Mr. McSideous raised some interesting, real world issues about health insurance yesterday. I’ll be addressing that soon, on this post. But feel free to have at in the Open Thread in the meantime…
Today’s prospectus: Nancy Pelosi does not have the votes, otherwise she would have called a vote. She’s promised to post all bills on-line at least 72 hours before a vote. There is no bill on-line. The President leaves Saturday for Indonesia. Tick-tock, Nancy…
A Brief History of Insurance
I love gambling, statistics and human nature, and this tale involves all 3!
The history of insurance is the history of seafaring…
People like exotic things. The harder to come by, the more valuable. Traders know they can make more profit by selling exotic things to the locals. What makes something exotic? It’s lack of local availability. Think about it. If something is abundant in a region, like coal in Newcastle or bananas in Brazil, it has little value to the locals. It’s everywhere. So the locals will sell the stuff for very little, practically give it away. People in Newcastle trip over coal and people in Brazil get hit in the head by falling ‘nanners. Both are a nuisance. But a banana in Norway?! Now that’s a treat! So a Norwegian will pay a huge sum for a banana. But how to get the banana from Brazil to Norway?
That desire for greater profits pushed traders to take risks, traveling to exotic places. The riskier the better. All that risk meant that sometimes a ship sank, or a caravan was killed by highwaymen. And, the drive to go to more and more exotic places meant traders had to pool resources with other traders, to afford the cost of a big enough ship and crew capable of traversing great distances across dangerous waters.
This is where the gamblers save the day. Sailors like to have a drink, or ten, and taverns like to make money, so there are always pubs located by ports. So pubs became meeting places for merchants and investors. The merchants would gather at the pubs to find other merchants to partner with, to find crews for their ships, and to find investors (gamblers) willing to take a flyer on one of their ventures. The merchants and investors got depressed when one of the ships didn’t return, they lost money. And the crew, they lost their lives. Eventually one of the gamblers recognized that he could make money if he could successfully predict the number of ships that would fail to return successfully. This gambler was the first actuary. If one out of every 100 ships fails to return, charge the traders a little more than 1/100th of the ship cargo’s value to insure the cargo. When a merchant’s ship sinks give him the money you collected from the other 99, and skim a little off the top for yourself. Voila, Insurance! Yes, it should be no surprise that insurance is the product of a happy confluence of sailors, pubs and gamblers.
Insurance is spreading the risk of an unknown event across as many people involved with that event as possible, and charging each of them a fraction of their total risk should the event fail, with the promise of a 100% replacement of their total risk, should disaster strike. It’s sort of a reverse lottery. In a lottery a million people pay a buck, and one lucky person gets $900,000. Nobody has risked more than a dollar and everyone has an equal chance of walking away $900,000 richer. With insurance the insured all put up a dollar, and one unlucky person gets the $900,000. How does this apply to medical insurance? It doesn’t really, it applies to life insurance. With life insurance the loser, the surviving spouse and/or kids, get the kitty. No more dad, but you get a nice check. If your dad was Vaclav Havel you’ve lost a Czech, but gained a check, so you’re even.
Now, the best analogy for Mr. McSideous and his situation with MediCal is fire insurance. One of these gamblers figured out that home and business owners faced a similar situation as the seafaring merchants. Sometimes a house or business burned down and the owner lost his property and the possessions stored within. Someone (it may have been Ben Franklin) had the idea of employing a fire crew to put out fires, and stop homes and businesses from burning to the ground. But who is going to pay for the equipment that crew needs? And, who will pay the crew? It’s more than just one home or business owner can afford, and any one, individual business or home would probably not burn in a given month, or year. What to do? Pool the potential losers. Charge each home and business owner a fraction of the total cost to run a fire department and when any of their homes or businesses start on fire use the fire department to fight the fire. Now, keep in mind, we’re not reimbursing them for their property or possessions, we’re just helping them PREVENT that loss. See the connection? Medical insurance helps you prevent death. Life Insurance pays you if death occurs. Property insurance pays you if your property is destroyed and fire insurance helps you prevent losing your building and possessions to fire.
