Monday, August 31, 2009

Health care, Insurance, other non real estate related

I have been involved in some really heated discussions on Facebook relating to health care and insurance. And of course I had to spend some time thinking about it all, of course after posting lots of stuff that was just off the top of my head. After some considered thought, here are a couple things you might think about.

First - As children we are programmed to be socialists: You can't have that unless you brought enough for everyone. We have to share. And a hundred other similar comments. Is this a bad thing? I think it probably is, because it programs us at an early age in a way that might not be appropriate for survival in a capitalistic society. When we later see that someone has something we like, and they aren't sharing it with us, do we feel resentful? Jealous? "Why didn't they bring enough so I can have one, too?"

Maybe this sort of thing is appropriate when we are talking about cookies, but it is not when we talk about laptops or cars. As an NLP practitioner, I can tell you that the unconscious mind will not make any distinction! So this preschool programming is a bad idea.

Second - Insurance is a socialistic thing. Premiums are gathered from everyone, and the "beneficiaries" get paid for their trouble. We all pay for a small group's misfortune. Perhaps it is a good business decision to buy insurance. More on that in a moment. The other side of insurance is that it is necessarily a profitable business, if run correctly. An insurance company must hold massive amounts of wealth in order to guard against a rainy day. Therefore an insurance company (aside from the "side business" of actually insuring) is really a massive investment vehicle for the insurance company stockholders, who by the virtue of the business model, profit from investing other people's money, without being accountable to them because the customers do not expect to get their money back unless a catastrophe occurs.

Finally, let's talk about health insurance. I think it is a different animal than say, car insurance or homeowner's insurance. Why? because health insurance (for the most part) is not catastrophe insurance, as it is implemented by most employers today.

Car insurance pays when you have an accident. You don't go out looking to get in an accident, and you don't usually spend the insurance company's money trying to not have an accident as you drive around (Insurance companies may invest money doing this, like Geico did when they funded some radar guns in the past). Pretty much we dread getting in accidents, and we dread having our home get damaged, or robbed, or vandalized.

The difference with most health insurance plans is that we are almost encouraged to go to the doctor for the smallest thing. After all, it is just a $10 co-pay. Why not go spend a hundred bucks of insurance company money, it only costs me 10, and who knows, this headache might be a tumor, and besides I need some time away from the office.

I worked in corporate America for many years and this is exactly the attitude many people had, at the several places I worked.
You can see how this entitlement mentality could cost insurers lots and lots -- reflected in increased premiums for everyone.

I'm one of those people who has to be near death to actually go to a doctor. I've been blessed with excellent health, and I see a physician on the average of once or twice a year. And it comes out of my pocket, because my insurance plan has a huge deductible and no co-pay. I go, I pay. And, being self-employed, time away from work is time not making money.

So I think the very nature of most health insurance is different from most other insurance. There are two simple things which can change this. First, we need to de-couple employment and health care. Employers should not offer health care. This should be something a person makes their own decision about and buys on the open market. Second, no co-pays, no prescription drug plans, none of that. Insurance pays, after your deductible, the amount of the loss. Just like home owner's insurance. This puts a dis-incentive in place to be sick. It should be as massively inconvenient to be sick as it is to be in an accident or have your home robbed, if you want to insure against it.

What about the people who cannot afford health insurance? This is a harder question. Today, in the United States, if you show up at an ER, for the most part, you will get treated. Should the government pay for it, should they be involved? I don't think so! Let's look at it another way. If you think that it is the job of the government to provide a health benefit for everyone, then what about a basic housing benefit and a basic food benefit? Is it any different? What is means is that those of us who choose to work and pay taxes will support those people who are either unwilling or unable to work. The government, at least the federal government, has no place doing these things.

Bottom line: We live in a capitalistic society. That means that there will be winners and losers. We should create incentives for people to try and win. Offering things for free, or that other people pay for, is not an incentive. I have no incentive to conserve energy when I stay in a hotel. The price is the same whether I set the thermostat on 60 or 75. Insurance should create an incentive to NOT use it. No co-pays. You go, you pay.


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