Ron’s surefire guide to lowering the cost of health insurance

So, despite my better judgment, I find myself playing Devil’s advocate on a variety of health care issues over at Music City Bloggers (despite the fact I’m neither musical or in a city, just in the suburbs).  For the record, I don’t think there’s that much wrong with the current system, and what is wrong cannot be corrected with government interference (things only get worse when the government gets involved).  But I will admit that things like health care insurance probably cost more than they have to, so here’s my plan on bringing down the price of private health insurance for everyone.  It’s a little thing I like to call the ‘free market.’ 

I don’t know how much buying health insurance on your own would cost, because the place I work provides me with health insurance (and I’m not going to Michael Moore myself by searching for random statistics and using the first ones I can find, because the statistics are not relevant to the discussion).  I’d imagine most of you don’t know it either, because the place you work provides you with health insurance as well.  It is one of the best/worst things the union has ever done for the common worker because while it benefits the union employee, it dooms his nonunion brothers and sisters. 

Regardless, people lack health care insurance because, supposedly, it is too expensive.  Why is it so expensive?  Simple:  health insurance is expensive because insurance companies have no pressing interest to sell health insurance to the individual consumer.  There’s no real profit to be made selling to people one at a time when they can sell bulk health care services to companies, state governments, and unions. 

They get a guaranteed term of service, collect a guaranteed amount of money every year, and because they are insuring hundreds of thousands of people, rather than individual persons, they are guaranteed to make more money than they will have to spend out to cover medical expenses.  Most people, as we know, don’t get sick that often, don’t need surgery every day, and generally don’t pursue health care that they don’t need. 

Meanwhile, when dealing with an individual person who seeks outside health insurance, there is an inherent risk that they are going to actually, you know, NEED something expensive.  Why else would they A) not have a job that provides them with health insurance and B) be seeking out health insurance in the first place?  Whether or not this is the case, it’s a reasonable suspicion.  Even a lot of employers who don’t have free insurance have companies that they recommend to their employees for insurance.  Rightly or wrongly, there’s the appearance that the insuranceless person, who randomly looks for insurance without some kind of back story or employer reference, is in dire need of something expensive.

So, how do you drive down the cost of individual insurance?  Simple (well, not simple, but easy).  Companies stop providing free or reduced cost insurance to workers and force the insurance companies to sell themselves to the individual consumer.  There’s no need to really compete for the individual’s dollar, just the fat pockets of Major Corporation, Inc. (and the right bribe in the right place usually takes care of that).  If the insurance companies had to compete for YOUR dollar, premiums would fall.  You’d get discounts for things like not smoking or having a gym membership (like good driver and good student discounts with car insurance).  There would be an interest, on the part of the health insurance industry, to get your business and reward you for eating right, working out, and not doing heroin. 

The onus would be on prevention and early detection, which is a hell of a lot cheaper than treatment.  Variable pricing packages would come into play, and those that want the full-blown free everything coverage and can pay for it are more than welcome to have it.  Those that want basic coverage and can’t afford the big stuff can still find a low-cost insurance outlet (the Esurance of health insurance, if you will).  Those that don’t want anything are free to roll the dice. 

How am I so confident competition would improve access to health care?  Competition with satellite drove down the price of cable.  Competition with cable drove down the price of the phone.  Competition between cellular phone companies drives down the price of cell service.  Competition drives down the price of meat, cheese, and soda.  Competition (assuming the product is readily available) always lowers prices and generally improves services for the consumer (because if you don’t keep the customer happy, there’s always another option). 

Car insurance is required, and because everyone needs it and your employer doesn’t pay out the nose for it, prices and packages are affordable for everyone.  If you are unhappy with your insurance, television service, doctor, garbage pick-up, or phone company, you can buy better coverage or change providers.  If you are unhappy with your company-sponsored health insurance, you can always buy coverage on your own BUT your company is still paying the designated provider for you, so the insurance company doesn’t lose business in response to YOUR unhappiness with coverage.

They’re getting paid regardless.  So why should they give a fuck about finding new customers that aren’t corporate customers who are going to pay up a designated amount of money for a guaranteed number of years?  Why should they try to cater to individuals who may or may not stay customers when someone comes along and offers the same care for $5 less a month?  There’s no reason for them to do it from a business sense  Sure there are a lot of uninsured people, but there’s no guarantee they’d want health insurance even if it were available at low cost. 