But McRufus, you say, I own a home and I don’t pay fire insurance. Oh yes you do. Let’s return to that first fire department. That first fire insurance scheme was very successful. A lot of folks signed up. But a lot didn’t. How was the fire department to know if a building on fire was a subscriber, or not? The insurance company put plaques on the exterior walls. If word went out of a fire the fire crew rushed to the building and if it had a plaque, showing the owner was a client, they’d fight the fire and save the day. No plaque? They’d turn around and go back to the firehouse.
You can see where this led. The firemen didn’t feel good about abandoning burning buildings and the citizens thought it was a little callous. So, some communities started forming co-ops, manned and funded by the residents, and that’s where we are today. If you live in a crowded enough area you pay property taxes and those taxes pay the salaries of the firemen and women, and buy the equipment they use to perform their duties. If you live in a rural area you may have a volunteer fire department, you may even belong yourself. Either way, if there’s a fire those crews will fight it. They don’t first check and make sure the homeowner is paid up on his property taxes. They put out the fire. If someone was behind on his property taxes his neighbors make up the difference by paying a little more in property tax the next year.
So, just as some communities didn’t like watching folks’ homes burn to the ground because they didn’t have the foresight to buy fire insurance, some communities tired of seeing their neighbors die in the street because they didn’t have health insurance. If you live in a crowded enough area there are probably clinics and hospitals that will take anyone, regardless of insurance, and if you live in a rural area you have resources too. Each community deals with this in the manner that the local inhabitants feel is best for their needs.
Notice we do not have a national fire department. How would that work? How did it work for the residents of New Orleans who depended on the Federal government to prevent them from suffering in the flooding caused by Hurricane Katrina? I remember the logos on the men and equipment battling the World Trade Center fire. Everyone read, “NYPD.”
Personally, I don’t want to live somewhere where people die in the streets. Where people born with genetic defects are abandoned. Where people struck by an unpredictable illness or accident are abandoned. So me and my neighbors do something about that. Some of us do. Just like fire insurance, not all my neighbors keep up on their property taxes, but enough of us do to fund a good fire department. When I go to the hospital I’m charged a little extra to pay for the patients treated who don’t have insurance. I’m O.K. with that. I don’t want to open my door one morning and trip over someone dying of tuberculosis while walking to the end of the driveway to get the newspaper. The people in the state of Massachusetts believe they can improve on this system by providing insurance for all. They believe this will get more people to follow preventative measures that will reduce the total cost of insuring their neighbors. That makes sense to me too, but it’s not working out that way in reality. It’s also not working out that way in Oregon. Why? We don’t know.
So, I’m fine with Oregonians caring for their neighbors the way they want, and Massachusetters caring for their neighbors the way they choose, and Freedonians caring for Freedonians the way I choose. When your house is on fire a centralized, federal bureaucracy is not the most effective way to put out the flames. My neighbor is much more likely to help me put out my house fire than a bureaucrat in Washington D.C. because if my home burns down my neighbors may catch fire too. My neighbor is also more likely to help me if I suffer from an illness, injury or disease. I am not against paying money to help those who cannot afford medical care. I’m a proponent. But let me and my neighbors figure out how we want to do that. We’ll learn from what others are doing and work towards the best care possible. That’s what Americans do.
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The Jackass in Chief
you’re far too kind, Scott.
I have been very “On the Outside Looking In” on the healthcare thing so far. I haven’t really evaluated it in regards to how it will affect me personally. I’m 26, in my last semester of school, hoping to be gainfully employed within the next few months, but I have to admit I am ignorant of what the direct effects on my life will be. Probably because I have been hoping it won’t pass. I still think there is a good chance it will not but I won’t put anything past this administration.
McBlackhawk,
To paraphrase Trotsky, “You may not be interested in health care, but health care is interested in you.”
