Saturday, September 5, 2009

Part II: More Health Care Problems

In Part I: America's Health Care Problems I talked about the problems we have with health care in America today. Too much bureaucracy in insurance plans causes too much of your money paid in as premiums and fees to be wasted on company over-head, worker salaries and executive profits. As I said, "The dirty secret is that if you saved up all the money you pay the insurance company in a savings account and paid for your health care from it, you would save a lot of money over your life." I also talked about how the government health care programs are exponentially worse because they do things a private insurance company would go to jail for doing: They unconscionably deny and ration care to cut costs, give free treatment to court the vote of groups that don't pay into the system and borrow billions from China to delay the inevitable collapse of their pyramid scheme. Finally, we debunked the claim that $50 million Americans are without health insurance and showed the figure to be more around $5 million.
I will now discuss a few more problems that are driving up health care costs in America.

Problem 4: Trial Lawyer Profiteering

Lawyers are some of the richest, most powerful special interest groups in America. Their interest includes suing doctors for exceptionally large settlements so that they can keep a large chunk of the cash. This has two main effects: 1) Doctors must pay for extremely expensive malpractice insurance to cover themselves if they get sued--between $70k and $275k per year (source), depending on where and what they practice. 2) Doctors routinely order unnecessary tests and xrays to cover themselves if they need to go to court. These costs are all, of course, passed on to the fees that doctors and hospitals charge to their patients. While "Tort Reform" has been widely pushed, it has never been taken seriously by politicians because of the incredible lobbying power of trial lawyers.

Problem 5: Coverage Denials due to Pre-Existing Conditions

Because insurance reduces down to a simple function of money in and less money out, most insurance companies deny applicants with pre-existing conditions. This is because it makes no sense and is not fair to everyone else to pay for the expensive medical care of a newcomer, who has paid nothing into the system, with the money of everyone else, who has been paying in all their lives. (Remember, insurance doesn't create money, it just makes your money available when you need it.) One possible way around this problem is for insurance companies to create policies that will cover everything but the pre-existing condition, thereby putting you on the same playing field as everyone else. Unfortunatley, that is currently illegal. As for the people who cannot pay for treatment of their pre-exisitng condition and haven't been paying into a plan all their lives, they are left to the "mercy" of medicare, medicaid and possibly SSI, all on the tab of hard-working taxpayers.

Problem 6: Government Supported Insurance Monopolies

Not only does the government require insurance companies to charge individuals and families for services they don't need--pediatrics for the elderly, geriatrics for young people, general care for people who pay for their own out-of-pocket--many states don't let you buy insurance from companies outside of the state. Recently the Wall Street Journal discovered that an insurance policy that costs $5,880 per year in New Jersey only costs $1000 in Kentucky. The lack of free-market competition in health care insurance allows favored companies to over-charge their customers because the law prevents them from taking their business elsewhere.

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