THE solution to #Obamacare, and Healthcare costs in general

Even as we speed towards the complete destruction that is Obamacare (aka ‘the Affordable Health Care for America Act‘), we are lied to repeatedly by various folks saying that this is the best (and really, only) solution to the rapidly rising costs of healthcare.

health-costs 1Which, of course, is ridiculous.

The REAL solution to the spiraling costs of healthcare is, by contrast, pretty darn simple:

–Pay cash for the health-related services which you can afford, and only use insurance to cover the items which you cannot readily afford–

I know that this flies in the face of our current experience, since we are now accustomed to presenting our insurance card for everyday doctor visits, checkups and even pharmaceuticals. But the primary reason that this “insurance” is so expensive is that it covers these uses at all

Health Care Costs

I sold for and led insurance sales teams for over 17 years, so please allow me a touch of credit here. Insurance isn’t rocket science: quite the opposite, actually. It exists to pool resources, so that when one unaffordable event occurs, the cost is spread among the insurance pool’s contributors. Your house insurance works this way, as does your auto insurance. Life insurance is slightly different, since it involves a guaranteed event (you will die, after all), but it also adjusts the premium according to your age, health and other factors. All of these products are designed to make the unaffordable, affordable.

Only health insurance has become less about paying for the unaffordable or unforeseen, and more about shifting ALL “event” payments from you to a third-party.

Forbes.com covered this in an article several years back:

The fundamental cause of this problem is the fact that only 10 percent of Americans with health insurance buy it for themselves. Due to an artifact of World War II-era wage controls, if employers take money out of your paycheck and use it to buy health insurance for you, you don’t pay income or payroll taxes on those funds. However, if you decide to buy insurance for yourself, you have to do so with after-tax dollars.

third-party-2

Stanford Nobelist Kenneth Arrow famously described third-party insurance as one of the principal flaws in America’s health-care market. That is to say, because patients don’t pay for their health care directly, they’re insensitive to the cost and value of that care. But the 155 million Americans with employer-sponsored insurance in fact have fourth-party insurance. Not only do they not directly pay for their care, but they don’t directly pay for their third-party insurance.

These third-party and fourth-party payments are why our healthcare costs have risen so dramatically: we’re paying for coverage which is totally divorced from what we actually need. By way of comparison, picture an auto insurance plan which paid for your gasoline, windshield wipers, or your oil changes. Would you imagine that such coverage would be substantially higher than what you’re currently paying? Of course it would, and it’d be MUCH higher than what would normally be your out-of-pocket expenses, since the insurance company also needs to include their expenses for administration (and profit, too) in their coverage costs.

Add in the reality of hospitals padding their insurance bills to make up for the folks who don’t/won’t/can’t pay, and you have the situation which we have today.

Premiums Chart800 v2

But let’s take a gander at what an alternative would look like. I cancelled our pharmaceutical insurance many years ago, and began shopping around for the best price on a medicine which I’ve taken daily for over 26 years. By finally locating a workable generic formula from a specific pharmacy, the cost of that drug fell from almost $90 per month…to $47 every THREE months.

When I had insurance paying the bill, it didn’t matter to me what the actual cost of the drug was, or if such a generic existed. All I had to pay was my co-pay, regardless. But when I had to foot the whole bill, it’s amazing how much the actual cost suddenly mattered.

This is why we search for a $.05/gallon savings on gas, but don’t give a second thought to the exorbitant price of our health care.

empty-wallet 1

Obamacare is coming (unless we get incredibly lucky) and it’s accompanied by less freedom, higher costs and less choice. It didn’t, and doesn’t, have to be this way.

Facilities like the one in the video below are quickly becoming an attractive alternative to traditional hospitals, and could signal a renaissance in American medicine. We’d better hope so, at least, since we can ill afford the alleged solutions in the ironically named “Affordable” Health Care Act.

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24 responses to “THE solution to #Obamacare, and Healthcare costs in general

  1. I couldn’t agree more.
    When it comes to parsing and interpreting corporatist conglomerates/cartels, it is necessary to start simple and go from there. Your post does just that.

    • Welcome, Daniel!

      It has been my experience that most people have barely a rudimentary grasp of insurance, regardless of their education. Just trying to highlight the shroud of deceit which the Obamacare fans have cast around this debacle. It’s been a lie since the conversation began, and the answers aren’t hard: we just have to be willing to accept that there are, indeed, real answers.

      Thanks so much for taking the time to comment, and we hope to see you here again soon…
      😀

  2. JTR, you and I did the insurance gig for many years. There are SO MANY reasons why healthcare costs have spiraled out of control. The cynic in me believes that a number of these reasons were planned and purposeful with the goal of exactly what we’re seeing now.

    1. The number of items MANDATED to be covered by the States.
    2. Complete lack of competition across State lines.
    3. Other than the Great State of Texas, almost ZERO done in the way of tort reform.
    4. The asinine and costly process of bringing new medications into circulation.

    Once again, as with capitalism, we see roadblocks, regulations, etc, all being thrown in the way of true reforms for healthcare, and then folks like Obama stand back and say “See! It doesn’t work.” Well maybe if you and other like you, sir, just got the heck out of the way and enacted meaningful tort reforms, and promoted competition among insurers, we wouldn’t have gotten to this point to begin with.

