Idiocy on a Congressional Scale
September 24th, 2009Guest Column
by Martin Horzempa
Huntsville Alabama
The public is up in arms and rightly so about the current state of our health-care system. After having seem the value of their life’s saving cratered by a greedy few in the banking system, they fail to connect the dots when it comes to health-care.
Most when starting out as adults are aware of the need for health insurance and dutifully procure coverage for themselves and their families and continue to maintain coverage their entire careers, while stopping occasionally to think about the years and dollars they have invested into the system even though they have been healthy and have really not used their insurance. This won’t come as surprise to many: It’s a fact of life.
If you live, you will get old and die, and as you age you will need more and more health-care. A study titled “The Lifetime Distribution of Health Care Costs” by Berhanu Alemayehu and Kenneth E. Warner is one of several studies that point to the fact that the distribution of our needs for health-care is related to our age. That very fact is what most people seem to ignore when discussing the health-care issue. Their main concern is the cost and availability now and what they would do if they lost their health insurance while failing to realize that their enrollment in a health insurance plan has essentially abrogated the basic tenet of insurance.
We all understand the basic principle of insurance: spread the risk of a given occurrence over a large group and thereby effectively mitigating the loss to any individual with all bearing an equal burden of the group’s cost The health care system that we currently have in the United States, with private health insurance for the young and healthy and Medicare for the older and sicker amongst us actually goes against this most basic tenet of insurance.
No one can expect anything but a near bankrupt public system for our elderly while we continue to pay inflated premiums to companies only when we are healthy at the very time when we should be building up some reserves for when we are older. Your premiums should accrue until you really need them, not go to an insurance company that will be turning you over to Medicare just as you are about to really need to avail yourself of the health-care system while reporting profits that are usurious.
The health insurance industry’s “Medical Loss Ratio” has gone from about 95 percent in the early 1990s to as low as 78 percent in today’s market. The “Medical Loss Ratio” is basically the ratio of claims to premiums, or put another way: Health insurance paid out $.95 of every premium dollar in the ‘90s and today only pays out $.78. The overhead for Medicare is 3-4 percent since they do not need any advertising, promotion, lobbyists, political donations, underwriters and executive bonuses. The extra 17 percent that is currently paid by the 204 million people currently covered by private health insurance would amount to over $163,000,000,000 annually or in governmentese $1.63 trillion over the next 10years. That’s with a “T”. And this is just 10 years, just think what should have accrued to the public’s good over a person’s 40 year career.
In today’s world the average single person policy premium in the U.S. is $4704 (don’t forget this is with the policyholder being responsible for over a third of any claim), at a 17 percent over charge that amounts to $800 each year, over a 40 year career at 5 percent compound interest that comes to roughly $102,736.36. That’s a lot of cabbage and but the figure will floor you when you do the math for all the current policyholders in the U.S., that’s a whopping $20,958,217,440,000.: $20.9 Trillion.
Twenty Trillion Dollars. We could balance the budget, fund Medicare, fund Social Security, pay for both wars, pay off the national debt and still have enough cash left over for another war or two. Everyone in Washington; that is each and every one of our leaders in Congress and everyone in the current administration is aware of this basic fact. And they are also aware of the fat that we are all being screwed by the system for the benefit of the health insurance companies.
They all know what needs to be done. We need a single payer system. We need a strong public option. All the experts agree. All other developed countries in the world use some variation of this basic system, and none have decided that it would be better to have private health insurance. None.
Only in our dysfunctional political system could private financial interests of a few be allowed to take precedence over the welfare of the country. The health and well being of the entire country is being held hostage by the private health insurance companies with our own government acting as accomplices. We find ourselves unable to compete in a global economy because we are over burdened by health-care costs and we have a democratically elected government that will not act to correct this even though they were elected to do just that.
This is Idiocy. This is Insanity
Comments
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September 24th, 2009 at 3:52 pm
The problem with Martin’s conclusions is that there is no straight line from eliminating private health insurance and funneling that money, or some portion of it through new taxes, into federal coffers to provide, theoretically, universal coverage and help eliminate government deficits.
Why? One word that includes 535 separate agendas. Congress.
There is nothing in the Constitution that requires Congress to spend taxes for the alleged funding purpose of the tax. Social Security is a superb example of this. Money collected today from active workers is used to pay current retirees. There is no such thing as a “trust fund,” it’s an illusion. In fact, the Supreme Court has ruled at least once that retirees legally have no proprietary or ownership interest in the money they paid in while actively working. It was, and is, a tax, revenues from which Congress can spend on anything it wants.
Newly in charge of trillions of dollars in new revenue, Congress doubtless would go on a spending spree that would embarrass drunken sailors on shore leave. This is based on what Congress has historically done, not on what an assembly of saints would do.
My own thought is that the best solution would be the regional cooperatives that President Obama seems inclined to support, keeping Congress away from the revenues in the first place, and the actual users of the service more or less in control.
September 24th, 2009 at 10:39 pm
The private, for-profit sector has proven they are not to be trusted with people’s health. We need national public health care for all! And we need it now! No more congressional games…
September 25th, 2009 at 9:42 am
That the for-profit sector cannot be trusted with people’s health (I agree with that) does not automatically mean that the government can be trusted. But, I believe that consumer-run health cooperatives can be, for the reasons implicit in my first post: control by the consumers themselves; keeping the money out of the hands of Congress.
Congress has a horrible record of waste and promoting or allowing bureaucratic mismanagement. Sure, we “should” elect representatives and senators who are as tenacious about this as the late Senator William Proxmire, the famous Democrat deficit hawk and anti-pork barrel vigilante.
Odds are, with 535 members of Congress, that election of the sort of assembly of saints needed to be good managers is not going to happen. Certainly there will be a few, and maybe even a significant minority of members who are dedicated to spending money wisely and serving the interests of their constituents.
Any national health care public option must, in my opinion, be done through something like a system of cooperatives, otherwise the billions that will go into the system will be looted, misspent and wasted.
September 25th, 2009 at 9:48 am
Congress won’t be running the plan, man. They just pass the enabling legislation.
Is Medicare or Medicaid wasting money? No.
If you have been following this debate at all, you should know the administrative costs for those programs are tiny compared to private health insurance. What costs us now is the demand for profit and exorbitant salaries for insurance company CEOs.
Nobody puts much stock in the cooperatives. We don’t even know how they would work. That will not and should not be part of the final health care reform bill. Sorry.
September 25th, 2009 at 10:27 am
I agree with Yana, the federal budget is like a back-hole. It is imperative that a new public option be setup as a completely independent financial entity unlike Medicare and Medicaid.
In a prior post i argued that a new public plan really should be modeled after the TVA. A federal program when started with seed money from the government which was turned into a self funding financially independent entity. This is the only way to insure that our legislative leaders are unable to access the reserves that the system must have if it is to provide a truly viable solution to the problem of short term insurance rates for medical insurance in which the bulk liabilities are not incurred until a person reaches retirement age.
While I doubt that we have the clout to do such a thing in the current political environment, it was done in the past so there is still hope.
I fear that regional co-ops would fail the same way that the Blue Cross Blue Shield “co-ops” of the ’30s morphed into the leaches that they are today, and without a public plan it is almost a certainty that it will bankrupt the country.