Friday, February 26, 2010


It's that time of year again, when health insurance companies arbitrarily decide to increase rates. We got the standard increase: 30%. Last year it was a 32% increase, the year before that it was a 29% increase. So, yep, we're paying more than twice as much for our premium as we were three years ago, even though our risk (according to our company) has not changed.

Seriously, I want someone to defend that, to show me how this is a fair and reasonable example of how a market ought to work.

And since I'm now unemployed I'm fairly certain this will be the year I decide the risk/cost of going without health insurance trumps the fake sense of security that comes with it.

Sorry, everyone else that has insurance, I know that will make your rates go up a bit (but let's be honest, your rates are going to go up no matter what). I'd rather watch healthcare crash and burn and be rebuilt the right way than continue to fund a corrupt system.

There are a few things here.

1. When I said I was dropping, I meant I was dropping myself. Kids are still covered, and so is Kara for now.
2. The idea that you are protected from financial hardship if you carry health insurance. It's totally false. We could run all sorts of scenario analyses, and you just don't win in the long run. It's the same concept as believing that steadily buying a lottery ticket will pay off in the long run. It might, but it's not a responsible use of money. Pay me $900 a month and I'll be glad to cash out $50,000 ten years from now. Really, I will.
3. In the event of a medical emergency that racks up $2M in bills, guess what? We're filing bankruptcy. No way I can get away from $2M in debt otherwise. So let's assume I continue to carry insurance and rack up $2M in bills. Well, I pay the first $10,000, then I pay my 20% copay ($250,000) while my insurance company pays their max ($1M), then they are done, and I'm left with the balance of $650,000. So I'm still left responsible for everything over $125,000, and 20% below that. So... I'm filing bankruptcy. Because we could probably liquidate everything we own and in 30 years maybe pay off the debt, but that's financially retarded. As an MBA with a finance emphasis, let me just say that one more time: that's financially retarded. For anyone. Hey, if you can work hard and get out of debt in a few years, more power to you. Don't waste away your entire life protecting your pride. Bankruptcy is a tool. Use it if you need to. So if I'm left with a mere $1M in debt, we're filing bankruptcy. You know, I'd probably have to work some numbers, but I think I'd file bankruptcy for $100k in medical debt. In 7 years a bankruptcy is off my record. At 18% interest, my payment would be $2,100 a month for seven years. Sorry, ain't gonna happen.
4. Inevitably, whenever I discuss this with anyone, nobody who has to pay for health insurance out of pocket disagrees with me. It's always (but maybe not you guys, Alisha) disagreement from people who get (usually good) coverage from their work. I don't. I never have. I've picked the wrong line of work, apparently.
5. Crystal, high costs are probably the biggest part of the problem. You may get billed $500k, but the hospital will settle that bill for something like 2/3 that with their negotiated rates and closer to 1/2 if it were covered by Medicaid. PROFITABLY. What does that tell you? Hospitals can profit on their lowest rate (Medicaid) but regularly bill multiple times that. Also-- how much has your insurance helped you with the other costs- missing work, commuting, etc?
6. I DO have solutions. Here they are.
a. Increase transparency. With the exception of emergencies, people should know up front exactly how much they are going to pay. When Kara's bills for Leyla came in, we went over them, and surprise surprise (I'm being sarcastic, there was no surprise at all), there was a crapload of stuff on there that was not legitimate at all. There must have been a dozen charges on there for c-section related charges... and she didn't have a c-section. "Oh, our mistake" they said after we made all sorts of calls and finally met with them, and they did eventually drop them. But what does that tell you about the industry? They are systematically dishonest. Their approach is, "we're going to go ahead and charge you for this, and then if we get unlucky, you'll catch us and we'll drop that charge." But being healthcare, it's not like you can just take your business elsewhere. Sure, you can doctor-shop to some extent, but it's hardly free-market competition. Crystal, I'll bet if I had my hospital administrator friend sit down with you guys, you could cut $100k off those bills just by scratching illegitimate charges. Dishonest, dishonest, dishonest. You will never pin the blame on anyone. It's always "an honest mistake." BS.
b. Allow insurance companies to compete across state lines. Too few options, too much collusion.
c. Enforce antitrust law.
d. No more negotiated rates with insurance companies. That is, no price-discrimination. If I need my appendix removed, don't charge me triple what you charge John Doe who carries Blue Shield insurance. In fact, stop negotiating rates on everything. Charge what you charge, and don't pay out until some chosen cost is met. You don't see Geico agreeing with Joe's Auto Shop to offer car parts at half price, do you? Just get rid of it. Have a set list of prices and insurance doesn't even get billed. Leave it to the patients to keep the bills and submit them once the deductible has been met. There, you reduce fraud, reduce costs, and increase transparency all in one fell swoop.
e. Government reform. There's lots here. Obama's plans aren't bad. I challenge you to specify anything he's calling for that's a bad idea, besides the premise that it's government paying for healthcare in the first place.

Keep in mind that 30% per annum growth is unsustainable. The median household income in the U.S. is about $50k. The average health insurance premium last year was $13,375. At 30% growth (which is what it's been for the last three years), it will only be another 7 years before the cost of health care exceeds the entire income of a family in a year, even accounting for inflation.

Finally, I don't think I'll ever understand the "licking the boot that kicks you" mentality with people accepting the status quo. It SUCKS. The U.S. ranks lower that almost every developed country in terms of care, and way higher in terms of cost. Hey, you can hate Obama, you can hate Congress, you can love capitalism, you can point out that some government official flew from his sparsely populated nation in Canada to have an operation in Miami, you can take all the lies out there about how perfect our system is and repeat them, but this system simply is not working and it's senseless to defend it. We've got good doctors, good facilities, and there's no reason we can't revamp the system and stop bankrupting people (and killing them through neglect) along the way.

Tuesday, February 16, 2010