There is a provision in Obamacare that went into effect a couple of years ago that forces smaller insurance companies to spend at least 80% of their costs on actual healthcare costs and for larger insurance companies that number is 85%. That means that for insurance companies only 15-20% of revenue can go to employee salaries, building rent, other administrative costs, advertising, CEO pay, profits, etc. So I'm not sure if this is actually going to make more billionaire CEOs. While more people will be buying health insurance, at the same time, CEOs are now limited in what they can pay themselves. The only way they can pay themselves more is to reduce administrative costs or cover more customers, which means making their own health insurance company more lucrative than their competitors to consumers, which is a good thing.
> That means that for insurance companies only 15-20% of revenue can go to employee salaries, building rent, other administrative costs, advertising, CEO pay, profits, etc.
> The only way they can pay themselves more is to reduce administrative costs or cover more customers...
Not true. There's one more variable you forgot: cost of care for an individual customer. Under a model where the percentage of profit is fixed, there exists an incentive to collude with care providers to increase costs across the board.
This is the fundamental issue with insurance. The consumer is once-removed from all transactions. They pay a fixed annual premium for all their care. This premium goes up and down based on market forces in which they only participate on the demand side. The costs for their usage are distributed amongst classes (groups) of users, so the user of the service might see price increases even when they haven't used the service much; confusing to say the least. This leads to the generalized understanding that "insurance costs go up over time", even though there may be no justifiable reason other than the desire for increased profit for providers.
IMO, Obama Care represents the worst possible solution to the problem. I'm not opposed to the idea of healthcare as a "right", but I am opposed to injecting for-profit organizations in to a service that is mandated by the government.
Yeah, well...there were several different single-payer proposals in the mix, but none made it out of committee, because they were "too radical" to pass the House. And once Scott Brown was elected, anything that even remotely smelled like "socialism" (i.e. simpleton socialism, not real socialism) was off the table.
There are no solutions to this problem that don't involve either making consumers aware of how much they're spending on health care (thus aligning economic incentives), or removing the profit-seeking entity from health care altogether. So long as we have consumers who don't know/care what they're paying, medical and insurance companies who have a profit motive, and physicians who have no incentive to consider cost of care, we have an economic recipe for health care hyperinflation.
The "conservative" propaganda machine has thoroughly brainwashed our poorest and most vulnerable people into voting against their own economic self-interests on this issue. I don't know what's going to fix it, but until that day, we'll get "free market solutions" that make health corporations richer and don't do anything to fix the underlying economic incentives that are causing the problems.
Consumer awareness on many health issues is not an incentive problem. Do you really think that someone wrecks their body with a poor diet over 20 years is going to change behavior based on how much they pay for health care? I really wish it was that simple.
Health care is got a nasty price-sensitivity curve. Who wouldn't pay a lot of money to live a little longer?
The solution I would like to see is:
1. Just lower the eligibility age for Medicare by 2-5 years every year. All the machinery is in place and
the gradual change gives the system time to adjust.
2. Put 10-20% of the health care budget into making it cheaper to treat and prevent diseases. Allocate the
money using the existing grant process. Require that all the results be public domain.
3. Treat lifestyle issues (weight / smoking) when people are young. Go after them aggressively as diseases
while people are still in public schools.
The only encouraging thing I have to say is that Social Security got progressively improved once it was enacted. Maybe we will get the same thing over time.
The solution I would like to see is that instead of just offloading the cost of individual health care to the collective whole of all America, we address the underlying absurd costs of healthcare, itself.
If healthcare insurance were treated like automobile insurance, it would be affordable for the individual and it would remain the individual's responsibility to take care of it themselves.
Instead, our solution to a $20,000 ER visit is to move the expense from the person receiving the treatment to the entire tax-payer base . . . the health care industry still benefits, either way and only those paying the bill for everyone feel the negative impact.
Why is our only solution "more government! More taxes! pay for everyone else's problems!". Why can't we find a way to address the pricing, in the first place? Why is this not even a discussion that has been had?
"Consumer awareness on many health issues is not an incentive problem. Do you really think that someone wrecks their body with a poor diet over 20 years is going to change behavior based on how much they pay for health care? I really wish it was that simple."
You're assuming that the problem with the US health care system is that people eat too much and are willing to pay so they don't die? Come on. That's universal human behavior. Diabetes and obesity are world-wide epidemics.
I agree that expanding Medicare systematically would be a decent idea -- in fact, it was one of the ideas that got sunk in committee. In a nation where for-profit health corporations have a lot to lose from government competition, the specter of expanding the (efficient and cheap) Medicare system is terrifying to a lot of rich people.
I still see hope for how it could play out. I forget the details, but I think states have the ability to experiment with their own alternate exchanges. Like they can experiment with state-run single-payer. And if it proves to work well, more people will switch to it, and other states could grudgingly switch to similar approaches, etc.
I consider myself progressive and this is the most asinine solution I've ever seen.
Instead of fixing health care costs we are going to make more billionaire CEOs.