It’s the same reason why, until satellite came along, my local cable company sucked out loud.  There was no need to improve service, because I had no other option.  Now I’ve got 500 channels, high speed internet, and phone service for $125/month.  Who wouldn’t want to bundle their health, life, car, and dental insurance if they got a discount for doing it?  I know I would!

Give insurance companies a reason to cut prices and improve service, and they’ll do it because they know if they don’t, one of the many other insurance providers WILL. 

Author’s note:  As fascinating as I find Noam Chomsky, he’s wrong on economics AND he’s twice as wrong on linguistics.  Generative grammar?  Come on, that’s been refuted as incorrect since the 50’s, and was based on the completely falsified A-over-A principle invented by one of Chomsky’s students!  The only reason anyone takes his linguistics work seriously is because he’s politically popular. 

Author’s Note 2:  If you read this far, you have my condolences.  Sorry it wasn’t funnier.  Next time I’ll work in a poop joke.

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20 Responses to “Ron’s surefire guide to lowering the cost of health insurance”

  1. Jade Says:

    Actually, I can give you one quote with regards to cost. As of 2006, Blue Cross/Blue Shield of MA was charging $474/month for individual coverage. I know this because that’s what my former boss was paying to insure herself through her business, and I was the one who had to write out the check.

  2. Ron Says:

    Holy shit, that’s insane. I can only imagine how many millions of dollars BCBS was soaking large employers for.

  3. Ron’s surefire guide to lowering the cost of health insurance Says:

    Ron’s surefire guide to lowering the cost of health insurance

    Great post. Thanks! I’ll add a link to your post.

  4. Music City Bloggers » Blog Archive » In Which Ivy Gets All Libertarian Says:

    […] So Ron has a surefire way to fix the health insurance situation, and I must say, I basically agree with him. Take it away, Ron: So, how do you drive down the cost of individual insurance? Simple (well, not simple, but easy). Companies stop providing free or reduced cost insurance to workers and force the insurance companies to sell themselves to the individual consumer. There’s no need to really compete for the individual’s dollar, just the fat pockets of Major Corporation, Inc. (and the right bribe in the right place usually takes care of that). If the insurance companies had to compete for YOUR dollar, premiums would fall. You’d get discounts for things like not smoking or having a gym membership (like good driver and good student discounts with car insurance). There would be an interest, on the part of the health insurance industry, to get your business and reward you for eating right, working out, and not doing heroin. […]

  5. nm Says:

    A lot less than that. You have it backwards: the companies make their money on the individual plans, because the group plans bargain them down. I know this as someone who was first insured through my job, then paid the entire cost of that insurance through COBRA for 18 months when I changed jobs, then had to buy individual insurance because my new employer didn’t offer insurance, just a subsidy for my individual policy. It’s true that my first employer absorbed some of the cost of the group plan, so that my costs went up a bit when I switched jobs and kept the old insurance on COBRA. But they went up by another 50% over the COBRA costs once I had to go to an individual plan.

    I’ll also repeat here what I wrote over at MCB in response to Ivy’s clip of your post: You do know that the insurance companies already refuse to insure people who have Type I diabetes (not lifestyle related), lupus (not lifestyle related), cancer (usually not lifestyle related) and a host of other diseases, unless they are forced to insure them through company plans. This plan would just give them the right to refuse to insure more people.

    Now, the gov’t could require the insurance companies to insure everyone. They already do this for people who change jobs and insurance, for instance. What you may not know, though, is that the only policies they will sell people in this position have such high premiums and deductibles that they can only function like major medical: they’re great if you’re hit by a truck, but you actually can’t afford to make regular visits to the physicians who deal with the chronic health problems. (This, BTW, is one of the reasons that such problems have worse outcomes here than in many other countries.)

    Unless the companies are also required to put all the insured into a single pool (i.e. same level of coverage for everyone) this suggestion just makes things worse for those who are already worst served by the current system.

  6. nm Says:

    Oh, and I think that your assumption that ‘most everyone who reads this will have health insurance through a job would have been true 20 years ago, but hasn’t been true for a while. The number of people who have to self-insure with individual policies is huge. I don’t have the number, but I think it’s at least a quarter of Americans, maybe even closer to a half, don’t get insured through their jobs. Which is part of what’s driving average costs up — those individual policies are insanely expensive.

