Dave Barr CLUSo, are you tired of hearing about the economy already? Deficits, tax cuts, bailouts, recession, unemployment, on and on ad nauseum. Could we please talk about something else?! Yeah, it’d be great to walk out of theater and have this show be over, but on it goes. And while it does, the decisions made and actions taken elsewhere reach out and touch you and me. In short, the economy affects yours. Specifically in your application of the 2nd rule of financial planning: More Money is Better than Less Money. Rules 1, 3 & 4? We’ll talk about those some other time.
Regarding the present economic state of affairs, let me admit candidly that I don’t have all the answers to the challenges we face. But I do have opinions and would like to know yours as well. Nearly all issues concerning our national economy today are controversial, if not polarizing. So here we’ll take a stab at one of the bigger ones…Health Care Reform. Oh, by the way, I don’t sell health insurance and haven’t for a very long time. And I don’t think insurance companies do everything right. Not by a long shot. Just thought I’d mention that.
Health care “reform” is a dual-issue: individual health and economics. Regarding the first, we probably all agree that the quality of care in the United States is unequaled anywhere else in the world. Yes, there are exceptions. There’s always room for improvement. But in terms of overall quality of care, it doesn’t get better anywhere else. So I would argue the point that health care quality is somehow lacking in the U.S. Enough of that for now…on to the economics of the matter.
First of all, a perfect system exists nowhere. But I believe that the major challenges are not with the current system but rather with its utilization. Or, more aptly put, over-utilization. Many people want insurance to pay for everything and tend to go to the doctor for every sniffle, sneeze & cough. Providers deserve to be paid. Insurance companies can’t pay providers without appropriate premiums. The same people that want insurance to pay for it all don’t want to pay high premiums. Who can blame them? But someone has to pay for this. Ever reviewed an itemized hospital bill? The cost of some individual items can be staggering! But this is seldom addressed because “insurance will pay for it”. And that attitude guarantees that premiums will increase.
When I entered the insurance business 30 yrs ago, a quality major medical plan with a $100 deductible could be purchased for a family of four for about $100/mo. Add a 3rd child, cost would rise to approximately $130. Adjusted for inflation (4.1%), today’s cost on such a plan would be $334/mo. Plans like that no longer exist because consumer demand was to get care with insurance paying for it all (or nearly all). Result: family premiums range from $800-1,000/mo. Now that’s a lot of money – we can’t afford that! But now that we’ve got insurance to pay for our care, let’s get somebody else to pay for our insurance: the employers.
And when employers foot the bill for this expensive insurance, that cost is passed along to consumers via increased prices for everything we buy! The notion that some other entity should pay our costs for us seldom works out the way we hoped, does it? It sure hasn’t in this case. And then nobody’s better off. A real lose-lose deal.
Solutions for the dilemma seem, at best, complex and perhaps even elusive. My “encouragements” to the players would be as follows:
First, to insurance companies: Pay Properly – in amount and on time. Providers are running a business and need their earned revenue to do so. Stop making them wait and jump through hoops for their money. You make certain that your premium income happens immediately. And the challenges of dealing with your bureaucratic minutia are rivaled only by dealing with government agencies. Please show some respect to those who make your existence possible.
Next, to providers: Get Real – especially the hospitals and larger clinics. Is it possible for us to agree that $8 for a single pill is a bit much? Or that a “wound cleaning tray” is not worth $17 (especially when you don’t get to keep it)? Talk about a health care crisis…
Finally, to consumers: Grow Up – learn that your health care is your responsibility just like your house payment and phone bill. If you want it, just like everything else, figure out how to afford it. I don’t prefer to use myself as an example, but mine is the one I know best. I don’t have coverage that pays for doctor visits. When our family goes in for a routine call, I pay the doc on the spot. His normal charge is $80, but we pay $50 because he doesn’t have to spend resources chasing his money. So we’ve saved money on premiums and office calls. There are other things as well: higher deductibles for catastrophic care only, etc.
Insurance is necessary but not the answer for everything. A bit of self reliance goes a long way here. My experience leads me to believe that everybody saves or makes some decent money in this equation while quality care is not sacrificed. And isn’t that the idea, get what you want and still have More Money?
And where does government fit into all this? That’s next time…
Hi Dave! First off, congratulations on the new website and for a good read (though a bit lengthy).
I do appreciate to hear the other side of the health reform issue from someone with a level head. I would have to disagree that the main problem is with over-usage from consumers, but the fact that private companies take such a large slice of the pie. Many families to go without health insurance because of the extremely high costs. Personally I was excited to read the plans for reform that President Obama published on the White House’s website. Removing discrimination based on age and policy refusal based on existing conditions is a great start!
Hey Doug! Thanks for your response. Let’s think this through, however…insurance is a business with the same goal as any other: provide a service and earn a profit. If customers want the business to provide more, they necessarily have to pay more. There’s just no way around that.
I’m a little curious about your comment: “private companies take such a large slice of the pie”. Perhaps you’re saying that insurers pad their premium rates for unreasonable profit margins? If so, I’d have to respond that I don’t think the competitive marketplace would allow that to occur. If I’ve read you incorrectly, please set me straight on that, OK?
Regarding “discrimination”, age and health conditions are primary factors in determining insurance rates. Just like a driver with several tickets and a couple accidents represents a higher risk and therefore has to pay higher car insurance premiums. True, no one can help their age and perhaps even their poor state of health. That doesn’t change the risk and financial obligation of the insurer if they issue coverage on an older, less healthy individual. No business can provide services at a price not commensurate with the cost of that service.
Hi David! We miss you here in Edmonds. You have a great look and feel on your new website. Healthcare is going to be the top headlines until there is a new bill signed and I see that happening soon. Our real problem is our changing culture: wanting more for less. This is for all goods and services whether from China or India if it is cheaper we chose foreign over domestic. Now it is coming down to public vs. private, And our citizens seem to be saying the government do it rather than private and have someone else bear the burden for me (those richer than me can pay higher taxes so I can have a better deal).
The politicians pick right up on than because the top 1 or 2 percent (more likely to be much higher than that eventually) of the population that get to pay the way only have a like amount of votes. So re-election is greatly enhanced unless a competitor politician offers the voters an even sweeter deal. Currently our political system does not want to show us just who is going to pay and how much they will pay for fear of a taxpayer revolt. We are spenting so much money through debt funding that only God in heaven understands the ramifications to our future well being. We may be well past the tipping point with little hope of reversing our financial fate.
While all that sounds gloomy I also know that America was founded on the faith of a few and many have subsequently benefited. With God anything is possible. Let us unite in pray and compassion to help those in need and reduce government involvement in our personal lives.
I want to encourage business owners and executives to “rebuild our economy, one business at a time”. Use your God given entrepreneurial talent to build an even better business and make America stronger and more self reliant.
Thanks, Norm. This matter of personal responsibility cannot be stressed too much. Not everyone who reads this will know of your background and accomplishments. I can only say that yours are great thoughts born out of a lifetime of business experience and leave me scarcely anything else to add. All the best to you, friend.
Great post! I couldn’t agree more. This is great information, so I appreciate your research into it. Thanks again!
Interesting article. Were did you got all the information from…
Health Insurance, I gathered this info over 30+ years as I’ve journeyed along in my personal & professional life. Thanks for stopping in.
The United States Gov. is killin’ me. Why can’t everybody notice that the health care bill will raise taxes for everybody and even create new ones for all of us?
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