William M. Briggs

Statistician to the Stars!

Health Insurance Isn’t Health Care

Here's to Obamacare!

Here’s to Obamacare!

We talked this to death in the run up to Obamacare, but somehow, nobody knows how, the words of wisdom emanating from this site did not find purchase. I was reminded of this in the Republican debate where the subject of “pre-existing conditions” and insurance repeatedly arose yet where none of the candidates talked a lick of sense. Except, slightly, Ben Carson, who correctly said nobody has a “right” to health insurance.

What is health insurance?

I have tried many times to show that insurance is a bet. You are betting you will get sick and the insurer is betting you won’t. If you do get sick, the insurer pays. If you don’t, you pay. This bet is remade monthly. If you bet you’ll get sick and you already are, you are, in effect, cheating. The insurer has to pay and there is no way that the money you give him will make up for his loss.

That means that mandating insurers “cover” those who are guaranteed to win their bets—those with pre-existing conditions—necessarily increases companies’ costs.

The post from which this quote was pulled was written 20 March 2010: Obamacare Predictions: Part I. The first prediction was “Your insurance costs will increase”. Did yours?

The second was: Your health costs will increase. Did yours? The third was: Your taxes will increase. Did yours?

And there were more big predictions in Part II. (1) Your health care will degrade, (2) Your liberty will be restricted, (3) Your sense of paternalism will increase.

All came true. Read the posts for details on what I meant by the predictions. When you do, you’ll see how wonderfully accurate they were. Maybe soon I’ll do a six-year review on these.

For now, I want to focus on insurance versus health care. They are not equivalent. That people think they are is what accounts for Obamacare and, hence, the inevitable increase in costs and government control. It explains why even doctors don’t know what they’re charging when you go to their office because the rates for services are negotiated by insurance companies who think they are health-care providers.

If no employer were required to provide “health insurance”, and if people (families) had to buy their own health care, then costs would decrease. Here’s why.

Asking to be insured for common colds would find no takers. What insurance company would want to underwrite a sure thing? I’ll tell you: none. It’s like asking for a payout on the sun rising in the east. If you want to take your kid to the doc to buy peace of mind that it won’t die from the common cold, in the absence of government involvement you’ll pay out of your pocket. So you likely won’t go. Costs will decrease.

And if you have something worth seeing the doc about, say strep throat, which is still unlikely to be insured since it’s so common in kids, docs will have to tell you what it will cost. Because you’re paying the bill, not some insurance company, costs will drop. You not paying is now a huge problem: the costs are hidden in the current system. Everything happens in the dark.

Of course, docs would have to write notes saying what services they provided, notes you’d give insurers. We wouldn’t expect insurers to trust people reporting truthfully their actual costs. But the amount of paperwork would be far, far less, because most people wouldn’t buy insurance for anything but serious maladies. Like, say, certain cancers or some kind of non-specific body failure. That’s the point about making bets only on certain events, which needn’t be diseases per se, but only damages to health.

“But wouldn’t costs of insurance vary by things like age, race, and so on?”

It ought to, else it’s a bad bet for one side or the other. And bad bets increase costs.

“But then some people won’t be able to afford insurance!”

That’s right. But you do recall health care isn’t health insurance, right?

“So how do we get poor people health care?”

After reining in lawyers, the same way we get the indigent food. Anything would be better—and cheaper—than the farce of forcing, by point of gun, citizens to buy products from government cronies. Maybe making Obamacare so expensive was part of the plan. Sure makes it an easy sell to say complete government control would be cheaper.

30 Comments

  1. You ever notice that health insurance doesn’t advertise? Unlike car insurance, which is in your face every day, health insurance doesn’t seem to want to bring in customers. What an odd thing!

  2. Of course my costs did not increase. I’m saving $2500 a year on insurance and I got to keep my doctor. And pigs can now fly.

    So true about doctors not knowing what they are charging. Over the last couple of years, I have found it impossible to simply pay a doctor. They have no idea of the charge. This happened again in February of this year. I asked to pay and they could not tell me the cost. That’s nonsensical.

    Health insurance companies are health care providers. They prescribe what medications you can have, what brands and how often. They do not care if your doctor disagrees. THEY are the provider.

    Agreed most definitely that health care costs go down when third party payers are removed.

    It is possible for large groups of people to “self-insure”, voluntarily contributing to a pool of money for when people have catastrophic health costs. However, the government disapproves….

