One of the biggest problems I see within the nation?s health insurance industry is lack of competition. In 2007 the American Medical Association released it?s last update to it?s report on Competition with in the Health Insurance market and it gave a rather grim picture.
Here in Iowa, Wellmark was reported to control 71% of the state market, with United Health Care (John Deere) the next highest in market share with 9%. While I?m no expert in business, a 71% market share sure seems like having the ability to basically set your own rules with very little care or concern about consumers.
While just about everyone agrees that there must be some sort of health care reform and soon, few can agree on how that should be done. Some argue that the best way to encourage competition within the health insurance market is to lift the limitation and allow consumers to cross state lines to purchase their health care policies. While at first glance this seems like a great idea and a workable one at that, there are some hidden problems that this unleashes.
Currently each state regulates the health insurance industries within the respective states. Groups who argue that the federal government has no constitutional authority to regulate health insurance companies often site states rights and the 10th amendment. Many of these same people are also in favor of allowing consumers to buy their insurance across state lines. While I personally haven?t entirely made up my mind on whether or not that would be a good way to go it there are a couple of possible results from this that don?t really sit well with me.
First of all, while allowing people to buy insurance across state lines would create a burst of competition in the short term, in the long term it doesn?t address the history of unregulated mergers and acquisitions that up until now have only really been contained by the state line rules. So instead of having monopolistic companies on the state level, we could quickly end up with them on the national level. How long would it be before a company like Wellmark controls 71% of the health care market nationwide? Should we really accept a short term fix that creates a long term problem?
Secondly, allowing people to buy insurance across state lines, effectively robs the states of regulating the health insurance markets within their states. Mirroring what happened with credit card companies, health insurance companies would quickly seek out the state or states with the fewest regulations and move there. So if for example, Texas has the fewest regulations on health insurance and all of the companies move there, then Texas state health insurance regulation agency is effectively setting the regulation policy for the entire nation, and what is good for Texas may not necessarily be good for Iowa.
As I?ve stated before, I do not support HR3200 (Open Congress) and I also do not support the plan that was put out by Max Bacaus in the senate. Both of them contain a mandate the requires all Americans to get health insurance regardless of whether they can actually afford it or not and if they don?t get the insurance they face a significant tax penalty of about 2.5% of their income. In my opinion what this does is create an artificial victory that Democrats will be able to point at in 2012 or beyond and allows them to claim that their health care plan worked because the lowered the number of people that are uninsured, which would be true only because they took away the choice of the people to make the decision of whether or not to get insurance away from them without actually fixing anything within the system. The Bacaus plan is even worse, because it contains the mandate but not the public insurance option. At least in HR3200, there is a public insurance option that gives consumers a tool to force insurance companies to lower premiums to something that is reasonable and affordable to working class people, you know, those of us making less than 50k a year and for who an insurance premium of $500 a month is not affordable.
My views on the public insurance option have changed somewhat since my review of HR3200 at the end of July. I currently see it as a tool to be used to get to the ultimate goal. I am no longer convinced it is the best option, but I have yet to see any options that feel are better.
I posted this question in a comment over at The Liberty Papers and as I?ve been sitting here today working I?ve delved into more deeply.
How much money would it take to provide health care to every American every month?
US Census Bureau?s Population clock estimates the population of the US at 307,040,414 as of 07/30/09 at 14:45 GMT.
Currently every working adult in America has a percentage of their gross income deducted as Medicare taxes. As of 2009 the rate was 2.9% which is divided evenly at 1.45% between the employee and the employer.
On top of this American?s have the health insurance premiums which can widely vary (about$150 a paycheck where I work.)
Now here is where I get theoretical. Instead of taking out the Medicare taxes or having every American pay an insurance premium, give them back that money and instead charge them $95.40 a month and put every man, woman, and child in America on Medicare Part B. That comes to about $29,291,655,495.60 collected every month in Premiums. Would that be enough money to cover the health care needs of every American in the US every month?
According to the Henry J. Kaiser Family Foundation probably not. In 2007 the the cost of health care in the US averaged out to about $7,421.00 per person. $95.40 a month only comes out to about $1134.00 a year per person. What usually happens with programs like Medicare however is that the premiums and taxes paid into it are put into a trust fund of some sort. A portion of which is then taken and used to create some sort of interest earning revenue. So, if you take that $29 Billion a month or $351,499,865,947.20 from one year, and take a portion of it and put it into some sort of interest bearing market, would that the combined result be enough to pay for the health care of every American?
One of the biggest conundrums of American politics today is the fact that a significant majority of Americans want government services like Medicare and Medicaid. 62% of Americans want a public health care insurance option of some form, however most simply don?t want to pay for it. It?s that type of thinking that got California into the mess it?s in. But as long as everyone is willing to chip in, pay their fair share, could we make Medicare work for everyone. Seniors like it. Sure it needs reform as well to cut costs. But it does work. And the idea that the quality of care would suffer? I find that unlikely. Most medical research that happens in America today is at least in part funded through loan and grant programs funded by State and Federal government. That is unlikely to change no mater what we do to health care reform.
And just to clarify; this is more of a thought exercise than anything and not necessarily a move I would 100% support or something I expect congress is likely to do.
To start off I want to state where I stand on healthcare reform. I am a firm supporter of a public or single payer option for healthcare, even at the expense of the profits or survivability of private insurance companies. I have no love for Insurance companies as they ration healthcare to Americans and if you happen to get sick you instantly become a leaper in their eyes and they do everything in the power to drop you or get your employer to drop you. A large percentage of the bankruptcies that happen in this country are due to healthcare costs, and the majority of those are people who have insurance. Healthcare decisions should involve two people, the patient and the doctor. There should be no one in the middle whether it be a private insurance company or the federal government. I also believe that every person has a RIGHT to affordable healthcare and that the healthcare industry should be required to be a not-for-profit industry.
That out of the way? after reading HR 3200, I have to say that I am completely opposed to this bill, and here is why.