A Rational View of Global Health Insurance

June 9, 2011

Did you ever wonder how an industry which is repeatedly bailed out by the government holds the right to monopolize homeowners insurance?  Every five years or so, the homeowners insurance industry, after making record profits, has to beg the federal government for huge amounts of tax payer dollars to retool after a major disaster.  This does not even include flood insurance which is already directly underwritten by the federal government.  Why does the federal government not own federal homeowners insurance?  Clearly, in a charitable gesture to an artificially supported industry, the powers that be have granted permanent solvency, not to mention huge profits, to an otherwise decadent phase of the insurance industry.  The solution, of course, is to hire the insurance industry to run federal homeowners insurance.

As experts in the field, the companies could show the government how a squeaky clean and efficient insurance operation is run.  The companies could be well compensated for their expertise, saving them from eventual extinction in the homeowner’s insurance business.  Without any incentive to “cheat’” and with bonuses to encourage the industry’s efficient and fair management, the public would save hundreds of billions of better spent dollars in insurance costs.  The huge question of our time, actually, is:  Does this unfortunate, but admittedly “rational,” view of homeowners insurance apply to the health insurance industry as well?  Sadly, I believe it does.

Recently, I asked my golf partner, a very intelligent thinker and a life long Republican, how much he thought that it would cost him, at 73 years of age, to purchase private health insurance rivaling the quality of Medicare.  We concluded that it would run approximately 25,000 to 30,000 dollars per year, a “conservative” estimate, I believe.  Under any voucher plan, most healthcare professionals know that for the average senior this means one or two hospitalizations, some outpatient rehab or skilled nursing and then, with the next hospitalization, bankruptcy.  Even the “rich,” as Democrats like to call those making over 250,000 dollars a year, would be hard pressed to pay 40 to 50,000  dollars a year per couple to insure against the efficacy of their vouchers.  Logically, in the long term, any comprehensive health insurance “owned” by private insurance carriers will be virtually unaffordable by any but the “super-wealthy,” that is, multimillionaires.  The rest of the population would be reduced to a welfare type of healthcare with a pitiable shortage of specialists and quality treatment options.

For the younger population , though far healthier, for the most part, than seniors, things would not be that much better.  If the private insurers agree to cover all preexisting illnesses as well as virtually uncapped expenses for enrolled patients, then despite any liberties, legitimate or corrupt, taken by the insurance companies, they would still face certain bankruptcy!   Their only salvation:  a joint agreement with the federal government, a shared pool, another form of  partial bailout for an otherwise failing industry that cannot “cut it” on its own. 

In other articles, I have repeatedly suggested legitimate ways in which insurance costs could be slashed and the benefits transferred to both the insurer and patient.  These include relaxation of anti-trust laws allowing companies to purchase pharmaceuticals, durable goods, oxygen and medical laboratory for their 140 million or so customers as one group.  They could also benefit from  further refinement of “reinsurance,” but would not be allowed to collude to fix premiums as they are currently permitted by inappropriate federal law.  These suggestions however, would only delay the inevitable.   At some point the industry would not be able to keep up with rising healthcare costs, no matter what they do on their own.   Like it or not they will become almost totally dependent on the government dole. 

The other issue here is the massively irrational and ineffectual concept of employers furnishing the bulk of private insurance premiums.  This once viable attempt to attract returning World War II  veterans to growing companies is an anachronism.  “It is what it is!” a tax on businesses!  Republicans, ashamed to admit that for all these years they have advocated this outrageous intrusion on the already besieged private businesses, are advocating far higher private taxes for health insurance than are Democratic advocates of socialized medicine.  These absurd “taxes” already add 1500 to two thousand dollars extra to domestically produced automobiles, while cutting jobs by reducing the consequent expansion of the automobile as well as other industries.  This applies equally for foreign and American brand cars produced in this country.  Despite all of the inane, patriotic rhetoric, the U.S. economy cannot compete with the rest of the world under any form of the present archaic system of healthcare.  This includes both “Obamacare” as it is erroneously called and the Republican alternative.

Sooner or later, when the money dries up for real and  Republicans have privatized and leeched all the available funds from all government agencies, when the “ultra-right” have finished eating their young, voters will realize that the federal government must “own” healthcare and the private insurance bureaucracy must be hired to run it!  That way the greedy lobbyists will be off the backs of the politicians and can offer their now clearly illegal donations, sexual favors and even their few remaining firstborn children before the deaf ears of people who cannot legally accept them.

Allen Finkelstein,  D.O.