  3. As I argued over at Mises.org, health insurance isn’t even insurance.

    https://mises.org/library/nowadays-health-insurance-isn%E2%80%99t-really-insurance

  4. Sheri, Insurance companies are not health care providers. They are gatekeepers to healthcare provision.
    There’s no such thing as cheap healthcare. Some methods are cheaper than others and nobody’s being honest about the cost.

  5. What’s really ironic is that health care for chronic disease isn’t even that good. Most doctors have no clue what causes major killers like cancer, heart disease and diabetes (hyperinsulinemia seems likely) and therefore have no effective way to treat these diseases. A doctor prescribing a statin for heart disease is really him basically saying “I dunno, my drug company rep says these will do something”. People paying more and more for treatments that will most likely make them worse off shouldn’t shock me the way things are today.

  6. Dear Dr. Briggs:

    Agreed.

    And you may want to read this –
    “Explaining the health care disaster in Canada”
    http://www.winface.com/pc_health.html

  7. If you look up the definition of health you will see that health is a personal condition, not a commodity or service you can buy. Therefore you can’t buy health insurance or health care. True insurance is to protect you from unpredictable disastrous economic events. Insurance does not pay for predictable routine expenses. If you expected you automobile insurance to pay for oil changes, tune ups and new brakes and tires, all routine predictable expenses, your insurance would be very expensive.

  8. You can call it what you like Ray but the queue grows longer not shorter and their not looking for an oil change.

  9. Ah, Briggs, your tax has increased! So whatever your wife does for a living, you must have a combined income more than $450,000.

    More than thirty Augusts ago, as an international student, I had to purchase health insurance before I was allowed to register for classes. It cost me $186 for an academic year. I was unhappy that I had to purchase the insurance as I was a poor student and believed I’d probably never file a claim.

    I have always been covered by a health insurance plan since then, and in my case, the premium has never decreased from one year to the next for more than three decades! Never. Who knew?! It must be Obama’s fault. That simple. Well, I am all for a simple life and simple explanations.

    I am getting older and now I have a different perspective. The young and healthy should subsidize the old (me, that is) and sick, and God Forbid that the rich should ever subsidize the poor! *sigh*

  10. Bob Johnston,
    Chronic diseases are not necessarily and in most cases are not life threatening.
    The word Chronic does not mean “severe” or “dangerous”.
    Acute diseases are inter early stages and the word has no bearing on the seriousness of the condition either.
    Each condition has it’s own natural history or rather than natural process.
    Acute conditions can often develop into chronic conditions if management, is not correct in the acute phase.

  11. Oh, Mr. Briggs, it just occurred to me that your higher tax may be due to a pay raise or higher returns in your investments, both of which, of course, have nothing to do with Obama administration if you ask a conservative. How dare that Obama claims credit for anything good that happens! He is definitely to be blamed for all the bad things though.

  12. If you consider what you pay for insurance a “tax”—as does Justice Roberts— then yes, “taxes” have risen considerably given the insurance mandate, even for those who make far, far, far less than $450,000.

  13. @ Joy – So what’s your point? I specifically named heart disease, cancer and diabetes as examples of what I was refering to. Are you trying to tell me that nobody ever dies from those conditions? My point was that health practitioners have no ability to deal with what are probably the three biggest killers and yet people are clamoring for health insurance so they can receive care from people who very obviously won’t be able to help them. That simply seems bizarre and ironic to me.

    And if you still have a problem with the term “chronic disease”, take it up with the CDC.

    http://www.cdc.gov/chronicdisease/overview/

  14. Bob Johnston,
    I point out a common misuse of the word.
    I take issue with the depiction of “chronic diseases” prognosis as well as that the heart disease, diabetes and cancer as examples. The words have a true value which refers to the phase of a condition.
    Prognosis depend upon the organ or tissue and a list of many other things.

    You might rightly argue that people die of chronic heart disease but this would be to miss the point about what the word chronic means. Acute cardiac failure is more of an emergency or more dangerous than chronic heart disease. “acute neuralgia” can be dreadful but less life changing than “chronic neuralgia”.
    Diabetes is not one disease, there are now some treatments for diabetes and some type II diabetics recover completely with careful management.
    Cancer is NOT a chronic condition. It can be a terminal condition.

    Everyone of adult age can refuse treatment if they wish.

    CDC are irrelevant, especially if Obama’s lot have been at tit.
    Pathology of the human body doesn’t change. These definitions are historically described from observation of the natural healing process or complications .
    There will always be the three top killer diseases.

