The Health Care Bubble: The Status Quo Is Unsustainable

Everyone loves to be angry with Wall Street and the mortgage lenders for causing a big financial mess. That's understandable, and I have certainly had my share to say about high bonuses on Wall Street. But I am struck by the sheer idiocy of some comments from defenders of the private health insurers in the U.S. who don't seem to recognize that health care built on private insurance companies is headed for the same kind of train wreck. Planted by Republicans and lobbyists to disrupt town meetings, and writing comments on articles and blogs in support of health care reform, defenders of the status quo seem unable to see the big insurance bubble for what it is: an unsustainable out-of-control behemoth headed for a huge collision.

Never mind that I am chronically angry with my health insurance company, United Healthcare, which cost over $17,000 in the last fiscal year, a large chunk of which is paid by my employer. If that's not a huge tax, I don't know what is. No wonder we have not received adequate cost-of-living salary adjustments during the nine years that I have worked here. Meanwhile, they recently denied the claim for my son's 2-year-old check-up. The American Academy of Pediatrics recommends well-child check-ups at 15, 18, and 24 months, and then every year after that. But the plan says that he has maxed out his benefits for well-child check-ups this year so I get the bill. Do the defenders of private insurance companies never receive this kind of absurd denial of payment after paying through the nose for the coverage that they love so much?

But all hatred aside, it is clear that the current system of private health insurance is economically unsustainable. Health care costs have been rising 12% per year, while incomes were rising 2% per year before the current recession. As increases in income are likely to be small or non-existent this year because many people have lost their jobs or had to accept pay-cuts or furloughs, health care costs just keep rising. The math simply doesn't work. It's like the housing bubble that few seemed to see coming as prices peaked in 2006. House prices can't increase 30% a year forever. It doesn't take long before people can't afford to buy a house, and those who already own them can't pay their mortgages. We all know how that story ended: in a huge recession. The story of a health insurance system built on private companies whose primary goal is the pursuit of profits for their shareholders will also have a bad, bad ending.

It is clear that retaining the existing health care system in the U.S. will drive the economy into the ground. It is also clear that the most economical solution to covering everyone and reducing costs is to implement a universal single-payer insurance system. Unfortunately there is no political support for that -- partly because the health insurance and pharmaceutical industries own the two houses of Congress and partly because Americans fetishize the free market with its valorization of private over public (both of which, again, brought you the housing bubble and the financial meltdown).

What isn't clear is whether the lobby-funded lawmakers will reform health care in a way that benefits the public and the economy, or will keep letting big business run this country into the ground. Maybe then I will finally convince my husband that we should move back to Canada, where health care is both cheaper and has better results.

Follow Louise Marie Roth on Twitter: www.twitter.com/louiseroth

Comments

[EminemsRevenge]

EVERYONE, including Team Obama, thought I was crazy when i came up with the idea that the Post Office SHOULD get into banking...NOW that idea is about to be a BILL in September: http://eminemsrevenge.xanga.com/709386660/obama-is-finally-listening/

As THAT link shows YOU...the Palinista doctrine is SO OPPOSED TO THE JEZEUS THEY *believe* in!

[DesertDogAlpha]

Much comment deeper below about how universal coverage would facilitate a boom in new small business growth. But, who pays for the insurance provided to the small businesses and their employees? Is the point that they cannot afford to do it themselves now? Under a new universal system I guess someone else (other taxpayers) would pay for it? Or would we simply fund it, as we are doing with so much else now, by an Obama magnification of the ridiculous Bush deficit spending - meaning our grandchildren evenutally pay for it? Would not health insurance cooperatives of the type proposed by Senator Conrad give small business and their employees the leverage to band together and get the same sorts of rates that Wal-Mart or Exxon get?

Let's be clear about it if we are proposing a system whereby small business people and others simply want to get insurance paid for by someone else.

[DannyDanson]

Thanks for this wonderfully informed article Louise!

I get so anger and disheartened by the low level of intellegent discourse about the actual need for Health Care Reform, Regulatory Reform, and Housing Reforms, some people seem incapable of grasping the big picture and how these opportunities offer the country a chance to do something incredibly beneficial to every American and every American business in the country.

I think the fundamental transformative changes embodied in President Obama's inital 3-legged stool approach to re-establishing America's long term economic footing has been lost in all of the political misdirection and gamesmanship.

If more that 5% of American corporation paid their full share of taxes.
If we could reduce the cost of Health Care over the long term, and make the country Healthier
If we could get banks to modify loans and keep people in their homes.

