The Health Insurance Beast

I’ve put off this post for years because I didn’t want to write something that would preclude me from getting health insurance in the future.  But it’s time.

Yesterday I read a very short article from my local online news source: Report shows number of uninsured Utahns.  I could not believe that “a third of Utahns under age 65” had no insurance “at some point during the past two years.”

One out of three of us don’t have insurance?

I hear a lot of people who say “I would like to start my own business but I have to stay at my job because of the health insurance.”

More important than salary (which they think they can replace (I think they can, too), more important than vacation or sick days or any other benefit, health insurance trumps all.

Maybe that’s why Obama got voted in, to help give peace of mind to this group of people who are uninsured.

When I got laid off I had the option of purchasing COBRA.  COBRA is a brilliant program devised by our elected officials that help ensure we still get health coverage after we lose our jobs.  Oops, did I say brilliant?  I meant, the concept was brilliant.  The reality, however, is that it’s ridiculous.  My COBRA costs would have been around $700 a month.

Help me understand how an unemployed guy with no income is going to come up with $700 a month for crappy coverage?  (The coverage, as far as I understand, is the same that you had at your former employer – basically you are “allowed” to stay on that plan, but you have to pay your part PLUS the employers part… and my employer had CRAPPY coverage).

I’ve heard of people getting quoted around $1,500/month for COBRA.  That is more than most people pay for a mortgage.

How could the Washington bureaucrats have thought this would be affordable, even possible?

Ah, the bubble they live in.

And that is one reason why 1/3 of the people (if I can extend this Utah sample out to the rest of the U.S.) don’t have insurance.

I am not a fan of Obama, and worried about the socialism he talks about, but I wonder if he could somehow fix the healthcare crisis.  Not necessarily socialized healthcare… but there are issues with private healthcare that I’ll write about in another post.

Health care – it’s a sad state.

19 thoughts on “The Health Insurance Beast”

  1. I am currently unemployed and paying for COBRA. My unemployment helps to cover it, plus I’m single with no kids so my premium is lower (about half of yours). Still, it’s a lot of money. Luckily, the government just passed a stimulus package that will pay 65% of your COBRA premium for up to 9 months. That’s basically the portion that employers typically pay. I’m still waiting for my former employer to send me information about it in the mail, which should happen in a few weeks.

    To answer your question about how somebody who is unemployed can pay a full COBRA premium: this is where an emergency savings account kicks in. I know not everyone has one, or enough money in one, but while you’re employed and things are good, it’s important to stash money away for a rainy day. I did, I thank myself every day.

  2. Welcome to government intervention! In response to “Help me understand how an unemployed guy with no income is going to come up with $700 a month for crappy coverage?” in short – the tax payer will have to pay if we move to government lead health care reform as a total solution. Nothing is free – ever! Somehow people think that health care reform is going to solve the problem. It will not – it will exacerbate the problem down the line. Higher taxes will be the result.

    The root of our problem(s) are centered on government regulations. Many are good and are passed with good intentions. Most are bad and hinder the free enterprise which brings prices down due to excesses of government. The current mortgage crisis is a symptom of government butting its nose into things it should not. We’ll see where this all heads –

  3. The goverment that brought the financial crisis is now going to provide cars and health care. Look north to Canada where you can get seen for a runny nose, but if you need an MRI for a tumor you wait months. Months more to see the specialist and months more for the treatment, if you are still alive. If government would get out of healthcare totally, the prices would go down.

  4. Jason,

    Obama’s not a socialist. Not even close! I lived in England in the 70s and THAT wasn’t even socialist, although it was a social democracy. (very different thing). Sorry to be pedantic, but a lot of people are misusing that word nowadays.

    As for COBRA, the problem isn’t the government regulation – it’s the cost of a private healthcare system. You pay what your employer paid for healthcare – it has nothing to do with the govt. They just gave you the right to keep your insurance if you could afford it.

