Dumb vs. Dumber, Which is the Smart Choice?

There is a debate going on, yet again, about the proper level of government involvement in health care, more specifically health insurance.  The false dichotomy being debated primarily consists of two camps, the “everyone needs health insurance” movement and the “I shouldn’t have to pay for someone else’s insurance” group.

But both groups have actually failed before the debate even gets started.  Why?  Because neither side seems to understand that you can’t insure an inevitability!  So since you are probably in one of the two aforementioned camps this concept might a bit foreign to you, and being the nice guy that I am, I will explain it for you.

An inevitability is something that is going to happen with absolute certainty.  Now some folks will argue that nothing is certain (seemingly ignoring the fact that by uttering that statement, they are in fact making a statement of certainty).  Those people are stupid, but I’ll leave that for a different rant.

It is inevitable that the sun will come out tomorrow, right Annie?  It is inevitable that the sun will set.  I say these things with certainty, allowing of course for the slim possibility that the sun could burn out, or that a comet could slam into the earth and destroy it, but rare and exceptional occurrences aside, there are some things that occur like clockwork.

One of those things is death and disease.  Everyone you know, hell, everyone on the planet that is alive, will at some point become sick and die.  It is a fact.  Nobody lives forever.  Oh yes, Kurzweil says eventually we will meld with machines and blah blah blah, but as our world exists today, we are all going to get sick, or die at some point.

When you try to insure against something that IS GOING to happen, you aren’t actually insuring against that event.  You are pre-paying for it, or getting someone else to pay for it.

Consider car insurance.  You have car insurance in case you get into a wreck.  Is it inevitable that you will get into a wreck?  Nope.  There is no guarantee at all that you will get into a wreck.  In fact, most people that have car insurance won’t ever get back what they put into it.  The insurance company knows the statistics, and they can make a “safe bet” and profit like a Casino, based on the fact that they will take in more revenue than payouts because they know that getting into a wreck is not inevitable.

Health insurance however, will get used.  Even if you never get the sniffles, a cold, the flu, a sinus infection, a broken bone, a heart attack, cancer, at some point you will age and with age comes health issues, for which you will seek out a doctor.  The older you get the more frequent the doctor visits, in order to attempt to stave off the inevitable visit from the grim reaper.

So why then do health insurance companies play the game?  They are gambling.  On what you ask?  On the fact that new customers will offset the current payouts.   But when the payouts start to exceed the revenues and there aren’t enough new customers signing up organically, what do they do?  They get legislation passed that forces a whole new pool of customers that won’t be using as many services.

Consider the timing of Obama Care.  The Baby Boomers are hitting the age where they are consuming more and more health resources.  Health Insurance companies are spending more and more and making less.  By their nature they have to take in more revenue than they pay out or they go under.  We all know about the Baby Boomers and Social Security insolvency.  Its no leap to connect the dots to Heath Care insolvency, even with the government Medicaid supplement, which is really just a hand out that lets the Health Insurance companies place the burden of meeting their obligations on the backs of the tax payers.

But Medicaid alone isn’t enough now that more and more baby boomers have gotten to the point in life when medical expenses are catching up with them.  How many people of age have you heard about with knee replacement surgeries, or hip replacements?  While these procedures are great, we are seeing more and more of them since more and more people are at the age where something like this is necessary, and these costs are transferred to the insurance companies and spread across the “pool of risk”.

So along comes Obamacare, which was setup, by selling the virtues of Altruism to our young people by disguising it as some power to the people anti-establismentarianism bernie sanders socialist utopia.  The truth is Obamacare hasn’t lowered premiums across the board.  It hasn’t made healthcare or prescriptions cheaper.  All it has done is create higher premiums that you and I can’t escape because we get fined or put in jail if we don’t pay.

Need proof?  How about we look at my health insurance company, United Health Care.

United Health Care stock performance over the past 10 years. Source Yahoo Finance

You might notice that United Health Care’s stock performance looks a little bit like the phony “Global Warming Chart” being peddled by Man-Bear-Pig.

