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Why Do We Need Health Care Reform?

August 17th, 2009 · 1 Comment

For weeks now, I’ve been trying to get my head around the whole health care mess so that I could write a long, comprehensive, well-thought-out post.  I figure that would be the best way for me to contribute to the process as our democracy sorts this out.  Problem is, it’s complicated.  And the situation is changing rapidly.  So I’m just going to start throwing out short posts on different bits and pieces of the issue.  After awhile, my position will emerge.

I guess the most the fundamental question is why we are going through this in the first place?  Why does the President want to push this at a time when we already have two wars (three if you count the war on terror outside of Afghanistan) and a nasty recession on our plate?  I cannot speak for the President.  But I can tell you why I think we need to tackle this issue now.

1)  People are going bankrupt in the US due to the cost of health care.  And I’m not just talking about poor people without insurance or people who made bad choices with their health and/or personal finances.  I’m talking about middle and upper class people who had health insurance and did everything you’re supposed to do but got nailed by a chronic health problem and were abandoned by their insurance company:

  • February 03, 2005 The journal Health Affairs reports that Harvard researchers found that half of all personal bankruptcies declared in 2001 were caused by illness and medical bills.  “Surprisingly, most of those bankrupted by illness had health insurance. More than three-quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy.  Most of the medical bankruptcy filers were middle class; 56 percent owned a home and the same number had attended college. In many cases, illness forced breadwinners to take time off from work — losing income and job-based health insurance precisely when families needed it most.”
  • June 04, 2009BusinessWeek reports on a study in which Harvard and Univerisity of Ohio researchers found that 62% of all personal bankruptcies declared in 2007 were caused by health problems.  “Medical problems caused 62% of all personal bankruptcies filed in the U.S. in 2007, according to a study by Harvard researchers. And in a finding that surprised even the researchers, 78% of those filers had medical insurance at the start of their illness, including 60.3% who had private coverage, not Medicare or Medicaid.”

2)  The cost of employee health insurance in the US is getting harder to bear, especially for small businesses:

  • January 28, 2009CNN and Fortune report that small businesses are struggling to provide employee health plans, particularly in a weak economy when they cannot pass the cost on to consumers while staying competitive.  “Premiums on group policies have soared by as much as 30%, on top of double-digit increases in each of the past five years. Coverage is shrinking. Thanks to insurer consolidation, policy choices are more limited than ever. And in a seller’s market for insurance, small business owners have little room to negotiate prices or terms.”
  • March 04, 2009 — The Council on Foreign Relations reports that health care costs in the US are undermining the competitiveness of US businesses in the world marketplace.  “Factoring in costs borne by the government, the private sector, and individuals, the United States spends over $1.9 trillion annually on healthcare expenses, more than any other industrialized country. Researchers at Johns Hopkins Medical School estimate the United States spends 44 percent more per capita than Switzerland, the country with the second highest expenditures, and 134 percent more than the median for member states of the Organization for Economic Cooperation and Development (OECD). These costs prompt fears that an increasing number of U.S. businesses will outsource jobs overseas or offshore business operations completely. U.S. economic woes have heightened the burden of healthcare costs both on individuals and businesses.”
  • February 11, 2005General Motors CEO Richard Wagoner tells the Economic Club of Chicago that “Failing to address the health care crisis would be the worst kind of procrastination, the kind that places our children and our grandchildren at risk and threatens the health and global competitiveness of our nation’s economy.”

3) The insurance company is not your friend and cannot be trusted.  If this last point seems more emotional and less impartial than the others, that’s because it is.  Right around my first birthday (1968), my dad was diagnosed (at the Mayo Clinic in Rochester) with Multiple Sclerosis.  The disease moved fast; by my eighth birthday, he was paralyzed from the waist down and had lost the use of his right hand.  That year, 1975, he left the workforce and lost his health insurance benefit.  The plan allowed him to maintain his coverage but he had to assume the full cost of the premiums.

I guess the plan’s rules didn’t allow them to kick him out because of his disease.  There was nothing, however, to keep the insurance company from increasing the premium.  Which they did.  Every six months.  After a long, expensive progression of premium hikes, my folks had to give in and “voluntarily” withdraw from the plan.  Of course, getting another policy somewhere else was out of the question due to the now pre-existing condition.  For the last 10 or 12 years of Dad’s life, he was without any health insurance at all.  I remember very clearly heart-breaking discussions of what we could do should Dad need hospital care.  I was just getting old enough to understand what was happening and the possibilities were scary.  In the end, Dad never needed to go to the hospital and he quietly passed away in 1994.  We avoided financial armageddon.

The free market is supposed to use competition to get services to the most people for the lowest cost.  Insurance works by spreading risk out amongst as many people as possible to minimize it (risk) for everyone.  Neither of these principles is working in the American health insurance industry and something needs to change.  That’s why I think we can’t afford to do nothing.  Of course, that raises the question of what, exactly, we should do.  That’s another post.

Addendum:  Although I stand by my opinion of insurance companies, I have to say that I have known individual insurance agents who were good, honorable people.  I think the evil happens higher up at the corporate office.

Tags: Family · Politics

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