    Here’s an example of where COBRA works – I was laid off once with 3 months severance. Because I was able to buy COBRA, I was able to hang on to my health insurance for that 3 months which was long enough to find another job and get back on a company health plan. Had I not been able to do that, I’d have been screwed if I got sick.

    So COBRA helps more people than were being helped without it, but it doesn’t help enough people.

    The stimulus bill that was just passed helps people by paying half their COBRA. That’s another good step in the right direction, but still not far enough.

    I’ve lived in both the UK and Canada, and both had single-payer government healthcare systems that were way better than ours (I don’t care what anybody who hasn’t experienced them says). Obama will never introduce that sadly, but maybe his plan will help even more people.

  5. Oops – to clarify, I meant ‘even more people’ than are currently being helped by the stimulus bill, not ‘even more people’ than are helped by universal, single-payer healthcare. Obviously that wouldn’t be possible 🙂

  6. This S may be time to be the unpopular Brit, but this is why it is so important for us to protect the National Health Service, free at the point of need regardless of means. In this country people often complain, but I suggest they look at this post to understand how lucky they are.

    As for Socialist, the UK has never had a Socialist government, but we do believe in society and collective responsibility. And those surely can’t be bad principles.

  7. I would agree with Louise’s comments on the better & more-efficient run single-payer NHS systems they have in the UK & in Canada. I lived in the UK & I never dreaded one single moment whenever seeking medical consultation nor prescriptions drugs, it was all simple & available, almost for free, work or no work! I understand part of that money comes from taxation especially true in Canada, where higher taxation is compensated by the immense social benefits people enjoy. I am unemployed & I missed the deadline on the so-called passed stimulus package (on Cobra entitlements) & count my blessing lord that I stay healthy as always, but why won’t Obama consider adopting single-payer healthcare systems that work elsewhere? Can someone talk sense here? The US healthcare is ridiculously expensive & inefficient-run (1/3 medical billing costs count towards paper-pushing administration) !!!

  8. My snarky response: no one seems to want to give up Medicare or Medicaid or the VA system or the drug program for seniors and that is totally run by the government as a single payment system. It would be better if the government was allowed to negotiate drug prices directly with the companies, but the drug companies lobbied against it or else the programs wouldn’t be so expensive…

    The non-snarky response: There are two big issues with health care: our costs are way too high (and the biggest increases to government spending in the future for those concerned about paying taxes) and 47-million Americans don’t have health insurance at all which, one way or another, we end up paying for. Utah, at 1/3, I would suspect is typical if not better than most states.

    So, two true stories: two days after my health insurance ran out after getting laid off, but before COBRA paperwork came in, I needed some tests done in an Emergency room. Cost: $9000+ for three hours. I got the bill. When COBRA paperwork was processed, I had the hospital reprocess the claim with COBRA. Result? Now an “insurer’s discount” is applied and the very same tests now only cost a little over $3,000.

    And people wonder why health care sucks? When most of the world-wide objective health care comparisons are done, the United States can’t beat out Costa Rica (and I’ve been there) when it comes to health care performance. We are way down on the list. So when Obama campaigns on health care reform, it has nothing to do with socialism and lots to do with finding a way to get different results.

    Second true story: My wife Kate has the health insurance for the family and she was recently laid off. The COBRA portion of health care from the employer now results in almost $1200 a month health care bill. But, with the stimulus package now out there paying 65% of the cost (the employer pays the cost — not the government…), our premium is under $450 a month. $1200 a month is ridiculous; $450, I think, is actually reasonable.

    So, health care in this country for anyone under 65 is broke and requires people to stay at jobs they hate just to have the coverage — if they are lucky enough to have an employer that even offers it. I think debating the alternatives is a good thing to get to the right solution for us and every country’s situation is unique (i.e., Canada and England can’t necessarily be compared with the US…). But letting the current health care system continue as is won’t cut it. It’s bad for competitive businesses, it costs too much for individuals, it doesn’t perform as well as many other countries and the cost increases for no improvements will kill anyone’s budget (including government budgets where our taxes go…).