    • Well, FDR started the ball rolling, and we’ve been suffering for it ever since. Since this has been so gradual, people have just simply gone along with it and acquiesced… until now. I truly believe there’s a backlash brewing, and programs like the one in the video buttress my belief.

      ‘Cause it’s either gonna be that, or you should prepare for a black-market/underground “doctor” industry to spring up.
      And just like the results of Obama’s other great ideas, it will be completely “unexpected”…

  3. I’m not disagreeing with you at all. I completely agree. This is an observation, however, that I think has a lot of truth to it.

    Many if not most Americans today pay so much in insurance premiums that what they can afford to pay in cash is … well, just about what the copay is.

    You have the right idea, but we are being maneuvered into a financial position where few of us have that option anymore. And, it will get worse because of ObamaCare. Without it, we had the option of not paying for insurance and paying cash. Now, not so much.

    • That’s absolutey the case, Aurora. It becomes a cart before the horse situation. Without the impediment of mandatory insurance, and/or with some real world options and education, we could turn it around. Now? It’s gonna be tough.

      However, swallowing Obamacare might be enough to convince folks there’s a better way. Heck, most people don’t know what their office visits actually would cost if they paid for them out-of-pocket, rather than through insurance, since 1-2 visits a year are “covered”. But if I told them that it probably only would cost them $50-75 per visit, they’d jump at that vs. paying up to $13,000/year for family coverage.

      I’m not suggesting no coverage unless you had the means to pay a big bill, but that’s what catastrophic coverage does. You have a $28,000 hospital visit? No prob: you pay the 1st portion (whatever your policy says) per year, and your policy pays the rest. But what eats away at the policies, and adds exponentially to the overall costs, is the nickle-and-dime office visits.

      Again, a version of this is going to happen in response to Obamacare: “underground” doctors will appear. It’ll be similar to prohibition in some respects.
      But your point is accurate: people are already paying so much in premium, they are trying to use their coverage so that the premium isn’t “wasted”….which drives up the cost even more.

      It’s a Catch 22…and one of which the government is all too well aware.

  4. Ah, quick add — we should be looking at cooperative solutions to providing affordable health care in our communities. An example is the clinics the Southern Baptists in Texas used to (may still) do for the poor along the Rio Grande. They would pull up in a bus on a Saturday with a doctor and some nurses and say “Hey, health care paid for by (put a name to it) church.” Maybe instead it should be “health care at a reasonable rate, no insurance taken.” I’ve got a cousin who is a doctor who has been doing this in poor communities in the Missouri region for about a decade.

    • Absolutely, Aurora – that was actually the rationale for all of the Catholic hospitals in the first place. Government regs and the other realities that I highlighted above have made them more secular and less charity-driven than they were originally, but they’ve been dealing with the same issues as everyone else.

      The system needs to be re-worked, no question, and your idea would work…but not with Obamacare mandating all other options out of existence.

  5. godsbooklover

    Thanks, my brother, for as cogent an article on this issue as I’ve read anywhere. Question: When this abomination of a bill takes effect, will we still be able to purchase catastrophic care insurance?

    • Thanks, Sis.
      This topic makes the longtime Insurance Guy inside me pretty frustrated.

      As to your question, the answer would be “no”. Obamacare mandates minimum coverage for all, which is wholly unnecessary for a wide swath of folks….especially younger ones or richer ones. In effect, those people will be subsidizing the unhealthy folks who were uninsurable, or at least high risk. And, of course, Obamacare will limit what companies can charge those very same people who were previously deemed uninsurable and high risk in the first place.

      There WAS an alternative, of course. If we had instead just provided some coverage choices for these problem folks (who would be expensive to cover precisely because they are so likely to use/need health care), while breaking down the barriers to lowering costs for everyone else, we wouldn’t have needed to implode the existing system…and at a fraction of the cost.

      But now there’s going to be far, far, far more upheaval and coverage issues, such as “why do I now need to wait 6 months for ___ procedure”?

      It’s a mess, and it’s going to be even messier as time rolls on.

  6. Such a great post, JTR. I am old enough to remember my parents paying for the delivery of my baby brother in payments. Insurance was not so universal. It worked.

    I have worked in hospital admin and know of the financial slight of hand when hospitals pay for the non-payers and keep a little to buy a new scanner. I ran the operating room, ICU and a few other departments at one time. There is always waste and efficiencies that can be undertaken.
    But the real devil is the 3rd party payers. Have you seen their glass and marble buildings?

    I can add Medicare and Medicaid which doesn’t pay the entire cost of the care to the hospital, Medicaid being the worst. And at least 30% of doctors ADMIT they will not accept Medicaid because they really can’t treat them and make anything.

    The morrass has become much worse with the addition of the monstor, ObamaCare. This will eventually bankrupt the whole country, individuals, doctors, hospitals, and the governemtents, state and federal. It’s a real mess.

    That surgical center in Oklahoma sounds great! Wish we had one here!

    • Thanks so much, tannngl. Yep, it’s a mess-and-a-half.

