The Health Care Problem - Part 1

At some point during the day today, a vote will be taken that may or may not result in some of the most sweeping changes to US domestic and fiscal policy since the Great Depression. If the vote succeeds, as many people will see the change as being long overdue and necessary for the good of the people as there are who will see it as an unconstitutional action that deprives individuals and states of rights and sovereignty.

If the vote fails, as many people will see it as the preservation of our democratic principles as there are who will see it as a future snubbing of basic human rights.

In many respects everyone is right. And wrong.


Let's start with the premise that you do not have health insurance today. You suffer an injury to your arm that requires medical attention. It is not a traumatic injury, but one that is preventing you from performing simple tasks like picking up a box or shifting gears in your car.

You could leave it untreated and hope the problem resolves itself, which is certainly the cheapest course but carries the most risk. You could go to a private practice, where you will get very good care in a week when your appointment is made, and depending on the treatment could pay anywhere from $75 - $350+ for the service. You could go to a "doc-in-the-box" like Doctor's Care, get similar treatment the same day, and pay slightly more. You could go to the emergency room, where you'd be seen the same day but may have to wait a few hours, get good care, and be responsible for a $400+ bill.

If the injury was a traumatic one, rest assured the bill will double. Or triple.

If you don't have insurance and haven't paid the health care provider when you leave the office, there's about a 60% chance you won't pay the entire bill.

If you have private insurance you'll only be responsible for a co-payment and your deductible. It's less likely you'll go to the emergency room, especially because there will be a payment of anywhere from $250 - $500 that is not subject to your deductible. Because you have insurance your health care provider has an agreement to provide a small discount in exchange for a guarantee of payment. You just might not know what that is until your claim has been processed.

If you have Medicare the same rules apply except your insurance coverage is based on government rules. The doctor who treats you will get reimbursed at a lower rate than they would if you had private insurance, and that rate is less than their cost to treat you.

For every dollar of cost, Medicare reimburses at a rate of about eighty-five cents.

So with a stable source of payment through insurance that is less than the cost of treatment, plus an uncertain source of payment through those without insurance, what else can a health care provider do except charge higher rates for those with private insurance? Eventually private insurance becomes too expensive and more and more people either go without insurance or end up on a public plan like Medicare or Medicaid. The cycle repeats.

Now let's assume the bill passes. What changes? Most of the people without insurance today are those who cannot afford coverage or cannot get private coverage under today's rules due to health conditions. It's assumed that those who can't afford coverage are less healthy than those who have it or who can afford it but choose not to carry it, which creates the possibility of increasing rates for private insurance coverage. If they can't afford private insurance, they'll go to a public plan that reimburses at less than cost. What happens to the system then?

You'll have private practice physicians who will refuse to take new patients unless they have private insurance. They couldn't afford to stay in practice otherwise. Those who have public insurance will continue to need to seek treatment at hospital emergency rooms, and the hospitals, who need to make up for the lost revenue somehow, will have to raise rates for private insurance. Eventually private insurance becomes too expensive and more and more people either go without insurance or end up on a public plan like Medicare or Medicaid. The cycle repeats.

Underpinning all of it is a system that rewards health care providers for providing as much treatment as possible, even if the benefits are marginal. At the same time, the system practically mandates providers do exactly that for fear they might miss something rare and end up losing multi-million dollar lawsuits.

What to do, what to do.


Oh, and we haven't yet mentioned the fact the system provides virtually no incentive for people to take care of themselves. Cholesterol too high? Take a pill. Overweight? Have surgery. Blood pressure too high? Take another pill. Why should we work hard to take care of ourselves when medical science has provided the necessary short-cut?