I think that most of our deficit related, health related bankruptcies, and home forclosure problems would eventually decrease, it seems like common sense.

[Dale Larson]

It's time to end our "risky experiment" of "For-profit health insurance". It's a proven failure.

Support HR676. It's a Single Payer system that is proven, pro-business and pro-people:

* Slashes at least 30% of costs off the top by removing private insurance overhead.
* Companies take health care expenses off their books. Stock value increases. Better able to compete internationally.
* Small companies could have access to higher skilled workers because previously they couldn't compete in the labor market by offering similar benefits.
* More entrepreneurial ventures will launch since they have more money and less unrelated risk.
* Dramatic drop in bankruptcies.
* Dramatic drop in lawsuits. Most of these lawsuits are simply to obtain money to cover health care if something interrupts their coverage.
* Reduced system complexity. Greater efficiency due to fewer regulations.
* Savings from employees not having to fight with their insurers during work hours.
* HSA and MSA dollars redirected back into the economy for goods and services.
* Additional money to spend from not having to carry "uninsured motorist coverage" on your auto policy.
* Contract employment is more viable for workers since they are guaranteed access to health care.
* People are covered when unemployed. No chance of being wiped out financially if you lose your job.
* Health care providers (doctors, hospitals, therapists...) see increase in business with much less administrative expense.

[TheFriendlyAtheist]

Great points Dale.
We could save $100 billion a year in taxes just by putting all gov. employees (federal, state, and local) into a single payer Medicare type system; but the "our taxes are too high crowd" doesn't evern want to talk about it.
Putting everyone into a single payer system could save us $500 billion a year in the extra cost that it takes to stay in a for profit system.

[NL207]

"Single Payer system that is proven, pro-business and pro-people"

Proven? Yes, a proven failure as clearly demonstarted in Canada, Britain, Germany and most of the rest of Western Europe.

Pro -Business? How? It is certainly not an asset to the Healthcare Business in any country that has one of these monstrosities. Any taxes these businesses have to pay, and HR676 most crertainly DOES tax small businesses are going to be a further detriment to competitivity: job killers.

Pro-People? What a hoot! Tell that to all the people in Britain and Canada who die from cancer that would survive if they lived here in the US. Waiting lists. Rationing. The British system is notorious for its poor dental care and the British for their bad teeth.

Three strikes. You're out, buddy.

[Dale Larson]

TEST FOR THE ANTI-HEALTH CARE REFORM FOLKS...

1) Name any positive influence for-profit health insurance has had on providing health care?

That's it. No other questions.

----------
Answers (now don't peek until you provide your answer!)

.gnihtoN (1

[mamalisa38]

For profit health insurance, by it's very definition, is immoral. The only way to maximize profits is to raise premiums and deny claims. Single payer is the only answer to the health care crisis in this country. By the way, G. W. Bush, in 2005, gave $950 million to Iraq for UNIVERSAL HEALTH CARE!

[martinfrosa]

If the President, the Congress and all federal and state employees want to reform health care and live under the same plan they are going to provide for the rest of us, I say, "bring it on.' But they won't so I won't.

[Lorianne]

Why Obama's Public Option Is Defective, and Why We Need Single-Payer
http://www.progressive.org/mpwool072209.html

[DesertDogAlpha]

No doubt change is needed in the health care area. Job number one is to mandate that 100 percent of Americans have health insurance and then to find a way to fund some minimal form of insurance for those who are truly needy and cannot pay for it themselves (and by this I don't mean people who give up good jobs with health insurance to make pottery or become artists or wannbe entrepeneurs - only to find out that they then can't afford what they previously could afford). For those the rest of us must pay for to have them get medical care, there should be mandatory programs to address smoking, alcohol use, use of illegal drugs, violent behaviors, being overweight, single mothers having babies when the fathers either can't or won't pay for the child's upbring, etc. And, fees (or taxes) should be imposed on the rest of Americans who are overweight, use alcohol and cigarettes, are caught with illegal drugs, engage in criminal violence, etc. so that they can substantially pay for the programs for the truly needy. Everyone would get healthier as a result - and isn't that what this is really all about?

Any government program that those who are not truly needy can get into for health insurance, should have to deal with exactly the same regulatory and financial requirements as private health insurance programs.

[jmpurser]

Congratulations! You just recreated the system we have now that has been failing for 40 years or more.

