No, Insurance Companies Treating People With Pre-Existing Conditions Differently From Other Customers Is Not “Discrimination.”

Here is a prime example of how the news media’s intentional or careless use of words warps public perception and policy.

Yesterday, the New York Times front page story about the GOP House’s health insurance bill noted in its second paragraph that the bill wouldn’t do enough to prevent “discrimination” by insurance companies against those with per-existing conditions. I have seen and heard that term, discrimination, used over and over again to describe the per-existing condition, and I apologize for not blowing the whistle on it long ago.

Using the term, which is usually used in other contexts to signal bigotry, bias and civil rights violations, is misleading and virtually defamatory. Insurance companies are businesses. They are not charities. They are not public resources. If an automobile company turns down an offer of half what a car costs it to make, it is not discriminating against that customer who made the offer. If a restaurant customer says to a waiter, “I have just four bucks, but I want you to bring me a dozen oysters, a steak, and a nice bottle of wine,” the establishment isn’t discriminating against the diner for sending him to McDonald’s.

Insureds with per-existing conditions want to pay premiums that are wildly inadequate for the coverage they know and the insurance company knows they are going to need. Insurance companies are portrayed as villains because they don’t eagerly accept customers who they know will cost them money, often a lot of money. That’s not discrimination. That’s common sense, basic business practice, fiscal reality,and responsible management. The news media and the under-cover socialists among us want to create the illusion that a company not wanting to accept customers who lose money rather than add to profits is a mark of corporate greed and cruelty, hence the use of “discrimination” as a falsely pejorative term, when the fair and honest word is “problem.”

Preexisting conditions are indeed a problem—a problem for those who have them and who are facing catastrophic expenses, a problem for the government that has a legitimate interest in making a large number of citizens’ vulnerability to crushing health care expenses survivable and also in not becoming insolvent, a problem for normal citizens who are healthy, take care of themselves, and don’t see why their insurance should be unaffordable to pay for the insurance of those who are not healthy, a problem for young citizens who don’t think they should be fined (er, taxed, that is—sorry Justice Roberts!) for choosing not to be insured at all.

The discrimination falsehood says, in essence, “You evil insurance company! How dare you refuse to pay for my daughter’s cancer treatments, no matter how much it costs? Have you no heart?”

That’s neither helpful, true nor fair. The reason the Affordable Care Act is in crisis now (whether the GOP bill will be any better is a different issue) is because the pre-existing condition problem is causing insurance companies to lose millions, or, in the alternative, to raise premiums and deductibles to intolerable levels to avoid losing millions. Framing the problem as  “discrimination” just warps the debate, and places blame on a convenient but in this case unjust target.

Insurance is based on people paying premiums to cover the possibility of future expenses. The insured gambles that he or she will come out ahead; the company gambles that the income from premiums will exceed the eventual payout. Insurance is not insurance when there is a certainty, not merely a risk, of health care expenses. That would be charity…but insurance companies aren’t charities, can’t be, and should be asked to be.

I don’t know how to solve the pre-existing condition problem. Maybe the government should pay for them. Maybe all our rich doctors should create a pool to cover them, or agree to charge less for their treatment. Maybe healthy people should be penalized for being healthy. Maybe we should take the position that we are responsible for our own treatment. There are lots of possible schemes, all with ethical conflicts and dilemmas attached to them like ticks.

It’s a tough one; I’m glad I don’t have to solve it. But constantly telling the public that the problem is one of bias and discrimination rather than economic reality is irresponsible, dishonest and incompetent.

63 thoughts on “No, Insurance Companies Treating People With Pre-Existing Conditions Differently From Other Customers Is Not “Discrimination.”

  1. Healthcare insurance companies face a dilemma: if they exclude individuals with serious illnesses from coverage they are perceived as heartless and greedy. On the other hand, if they cover these people without limits on cost of treatment, they are very likely to go out of business. One solution might be to force members of Congress to get the same plans that everybody else has.

  2. Of course it is discrimination, but as you acknowledge, not one done out of any personal animus, just profit motive. Not that it makes it any better to a dying person who can’t access healthcare.

    I think as we ponder the healthcare scheme that we have in the United States, it is very difficult to get around the fact that we will need some form of single payer. Insurances companies, rightly so, do not want to pay for people who are certain to be sick. Health care costs out of pocket are basically impossible for most middle class families to afford. A routine C-Section can cost $35,000 at most hospitals. If the baby is born early, a stay in the neonatal unit can run into the millions. The major cause of bankruptcy in the US is medical expenses.