Let’s take a closer look at why the stock price is going up:

Profits for the last three years, source Yahoo Finance

I mean lets face it folks, Obamacare has been good for United Health Care.  You simply can’t argue that Obamacare has cost people like me more money.  The stock price shows it, their earning show it.  Their Gross Profit margins have almost doubled in the last three years alone!

These insurance companies were hand delivered  a bunch of young people on the roles to offset the aging Baby Boomers, all the while the young people thought they were getting one over on the evil corporations.  Morons.

So what is the solution?  The solution is simple.  Quit it with the false dichotomy and start from the ground up.  Define the problem and identify an optimal solution that doesn’t put a sacrifice one man for the sake of another.

Health care can’t be insured in the traditional sense.  It can however, be prepared for.  Like the squirrel storing nuts for the “inevitable” winter, we the people should have the good sense to prepare for old age, by saving, both for retirement (to which we might not make it) and for the inevitable break down of our bodies.

This can be done with a health savings investment account, or it could be done via a non-profit health care collectives or by some other means not yet discovered.

There are lots of things that can be done to lower the cost of health care and make it more affordable, but the truth is that nothing that was done via Obamacare and nothing in Paul Ryan’s new plan does anything to address the costs of getting care.

The real culprit to higher healthcare prices is the inflated costs of care/service by the existence of a for profit pooled risk health care industry.

If all businesses applied the health care insurance model, prices would skyrocket for them as well.  Pooled Risk models allow for higher fees to be charged by service providers and product suppliers.

Imagine gas insurance.  You pay a co-pay every time you fill up, and the rest gets billed to the insurance company.  The insurance company offsets the costs by charging higher premiums across the board.  Now you are subsidizing the fuel costs of long haul truckers or cab drivers who spend all day on the road when you may only fill up your car once every two weeks.  Nobody pays attention to the cost per gallon, because they are only going to pay a flat co-pay.  Nobody shops for a good deal on gas anymore because a co-pay is a co-pay.  In fact, you wind up only filling up at certain gas stations because the other ones aren’t in your gas-insurance network.  Now we have outside forces thinning the competition, which further allows for higher prices via fewer service providers.  And you don’t complain because after all, your costs are offset by all the non-drivers who are paying premiums they don’t need.

Doesn’t make sense does it?

How about computer insurance?  You pay a co-pay when the nerd comes to your business  to repair a computer, everything after that co-pay is billed to the insurance company, which offsets it by charging premiums.  The companies that keep things working, keep their anti-virus up to date, the ones that don’t let their employees go to nefarious websites and who don’t open every email from Nigerian Princes offering them great wealth are going to wind up subsidizing the people who don’t take computer security seriously.  The IT Guy can charge two or three times his normal rate because the cost of his visit is no longer on the single client. It is pooled across an entire pool of clients and the insurance company that services the collection of premiums and payments to the IT Guy.  And while this may be great for the IT Guy, and the Insurance company that is profiting as well, its going to suck for you when your premiums get adjusted next time open enrollment comes around, because that IT Guy, he’s not going to charge less than what he can get from the insurance company and we all know that the insurance company won’t lose money (see the graphics above if you forgot).

In both instances the IT Guy and the Fuel company can charge more for their services and you won’t object since your co-pay is tolerable.  The “risk” is pooled across many businesses and the true costs for services are only seen via co-pays, which never really seem to go up as much as the premiums because they know what the average Joe can afford to pay out of pocket and what the average Joe will object to as well.

Now add to that a law that forces you to buy the “insurance” or risk a fine or jail time.  Suddenly the person who doesn’t have a computer or car is paying for others to drive and or get their computer repaired every time some idiot gets the equivalent of online gonorrhea.

This is the stupidity that is the current debate on health care.

It is a debate about how to have the existing system (which was flawed at inception) propped up, when the correct thing is for the government to remove regulations that keep the market from creating solutions to the problem efficiently, effectively, and competitively as it has done through out history.

-Max Casey