Get Ready for Health Insurance Slumlords
Insurance price controls force insurers to lose money on sick people. To avoid losses, insurers will design policies that are unattractive to high-risk customers. “If you think insurers mistreat the sick now, just wait until price controls turn every single sick person into a $15,000 liability. Insurers would go to even greater lengths to avoid and dump the sick; those that didn’t would go out of business,” explains Cato Institute scholar Michael Cannon.
Politicians could respond by mandating that all policies cover certain benefits and have low deductibles. Insurers would adapt by further emulating slumlords: denying claims and skimping on customer service and provider networks to drive away the sick. Such mandates would also raise premiums for everyone and outlaw catastrophic insurance policies, which happen to be the only plans whose costs are not skyrocketing.
“Individual insurance markets deteriorated” in states that have imposed insurance price controls, concludes a Milliman actuarial study. “Insurance companies chose to stop selling individual insurance” and “premium rates tended to increase, sometimes dramatically.” Price controls also lead to an “increase in the total number of uninsured persons,” says leading health economist Mark Pauly.
Instead of encouraging insurers to avoid sick people, politicians should allow insurers to compete for their business. Leave insurers free to risk-rate premiums and compete for customers based on quality and price. If necessary, subsidize premiums for high-risk consumers, as high-risk pools do. This avoids the slumlord incentives of price controls.
Individual insurance markets pool risk well without price controls. “High risks are not charged premiums that fully reflect their higher risk,” concludes a study published in Health Affairs. Professor Pauly found that high-risk customers pay 1.6 times those of lower-risk customers while incurring four times more expenses.
Markets can provide peace of mind for those who are still healthy. For example, you can guarantee your future insurability by buying the optional “Continuity” rider with a UnitedHealth insurance plan. This is a version of what economists call “health status insurance,” which pays for premium increases associated with changes in health status.
“Ultimately, government price regulation will always fail because it does not change the underlying economic forces driving up prices,” the Progressive Policy Institute report concludes. Indeed. States mandate that all policies cover costly benefits, and then prohibit us from buying more affordable policies available in other states. Federal tax policy limits competition and prudent spending by chaining us to our employers’ plans and punishing those who pay cash for treatment instead of using insurance. Medicare and Medicaid also increase premium costs.
Politicians should address these issues instead of encouraging slumlord health insurers.
All of which means we have to replace the current occupant in the White House in 2012 or this disaster will be with us until the economy crumbles.
“Politicians should address these issues instead of encouraging slumlord health insurers.”
Dr. Schwartz doesn’t get it.
This is a game. A pathetic, sick minded game that Barrack Obama, Nancy Pelosi and Harry Reid are playing with the American people.
With the Capitol Hill switchboard 200-300% over maximum capacity, all Congressional district office telephone answering machines jammed full, over 80% (noon Saturday) of the American people vehemently against passing this healthcare debacle, the Catholic Church against it, the Hispanics against it and the nation itself ripped into angry and furious shreds – plus much, much more, all of it is nothing more than a game to demonstrate the incredible leadership of Barrack Hussein Obama.
The bill will pass today.
Guaranteed as good as any gold that has ever been mined.
The reason?
America has not yet been punished enough for their reckless stupidity when it comes to who that they elected for their representatives.
Think not?
I have several everyday Democrat friends that voted for Obama. Most of them are 60+ years old. Every one of them think that whats going on now is funny.
I hear and read about how fluid and iffy that this mess is – that it can go either way.
The last time that things had any chance of going either way was the day before the 2008 General Elections.
That is when America gave up any claims or rights to having a choice or say so about what happens in Washington, DC.
Through apathy, brute ignorance and downright evil wickedness America slit its own throat.
Things are going to get much, much worse than they are now.
Take it to the bank!
One need only remember “bussing”; that replaced “separate but equal”; virtually all the schools went to the lowest common denominator (they stink) virtually no school, approaching zero, improved.