[DesertDogAlpha]

How so? We're doing nothing to fight obesity, cigarette smoking, use of alcohol and illegal drugs by the poor now that I can see. And the number of single mothers without means of support or commitments from the fathers to pay for the children's upbringing has grown massively. If you're too poor to pay for your own health care and want others to pay for those others (those who pay enough taxes to fund their share of the government) deserve to have their largesse rewarded by getting the takers onto healthier ground so they put fewer demands on the system.

[tjb22]

Don't we want to encourage people to "go out on their own"? Isn't that the mantra of conservatism? Why should we discourage people from starting their own business? Sure, many will fail, but we hear, over and over, that small businesses are the back bone of our economy...why make it more difficult for those willing to take the risk to start up? Do you really have something against pottery or art? If someone can work and sell enough of their work to make ends meet, we should encourage that...after all, that "real job" they had can then go to someone else, and have you checked the unemployment rate lately?

We can't make health care a question of who "deserves" it...that's the path that the republicans are actually try to scare people of. If we do that, we will be "rationing" care and letting people die because of perceived moral weakness. And who gets to decide who's "deserving"? Doesn't that scare you? Ofcourse, I suppose you're perfect.

[Louise Marie Roth - Huffpost Blogger]

Most Americans valorize small businesspeople and entrepreneurs who "go out on their own." But one of the things that stops people from doing that is health insurance. I happen to be married to someone who is an entrepreneur, and is in favor of universal single-payer health insurance. How could a small business-person not be? His company was paying through the nose to provide sub-standard insurance to its 20 or so employees. The only way to get decent insurance is to get a group rate, and the only companies that get group rates are those with LOTS of employees - by definition not the small businesses or entrepreneurs.

There was a post a couple of days ago on this site that compared the U.S. and Europe in terms of ownership of small businesses. European nations have more of them, and one of the reasons people can strike out on their own more easily there is that they don't have to worry about health insurance for their own families or their employees.

[nash2]

Collapse of the Healthcare system due to lack of cost controls will allow conservatives to do what they've always wanted to do: get rid of all employer-subsidized health insurance, Medicaid, Medicare, the VA, and probably even government-provided healthcare for the military. (Why not "privatize" that too?)

This is crisis economics applied to healthcare.

[force fed up]

I say let it crash. Then maybe something might actually get done. Typical Americans, wait for the disaster to hit before you actually fix the problem.

[jmpurser]

"The Americans will always do the right thing . . . After they've exhausted all the alternatives."

I'm not sure we still deserve Churchill's confidence but it's clear we won't do the right thing UNTIL we've done all else. And maybe not then.

[Dosadi]

No, if it crashes we will have to bail it out. We need to abolish it now.

[Squeezer55]

Yet another sad comparison :
Like many Canadians I have American family members. My paternal grandmother is American as are seven of my aunts and uncles. My grandmother lives in L.A. and is covered by my aunts Kaiser plan because my aunt works for Kaiser. My uncle is a management exec with FORD and he covers my grandmother as well. She developed breast cancer and even though she had the best coverage money could buy at the time, her 10 day hospital stay still cost $13,000 as an out of pocket co-pay.That was ten years ago! Here in Canada, my wife under went cancer treatment for metastisized cancer that required two operations and nine months of chemo. Her drugs cost over $50/day. Our cost for the entire process - our regular $74 month premium. She's now cancer free for five years. Don't accept anything less than universal health care - you pay enough taxes , you deserve it.

[Louise Marie Roth - Huffpost Blogger]

Touche. People who criticize the system in Canada should try living with it for a while. (I grew up there, and I want badly to move back (except for the weather)). They would never give it up for the system the U.S. has.

[HST]

All the people who are protesting healthcare reform are the same people who sat quiet while Bush spent a trillion plus looking for non-existent WMDs and cut the taxes on the richest 5% by a trillion dollar and then set up a trillion dollar TARP program on the way out the door -all done in just 8 years. Now the protesters are telling us spending 1 trillion over ten years is waaay too expensive.

[Louise Marie Roth - Huffpost Blogger]

Yes. Did you see the NYT article a while back called "Going Dutch"? It talks about some of the hidden taxes that Americans pay to cover unnecessary things like a bloated military, bank bailouts, and unnecessary wars. Taxes here only look lower than other countries. When you account for hidden taxes and look at whether or not you get what you pay for, they start to look very high indeed.

