Health Insurance Bizarro Economics

Some things snark themselves

The nation’s major health insurers are barreling into a third year of record profits, enriched in recent months by a lingering recessionary mind-set among Americans who are postponing or forgoing medical care. …

… Yet the companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends. Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care.

I don’t think the skin-in-the-game theory takes insurance company price gouging into account.

“I am noticing my patients with insurance are more interested in costs,” said Dr. Jim King, a family practice physician in rural Tennessee. “Gas prices are going up, food prices are going up. They are deciding to put some of their health care off.” A patient might decide not to drive the 50 miles necessary to see a specialist because of the cost of gas, he said. …

… For someone like Shannon Hardin of California, whose hours at a grocery store have been erratic, there is simply no spare cash to see the doctor when she isn’t feeling well or to get the $350 dental crowns she has been putting off since last year. Even with insurance, she said, “I can’t afford to use it.” Delaying care could keep utilization rates for insurers low through the rest of the year, according to Charles Boorady, an analyst for Credit Suisse. “The big question is whether it is going to stay weak or bounce back,” he said. “Nobody knows.

The article goes on to say that people with employee benefit insurance are paying higher premiums and co-pays, and an increasing number have deductibles of $2,000 or more.

First — obviously, more “skin in the game,” or making people pay more money for their health care, does result in people passing up medical treatments they don’t need. However, it also results in their passing up medical treatments they do need.

16 thoughts on “Health Insurance Bizarro Economics

  1. And as a result of “passing up medical treatments they do need”, patients get even sicker, and their medical costs eventually go UP. Gee. EXACTLY like those wise old insurance companies predicted would happen. Hmm. Which proves they were right all along and we should believe their predictions. Or. The patients simply die. Either way. Who wins?

  2. The entire health-care fracas is ridiculous – and one would think a proper free-marketeer could pick up on its ridiculousness. We’re 37th in the world in the quality of our health care and it costs us twice as much as it costs the rest of the world.

    Any free-market nut case would agree that a corporation selling a widget that was 37 times inferior to the same widget on sale elsewhere, and charging twice as much for it, should/would go out of business. So, why is the health-insurance business still in business? Beats me.

  3. For our Health Profiteering Corporations, their motto is:
    “Your pain is our gain!”

    So, they need double digit increases because when the economy improves they need a reserve because there’ll be an uptick in demand.
    And, wanna bet when there’s a real uptick in demand, they’ll demand more double digit increases?
    This is why we needed/need ‘Medicare for All.’

    I haven’t had health coverage in 30 months.
    And I’ve had several teeth waiting for bridges for 3+ years, because when I had dental coverage, it was so shitty, and good dental care is so expensive, that I couldn’t do more than a procedure a year – and our dental policy was one of the best – what a joke!

    I suspect that there’s several things that are several things that may be undetected because I can’t go to a doctor except to pay one $75 for a visit every 6-9 months to renew my blood pressure medication.
    I fully expect that my life, and many others, will be much, much shorter than my parents and grandparents, who had better and cheaper coverage.

  4. Oops, I hit ‘submit’ accidentally and didn’t get a chance to proof what I wrote. But, I think you’ll get it.

    I also wanted to add that over the past 30 years, as far as our health care coverage is concerned, we’ve gone from a majority of people covered with Cadillac/Buick plans at Model T prices, to less people covered, and those who do have coverage have Model T plans that cost as much as Ferrari’s.

    Progress – USA! USA!! USA!!!

  5. Personally I’ve made some decisions to defer care – I have apnea, sleep specialist MD recommended I do a follow up sleep study to titrate settings for a new CPAP machine. I opted to postpone both the study and new machine until 2012. When I started work I enrolled in a Health Care Spending Account, and I underestimated my out of pocket costs, it’s depleted after just 3 months. Come January I’ll have a new HCSA to draw from and will be following up. Doctor and I talked for a bit about the risk involved and felt it was minimal.

    I didn’t defer physical therapy nor testing my family history dictates even though I’ll be paying copays/deductible with taxed income.

  6. I am one of those facing a double digit increase (15%) next month. I’m self employed and am grandfathered into a pre-Obama plan that’s closed to new customers (I hate that word in connection with health care), and so they’re giving me the choice to move into any other plan, without going through underwriting, however premium or any future increases are unknown. As my brother put it: “I’d gladly pay a few thousand dollars extra in my taxes to not have to worry about this”. But this is America, and we can’t have that here.

