I was sent an email with an article from "Casey's Daily Dispatch" (link) This email raises some issues about healthcare reform, including why it would be bad for the insurance companies to be required to cover those with pre-existing conditions. I responded to this email with the following. And unlike the email, I actually offered some links with info and offered suggestions.
Interesting article, though I wish it went into some more details on certain points. Personally, I understand why they are doing the mandate. But in my opinion the mandate should NOT be there without some kind of public plan for people to purchase into. The mandate is to protect insurance companies from those people who actively choose not to get insurance though it is available AND affordable for them (what some people call "the invincibles")
The second topic they bring up is insurance companies being forced to accept all applicants. The reason that the article doesnt want this is because insurance companies (for profit, the not for profits just move the money around) is because the insurance companies only exist to make a profit. As a corporation, that is their ONLY goal. This is telling for an industry that does not provide the service, but is only a middle man (at least auto insurance companies can get you a rental car after a crash. What does an insurance plan do after a heart attack? They cant get you a rental heart). Private for profit insurance companies spend upwards of 30% on average in administrative costs and executive pay. These are costs associated with things such as advertising. Medicare, on the other hand, has an administrative overhead of 3%, 1/10 of the privates. So, if you dont provide the service, and you want to be for profit, how does an insurance company make its money. There are 2 ways. First, you raise premiums. Premiums have more then doubled in the last 10 years. Second, you deny claims. Claims denied is money kept. The industry has a phrase for the money they pay out on claims, its "medical loss ratio". 10 years ago that ratio for most insurers was 80-90% (for every dollar coming in, 80-90 cents went out in claims payments. Now it is 75-85%. (source http://www.pnhp.org/... ). So, taking those 2 points into account, you can easily guess where insurance company profits have gone. They have gone up, while wages remain stagnant, and medical bills are now cause for upwards of 60% of all bankruptices in this country (source http://news.health.com/... ).
Next, why doesnt the article talk about how the federal government already pays the private insurance groups more then it costs the government itself to take care of patients in Medicare. We are effectively throwing money at the private insurer to do something the government can do cheaper, that is where Obama wants to save some money to help pay for this overhaul. Another great way to help the government pay would be to allow Medicare to negotiate drug prices with the drug companies. We are restricting Medicares ability to do that currently, and at the same time pointing at Medicare's supposed inability to control costs.
Tort reform is next on this list. According to "Americans for Insurance Reform" (link: http://www.insurance-reform.org/... ), when malpractice info is adjusted for inflation, the following was found. Premiums are at a 30 year low, claims are down 45% from 2000, premiums are less then half a percent of total healthcare costs in this country, and claims are only 1/5 of 1% of total costs. And in all this were are malpractice insurer profits? Going up. Up more then companies who insure things like property.
Finally, to address the comment about how much it will cost if its free. Did you know the US spends more per capita on healthcare then any other nation? Thousands more. Our percent of GDP spent is higher then any other country. And those other countries have 0 uninsured, because they have a single payer system. How about the people needed to process this. Can you imagine how much time it would save doctors if they only had to fill out 1 set of paperwork, not a different set for each insurance company.
So, in all of this, what can we learn about how to bring costs down. First, eliminate the middle man. I'm not saying abolish insurance, just let them work as secondary forms to compliment single payer. Second, let the US Government negotiate prices on drugs.
We dont have to do this all at once, we can start with a "Medicare for All" system. Open up the availability for anyone to purchase into Medicare for a premium. You can start with all people under 25, and all people over 55. Close the gap to under 35, over 45, then shut it completely (this is if you wanted to scale it in). You could then offer it to everyone automatically. This wouldnt "trap" people, it would give them a safety valve to know that a sickness wont bankrupt them. There should be no reason we are the only country in the western world were you can still go bankrupt due to medical bills.