  15. Anon,

    Yes, you are correct if insurance premium is considered as tax, which is, again, ever increasing. Obamacare or not. Is that what Briggs meant by “tax”? Maybe. If this is the case, perhaps there will be a post titled “Health Insurance Isn’t Health Care and Insurance Preimium is Tax”.

    Where is it in the Justice Roberts’ opinion (http://www.supremecourt.gov/opinions/14pdf/14-114_qol1.pdf), starting with the following paragraph, indicating that he considers
    what you pay for insurance a tax?

    “The Patient Protection and Affordable Care Act adopts a series of interlocking reforms designed to expand coverage in the individual health insurance market. First, the Act bars insurers from taking a person’s health into account when deciding whether to sell health insurance or how much to charge. Second, the Act generally requires each person to maintain insurance coverage or make a payment to the Internal Revenue Service. And third, the Act gives tax credits to certain people to make insurance more affordable.”

  16. The “ACA” angers me to the point of being speechless.

  17. Anybody that read the bill, all 2600 pages of it & the 1800 pages of foot noted USC Title code references, KNEW the bill was horrible set of taxes and no new care. It took me a month to read it and chase the citations. There is a solutio to this mess, but none of it is in that bill, and anybody with anytime in patient accounts knows it. Pure social justice bill and churn.

  18. “the words of wisdom emanating from this site did not find purchase.”

    There is very little wisdom on this blog but a lot of bigotry and bad faith.

  19. Joy: As far as I can tell, the person who dictates what I can and cannot buy without incurring extra cost because they do not approve of my doctor’s choice IS the provider. I have a specific brand of blood glucose meter because my insurer says that is the only brand that should be used. Same for brand of insulin—and it changed this year. I have used the same brand for over 40 years but now if I disagree, I pay over $250 for a bottle of the brand I use. All drugs MUST be generic for coverage, unless no generic is available. Even if my doctor says I must have a certain brand, they say that is wrong and I should only use what they say. Of course I can buy on the “black market” directly from a pharmacy and without insurance, but that would be because my incompetent doctor prescribed the wrong drug. I am playing Russian roulette with my health that way. Seriously, you think I’m that careless? (Who is the provider— The one with the prescription pad or the one with the checkbook who agreed to pay for my medical needs?)

    I do agree there is a complete lack of honestly in all of this.

    Some types of cancer are considered chronic. They can turn into acute cancer at any point, but generally progress very slowly.

    Bob Johnston: Agreed. My doctor has said things like “According to my drug rep”. I check the FDA site and any studies I can find on line or at a medical library.

    JH: No one should subsidize you—no one. You are not entitled to the money someone else worked for. The rich pay for whatever they want. It’s their money, they earned or inherited it. You pay for you.

    If Obama had done anything good, he could have credit. He did make people hate the government and follow Trump, increase racial tension and increase unemployment while killing many industries with global warming as an excuse. Don’t know if that’s good or bad. Either, I’m giving him the credit for the afore mentioned accomplishments.

    My understanding is that the penalty for not buying Obamacare is a tax. That is why the IRS handles it. The Obamacare exchange is a welfare/insurance sales site, which is what Obamacare actually is—welfare for many, insurance for some who have no other way to get insurance. That last group—no other way to get insurance—increased under Obamacare.

  20. “If Obama had done anything good, he could have credit.”

    You demonstrate a basic misunderstanding of how your government work.

    In the US, the president has very little power for internal matter. He cannot write law, he can propose laws, but the senate and representatives chamber have no constitution obligations to consider them, unlike the nomination of Supreme Court judges, which they can turn down the nomination but they are bound to consider these nomination.

    The biggest myth is that the President influence the economy. He doesn’t, all money spending requires congress approval to few exceptions.

    The President can also veto law which can be overturn by congress 67% majority Bush had a some veto overturned, while Obama had two Veto that I know of but on matter that where resolved.

    Obama is also the President that created the least executive order in modern history and most had precedent under other president like Reagan.

  21. Obama now has 9 Veto

    Including keystone which was killed in Canada to begin with.

    And Obama has the lowest excutive order average per year since Grover Cleveland and in total number he is only higher than one termed or less President

  22. Sheri you entered into a contractual relationship with a health insurance company. They have contractual obligation to provide funds for the specific care for which you agreed to pay them. If you desire care outside those contractual obligations, then that care, device, medication, is your responsibility to purchase. Either way, self or insurer, you are the purchaser of your healthcare and the physician organization is the provider.

    All causes of death are acute. many deaths are secondary to chronic conditions. It has always been so, and will always be so. Everybody dies of something. no one is perfectly healthy until they drop dead.

