The Health Insurance Gig Is Up

By Doug Thompson

There are 48 million uninsured Americans now. That’s roughly equal to the combined population of California and Ohio.

If the uninsured were all in one state, they’d elect 71 members of the U.S. House of Representatives.

Somebody pays for their health care. The uninsured themselves do, mainly, with a big share of their income and by simply ignoring health problems. Those who don’t pay out of pocket and don’t seek health care, shorten their lives, living with pain and sickness. The declining percentage of people with health insurance pay much of the rest. Taxpayers and institutions like hospitals pick up the balance.

The automobile industry is contracting. People clamor for U.S. workers to trim their benefits. Maybe they should, but that will be a lot less money in the private insurance sector when they do.

Insurance companies make money by taking premiums and investing them. Well, we’ve just lost a long-running bull market. Despite all the investment income insurance companies made before the collapse, premiums still went up faster than inflation. You can imagine what the blight of investment opportunities will do to that investment income now.

If the insurance and related health care industries could not catch their breath and reform themselves when times were good, how are they going to restructure themselves now?

Unemployment is already more than 8 percent nationwide and we’re still shedding 600,000 jobs a month. Most people who have insurance get it through work. Those who still have it have higher deductibles and less coverage.

Here’s the point: Health insurance is going to go through some radical changes during President Obama’s administration. Like it or not, it doesn’t matter. If Obama can’t get his reforms through, much of the industry as we know it is going to collapse anyway. Millions more will be uninsured and somebody will pick up the cost.

Look how much of the so-called stimulus package is actually bail-out money for state Medicaid programs. A third of Arkansas’ share is just that, and we’re not running a deficit.

Cry “socialism” all you want. People in a socialist country work, work and work to pay their taxes. People in a capitalist county work, work and work to pay their taxes and their insurance. What’s the practical difference?

Here’s one: From 1997 through 2006, “health spending per enrollee (for comparable benefits) grew at 4.6 percent under Medicare, compared with 7.3 percent under private health insurance,” according to Jacob Hacker, a political science professor at Berkeley.

The bottom line is simple. If the private insurance industry was working, the number of uninsured Americans wouldn’t rise every year whether economic times are good or bad. Put in simple business terms, the private health insurance industry is losing customers by the bushel basket. It’s getting more money out of the customers it’s been able to keep, but that’s a pattern that’s visibly self-defeating.

We spent 12.2 percent of the national gross domestic product on health care in 2007, according to federal statistics.

You could make an argument that the debt-laden U.S. consumer is not so much someone who likes to blow his money as someone whose disposable income disappears as soon as he gets sick.

How can consumer spending go up — which apparently it must do for the economy to recover — when one dollar in every eight goes to the costs of staying alive and relatively healthy?

Dr. Douglas W. Jackson, writing for the trade publication “Orthopedics Today,” writes about how health care reform is already under way in the stimulus package, among other efforts. 

“I am amazed at how quickly these new entitlement programs have advanced,” Jackson writes. “This has occurred without many debates on the long-term consequences of the undetermined financial costs or on the timing of the programs during a yet-to-be-defined form of national health insurance.”

Yes, doctor. These are the consequences of failure. Private sector health care isn’t getting the job done, so the amateurs are having a go at it. It will be expensive. It could fail. It probably will for a long time before people find the handle. The option, however, is to do nothing while the system is failing anyway.