Comments on y-intercept blog: The Right Direction for Health Care

Medical care IS a limited resource because of t...

2007-12-06T17:29:00.000-07:00
Medical care IS a limited resource because of the government. The government controls how many of which kind of doctor can graduate from which medical university each year. It controls how many of what kind of medical facility can open in which community. So yes, thanks to government meddling, medical care is a limited resource. But it doesn't have to be that way.

What Marshall's mom needs is catastrophic insurance that covers unexpected and expensive health problems. This kind of insurance in analogous to liability insurance. We require liability insurance on automobiles. But we don't insure our cars for oil changes, tire replacements, and other regular maintenance. Experience shows that when we insure for run of the mill expected health issues, we drive the cost of medical care up.

Health savings accounts are a good way to go if they are properly designed. My employer's HSA offering is little more than a tiny savings plan coupled with the exact same insurance plan with a somewhat higher deductible.

I did not say that the doula model was the answer ...

2007-12-06T02:28:00.000-07:00
I did not say that the doula model was the answer to all health care concerns. I put it forward as an example of a group moving in the right direction. It is a group of very dedicated people who are providing superior care at a lower cost in one small area of health care.

The WSJ article is interesting. It shows how people with massive amounts of coverage are being messed over by the health care bureaucracy when it comes to receiving care. The hospital quickly burned through $1.25 million coverage. The patient now must pay out of pocket and is finding himself billed $720 for a $12 pair of stockings, and loads of hidden expenses. The machine churned about $2,000,000 in the care of this one patient, but probably only provided $500,000 in real service. The article confirms my belief that the machine is wasteful.

Your mom's experience is interesting. I used to do actuarial analysis. The reason your mom can't justify buying insurance is that the whole thing is a rook. In your mom's case, the expected return for her insurance investment is somewhere from 50% to 70% of her premium. That is, she would spend about $600 a month, but only get $300 a month in real service. A person with business savvy balks at the numbers. I would not intentionally invest in such a losing venture.

Even worse, the insurance demands that she consume time dealing with the insurance agencies and claim adjusters to use the product.

BTW, if a worker were setting aside $600 a month for health care expenses in an interest free account, they would end up with about $300,000 to spend on health care. If they put the money in an interest bearing account, they would end up with well over a half million dollars.

That half million in real money would probably have purchased the same care that the victim the WSJ story received before being capped by his insurance.

Families that are paying $2k a month in premiums would actually have several million to spend on health care if they controlled the money themselves.

Doula are all nice and good but that is not where ...

2007-12-05T22:08:00.000-07:00
Doula are all nice and good but that is not where the health insurance costs are coming from. When you can sit down and pick out a doula then this idea of personal health account or whatever you want to call them works out fine.

BUT when you have cancer or get pneumonia or get in a car accident then all these happy fantasies go right out the window. That is where the insurance costs are and no amount of direct access to a provider will keep a person out of financial trouble if one of the above scenarios happens. Instead you are going to be ten feet deep in medical payments and there is no way a personal health account is going to even begin to cover the costs.

There was a WSJ article about how even with insurance regular people are being hit by the caps. You should really go read the article.

And I am sorry that I complain about my mom not having health insurance, see she owns her own business, works easy 60+ hours a week and yet can't justify paying the 600+ dollar a month premiums just for catastrophic, that is half her mortgage payment for health coverage with a 3000 dollar deductible. I'll let my mom know that according to you she should really just suck it up and stop complaining.