Health Care “System”

Two point five TRILLION dollars spent in the health care ‘system’ in the United States of America in 2009. Almost 6000 thousand dollars per person. Per year. This number is greater than three times more than the closest figure, including every country that covers 100% of all of it’s citizens. We don’t even cover everyone.

According to a study published in the New England Journal of Medicine, total overhead in the system is at 31% That means that health care itself costs the US about 1.5 trillion dollars per year and the extra expenses amount to about 800 billion dollars per year. For comparison, the amount spent on overhead for a ‘wasteful’ government entitlement program like social security, is just 1 percent. That’s not a typo. ONE PERCENT. There is no profit in a government program. There is no CEO making 100 million dollars per year, with ten VPs making 20 million per year. ETC…

I work in an electric utility. We make electricity and it is reliable and the price that we can charge our retail customers is controlled by the state. When we want to raise our prices, we apply to the state to do so. They make us prove to them that we need a rate increase. We have to show what it costs to make electricity. The state controls the price and the reliability of this system.

If we only controlled by the ‘market’ like a health care provider, we would just bill the customer more. We would bill as much as we thought we could get away with. For electricity, that would probably be a pretty high number. Maybe we could raise the cost of it by about twice the rate of inflation. That is what health care providers do year after year. Their increases are never below the rate of overall inflation. To continue the analogy, we wouldn’t actually get that much, because the insurance company has an annual agreement with us about what we can charge. We charge more than that so that next year, when we are deciding what the ‘reasonable and customary’ charge is for our services, it will be a higher number than last year due to us charging more. Its a great racket. We get to raise prices year after year and no one makes us prove that the increases are in any way justified.

Insurance companies in the US, by and large, are run for profit. In other words, they have a responsibility to the owners of the company to make more than they spend. Health care insurance companies make money basically two ways. They take in premiums for promising to pay for your health care, in the unlikely event that you need it. They take these premiums and invest it in various places, think stock market. Of course, the value of stocks and bonds don’t always go up, which is why sometimes when the market goes down you will hear a lot of squalling from insurance customers that their premiums are going up. Ever heard of one of the doctor’s strikes because their malpractice insurance has skyrocketed? Look at what the stock market was doing at the same time.

Insurance company expenses include overhead, like wages and multi-million dollar executive compensation packages, and claims. Cant do anything about wages, but–they can do something about claims. Cancel your policy, deny your claim, stall. They aren’t being evil. They owe it to the stockholder. They can raise your premium and they will. They can deny your coverage, and they will.

If want to see how it could be, look to Switzerland. The land of big bank and big insurance companies. Until 1994 they had a health care system just like ours. In 1994 they had a vote by all the people on keeping what they (we) had or going to another way of paying. They changed. This is what they have now. They still have private insurers paying for health care costs. However, it must be non-profit. If health care costs more this year than they took in then the premium goes up next year. If it costed less, they get to collect less next year. Every Swiss citizen gets a health care smart ID card. When they get health services they present their card. The doctor gets paid. No paperwork. Doctors and hospitals are private. They spend half what we do per person on health care per year.

No way we wouldn’t save money by going to a system such as this. The only system on the planet more costly than ours, is ours –next year.

About dcarmack

I am an instrument technician at the electric utility servicing the Kansas City Missouri metropolitan area. I am in the IBEW, Local 412. I was trained to be a nuclear power plant operator in the USN and served on submarines. I am a Democrat, even more so than those serving in Congress or the White House.
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