Health Insurance by the Numbers

Numbers

I want to look at health insurance in one more way. I want to look at it by the numbers because the insurance industry is all about numbers. We know that before anyone offers to insure something the industry takes a look at the risk/s involved. The variables must be named; how many years does a person live in the case of life insurance, but this one is simple and there are actuarial tables for this. Vehicle accident insurance risks are more complicated to calculate and require constant readjustments; how many accidents per year, how many accidents that total vehicles, how many injuries, how much loss of life, how big is the pool of drivers, etc., how much money will be paid out in insurance per year per market, how much money must be charged to make a profit. Drivers are required to buy car insurance if they own a car. Isn’t this an individual mandate?

The risks in health insurance are extremely difficult and calculation cannot be expressed in a single table, at least until many factors are examined first. Insurance companies almost certainly have access to the total health care costs by region. They probably know what treatments cost on average by region and condition being treated. These figures are unlikely to hold true for more than a year or two, so I’m sure insurance companies hire people to keep track of this information and chart it, convert it to tables, make spread sheets about it, design power point presentations, and whatever else is state of the art for summarizing data. They must be able to predict costs accurately enough to keep stockholders and employees happy with their profits.

Risk Management

We understand that in order to take in a high risk insured with a serious or chronic condition there will need to be a number (I don’t know the number) of healthy people among the insured, people who make demands on the insurer that are quite small. If someone lives in a rural or poor state (there are six states in America that have no millionaires) it is difficult for insurance companies to cover them unless they are national in scope and covering areas with huge populations to offset the losses they will probably see in lightly populated areas. Doctors in rural areas are harder to find as are hospitals, forcing people in insurance plans to travel for care. This makes it less likely that healthy people (who are needed for balance) will buy any insurance at all thus lowering the number of clients even further.

Modification Offered to Reduce Risks

When a public program like Medicaid picks up the poorest and sickest folks and pays for their medical care (although they don’t pay doctors and hospitals well) then it should be possible for insurers to cover the rest. But shareholders are relatively brutal when it comes to showing profits so insurance companies are still unhappy to operate in certain markets. Even when a subsidy was offered insurers wanted guarantees that large numbers of healthy people would enroll. The individual mandate was supposed to take care of this but it was demonized in the exact areas where it would have helped enrollees the most.

So any private health care plan must deal with the issues of risks, which in the case of health care involves lots of variables, some far less predictable than others. Unpredictability is not a trait the insurance industry will ever like. Cutting profit is not acceptable in private markets especially when there are stockholders.

Why didn’t the ACA Work

Although Obama was able to put together a plan that offered fewer risks for insurance companies it all had to work in concert. Taking away aspects of the plan changed those risk factors that had been nailed down in negotiations and left the plan spinning out in some areas of the country while doing well in other areas. The plan did not control prescription costs and that made it very difficult for many people who needed expensive, non-covered medications. Once things started to slide, insurance companies felt released from agreements that they had made to hold the line on prices.

And, while Obama thought that people would be able to keep their doctors and promised the public that this was so; it ended up being false. When I see my Explanation of Benefits printouts and I see what my doctor charged and what my doctor was actually paid, what I have to conclude is that our doctors are not being overpaid. And perhaps the doctor deliberately overcharges so that they will recoup more money but perhaps the insurance companies also underpay because they have already taken overages into account. No matter, I’m guessing that many doctors with expensive and thriving practices were not amenable to the cuts in payment that were required if they stayed in the marketplace.

Married to Capitalism

Even more than other Americans, Republicans fell in love with and made an exclusive marriage with Capitalism, in sickness and in health ‘til death do us part. The only problem is the deaths right now will be ours. The health insurance industry knows who is in charge of this administration and perhaps contributed big money to put them there. They are unlikely to be willing to negotiate on health insurance at all given the current favorable climate in Congress. Most likely we are screwed.

Private health insurance is not sustainable because the risks cannot be managed for all levels of care. The kinds of cobbled-together public/private health care plans designed by the Obama administration and this Trump administration are like Rube Goldberg contraptions with many moving parts and there are certain points where if a break occurs the whole mechanism must be reworked. But we will not let the private health insurance industry fail, even if they cannot meet the needs of consumers, because private is good and public is bad. So although I know this is America, and I know we don’t do socialism, I think we should give serious consideration to a single-payer system.

Think it through. We already give our tax dollars to the federal government in order to live in a well-ordered society. If the people decide that they would like to spend their money on a single-payer health care system that would not be socialism; that would be democracy in action. I’m thinking that the richest Americans will never go along with such a solution. They would have to wait in line for care like everyone else or make a privately insured system of their own. If affluent Americans left the single-payer system would there be enough money left in the system to insure everyone else or would the system be doomed by bad risk factors?

Why can’t we even look deeply at this single-payer option which has worked well in other democracies? If anyone is able to come up with a really workable system regardless of whether it was private, a hybrid, or public and if that system would keep this issued settled even for one decade wouldn’t it be well worth the effort? However, given the complexities of the variables involved in health care I do not see a private health insurance company ever being willing to make a plan that doesn’t stick it to both patients and health care providers. And as long as ideology reigns over practicality we are also doomed to a less than sensible health care system and thousands of people could die.