Health Care Costs Without The Parachute

We are going to do a real brain teaser so sharpen your imagination and thoughts.  The country has endured endless debate and ultimately a mind-blowingly large health care overhaul.  You will recall that one of the major arguments of the proponents of the health care bill passed last spring was that it was a deficit fighter.  That health care change with government takeover of virtually the entire sector was essential to bring down costs.  It was argued that only government could do this.   It was offered as a way to reduce the deficit, the total US debt and “bend the cost curve” down in the out years.  You heard those arguments if you were awake during ’08 and into ’09.  The cost savings was a central mantra of the pitch for that massive 2700 page bill that Pelosi promised we would like once it was passed and we got to see what was really in it.

Of course this summer several major companies reported the increases to their costs for the Bill.  You will remember the WH yelled back saying they were just playing politics with the issue and trying to embarrass the President.  Then quietly the WH backed off because it became evident that those companies were merely doing what was required by law and if they hadn’t they would have been in trouble with the SEC for not making a disclosure of material information regarding their financial condition.  Recently, several insurance companies have submitted applications for increases in rates.  They are now having to cover more circumstances and take greater risks than before so, surprise, surprise, it will cost more for those risks.  The Secretary of Health and Human Resources has already lashed out at these companies too, accusing them of unjustified rate increases.  I don’t know how much each company is seeking but it goes without saying that there will be an increase; they can’t cover additional risks without all of their insureds having to pay more to cover that or they go broke which probably wouldn’t do anyone any good.

How about a radical idea for a change. Neither liberal or conservative.  Imagine for a moment a world with no health insurance, none, zip, nada.  None for individuals, union members, retirees, government employees.  No, really think about it and what would happen as a consequence.

First, there would still be a demand for medical services.  People would need care.  Those doctors and hospitals and specialty clinics would need to pay their bills and feed their families.  The competition for patients would be fierce and proactive.   The costs would drop, dramatically.   Each health care provider would be very interested in market share and volume.  Those MRI’s that used to cost $2000.00 would suddenly  be going for $750.00.   Those $800.00 a night hospital rooms would be $200.00 a night.  Doctors and nurses would make less but it probably wouldn’t be nearly as dramatic.  But the surgeon who used to charge $15,000.00 for a pacemaker would now be doing it for $5000.00.   The drugs and all other medical devices would likewise drop tremendously in price, they would have to because the patients couldn’t afford them anymore at the higher costs.  It doesn’t do a health care provider any good if it has the best product on the market but no one can afford to pay for it.  The price would adjust to the level the market (patients) could afford.

The savings would be in the billions.  Don’t forget too that there would be enormous savings in the health insurance premiums we all have been paying and those paid by our employers.  That would also be in the billions every year, year in and year out.

Now the patients, us.  First, the overwhelming majority of us do pay health insurance premiums each year and so do most of our employers.  Let’s be arbitrary but within reason to assume a family of 4 would have been expending $10,000.00 per year for insurance.  Now they have that money in their own pocket to spend as they think fit for their health needs.  They will be good consumers and shoppers.  It is their money they are spending and they will use it much more wisely than any government program.  That facts are that many of them won’t have to spend that much in any given year and would be thousands of dollars ahead each year.  Those routine visits for the kids and regular flu treatments and arthritis, etc. don’t and wouldn’t cost that much for a visit.  You can bet your bottom dollar for sure that they would all ask questions  everytime the doctor ordered and MRI or Catscan.  They would want to know why and what it cost and if there was another way to find a diagnosis without it.  Or here is an idea, maybe just wait and see what happens.  The old Hippocratic doctrine of first do no harm.  There are millions of people like me who hasn’t cost his health insurance company but maybe a couple of thousand dollars over the last 40 years.  I am healthy and work at it.

For those really necessary and expensive treatments like heart transplants or cancer treatments we would pay those out over time.  The cost for them would drop because of the competition but when they were still too high the banks and other lenders would step in and make loans to be repaid over time.  The health care providers would likely jump into that lending market themselves.  Remember, everyone would be saving money each year equal to the old premium they had been paying.  Over the course of years that would a very tidy sum indeed and could cover even expensive procedures if utilized for its purpose.

Yes, there would be the need for charity.  There would still be those who are down on their luck, suffer a permanent disability or whatever circumstance prevents them from having the ability to pay.  Almost every community in America already has a charity hospital and it is paid for with local taxes.  In our community it is hundreds of millions per year and there are private charities available.  There is lots of money already spent on those in need almost everywhere.  Those taxes are already baked into the cake as it were.   We haven’t covered all the issues that would arise but the basic idea of dramatically lower cost is sound.  That most people most of the time would save thousands per year from medical premiums to cover current medical needs is obvious and so is the fact that most, most years would have thousands of dollars left over to add to next year’s savings.  You think about it.  Do we really need government intervention?  Do we really need medical insurance?   The market is efficient if left to operate.  Not only is it efficient, it is fair as opposed to government picking the winners and losers based on status or political influence.

Edison, Bell and Morse all were prolific innovators.  They advanced our industrial development in an astonishing manner.  What is of current value to remember is that they did all that without any government grants or loans.  Today, the government has its hand in everything from clean energy to stem cell research believing that only it can provide the direction for the future.  Thank God it wasn’t around when those guys were at their peak.  They would have spent all their time doing grant applications rather than inventing things that changed our nation and the world.    www.olcranky.wordpress.com

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Filed under business, Economics, government, Politics, Socialized Medicine

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