If Social Security Were Medicare
Paul Ryan is catching grief for his proposal to convert Medicare from "all the medical care you wish to consume" to grants of $X per year. This seems unimaginable to people (forgetting for a moment that the US functioned for nearly 200 years without it at all).
But what if Social Security were Medicare. What if, instead of giving $X per year, Social Security made an open-ended promise to fund whatever consumption one thought necessary to maintain his or her lifestyle. Can you imagine the fiscal disaster? The horrible incentives
And if Social Security had been structured that way, and we were now trying to change it to fixed grants, what would people be saying? They would say, "what if something unexpected happens - won't that just leave people in the cold?"
MJ:
I think you've just stumbled on material for your next column.
April 14, 2011, 1:24 pmJohn Moore:
But social security is not for the same purpose as Medicare.
Medical expenditures naturally call for insurance, which pays for the losses encountered, not a fixed fee.
Social security is a guarantee of a fixed amount - a pension plan, not insurance.
It would be nice if we had a better insurance plan for the elderly, but then it would be nice if we had decent insurance for younger folks too.
As one who has been medically uninsurable since age 30, for a genetically based disorder, I have more experience than most with the failure of our medical insurance systems. I have been unable to become an entrepreneur or small businessman because I would never get insurance. Instead, I've been forced to be an employee, or go on the dole, which I refuse to do. As I approach Medicare age, I'm glad that I will finally be able to have health insurance without having to work for a big company.
We can speculate about what systems would have evolved if we didn't have the system of corporate provided insurance (a consequence of unions and WW-II price control), and what would have happened without Medicare. But that would be pointless, since we have what we have.
Giving out X$ per year for Medicare is a plan designed to fail. ANd if it fails, the political market would produce another government system.
April 14, 2011, 8:57 pmfoxmarks:
“Giving out X$ per year for Medicare is a plan designed to fail.”
Fail how? What do you expect Medicare to do? Medicare is not insurance, it is welfare paid in the form of medical treatments.
Your situation, as you describe it, is not a failure of the medical insurance system. You are an uninsurable risk. You have a known disorder. You are not a candidate for insurance. You may be a candidate for welfare (public, or private charity) as we like to help those dealt a weak hand by Fate.
As an employee, getting insurance when you represent an uninsurable risk, you are already on the dole. It may be “workfare” instead of welfare, but you receive more benefit for the same work than would someone without your disorder.
You say you were forced to be an employee or go on the dole. Who forced you? Entrepreneurs frequently go without insurance as they build their businesses. Why couldn’t you take the same risk? If you needed some kind of regular treatment, your barrier was not lack of insurance, it was your inability to pay for care.
April 14, 2011, 11:35 pmIgotBupkis, President, United Anarchist Society:
> Can you imagine the fiscal disaster?
Thanks to President 0, I can honestly say:
Yes. Yes I Can.
April 15, 2011, 12:37 amIgotBupkis, President, United Anarchist Society:
> Medical expenditures naturally call for insurance, which pays for the losses encountered, not a fixed fee.
Where the f*** are YOU getting insurance from that doesn't have upper limits?
All insurance has upper limits, and lower limits as well (it's called a "deductible"). And the idea that you can't buy your own insurance is complete BS. You just don't want to pay the full price of an individual policy, and likely have never looked seriously to join a high-risk pool.
April 15, 2011, 12:43 amhunter:
This is a great way to look at the problem.
April 15, 2011, 4:57 amParatrooperJJ:
If insurance companies could sell across state lines or if businesses could band together for insurance buying there would be a significant decrease in rates.
April 15, 2011, 9:52 amschnail:
Yes! No more luxury organ transplants or chemotherapy if over $X. Makes total sense to me. Sorry Grandma!! And yer darn right we did without Medicare for 200 years. Did just fine without telephones, automobiles, antibiotics, and free blacks for our first 100+ as well. And you liked it. You liked it fine. Youuu lllloved it.
April 15, 2011, 11:11 amIgotBupkis, President, United Anarchist Society:
> Yes! No more luxury organ transplants or chemotherapy if over $X. Makes total sense to me. Sorry Grandma!!
So, you figure my Grandma has the right to steal from your neighbors in order to buy her a few more years of life?
To hire thugs to come to your house, your neighbor's house, your kid's houses, and steal from them to pay for this?
Does she?
But wait, we're going to go it one better -- does Grandma have a right to take out loans in your name, your kids' names, to pay for her extra 10, 20 years on earth?
Or is it just YOUR Grandma doing all this to ME, to MY kids, to MY neighbors?
At what point does someone get to come to my house and take money from me at gunpoint for this purpose?
Hmmmmmmm????
