Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at intelligent and rational individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

"Observe that the 'haves' are those who have freedom, and that it is freedom that the 'have-nots' have not." Ayn Rand

"The virtue involved in helping those one loves is not 'selflessness' or 'sacrifice', but integrity." Ayn Rand

17 April 2009

Socialists to Kill Private Health Insurance

The Wall Street Journal under Review and Outlook had an article on 12 April 2009 called "The End of Private Health Insurance." Obama has repeatedly said that everyone will be offered government health insurance modeled after the plan that government employees have, but they can keep the private plan they presently have if they wish to keep it instead. As he puts it, it just sounds as though one has an additional option and everyone likes having more options, right?

Well, no. Clearly this middle class entitlement program will be managed by the politicians of
Congress to garner as many votes as possible for the politicians. House Democrat Pete Stark has made it clear that the government offered insurance plan will be used to force private insurance plans to lower their costs. He claims this will be done by forcing them to "modernize", but we already know much about what will happen simply by studying Medicare/Medicaid. The government health insurance plan will pay substantially less than the true cost of the health care delivered, so doctors and hospitals will be forced to charge the private plans more. They already do this due to Medicare/Medicaid. According to the article:
A 2006 study in the journal Health Affairs concludes that around 17 cents of every dollar in relative reductions in Medicare payments to private hospitals are shifted onto private patients -- and that such cost-shifting accounts for fully 12.3% of the total increase in private payer prices between 1997 and 2001.
Actually, I am pretty sure that this study underestimates the degree of the cost shift. Because doctors and hospitals know that Medicare/Medicaid is shafting them in a most unethical way, they retaliate by charging for many unnecessary supplies and services. This is not an efficient way to make up the lost income due to the inadequate pricing schedules from the government, because real supplies are wasted and real manpower is used in the unnecessary services. It costs a lot of resources to make up a part of the loss in initial underpricing and the whole process causes the medical profession to become wasteful and to lose their ethical path. Soon, they are applying the same practices to private insurance holders so their costs go up not just by virtue of transferring costs with higher prices to the private insurance companies, but also due to other inefficient and unethical practices made the standard operating procedure by government.

Basically, the government dictated prices for services will cause people to demand unneeded services, will cause the health care system to become more inefficient, and will cause the health care providers to become more and more unethical, frankly in response to the unethical arm-twisting, or to be honest, their enslavement by government. The article notes that:
Much like Medicare, overall spending in the public option will be controlled over time by paying less for medical services, drugs and technology. With its monopsony purchasing power, below-market fees will be dictated on a take-it-or-leave-it basis -- an offer hospitals and physicians won't be able to refuse. Medicare's current reimbursement policies pay hospitals only 71% of private rates, and doctors 81%, according to the Lewin Group.
I have seen claims that the underpayments are worse than this. In any case, the underpayments are bad enough that the costs of private insurance will have to go up even more substantially than has been the case due to Medicare/Medicaid due to the much larger numbers of people under government dictated pricing plans. About 170 million people are now covered by private health insurance plans. Medicare and Medicaid presently account for 4% of the GDP and this will increase to 9% by 2035 according to the CBO. This is without the Obama/socialist government health insurance plan. Individual and corporate tax rates will have to be increased by 90% to pay for the increased cost of the present government health plan between now and 2050.

Depending on what fraction of the health care costs are paid by the proposed new government health insurance plan, it is thought that huge numbers of people will leave the private insurance plans. If the costs are set equal to those of Medicare/Medicaid then the estimate by Lewin is that 119 million people will transfer from private to public insurance. With this huge shift to the government plan,
Congress will finish the job with regulatory changes. Under the aegis of a level playing field, all private plans will be forced to offer benefit packages similar to those in the public option. They will also be required to accept all comers, regardless of pre-existing conditions, and also be forced to offer similar rates to all enrollees, ending the ability to manage risk through underwriting. Any private plan will essentially become a public utility where government decides what products it must offer and how much it can charge.
It is then very clear what will happen. Either health care costs skyrocket, or health services will be severely rationed. Doctors, nurses, and hospital pharmacists will be paid less relative to other professions and less and less competent people will enter these professions. Your doctor will be as hit or miss as your children's public school teachers are. The health care system will make you visit the doctor 3 times to do what he could do in one visit, since the doctor will be limited severely in what he can charge per visit. Imagine the time you will waste leaving work and driving to the doctor, the danger of driving the government-designed small GM cars to the doctor's office, the long wait in the doctor's office, the added worries about your deteriorating health between these visits, and the worry that if a serious medical procedure is needed that you will die while waiting for it to happen.

So, the necessary tax increases will be far higher than the 90% increases needed with no such additional plan and you will be forever asking the doctor if you will die while waiting for the operation to save your life. But, there is a silver lining in death: you will not suffer the confiscatory taxes anymore and you will finally be free from slavery! Its a plan, its a government plan you can count on as surely as you can count on death.

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