If you have been paying attention to the Obamacare debacle, it would seem that impotent Republicans have backed us into a corner with their failure to lead on the high cost of medical care.
Note that I didn’t write the “high cost of insurance”.
Health Insurance is simply a reflection of the high cost of medical services. But with their Obamacare legislation the Democrats were not trying to address the high cost of services, which is the disease. They went after the symptom – the high cost of insurance.
I own an Insurance Agency. We don’t do Life or Health, just Auto. But hardly a day goes by that someone doesn’t ask why they pay so much for insurance.
“Well,” I want to say. “You pay $2,000 a year for car insurance. Last year, your company paid out over $100,000 for the accident you had. You will have to pay $2,000 a year for the next 50 years for the insurance company to break even!”
I know. Insurance companies are evil. So who cares if they lose money, right?
But the sad fact is, if they don’t make money, they will go out of business. And that is not a good thing, trust me.
How do Insurance Companies Make Money?
We see the huge profits that insurance companies make, so the obvious answer to the question is the one the politicians want you to believe. Insurers make money by charging you a huge premium which covers their payouts, costs and profits.
If that is what you believe, you are dead wrong.
When insurance companies set their premium prices that you and I pay, they are calculated to break even on what they pay out in claims. They do not build in profit and expenses like buildings and infrastructure and employees and employee benefits. They make their overhead and profit with careful, short term investments. And most insurance companies actually come up short in what they charge in premiums versus what they pay out in claims. That is called an underwriting loss. And these short term investments actually subsidize their claim payouts. And these investments pump trillions of dollars into the economy and investment markets.
The Truth About Single Payer Systems
If you believe insurance companies make money by charging high premiums, you have them confused with single payer systems. All single payer systems are government. And they have to charge enough to cover all payouts for claims, employee salary and benefits, offices and support staff, computers, etc. And they will not invest a dime in the markets and they will never make money by investing and growing your premium money.
With insurance companies out of the way, the true goal of Obamacare, how do we control prices?
And ponder for a moment what will happen in the markets when the insurance companies no longer invest trillions of dollars. What will happen to your 401K?
With Single Payer, Costs Can Only Be Controlled at the Source – Your Doctors, Hospitals and Pharmaceuticals
Do you like to call your cable company for tech support and be routed to India to someone who barely speaks English? If you do, then Single Payer is for you. Does it matter if your doctor went to Medical School at Johns Hopkins or some school in the Caribbean or Africa? Or just an online medical school?
Because the first thing the government has to go after are the high salaries and benefits of the providers.
US Medical Salary vs UK Medical Salary for Doctors
In the US, a Family Doctor can expect to earn $207,000 while in the UK, a Family Doctor makes between $71,000 and $109,000 (£55,000 and £84,000). And in the US, 52% of family doctors feel adequately compensated, even though they make 2 to 3 times what their counterparts do in the UK.
And if you specialize in something like Cardiology in the US, you expect to make $410,000 (and only 48% of Cardiologists in the US think this is fair compensation) while in the UK you only earn $78,000 (£60,000) as a cardiologist.
Specialist doctors in training can expect to earn around £36,000 ($47,000), but once qualified consultants are some of the most sought after professionals in the industry and get paid between £76,000 and £102,000. ($99,000 and $133,000).
In the US, Orthopedic doctors can rake in $443,000, 3 1/2 times the top pay for UK doctors.
And in a bit of irony, the article cited above for UK Doctor salaries states:
It’s stressful being a doctor and requires years and years of hard work – but you are certainly rewarded financially!
But as you can see, the rewards are far less in the UK than in the US.
US Medical Salary vs UK Medical Salary for RN’s
Ok, so you hate insurance companies and doctors. What about the ones that do the really hard work like RN’s?
So an RN in the UK makes about the same as a travel agent in the US, and the top paid doctor in the UK makes about the same as someone in the US extracting natural gas.
What Happens When you Lower the Salary for Doctors and Nurses in the US?
So what do you think will happen when the government moves in to control costs and sets the salaries of doctors and nurses in the US? And the medical techs and every one else that works in the Health Care industry?
Well, as they found out in the UK, that isn’t enough. They have consolidated a lot of the more expensive diagnostic and treatment equipment to fewer and fewer locations. Now it does minimize the number of machines they need, but it also increases the travel time for you. And the wait times.
And there are always not enough staff to deal with your problem.
How Long Will I have to Wait for my Surgery?
I was in the UK a couple of decades ago when the news was buzzing about women’s health care. In the US, they has come to mean abortion. But in the UK it was all about having to wait months, sometimes more than a year, for real women’s issues like hysterectomies. Women were up in arms at having to wait so long.
