The failure of single-payer in Vermont

[George S]

My understanding is that costs took off after the expansion of Medicare in the 80s. Doctors, in return for supporting what many saw as socialized medicine, through a special committee, were allowed to set rates for procedures. This is why the specialities became so lucrative; they were constantly creating new procedures whereas something like a physical exam hasn't changed much.

I remember being young and having several stays in the hospital of several days each in the 1960s. In hindsight there was much milking of the system, even if the costs were in fact much lower. What effect breaking up blue cross/blue shield had I don't really know.

I've always attributed the soaring increase in healthcare costs as being the result of new and more expensive procedures becoming available, and also the proliferation of litigation.

It would be interesting to know what an individual and a family of four would have paid for top of the line healthcare in 1965, and compare that to today. Would it equate in today's dollars? And of course I don't know how pre-existing conditions were treated back then. Does anyone have a good source?

Pre-existing conditions were never covered by insurance. The idea is to get insurance before the event. The problem arises with pre-existing conditions when you change insurance companies. Since sometime in the 70's (or so) there has been employer-provided group insurance.

I now have an "existing condition." When I recently attempted to change my supplemental insurance to a similar but cheaper plan I was rejected by the underwriters. However, I kept the policy that had existed prior to acquiring that condition in place. They still insure me. I acquired the condition while insured.

Insurance is about having the sense to buy insurance before. You cannot insure your roof after it has been damaged already. Why should you be able to "insure" your body after it has been damaged already?

Solution? Do not buy group insurance unless you don't plan on ever leaving the group. Buy a private health insurance policy that is yours for life and you will never have to worry about "pre-existing conditions." Except, of course, that any conditions existing on the date of purchase (should be done when young) are not covered.

"Health Insurance" today is not insurance. Not in the original sense of insurance. Insurance is about statistically low probability costly events happening. Will your home burn down? Unlikely. But someone's will. We agree as a group to pay for anyone's house burning down and charge enough from everyone else to do so. Insurance is an expense. The only "winners" are those who would have suffered severe financial loss but for insurance. They planned ahead.

Health Insurance should be about planning ahead to avoid untenable financial loss. Instead it has become synonymous with pre-paid healthcare.

The idea of weaning people away from employer-provided group insurance is a good one. Setting up easy-to-access private insurance stores, a good idea.

I recently changed my home insurance from one company to another. And I filed a claim with the old one. The damage had occurred while under the previous policy, and so they paid. To my new insurer it was a pre-existing condition.

Another possible fix to health insurance would be to require the company which was the insurer of a person on a given date (including group insurers) to cover that condition even if the person no longer has the policy in force. Yes, rates would have to go up because the insurer knows that and must plan for that new regulation. But every pre-existing condition would be covered if that person had prior insurance for that condition.

Should society protect those who fail to plan ahead? Social Security was explained to me by my grandfather. It is a forced savings plan so that those who do not have the ability to plan ahead for their retirement do not become a burden on society (requiring charity from society) in their old age. It would have worked, but... Congress has borrowed and spent the "saved" money (the Social Security Trust Fund) and replaced it with government bonds. Promises by the government, on behalf of the people, to pay back the loan. (A bond is a loan with interest.) There is no money in the SSTF, only debt due and payable by future generations.

 

[Loren Pechtel]

Solution? Do not buy group insurance unless you don't plan on ever leaving the group. Buy a private health insurance policy that is yours for life and you will never have to worry about "pre-existing conditions." Except, of course, that any conditions existing on the date of purchase (should be done when young) are not covered.

This doesn't work. The problem is the insurance companies were periodically closing off old plans and opening new ones. The rates are set based on the claims experience of the plan, not of the company as a whole. People in the old group would get sick, the rates would go up. The healthy would jump ship for the new offerings, the rates in the old group would go up still more. Rinse and repeat--soon you ended up uninsured because you simply couldn't pay the bill.

Another possible fix to health insurance would be to require the company which was the insurer of a person on a given date (including group insurers) to cover that condition even if the person no longer has the policy in force. Yes, rates would have to go up because the insurer knows that and must plan for that new regulation. But every pre-existing condition would be covered if that person had prior insurance for that condition.

