The Health Insurance Mafia

Wall Street Journal ^ | April 14, 2008 | JONATHAN KELLERMAN

[neverdem]

Most discussions about the rising cost of health care emphasize the need to get more people insured. The assumption seems to be that insurance – rather than the service delivered by doctor to patient – is the important commodity.

But perhaps the solution to much of what currently plagues us in health care – rising costs and bureaucracy, diminishing levels of service – rests on a radically different approach: fewer people insured.

You don't need to be an economist to understand that any middleman interposed between seller and buyer raises the price of a given service or product. Some intermediaries justify this by providing benefits, such as salesmanship, advertising or transport. Others offer physical facilities, such as warehouses. A third group, organized crime, utilizes fear and intimidation to muscle its way into the provider-consumer chain, raking in hefty profits and bloating cost, without providing any benefit at all.

The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like. Insurance companies provide nothing other than an ambiguous, shifty notion of "protection." But even the Mafia doesn't stick its nose into the process; once the monthly skim is set, Don Whoever stays out of the picture, but for occasional "cost of doing business" increases. When insurance companies insinuate themselves into the system, their first step is figuring out how to increase the skim by harming the people they are allegedly protecting through reduced service.

Insurance is all about betting against negative consequences and the insurance business model is unique in that profits depend upon goods and services not being provided. Using actuarial tables, insurers place their bets. Sometimes even the canniest MIT grads can't help: Property and casualty insurers have collapsed in the wake of natural disasters.

Health insurers have taken steps to avoid that...

[neverdem]

This makes too much sense. That's why it won't happen. If they only could just peddle insurance for a medical catastrophe that the insurers had to cover, with everything else out of the patient's pocket.

[socialismisinsidious]

Socialized Medicine aka Universal Health Care PING LIST

FReepmail me if you want to be added to or removed from this ping list.

[farlander]

It’s called a ‘medical savings account program’.

[goldstategop]

The point is doctors have no incentive to offer patients the best care at an affordable price. They can charge what the market can bear because someone else pays the bill. Ditto for patients. The bill is absurd from their point of view but they get off paying it too. In the health care system, there's a lot of cost shifting and little cost containment or real choice. No one wants it.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[goldstategop]

Jonathan Kellerman? I wonder if he's the same person as the author of the Alex Delaware novels under his name.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[poobear]

I have decided that this Universal Health Insurance is the Democrats’ way to fix SS/Medicare in the form of another payroll deduction.

tin foil hat OFF!

[G Larry]

Two non-value-added groups:
Tort Lawyers,
Insurance Companies,

Kinda like cockroaches, there’s no getting rid of ‘em.

[The_Republican]

Not enough details. I understand the business model and how it relies on not providing any services that you are charging for. However, there were no suggestions on the system can be fixed. How much of the payments are actually been skimmed by Insurance companies.

Just saying Doctors and Patients should cut out the middle men all together is not going to get it done.

[goldstategop]

Kellerman's point is the model that works in every other area of the economy ought to work in health care. Doctors post their prices and patients decide if they can afford to pay for them and pay in cash or or an installment plan. This will make health care more available and increase satisfaction on the part of both sides. When you cut out the middleman, a huge financial burden on the system is removed. However, the politicians have no desire to see that happen - it would cut them entirely out of the health care picture.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[Nachum]

The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like.

What a total crock. If people could have gotten rid of Insurance companies they would have done so a long time ago. The insurance industry is one of the most heavily regulated industries in the world: especially health insurance.

You want to know why insurance plans cost so much? Look no further than your legislatures in any number of states. The states place any number of unfunded mandates on insurers that systematically drive prices up. The worst offenders are the states of New York, California, Oregon, New Jersey, and Massachussetts. They have the most mandates on insurers and correspodingly the highest rates and fewest companies competing.

IMHO, the goal of all of this is to make it so destructive to the public and health care providers as to force everyone into socialized health care. So far, the public has given the socialists the finger.

[neverdem]

It’s called a ‘medical savings account program’.

That's for routine medical care, not a catastrophe with costs in 6 or 7 figures.

[farlander]

Medical savings accounts plans are backed up by the catastrophic insurace policy that has a 3-5k annual deductible. And those are *cheap*.

[B-Chan]

It is getting it done. Our pediatrician gives us a 60% discount for office visits if we pay in cash.

But office visits are not the problem. Most people can afford to pay cash for routine care. The costs of lab/diagnostic work, prescriptions, therapies, prostheses and major medical procedures are the killers, not checkups and sore throats. Even at a 60% discount, the costs of long-term meds, prostheses, therapy, emergency care and surgeries are going to be beyond the reach of the average person.

If only it were possible to buy insurance only for Rx/emergency/major medical/catastrophic care.

[untrained skeptic]

The largest value added by insurance companies is their negotiated rates, which in many cases are only a small fraction of the list price the provider would try and charge if you didn't have insurance.

A lot of people might be better served if they had an option to have much higher deductibles while still paying only the contract rates out of pocket.

[goldstategop]

That's the point. There's a mutually symbiotic relationship between insurers and the politicians. They both have a vested interest in squeezing doctors to make more money for the insurers and to allow the politicians to claim more government intervention is needed to correct the distortion created by the absence of market forces in health care. Its worked out beautifully - for them.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[B-Chan]

Medical savings accounts plans are backed up by the catastrophic insurace policy that has a 3-5k annual deductible

Really? I can't seem to find such a plan here in Texas. Care to enlighten me?

[heartwood]

The mafia comparison is apt. One reason people get health insurance is so they can (through the insurance co.) get the “connected” prices. Example - mammogram to insurance co. $150, without $600. Minor surgery - hospital accepts $2000 from the insurance company, but bills patient without insurance $10k.

[goldstategop]

That's when catastrophic insurance needed - which is what most people really need just in case they get too sick to care for their health out of a pocket. HSA's and tax deductible insurance plans for emergencies should cover such expenses nicely. But that's not popular with insurers who stand to lose money on people who don't pay premiums and there are too few sick people for the politicians to justify covering them alone with a government program.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[maryz]

Dr. Kellerman, clinical professor of pediatrics and psychology at USC's Keck School of Medicine, is the author of numerous crime novels and three books on psychology. His latest novel is "Compulsion" (Ballantine, 2008).

Looks like it! I never read him, but I love his wife's Peter Decker/Rina Lazarus novels!

[VideoDoctor]

The Health Insurance Mafia

It's an "old" model that is doing more destruction than good.

It's about time things changed.
Things usually change when a substantial amount of people-public begin to "wakeup".,,,,

The WSJ article is smelling salts for the wakeup process.