    Oh, and COBRA payments are one of the reasons I’ve consistently advocated having one year’s take-home pay in the bank to cushion a layoff.

  9. Sorry – no government-provided solutions will EVER reduce spending or make the health care system more effective, efficient, innovative or affordable. Ever, ever, ever.

    By far the best solution would be to have both government and businesses get out of the health insurance business entirely.

    If businesses didn’t have to provide health insurance benefits, the cost of almost every good or service would decline.

    If individuals were responsible for purchasing health care services, the costs would decline significantly and the quality levels would rise (basic laws of capitalistic supply and demand).

    Businesses and governmental organizations who currently pay for health care services for employees/beneficiaries would provide cash payments to individuals, who in turn would purchase services (debit cards, etc.) on their own.

    Elderly, incapacitated, mentally unfit individuals (Medicare, Medicaid recipients, perhaps) would be the only exceptions. In that case, purchasing co-ops could be formed to advise and support such individuals.

    Such a move would definitely reduce costs, increase quality and innovation, and provide employment for an entire new business/employment specialty – health care advisers. They would operate much as independent insurance agents currently do.

    We somehow manage to comparison shop for car insurance and car repairs…home purchasing assistance and home repairs – why not health services?

    Radical? Yes, certainly. Effective? Definitely. Possible? Not with current administration (or with most others)!

  10. I hear something like this all the time: “If individuals were responsible for purchasing health care services, the costs would decline significantly and the quality levels would rise (basic laws of capitalistic supply and demand).” Please tell me how this *actually* would work. Here are the individuals, with health *crises* — a broken arm, for example, or pneumonia, or how about a lump in your breast? So these individuals look for health care services, but, gosh, those services are very expensive, too expensive. These *critically ill* individuals are going to say, Nope, too expensive, I won’t purchase your services until they are less expensive, I’ll just wait till you lower your prices…. What do you think will really happen? The critically ill individuals will pay whatever they have to pay in order to gain services they cannot risk going without. And although you may think the service providers will compete in order to gain the patients, believe me, when you are critically ill is the *last* time you can spend time, attention, or energy “comparison shopping”. Not to mention all the rest of it — the extraordinarily high price of malpractice insurance plus the litigiousness of individuals, both of which drive health-care providers to raise prices to cover their overhead and to order unnecessary tests to cover their exposure to liability; the influence of pharmaceutical manufacturers, who are also being capitalistic by pricing their wares as high as the market will bear and using advertising and other methods to sell as much of their wares as possible; the cost to buy and run medical equipment such as MRI machines; even the cost of medical-school loans; and on and on.

    I certainly think the current system is broken. I personally would like to see so-called health insurance just plain outlawed — but, after all, those companies employ a lot of people, so what to do with all those employees would be a whole other problem. I have not been able to think of a solution that I think has any likelihood of succeeding in this country. Possibly we should try having the federal government become the insurer of last resort — all of the health-insurance company employees could just be declared government employees now? — though I am not optimistic about the outcome. Besides, as long as so many in this country are obsessed with opposing rises in taxes (why, I always wonder; why is it so important to be so greedy and so selfish?) nothing that is seen to raise taxes will be supported. So it is more likely we will limp and lurch along until the system collapses, and then cobble something together from the pieces.

    By the way, I have experienced the health insurance system from many sides. I spent 11 years without health insurance while I had young children — it isn’t true that “one way or another, we end up paying for” the uninsured; we ourselves — that is, my family, not my community or my society or my country or whatever the other “we” is supposed to be — paid for all of it (including my daughter’s normal prenatal care and birth costing 20% of our gross income), and we got no discounts, and we didn’t declare bankruptcy. More recently, I experienced our paying for COBRA to keep me in particular covered while my husband was unemployed for 15 months, because my health had collapsed and once coverage lapsed I would be unable to regain it due to “the exclusion of pre-existing conditions”. Once again, we paid for all of it and we didn’t declare bankruptcy; we just burned through all our savings and maxed out our credit cards. I have also, just last year, experienced our health insurance being changed, not by our choice, *four* times in one year, including the final two months during which we were trying to acquire private health insurance after my husband was laid off and the health insurance company in question used delaying tactics and actual lies to try to push us over the 63-day limit into “the exclusion of pre-existing conditions”. Yeah, they’re *not* nice people. Fortunately, my husband found a new job and our coverage by yet a fifth health insurance company began 1 day under the limit. I have also experienced malpractice, several times, for none of which I sued. In fairness (and real gratitude), I have also had my life saved several times.