I have little interest with what’s actually in the bill, even though it will certainly impact my life. I’m agin’ it for what it will do to my kids’ lives, and their kids’ lives. The President is on record as saying he wants all Americans on a single-payer plan; Socialized Medicine. He’s also on record as admitting that we probably can’t get there with one bill, it will take incremental steps. I believe he is trying to put us on an inexorable path towards socialized medicine.
Why is that bad? First, it violates the principles of our nation’s government. It gives the Federal government more power over our lives, immense power, 1/5th of the economy. It also impacts the way my children, and their children… will think about liberty and personal responsibility. Most of my wife’s family lives in Europe, and have socialized medicine. I have worked in many countries with socialized medicine. There is a subtle, but immense difference in how those folks look at the government, and themselves. This is not hyperbole; I genuinely believe that if this bill passes, and we eventually have socialized medicine it will be the end of the notion of personal responsibility in America. Many Americans already view the government as a Nanny, who is supposed to protect them. Look at Hurricane Katrina. We Fireflies lived in Florida, and lived through many hurricane warnings. We watched the weather reports and took care of ourselves based on our own, personal decisions. When Floyd (the hurricane, not the blogger) was bearing down on our house we even boarded it up and flew 1,000 miles away. We didn’t wait for the government to tell us what to do. Many people did. Too many in New Orleans did. They already have that perception of government; our Nanny.
Many Americans travel to Europe and are impressed. Heck, I really like Europe. I’d love to live there for a few years. But what lies unseen is the impact America has on the European’s lifestyle. Socialism is failing in Europe, but a dirty little secret is it wouldn’t have even lasted this long if not for America. We pay for most all of the defense over there. And, we’ve prevented several wars from escalating there in the past 60 years. And, where do most miracle drugs and medical procedures come from? The U.S. There are no other large countries with a private medical system. What happens to medical research and development when the ginormous lottery that is the U.S. capitalist system goes away? Medical innovation will drop off, exponentially.
This is serious stuff.
Obama wants to turns our beloved nation into a large scale Detroit, with a dash of Ecorse and Gary, IN thrown in.
In Europe, and other countries that have the single payer system (or universal, or nationalized, I don’t know the difference or if there is one) they boast that they recognize heath care as a right and that therefore they have progressed beyond us. We are still stuck in the dark ages. But the dirty little secret is that in those countries people get turned down for care all the time. If it is a right, then why the hell are people getting turned down? The fact is if you depend on the government to deliver your rights to you you have given up your rights.
By definition, a right cannot be dependent on a service that must be rendered to you by another. I have the right to free speech, but tI don’t have the right to demand a platform from the government on which to spread my views. I have the right to pursue happiness, but I don’t have the right to demand that the government deliver that happiness to me upon birth. If we depend on the government to be the deliverer of our rights we have already given them up.
O’Blackhawk,
Bingo! That is precisely why I am so concerned about this bill passing. If it passes I believe it puts us on the slippery slope towards changing that perception. We believe we cannot have a right that requires an action on someone else’s part. The Europeans view rights differently.
By the way, philosophically we have the correct view. Don’t tell them, because they are convinced they are much smarter than us, but they are wrong. Regardless of whether socialized anything is good, or bad, from a pure, philosophical interpretation they’ve got it wrong.
Europeans and Canadians don’t have a “right” to “health care”. They have a right to be put on a waiting list, which, if they live long enough, might get them the health care they need.
The waiting list is so all-important that those who try and circumvent it by showing any willingness or personal incentive to provide their own care separate from it are ostracized when they aren’t actually punished.
Raoul
My Dad did a lot of business in Europe. The Brits that he worked with all had private health insurance to supplement the government health care. They had this to cover everything that the government would not, which was obviously very substantial since from what I understand private health insurance is not cheap over there. The irony of course is that we are told that this form of government provided care equalizes access between the rich and the poor, when in reality it it gives the poor low quality care and makes the higher quality care so expensive that only the rich have access to it.