    So in the end, I think we should probably expand Medicaid to cover everyone. It will be the floor, and not the ceiling. People can buy additional insurance if they want for the bells and whistles. I think it is the one few feasible ways we get healthcare to as many people as possible.

    • Obamacare is essentially a stealth Medicaid expansion. Funded, inadequately, by a tax on younger people and wealthier people.

      deery, if you went to medical school, would you want to be forced to become a government employee?

      • Obamacare is essentially a stealth Medicaid expansion. Funded, inadequately, by a tax on younger people and wealthier people

        I do think Obamacare had the potential to be stealth Medicaid expansion, though once the Supreme Court made the expansion voluntary, that wasn’t likely by many of the red states. Insurance already is, essentially, a tax on healthier, younger people to fund the healthcare of the older and sicker, with some pit stops for insurance companies to make sure that people are receiving as little healthcare as possible so that they can get a profit out of it. This just cuts out the middleman.

        deery, if you went to medical school, would you want to be forced to become a government employee?

        If you take insurance, someone is already calculating what you can charge for your services (well, what you get paid). Just add Medicaid in there with the rest of the plans. Or don’t take any insurance at all, and let your customers pay for your services out of pocket, as many doctors already do.

        • Insurance already is, essentially, a tax on healthier, younger people to fund the healthcare of the older and sicker, with some pit stops for insurance companies to make sure that people are receiving as little healthcare as possible so that they can get a profit out of it.

          That would imply that auto insurance is a tax on good drivers to pay for damages caused by repeat drunk drivers.

      • deery, if you went to medical school, would you want to be forced to become a government employee?

        You realize that about fifty years ago, we were drafting people to fight to defend South Vietnam from a Communist invasion.

        Given that precedent, I fail to see the problem with drafting doctors and nurses and other health care professionals and giving them the choice of either providing health care for free, or spending the next ten years in Leavenworth.

        • Gee, Mike, sounds an awful lot like ‘first they came for the doctors, but I was not a doctor…’

          Just where along the line do you think they start just telling everyone to work for free, or go to the re-eduction camp?

    • The problem in the U.S. is that the expected floor is incredibly expensive. In Mexico, Social Security covers about 95% of the population for a reasonably good standard of healthcare (the other 5% is mostly government workers and they are covered by a parallel system with a very similar service structure). Most basic services are covered with a relatively short wait (annual checkups, vaccinations, etc.) More complicated ones are generally covered at a standard that most Americans would balk at. To give an example, birth is done in a *very* assembly like fashion. Patient rooms are shared (about 4 moms per room) and you’re only moved to the individual delivery room when the baby is expected to be born within a couple of hours. Babies are taken to the nursery and cared for by nursing staff. You only get to see the baby very strict feeding schedule unless there are any health complications. Only one person is allowed to visit and there are no facilities to stay overnight. Mom and baby are usually out in under two days and the checkout process looks more like the DMV than a hospital. All families due out that day leave at the same time in a one hour period and stay in a waiting room until they’re called, given a three minute consultation and then they get the baby to carry home. All of this is “free” (i.e. paid for with SS taxes, that even I libertarian like myself would consider reasonable).

      I’ll also note that this care is delivered in government owned and operated facilities. Doctors are required to work for these a certain number of hours, after getting their license, at a fixed rate (which I’m told is not a bad one) and after they cover them they can leave or negotiate a new contract to stay (which many do, even if part time only) with no further obligations. If you want the “luxury” experience you can go to private hospital and pay for it. There are even some insurance plans that will cover that.

      If you can’t afford anything else it’s a pretty decent system. My parents (both over 65) still use it even for some specialized doctors. They keep separate insurance for anything catastrophic that may require more expensive treatment, but they generally don’t use it, or pay cash for services that are not cripplingly expensive. I don’t say the system is ideal (I’ll save my criticisms for another day), but it certainly works much better than anything I’ve experienced in the U.S.

      Insurance tends to have a very peculiar dynamic. Once in, the insurer can’t kick you out of the plan and you get to pay based on your health at the time you joined, but there is also no obligation to stay with a plan you were part of. Over time what this does is that healthier members can usually move after a few years to a cheaper plan, while those using it stay since any change will likely make it more expensive. This has the effect that premiums will rise slowly, but surely. After a while, any regular old plan ends up becoming a high-risk pool with pretty high premiums, so that everyone ends up leaving.