[quidam56]

My father had good insurance and from all the fancy ads, billboards, television commercials and infomercials I thought he was in the best (hospital) health care system in East Tennessee. Boy was I duped. His care was called "horrifying" by the state of Tennessee, but said it was perfectly within the parameters of what they deem, defend and support as "the acceptable standards of care" in E. TN. He had a nurse playing doctor who was practicing medicine as a physician without a physician's license. The man was showing all the signs and symptoms of internal bleeding and was going into shock yet the nurses prognosis was Sundowners Syndrome. They finally had a nursing instructor who teaches at The University of Tennessee who said the reason my father was going into (shock, was sweating profusely, confused, no urine output, blood pressure dropping 55/35, heart rate increasing 255,blood sugar was topping out around 600), it could have been caused by the room temperature being set too high. It's on record in Greeneville, TN Federal Court. Case no 2:04-cv-375.
See what is called quality health care in TN and VA. http://www.wisecountyissues.com/?p=62 He rotted to death for ten long months, his legs were amputated. He was begging for a gun, looking back I should have granted him that wish.
There will only be change when those unaffected are as outraged as those who are.

[viewfromuphere]

very true...perhaps the most interesting aspect of some of the disrupted town halls is large number of individuals doing the disrupting who, judging from their ages, are likely covered by Medicaid or had other forms of insurance.

If there was ever a clear demonstration of the attitude...I got mine to heck with you....it's that.

[TheFriendlyAtheist]

I feel so bad about your father. He would probably have had a better outcome by being treated by a Witch Doctor in Africa instead of what the conservative nutjobs call the "best healthcare system in the world".

[renaissance]

The oft-repeated argument that "developed countries" around the world offer better care for less money is an APPLES TO ORANGES COMPARISON!
It holds no water under scrutiny, but it sounds good as a talking point...
The U.S., with a population of 300Million, a diverse makeup, and large numbers of recent immigrants from "developing" countries CANNOT be compared to Sweden, and Belgium, or even France or Germany.
This is not just because of our size and history, it is also because of our geography and our culture: our suburbs and car oriented, tv dominated, sedentary lifestyle... Our incredible obesity rates...
ETC...
Sure, Spaniards may smoke more cigarettes, but to compare life expectancy of European countries (plus Japan and a few other rich ones) to ours and say that proves anything is not an informative comparison.
ALSO, the U.S. funds the majority of worldwide research into new medical technology and treatments, and our academic institutions train the most doctors, etc, all aspects of our health economy that are lumped into the "We spend 2 times what Canada does" argument, that is so misleading...
Hope this helps you find the truth.

[viewfromuphere]

and I'm sure the thousands of Americans without health care and those denied health care really give two nickels about the smoking habits of Spaniards.

bottom line pal....is the bottom line.....countries with a "better" handle on their health care costs are going to be in a better position than a country who's costs aren't.

Concern about huge govenment spending is a legit concern but frankly...a health care industry putting millions and million into anything other than patient care and support (like funding attack ads, sending off screamers to townhalls...golden parachutes for retiring exes) is looking out for itself...not the people it's supposed by caring for.

[jmpurser]

The truth is we spend twice as much as anyone else and get very poor results. Your excuses might explain a few percentage points but not the complete failure we're experiencing.

[Louise Marie Roth - Huffpost Blogger]

How can it be an inaccurate comparison when people are people, illnesses are illnesses. Your response reminds me of what one of my American uncles once said about why the U.S. couldn't have universal health care like Canada does: "There are too many poor people who would need to be covered." If you care about your population, then the kinds of horror stories that others have written would not have to happen. If you care about the public health, then you make sure everyone is covered. If you want to control costs, then you don't let private health insurance companies run the health care system in a way that rakes in huge profits to please Wall Street while denying or dropping coverage. The system here is ridiculous, and claiming that it can't work better than this is absurd.

[NL207]

Try comparing cancer survial rates between the US and Canada or Great Britain.

You pretend there are no horror stories associated with single-payer healthcare. That means either you don't read the British press or you have yor head stuck firmly in a dark place.

The system here is better than in Canada, Great Britain or Germany. The proofs abound:
You do not see anyone who is a US Citizen going to Canada, the UK or Germany for treatment, now do you? Lots of Canadians come across the border to be treated here.
Isn't British dentistry wounderful? The Brits have to have the worst teeth in the civilized world. That is government run there. The German dental system is tolerably good, but it is still largely PRIVATELY funded.
Are there waiting lists here for treatment? There are in Canada and Britain.
Are certain procedures rationed here? No. But there are rationed procedures in all of Canada, UK and germany.

[TheFriendlyAtheist]

Tell it to the 20,000 Americans who die every year as a direct result of not having health insurance.

[NL207]

references please. I'll wager there are no credible statistics to back your claim up.