Between the “maim stream media” and the public schools, we have a “stupid class of people” trained in believing “the big lie today”.
Now your health care will be delivered by the: “stunningly competent post office types”!
Start over:
1) Insurance not limited by state lines.
2) All law suits are automatic counter suits; the Jury can fine the plaintiff and/or the plaintiff attorney guilty: abuse of civil process, fraud or whatever the jury wants; and order the plaintiff attorney and/or plaintiff to pay whatever they tried to extort: that is all you need for tort reform.
3) Make general health insurance policies universal in coverage mandates; make hybrid policies all inclusive; except…style; only; no named perils policies.
4) Open neighbourhood health clinics for the uninsured; it is cheaper than this. Pay off Doctors student loans plus salary if they work there 2 years.
5) Drastically increase nurse pay and increase their authority for the highest trained.
You make some excellent points that are seldom expressed even in conservative circles. The populist myth of insurance companies as evil profit makers is so pervasive we accept it as background reality. The truth is that they are responding to incentives in what’s left of the marketplace.When Congress is finished destroying that, I forsee an eventual failure of the insurance industry and its replacement by government regulators. The public option arrives in a Trojan Horse. Legislators will find themselves unable to resist the temptation to load policies with all kinds of unsustainable mandates: coverage for any and all mental health conditions, alternative therapies, organ transplants for people with lifestyles that will destroy the replacement, first dollar coverage for unmarried moms to increase the size of their brood, etc, etc. Eventually we’ll see rationing of the type practised in the UK: long waits to see specialists and the reliance on overworked and underpaid primary care providers. Don’t expect to see anyone with an MD in your first contact with health care. So called mid-level providers who are paid less for good reason will perform most of the care.
“ObamaCare would force insurers to behave as slumlords, much like rent control does.”
If they do, the next step is universal health care one-payer system.
I don’t think the insurers would want to put themselves out of business. Their executives are paid to use their brains; and if they want to live a happy, long life, they should hold to their high moral principles.
Excellent job! I never before thought through what rent controls do. I just lumped them in under the general heading of “all price controls are bad.” Thanks for the enlightening article, both for its great job on rent controls, as well as how price controls affect health-care insurance.
Vivo: We already have single-payer systems in Medicare and Medicaid where “insurance companies” are subcontractors for the government. That will not change in any future or enlarged single-payer system. The same already holds for many large beneficiary pools, like state university systems, which effectively self-insure, using companies like United Health Care to perform for-fee management of benefit distributions. Frequent changes occur in these relationships when contracts expire because, like all government agencies, contracts are bid out and won more-or-less by the lowest bidder. No matter what limits you place on the bid process, there will always be a lowest bidder. But, you get what you pay for – always.
My question is this: What industries and companies – the government doesn’t count since I can’t buy very dynamic equities in that – will profit most from the likely changes? There are always winners.
Well, Dr. Schwartz, as far as single-payer proponents are concerned, you’ve just made their case.
In the end, those nasty slum lord insurance companies must be punished. The solution…. ask Nancy. Or any other Democrat who has been pushing this health care plan.
What to do? Dump private free market insurance in favor of the government system. The government will take care of your health care. The government will administer your treatments, medications, and, deliver the message that you cost too much so all they plan to do is make you somewhat comfortable, until you, die!
The plan is the incremental plan. this is the death by a thousand cuts plan. Sooner or later you will become so fatigued you will accept any plan just to get them off your case. Which will mean, they will have finally gotten so much on your case that you are the servant of those running the government.
This plan represents the American revolution, in reverse.
So now, I join the “repeal & replace” crowd. We can establish all sorts of good programs whose costs will be minimal & whose delivery of services will be maximum. We can reduce costs by eliminating government (including state) controls & regulations.
Regulations are not bad. What is bad are regulations that are designed as over-regulation and those that expand & expand & expand. Each time regulations are added, service & quality go down. Look at AMTRAK. Its not government involvement… its government OVER involvement. Offer an inch, they take 3,000 miles!
