Insuring The Uninsured Is Worth It

Congratulations to the Democrats for passing a smaller, less corrupt version of Obama’s health care plan to cover the 30 million+ Americans who are uninsured.  I’ve read numerous articles about the pros and cons of this plan, and I still can’t figure it all out.  An Associated Press article writes, “Obama practically needs a spreadsheet to tell people what’s going on and when.”  That said, progress has been made.  I’d like to go over some of the basics, and end with a discussion.

LOOKING OUT FOR EACH OTHER

Unlike making money, we can only do so much with our health until genetics take over.  We can eat fruits and vegetables until the cows come home.  We can work out 5 hours a week and play another 5 hours of tennis on the weekends to improve our fitness.  But who’s to say we don’t get cancer one day and die because we can no longer afford to treat the disease?  As far as scientists can tell, if we’re destined to get some disease, we will.  Wealth helps keep us alive.

Earning a living, on the other hand, is pretty straight forward.  Don’t slack off in grade school, go to a good university, get a reasonable job, don’t slack off at work, add value, spend less than you earn, and voila!  You will be rich when you retire.  Along the way, you’ll find impasses such as economic Armageddon we just experienced.  You might lose your job, or 30% of your net worth like I did.  But that’s OK.  We just go back to school, find another profession, extend our retirement age by a couple years and keep marching forward.

You can’t march forward if you are sick.  You can’t even stand sometimes.  This is where we MUST step in and provide a safety net for those who cannot help themselves.

HEALTH AND POVERTY

Watching a documentary about personal bankruptcies the other day, it was amazing to learn that 3 out of the 4 families profiled were living in poverty due to health related issues.

A beauty queen broke her neck, and couldn’t continue working.  She now lives in a shelter because she couldn’t afford to pay her medical bills.  A family of four live in their broken down car because the father severed a nerve in his arm at work, and could no longer operate the machinery.  The insurance for rehab ran out, and he was left stuck, unable to do return to his old job.

If we had a better health care system, perhaps we’d have less health related bankruptcies.  Is that so bad?  Should we not try and help others out who bet on red but get black?  We should.

THE OBJECTING CROWD

Everything comes down to money and service.  Those who oppose ask how we can afford free coverage for 30 million more people?  The opposition also asks with 30 million people in the system, does that mean my doctor’s visit wait jumps from 15 minutes to an 1 hour?  Do the citizens who can afford to pay get crowded out as a result?  Good questions, and I don’t have the answer.

However, if you were to ask me whether it’s OK to raise my taxes by a couple percent a year to insure that everybody in America can get proper health care, I say yes.  Let’s say I earn $100,000 a year, and the tax increase of 2% is earmarked for health care reform.  I’m willing to pay an extra $2,000 a year to ensure we all have the right to health care.

Whether my premiums go up $2,000 a year or my taxes go up by $2,000, it’s the same thing, so I’m not arguing where the money will come from.  Ask me to pay $2,000 more in taxes a year for some pork spending I have no idea about, I would vehemently vote no.

Let’s say I do have to wait 45 more minutes for the doctor because of a crowding out effect.  Fine, let me surf the web on my PDA, read some magazines, do some stretching, and perhaps take a nap.  Maybe I have to wait a week longer than normal to see a doctor.  That is a problem which will be solved by capitalists who will open more independent practices to meet demand.  Just knowing that I will get assistance tempers my worries.  And if you never had a shot at seeing a doctor in the first place, you won’t be complaining about a wait.

If I have an emergency, then off to the emergency room I go.  I will be treated according to the degree of my trauma.  Hopefully there won’t be millions of new hypochondriacs who abuse the emergency room system, but that is a chance I’m willing to take.

CONCLUSION

I feel it in my gut, opposing health care reform is bad.  It’s as if the karma police is watching me.  We can only do so much to control the outcome of our lives.  We don’t know how long we will live, and whether we will die peacefully or painfully.  Sickness affects a billionaire as easily as it affects a beggar.  Why should someone lose everything just because they are poor?  They shouldn’t, and that’s why I congratulate the passage of this bill again.  Let’s just make sure everybody helps pitch in, and not just those who aren’t lucky enough to be Nebraskans or particular union workers.

RECOMMENDATION

Shop around for health insurance:  The internet has really helped lower the cost of insuring yourself and your family. eHealthInsurance has some of the lowest rates and best coverage due to its largest network. They are based right here in the Bay Area, and I have met a number of their representatives. The Affordable Care Act debacle has proven to be more expensive and more cumbersome to sign up so far as of 11/16/2013.

