Why address the actual problem when you can take over an industry?

Craig Hall, Publisher
Craig Hall, Publisher

I know I’ve been writing about the history of health care and health insurance (with one, personal experience column) over the past several editions of the paper.

First and foremost, I say health care and health insurance because they’re entirely different things, albeit related. Health care is what you go to the doctor for in cases of the flu; stitches; basic maladies; and other bumps, bruises and (mostly) self-inflicted ailments. And yes, over the past century some of these services have been paid for by insurance. Health insurance was originally created for such catastrophic events as a major illness or surgery that required hospitalization. And yes, some of these things over the years have been paid for by health maintenance-type organizations.

The summary of the health care and insurance industry from this baby boom era is pretty simple. Insurers discovered a way to identify groups of people who were lower risk at a lower cost. That pretty much rendered community based insurers obsolete because community based insurers had to incorporate low-, medium- and high-risk folks into their programs. Additionally, the community plans were losing low-cost subscribers to lower-cost plans from insurance companies. It forced folks like Blue Cross to give up community ratings to survive. In other words, the market changed.

Also occurring post World War II was another group of politicians trying to create a “national insurance plan” to cover every American. Several plans proposed, including the Hill-Burton act that after passing Congress subsidized hospital and nursing home construction. In the end, the new plans focused on senior citizens.

One plan was to use payroll taxes to pay for senior insurance — which was backed by the unions because lower income folks would also be paying, leaving them more room to negotiate higher wages for members. This plan was also backed by the hospitals, mainly because many were still under Blue Cross community plans and this paid of the bulk of senior costs. There was a Republican-introduced plan that was need-based and paid by federal taxes and senior premium and also included prescriptions and nursing home care. A third plan addressed federal assistance for state plans to help low-income seniors.

As someone in the insurance industry described things to me, the best way for insurers to make money is to rid themselves of their most-costly clients. For health insurance, that’s predominantly seniors. Add the life expectancy factor to the equation and we had a new problem for senior-based health care givers and insurers in the marketplace. The community based systems couldn’t fix it, nor could group plans that relied on low-risk members.

So instead of giving the market another chance to answer the calls for these needs, in stepped the federal government. What it created was the three-headed monster known as Medicare and Medicaid.

On paper, Medicare looks impressive. It’s anything but. Medicare Part A was a gift to unions in making sure lower income, non-union folks —t hose who could least afford it — would pay the toll for seniors. Part B sounds good, but I’m managing my dad’s Medicare right now and his premiums are basically ZERO. Given that most seniors need the care the insurance covers, it’s not doing anything to cover that huge cost. Then again, seniors have great coverage for practically nothing and vote in droves. Finally, as only the government would do, it took the third part of Medicare and expanded it not just to low-income seniors but also to different low-income groups via Medicaid.

Medicaid in the late 1970’s was expanded to pregnant women and children through the SOBRA program. In 1983, the federal government stopped paying providers of Medicare patients “allowable costs” on their services and began paying “prospective payments.” In other words, less and less — something that continues to this day. Medicaid was expanded again in the mid-1990s through the CHIP programs to include families up to 300 percent above the poverty line. A final addition to Medicare came in 2006 with its subsidized prescription program.

What we have today with the Medicare and Medicaid is simple: Overcoverage, overexpansion and overreach. A federal government program to help seniors with medical coverage is now subsidizing an entire industry and as demand naturally goes up and the best way to buy votes is to create more users. Which is why we have more than a third of our population enrolled in them.

In health care and insurance, free enterprise has been at the forefront of creating new products and services. That’s what the nation saw at the turn of the century with community based health care and during the depression with health insurance due to wage and price controls. It’s an ever-changing market. That sparks innovation — as we see now with small clinics covering basic health needs for less than $100 a month for families. It also keeps costs down.

That’s not what you get with Medicare and Medicaid or any political solution. But you will get Obamacare.