Now the time has come for the United States of America to be punished for its stupidity in electing such amoral politicians like Obama, Pelosi, Reid, the entire Kennedy family,the big city democrat machines a la Chicago, Philadelphia, New York, Baltimore etc etc. The American people will suffer, have no doubt about it, they turned away from God a few decades back and now have to face this devastation with no Divine intervention at all. quo usque abutere patientia nostra, O homo Americanus!
What haven’t we learned over the past 2,063 years?
“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.”
~ Marcus Tullius Cicero (55 BC) Roman statesman, lawyer, political theorist, and philosopher.
SukieTawdry: He has made their case only if you accept the premise that single payer systems avoid the problems he describes. They don’t. In this country they won’t because the incentive structure drives low-bid contractors for benefit management services in the directions he describes. These contractors will always be with us because state governors and their legislatures do not have and will not get the resources to fund a permanent bureaucracy to replace them and the federal government is not going to take over what is already at various points a state responsibility. These structural issues lie at the heart of what distinguishes the US when compared with other countries “nationalized” health insurance systems. I haven’t seen where in the bills being considered these issues are addressed. I don’t believe they have been.
re cost controls:
Please keep the distinction between cost in insurance and cost of billed services in mind. As far as I can tell, they are only trying to limit the cost of insurance. I do not consider that strategy worthy being called healthcare reform. Its the end of insurance as we knew it for all the reasons the post cites.
Structural solutions must address how much we waste because of great expectations of quality of life (regardless lifestyle choices) and providers’ fears of suits etcetcetc. Oh and how about the stock prices of those med schools…oooopps I guess they are still private and expected to stay that way- why share that booty.!!!!!
FACT: The United States of America has the best health care in the world. Experts agree that the best measurements of health care quality are infant mortality, life expectancy, and percentage of chronic illness. USA scores #1 in all of these.
citation: http://dll.umaine.edu/ble/U.S.%20HCweb.pdf
FACT: We pay less per capita for our healthcare than citizens of any other country.
FACT: We pay less of our GDP for healthcare than any other country.
citation: http://www.who.int/nha/use/THE_pc_US$_2006.png
The fact that the Demon-o-crats are trying to dismantle the world’s least expensive and most effective best healthcare system PROVES, BEYOND A SHADOW OF A DOUBT THAT IT IS A COMMUNIST PLOT!
This may make health care in Mexico look good. Instead of people crossing the border to buy prescription drugs, they’ll be going to see a doctor. Will take a year to see a doctor in the US, 6 months to see a Canadian Doctor, but go to Mexico, give the receptionist some “mordia” and you’re the next appointment. I think I’ll start Mexicali Health Solutions HMO.
Thank you, Brian, for making these important points.
As the problems with ObamaCare inevitably unfold, it will be important to remind Americans that they are caused not by private insurance, but by government interference with the rights of consumers and insurers to contract freely.
This will be the next front in the battle of ideas. Thank you for that fine opening salvo!
Please consider my plan to save our country: It should be illegal for anything to exist that doesn’t turn a profit.
Why can big government steal money out of my paycheck to fund public libraries that are full of third-world ethnic types taking a free ride? Libraries should be cut loose from public money and have to compete in the marketplace like God intended!
If there’s a fire in my house I should have a choice of efficient, inexpensive for-profit fire services. If a bunch of Mexicans are burning down their crack house and can’t afford to pay a private service, let their whole slum burn down. Burning them all out is the fastest to clean up our cities.
Our private prison system is the best in the world. We need to privatize the whole system from end-to-end! Forcing our police departments to get off their lazy butts and turn a profit would finally shake up law enforcement and get all the criminal-loving liberals out – especially when cases get tried in the new free-market courts!
God has a plan for our country. And the sooner we get there, the sooner we’ll rid ourselves of all the Gays, Illegals, Foreigners, Elites, Liberals, Scientists, and Child Molesters. Our American Utopia is in reach, if only enough of us can band together to create it.