I was under the assumption that private insurance in these “health care” utopias was illegal.
But here’s a related topic. I see today that pharmacies in the Upper Left Washington have stopped taking on new Medicaid prescriptions, because the Gov’t won’t reimburse for their costs. Only a Progressive-type government would think to force people to preform a service and not pay them for it (and didn’t the 13th amendment stop that sort of thing?). And then there’s all that talk of docs retiring early (i know two friends who are docs are talking that way). So what good will “universal health care” be if there’s no one to fill the pill bottles and no one see you when you finally do get to the front of the line?
In some sense, I want to see this stupidity pass the House. Let’s get it over with, have the collapse and maybe things’ll be getting better before it’s too late for me. (If this “Progressive” incremental bullshit lingers on for another decade or so, I figure I get caught in the undertow just about the time I’m gonna really need the services of the medical-industrial complex.)
Doctors retiring isn’t anything they’re worried about. They’ll find doctors. Just like the care will get watered down, so will the pool of doctors. MCAT scores will be adjusted to fit affirmative action goals. It’ll be awesome!
Bill O’Reilly cited a New England Journal of Medicine survey that said over half of MDs would leave the profession if this thing passes.
change!
Our company is really worried about MD’s jumping ship if this passes because we are an HMO so if docs quit our network shrinks. Surveys our Network Development department have been doing show just shy of 40% saying they will retire within the next 3 years if it passes. Since we specialize in rural areas where already choice is limited we are very concerned.
McVeruckt,
What worries me even more are the vast number of doctors who are clueless about this thing. Most all doctors are smart, but many don’t have much business sense. I’m amazed at how many I talk to that don’t understand the slightest about what this means to them, and their day to day lives. This will turn into a crap sandwich quickly and MDs will suffer more than any of the rest of us. It will completely change all aspects of being an MD in America. This is huge.
Ask any MD who has involvement with billing and payment (surgeons, radiologists, anesthesiologists, etc., are often removed from the business aspect of their profession) and those MDs will tell you the absolute worst aspect of their job is dealing with Medicare, Medicaid and insurance companies. Well, Brother, if this bill passes you can ramp that frustration up by a factor of 100. If all doctors really understood the tsunami coming their way they’d be storming the Capital with pitchforks, rubber gloves and ointment.
One of the points I always make to people whenever Obama marches out the white lab coats is doctors know medicine but often not healthcare. Healthcare is the business end that really requires more legal and business sense than medical knowledge. If they wanted to impress me they would be trotting out hospital CFO’s and Business Office Directors because those are the people who know healthcare.
McVeruckt,
“doctors know medicine but often not healthcare”
Great point. And, most doctors I know are extremely motivated by access. Whatever gets more access to more people is better. They are schooled in the scientific method and tend to focus on absolutes. Their oath says they’ll provide care for people, so that’s what they want to do. They view insurers as obstacles to that oath. But, since they don’t understand the business end, or the insurance end, they fail to see that adding a layer of government bureaucracy will decrease access. We are dealing with limited resources; physicians, nurses, equipment, facilities and, most importantly, hours. We can’t increase the care. If we increase the pool of recipients the only option is to reduce the amount of care per recipient.
I actually just posted this in yesterday’s Healthcare as a response to Mr. Sideous but thought it was worth carrying over to today since it shows the effects of government on the market in California.
O’Veruckt,
Great breakdown! This is why it is so important to keep the Fed out of this stuff! We’ve got 50 states trying 50 different things. Some will work. Some will fail. The way to improvement is through experimentation. The California method is failing. People can leave. People can vote in new legislators. What happens when all 50 states follow the same program? Where do we go? How do we learn?
No wonder this state is going down with the tide. thanks for the info. Depressing, but its good to be informed.
Slainte, O’McSideous!
Mr. S, I am very glad to know your ailment was successfully treated and hope for good health for you in the future.
Rufus,ask Veruckt about TennCare…
I’m like a vampire who sees a cross whenever someone mentions TennCare. I hiss and run away. What a *bleeping* trainwreck.