        • “3.2% of GDP”, “fragmented, inneficient, and unresponsive”, and “no insurance choice” (this one is false, per my comments above). Please tell how those criticisms (the worst according to the linked article) are in any way worse than the current U.S. system.

          I haven’t read the actual report, but it sounds to me that it is evaluating the system against an idealized version of single payer that does not exist anywhere.

          • Also it should be noted that your questioning of “reasonably good” is exactly my point that the average American expects way too much from “free” healthcare.

            • Right. Medicaid and the ‘Affordable Care Act’ have promised far too much for those who are low income or who are without a job for some reason. Incidentally, I’d certainly not want to do medical tourist and get a kidney transplant in Mexico.

    • It is, as you say, discrimination in that the compananies must make discriminating choices. That’s not what discrimination means in the context in which it is usually used, however, as in racial discrimination. If I cast a white actor to play Abe Lincoln rather than a black actor, I am properly discriminating between two individuals, but I am not discriminating in the sense of enmity or bias.

  3. This one is close to me, so here goes a story (some details changed to preserve anonymity).

    A very good friend of mine works for a $BIGCO and is covered by their insurance plan. Being a healthy, young adult, he opted for a medium-tier plan where most check-ups and visits charge a copay (mostly reasonable, around forty dollars per visit), there is a high deductible (high four figures for one person), and coverage is limited to doctors belonging to a certain health organization (think a co-op plan, but not exactly). He’d been previously on a much better plan (premium fully covered by employer, no deductible), but when ACA passed the company canceled the plan because it was a “Cadillac” plan and a 25% tax on top of the premiums was something the company would not cover.

    Fast forward a couple of years, and my friend is diagnosed with a very aggressive, late stage case of cancer. His current plan only covers a set of pre-approved treatments that the doctors have stated have less than a 1% chance of saving him. It’s unclear whether the old plan would have covered the more sophisticated treatments that were suggested, but that was a moot point anyway. Luckily he has a good paying job, is single and has enough liquidity available. He gets in touch with specialists across the country and signs up (and is chosen) for an experimental treatment. His insurance covers less than 5% of the expenses, and even after aid from multiple organizations he’s responsible for over 300k. Results have been positive, but he’s spending over 70% of his monthly income in continued treatment. His current insurance plan is mostly useless to him now (but if he drops it he has to pay the penalty) and any plans like the one he used to have are no longer available (not just to him, they were canceled all across the state both for individuals and groups).

    Should insurance have paid for his treatment? Probably not, we’re talking over a million for experimental interventions that ended up being published in a medical journal. Should it be paid by whoever is conducting the research? Maybe, but the chances of recovering any of that investment are probably close to zero, so there’s no way that these projects will be self-funded. Is it worth for some charity to pick up the tab? Probably not, and if they pick some of it (they actually did that for him) they want to spread that over multiple patients and treatments to increase the chances of funding a successful one. Is it unfair that he ended up paying that much? Probably not, it’s unfair that he got cancer, but it’s part of life. Maybe a better plan or one for catastrophic expenses (which make no sense these days given all the coverage being forced) might have helped, but the likelihood of them covering what ended up saving his life was really low. He got what he paid for and he got very lucky that it worked. He literally paid to have his life saved and it worked.

    Take whatever lesson you want from his experience. I’m happy and grateful he made it through, even at a fairly high cost.

  4. Prior to the ACA, insurance companies were required to offer one or two plans – usually their two most popular – as HIPAA plans. They were guarantee issue and intended for just those persons who could not get medically-underwritten coverage due to their serious medical issues. The premiums for those plans were high due to their very nature.

    They also had to meet specific guidelines, such as not being eligible for other types of coverage and not having lapsed their previous coverage due to nonpayment. And there was a window after the loss of coverage to apply.

    So there was an option for a lot of the people considered uninsurable…they just had to be locked into specific plans, couldn’t change them and had to pay the higher prices for them.

  5. Great, great post Jack. Thank you. Pre-existing conditions is the healthcare elephant in the room and I wish people would address as you have. I will say one of the guiding concerns of my wife’s and my life as adults has always been making sure we have health coverage. Would it have been easier and more fun not to have worried about having health insurance? Sure. “I coulda been somethin!” But instead one or both of us always toiled away and had insurance. Without interruption. For well over forty years.

