Wow, is this sucker a mess or what? From angry shouting matches at town halls, to scathing opinion pieces in newspapers and magazines, it's getting (to use a word) thorny. But would we expect anything different? People are not going to leave their homes, write letters, or call talk radio shows unless they are engaged to the point of passion.

As a Wall Street Journal piece put it: "People are not automatons. They show up only if they care."

So what is going on? Why all the undies in a bind? Lez and I spent about 2 hours debating the issue last night and we are far from being able to solidify things beyond Jell-O Jiggler status. But at least we think it tastes fruity... take a bite and let us know your thoughts:

Here is what we are thinking:

A while back we wrote about emotion vs. economics and when it comes to health, emotion always wins. We still stand by our conclusion today, but need to add another line to the thought train... It's obvious but, when it comes to both free market business and politics or crafting legislation, economics always wins. Economics in the sense of private interests influencing political decision making in just about every capacity.

Right now, if you have insurance, you have to deal with corporate bureaucrats. Don't be fooled. Just because they use words like "leveraging" or phrases like "let's touch base" or "outside the box"...this doesn't mean they have your best interests at heart. The are motivated, as we all are and rightly so, by profits (personal development note: remember profits are better than wages, but that is for another post).

They do care about keeping your business, but only at the absolute minimum to keep you from going somewhere else, which is fine, and in this country we mostly have the ability to choose where we go. To increase profitability they allow, based on statistics, only those who are most likely to be profitable members of their managed risk pools, and they charge premiums based on current industry levels of profitability.



OK, so here we are paying premiums each month, or having the premiums come out of our salary through our employers, and crap! we drink ourselves into needing a liver transplant. Now it is sad, but private insurance companies have the incentive to increase shareholder value with as much of your premium as possible and administer medial care with as little as possible. An excerpt from the Wendell Potter (former Vice President of Cigna Insurance, 4th largest medical insurer) interview:

On these calls, Wall Street investors and analysts look for two key figures: earnings per share and the medical-loss ratio, or medical "benefit ratio," as the industry now terms it. That is the ratio between what the company actually pays out in claims and what it has left over to cover sales, marketing, underwriting and other administrative expenses and, of course, profits.

Now this is all fine and dandy until your transplant is denied due to a spelling error on your insurance application. OK, so maybe not a spelling error, but yes there are nasty stories of denied coverage and dropped people because they begin to require treatments. Legal fights ensue, some people win, some lose. It can't be that bad if 3 out of 4 people are happy with their insurance companies.

However, it is a fact that people are denied coverage if they appear to be "too costly" to an insurance company - and there is no way to stop that now. One more quote: A congressional subcommittee was held with leading health insurance CEOs a little while ago to investigate the process of dropping people when they start to file claims for insurance coverage.

REP. BART STUPAK: Let me ask each of our CEOs this question, starting with you Mr. Hamm, would you commit today that your company will never rescind another policy unless there was intentional fraud-- fraudulent misrepresentation in the application?

DON HAMM (president of Assurant Health) : I would not commit to that.

REP. BART STUPAK: How about you Mr. Collins, would you commit to not to rescind any policy unless there is an intentional fraudulent misrepresentation?

RICHARD COLLINS (president United Health Care): No, sir. We follow the state laws and regulations. And we would not stipulate to that. That's not consistent with each state's laws.

REP. BART STUPAK: How about you, Mr. Sassi, would you commit that your company will never rescind another policy unless there was an intentional fraud, misrepresentation?

BRIAN A. SASSI (president WellPoint) : No, I can't commit to that. The intentional standard is not the law of the land in the majority of states.

So there it is, like it or not, it is how things are done. Economics aside, people are up in arms because emotion wins when your health is at stake. So how can we fix these issues?

"Hello, I am from the government and I am here to help."


So, put all the hypotheticals aside, and forget about those clever protest slogans for a minute. Right now the government is suggesting a public option - not a universal plan - but a public one similar to current corporation run options, with the government as CEO. This would provide a second layer of competition to the insurance companies, and I hate to ask it, but would a government bureaucrat who does not have the profit burden to worry about be better than a corporate one?

Government is known for financially screwing up just about everything it does. So some magic would need to happen to avoid a host of other problems, like inevitable insolvency or a tax hiking fiesta when you cannot turn away the most expensive clients who need care the most. I am also fundamentally against "taxing the rich" to pay for this, which is what is currently proposed - but I do think something needs to be done.

When the word "government" is placed in front of something people get scared and sometimes for a good reason. It is true that arguments can be made for recent Constitution overstepping by the federal government, but what would the framers do in this situation? In my opinion the free market system we have now may work better if added competition with a focus on quality becomes the greater incentive.

OK, this is paragraph 50, and I still haven't figured out what the debate is about:
Fine. Geeze ok, In our opinion the debate is about competition.

GOVERNMENTS ANGLE: Why are there not greater levels of competition in the health insurance controlled health care industry? Why are we not seeing prices drop dramatically and quality increase dramatically over time like we do in medicine not primarily controlled by the insurance industries? Lasik for example has become substantially, cheaper, better, faster, over time. Can we create a competitor to change where the incentives are?

INSURANCE COMPANIES ANGLE: We are making money with the way things are, and a majority of people say they are happy with the services we provide. We will look into further efficiency and improvements to our systems and methods, but we want things to primarily remain the same. We would rather not have another competitor, especially a law making tax funded entity like the government.

Great! I now know what you think is at the core of the debate, but is there something not being talked about that should?

Why yes, thank you for asking.

Read this excerpt from the interview: