Sign Your Health Insurance Policy Contract with a Gold Pen or you will be out of Place

The three most basic reasons why the concept of insurance is not appropriate for financing health care are:

(1) Insurance is for things that are not supposed to happen, seldom happen, and rather often never happen to individuals in a lifetime. But health care is inevitable and therefore insurance is not by itself an appropriate funding mechanism for health care. The vast majority of people need health care during their lives at some point, usually due to both one or more accidents and to one or more sicknesses. Even if you live and die without ever getting sick or getting injured, you are still by rights supposed to get preventive care such as annual or biannual check-ups.

(2) Insurance was invented as a luxury product for wealthy people. The real purpose of insurance was and still is to protect most of the wealth of well off families if they happen to suffer a major misfortune or two. To this day, insurance has not really lost its' association with the high income and high wealth population. Simply because of the nature of and the mathematics of wealth itself, insurance is much less valuable to those who are not well off than it is to the well off.

Quite frankly, lower income and lower wealth people who "load up" on insurance are rightly regarded as kind of foolish by most financial people in the know, and even by insurance sellers themselves, who if they are honest at least caution people of lesser means to avoid going overboard on buying insurance that they can not afford and/or that will not prevent them from becoming impoverished if and when misfortune strikes.

(3) Health insurance in the US, to anyone who is neither relatively poor nor very rich, is an absolute necessity since health care itself is an absolute necessity unless you want to take risks of dying young. The health insurance industry therefore has a captive market, which gives them far more power with which to charge higher prices and with which to dictate fine print terms in contracts in their favor.

But during the 20th century, in the most economically successful countries, things which people desperately need were gradually removed from the vagaries and ravages of the private sector and into the public sector. It was more and more understood in the successful and well off countries that people should not be at the mercy of private, profit-making companies always free to just say no (and free to go out of business) for things which everyone perceives that people absolutely have to have.

America, however, much more so than other countries, resisted the trend over the decades of the 20th century. While between 1900 and 1980 other countries were making utilities such as electricity and local bus service public, the U.S. resisted, although certainly not entirely. For example, even in the U.S., the interstate highway system built starting in the 1950's was considered a public enterprise.

But in the late 1970's, in much of the world the winds shifted against the common good in favor of private interests. The well off moved to take control of things. In the last 30 years, while the US became a very right wing economy indeed and moved to privatize enterprises among its relatively small number of them, the countries with the most public enterprises (such as in Europe) reduced them but certainly did not eliminate them entirely or renounce the concept the way the US did.

This is the context or background for the scrapping of for profit insurance companies in favor of public financing of health care in most of the world outside the US. There were ebbs and flows between public and private world wide, and in some places the common good made much more headway than in others. But while most of the rest of the world accepted the concept that health care (and certain other absolute necessities) are not appropriate for the private, profit making market because for one thing people are absolutely desperate for the product, the U.S. never accepted the concept and, indeed, didn't much accept it for anything else.

ORIGIN OF INSURANCE
Insurance companies began about 1680 (about 330 years ago) in England and the first policies insured ships, which were about the most expensive things in existence at the time, especially considering that England was at that time in its' fairly lucrative mercantile and colonial era. Obviously, it was well off people who owned the ships.

One of the most well known insurance companies has always been and is still today Lloyd's of London. This company was founded in 1689 by a group of men who met in Lloyd’s coffee house in London, and originally sold only ship insurance. From its' inception right on down to today, Lloyd's of London has specialized in offering insurance products which are customized to the needs of the well off and of well capitalized businesses. Give credit where credit is due: Lloyd’s is one insurance company that doesn’t very much try to turn a buck by selling insurance to less well off people who will really not benefit from it.

In the United States, the first insurance policies were offered in the early 1860’s, when the Civil War was raging. Obviously, well off people in both the North and the South were worried about losing what they owned directly or indirectly due to the War, so the concept of insurance was, under duress, imported from Mother England despite the fact that, overall, both the American political and the American economics systems were clean breaks and fresh starts from those of England. Note that for about 85 years after the Declaration of Independence, America got along just fine with no insurance industry at all.

Just as in England 170 years earlier, insurance in the States started out as a product exclusively for well off individuals (and businesses owned and operated by those individuals) to insure against losses associated with very, very expensive things. Of course, insurance of various types gradually became more and more popular in the 20th century in America. But in the first half of the 20th century, insurance was sold mostly to wealthy people and to businesses mostly owned by relatively wealthy people.

