How "Healthcare" Screws You

 Orren Cass is a thinker.  In this essay, he writes a history of health insurance and proposes to tell us--later--about how to fix the system.  We're not convinced he is right about all his contentions, but here are a few excerpts of interest.

...Health care is mostly something we use if there is a problem with our health, and health care insurance is really something we should only need in the very rare case where a catastrophic event requires health care far in excess of a typical year’s consumption. The Affordable Care Act’s health care insurance subsidies, then, should be something of an oxymoron. What kind of insurance product has a baseline premium, meaning the amount you pay when you don’t have a catastrophic event, that itself represents a catastrophic cost necessitating government assistance?

A subsidy might make sense as an element of the safety net for low-income households, but the current debate is over expanded health care insurance subsidies for the middle class and beyond. The basic insurance product has reached a price where politicians feel they must help even households with incomes more than four times the poverty line in order to deliver the holy grail of universal coverage. Meantime, access to actual health care is generally in decline and Americans are generally in lousy health....

Yes, so far.

...[The patient] in the eyes of the system [is] not so much a patient as a junk bond. His stream of future cash flows is unpredictable, as a standalone asset he is uninvestable. But securitize him in a sufficiently deep pool of assets with uncorrelated risk and voila, he is sound as the pound. This was how the Blue Cross system began, using large employers to create insurable risk pools. Exempted from World War II wage controls and income taxation, corporations poured resources into health insurance coverage not because it was anyone’s preferred compensation, but as a form of financial engineering. As health care costs exploded, each insurer negotiated rates with select providers and covered access only to them....

Not so sure that his comments on the emergence and popularity of Blue Cross/Blue Shield are accurate; health insurance was very popular, at least in the '60's/'70's.  But yes, the system did "progress" to HMO's, which were very UN-popular. 

A couple of things were important in the following decade(s):  very expensive health-care technology and drugs, and the growing population of high-cost health consumers such as the aged, plus non-aged but expensive.  

  ...In 2019, the costliest 5% of patients accounted for half of all health expenditures. The costliest 20% of patients accounted for more than 80%. Put another way, the cost to provide care to each member of the bottom 95% of the population is half the cost of providing care to everyone. If insurance coverage for the entire population costs $10,000 per person per year, insurance coverage for a pool that included only the least expensive 80% of the population would cost just $2,000 per person per year....

That's a helluva gap.

... Common sense would suggest that, in such circumstances, funding the care for those uninsurable risks would become the responsibility of a public program. But the nation’s center-left and center-right were both determined to prove that they were pro-market, and that markets could solve the problem, so they advanced instead the idea of an “individual mandate,” a brainchild of the Heritage Foundation, that would force everyone to buy the same insurance, priced at similar rates. Asking healthy Americans to pay higher taxes to provide care to unhealthy Americans was outrageous, big-government overreach. Telling healthy Americans they had to pay the same amount of extra cash to an insurance company to cover the cost of providing the same care to the same unhealthy Americans was a “market-based solution.”...

First off:  "common sense" and "Government" have NOTHING in common.

Secondly:  The Heritage Foundation 'thinker' who came up with that should join Fauci in the Medical Hall of Shame.  But that "Heritage" stamp is why Paul Ryan would not bust ObamaCare; Paul was a property of Heritage--or at least had to follow their lead.  See above:  Ryan was "Government" so "common sense" was not present in him.

Besides:  both hospitals and insurers LOVED ObamaCare--at the beginning.  Now, only the insurers love it, as hospitals have found that the loving embrace of healthcare is strangling them.  Just desserts, but having no hospitals is ..........  not an option, either.

In Cass' telling, all this descended into lunacy, with the cooperation of the Democrats.

...To prove its market bona fides in the ACA debate, the Democratic Party ultimately rejected even the idea of a “public option” insurer run by the government. The taxes disguised as premiums could go only to private companies. The Republican Party, determined to be more pro-market, proposed simply relaxing the various regulations and reducing the funding, as if this would somehow allow the artificially constructed market to work better rather than just falling apart. Everyone supported various permutations on tax-advantaged accounts, in hopes that yet another financial product could further buttress a sense of agency while addressing no element of any underlying challenge. ...

What Cass is apparently heading toward is this:  find the 20% who are ultra-expensive.  Put them on Gummint programs of some sort.  Put the other 80% on a "loss-limit" plan.  Taking his figures, a family of four could spend $8K/year on healthcare (MD, RX, Dental) and after that, their insurance plan kicks in for the rest of the year.  Real insurance, not Gummint moneys. 

He may have a better plan; you can follow it at his substack.