The Illusion of Freedom that is Private Health Care Insurance

Many persons continue to prefer an health care model within which a public health care plan coexists with private health care insurance.

It is matter of fact that private health care insurance that is affordable and worth having typically is obtainable primarily through employers. It further is true that since introduction of the Obama Health Care plan, costs of private health care insurance that are obtainable through employers have skyrocketed. While the Obama Health Care plan does not have character of an alternative to private health care plans, the fact that, regardless, costs of private health care insurance have skyrocketed do not bode well for feasibility of private health care insurance whose costs do not increase faster than the rate of inflation.

For concreteness, with private health care insurers quoted on the stock exchange, and responsible to shareholders who demand ever increasing returns, it is unlikely that there ever will arrive any time period during which health insurance premiums do not grow at a rate faster than the rate of inflation. We arrive then at the following stylized fact.

If you stick with private health care insurance, there will not be arrival at any capping of your health insurance premiums. Your health insurance premiums will, most definitely, grow over time at a rate higher than rate of inflation.

In addition to health insurance premiums that grow faster than the rate of inflation, it is guaranteed, in presence of coexistence of a public plan that pays less for health care, and private plans which pay more for health care, that quality of care available to persons on the public plan will not be comparable to quality of care available to persons on private health care plans.

The reasoning is as follows. Naturally and rationally, with private plans paying more, family doctors will pursue persons on private health care plans at expense of persons on the public plan. The mathematics is simple. If a doctor requires 20 patients a month to break even on the private plan, and 50 to break even on the public plan, there exists incentive to seek out patronage of persons on the private plans. We arrive then at a situation within which only ‘loser’ doctors have their rosters filled with persons on the public plan. With loser doctors feeling the pinch of having lost out in the fight for the higher paying customers, can we really expect that they are motivated to provide the best quality health care to their customers? Moreover, with such doctors having to see a lot more patients in the same amount of time, we arrive at lopsidedness of probability of high quality health care from family doctors.

If doctors have to compete, such that doctors whose rosters become filled with persons who are on the public plan feel like ‘losers’, the quality of health care that is available to persons on the public plan will be lower than quality of health care available to persons on private plans.

Consider then that, were a person to lose their job, as such end up on the public plan, they automatically will experience a drop to their quality of life, or standard of living — one of the age old problems that overhaul of the health care system ought to address.

In the maintenance of anxiety over potential effects of loss of job on quality of health care, we arrive at an overhaul of the health care system that enables decreases to costs of health care for those on the public option, but with quality of health care lower, does nothing to address anxieties that preceded overhaul of the health care system.

Given it is matter of fact that healthiness of the body cannot be dissociated from healthiness of the mind, clearly, an overhaul of the health care system that does nothing to address preexisting anxieties over either of costs (private health care plans) or quality of health care (the public plan) merely places band aids on a wound requiring of surgery and stitches.

Coexistence of a public plan with private health care plans produces an health care system consisting of two classes of health care quality, and anxieties over either of poor quality health care, or feasibility of loss of job that induces poor quality health care.

If an overhaul of the health care system in the USA is to be effective, everyone must transition to a generic public health care plan, but yet, a plan that allows not for buying of quality of health care by the well off, but for buying of luxuries.

Illustrations of health care luxuries are inclusive of private rooms at hospitals, private floors (if available, and there does not exist any competing demand), pet drugs that are not necessarily deemed better than those approved in context of the generic public health care plan, doctors willing to make home visits etc.

In presence of a generic public health care plan to which a person continues to have access in presence of loss of job, anxieties that relate to quality of health care, and switching of jobs are mediated. Simultaneously, costs of health care no longer are tied to any inflationary pressures, with outcome payroll taxes do not experience significant increase over the years, this because the government soaks up some of the inflationary pressure.

Given total numbers of persons who will not be willing to spend premium cash on, far outnumber those willing and able to splash premium cash on health care extravaganzas — which only are available at hospitals or pharmacies, not at doctors’ offices — it is unlikely that availability of extravaganzas affects quality of health care for those unwilling to splash on such extravaganzas.

The truth of the matter is, Bernie is right. If the USA is to successfully overhaul it’s health care system, it has got to be ‘all public’ or bust.

This is not an endorsement of Bernie. I am on record here, and here, and there, that I do not consider Free College Education to be a robust solution to educational challenges that subsist in context of Higher Education. I also am confident that it is not capitalism that is the problem in the USA, but hedonistic interpretations of capitalism. As such, I do not believe the solution to ills of the USA reside in any sort of transition towards socialism.

Health care for all is not socialism, is not a political statement, rather is an inalienable right that accrues to life.

I am not gung ho on Biden either — I wonder whether he is not so establishment, there is not any push for any meaningful change in the next four years. Biden’s plan for fixing of the health care system is, for instance, not likely to address either of the costs or quality problems that I have highlighted in this post. Regardless, this post does not have character of endorsement of either of the two remaining Democratic candidates for President of the United States of America.

Other than the fact that insurance companies have to spin off and delist their health insurance units from the stock market, then work on commission for the government, with some protection for jobs in the health insurance units for say, three years, it is unlikely that the transition produces any major unemployment hiccups.

Within those three years, one would hope that new innovations arriving in the real sector will provide new opportunities for any excess capacity that subsists after the job protection window of about three years. Incentives for arrival of such new opportunities within any and every sector of the U.S. economy ought to be important components of the strategy for transitioning from a private health care insurance system to a unified and generic public health insurance framework.

There are times when patching of a highway works. There are times when fixing of a highway requires laying down of new layers of bitumen. For the health care industry of the USA, it is bitumen laying time.