So it looks like once a month is the maximum I’m able to post recently — and with this political culture we have today, that just won’t do. Hopefully I’ll get back to once a week. Let’s jump right in and talk about healthcare and health insurance. Warning: this is a long one.  (and it’s the cut down version – because this topic is rich)

Let’s go back to the health care bill that we all seem to have forgotten about in the last couple of weeks (understandably so with all the media fireworks about THE COMEY TESTIMONY!!)  I don’t think I’ve covered the passage of the bill in the house, but in the interest of keeping this blog as short as I can, I’m going to assume you have seen the American Health Care Act (HERE) and that you understand that it still needs to pass the senate in order to be signed by Trump. Here is a quick rundown if you don’t want to trudge through the boring bill.

In terms of the structure of the bill, it’s an absolute hybrid monster without much real improvement across the board.  The CBO (which is notoriously wrong) estimates that this new bill will SLIGHTLY reduce the federal budget over the next few years and will result in 10-14 million people dropping their insurance plans. (SEE CBO REPORT SOURCE) It also creates an option for states to drop the requirement for insurance companies to cover people with pre-existing conditions.  This means that if a state votes to do so they will have a market where the insurance companies don’t HAVE to cover anyone that they deem too high of a risk.  It’s very important to be informed about how people actually have insurance here in the United States.

49% of Americans get their health insurance through their employer and a few percent more are covered in other “groups”. 20% of Americans are covered under MEDICAID (which is the government subsidized program for lower income people and families) and another 14% are covered by MEDICARE (which is the government program for seniors). An additional 2% are covered by other public services (like the VA or active military).  This means that 85%-87% of people in the United States get insurance through group policies or public services that do not require screening for pre-existing conditions. 9% of people in the United States CHOOSE to be uninsured and approximately 6-7% of people have private insurance — meaning they don’t get it through any of the above sources but have to look for a program to cover them privately. (SOURCE) To keep perspective, pre-existing condition legislation would affect approximately 10 percent of the people in the United States. It is also possible that some people who would no longer qualify for medicaid under the new bill may also be affected, but that number is very difficult to quantify.  We’ll come back to this in a second.

Here is the root of the problem — most of our leaders don’t understand the economics behind insurance (or they refuse to admit it which is just as harmful).  The way to get the price of any insurance down is to widen the pool of people contributing premiums coupled with more responsible use of the insurance – in other words lower the risk.  It’s similar to someone getting in a minor car accident and paying for the damage to the other person’s car out of pocket. That’s because they determined that the use of the insurance policy would be irresponsible and their premiums may go up so as to render the savings useless in the long run.  We need to do the same thing with our health insurance.  You don’t need to go to the hospital if you have the flu (barring you’re old or immunocompromised or something) — you should be able to go to a doctor and pay a VERY reasonable fee for a steroid shot and a prescription for the right medicine. Or just not go at all and ride it out. All of those types of decisions have an affect on premiums.  Couple that with the larger number of people paying premiums over a longer period of their lives and we can lower costs substantially.  So somehow we need to find a way to encourage people to get health insurance from a very young age, to use it properly, and to recognize that people need to actually pay for it. So how can we do that?

The way to incentivize someone to purchase an insurance plan when they are healthy is to create a world where NOT doing so would be a very poor decision in the long run.  As it stands right now – there is virtually no incentive to do so because you can sign up for insurance as soon as you get sick and no one asks you any questions because companies are required to cover pre-existing conditions. Now this is a problem not only because it doesn’t encourage people to sign up early but also because it causes people to look at insurance as unnecessary and that’s irresponsible. So we need some kind of penalty — and that penalty needs to be market based – like higher premiums for those people who haven’t been covered and stayed covered. People with conditions from birth are usually covered under their parents’ plan until a certain age and then need to be assisted through their community and/or a program specially designed for group coverage of people with these cases.  Remember – we are talking about a small number of Americans that fall into this category — and I am NOT suggesting that they’re less important because of it — but rather that this doesn’t get proportional coverage when framing the healthcare / health insurance debate. The fact is they are of extreme importance and we need to be sure that people learn to be both charitable AND take responsibility for themselves so that we can help people with pre-existing conditions.  All of that can be done without the burdensome interference of government. We’ve done it for decades and technology is only lowering the cost of medical care.

Lastly, I’ve had many people argue that healthcare (and thus insurance) is a human right.  That may sound and feel good to people, but it’s impossible to justify this as it contradicts basic rules of economics not to mention the philosophical definition of rights in America.  Simply because you declare something a right doesn’t make it readily accessible. You have a right to bear arms, but the government doesn’t provide you a weapon. They provide you legal access to them. Furthermore, take the example of other governments declaring “food and healthcare” a basic human right while their people are starving.  This declaration does nothing to address the reason why food or healthcare wasn’t there in the first place – and that’s scarcity.  The fact that there are only a limited amount of people who are skilled enough to provide healthcare doesn’t change simply because the government mandates it. People need to have an incentive to go to school, train to be a doctor, spend their money to invest in medical technology research, fund experiments etc etc.  That incentive can ONLY come from profit – it’s the only mechanism that has created the world’s BEST healthcare system AND the world’s best economy – the one here in the United States.  The government doesn’t mandate that certain people have to become doctors, nurses, or hospital administrators, but people instead choose to do so because there is a financial incentive from the people who NEED the service – the moral benefit of practicing medicine only goes so far. This is the same reason why the government has not been successful in mandating that people purchase a health insurance plan — because when someone makes you do something, the lesson of why you need to do it is largely lost. Moreover, it’s human nature to not do something as passionately when you are forced to do it. 