April 15, 2011, 9:52 pmIgotBupkis, President, United Anarchist Society:
> if businesses could band together
Businesses, hell, people can and should be able to do this, regardless of where they live. That would help people like John Moore considerably, because they could find a group of people like himself who would form a large enough group to render risks predictable, and then they would find insurance companies which that group could and would deal with to get a decent rate for sharing in the risks. He'd still pay more, but it would be far more reasonable. And, if it still weren't reasonable enough, one could probably, at that point, find some reasonable charitable assistance for the situation, since the amount in question would not be open-ended, but fixed and reasonably static.
April 15, 2011, 9:57 pmJohn Moore:
Medicare is most certainly insurance. One makes regular payments into it, and one gets paid services for unforseen circumstances. If that isn't insurance, then perhaps you can tell me what is!
,blockquote>Your situation, as you describe it, is not a failure of the medical insurance system. You are an uninsurable risk. You have a known disorder. You are not a candidate for insurance. You may be a candidate for welfare (public, or private charity) as we like to help those dealt a weak hand by Fate.
Wake up, dude! As you get older, what do you think your chances are of ending up in the same position. That's what insurance is all about. That it hit me at an earlier age than most just highlights the problem. But, by the time you are 60, there's a pretty good chance you will have conditions for which you cannot buy insurance.
If you were fortunate enough to have purchased insurance while healthy, and never missed a payment your whole life, then you will have insurance that covers this.
Obviously you don't understand the concept of a risk pool. Employment provides a larger pool across which risks are spread. One could be arbitrary, as you apparently would be, and prevent anyone from joining the pool if they already had the risk. That would be great - folks tied into a single employer for life - unless they chose to put their hard earned retirement at risk.
Perhaps you should think this through before throwing out libertarian knee-jerk responses. I've thought about it a lot, and I don't accept you answer, which would be to throw people who are unfurtunate medically to the wolves.
I had plenty of ability to pay for my care. However, I also had financial responsibilities and all of that would have been at high risk had I forgone insurance. Also, of course, I would have forgone for the rest of my life (in your wonderful word), the ability to again purchase insurance. It's called pre-existing conditions, and is a *necessary* response of insurance companies in the real world.
As for Bupis... just try finding "a group" of other higher risk people and getting insurance. It does not exist. Period.
Now, if employers didn't provide the risk groups, the situation would be somewhat different. Would the libertarians blasting me here want to legally prevent businesses from offering insurance to their employees.
The fact is that medical insurance is a special situation (unless you are as ready to die as you are to forgo a luxury good), and simple free market approaches will simply leave lots of people, suddenly, without their savings. Is that what you want?
April 15, 2011, 10:23 pmfoxmarks:
“No more luxury organ transplants or chemotherapy if over $X”
That line of rhetoric is dependent on the relative value of X. If the cost of treatments were a dollar, who would care that there was no government subsidy?
Those who fire out such lines ignore the proposed corollary adjustments in the system which reduce the price of treatment. Malpractice and tort reform, FDA reform, drug patent policy adjustments and organ markets make more treatments more possible for any value of X. This is not a claim about rooting out inefficiencies to reduce cost, but to price risk better.
April 15, 2011, 10:27 pmtomw:
John Moore, the whine I am hearing from you is that you are stuck working for someone else, cannot change jobs or you'll lose your insurance AND retirement, and cannot afford to pay for your own independent medical insurance because of financial obligations. Anyone force you into those obligations?
April 16, 2011, 6:58 amWhy not make insurance portable? Supposedly, 401k accounts were to enable retirement portability already, what happened to yours? Or do you have a defined benefit plan you are unwilling to give up?
As far as entrepreneurship, why don't you work on your own 'company' at night after regular work hours? That is what Henry Ford did back when, and he didn't have medical insurance.
The problem is that the product is one or more steps removed from the supplier. The COST for medical care is not born directly by the CONSUMER, so there is no mechanism for the consumer to indicate the preference that a market would show. The insurance companies have a vested interest in the current situation, yet are doing a poor job by distorting the cost of medical care to the uninsured, and the penurious. Insurance companies get the discount, and independents and the poor pay full retail.
To call requiring acceptance of pre-existing conditions "insurance" is covering charity with a nice name. The cost of providing treatment for the pre-existing conditions is more than the premium collected. The other insured are carrying the pre-existing insured, they are just spreading the cost around in higher premiums. To deny that is to deny basic math.
The plaint reminds me of a teacher I know who claims that she is not paid enough, yet, is the head of the mathematics department at the private school where she teaches. She is not held there by chains of anyone else' making. She chose to work there at the pay they offered, yet cries she is underpaid. She cannot change jobs because her husbands health would preclude insurance.