    Maybe my experience is unusual, but I think maybe not. From that experience, the best changes I would like to see are: no health insurance companies (no middlemen, I suppose); better-trained doctors — most of them are not actually very good; many, many, *many* more doctors, so that each doctor has only a few patients, and each visit lasts a long time and approaches the widely-disseminated and completely-unrealized ideal of the doctor genuinely helping you to manage your health; therefore, very different, much less expensive, much more practical medical training; probably a separation between doctors who practice in hospitals and doctors who practice in offices, with completely different training; a separation between doctors and pharmacists, so that doctors no longer prescribe medication, but only people with real training in the use of drugs (which is *not* doctors) are allowed to prescribe; and computerization of medical records, with also, doctors required to *know*, backwards and forwards, the *complete* records of *every* patient they see. And I would like to see the social status of doctors drop to something more realistic, something like that of car mechanics. Unless, of course, they get a *lot* better at what they do.

  11. I have a friend who is a healthcare Case Manager for CIGNA. Her job is to see that patients who have been hospitalized receive, upon discharge, all the information and guidance they need to recover and stay out of the hospital in the future. It’s really a cost saving function. She works at home on a computer and with secure software provided by CIGNA. Because she works at home, the amount of work she must do and the hours she must spend, are invisible to her employer. She is an excellent nurse and very good at personal interactions, but a poor typist and ad hoc computer user. She worries very much about losing her job and spends 10 hours plus per day and considerable time over the weekends.

    Here’s my point: CIGNA, like most corporations is oriented toward the short-term bottom line. They will not make provision of an adequate supply of Case Managers a priority, even though this function tends to save money in the long-term. It is key to them to show their customers they have this service in order to keep their accounts and gain new ones. It is not important to them to robustly fulfill the obligations inherent in this service. Their customers are the employers and not the patients. It would seem that government involvement, rather than providing or subsidizing healthcare directly, might be effective in taking over Case Management functions.

  12. Not sure what the answer to the healthcare problem is. I am sure from a humanitarian and economic standpoint we can no longer continue with our present system.

    For those who worry about taxes going up if we change how healthcare is covered, consider this: When you have a large percentage of a talented, entrepreneurial population tied to an employment lifestyle they can’t leave, just because they need benefits, it’s the best way to squash a nation’s creativity.

    I predict that when healthcare is affordable and available to all, this country will see an explosion of entrepreneurship and innovation the likes of which we haven’t experienced since the industrial revolution. And since small business employ the bulk of workers in the US, the operative phrases are “new tax base,” “expanding economy,” and “job creation!”

    I have friends and colleagues who live in Canada and are very happy with the system there (and some have had life-threatening illnesses). I have friends who work for doctor’s offices here in the US and bemoan how insurance companies regularly deny every submissions expenses, hoping – it seems- that no one will bother resubmitting. Also, I’m tired of the US lagging behind all the industrialized countries in terms of infant mortality rates. Sheesh, we’re the richest country in the world and we can’t keep our babies healthy. It’s just wrong, and a big symptom of a broken system.

    So, yes, I’m for finding new solutions, even if they are not perfect. Thanks for the post, Jason!

  13. Awesome comments y’all. Thanks for the discussion. I wanted to pull two things out of Deb’s comment:

    >> When you have a large percentage of a talented, entrepreneurial population tied to an employment lifestyle they can’t leave, just because they need benefits,

    I remember in my first “real” job, I made about $10.50 an hour. I was a clerk at the FBI. Benefits were great, including really nice vacation and sick leave.

