Back to an issue which is in many ways an economic one, and that affects all businesses:
Much of what I see in the news about the health care “debate” drives me nuts. Lots of finger-pointing, name-calling, and screaming but little discussion of the details that make all the difference. It strikes me there are a handful of important questions which get little or no public discussion.
Recently my friend and Whole Foods Market co-founder and CEO John Mackey wrote an editorial about his thinking on these issues (http://online.wsj.com/article/SB20001424052970204251404574342170072865070.html). Whether you agree with John or not, you have to agree he was talking practical specifics, based on his real-world experience with thousands of employees. And yet most of the page-after-page of comments about his ideas never dealt with the specifics he had raised: the language always seems to come back to either “No socialized healthcare!” or “Everyone has a natural right to healthcare!” This moves us no closer to any solutions, particularly the types of innovative solutions that America is best known for and needs now more than ever. Are we becoming incapable of thinking?
Here are some of my thoughts and questions:
1. Stop confusing Healthcare with Health insurance. They are as different as auto repair and auto insurance. Even the President seems to get them mixed up. Healthcare is an expense that is one of the largest ones we must pay, either individually or as a society, right up there with food, education, cars, and houses. Insurance is a way of reducing the unexpected, smoothing out the peaks and troughs, resulting in costs that are averaged out over time. Again, just like for cars and houses.
2. It is clear, at least to me, that healthcare costs themselves, whether insurance covers them or not, are growing faster than inflation and need to be slowed down. That is the underlying problem, no matter how we cover it or spread it out with insurance. What steps are either party recommending we take to get more bang for our healthcare buck? As I mentioned in an earlier post (http://hooversworld.com/archives/2952), I think a higher level of consumer involvement and more and better information on healthcare pricing and quality are critical, required steps.
3. If we look at health insurance as a separate issue, what is wrong with it? Is it too expensive because the health insurance companies are ripping people off, or because the costs referred to above are out of control? If the insurance companies are ripping us off, that can be pretty easily discovered by looking at some key statistics, such as their loss rates relative to premium income, their profits as a percent of assets and invested capital, and so on. These should often be the same measures that would be used to measure auto, life, or property insurance companies. It should not be difficult to find out if the health insurance companies are overpricing their products, relative to insurance industry norms. I do not hear most people complaining about life, auto, home, and property insurance companies and their rates. These are not unimportant expenditures for the average family or business.
I realize some will say that “health is not like cars” but that is irrelevant – I just want to know how things work when insurance works right. And arguments that “profit-making organizations screw us” are also ill-conceived. Most of those other insurers are profit-making; the companies which have lowered the price of food, computers, and many other products and services are profit-making; and the present health insurance industry has some major competitors, such as Blue Cross, which are non-profit but still the complaints about pricing continue.
What are the real concerns about someone else deciding which healthcare treatments we get, and when? Some complain about the insurance companies, but would any other entity, such as a government agency, be any better? Is there a difference today between the insurance companies in their reasonableness and speed in approving expenditures? How do companies which insure homes and cars resolve disagreements with policy holders over what should be covered, who can do the work, and how much it should cost? What can we learn just be doing some homework and research?
4. If we increase the costs that health insurance entities (public or private) are required to cover, as some present proposals suggest, how are we going to pay for such increases? As a business owner and sometimes employed entrepreneur, I have been through the nightmares of getting coverage for employees with pre-existing conditions, and extending coverage after employment through COBRA and similar programs.
If we require insurance companies to ignore pre-existing conditions, then we are clearly asking them to increase their costs and raise their prices. I once had a young friend, not real bright, whose girlfriend became pregnant and he was calling all the insurance companies to try to get coverage to pay for the pregnancy. I had to explain to him that it did not work that way.
Requiring lower deductibles or co-pays or raising limits on what is covered also would raise the costs of insurance. How are such increases going to be covered? Who is to determine what these levels should be and what will be their basis for such decisions? My instinct is that I am in the best position to know what levels of risk and uncertainty – such as deductibles and co-pays – I can live with. Why not give me the choice?
On the other hand, allowing insurance to be portable – to carry it from one job to another, or even extend it (on your nickel) when you are out of work – should not add to the cost. If you are already covered by an insurance company and continue to pay the premium, why should they care about you staying with them?
Why can’t individuals and families, including the self-employed, be pooled into risk-sharing group programs that have the same benefits as those programs offered to large employers?
These specific aspects of the various proposals on the table (5 bills last I checked) need to be pulled apart. When things cost more, how do we pay for them?
5.. What is the basis for believing that the government should become more active in the healthcare insurance business? Some say that we should require everyone to have health insurance. The idea of making everyone buy whether they want to or not makes me a bit uncomfortable – when I was younger I went years without health insurance, with relatively little risk to society’s health care costs. I paid my bills out of pocket.
But even if you accept such a mandate, that would be no different from most states’ laws on car insurance. Where I live, you cannot even get a license plate without showing proof of insurance. So we have a “mandate from above.” But even so, the insurance itself is provided by private companies, in a market which appears to be very competitive. State Farm, Allstate, GEICO, Progressive, Nationwide, USAA, and specialized high-risk carriers appear to be battling it out, meeting the needs of consumers, and at the same time earning reasonable profits. Why does this work for cars but not for humans? What is the economic and structural difference between the two industries and situations?
Likely there are more key questions that need to be asked – and answered – but those are my starters. If CNN or one of their peers would spend a little more time talking about these realities, rather than showing crowds of people (and politicians) yelling at each other and calling each other names, I think we could make better progress on what is clearly an important issue facing our nation.