Healthcare 2
I was just reading that Aetna was pulling out of the ACA exchanges in all states. I suspect this is because they are not making enough money on operations so it's a bad business deal. Well, health care is a bad business deal for them because it doesn't really lend itself to the insurance model- period; and it never will.
Insurance is based on statistics. Specifically the statistic that the big payouts are at least 3 sigma off the mean population (if you don't know what I'm talking about, you need to study up on large, normal, population distributions). In a normal distrubution, which large populations tend to gravitate toward- a small percentage on the low end of the curve never get sick at all and at the top is the small percentage that is sick all the time (in the case of health care, a large part of the sickest are "known" and no probablistic...we refer to them as "pre-existing" conditions). The largest part of the population is between those two extremes. Socio economic class works similarly in the US with the poorest of the poor at the bottom, and the richest of the richest at the top with a very large middle class. This rant isn't about population changes so I'm assuming, for now, that we are all normally distributed.
The perfect world of insurance has those that never or rarely making a claim, in essence, subsidizing those that are misfortunate enough to need the help and, on average, rates for everyone could be the same. But, insurance companies are allowed to "game the system" by fixing the populations. In the auto insurance industry, you are part of the big pool right up until your aren't. They you are put in another pool where they can charge you more money or eliminate you entirely from their population. Modern information systems see to it that you carry this information along with you even if you need to switch carriers. So what does this have to do with healthcare?
First, healthcare is only partly catestrophic. Most of it is routine and therefore doesn't lend itself to a catastrophic insurance model. Second, you can't put the "bad drivers" back into the pool without the "good drivers" subsidizing them. This is the "pre-existing conditions" pool that republicans are fond of talking about. A human, unlike a car, with a pre-existing condition is unlikely to manifest ever as part of the normal (middle class in my example) distribution with time, whereas, if the car business one accident does not mean you will have a second and eventually you become part of the normal distribution again. Also, not that your car insurance doesn't cover oil changes, brake replacements and the like. I healthcare, the equivalent procedures have to be done for a variety of reasons which I would hope are obvious, but yet the ARE part of your healthcare insurance. This is, in part, why healthcare doesn't lend itself well to the insurance model.
Now consider that some health related services keep you from (or delaying) catestrophic health events. In the driver world, they make you go to defensive driving school in hopes that you don't have another accident or get another ticket. The equivalent in healthcare is preventive medicine. In the current scheme, most insurance cover a very small amount of preventative health care. In my opinion, they cover just enough to get you into the system so they can keep track of you and to keep you going to the doctor's so as to improve their overall income...the more people go to the doctor for routine non-costly visits, the more co-pays and the more of the deductable goes to the insurance companies. On the flip side, they might find something seriously wrong too. While this might cause a major outlay, I'm betting that it's still less expensive than treating a pro-longed condition when it is finally diagnosed down the line (and sure there are probably exceptions). As long as the entire population pays into the pool (healthy and sick alike), there should be no issues providing all needed services.
This is where the big rub comes in. The ACA addressed the "pool" problem by doing the following: Young and old, sick and healthy all had to pay into the system in some way. Further, they expanded Medicare (known in the US as the most efficient health care system available) to cover more people, in effect, adding tax dollars into the pool for those that cannot afford them. Presumably, Medicaid would pick up the rest. The republican version of the ACA...eliminates nearly everything above. Only two things can happen: Only really wealthy people will have any kind of insurance or; we'll go back to the way it was before where only corporations will provide health coverage. The problem with the latter is that they (companies) are already shedding this expense so, unless something happens, we're going to end up with only wealthy people having guaranteed health care. Emergency rooms will be back in vogue and care will be even more expensive not to mention that people will die. It will be that drastic.
Editorial note 2022. I just realized I never hit the publish button so I did to complete the record....sorry!
Insurance is based on statistics. Specifically the statistic that the big payouts are at least 3 sigma off the mean population (if you don't know what I'm talking about, you need to study up on large, normal, population distributions). In a normal distrubution, which large populations tend to gravitate toward- a small percentage on the low end of the curve never get sick at all and at the top is the small percentage that is sick all the time (in the case of health care, a large part of the sickest are "known" and no probablistic...we refer to them as "pre-existing" conditions). The largest part of the population is between those two extremes. Socio economic class works similarly in the US with the poorest of the poor at the bottom, and the richest of the richest at the top with a very large middle class. This rant isn't about population changes so I'm assuming, for now, that we are all normally distributed.
The perfect world of insurance has those that never or rarely making a claim, in essence, subsidizing those that are misfortunate enough to need the help and, on average, rates for everyone could be the same. But, insurance companies are allowed to "game the system" by fixing the populations. In the auto insurance industry, you are part of the big pool right up until your aren't. They you are put in another pool where they can charge you more money or eliminate you entirely from their population. Modern information systems see to it that you carry this information along with you even if you need to switch carriers. So what does this have to do with healthcare?
First, healthcare is only partly catestrophic. Most of it is routine and therefore doesn't lend itself to a catastrophic insurance model. Second, you can't put the "bad drivers" back into the pool without the "good drivers" subsidizing them. This is the "pre-existing conditions" pool that republicans are fond of talking about. A human, unlike a car, with a pre-existing condition is unlikely to manifest ever as part of the normal (middle class in my example) distribution with time, whereas, if the car business one accident does not mean you will have a second and eventually you become part of the normal distribution again. Also, not that your car insurance doesn't cover oil changes, brake replacements and the like. I healthcare, the equivalent procedures have to be done for a variety of reasons which I would hope are obvious, but yet the ARE part of your healthcare insurance. This is, in part, why healthcare doesn't lend itself well to the insurance model.
Now consider that some health related services keep you from (or delaying) catestrophic health events. In the driver world, they make you go to defensive driving school in hopes that you don't have another accident or get another ticket. The equivalent in healthcare is preventive medicine. In the current scheme, most insurance cover a very small amount of preventative health care. In my opinion, they cover just enough to get you into the system so they can keep track of you and to keep you going to the doctor's so as to improve their overall income...the more people go to the doctor for routine non-costly visits, the more co-pays and the more of the deductable goes to the insurance companies. On the flip side, they might find something seriously wrong too. While this might cause a major outlay, I'm betting that it's still less expensive than treating a pro-longed condition when it is finally diagnosed down the line (and sure there are probably exceptions). As long as the entire population pays into the pool (healthy and sick alike), there should be no issues providing all needed services.
This is where the big rub comes in. The ACA addressed the "pool" problem by doing the following: Young and old, sick and healthy all had to pay into the system in some way. Further, they expanded Medicare (known in the US as the most efficient health care system available) to cover more people, in effect, adding tax dollars into the pool for those that cannot afford them. Presumably, Medicaid would pick up the rest. The republican version of the ACA...eliminates nearly everything above. Only two things can happen: Only really wealthy people will have any kind of insurance or; we'll go back to the way it was before where only corporations will provide health coverage. The problem with the latter is that they (companies) are already shedding this expense so, unless something happens, we're going to end up with only wealthy people having guaranteed health care. Emergency rooms will be back in vogue and care will be even more expensive not to mention that people will die. It will be that drastic.
Editorial note 2022. I just realized I never hit the publish button so I did to complete the record....sorry!
posted by Politico at 8:15 PM
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