Sunday, November 1, 2009

Health care round up

I read two interesting articles on health care this week:

The first is this awesome blog post. Four main points as follows:

1. Insurance is not part of the solution; it’s part of the problem.
2. Somebody has to say no.
3. A public option can only make things worse.
4. It’s always the poor who get screwed.

The second is this NYT article, my favorite part is as follows because it reminds me of what happens when you give a mouse a cookie:

Health reformers start with the problem that some people are expensive to insure, because of pre-existing health conditions. Their solution is to require insurers to sell insurance to everyone (a policy called guaranteed issue) at the same price (called community rating).

This solution, however, causes another problem. For healthy people, insurance is now a bad bet. A person without significant medical needs has an incentive to wait — to buy insurance later if and when he gets sick, a decision that raises the cost of insurance for everyone else. This problem, according to the reformers, calls for another solution: a mandate requiring people to buy health insurance.

But this mandate leads to yet another problem. Requiring an expensive purchase like health insurance can be onerous for low-income families. So the health reformers offer subsidies.

Which brings us back to marginal tax rates. If large health insurance subsidies were offered to all Americans, regardless of income, the program’s cost would be exorbitant, requiring substantial increases in explicit taxes. So, instead, the subsidies are phased out as income rises. As a result, we get implicit marginal rates like those in the Senate Finance bill.


PZGURU said...

The real down side to ANY type of insurance is that it's all about risk of a possible future occurence.
I sat down and calculated that if person starting paying for health insurance at age 25, at $400 a month, by age 75 that person would have paid $240,000!!!! That doesn't even include (1) yearly rate increase (2) co-pays , or (3) prescription costs and other out of pocket costs. If that same person never had a MAJOR health issue, then that money is all down the drain.
This is why we need Personal Medical Savings Accounts. If that money was put into a PMSA, but was not NEEDED, that person still has the money and can pass it on to his children like any other personal asset.

Anonymous said...

That's $557,000 according to:

if using 3% annual compounding. Compounding would actually be monthly so the figure would be higher.

PZGURU said...

ANON - great link - thanks. That is a STAGGERING number to think about.

That's more than enough money to retire on. I am seriously going to consider stopping my own health insurance (maybe).

If you figure only 1% of insured people will get a huge health crisis such as cancer or serious car injury or need an organ transplant, it's no wonder the insurance companies are fatter than hogs. They rake in all that dough and only have to shell out a fraction of it for actual services.