Another way to look at the “is healthcare a human right” question may be a bit clearer.  When something is a “right” it does NOT demand action from others. This is an American tradition – also known as “negative rights”. Let’s look at three basic rights discussed in the Declaration of Independence – life, liberty, and pursuit of happiness. Pursuit of happiness is basically the right to own property.  What does that mean? If you pay for something and obtain it through all the legal channels you have a right that it not be taken from you by another. You don’t have a right to the actual property but rather have a right to own something you can pay for. Liberty means the right to believe what you want, think what you want, and discuss this with others all without interference.  What makes America unique is that we see these rights as precluding the state – we are born with them.  Last, the right to life. This is the one where people seem to get confused.  Like the other two (among the many others in the bill of rights) you are the steward of your own life and have a right to NOT have that life taken by another. You have a right to reasonable safety and to be free from harm which is why one of the government’s largest responsibilities is to keep us safe. In other words – you have a right to be left alone so you can build your own life.  It’s why the founders ordered life first – so you can have liberty to pursue happiness and property. Thus the right to life does not include the right to someone else’s services so that you can extend or improve the quality of that life. What you do have, which is covered under the right of “pursuit of happiness,” is the freedom to participate in an economy where you can purchase the service of healthcare.  However, government requiring the services of one be provided to another is not a question of rights – because it’s certainly a violation of such – but rather a question of morality.  In my opinion, and the opinion of the founders, what you choose to do is no business of the government.  It’s what liberty means.

Governments across the world that have the power to grant you the “right to healthcare” always struggle to do so.  I don’t want get into the cost or quality associated with involving government in providing healthcare. (Suffice it to say world leaders often fly into the USA to get a special surgery they need. You never hear of anyone here flying out do you? Unless it’s because the FDA won’t approve medicine that they need —but don’t get me started.) Let’s focus on government – if they have the power to grant you the right to healthcare then they also have the ability to take it away and MANY governments have done so in the past.  Many people refer to it as government “rationing” healthcare. This is a form of them taking away access to healthcare is it not? All in the name of dealing with what we discussed above – scarcity.  People need to be motivated to pursue careers in medicine at all levels – and the proof is already here at what BEST makes that happen and that’s the free market with government involved as little as possible.  If we can at least acknowledge the underlying principles that affect this policy discussion maybe we can make some real progress.

Now — what does the senate think about all of this? They’re even less informed than the house, which we just went over isn’t too bright.  The senate has signaled that they want to make substantive changes to the House version of the healthcare bill. (SOURCE) Moreover, the senate has also signaled that there is so much gridlock that they may not even pass a bill AT ALL! (SOURCE).  Specifically, senate republicans aren’t taking this process seriously – which is incredible for all the reasons I listed above and in previous blogs (HERE and HERE) Part of the reason for this gridlock (or specifically 1/52 nd of the reason) is senator Bill Cassidy from Louisiana. This man has absolutely no understanding of the principles we discussed above – making statements like, “if the government mandates that hospitals have to treat all people government should have to pay part or all of the bill” and “ we need to find a way to lower premiums for everyone, lower the burden on businesses, and cover everyone with pre-existing conditions.” These statements are incredibly obtuse.  First, if “government” is paying the bill that means EVERYONE is paying the bill.  Government only gets its money from the taxpayers which means his philosophy will only further burden the economy of the United States.  Secondly, basic supply side economics dictate that covering everyone with pre-existing conditions AND lowering premiums cannot exist in the same universe.  How do we know that? Because that is exactly what Obamacare tried to do and slowly but surely insurance companies are abandoning that market while premiums are consequently SKYROCKETING. That problem is compounded by the subsidies to private insurance holders ushered in by Obamacare – because those people are not paying premiums – the government is.  Which means we all are. Thus, when Senator Cassidy discusses “government paying the bill” that sounds nice, but we all know that isn’t going to solve any problems – it will only make them worse.  That’s exactly what the entire Republican party is doing with this healthcare bill and with their unwillingness to step up and lead on such a major issue in the United States – just making things worse.

All in all I am horrendously disappointed in the Republican party with their lack of direction, unity, and foresight in almost every area.  They have lost the conversation by conceding things to the Democrats about the conversation at large. They all need a lesson in basic economics and the reasoning behind the federalist system of government the founders created.  Please be sure to read the next blog coming out rapid fire on Monday or Tuesday.  I apologize for missing so much time but sure am having a good time over here.  I am under no illusion that any of you are holding your breath for these blogs … but I sincerely appreciate you reading.

[[ Someone just asked me about my views on how illegal immigrants fit into this.  The effect of illegal immigration on the health insurance industry should not go un-noted here, but I will discuss this in a separate blog about illegal immigration. I chose to leave that out of discussion here for length (this is already the largest blog) and because it is largely left out of the current conversation about this specific healthcare bill. ]]