Does anybody else see a pattern here??!?! Didn’t we learn anything from over-regulating Wall Street?!?!?
Government regulations destroy the economy! Now Obama wants to destroy Health Care too? We didn’t even have any “financial crisis” until Obama destroyed our economy by regulating Well Street!
#15 Mexico may not be a good choice. But Columbia, Chile, Costa Rica and the Dominican Republic all rate better than the USA in the World Health Organization’s fact-based ranking of health care systems.
Even Canada and the UK, the great right-wing demonized straw-men, come in ahead of the US. To be fair, if you mixed the made-up and cherry-picked scare-stories with the actual facts, the USA would be number 1. So it all depend on how you decide what is true.
Brock, you are naive if you think Gays and Scientists are the problem. Liberal non-science loving Scientists are. There aren’t enough Gays in the general population for you to have this ‘fire and brimstone’ attitude about them. Leave that and your caveman-inspired Objectivist ideals back in the Montana countryside. Capitalism with some federal regulation has its place. The utter failure of Libertarians to effect major change in this country is all the proof you need. You can’t lobby for change if that change will put you out of a job.
So it took, what, 218 years before the first black president was elected as liberals drooled in their drawers? Looks like it’s going to be another 218 years before another black president is elected, assuming we’re still here of course. I hope the experience with the first female president goes better, but I’m not holding my breath on the way to San Jose and Cuban health care nirvana–or did Mr. Bill get that honorary gender bending distinction for so kindly feeling your pain?
Insurance company executives will lose millions of dollars this year in extra pay and bonus’s if health care reform passes. Millions of Americans, working people, veterans, small business people and families will be able to access health care if this bill passes. For once, they win, big banks and big insurance lose one….just this once…I hope this Congress sends a clear message to the insurance companies:
Let em eat cake!
Support health care reform. Your country is counting on you to really stand up and be really pro-life ….. for once ….
God Bless America
If any service that is valuable suddenly becomes “free” to the consumer or if it provided as a low priced all-you-can-eat buffet, the demand for it will grow exponentially. But the providers must make a living and the true “cost” of those services must be paid by someone or else they will not be available at all. So there is only one way Obamacare can play out:
1) Usage and therefore costs will escalate dramatically.
2) A practical upper limit of paid health care premiums and taxes for health care entitlements will be quickly reached and the economy will not be able to grow enough to pay any more. The rest of the world will balk at any more increases in our debt.
3) The government will react by imposing cost controls which will shrink the provider pool.
4) When they see that they cannot win at this fool’s errand of a balancing act, they will have no choice but to ration health services.
5) Those politically well connected will be given preferences – the rest of us will suffer.
Normally government screws up things because of unintended consequences that are a little hard to see (but would be caught by the private sector where you pay a price for stupid ideas and decisions). In this case the consequences are not hidden or unintended. They are sitting right there for all to see. The Obamadems just don’t care because of their higher calling to re-distribute wealth and a belief that collectivism is superior to freedom. We are all helpless bystanders. 2012 cannot come soon enough and whoever is put in power better be willing to seriously reverse some things – for the first time in our history.
MoonsHarshMistress, I’m sorry to correct you, but so-called Scientists are Hell-bent eroding Americans’ belief in the Almighty. And our faith is all that stands between us good citizens and the Liberal Fascist Revolution!
Just look at the scientists’ biggest heroes: Einstein and Newton both claimed that “a scientist’s first duty is to oppose God”. Is that who you want leading us?
Perhaps I should add Uppity Women to that list of America’s enemies. Read enough on here and you’ll see your kind is not welcome.
Mr. Montana, I know I’m welcome here. Precisely because I’m uppity. And you know what? Einstein and Newton are both DEAD, last time I checked. Religion and Science are not mutually exclusive. Don’t you pay attention?! Many scientists are more than happy to add their scientific reason to the discussion of theology. Perhaps you see what you want to see?