  6. If we begin by examining health care fees for non-medically necessary or cosmetic procedures such as Lasik surgery, breast augmentation, liposuction etc. over the last decade we will see that in some cases the prices have actually fallen and in others the prices have risen relatively modestly when compared to services paid through third parties. These prices – or consumer costs have not escalated as much because consumer demand for services is a function of the ability to pay.

    In fact, persons with preexisting conditions are not buying health insurance to protect them from an unknown event in the future, they are trying to buy an all inclusive medical maintenance plan. Proponents of mandates say that we need to increase the size of the risk pool to help lower health insurance costs. Insurance is designed to share risk not claim costs. How many people would buy auto insurance from a firm that only specialized in insurance the highest risk drivers?

    Lets put some things into perspective. If we have one person with a preexisting condition that requires $1,000,000 per year in maintenance those costs must be shouldered by other people in the paying pool. There is no risk assignment – it’s a 100% given. Why should I join that pool when the expected payback is much higher for another in the pool. The expected benefit should be the same for the same premium.

    Let’s be clear, health insurance is not health care. There has been no effort whatsoever to lower healthcare costs by anyone other than insurance firms. Consumer demand is a function of the consumer’s ability to pay. When government improves the consumer’s ability to pay demand increases. As demand grows, so do prices for insurance. As the level of personal financial risk declines through insurance the demand for health care services that might not really require medical treatment will rise exacerbating insurance premiums.

    I have long suggested that if government wishes to be involved in helping the chronically sick avoid financial ruin it should segregate those with preexisting conditions and subsidize them only. You could create a reinsurance type program in which those with preexisting conditions are insured privately – like everyone else – but the government helps defray the actual health care costs of the excluded coverage that the pre-existing condition would create. This way you level the playing field somewhat by eliminating the risk of the known condition in the pool. That would help reduce premiums and prevent the problem of overutilization of health care services.

    People with preexisting conditions are not in the same market for insurance as anyone else who is deemed otherwise “healthy”. Once we decide that we will share everyone’s medical costs we will then be able to tell each other how to eat, play, and live so as to lower our own costs. I hope that day never arrives.

  7. Insurance companies rely heavily on actuarial science to calculate the risk any prospective insured party might pose. Actuarial science relies on many factors but most heavily on statistical records and probabilities. The actuaries have zillions of statistical data for every imaginable kind of risk including health risks and they can calculate to a high degree of accuracy what the value of the risk is and measure it in terms of likely pay outs for future claims. From this they can calculate insurance premiums for the pool of insured so that the insurance company makes a reasonable or maybe even an unreasonable target profit. It is mostly arithmetic… nothing personal.

    With regards to health insurance, each individual poses a certain degree of risk as measured by dollars of pay-out likely. Some of the risk factors are beyond the individual’s control. But some of it is at least partially within the control of the individual. People who smoke, drink lots of alcohol, do drugs for fun, eat junk food to excess, jump out of perfectly good airplanes, and sit on the couch ten hours a day, are probably going to exacerbate their risk of health problems and insurance claims. While it may sound heartless, I don’t think that the insurance companies should knowingly take on the extra financial risk because of obvious and known risky life choices.

    Obviously, in a civilized society, there should be some safety net to take care that hardship is mitigated for those who, for whatever reason, can’t take care of the problem they face. The degree of mitigation provided by the society is a social and political problem that will always require some compromise.

  8. We all have pre-existing conditions Jack. It’s a judgment call afforded to the insurance companies who hold all the power over your physical and financial well being. They could, conceivably, not cover just about anything based on pre-existing conditions. After all they have stockholders to think of. The customers have zero recourse. That’s why I do not like our current healthcare situation. We pay money for a service that we, mostly likely will be denied when we need it most. That’s how crazy this is.

  9. I don’t know how to solve the pre-existing condition problem. Maybe the government should pay for them. Maybe all our rich doctors should create a pool to cover them, or agree to charge less for their treatment. Maybe healthy people should be penalized for being healthy. Maybe we should take the position that we are responsible for our own treatment. There are lots of possible schemes, all with ethical conflicts and dilemmas attached to them like ticks.

    Joshua Black (I think you blooed about him once) poasted a meme on his Facebook pagbe which identified the problem not as health insurance coverage, but health care costs.