  7. Jon Rodgers Says:

    I agree with everything Ron said and this is all true, but at the stage we are at right now I can recommend what I did for health insurance–I work at a very small business of about 10 people and what we did was go through a health insurance broker–they can give you unbiased advice on a variety of plans and my company ended up getting a good deal. We went through http://www.healthplanone.com and were very happy, but I just think insurance brokers are out best bet with the health insurance system we have right now.

  8. Ron Says:

    The NCHC says that a third of US firms didn’t offer health insurance last year, and most of those were smaller businesses like Jon describes.

    Here’s a link to a bunch of stuff: http://www.nchc.org/facts/coverage.shtml

    Yeah, I know insurance companies refuse to insure people with chronic health problems. My father is on disability and has diabetes, and the health insurance he has now is basically that major medical you described, but it’s SOMETHING, you know? Most people (or maybe me) only go to the doctor when they get hit by a truck, not when they have the flu (health insurance or not).

    Group plans might bargain down the costs for the company, you’re right, but the individual has no bargaining power. The individual only has to depend on competition to drive down the price (or go through a broker like Jon said). You can’t negotiate for your own price under the current system, because they’ll just tell you to go away. That’s another reason why I like the variable price structure; there’s more flexibility for the person buying the insurance in terms of how much per month in premium they can afford based on the services they think they’d use.

  9. nm Says:

    Unless they can’t. You do know that if your father isn’t seeing a physician regularly about the diabetes he will die sooner, right? And he’s more likely to lose a limb to gangrene that way in the mean time. There are conditions for which regular doctor visits are really important, and these are the conditions for which the current structure prevents regular doctor visits.

    Also, I’m not saying that I’m sure you’re wrong that if there were no group plans prices would come down for individual plans. But remember that the Supreme Court just ruled that it’s OK for companies to collude to set minimum prices. We are not, in fact, operating in any sort of genuine free market. So forgive me my cynicism when I say that to me, this just sounds like a way for insurance companies to make more money while providing less coverage.

    BTW, where does Chomsky come into it? My cousin, a very fancy-schmancy computer programmer, says that Chomsky’s ideas have been invaluable in the development of relational computer languages, but I don’t have a clue about the health care connection — is he just a straw-man you’re throwing up there to scare off us liberals?

  10. Ron Says:

    Chomsky’s linguistic theories of formal language have been useful in developing computer languages, but aren’t applicable to human language formation. And he’s not thrown in there to be related to health care or as a straw man, but he is known to be anti-free market. I love his political books, honestly; just not a fan of his ass-backwards language formation theories (English major nerd mode).

    My dad is seeing the physician regularly about his diabetes, though. If I remember correctly, and he’s not here so I can ask, he gets most of his stuff not doctor visits (pills, lancets, meters, even shoes) through Medicare or Medicaid. He’s on disability, though, so he’s got access to things some otherwise healthy diabetics don’t.

    One of the best things to happen to uninsured Americans is the Wal-mart $15 drug list, IMHO. And the Little Clinics you can find in Krogers (at least around here). One of the things I like most about our economic system is that if there is a need, someone will eventually step in and fill it. Like you said, the recent change in health coverage has just been within the past 10/20 years, so the market has to respond.

  11. nm Says:

    Unless you’re specifically rebutting something Chomsky has to say about health care, I don’t see how he’s relevant here. I call straw man on you. (joke, OK?)

    More to the point, if insurance costs make visits to a physician impossible, then a person has no prescriptions to fill. So having a cheap way to get them filled is more or less beside the point. I’m really relieved to hear that your father has the additional coverage. But I know too many people who genuinely can’t get their chronic illnesses overseen, and can’t get the medications that might help to control them, to think that it’s a trivial problem.

  12. O.D. Says:

    Although private Health Insurance Companies would be put out of business, and our income taxes would rise: It would be nice…, if this country would/could have a National Health Care Plan…so that EVERYONE would be covered…, regardless of this, that and the other.

  13. Ron Says:

    nm: He’s not a straw man, he’s a wicker man. We’re going to stuff Nicholas Cage into it and burn them both later as a sacrifice to keep the crops growing strong.

    I agree, it’s not a trivial problem, but there are also a lot of free/low cost health resources that go unused out there. There needs to be something to educate people as to the things that they have at their disposal.