If you are so myopic as to believe that ‘uppity women’ are the enemy of America, you have bigger issues reverberating within your skull than just a woman with an unapologetic view and a strong backbone. I’m used to dealing with your kind. That is, the kind with a brain in a straitjacket masquerading as ‘patriotism’.
24. What are you talking about? Is this the same Newton who said, “In the last days, men will turn to the ancient prophesies in a time of great distress,” or “God is a great mathematician?”
17. The way you phrase that, it would be illegal for charities to exist.
Poor Citizen: Your comment pretty much sums up the feelings of, apparently, most of the nation. Therefore, we are doomed. Now…back to American Idol.
Wow. I’d like to congratulate Myth Buster and MoonsHarshMistress. I haven’t been on this blog for all that long. But before this I have *never* seen any conservative openly disagree with any other conservative’s posting, no matter how hateful, ignorant, or counter-factual it may be. Thanks for not contributing to the echo chamber.
“17. The way you phrase that, it would be illegal for charities to exist.”
Exactly. You need to read up on your Ayn Rand. Pity for the guilty is treason to the innocent.
Handouts reward the weak and the expense of the strong. And they create a new class inferiors dependent upon the state and pliable to its dictates.
We all got the same chances in this life. Poor people are poor by choice. The cause of poverty is laziness. So one could say that poverty is caused by poor people. Do you really want us to pay them to sit around and breed?
Brock, I pity those around you. The gods forbid someone gets laid off, or winds up with $2 million in medical bills, or disabled from a work injury, or has to file bankruptcy from a bitter divorce. I imagine you’d call them all lazy in a heartbeat. Letting them be ‘manipulated’ into poverty. Allowing themselves to become broke by being lazy.
Let me be the first to enlighten you. Poor is a mental state. Some people make less money, have less belongings, owe no money, and drive older cars. Lazy? I think they are geniuses! It’s called ‘living within your means’.
Now, that’s not to say some poor folks prefer to exploit charities and beg, or have no ambition, and refuse to be self-sufficient. I’m not talking about them. They are as lampreys onto an unsuspecting fish.
But your paradise of unfettered Objectivism will not and cannot ever exist.
Well, this still has to clear the Senate and you have 38 states planning on suing and there are constitutional questions and it will end up in the SCOTUS for a final decision…and that could take years. Menatime, I can’t wait to see the bloodbath in the November elections. My local representative could run against a dead person and I’d vote for the dead person.
Heh! Gotcha there CO2. Here in Missouri, not only did we vote for a dead person (literally), we elected him to the Senate!
#14 Brock, the citations you listed completely disprove the health care “FACTS” you asserted. Did you even look at them?
The ultraliberal internet groups have routinely tasked their cohorts with false-color missions in order to cause dissent and to injure public perception of their political opponents. Nothing damages a political effort as effectively as does associating its public persona with loonytune racist trailerdwellers with suspiciously correct spelling.
So, Brock, please trip on back to kos and get some other assignment. Maybe you and the guy who claims he’s *never* seen any conservative jump in and object to crap can start a fake grassroots org somewhere. It’d be just as honorable, I would think.
Bobby B: Actually, I’m the [relative] liberal here complimenting conservatives for calling out other conservatives for ignorance and prejudice.
Why are you going to make accusations about that, but not challenge the racist insinuations of don [#21]?
Brock Montana;
poor people are poor by choice
That is generally true of CHRONIC poverty. More on that here:
http://www.heritage.org/Research/PoliticalPhilosophy/BG791.cfm
Quote – “They are trapped in “behavioral poverty”: a vicious cycle of illegitimacy, destroyed families, absent work ethic, crime, drug addiction, and welfare dependency.”
However, there are people who have a temporary run of bad events and fall into poverty. They are certainly deserving of help.
Brock, let me spell it out for you, “Congress shall make no law respecting the establishment of religion or prohibiting the free exercise thereof.” My religion commands me to care for those who cannot help themselves, or who find themselves in temporary dire straights. Feeding the slothful only hurts the slothful, but banning us from feeding orphans is a prohibition on practicing our religion.