Kucinich is voting “Yes”. Not good.
http://www.cleveland.com/open/index.ssf/2010/03/rep_dennis_kucinich_to_vote_xx.html
As I wrote yesterday, I think this means the President convinced him that this will inexorably lead to a national, single payer plan. I have little doubt that was the conversation on Air Force One on the way to Ohio. Kucinich is principled enough that he would not flip simply to please the administration. He wants single payer.
Freaking out about DK voting yes is not something we should do. I was pretty sure he’d al;ways do it. Nazi Pelosi still doesn’t have the votes. Rush said that she may have the CBO scores and is holding it because she likes the numbers. A vote is scheduled for Sat. I think the thing is going down and if they ram it through there will be an all out rebellion. Obama went a bridge too far here.
Stephanie,
Is a vote definitely scheduled for Saturday, or is that rumor?
I think thats what Rush said. It is gonna be close but I say this…they won’t get it. I mean look at it this way: Why is O going on FOX Special Report tonight? Because after the contiuous attacks on FOX he is desperate. if he didn’t need FOX and the independent viewers out there to hear his crap he wouoldn’t do FOX..this move tells me a lot.
You know what upsets me about the CBO numbers is that it evaluates costs of a bill but has little to do with what is going to happen in the real world. So what if they finagle some kind of reduction in the cost of the bill, when that really means they are just going to take more out of _our_ pocket.
The bill is going to cost 100 million dollars less because they are going to extract 100 million dollars from tax payers, via taxes on health care plans or whatever scheme they come up with. I’d like to see a bill that has numbers based on how much tax is sucked out of the populace.
Show me one example when Congress has accurately predicted future costs of any significant legislation they’ve enacted; Social Security, a War, Medicare, Medicaid, the NEA, prescription drugs… Show me an example where the CBO got it right.
If a process is wrong 100% of the time, and by multiples, why would we even pay attention to it? Again, show me Congress can fix Medicare or Social Security and then come back and ask me for permission to take on something bigger. Until they show any ability to do anything competently why even consider increasing their reach? It is literally insane.
Many a company has a midyear re-budget, let alone predict 10, 20, 30 years into the future. Financial forecast is an imprecise process.
The bill cratered on intrade – big time- then rebounded a bit. That was around 10 a.m., I have no idea if it’s still that way.
My guess, if they had the votes they would have already voted on it, but they are going by hook or crook. It will be close.
Its game over man! Game over!
Hannity just reported that the vote is this Saturday. I wish I could go to DC….
the one in office is on Fox News being grilled by Bret Baier.
I can’t watch it. And the cops are buzzing around here in a chopper chasing a White Male, 5’9 wearing a white tshirt and blue jeans….they were actually broad casting it. fun. Me and the dog are hiding in the house right now. I miss my husband. Thank GOD for the shotgun…..
Be safe, Steph!
I don’t know how the guy could get into our development unless he climbed a fence or ran the gates when they are opened. I just get all squiggy when I see this stuff. Scares me.
Let us know when it’s over and keep your doggie close!
Its all good. Chopper rolled out and they most likely caught the runner.
Good! Glad all turned out well for you.
I was actually right about something.
http://hotair.com/archives/2010/03/17/idaho-passes-law-promising-legal-challenge-to-individual-mandate-if-o-care-passes/
Steph, go pump that dude full of buck-shot, maybe we can wheel him in as our plaintiff.
Eh he has to be trying to get in and if he did he’d have a face full of number steel shot.
Mark Levin has a lawsuit all prepared to file if they go the “Slaughter Rule” route.
He’s just the guy to fight this thing in court! Go Levin!
So if I read Rufus’ parable correctly, universal healthcare is OK if it’s run by a smaller governmental unit like the a city, town, village or county — like fire departments. Interesting idea.
But then I have also heard Rufus say that there are some tasks too big for anything but the feds to take on, like national defense. Might not universal health care be another of these?