrete services today to a true “system” of care that coordinates across the full set of services and providers. The path to that transformation lies in payment reform."

Sid Schwab said...

NE1: I think it's a pretty comprehensive report. True reform would be broad and deep, and it seems unlikely to happen, as I've said. Not because it's unneeded, but because it's unwanted by the ones holding the purse-strings.

In my clinic we happily went to the capitation model, and for a few years we did really well, and convinced ourselves that we were better than everyone else at controlling costs. As time went on, things changed: it stands to reason that most people who join a plan don't get sick right away. Given time for illness to happen, we began losing money and eventually went away from it. And we were, in fact, pretty good at controlling costs: we had procedures in place for evaluating costs generated by each doc, and the outliers were counseled.

So I guess it depends on the level of capitation. Also, there were some instances of primary care docs waiting too long to refer to specialists. When such referrals mean money is taken from the pot, there's the opposite incentive to what we have now. Don't know the answer to that one.

As with many things, about health care most people agree it's not working well; but everyone still wants everything, at no cost. More or less. No one -- providers or patients -- want to make the sorts of changes that will really fix the system. Habits like that are nearly impossible to break.

Anonymous said...

"as usual"? I'm not sure I understand that, but maybe there's a back story I don't know.

I''m offering my own reasoning that the only proposal on the table--the obama plan-- won't succeed. Isn't that the point? Why it won't work?

I've yet to see figures on the insurance industry. Typically, insurance makes their money by investing the premiums before they pay them out. If you have some figures that show what comes in, what goes out, investments coming in, etc., I'd love to see it.

A Better Angel

Sid Schwab said...

ABA: sorry. Yeah, back story, thought I sensed a previously anonymous writer...

Well, the point of my post is the influence and deception of insurance companies. The merits of the "Obama plan" (a misnomer, in that, so far, he's letting Congress do the writing. Too much, I'd say) is another subject.

And, assuming total reform isn't possible, I'd say a layered approach, where there is basic coverage for all (with "basic" yet to be defined) and additional coverage available to those who wish to/can pay extra, is more likely than a single universal plan for all.

My point is that there isn't the will really to take on the insurance companies, and the article suggests that any attempt to do so will be fought hard and dishonestly, and many in Congress will join in. And I don't exempt Obama from criticism: at one point he said he was for single payer, and I'd bet he knows it's the only way to real reform. But he's giving in to the dark side of the force.

Larry Hamelin said...

Indeed. And as long as we have a capitalist system, a system that rewards making money with personal power, we always have an insurance industry able to influence politicians and reporters.

Simple as that.

Anonymous said...

ego: Sure, if you can afford to pay for your damages out of your own pocket, then yes, you are wasting money buying physical damage coverage for your vehicle. The problem is, MOST people can't afford to pay for their $30,000 car in one lick if it gets totaled. Don't say though, "well, I don't plan on totaling my car." Nobody plans that, which is why we have insurance. Again, we're not talking about liability coverage for when someone sues you here.

egomosperficio said...

Adjuster Mike said: MOST people can't afford to pay for their $30,000 car in one lick if it gets totaled.

true enough, but the odds are good that if i put even half of my monthly insurance payment in the bank each month, i'd have more than enough to pay any repair bills 99% of the time. i don't think that 1% of incidents are a justification for how much money insurance companies get from their customers.

the last vehicle i purchased was used [first and maybe last time i will ever do that]. with a used vehicle i almost paid for the value of the vehicle in about 5 years to the insurance company. we're talking about a very nice passat, not some ford here. . .

still, you make a good point. . .

Jumbo said...

" the odds are good that if i put even half of my monthly insurance payment in the bank each month, i'd have more than enough to pay any repair bills 99% of the time."

I guess it depends on what kind of car you hit, and how many people in it are injured. Please don't hit me if you have no insurance.


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