    And that is right. Why do we not need auto insurance to pay for oil changes and brake replacements or transmission replacements?

    it is because the price of health care is too high.

    Legislation is needed to place caps on these prices.

      • And wages. If those greedy doctors didn’t all make 6 and 7 figures, we’d all be able to afford health care!

      • Compare the costs for prescriptions, emergency room visits and different surgeries against those in other nations, and then tell me if you don’t think American medical costs are crazy…some humdingers that I’ve come across during my parents’ various illnesses ( what was billed to their insurers) $33.000 for total knee surgery, $1,500 for 3 Ativan tablets, a $700 MRI (lower back) , and $3,300 for an emergency room visit for a fever. Is this reasonable?

        What about the denial of care that goes on? I was told point-blank on the phone that further anti-emitics for nausea after chemo weren’t possible… “Those pills are expensive! We can’t give them out like candy!” and in another phone call because of the utter misery my parent was in, “You do realize he’s terminal!?” My mother’s start on dialysis was postponed until her BUN levels were 110+, far higher than is necessary to start dialysis in other systems. Cutting costs by cutting/postponing treatment seems rather a stupid way to go about health care…

  10. Donald Drumpf, as anyone who read his first “comment” would guess, is banned following his second useless, trolling, ethics-free and ethics-challenged “resistance” style ranting bile-display. What a jerk.

  11. What is the objective? To provide a minimum standard of healthcare for reasons of public health? To minimise the number suffering and dying because they can’t afford simple treatment? To ensure a regulatory environment that makes medical insurance immensely profitable? To have the usual insurance environment for the moderately well off to spread risk of catastrophic events?

    These are different goals, often competitive with one another.

    The ACA – Obamacare – originally looked a lot like the Australian system Trump recently praised. In a futile attempt to get GOP and Donor support, it got changed out of all recognition into something quite different.

    The problem is that resources are limited – and for the good of the economy, there has to be some degree of “from each according to their ability, to each according to their need”. That is unacceptable though in the US, and that phrase should raise hackles in every nation.

    • A degree of clarity never honestly discussed in political debates. It’s all blurred together as “access to health care,” then “access to affordable health care,” with the real meaning being “access to health care someone else pays for.”

      • Price controls are the solution.

        Several cities in California banned plastic bags and required supermarkets to charge ten cents per paper bag.

        Why can’t the government tell doctors and hospitals how much to charge? Many cities in California set prices for paper bags and this did not cause the collapse of the paper bag industry.

  12. Tex actually identified the biggest problem — single payor is a jobs killer. I’ll admit that. Tens of thousands of people will have to find new jobs. Of course, there’s a flip side to this issue. Is it moral to sustain an industry that only benefits the rich and those who have access to employer-sponsored health care?

    If we are going to get anywhere in this political debate, we have to be honest. Single payor is not sunshine and rainbows for all. Many people will have to find new jobs. Not everybody will love the care that they are provided. Medical students might decide to become stockbrokers instead because they will not make as much money. (On the plus side, the risk for med mal will go down so maybe there will not be a mass exodus.)

    Another truth: a single payor plan will hurt the upper middle class the most. People like me. Because under single payor, I undoubtedly will have to pay more in taxes (the only way it could work), but I most likely will get a lower standard of care down the road. So, I imagine many people like me will go out and buy private insurance to sit on top of government provided medical care. So now I am even out more money. (Similarly, I don’t like my government provided education, so I pay money out of pocket for my kids’ school.)

    While acknowleding all of this, I would still vote for single payor. In my view, it’s not ethical to let people die so other people can have jobs. That’s my position. If it means we can never go on another vacation or eat out again, it is more important to me that everyone have access to basic health care.

    • Sparty, isn’t single payer just one more way to control the population? You trust progressives to decide if their political opponents live or die? Or (shudder) Republicans?

      Honest question ( and some snark)

      • You know what? I’m already enrolled in a single payer system. Called Medicare. The program deducts from my monthly Social Security a fee for medical insurance (or paid health care, if you want to call it that).

        Besides that fee, I also pay a Medicare-Plus organization for office visits, part of my medications, and specialist fees. My co-pay for visiting an emergency room is $50; my fee for one-day offsite surgery (not performed at my HMO’s clinic) is $150, and my hospital stay, no matter how long, is $500.)