    In other news, I’m pleased to report that the California delegation to Congress has been busy. I got an email from Barbara Boxer soliciting citizen co-sponsers of her her bill to get us out of Afghanistan:

    …That is why I support President Obama’s plan to begin withdrawing American combat forces from Afghanistan this July, and why I have authored legislation requiring an end date for that effort.

    …Please stand with my friends at Democracy for America, many of my Senate colleagues, and me by becoming a citizen co-sponsor right now.

    You can read about the bill and co-sponsor here. There is a great article on Alternet comparing how things have devolved in this country, to the point where they parallel the times of monarchs in 17th and 18th century Europe who declared various wars on their neighbors, drawing down the country’s wealth and peasantry. This is why the Founders insisted on wars being initiated by a declaration of Congress, something that’s slipped away over the years.

    Finally, Nancy Pelosi is giving the Republicans a bit of traveling music, as they face angry constituents at home, who are not thrilled about their anti-Robin Hood acts:

    …As you go home to face the music of your vote to end Medicare as we know it, we know you’re worried about what your constituents are going to say…for good reason. Here is a suggested playlist for your trip:

    Think – Aretha Franklin (1968)

    Desperado – Eagles (1982)

    Sorry Seems to Be the Hardest Word – Elton John (1976)

    Hard to Say I’m Sorry – Chicago (1982)

    I’m Sorry, So Sorry – Brenda Lee (1960)

    You Can’t Always Get What You Want – Rolling Stones (1969)

    You Got Another Thing Coming – Judas Priest (1982)

    Mama Said – The Shirelles (1961)

    Sorry (I Ran All the Way Home) – The Impalas (1959)

    Cryin’ – Aerosmith (1993)

    Who’s Sorry Now? – Connie Francis (1958)

    Lost Cause – Beck (2002)

    I Learned the Hard Way – Sharon Jones and the Dap-Kings (2010)

    Not Ready To Make Nice – Dixie Chicks (2006)

    Bad Day – Daniel Powter (2005)

    Troubles – Alicia Keys (2001)

    When the music stops, you should try listening to the American people.

  7. Who came up with the skin in the game theory ? Wouldn’t take it, or leave it be a more accurate description in dealing with medical costs? Maybe you can whittle down the cost of a drug by asking for a generic substitute, but other than that, there’s no way to reduce costs. Sure, you can refuse your doctor’s advice and not get tests they recommend to diagnose what condition they might be dealing with, but that kinda defeats the point of going to a doctor.

    • that kinda defeats the point of going to a doctor.

      The person receiving medical care most of the time is not the person who “shops” for it. Generally patients make no choices but to accept whatever care the doctor and the insurance company says they should, and may, have. Sometimes you have a choice between getting your mammogram done at clinic A or clinic B, but usually in managed care plans, within the same geographic area there’s probably not going to be a significant difference, if any difference, between what mammogram providers bill for mammograms.

      The article mentions people asking for generic drugs instead of the “brand” drug, but these days a lot of the managed care plans won’t pay for a brand name drug if there’s a generic available. It’s the insurer doing the “shopping,” in other words. My current insurer won’t even pay for most of the cost of brand name drugs even when there isn’t a generic available. I stopped taking Lipitor against my doctor’s advice because I couldn’t afford it, so he substituted a generic drug that he says is sorta kinda similar.

  8. Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care.

    These are the very same people that argued we had to give all that surplus money back to the rich people instead of paying down our debt or saving it for a rainy day.

    “Snarks itself” indeed!

  9. There is a minor piece of good news in the offing-Lipitor and some of the other expensive drugs out there are going off patent in the next year or two, so I hope your insurer will agree to cover it, Maha. Personally, I think single payer is the best way to go, but we are never going to dump the for-profit insurers as they won’t voluntarily commit to their own demise. Another much-needed improvement would be to remove the insurance industry’s antitrust exemption.