    O.D.: I don’t think the government would be as good at providing insurance as the private companies are. Sure there is red tape now to cut through, but imagine how bad the red tape would be if you had to go down to your local government center to get your prescription filled. I’ve been to the community health care office before; it’s not a comforting experience.

  14. O.D. Says:

    Well…, I agree with you there (on the stab at the government) because anytime things involve our so-called government…it usually doesn’t involve the ‘promised lands’ (anything good/promising) either. Forget my analogy; I was trying to think of us as a whole. At any rate, we should both know that greed is the true culprit……while a ‘humane humanity’ (fit those 2 terms together & smoke it) is still waiting to be seen……I truly hope we do better in the future, and soon! If you really think about fairness when it comes to health……why is it not united (National Health Care Plan), much like our supposed rights/benefits that we have – within this soooo very boastful/arrogant country? Answer me that……

  15. Ron Says:

    Well, I don’t think health insurance was ever considered a fundamental right, although it’s really useful these days. Some sort of National Health Insurance, if it could make money (or not lose money) rather than run a deficit isn’t in and of itself a terrible thing. I just think the red tape would be outrageous and it’d be as poorly-run as the post office.

  16. O.D. Says:

    I never said it was a fundamental right; I said it should be united like our supposed rights & benefits. I agree that a united/national health insurance plan would probably not run as efficient or smoothly, but it would be more fair (as a whole). I must admit, I’m slightly biased on this viewpoint because I don’t think health insurance should relate to a person’s job, employer, etc., no matter how you slice it. Therefor, either way…, your Surefire Guide to Lowering Cost of Health Insurance or a National Health Care plan…, both sound like good alternatives……when viewing from a broad perspective. You’re just thinking slightly more about money, and I’m thinking slightly more about fairness. Damn, that almost sounds like oil & water…but they are closely related…in this case.

  17. nm Says:

    Um, since a single-payer system (whether public or private) would mean that doctors wouldn’t need to hire coders to fill out the forms for all the different insurance companies and have those laborious checks of your insurance every time you visit (some of the reasons the cost of ordinary doctor visits has risen over the past 10 years), costs would go down and efficiency would go up. And remember, the higher taxes would be offset by not having to pay those premiums….

    And, Ron, you’re probably right about the unknown resources out there (I don’t know for sure that you’re right, since I don’t know about them by definition), but you say yourself how awful the experience is of having to make use of them. Maybe a single system that coordinated all the options would make things more pleasant.

    And I think we’ve reached the point where we should start to consider health-care for all as a right this country guarantees. Remember, when the Constitution was adopted, it didn’t include freedom as a right, and even free citizens didn’t necessarily have the right to vote (women and those who owned less than a certain value of property were excluded), but the ability to expand the rights the Constitution guarantees has always been there. This is a change whose time has come, IMO.

    Oh, and I’ve met Chomsky, and although I think he’s a complete idiot about a lot of things he’s not nearly priggish enough to be a wicker man.

  18. O.D. Says:

    nm: You must have a different outlook on ‘efficiency’ because that has nothing to do with what I’m talking about. Silly-ass paperwork & pety Kindergarten Mathematics on Premiums vs. Higher Taxes are irrelevent to the patients actual service (as in health related). You might need to check on some of the cons that are found within Canada’s Health Care service (for example). Don’t get me wrong, I’m for a National Health Care Plan, I just think it is foolish to assume it would suddenly (from the start) be more efficient (as far as patient care) from the get-go.

  19. nm Says:

    Oh, no, I think any transition like that would take a considerable time and have a bunch of glitches to deal with in the very complicated period of change that would be necessary. I was comparing the “how things are now” with the “how things would be once all the changes had been made” and leaving out the interim completely. I’m sorry if I gave a different impression. I think we can get there from here, but “here” is so complicated that the getting “there” will naturally be messy as well. No argument.

  20. Rebecca Ormosen Says:

    What I do know is that in Canada people pay 55% in taxes and 17.5% sales tax. Thats a lot of taxes just for having national healthcare. Not to mention that all the good doctors from Canada move to United States because they make twice as much money here. We also sll know that govenment cannot manage anything efficiently just look at VA Hospitals, Medicare and other government program. I read that government spent over $600 billion on medicare pard D alone. Not to mention that Medicare is more confusing than it has ever been.

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