        You could describe it as a public-private partnership. My wife and my two sons are also in Medicare-Plus programs. Last year, I paid Social Security $1259 for my Part B coverage, and $4469 for my Medicare-Plus and my family’s medical coverage. Prescription medicine payments for 2016 were $1500.

        The down side of this coverage, if you want to call it that, is that my doctor and specialist visits are mostly within one or another of Kaiser Permanente’s facilities. X-rays, CAT scans, sonograms, prescriptions, blood draws and urinalyses are all provided by Kaiser employees, and most of these services are in the same building where I see my doctor or specialist. If I need emergency care inside a hospital, I must go to a hospital that Kaiser has a contract with, and the choices are not limited.

        And we get constant reminders to eat well and keep physically active.

        I suspect that many of the Republican legislators don’t want the general public to know what the Affordable Care Act covers. The summary prepared by the Kaiser Family Foundation would take 27 pages to print out. (If you think the foundation is a partisan source, check out its website. And keep checking the site as senators, state governments, and health-care professional societies start looking into the AHCA.) Insurance for individuals is only a small part of the ACA; the purpose of the measure as a whole is to try to bend the growth of health-care costs in the U.S. According to the Congressional Budget Office, just that is happening. Whether this is a result of the ACA is debatable and perhaps more an issue of belief rather than fact.

        Health insurers would be financially stronger if they could reinsure some of their high-cost subscribers. (I can’t explain how it works but it involves spreading out risks.) When the ACA was passed the Republicans forbid insurers to do this; I don’t know the reason but have suspicions.

        If you happen to attend a town-hall meeting with your elected representatives during their recess, ask them about reinsurance and the parts of the Affordable Care Act nobody talks about (bring that 27-page printout). Do the Republicans want to repeal those sections, too? Do the legislators know what the medical societies and hospital groups have said about the AHCA?

        (Ital) My apologies for such a long report, Mike. I just think too few people have looked at the sinew and bone of the ACA, only the skin. Edit the report where you can (end Ital.)

        • When the ACA was passed the Republicans forbid insurers to do this;

          Huh? Parties can’t order anybody to do anything. What are you talking about?

          Other questions: what does Medicare have to do with the ACA? It’s a senior program, and it is still eating a dangerously high percentage of the budget. You’re might airy in dismissing “spreading risk” which means huge deductibles and premiums, plus lack of consumer autonomy. Who cares what the ACA “covers”—it’s number don’t add up, and never did. So there are features nobody talks about? People who could afford heath insurance now can’t, and never get to the those alleged virtues. Meanwhile, medical costs keep rising. That’s not lowering costs. “Yeah, but how do you know they wouldn’t be even higher without the law?”


          • Huh? Parties can’t order anybody to do anything. What are you talking about?

            I suspect it is an effort to hold blameless Barack Obama and Nancy pelosi. Check out this status update from Facebook.

            “I maintain that even though Republicans refused to vote for the ACA in the first place that they cannot say they had no responsibility for the ACA, when what they did do was attack it from every angle so they could to destroy it.
            They took a program that could and did help millions of Americans and sabotaged it so it wouldn’t work the way it was intended to.
            The Republicans play with people’s lives as if we are all pieces in a game. It was all a play for power and nothing more.”- Cathy Reulbach

      • Do you think senior citizens believe they are controlled by the government because of social security and medicare?

    • Another truth: a single payor plan will hurt the upper middle class the most. People like me. Because under single payor, I undoubtedly will have to pay more in taxes (the only way it could work), “

      True. Inevitable. The money for more coverage must come from somewhere, and you can’t get blood out of a stone.

      but I most likely will get a lower standard of care down the road

      Not necessarily. Consider air travel. Everyone on the plane gets from point A to point B. In that sense, everyone gets the same level of service.

      On a 30 minute puddle jump, the difference between first and economy class is negligible. On a 12 hour transcontinental flight, significant. That’s the difference we’re talking about here. In extremis, the difference between a hospital substance abuse ward, and a private country club that deals with substance abuse.

      It depends on implementation. A elderly relative of mine from one country with single payer was visiting another country, also with single payer, when she fell and broke her hip. In her own country, she would have been put on a weeks long waiting list for a hip replacement. In this one, she was in the surgical theatre within 6 hours of the accident. No charge, and no need for travel insurance as there was a reciprocal arrangement.

      Her experience was that the standard of care for top up and no top up was identical, with both public and private patients mixed in the same wards and using the same facilities. If a private room was medically indicated, it was provided. If it was just preferred, those with top up insurance got priority.