Insurance was the type of product that was and still is seemingly custom designed for enterprising or conniving sales people to sell to those who were worried about this, that, and the other thing. And to those who are worried about financially "keeping up with the Jones'". More broadly, insurance turned out to be one of the mainstays of the great American commercialization and industrialization from 1860 on.

Eventually, along about 1950, banks granting mortgages required all “homeowners” with mortgages to carry house insurance. Similarly, virtually all of the states eventually required those to whom drivers’ licenses were issued to carry liability car insurance, which can pay for damages caused by the driver.

So during the 20th century, insurance began to be sold more and more to people not so financially well off. When after and due to Franklin Delano Roosevelt the American middle class grew by leaps and bounds, the insurance industry, armed with more and more types of insurance products and with more and more and ever niftier sales pitches, pursued this vast new market without hesitation. Since during the 20th century the American middle class had its' apex, the insurance industry naturally penetrated this class of the population so that it could vastly increase its' sales.

Thus by the late 20th century, insurance was as much an everyday industry among large sectors of the American population as is food sold at the grocery store.

And yet insurance was and is still, well, insurance. Legally it hasn’t really changed much from 17th century England. The problem is that insurance as a product is at heart still far more appropriate for the wealthy than it is for the non-wealthy. When a wealthy person has a misfortune and files a claim with his insurance company, he or she has plenty of money to pay all of the deductibles, co-pays, and uncovered items associated with the claim. In fact, the wealthy person often technically has enough money to pay for the entire misfortune lock, stock, and barrel, but that could make that wealthy person not wealthy anymore, thus the need for the insurance. Again, the objective of insurance was and still ultimately is primarily to keep wealthy people wealthy, not exactly as wealthy as they were before the misfortune, but almost as wealthy as they were.

But when a non-wealthy person who happens to have an insurance policy files a claim, he or she can become destitute even if the insurance company honors both the spirit and all of the fine print of the contract. We have seen this in the massive number of medical bankruptcies filed by those with health insurance policies that have occurred in recent decades in the States.

With the new health insurance laws, we will continue to see large number of medical bankruptcies in the future in the United States, although many of them will be disguised for political reasons as old fashioned "the debtor made bad decisions" bankruptcies.

Under the Democrats' unconstitutional health insurance laws, people who think they can but really can not afford premiums and all of the other less talked about health insurance expenses that come up from actual claims (deductibles, co-pays, disallowed items, uncovered items, prescription drugs, vision care, dental care, etc.) will end up in bankruptcy court. Meanwhile though, other, wealthier people will avoid bankruptcy thanks to the new health insurance laws, because for example they really need health insurance but they were denied it prior to the new laws due to a preexisting condition.

This is why we have already stated in a previous article that bankruptcy is "moving down the income scale". The total number of medical bankruptcies will neither greatly fall nor greatly increase due to Obama Care, but the income and wealth of the bankrupts under Obama Care will be lower than it was before. The gap between assets and liabilities among the bankrupts will be lower than before due to the subsidies and due to new annual “out of pocket” limitations.

The annual out of pocket limit regulations in the new laws do take direct aim at bankruptcies, but will not help one iota those who “live paycheck to paycheck” and so don’t have $5,000 or $10,000 or $20,000 lying around to cover the amount they are supposed to pay for the deductible, the co-pays, the prescription drugs, and the uncovered items. Ironically, a much higher percentage of Americans live paycheck to paycheck than do people in other countries who don’t have to worry about any of the things we are discussing because their health care expenses are taken care of completely (or at least virtually completely) by the general tax system of the country they are living in (which is the core idea behind “single payer” financing of health care).

If you wanted to be crass about it, I guess you could say that thanks to the Democrats, medical bankruptcy is moving to the "bad neighborhood" where the rest of the bankruptcy family lives, laugh out loud. In other words, the Democrats’ unconstitutional health insurance laws are all about moving medical bankruptcy to what is in their view its’ rightful address on the wrong side of the tracks.

It is interesting to note that in the final days before passage, the Democrats who were the most insistent that the new laws be passed despite heavy opposition often brought up the notion that people who refused to buy grossly overpriced insurance simply because it is unaffordable were freeloading. The freeloaders were getting care in emergency rooms effectively almost for free. This is known as uncompensated care, the cost of which is partly passed on in the form of health insurance premium hikes but is also partly absorbed by the commons.

But the Democrats are all about supporting wealthier people these days, so unlike Democrats of decades ago these Democrats were disgusted with common people trying to “freeload” off the wealthier. So there was an undercurrent of disdain and disgust toward the common people freeloaders, who of course are merely innocent bystanders to the US health system wreckage in general and to unaffordable health insurance in particular.