Keiju,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. An Anonymous Coward says

    Robert Heinlein wrote about this 50 years ago in his science fiction novels. He proposed that no democracy could ever survive, because the poor people would always vote for “Bread and Circuses” if given the opportunity, which eventually bankrupts the state.

    TANSTAAFL (look it up)

  2. retirebyforty says

    Is this the mid season recap? :) This is great for me because I only started following Financial Samurai in the last month or so.
    I agree with you 100% on this. I would pay more tax if it goes toward health care.
    My parents are retired in Thailand and they can go see a doctor and pay about $1.50 each visit. If they were rich, they can go to a private hospital and pay as much as they want to get excellent health care. Many foreigners go to Thailand to get excellent health care and pay a lot less than at home.
    The negative I see is the upward spiral cost of health care in the US. Cost of health care seems uncontrollable and probably will bankrupt any single payer program. There need to be a cost-reward analysis and we should instate a “death panel.” Tax payer should get good return for their money. If you need $1 million to extend your life for one month – forget it. You can pay for it yourself if you have the money.

  3. Early Retirement Extreme says

    Affording is pretty easy. Here’s a very simplistic argument. As far as I remember, insurance companies have a combined ratio (the money they swipe) of about 10% (maybe that number is different for health). There are 300+ million Americans. Eliminate the insurance companies and replace them with a single payer system. That should release treatment money for 30 million extra people.

    A big reason for the mess is that they’re/we’re trying to change the current system into something it’s not. If you’re going to have roughly the same treatment options for everybody, does it make any sense to have a middle man?

    Only for the middle man … so there’s a lot of lobbying.

    From a stand point of the US paying twice as much as the next nation for a similar level of health, the entire system is broken beyond repair. There’s no fix. Scratch it and start over.

    • Financial Samurai says

      Health insurance lobby group is way too powerful to change. Govt needs to just charge all of us more and that’s that. It’s the right thing to do since health discriminates against no one unlike the govt!

  4. Nicole says

    I’ve been going through David Cutler’s slides on the bill. Re: wait time, wait times are considered too high under the current system and the government is hoping to reduce, not increase, that. I know I have to wait forever to see a doctor with my private insurance, and that’s costly and leads to increased emergency room usage, which is inefficient.

    It is a complicated bill because it is a complicated problem. It would be much less complicated if we could scrap everything and go straight to a national single payer system, but that’s just not possible in today’s political climate. Clinton tried and failed. Nixon tried and failed…

    Here’s the Kaiser Family Fund’s little fact-sheet. (Possibly less biased than the government’s version): http://www.kff.org/healthreform/upload/8061.pdf

  5. The College Investor says

    The thing I think most people forget is that every insured individual is already paying for the uninsured. The uninsured receive medical care everyday at every hospital and clinic in the country. And usually they are getting help for something major since they never went to the doctor before. Furthermore, even the uninsured who self-insure end up bankrupting themselves trying to pay, and the hospital or doctor still doesn’t get paid.

    The cost of this care is simply added to the bills of every paying customer. What many people don’t understand is that by requiring every person to be insured, you open up this huge new market to insurance companies, which they can make pay. This would lower the rates for most people (maybe not the ones who see the doctor for every minor issue) because now most people are in the system.

    • Financial Samurai says

      I think most people agree health care is already ridiculously expensive. Given the case, what’s another several hundred to a thousand bucks more a year to prevent catastrophies for others? Nothing, esp if we can convince the 47% of American workers who don’t pay any taxes to contribute.

      Btw, can’t comment on ur blog bc I need to log in

  6. tom says

    I agree with some aspects of the bill, but let’s be clear here: This is not a health CARE reform bill, it is a health INSURANCE reform bill.

    Very little in this bill addresses actual health care costs. It is assumed that if everyone has insurance, then costs will go down because there is coverage for services. They never drove down to the root of the problem. Why does a tablet of aspirin cost $20?

    I think the root of this problem is insurance itself, it masks true cost and eliminates competition. As soon as cost oversight is removed from the equation, costs rise. The only time I’ve (and I’m guessing 99% of insured Americans) ever looked up the cost of a health care service is when I have to pay out of pocket or through a health savings account. One way to combat this and still have insurance is to open state boundaries. That creates nationwide insurance competition. That could have been a huge win for both sides, because competition drives down insurance costs, which will eventually drive back down service costs.

    The drastic increase in medical tourism is a prime example of this. Now insurance companies are promoting it, because they pay less and make more money off of your premiums! Medical tourism is cheap not because of low cost of living locations like in India, it’s because you are paying the true cost of the services. Most of the doctors you see overseas are trained in American schools and use state of the art equipment. They don’t jack up their fees because it’s competitive!