    Cancer can be a chronic condition. In the medical profession no one is ever “cured” of cancer. True many people die in weeks or months of diagnosis of cancer, most now live months to years due to medical treatment. Some perhaps most will die due to acute implications of then cancer in their body, many will die due to complications of unrelated chronic disease.

    Employers who are wise will always pay for the medical care of their employees. Even for the expense of those who have common colds, and other mundane medical issues. They will do so because in the end their employees are more productive. Profit is a good motivator. When health care stops being profitable for employers, families, and individuals then ultimately they will stop seeking it.

  23. Bert Walker, Allow me to elaborate:
    The misuse of the word chronic and to continue it’s misuse by repetition re-enforces the misunderstanding. This ONLY matters to me in the way that truthful terminology prevents frightening misinformed members of the public. When it comes to health matters people are misinformed either by accident or deliberately and sometimes even by the healthcare provider.

    The result of years of insurance forms and box ticking for hospital stats; where chronic has acquired a meaning or a value which is not what it really means.
    As for cancer being described as chronic, there are many cancers classed as such when there is no single one type of cancer. blood cancers are an example of this. To describe them as chronic is useful perhaps to someone footing a bill but the disease has it’s own natural process which does not itself make the condition chronic. I would refer to my previous remark on this. If we’ve reached the it is it isn’t stage, count me out.

    “All causes of death are acute” is just silly.
    Goodness this matters because people come with ideas beliefs and notions courtesy of their friends, google and now, it seems, insurance companies and lawyers who all are experts.
    We even have lazy Drs who don’t know what they’re talking about contaminating patient’s thinking with loose and fretful language. It is important to make things clear. So again, the value is always set against the nature of the particular disease.

    “health” is universally understood but that which is considered healthy is where the disagreement starts. “wholesome”, “fit” or probably any other adjective would run into the same problem. So if we argue about this we haven’t solved the problem. For this reason It’s quite pointless pursuing the sideshow “what is health” argument. To make a person think they “need” treatment is utterly dishonest. I would hope that is clear.

    We have seen this happen in the NHS in the past but it is changing and has never been such a problem as within the private sector as there is incentive for patients to “need” input. I once became embroiled in a huge row because a private practitioner was treating patients who didn’t require help other than the practitioner told them they did. It is rife in small practices and maybe explains some of the above attitudes to healthcare in general. I’m not making a case for the NHS just a comparison.

    I agree with Boris,
    I personally see no reason why serious honest study of healthcare costs cannot be carried out. Not by an accountant because they have a natural tendency to cut and shave before they’re done.
    No politicians should be allowed near, no insurance companies, not only are they self interested but they can’t help themselves but start predicting.
    When the facts are established the cost is a simple addition.
    When cost of labour, materials, fuel rise so healthcare provision costs go up.
    Society needs to get over it. Discover the facts and let the dice fall where they may.

  24. Sheri,
    People have the same arguments here with both NHS and private cover regarding generic and branded products. Our GPs still have the discretion and if there’s a clinical reason then there’s no question. Does your insurance company not allow you to top up the difference? I suppose not.
    That’s insurance for you.

    About paying for other people in tax? That’s politics and religion. How does one usually solve such arguments? Let’s have a fight!

  25. Bert Walker: I was forced to obtain healthcare by my government and my employer chose the company. If I or my employer doesn’t chose a company my government approved of, I am fined. I cannot enter into a contract for health insurance in a free market. So I was coerced into the company and coverage I have. (My employer negotiated the contract, not me. If I won’t sign up, I must use a government negotiated contract. If I don’t, punishment will ensue. So I did not enter into the contract—I was put there by my employer or government if I wished to avoid punishment. If I were rich like my legislators and didn’t need coverage, then it would not be an issue. Of course, they are exempt from their own law.)

    Employers almost never provide the medical care you list. We did have good insurance until oil went bust, but only one year was really good. Coal mines had good insurance too. Again, we cannot stop seeking insurance—it’s against the law. We will be taxed punitively if we do not buy an approved plan.

    As for health “insurance”, as another commented, it is not like car insurance—that does not pay for maintenance. Nor have I ever seen a car insurer saying “You have to go buy a Ford because we do not cover Chevy” yet health “insurers” do it all the time.

    Joy: Then any disease that eventually kills if something else doesn’t get you first is not chronic? Heart disease, diabetes, etc? Both eventually kill.