Not only will the Democrats' unconstitutional health insurance laws move bankruptcy to (in the view of the Democrats) back to where it belongs on the income and wealth scale, but the new laws will also remind us over and over again in the years ahead that insurance is not a fully appropriate concept for those who are not above average in wealth and income (before any misfortunes strike). Because despite having insurance (that they were bribed to buy with subsidies and prodded to buy under threat of tax penalties) people with lower incomes and little wealth will be going bankrupt right and left under Obama Care when they discover the hard way what the wealthy already know: that insurance certainly can not and will not pay for everything, and when misfortune strikes you will take a hit despite having insurance.

Unlike the wealthy, if you are lower down the income and wealth scales, you won't be able to take the financial hit that comes despite the insurance and financially live to tell about it. That "hit despite insurance" is relatively small to a wealthy or to a high income person but hardly so for others. So if you are induced to buy health insurance and then you can’t cover all the things that the insurance won’t cover, it will be off to bankruptcy court for you to file an "Obama Care bankruptcy". There may be a waiting list, so get your bankruptcy filing in early, please.

Remember, if you do buy health insurance, make sure you are wearing expensive, formal attire and have a gold pen when you sign your policy contract. Otherwise, you will look like a fish out of water.

By the way, did you know that bankruptcy has become so commonplace that you can largely do it on the Internet with no attorney?

READING LIST
Wall Street loots Birmingham

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Who is Helped and Who is Hurt by Obama Care: The Blood in the Water

Among the health insurance contract aspects, a few things were fixed by Obama Care (at least fifty years late; what took the Democrats so damn long?) but many more were not fixed. For example, insurance companies can still deny payment for unusual and novel treatments even if doctor requested and doctor approved. If the new or unusual treatment is not in the Government mandated health insurance package, you don’t get coverage for it whether it is approved by doctors and scientists or not. The new health insurance policy management system will be quite inflexible, slow moving, bureaucratic, and financially conservative due in part to the overall economic context.

Also, insurance companies can still deny payments and rescind policies if they declare fraud. Unlike before when whatever the insurance company said was automatically worshipped as gospel and dutifully obeyed by every governmental and judicial official, the companies may now have to "prove" fraud at a hearing IF the consumer actively contests the fraud. But with huge staffs of extremely high paid attorneys, the insurance companies will be able to prevail in most hearings when they decide to kick someone off the policy they don’t want to pay on by declaring fraud.

The concept of fraud, which is still alive and well with Obama Care, is vague and wide ranging enough to allow for a lot of successful attacks on consumers by the insurance companies. (And no, there is nothing you can do to eliminate the chance that your insurance company will falsely declare something you filed was fraudulent. Along with the huge staffs of highly paid shark type attorneys, they have plenty of legal tricks up their sleeve with which they can successfully accuse anyone of fraud.)

As I have said before, all these new laws do is rearrange the deck chairs on the Titanic. The system will eventually go to the bottom of the briny blue, but in the meantime, some people will enjoy a better position on the deck than they have now. In particular, here are some who will be helped:

--Higher income people who know how to "do health insurance" and have a big enough and dependable enough income to back up those skills and make all the right payments at all the right times will be helped by Obama Care.

--Those who have been hammered by the “donut hole” (that big gap in Medicare Part D prescription coverage) will be better off in about ten years when it is finally gone (assuming no repeal).

--Those who simply can not get health insurance under the status quo but have enough resources to pay for premiums, deductibles, co pays, uncovered items, prescription drugs, dental care, and vision care in full and on time year after year after year. These would be fairly rich people by definition and it is no surprise that the right of center Democrats are strongly behind them.

Here are some of the groups of people who are harmed:

--Those who are ignorant about the many complexities and consumer traps of private, for profit health insurance. Such people will still be subject to disasters caused by such things as lapsed coverage due to missing premium payments, for example, interrupted health care, incomplete health care, and inadequate health care.

--Lower income people in general, especially those between 133% and 250% of the federal poverty line. Those with less than 133% will get Medicaid, but actually getting quality treatment with Medicaid (especially in a quasi depression when states are completely broke) will be at best a very dicey proposition.

--Some people who would have declared one or more bankruptcies pre Obama Care will now never have to declare bankruptcy. But lower income people (mostly among those with incomes less than 500% of poverty) have been often avoiding medical bankruptcy by not attempting the impossible (for them) task of feeding the private health system beast year after year, but now they will be induced to feed that ever growing beast, and numerous bankruptcies among them will inevitably follow. In other words, medical bankruptcy is moving down the income scale. Going forward, the people filing medical bankruptcy will be lower income and will perhaps have a smaller gap between assets and liabilities than the prior group of bankrupts. But this is obviously a key way in which Obama Care does nothing but rearrange those Titanic deck chairs.

