May 9, 2007

On the High Costs and Declining Quality of American Health Insurance

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Left: Graphic illustrating the continuing erosion of employer-provided health insurance

My wife came home in tears the other day, frustrated by her employer's efforts to pass along rising health care costs to the full-time employees. She received a two percent raise, amounting to approximately $600 per year, while being told that health insurance premiums were rising by 10 percent, meaning that her raise was just wiped out.

Worse still was the fact that her employer also went from a 70-30 share for the costs of the benefits to a 50-50 split, meaning that her monthly cost will jump by nearly $200. Thus, to stay at her current position - which she has worked for nearly eight years - she will actually take a cut in pay of several thousand dollars per year.

As a math teacher in a private school, she is one of those people who truly love their jobs, and there is certainly a quality of life consideration for those who work in such a setting. Still, the prospect of making an additional $10-$20 thousand in salary and receiving better benefits has her searching for a new job in a suburban school district not so scrapped for cash.

My wife, however, has a few choices, considering her advanced education and the demand for math and science teachers across the country. Many Americans find themselves being held hostage by a health care system that is spiralling out of control.

45.8 million Americans do not even have health coverage, which is 15.7% of the population. Many millions of others are forced to work jobs they dislike for fear of losing benefits, while simultaneously being forced to pay higher premium rates, higher deductibles, and an ever-increasing share of the total premium.

Each election cycle we get more empty promises from politicians on both sides of the aisle, yet the problems never seem to get resolved. Perhaps due to the orchestrated attacks against the last serious attempts at reform by Bill and Hillary Clinton (who can forget "they are gonna socialize our health care!!! or "who elected her to fix health care?!?!"), our elected officials seem unwilling to address the failures of the American system of health insurance.

So we continue to suffer with a health care industry that is increasingly beyond the reach of many millions of Americans, while those of us who actually have some substandard, horribly expensive policy look out our windows and thank God we at least have something.

But hey - the free market will fix it all for us, right? All we have to do is click our heels three times and say: "Invisible hand... invisible hand... invisible hand" while bowing to our portrait of Adam Smith.

There! Don't you feel better now?

8 comments:

MP said...

Please let this issue come to the fore in the upcoming election.

Please.

Sigh.

HumboldtsClio said...

Due to some bad medical expenses in the early eighties, my parents have been gun-shy about going without health insurance. Not a problem while my mother worked for a major university, but now that both parents are self employed, insurance premiums are just terrible. Something like $1,000 a month per family member. I mean, there's cheap insurance and there's good insurance. It's not fair that Americans have to choose.

My mother used to work with families of disabled children back in the eighties. She told me that some insurance companies have million dollar caps on what they'll pay. Some of those children have lifelong health problems, and are capped out as toddlers because their care was too expensive. Isn't that insane? I haven't figured out how people survive. My guess is that most people go bankrupt.

Sorry, you hit on an issue close to my heart.

The Screaming Nutcase said...

"I mean, there's cheap insurance and there's good insurance. It's not fair that Americans have to choose."

It's just not possible to get insurance that's both good and cheap, unless you'd like to go back to what medical technology had for us 30-40 years ago: no CT, no MRI, no advanced drugs, nurses with 20-30 patients, ambulance services run by funeral homes.

We've made a lot of advances, and we're paying for them, or rather expecting our insurance to pay for them--it's that simple.

Anonymous said...

I have $200 left over to live on after paying my monthly health insurance bill.

HumboldtsClio said...

Advances in medical technology are useless if you can't afford to pay for them. Why get an MRI to tell you that you have a tumor when you can't pay for it and your insurance won't pay for it? A lot of people are faced with these decisions. I know someone who has peridontal disease. Her insurance won't cover the treatment that will save her teeth, but it will cover her dentures when all of her teeth fall out.

I'm not saying good insurance isn't worth paying for. I'm saying that if you get cancer, and you don't have major medical, you either go into debt trying to pay for treatment, or you die. There's not much room for maneuvering.

SensorG said...

We've made a lot of advances, and we're paying for them, or rather expecting our insurance to pay for them--it's that simple.

Sorry, but this statement is just dumb. My insurance premiums through my employer went up 6% last year and 5% the year before. Has the quality of the care gone up by 11% over the last 2 years? (I know there is compounding, but let's keep it simple).

The answer is no. As a matter of fact I have less things covered and spend more out of pocket for prescriptions. These are the same prescriptions that my family and I were taking last year. My prescription co-pay has doubled; the quality of my medication hasn't doubled.

SensorG said...

One last thing...

Insurance/medical care is one of the great limiting factors for people striking out on their own to form new businesses. I'd like nothing better then to start my own consulting company.

Unfortunately my wife and son have some per-existing medical problems them essentiality make them un-insurable.

I have no choice but to work for a company that I can get insurance for my family through. I wonder how may other small businesses would be created if insurance was more affordable.

The Screaming Nutcase said...

"We've made a lot of advances, and we're paying for them, or rather expecting our insurance to pay for them--it's that simple.

Sorry, but this statement is just dumb. My insurance premiums through my employer went up 6% last year and 5% the year before. Has the quality of the care gone up by 11% over the last 2 years?"

As you have correctly noted, paying for the latest advances doesn't mean anything regarding actual quality of care--however, this doesn't make stating that our demand for health advances drives up insurance costs a dumb statement; it's quite true, though certainly not the only reason. (Insurance probably wouldn't have grown much faster than inflation without these advances. If you could today find a plan which would cover what medical technology was available in, say, 1950, it would be quite inexpensive, because it would cover essentially nothing.)

Granted, there are other factors, such as the vicious spiral--health insurance getting more expensive leads to more uninsured, which leads to more charity care by hospitals, which means the hospitals have to charge more to break even, which makes health insurance more expensive, and so on. This is where another huge problem is.

The other is the law of diminishing returns. The big advances in health were fairly cheap, since there was nowhere to go but up: sanitation, early antibiotics, insulin. Now we have to spend way more money to make fractional improvements in health.