      So, I imagine many people like me will go out and buy private insurance to sit on top of government provided medical care. So now I am even out more money.

      Many do. Some don’t. Private insurance usually won’t buy you a higher place on a queue for services rationed strictly on medical necessity. It will pay for nonmedical extras, perhaps a choice of decorative porcelains for a toothcap rather than the standard white. Gym membership. Homeopathic or other fashionable alternative treatments with no good evidential basis of effectiveness. Some single payer nations don’t even cover dental or ambulance expenses except for the indigent, and many get insurance just for those.

      Most importantly, it may also defray the cost of medics who choose to charge more than the fee they get reimbursed for those patients not in possession of entitlements due to poverty, age, veteran status etc. Very much like Medicare. There’s nearly always a copay for patients without such entitlements, in order to contain costs and prevent over-servicing. In France it’s about $25 per visit to a PCP.

      Typically, for a multimillion dollar cancer treatment, someone on welfare benefits will pay $100 per year, those on median income $4000, everyone else up to $10,000 capped.

      I think you can reasonably budget on paying 2-3% of taxable income that is over the median wage for such a system, plus another $2000 pa for a top up. Given US medical costs of 150% of those of most nations, maybe increase accordingly.

      Break even point is around $200,000 pa personal or $300,000 family income, but even then, there is often a cap on copays so no-one goes bankrupt, and there’s no lifetime cap on benefits. Those with an income over $200,000 will certainly have to pay more, yes. Those with a 7 or 8 figure income substantially more, especially since many self insure.

      • Not necessarily. Consider air travel. Everyone on the plane gets from point A to point B. In that sense, everyone gets the same level of service.

        WOW! What an audacious time to make THAT analogy!

      • “Most importantly, it may also defray the cost of medics who choose to charge more than the fee they get reimbursed for those patients not in possession of entitlements due to poverty, age, veteran status etc. Very much like Medicare.”

        The practice of charging a patient more than what Medicare allows is called balance billing. It is strictly illegal. All private insurances I have dealt with are the same. If a doctor accepts assignment then they accept the fee they agreed to and cannot go after the patient for more. Doing that with Medicare may very well result in a stay in a federal lockup plus a hefty fine plus being banned from participation in Medicare. The real benefit of having additional coverage is that the secondary insurance will likely cover the deductible which in some cases can be substantial,

  13. I just want to add a few comments about some of the points that have been made and add one or two of my own.

    The $1.50 acetaminophen pill. What happens to the lets say 1 cent acetaminophen tab you might get in the hospital. Not looking at all the steps: stored in the warehouse, moved to the pharmacy, possibly repackaged as a unit dose pack. Meanwhile: doctor writes order, nurse takes off order and verifies, nurse sends order to pharmacy, pharmacy verifies order, pharmacy checks for drug interactions, pharmacy sends to the nursing unit, nurse verifies and puts in patients med box, nurse administers pill at time ordered. The charge in this case is not for the pill, it is for delivering the right pill to the right person at the right time. Each of those steps have a cost. I no true knowledge of the true cost but my feeling is that $1.50 is probably a fair charge. I think Starbucks is charging about the same price or more for making a cup of coffee but nobody complains about the premium they are paying because they generally understand that the steps involved in turning coffee beans into coffee have a cost. That said, I feel that $500 for an Ativan is totally inappropriate when the retail price of brand name Ativan is about $30 per 1 mg pill.

    In the article in the WaPo that Michael E linked to there was a comment about doctors charging for such items as gauze and markers. The hospital, not the doctor, is the entity charging for all supplies, medications, and such. The doctor has absolutely no control over what the hospital charges for those items and receives no money from those items. The doctor is paid the amount allowed by the insurance company for whatever services he or she bills less the deductible. If the doctor is employed directly by the hospital, which is becoming increasingly common, then the doctor receives only the salary or fee the hospital agreed to pay no matter what the hospital is able to bill for the service.

    What the doctor bills to insurance companies is seldom what the doctor is actually paid. When I was in private practice I charged $75 for a follow up appointment which was actually quite a bit below the usual rate. Medicare allowed about $55 for that follow up so $20 was written off immediately. Medicare then paid 50% of the fee and the patient was responsible for the other 50%. Of course, I then had overhead and taxes coming out of that.