Unfortunately, what exactly counts as the condition? In some cases it's obvious, in others it isn't. I've been stumping doctors for a decade. Is that when it counts from? (And who would pay in that case as at the time I was covered under an employer plan where they were self-insured up to some pretty high limit--and that employer no longer exists??) Or should I look back 28? years to what at the time was totally unrelated but I now strongly suspect to have been part of the same issue? Or 28? years to when it moved from very minor annoyance to more substantial annoyance (but with no idea that it would ever be more than an annoyance?) Or should I look back 35? years to when the minor annoyance showed up?

Should society protect those who fail to plan ahead? Social Security was explained to me by my grandfather. It is a forced savings plan so that those who do not have the ability to plan ahead for their retirement do not become a burden on society (requiring charity from society) in their old age. It would have worked, but... Congress has borrowed and spent the "saved" money (the Social Security Trust Fund) and replaced it with government bonds. Promises by the government, on behalf of the people, to pay back the loan. (A bond is a loan with interest.) There is no money in the SSTF, only debt due and payable by future generations.

Social security has always been pay-as-you-go. The "savings" was Congress raising the rates higher than was needed at the time to generate a surplus as a less offensive tax increase, the money never really was for social security.

 

[Starr]

Solution? Do not buy group insurance unless you don't plan on ever leaving the group. Buy a private health insurance policy that is yours for life and you will never have to worry about "pre-existing conditions." Except, of course, that any conditions existing on the date of purchase (should be done when young) are not covered.

The only way this works is through even more government regulation. When you have an insurance policy, you have it for a term (say Jan 1 2015-Jan 1 2016). The insurance company can choose not to renew your policy at that time. Your private insurance isn't necessarily going to cover you forever. Now HIPAA regulates this in the health insurance market. Health insurance providers are only allowed to non-renew individual plans due to:

1. Non-payment of premium
2. Fraud
3. Discontinuation of plan

Number 3 is how the insurance company can get around the regulation. They are allowed to non-renew if they are discontinuing the entire insurance plan you are insured under. They are required to offer you any other plan available in your market (and they must issue the policy if you take them up on the offer), but all they have to do is cut out the coverages that they found prohibitively expensive. So lets say you have expensive condition X, but you are OK, you have had insurance since before you had X, and the insurance company is required by law to renew your policy every year. Except, no, they are not. They find that X is an expensive condition to cover, and they are losing money on it. So they discontinue the plan that covers X, and are forced by law to offer you another policy. But the only policies they offer now do NOT include coverage of X. If you move to a new insurance company that covers X, it is a pre-existing condition. You can no longer get coverage.

Obviously they can't just non-renew an individual due to their claims, but my point is simply that you shouldn't feel secure if you have an individual insurance policy. It is more secure than a group plan, but insurance companies still discontinue plans all the time, and you are very likely to receive a non-renewal notice at some point in your life. If you are lucky, whatever new plan the insurance company offers covers any pre-existing conditions you have (the company can't discontinue your current policy, then claim the condition was pre-existing in the new one), because a new insurance company will not necessarily be required to cover it.

The solution to this is to remove #3 from the list above, forcing insurance companies to honor the insurance contract in perpetuity as long as there is no insurance fraud, or non-payment of premium. Of course, this would require additional regulation of premiums as well, as the insurance company could get around that by hiking up rates on the plans they want to "discontinue" until it is untenable for people to maintain their premium payments.

 

[George S]

Yes, Starr.

Remove #3.

As for the raising of prices? Consumer's Report would note that they have done that and are a bad one to buy in the first place. Another company which has a history of raising the premium no more than inflation would have a better reputation and get more business. Consumers would have to do due diligence. We can't protect buyers from themselves with regulation.

 

[ksen]

Yes, Starr.

Remove #3.

As for the raising of prices? Consumer's Report would note that they have done that and are a bad one to buy in the first place. Another company which has a history of raising the premium no more than inflation would have a better reputation and get more business. Consumers would have to do due diligence. We can't protect buyers from themselves with regulation.

No, but we can protect them from unscrupulous businesses with regulation.

 

[bilby]

Yes, Starr.

Remove #3.

As for the raising of prices? Consumer's Report would note that they have done that and are a bad one to buy in the first place. Another company which has a history of raising the premium no more than inflation would have a better reputation and get more business. Consumers would have to do due diligence. We can't protect buyers from themselves with regulation.

But you can protect buyers from corporations with regulation.

