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…