    I was employed by the government as an Air Force doctor for some of my career. As a civilian doctor in private practice, pretty much all of my income was through insurance payments which meant I accepted what they paid plus the deductible as my fee. In this geographic area almost all doctors work primarily for insurance reimbursement so far the most part they are already working under cost control set by the insurance company. The reimbursement rate for most insurance is close to Medicare so essentially the government is setting the price cap for physician pay. If interested, you should be able to find most of the Medicare fee schedules on line.

    When you look at the entire cost of healthcare, particularly when you look at the really high cost things, you will find that the actual amount the doctor gets is a small fraction of the total cost. The doctor is not getting $33,000 for a knee replacement surgery. There are costs for OR time, equipment used, supplies used, recovery room time, etc. Whether that total cost is reasonable or not I do not have the information to say. Are doctors overpaid? Well, I don’t think so. I know quite a few attorneys who make a lot more in a year than I ever have. I feel that they earn their money. Of course, if we are going to start drafting professionals and sending those who won’t serve to Leavenworth per Michael or having the government decide how much doctors should be allowed to earn, then I would be honored to have my attorney friends and other professionals join me in playing by those rules.

    A question for Spartan. If we adopt a single payer plan like she envisions, will it be ethical for people to buy additional insurance to get a higher level of care? With a limited amount of resources available it seems that would lead to the situation where those with money will be able to ensure that they can buy care others cannot obtain. Sorry Ms Smith, your granny can’t have dialysis, Spartan just bought that slot on the machine for her family member. Will scenarios like that actually happen? I think at some point they are bound to given the acceleration of the types of advanced care that are available and the limited availability and extremely high cost of some of them.

    I think Sue D asked some very pertinent questions. Until those are answered and we decide openly and honestly what it is we really want and what we are willing to settle for regarding all aspects of healthcare any attempts to fix it run the risk of just making things worse than they are. Just my not too well organized thoughts

    As a native Kentuckian, I have to say Happy Derby Day to everyone and I hope that you enjoyed your mint juleps and that your horse won.

    • “A question for Spartan. If we adopt a single payer plan like she envisions, will it be ethical for people to buy additional insurance to get a higher level of care?”

      But that happens now under the current system. For e.g., a person can choose an HMO or PPO plan. Under a HMO, you typically have to go to your primary care doctor before you get evaluated for diabetes. Then you work your way up to a specialist. However, if that same person had a PPO, they could go directly to the specialist. And, the super rich can do whatever they want — they aren’t concerned about following the right steps or figuring out if a doctor is within network or takes insurance at all.

      The truth is that right now people aren’t seeking preventive care because it is too expensive. So, to stick with your hypothetical, a lot of people could be seeking medical care that would eliminate the need for dialysis altogether. The goal here is to see a healthier populace generally, but of course the elite always will have it better than the little guy. There’s nothing wrong with that — I just want to establish what is a baseline standard of living. For me, being able to go see a doctor if you feel ill is that base.

      Truly, it is the exact same analysis as schools. Public schools are completely funded through taxes. Some of them are great, some are awful but, as a nation, we decided that at least a baseline education should be provided to our children. We all have to pay, whether we have children or not. However, if you have extra money to spare, you can enroll your children in a private school that you think is better for religious and/or educational reasons. We have made that choice in our family. And although it is a financially difficult choice, we have done it and do not begrudge the tax dollars that have gone to finance education for our neighbors.

      • I agree totally with your point re preventative care. As a military doc, especially when I was a flight surgeon, the major goal was to keep the troops healthy. Preventive care needs to be the mainstay of a health care program. It seems to be very hard to get that paid for because for the most part you don’t see any immediate benefits. The payoff is years down the line. After routine health screening and preventive care, the next step will be to continue to work on things like smoking, excess drinking and other behaviors that increase health care cost. I was going to mention that above but felt I had blithered on long enough.

        I understand your point about paying taxes for education and then paying additional for a higher quality education. A difference from healthcare is that you may die if you don’t get some super treatment that you can’t afford to pay for and there may be a limitation on how much of that treatment is available. Perhaps a straight lottery system for who gets a treatment with limited availability would be the fairest system. As you say, no matter what the elites will get more. Particularly politicians who carve themselves out of the system everyone else has to struggle with. As a military retiree I have TRICARE which is a fairly good program and that plus Medicare now that I am a geezer pretty well keeps us covered. Congratulations on your COTD. A lot of good points.

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