--Those who become unemployed due to a bankruptcy filing. Many professions and employers become very negatively disposed to employees who have filed bankruptcy in the US and they start looking for pretenses to get rid of such employees.

--There will be a good number of people who get so totally carried away by "their responsibilities" under Obama Care that they will end up homeless when they would never have been homeless under the status quo. These people will ironically end up in much worse health than they would have been with no Obama Care since homelessness is usually devastating to a person's health.

--Medicare Advantage enrollees, since that program has been heavily cut. My understanding is that many will simply drop out of that program in the wake of the big cuts to it.

--Existing Medicaid beneficiaries, since the demand for service among the big influx of new Medicaid people will be much in excess of new resources for the program. The number of people on Medicaid is supposed to increase by roughly 50%.

--Small businesses, especially those with roughly 50-250 employees, which operate with their heads just above the waterline financially speaking.

--Employees of those small businesses who are fired so that those small businesses can offset the new health insurance mandate they must take on, or so that the small business can reduce it's workforce below 50 employees and thus escape the new regulations that target small businesses.

--People who harbor a lot of resentment about being denied health care freedom. Different people come at this from different perspectives but end up in the same place: very much in opposition to the Obama Care “mandate”. Generally speaking, everyone but especially right of center people very much resent being told by the government to buy a particular product. (This is of course unprecedented not only in the US but world wide.) Rather then being told what they must do, people want the freedom to buy it, to buy something different, or to buy nothing.

Progressive people are more often most resentful of being indirectly blamed for the mess when a health system is a governmental responsibility that the government should discharge with ordinary public and progressive financing methodologies, and/or they are very resentful of having to help pay the massive salaries, massive perks, and massive profits of private health insurance companies.

--In my wide angle view, probably the most outrageous thing of all about Obama Care is that it is a slap in the face of basically the entire rest of the planet on the issue, which has decided that health care is ultimately a societal and governmental responsibility rather than an individual responsibility.

Coming next is a complete exposé focusing on this last aspect.

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The Republican Proposals Versus Obama Care

GUEST COMMENT
Mookie March 22nd, 2010 1:35 pm
What Republican plans? The absolutely only thing Republicans harped on was tort reform. Yeh, let's let the existing poor health care system in the United States continue to kill 200,000 a year through malpractice and unclean medical care.

No one who thinks Republicans are worth a frack is worth listening to.

UNITY PROGRESS
Laugh out loud, I don't agree with Republicans very often and I suppose I am playing the novelty of the moment for all it's worth, but I do agree with them regarding how bad Obama Care is. I mean, it may never happen again so I have to enjoy the novelty of it now.

Seriously though, if you want specifics, the Republicans' allowance of interstate health insurance purchasing and their proposal for allowance of a very low cost but limited insurance policy, useful for full out health/financial catastrophes only, are economically well grounded proposals within the context of the current bad system and would slightly (or marginally if you prefer) improve it.

Although a few Republican ideas were included in the thousands of pages of new laws, I do not believe the two I just mentioned, which were among their best, were included. If I were a Republican economist (laugh out loud at the thought) I would know enough to be able to tell you definitively whether or not it is generally true that the best or at least the biggest Republican ideas were not included while the lesser and not so good ones were included. But I do suspect this is true.

Moreover, the mandate is so extremely regressive that the mere absence of it in the Republican proposals means that they are much more progressive than Obama Care (or much less regressive, to put it more accurately).

So of course I stand by my rankings. Technically the Republican proposals are more progressive than Obama Care despite the fact they are still overall quite regressive by world standards and doomed to eventual total failure as is Obama Care. And then we don’t know whether the Republicans would actually vote for them or whether they are just for public relations.

The truth is neither the Republican plans nor Obama Care are really worth even discussing if your objective is a truly good working system. No serious person in most other countries of the world who had any say in system design would take either very seriously. On my ranking scale, the Chinese system is much better than the Republican modifications of the US status quo while the distance between the Republican proposals and Obama Care is less than that.

The issue of Republican proposals versus Obama Care is only a side issue by world standards and amounts to just a matter of deciding which would be better among two very bad health systems. But for the record, the Republican system would be a little better than Obama Care if both economics and health care are taken into account. If ONLY health care is taken into account without regard to costs and economics, I suppose Obama Care is better than Republican proposals. But only in Wonderland can you support one health system over another while totally ignoring costs and economics, especially in the current context of labor market collapse.

The above was in response to this article.

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