I am continually stunned that no one remembers that PharoObama has surrounded himself with followers of Thomas Malthus and Paul Ehrlich.
The idea NEVER was to improve health care. The only folks who will get something are a select group of urban minorities who were outside of any possible sort of care outside an emergency room (which will quickly include “formerly” illegal immigrants). Those folks were promised a reparation from the government for their long years of support for the Socialists.
The real promise of this program is to encourage a massive decrease in the numbers of the majority race and in their relative ability to pay for their own survival. For the youth both abortion and “alternate non-reproductive” lifestyles will be heavily promoted in the schools. Most health benefits will be cost-benefited away from seniors to encourage their early demise.
The transfer of wealth thru medical support to those who don’t pay for it (mostly to support the bureaucracy), massive increases in the hiring of mostly minorities to unionized positions in the agencies who will be overseeing the “redistribution” of the assets of the majority race, educational benefit dedications to mostly urban minorities for those government positions,
The private sector and the military/industrial complex will be massively reduced cutting the ability of many people to support themselves and to avoid servitude to and reliance on the government largess of which their will be ever less.
Never forget…many of those in DC firmly believe that MAN is the greatest threat to life on earth.
Once the society that has done the most to uplift humanity and increase mankind’s lifespan and wealth has been destroyed it will be easy to return the First World to the Third World and then back to the natural world – where man has no more footprint than a flock of geese or a pack of monkeys swinging in the trees.
Wayne – first problem -
“The private sector and the military/industrial complex will be massively reduced cutting the ability of many people to support themselves and to avoid servitude to and reliance on the government largess”
How is supporting oneself off of the military/industrial complex *not* a form of government servitude/largess?
Secondly – does your bizarre fantasy have any evidence? Please, I’ll read it. Really.
Obama has surrounded himself with followers of Thomas Malthus and Paul Ehrlich. [citation needed]
The idea NEVER was to improve health care. [citation needed]
The only folks who will get something are a select group of urban minorities who were outside of any possible sort of care outside an emergency room (which will quickly include “formerly” illegal immigrants). [citation needed]
Those folks were promised a reparation from the government for their long years of support for the Socialists. [citation needed]
The real promise of this program is to encourage a massive decrease in the numbers of the majority race and in their relative ability to pay for their own survival. [citation needed]
For the youth both abortion and “alternate non-reproductive” lifestyles will be heavily promoted in the schools. [citation needed]
Most health benefits will be cost-benefited away from seniors to encourage their early demise.[citation needed]
massive increases in the hiring of mostly minorities to unionized positions in the agencies who will be overseeing the “redistribution” of the assets of the majority race, [citation needed]
educational benefit dedications to mostly urban minorities for those government positions,[citation needed]
any of those in DC firmly believe that MAN is the greatest threat to life on earth. [citation needed]
By the way, Brock, you can’t outlaw running short-term losses, either. Otherwise, countless businesses would be forced to shut down. Consider biotechs, who have no revenue until their first drug is ready for market.
A good part of the reason Insurance companies have been unsatisfactory in some ways — is because the government has been interfering with them for a long time.
If they were opened up to across the country competition, they’d have to be excellent or would go out of business.
This just passed Health Care bill is a stealth plan to get to single payer — one way is to bankrupt the insurance companies — and the other is to force them into giving worse and worse service while they try to survive, driving a wedge of hatred between them and the public. By that time, the plan is, the public will blame them — not the government — and be so fed up — they’ll “submit” to socialized medicine.
My 67 year old friend in Norway had to wait 2 years for surgery for a life-threatening ailment. Everyone thought he’d die before getting it. It’s just chance that he didn’t. That’s the kind of treatment we can expect.
And it could have been resolved so much better for all of us — including the poor and those with “pre-existing” conditions.
Why is it up to health insurance companies to regulate medical costs and provide free preventive care? Should doctors and lawyers have something to do with a viable solution?