Yeah, I worked my whole career at one company, and missed one day due to sickness. I paid for years for insurance coverage I never used. That is part of the deal. Those who were unwilling to face the grindstone every day should not be rewarded by those who did. But, I know what is coming, and have no choice.
You look forward to having health care insurance, but you forget that the Government is driving physicians from caring for Medicare patients. Good luck finding one that will take Medicare. The mental midgets in DC think they can save billions by cutting the reimbursement rate, yet forget that physicians are not yet slaves, and can choose who they will or won't see. Lame.
tom
John Moore:
Thanks for the respect, turkey!
Perhaps you should learn to red. I could change jobs because, as long as insurance is continuous, I would be granted coverage. I have NO retirement in the company - it's private funds I have saved and would be at risk for a major medical emergency.
I *can* pay for independent insurance. But, nobody would sell it to me at any price.
Yow that we've cleared that up...
I think that's a fine idea, and it is, within limitations.
There you go again, leaping to assumptions. All of my retirement is in my private assets, many of which are in 401K's.
No, only government parasites get those.
Been in that situation for 30 years. That is what Henry Ford did back when, and he didn’t have medical insurance. In those days, you would have to try really hard to spend all your savings on medical care. Today, because of advances in technology, and government and insurance driven cost inflation, one event is all it takes. Last year a close relative developed heart trouble and BOOM, $100,000 for absolutely required life saving treatment. Fortunately, insurance was available.
I have also been part of an entrepreneurial startup, so I know how this insurance works up close and personal. You need to understand how insurance risk groups work to understand the difficulties there. In this case, we had just enough people, and it was long enough ago that the underwriting standards were less intense, that I was able to be covered on the corporate plan (after the first one told me - the purchaser of the insurance for the company - that they would cover every one but me). But that was then, and this is now. A friend of mine was covered all her life by corporate insurance, which she contributed to (everyone does - it just comes out of your pay). She got breast cancer and the insurer of this company (100 employees) told them that they would cover everyone but her! The real world is rather tough.
Given you attitude, it is tempting to wish upon you a condition or two, so you could lose your attitude and understand the complexities and difficulties involved. Not only have I been a co-founder in a startup, I have also worked in the health insurance industry, so I do know a bit about this stuff.
April 16, 2011, 10:34 pmtomw:
Ok. You are name-calling while whining. That sure helps.
Re-read your own post responding to foxmarks in re: putting your retirement at risk and having financial responsibilities. You brought both up.
Pre-existing conditions, whether caused by genetics at birth, or by riding a motorcycle into a tree and then showing up for ER care, raise costs. In either case, it is a given that the expected costs will be more than the premium paid. Why put both of those conditions in the same 'pool' as those without such condition? That is manipulating the market, and as we have seen, not very efficient at covering costs nor effective at encouraging healthy behavior. I am all for portability. I am for getting the insurance company out of the interface between provider, customer and bill-payer. I think HSA's along with high-deductible, real *insurance* policies are a better way to curb costs. Pre-existing conditions being covered by employer paid health insurance are not 'insurance', they are pre-payment of expected fees, with a discount for being in a pool. I know my 'fees' will go up with my age. That is the same as having a "pre-existing condition" of being born longer in the past than some others.
April 19, 2011, 11:43 amEvery person who reads this blog has had to make decisions based upon their particular pre-existing conditions. Career choices, education, family, spouse, just about everything we do is limited or constrained by pre-existing conditions. Of every sort.
The idea of 'insurance' is to hope that one will not have to avail oneself of its existence. Knowledge denies that hope, and changes it from insurance into discount for service rendered.
John Moore:
Here is what you are missing: most people, including myself, started paying for insurance *before* the pre-existing conditions manifested. If I have been paying for insurance all my life (directly, or indirectly through my employer), it is hardly whining to want to be able to remain covered.
The current system precludes that. You can remain covered for 18 months after you lose your job due to a federal law (COBRA). Then you are totally screwed.
Now you may think that it's all fine and dandy for folks to be totally screwed.
I don't.
You might also want to consider that a high percentage of folks develop pre-existing conditions as they age.
You know that fees will go up with age, but what you may not realize is that you have a significant chance of having fees go extremely high, or, as in my and many others' case, having insurance simply not offered, at all. When I was denied insurance, at age 33, it was for a condition that was relatively minor, btw.
You define "real insurance" as insurance where each insured pays based on his own risk. That works for Lloyds of London and ships, but it doesn't work for health insurance.
In other words, there are two difference kinds of insurance - those where the risk pool consists of one item or person, and those where the risk is shared across many. The former works because the insurance company writes a bunch of those policies, one at a time, so it actually has a risk pool. The latter works because of the statistics of a larger pool.