Healthcare is required by everyone. People with educational difficulties, people who are not great at thinking ahead, people who are stupid, people who are in denial; all of these people still need treatment when they have a medical problem.

A civilised society does not allow somebody to die in the street because he had a heart attack, even if he chose to spend his last 20 years of wages on hamburgers instead of health insurance premiums.

So either you allow non-payers to freeload; or you allow people to die in the streets; or you force everyone to pay - on the grounds that almost everyone will ultimately get the benefit (and there is no way to tell in advance who will need the most expensive treatments later in life).

There is an efficient system in place for things that everyone has to pay for (because they all benefit from it), but which many people do not want to, or cannot afford to, pay for voluntarily - things like the military, the police, food and drug safety standards, roads, basic education, etc. That system is called 'government'. It works, very well, despite the bizarre insistence of many people in the USA that it is impossible for it to work.

There are other, less efficient ways to organise payment for such universal services; but it seems odd to settle for second best purely on the basis of left over cold-war propaganda that sees no difference between a proposal that the government should pay for hospitals, and Stalinism. The government is not the best way to provide all goods and services; and the market isn't either. Both have their place, and any system that irrationally promotes one over the other will be less efficient and less pleasant to live in than systems that strike a balance between the two.

Insurance works best when the pool of insured individuals is large - this spreads the risk, which is the point of the exercise. The largest pool is a single pool in which all persons are covered; but a single pool implies a monopoly - and monopolies cannot be controlled by market forces. Fortunately, by having a representative democracy that runs those things that are best operated as monopolies, we can exert control without relying on market forces.

Two principles apply: Healthcare insurance should ideally be a monopoly; and monopolies should only be run by governments.

The theoretical claims that 'government turns everything to shit' or that 'government monopolies never work' are trumped by observed reality - every wealthy nation on the planet has government run healthcare, except the USA; and every one of them gets better results, or spends less money, or in most cases, both. It is therefore irrelevant what the economic or political theories say might happen - it has been tried, and the results speak for themselves.

The British NHS is not perfect; Nor is the Australian hybrid model; not the French or Canadian systems. All have their flaws. But none of those systems are as obviously fucked as the US 'system', which manages to have both very high costs, and large numbers of citizens with poor or non-existent treatment for their conditions, simultaneously.

When what we observe doesn't match our theory of what 'should' happen, the theory needs to be ditched.

The 'theory' that for-profit private health insurance can produce either cheaper or better healthcare than government run systems is well and truly exploded.

The world is too complex to use the same set of slogans for everything without getting some very poor outcomes. Government run collective farms don't work, and nor does privately run for-profit healthcare - and in both cases, the only reason people want to cling to the failed system is ideology.

It is completely moronic to say that 'Private enterprise is always evil and exploitative'. It is just as moronic to say that 'The government is endowed with the reverse-Midas-touch. Everything the government touches turns to excrement'.

Almost all of the things that are identifiably 'wrong' about how the government does things are also seen in very large corporations; the problems typically don't stem from the fact that 'the government' is doing something, but from the fact that 'a very large organisation' is doing it. The only significant difference between a government and a mega-corporation is that the people in charge of the government are nominally responsible to every citizen via the ballot box; while the people in charge of a mega corporation are responsible only to a handful of major shareholders.

 

[George S]

Except you can't protect people from their own stupidity through regulation. Has it worked? Isn't the insurance industry heavily regulated already?

Regulation helps established businesses in the regulated industry. Doctors love the law (in some states) that only MDs and ODs (but not NDs) may prescribe. Hairdressers love the beauty shop licensing. It keeps down the competition. The existing insurance industry loves more regulation.

 

[ksen]

There isn't just one "regulation".

There's good regulation and there's bad regulation.

 

[bilby]

Except you can't protect people from their own stupidity through regulation. Has it worked? Isn't the insurance industry heavily regulated already?

Regulation helps established businesses in the regulated industry. Doctors love the law (in some states) that only MDs and ODs (but not NDs) may prescribe. Hairdressers love the beauty shop licensing. It keeps down the competition. The existing insurance industry loves more regulation.

People in the UK are able to access healthcare as and when they need it, without regard to their current financial situation, nor to any past decisions they have made, stupid or otherwise.

Clearly you CAN protect people from their own stupidity by legislation. Your article of faith does not conform to observed reality, and needs to be discarded.