  10. I think sometimes I hear people trying to let doctors off the hook regarding our health care crisis. However, I have encountered doctors who had three homes, a car for every person in his family, travel all the time, and other amenities most of us regular Joes and Janes don’t have. They seem to believe that the patients owe them all these perks because of all the time and money it takes to become doctor. Now, I know this isn’t every doctor; but, I believe it is the attitude of at least 75 percent of the American doctors. Well, I didn’t make any one become a doctor; that was the choice of the particular person. While the insurance companies are the really, really bad guys, there are many doctors, surgeons, pharmacists, etc., who could help make changes but they don’t want to “rock the boat.” Additionally, these rich doctors treat nurses like dirt despite in any hospital experience I have ever had, it was the nurses who knew my name and helped me through the worst of the experience. I also have friends who are nurses who know this treatment first hand. I do not go to the doctor unless I am at death’s door. I believe I would still be that way under single payer; but, would like the opportunity to find out. A. When I do feel bad, I figure I can do more for myself by staying in bed instead of in the waiting room for 4-6 hours and B. a cup of tea and bed rest costs a whole lot less than anything my doctor is going to prescribe. Thus, the money I save I can use to pay a dentist outrages sums of money to fix my rotten teeth, which more often than not has been the cause of many an illness. When I was on the east coast, a 10-year old boy died because of an infected tooth and his mother could not afford to take him to the dentist. When he was taken to the ER, the doctors never thought to look dental problems as the cause of his illnesss. Thus, healthcare needs to include dentists, too–not just doctors, hospitals, medications. Most Americans never go to a dentist because of all “the skin in the game” we have. In the Seattle area, Boeing had good health care and dental care; but, few employers ever offer dental care. Even as a retired Federl Government employee, my health care never covered dental. I supplemented my health care through my Union, which offered a dental plan that was better than nothing. Add all these problems to our present day, lousy education system, the future for America is people with poor educations and poor health except for the one percent of the richest in America. This is hardly what the Founding Fathers had in mind when they wrote the U.S. Constitution. Sorry to be so wordy today.

    • Bonnie — be as wordy as you like. It’s not a problem.

      I have a very user-friendly primary care physician who is not full of himself and who never makes me wait long in the waiting room, and I consider myself lucky. Over the years I’ve gone to some who were real jerks.

  11. Bonnie, I’m the long-winded one. And don’t you forget it!!! 🙂
    Look, I’ll prove it! (AGAIN!)

    Dental care is another 800 pound gorilla in the health care room that no one ever talks about. Dental care costs a fortune, and even the best coverage is limited to a few thousand dollars a year – at best. Not much if you need a root canal, a crown, or a bridge. I had to take out a loan against my 401K and another loan with some dental loan outfit my Dentist had available, with over 20% interest, to finance a $6,500 bridge almost 6 years ago because my coverage didn’t pay nearly the whole thing and I didn’t have the cash on hand – no wonder, I never paid more than that for A CAR until I bought a new one in 2000!
    My teeth are, and always have been bad, despite brushing, flossing, gargling, etc. I was born right about the time that flouride was put in the water, my sister well after. My father who is 85 has good teeth, my mother who’s 70 has full dentures. So, in my case, it may be lack of flouride early, or genetics.
    But bad teeth lead to bad health. There are certain foods that my mother can’t comfortably eat – the same with me. I have a tough time chewing certain things, so sometimes I have difificulty digesting meals and have to take baking powder or an antacid.
    They have done studies around the world, and dental problems lead to shortened life spans for a variety of reasons – that child who died is the extreme example. But problems chewing leads people to eat over-cooked foods, or softer foods. So, rather than looking for nutrition, people look for what they can chew to fill themselves up.
    I’ve never heard of a single article, let alone book, that deals with the greatest ripoff of them all, in my opinion – modern dentistry.
    Compared to the best dental plans, the worst health care plans are like the ones our Congresspeople get.
    And no one says a word.
    No one complains.
    We just grin and bear it, say, “AH,” and rinse and spit. Next time, we need to spit in the Dentists eye.
    Dental care is NOT a part of Medicare, and it should be. Dental care is NOT a part of Medicaid, and it should be.
    You want to boost life expectancy? Provide single payer dental care for everyone. I really believe it is the one simple thing that we can do to extend people lifespans. Good nutrition beats a lot of other factors. And with bad, or no, teeth, it’s almost not possible – blenders, not withstanding. But who want to eat some fresh salmon blended with freshly sauteed veggies, whole grains, and fruit. YUCK!

  12. Gulag is right. Insurance companies decided that dental care was not a part of health care. Insurers separated treatments into categories for easier accounting. Providers need a huge office staff to deal with Insurers. Corporate hogs have created the mess we all struggle to live with.

    I could outramble anyone on this topic, but will add this to his last paragraph. Don’t smoke if you want to keep your teeth in their gums.

  13. The other thing about “shopping” to keep costs down. Going to the doctor is not the same as buying a pair of shoes. Nor is it anything like buying groceries. Grocery stores put ads in the paper and other places where people can compare prices without the legwork of just going store to store. Also, you can find a mall with 10 to 15 different shoe stores and try on all the shoes you want without cost, spending mostly your time. How to select the right doctor often has nothing to with cost. You select a doctor who will deal with you in the manner you think is appropriate. Consequently, it’s really quite a ridiculous way of looking at health care once you stop to think about it.

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