    Just about everyone in that position was TRAPPED. TRAPPED! Many I worked with (who made more than I did (not hard to do)) could not go anywhere in that small Idaho town and make what they made at the FBI and have all the perks… health insurance, lots of vacation, etc. WE WERE TRAPPED.

    I see it every day… a friend of mine is bored out of his mind, TRAPPED in a job that offers him perks he can’t get anywhere else (because he has been there for so long). Would love to leave but can’t give up the perks.

    This is the “employment lifestyle” you are referring to…

    >> it’s the best way to squash a nation’s creativity.

    This is sad. It’s demoralizing. And it’s true… you and I have talked about this before… what if there were health insurance option that were appropriate right now… how many of the formerly trapped people would finally go do their own thing?

    I’m guessing this is the single thing that is keeping so many great minds from moving forward. It’s scary, of course, doing your own thing… but imagine what kind of creativity we would have in this world if we weren’t all so TRAPPED…. !

  14. Deb and Jason make a good point about being TRAPPED – but the solution is NOT a big, gov’t provided health care system.

    I have family in Canada, and they are terrified of getting sick with something more complicated than a cold – there IS rationing of health care under their system, and the elderly, disabled, and fragile members of a society will inevitably be considered “burdens” on their system. Just wait until the Baby Boomers hit peak retirement…as they age and require more and more expensive treatment, a total gov’t provided system won’t be able to afford all the treatment that seniors get today – voila, rationing! If it’s YOUR elderly parents or premature baby…tough luck.

    As for Helen’s comment about how a consumer-driven health care system would *actually* work, it would *actually* work the same way we reasonably normal, reasonably well-educated, reasonably intelligent individuals manage to purchase goods and services every single day.

    Somehow we seem capable of making a $20-30,000 dollar purchase every couple of years (cars), a $150,000 – $500,000 purchase every decade or so (housing, price depending on where you live), and daily purchasing decisions that add up to $10,000 – $100,000 in expenses every year (household purchases of groceries, utilities, good and services).

    Since the vast majority of health care decisions and purchases are NOT made under emergency conditions, consumers would research various providers and options before making their health are purchases. The force of so many consumers calling, asking, and eventually purchasing will inevitably drive quality up and expenses down.

    It has happened in EVERY other industry; why on earth wouldn’t it work for health care?

    If enough consumers voted with their dollars to use providers that use electronic medical records…well, amazingly enough there will be a surge in medical providers who adopt such systems (with all the expense and disruption that is caused – same as in any other industry).

    If you want better health care providers, you let people choose who they will use – and their choices may be based on skill, personality, environment, years of experience, etc. They “vote” with their dollars to use the providers that best meet their individual needs.

    Let me be clear – business can still offer health care benefits, but they should just drop the cash they’d spend on insurance, into a health care saving account that the employee uses to purchase a wide assortment of medical and dental benefits. They are spending all that money on essentially individual policies ($300, $500, $700 per month, per employee)…let it go to the employee directly and have the employee purchase health care on their own.

    Employees can save it, or spend it on health care services as they see fit. Every year money that’s not spent can roll over and be part of a larger pool of savings that is used when medical/dental expenses hit a speed bump of expense.

    If you insist on government-funded health care, then have the gov’t drop $3,000 dollars per person, per year into health care saving accounts to pay for all but emergency or elaborate (cancer, debilitating diseases) care. Again, that money rolls over every year – an incentive to make BOTH good preventative decisions and good purchasing decisions (‘ya want more money in the account? Make better health choices).

    Allow individuals (and families), self-employed, etc. to save additional amounts in personal accounts (again, keep the roll overs every year) and tax deduct the amounts they save.

    In any scenario, put the funds on a debit card, and create restrictions that the money can only be used for health care expenses.

    Catastrophic care (emergencies, cancer, etc) can be covered with insurance – which would likely be much less expensive since the overall cost of health care would decline with the innovations driven by consumer purchasing of less serious care. Consumers should still be involved in purchasing the catastrophic policies on their own, to again drive innovation and lower prices in that arena.