      What frustrates people like you and me is that we KNOW the solutions are fairly simple, and yet they meet so much resistance by the folks (both corporate and in government) who crush solutions to keep the system operating less-than-optimally.

      And having Obamacare come in and make things even worse is as insulting as it is scary.
      Prayer time, my friend. Prayer time.

  7. You make a good point with this article and I may have touched on this before. In our town, we have a place called Mountainview Imaging where you can get x-rays, C-T scans and MRI’s. Take the C-T scan for instance. The local hospital charges about $2,000 plus an additional fee of about $300-$400 for the radiologist to interpret the scan.( If you don’t have insurance and pay cash at the hospital, you get 25% discount.)

    On the other hand,Mountainview Imaging, the same C-T scan costs $500 inclusive>/b> with a 10% discount for immediate payment and if you don’t have the complete payment, they will work with you on a payment schedule.

    Some of the readers know about my liver disease, and I have written about it on my blog. http://thatmrgguy.wordpress.com/2013/03/28/new-hepatitis-c-drug-on-horizon-plus-update/ I researched the costs of the medicines I took/am taking for it. Suffice it to say that if I wasn’t a Veteran and being treated by the VA, there is no way I could afford the medicines, and that doesn’t include the monthly lab work and doctor visits. One prescription was over $12,000 a month. The other two are around $1300 to $1400 a month. I do have a co-pay for the prescriptions.

    • Yours is a tough situation, Mr. G. I’ve seen these before, and the fact the the VA is covering you so completely is why more choices are essential in this field.
      Military folks take the ultimate risk, and need the maximum coverage. A very small portion of the population could spring for meds that cost $12,000 a whack.

      And most of us have no problem having our tax dollars spent on coverage for our military. Lord knows I don’t….

      Take care, brudda; we’re keeping you in our prayers on this….

      • Really, the first paragraph was the point I was making that agreed with the premise of your article about the free market working. 😉

        I should have phrased the second paragraph in a different way. I really just meant to link to the story about new treatments on the horizon and got carried away. The fact is, baby boomers have the highest incidence of the disease among the American population…over two million known cases. It is recommended that all baby boomers get tested for it. (There are so many ways to get the disease that have nothing to do with intravenous drug abuse. Blood transfusions, tattoos, improperly sterilized medical and dental instruments, ect.)

  8. Huh! Messed that up, eh.

  9. The other day a friend and I were brainstorming this very thing. We were also comparing health insurance and auto insurance and how if auto insurance was handled the same way the costs would rise. I was afraid there was something I was missing so I’m glad you wrote this. Thanks! (Reblogging.)

    • You’re entirely welcome, DD, and I’m honored by the re-blog!

      Insurance itself is simple, really, but the government has actively hindered or removed market forces which would control the rising costs of healthcare AND insurance, ….all of which drives me crazy.
      And now with the advent of Obamacare, our problems are just beginning.

      • Yeah, it’s annoying how bad laws get made, problems are created by the bad laws, and then more laws get made to try to counteract the bad laws, but that just makes more problems. No one ever wants to simply repeal the old bad law.

  10. Reblogged this on Principles, Not Men and commented:
    Practical thoughts on health care and health insruance.

  11. Loved this post! Since you have experience in the insurance business it’s good to hear you support something that many have suggested and it sounds like good common sense to me.

    Also, wouldn’t it also help is we did away with group plans and have each family purchase their own insurance based on their needs? The employer provided plans are an incentive to get talent but the costs are hidden and we really don’t feel the pain as if we purchased the plan on the open market ourselves and shopped around.

    • Thanks so much, Cosmo!

      The group plans themselves aren’t the issue, per se, but rather the combination of the favorable tax treatment that employer plans receive AND what the plans actually cover.

      By having the plans be payroll deducted, folks quickly lose track of their actual cost. Plus, why should a plan which I have through an employer be taxed differently than one which I pay for privately? Don’t bother answering: there is no logical answer, other than “it just does” (hint: FDR’s wage cap was responsible).

      The best solution was the Healthcare Savings plans, coupled with a catastrophic health plan. It’s not much different in nature than adjusting your Auto and Home insurance deductibles up to the amount which you can comfortably afford.

      ***E.G. — If you wouldn’t turn in a $2,000 claim on your house insurance (since you’d lose your accident free discount AND get a surcharge, as well), then having your deductible at $500 makes no sense, and just costs you money…a LOT of money. The obvious solution is to raise your deductible up to $2,000 and pocket the savings.

      Usually, you can make up the difference between what you’d spend in premium vs. what you’d spend with a claim in a very short time, after which you’re ahead of the game.
      —-

      Again, I’m gratified you enjoyed this one. Anytime that I wander into an insurance discussion, I have to be careful not to get too excited, and remember that not everyone enjoys talking insurance as much as I do!

      😉

      Talk with you soon, bro…

  12. Pingback: #Obamacare: “I just didn’t realize I would be the one who was going to pay for it personally.” | Two Heads are Better Than One

  13. Pingback: PRICELESS: The Left’s ridiculous #Obamacare spin is blowing-up in their face | Two Heads are Better Than One

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