No, it is called sharing the risk - a common thing in insurance, unless you also consider life insurance to not be real insurance. Medical insurance, health insurance, car insurance and home-owners insurance is based on pooled risk - except for individual medical insurance which is a dying breed in the US (less than 5% of individuals have private medical insurance, while 15% want it).
Where it becomes unfair manipulation is if you let people go without insurance *until* they develop a condition, and then allow them into the system. I am not advocating that (except in cases where people legitimately cannot afford the insurance).
Is it unreasonable that one should be able to buy insurance against *future* risks, including the risk of becoming uninsurable? In today's market, you *cannot* buy that insurance.
If you read what I wrote above, it acknowledges that- as I point out the Mass. experiments failing partly due to that fact. But when pre-existing conditions arise while one is insured, and the result is that one is locked in forever, always at risk of losing that insurance, well, that's a problem. You can say - tough beans, but politically, guess what - it won't wash.
April 19, 2011, 10:32 pmtomw:
John Moore,
April 20, 2011, 8:56 amA pre-existing condition, in most cases, is one that is known at the time the policy goes into effect. An unknown condition, IMO, is not considered a pre-existing condition. FWIW, I have read of people refusing DNA testing to keep their 'ignorance' of possible genetic problems intact.
Portability of policies is a worthy goal, IMO, and I don't believe I have implied I am against it. The less the government meddles beyond enforcing honesty, the better.
I have heard of insurance companies denying coverage after the policy has been in effect for years, and even returning premiums when they find what they consider a pre-existing condition. I do not find that to be acceptable. We are all ignorant to some degree of what the future will bring, and that is where the pooling of risk comes into play.
I think anyone having paid premiums for years should not be dumped when things surface. That is the idea of insurance, things occur that cannot be planned for. At least that was what Blue Cross/Blue Shield used to be 50-60 years ago. They did not pay for visits to the doctors office, but they did pay for appendectomies, suturing the lacerations, obstetrics, and other unexpected occurrences.
Some insurance companies are adept at finding loopholes to deny coverage. If the market were indeed freed of government interference, it would shake out the poor players, as word of mouth would make the market more open. If there was competition to allow sales across state lines, I think the results would be positive.
Sharing the risk is sharing an unknown. The individual policies written by Lloyds were based on factors that were important at the time of writing the policy: Who was the captain? Who were his officers? What was the condition of the ship? What was the cargo? What was the destination?
So, in a sense, they were individual, but in effect Lloyds pooled the risk. But the ratings for a given ship calculated the attendant risk, and thus the cost for the policy would be weighted to take that into account. They had pre-existing conditions, and the ship's owners knew that when applying for the insurance.
Perhaps it is the wording. A pre-existing condition that is known, and one that is unknown are two different things. Just ask Mr Rumsfeld. I don't see how one can know the future, to know that an unknown pre-existing condition will surface is impossible, IMO. That condition should have been factored into the calculation of premiums for the pool.
It really is too bad that people are shackled to a specific job because of their health and genetics. But the fix is to get the government involved without the influence of lobbyists and attendant bias. It seems that the eventual customer, us, is third in line behind the insurance companies, the health providers and the contribution accounts of the pols in DC.{and state capitals..} Make that fourth in line.
t
John Moore:
tomw - we are now on the same wavelength.
I do not see a clear path to a better system. I am destined to be on Medicare pretty soon, which means insurance by an unanswerable bureaucracy. The only solace is that at least I'll have the insurance. Of course, it will be a bit annoying to see the employees of the government that worked for Medicare using their gold plated government insurance to go to the best docs, while I can only do that if I pay out of my own pocket.
Third party payers are always a problem. In our system, one issue is that we have pre-paid health care masquerading as insurance. This confuses people, who thing that "insurance" that pays for routine doctor visits is somehow the same thing as insurance that pays for the unexpected appendectomy. If you look at the (vanishing) individual market, you can see that the increased premiums for lower deductibles are worthless - you are literally paying up front for those services, with the insurance company profits stacked on top.
But health insurance is a very special commodity. If your house burns down with all your possessions, and you don't have insurance, you can still go on with your life. If you contract a dangerous disease and don't have insurance, you may not survive. Worse, you can buy insurance for most unexpected events that will eat up your assets, but because our individual market is moribund, many people cannot buy insurance to prevent an unexpected medical event from impoverishing them. For example, if you have ever been treated for high blood pressure, even if the condition went away (say, you lost excess weight), you won't be able to buy individual insurance that will protect you from any condition that might be traceable to hypertension - such as kidney failure, stroke, cardiovascular events, etc. This sort of thing is why I say the individual market is essentially dead.
I am convinced that Obamacare is designed to destroy the insurance system, leading to a single payer national system. Having studied health insurance and worked in the industry, I can see exactly how that will unfold.
April 20, 2011, 10:03 pm