    I know we are all so enamored of more socialistic policies with the ascendancy of The One (President Obama), but there is NOTHING in history to suggest that democratic/liberal policies lead to less expense or greater efficiency in any industry they touch.

    Jason – you worked in the FBI…anyone there strike you as vastly superior in knowledge, education, drive, innovation or compassion that the hundreds/thousands of individual job seekers/entrepreneurs you’ve come in contact with in the years since?

    Nope – didn’t think so. I’ve worked in, around and near government…and the idea that gov’t employees are somehow superior to average, ordinary citizens is ludicrous! They ARE hard-working, dedicated, color-within-the-lines kinda folks. People drawn to gov’t service aren’t usually doing it for the innovation and creativity they can bring to their workplaces. They keep their heads down, write the rules, and then follow the rules. They typically value steadiness, stability and security.

    There is NOTHING out there to suggest that they are any smarter, capable or dedicated than I am. There is NOTHING out there to suggest that they should be trusted with making health care decisions for me or mine. NOTHING. Why on earth would you entrust your most sensitive information, and literally life-changing decisions about the health care of your family, to a bunch of gov’t bureaucrats??? Crazy, crazy, crazy.

    Talk about releasing an explosion of creativity and innovation in health care? Consumer-driven care would do it, not gov’t provided.

    I haven’t even touched the issue of paying for all this gov’t gravy, or the taxes it will require. Entrepreneurs already pay close to 50% of their income in taxes…and now you want more? Sorry – no society has ever taxed its way into prosperity. None.

    Higher taxes drive down innovation, creativity and entrepreneurial activity. California is a real bellweather here – watch and see what happens over the next 12 months. Their ballot initiatives to raise taxes in the next couple of months will fail miserably. Their budget is unsustainable – they need to encourage economic activity…not punish it through higher taxes. I’m generally against higher taxes because they DON’T WORK to improve the overall quality of life for a community/country – they reduce it.

    You either believe in human nature as essentially self-interested (see: Adam Smith, see: Bible), where humans make decisions that benefit themselves (and then by extension, benefit the entire community (see: Adam Smith)…or you believe that humans are some form of enlightened or pre-enlightened creature (see: Thomas Jefferson, and every New Age guru out there) dedicated to living the most enlightened, selfless life imaginable.

    Which kind of human do you see in your neighborhood?

  15. I am fortunate that even with my current layoff I still have insurance through my husband. I have been consulting on a project that exposed me to the high cost of health insurance and the negative impact it has when a family or individual cannot afford insurance coverage. They put off preventive care or seeing a physician when they are not feeling well. By the time a serious problems arises, the cost is higher; the person is sicker than they would have been if they originally had visited the doctor; any many times the person ends up in the emergency room.

    With the said, I have been working on with a company that recently launched a health discount program. While not insurance, this type of insurance does provide discounts on prescriptions, doctor and dentist visits. I know that these types of plans are not the long-term solution but at least they help those without any insurance or those underinsured. Please visit and provide your thoughts/feedback if you think consumers would be interested in this product.

  16. I have worked and had health insurance all my life. 18 months ago, due to the recession, I was laid off from my job. at the end of this month, my Cobra runs out. I have tried to get insurance, about $1,000 per month premium with rediculous deductables and co-pays. Guess what? I am considered uninsurable due to pre-existing condiions.
    I can go on state HIPPA plan, with about a 70% increase over the $1,000 premiun. I am too young for Medicare and am considered too middle class for Medicaid. I think it rediculous that as all the politicians call us, “the Greatest Country in the world”, that we will let our Citizens be put in such dire straits. While we spend almost $700 billion on defense and being the policemen of the world, the countries we use our militaty to protect, provide free health care for all their citizens.
    Of all the things I see hundreds of thousands at the Washington Mall rallies…..why are the uninsured or under-insured? We need to be there also

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