    Again, I agree with insuring everyone (although I don’t agree with mandating coverage, if you don’t want it and you get sick and die because of it, your problem), and I especially agree with insuring kids. Unfortunately, they stopped half way. The next bill needs to address costs and competition.

  7. JR says

    I do not subscribe to the idea that healthCARE is a RIGHT. Especially the way I see so many folks “caring” for their health. As you pointed out in the original article, genetics eventually takes over. Why do we prolong the inevitable? Death is truly the only guarantee after birth. Actually caring for one’s personal health is the best we can do.
    We already have Medicare and Medicaid that are abused beyond belief. Now we want to add more? Whether it’s insurance or MediCare/MedicAid, payments are usually only ~80% at absolute best. Health provider overhead is tremendous. I am so very against these enabling programs at the state and Federal levels. The greater population is only willing to do the minimum amount needed to get by. e.g. I knew a couple of folks who worked harder to work the system than to actually work. I have since met many more like them in my travels.
    Our overall system is not meant to support parasites. Our system works with symbiosis, as well it should. Any relationship that moves unilaterally tends to break down over time. I think we are seeing the results of that break down in the enabling programs. Helping is NOT doing for.

  8. Jerry says

    I also have the same opinion that not everyone MUST get health insurance. I believe you should have the choice. This leads to more freedom and I think it just makes sense.

  9. ProfitBeforeLife? says

    @Investor Junkie

    Since you are provably factually wrong on almost every point you make, how do you expect to come to the right conclusion?

    Sorry, most people who will have insurance, employer-covered or from the exchanges, will have “skin in the game”. Most people will NOT get a 100% subsidy, NO plans in ACA have zero deductible, most plans, ACA or otherwise, have co-pays, etc. Perhaps you want people to have NO insurance, which means that when someone gets a $50,000 bill they have no hope of paying, then the taxpayers and people WITH insurance end up having all THEIR “skin in the game.”

    Sorry, Medical Loss Ratio is already saving premium payers money by limiting insurance company profits, and ACA’s wider risk pooling, price transparency, wider competition, standardized plan levels, requirement that “health-so-far” people get coverage and (hopefully) more use of preventative care and better healthcare outcomes should ALL reduce actuarial cost, as they are specifically designed to do.

    Sorry, you can’t get insurance “on the way to the hospital”. Google “ACA open enrollment window”. It works the same way as employer-covered plans have for a long time. If you get bit by a snake on a hike in 2014, and spend a week in the hospital, that $50,000 bill comes to YOU and YOU alone, NOT to the insurance company you sign up for the NEXT YEAR, in 2015, during the next open enrollment. And having insurance sure is better than trying to negotiate a lower cost of care, by yourself, from your gurney, “on the way to the hospital”. And certainly better than trying to negotiate after the bill comes.

    Sorry, the current economic recovery is slow because we had the worst crash since the great depression, and because the SINGLE sector that has NEGATIVE growth right now is the GOVERNMENT sector–the rest of the sectors are doing okay, and the economy would be doing better if we weren’t cutting government with the sequestor. The other reason for the slow recovery is the richest few percent are HOARDING cash rather than investing, because demand isn’t there. Demand isn’t there because the rich have been favored and coddled for a decade, so that the middle class is almost gone, and there is just NO WAY the richest 1% spends into the economy at a rate of 99 times the other 99% of people. This inequality is getting worse, and it’s already as bad as it was right before the Great Depression, which lasted more than ten years and ONLY ENDED DUE TO MASSIVE GOVERNMENT SPENDING ON A WAR.

  10. mysticaltyger says

    America spends more money than any other country on health care and we have LOUSY health outcomes. Both public and private health care spending are bloated. Our health care system, whether you’re talking private or public, is so bloated that WE SHOULD NOT HAVE TO SPEND ANOTHER DIME IN TAXES to make it better.

    Certainly genetics plays a role in health, but even scientists will tell you that 70% of our health care costs are driven by unhealthy lifestyle choices. 70%. That’s HUGE. Our publicly funded health care has done nothing to address these issues for the last 50 years….so I don’t see why Obamacare will be any different.

    Just my opinion, I think Obamacare is more about centralizing power and control. You’ve said it in your other posts about Big Government….Government is greedy (for your tax dollars as well as power). It will try to gain more power over our lives by any means necessary. And yes, I get it, same thing goes for big business….the two have become so intertwined they’ve practically become a single entity (which was the goal all along, I think).

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