So the Single Payer government run health care in the UK came up with a fix. They would set a target wait time of only 18 weeks. Which is still almost 5 months. But this is only for non urgent surgery like knee or hip replacement, cataracts, hernia repair, etc.
And keep in mind that they shoot for 92% in 18 weeks. Some are longer.
Only now, that 18 weeks and 92% is out the window. And some places are so cash starved that they stopped having elective surgeries at all for several months.
And for women needing hysterectomies, you must see your GP first who sets up an appointment with a GYN specialist. And these appointments can take months and often require many calls to your GP that prompt another request because the GYN has not responded.
When Would You Like That Appointment?
“We have one today at 3 PM,” isn’t something you hear in the UK.
Neither is, “When would you like to come in.”
What you get is, “Your appointment is the 26th of next month at 9 AM.” If you get one that quickly.
So if you call your GP and say you feel a growth in your abdomen, it will usually be several weeks before you can get an appointment. And if your GP thinks you may have cancer, he must refer you to a specialist. And they do their best to fit you in in 2 months or so. And the they schedule you for tests. A few more weeks pass waiting for the test appointment. Then they have to go over the results and call you in for a consultation and decision on treatment (if it is cancer). And then they do their best to start treatment within 31 days.
So while you are waiting for one appointment after another with weeks in between you can take comfort in knowing that according to the Cancer Research UK “Many people begin to worry that the cancer will spread during this time. But we know that most cancers usually grow very slowly and this is not likely to happen. Waiting a few weeks for a scan or treatment does not usually affect how well the treatment works.”
What if we cut back on the Costs Now, Instead of Attacking Insurance?
Republicans missed a golden opportunity. They were handed the House, the Senate and the White House. And instead of actually looking at ways to cut back on the cost of health care itself, they continued with the Democrat’s dialog that the problem was the greedy insurance companies. And exchanges and bail outs and Medicaid expansion were the only way to fix Obamacare.
Republicans, by agreeing to repeal and replace bought into government run health care as a solution and that Insurance Companies were the problem.
And since Obamacare became law, Republicans have been bantering around ideas like Tort reform that would relieve some of the financial strain on providers, but that has not been in any proposal I have seen. Instead, the GOP is as stuck at stupid as the Democrats looking at ways to increase competition across state lines and eliminating mandates. They are focused on counting the number of insured blissfully ignorant of the fact that most of the insured can’t actually get treatment because they can’t afford the high deductibles. In essence, millions of Americans have health insurance, but no actual affordable coverage.
The only thing Obamacare even pretended to achieve was making insurance more affordable, not the actual care. And it failed at that.
So we need Single Payer?
We need to lower the cost of health care so people can afford it. Insurance Companies do a brilliant job of growing the pie. They take in less money (more often than not) in premiums than they pay out in claims and make money with short term investments. The government will never invest a dime and every penny paid out for claims as well as overhead must come from premiums or confiscatory taxes.
So between insurance and government run health care, insurance is the only way to get more bang from the buck. But the lack of vision and leadership in Washington has proven that these elected idiots are either clueless or intentionally failing to cut back costs. Or both. We don’t need to cut the salaries of medical providers 200% or 300%. But we have to lower costs. Many of the charges paid by those with insurance subsidize the costs for Medicare and Medicaid patients. Since we have abandoned the free market in healthcare, the best we can do now is go back to the days of price fixing by the government. When I have a test done at the doctor’s office, often the price is unbelievable for a simple test. But when I look at the Explanation of Benefits, the test that cost $100 was paid in full by my insurance for a couple of dollars.
The healthcare providers have hidden their real costs in exorbitant prices for goods and services that do not cost what they are charging. But they have a lot of overhead.
- A single Tylenol in a hospital costs $15. You get two at a time. Average cost during a hospital stay, $345
- A cup that holds the Tylenol costs $10. Average cup cost per stay: $500.
- Charge to give you the Tylenol $7. Average $90 per stay.
- Plastic bags for shoes, clothes: $8
- Sterile Water IV Bag: $800 (manufacturing costs about $1)
- Hold your newborn: $39
How could things cost so much?
Here is an idea. The government now requires restaurants to post calories of their food. Why not require doctors and hospitals to post their prices online for various tests and services? Forget interstate insurance, let’s see how long a hospital can charge $47 for a couple of Tylenol if they have to post it, or how many doctor’s offices will charge $200 for a blood test you can do yourself for $20.
But it looks to me like we have not even considered looking at the cost of services, only the price of insurance.
Wouldn’t it be nice if we could bring our own Tylenol and keep our doctor, plan and actually afford to go to the doctor.
But we won’t even look at reducing costs and keeping insurance. But I promise you that after we destroy all of the insurers and have government run single payer health insurance, we will look at costs. And at that point, we will be complaining about wait times and inferior treatment.