    Yes, my insurance company will let me pay the difference—nearly $150 dollars a month for the one medication (someone has to pay for failed hedge funds). I buy generic and if I have a bad reaction, my insurance company happily pays over a thousand for an emergency room trip. It’s what they wanted and said I needed. (Yes, Joy, I did ask that question specifically. They said they would not cover brand name. Since I clearly stated that my only other option was to buy generic and go to the ER and they eliminated option A of brand name, that leaves the ER. They said the ER is covered.)

    We should not be paying for other people in taxes. Services like roads, armies, and minting money, yes. People, no. Let’s just all stay home and see if the economy works when we all want to behave like parasites. My guess is no. Let’s see if anyone wants to disagree. We don’t need to fight—we can all just stay home and wait for the government check.

  26. Sheri,
    On chronic and acute it’s not tricky to understand so I’m not sure why you’re stuck on it.

    As for your insurance company causing you to have a visit to A&E. Take them to court and you will win.

  27. Stephen S. Rodrigues, MD

    February 28, 2016 at 7:36 pm

    Yes, you can thank Obamacare for keeping this 60 year old healthcare system afloat. The ACA is actually a “too big to fail Healthcare system” bail out. Yes our present broken system needed an infusion of capital to stay afloat.

    I have a unique set of experiences from my frontlines view as a solo board certified family doctor who also spent the last 18 years investing alternatives medicine treatments as to why many of my patients were having to live life in pain and misery.

    If was not for the extra funds flowing into the coffers the prior systems would have already imploded in 2008. Here are a few extra bits of evidence not in your view which should make you thing again and form a new opinion.

    The reason why our older system is broken and tainted is because it was unwittingly set up to fail in 1968 with the first knee replacement for pain. It was a success, the steel 2 piece artificial joint stayed in place and all of the tissues healed over the prosthetic device. The patient was able to walk with the prosthetic device in place. Did it relieve pain or restore the patient?

    This procedure to treat pain in the “knee” was never supposed to happen. The idea of replacing a viable natural living tissue with that of metal is not logical, scientific or how nature and the human body works. It was done to jump past a few fact of biology. It was done simply because it would be done.

    This is the bizarre part of the story – the science proves that:
    The most common primary location of everyday aches, pains and stiffness has to be somewhere – The most likely and really only organ which can do this is in the muscular system.

    Muscles can only heal with the help of old school hands-on Physical Therapy and muscle tissue elbow grease. “Elbow Grease Treatments” comes in hands-on manipulations, spray and stretches and with needles; dry needling, wet needling, TrP and variety of other injections.

    Lots of Elbow Grease will tease, stimulate, rub, unwind and knead out the pain which is locked into muscle fibers – these treatments are almost 100% guaranteed if appied by a team approach!

    So:
    Spinal nerves cannot cause this type of pain!
    Spinal degeneration, disc or even compression cannot cause this type of pain!
    Joint structures do not cause this type of pain!
    Cartilage, ACLs and PCLs cannot cause this type of pain!
    Guess what? The system is so broken that the Feds thanks to lobbyist and marketing will pay $100,000 on amputation or fusion surgeries that will not do anything to remove the pain from the primary location in muscles.

    But will not pay $1,000 on a few Elbow Grease Treatments sessions??!!
    Does anyone see something a little suspicious?

    I think we have all been tricked by some very sophisticated profiteers.

    In bailouts the business is suppose to be reorganizing not hunkering down stuck on stupid. I do not see the systems changing just gearing up to rake in the cash before it implodes.

    So every time I see a Medicare recipient with bilateral knee replacement I cannot stop from thinking, our elderly citizens are being used as conduits from Fed coffers into the hands of wall street investors and private sectors. The elderly lose lose and lose. Investors win win win.

    Yep this is a big messed up system.

  28. I had an elderly friend who went in to a neurologist about normal pressure hydrocephalus and came out with back surgery because her legs went to sleep and the neurosurgeon convinced her she would be paralyzed if she didn’t get surgery. She was also hooked on pain meds, gained 75 lbs and rarely left her house. The surgeon was under suspicion of welfare fraud, etc, but today he has a lovely hospital built and is still “helping” patients. Yeah, it’s messed up.

    I also wonder if this knee and joint replacement encourages people to abuse their bodies, knowing they can just go in for a rebuild.

  29. Stephen S. Rodrigues, M.D: My father had both knees replaced when he was 60 after living 10 years with extreme pain every day. The surgery allowed him to live the final years of his life without pain. He literally died laughing when a massive heart attack took him from us. His and my own experience with “alternative” treatments has led me to conclude they offer little more than the placebo effect and in fact place a greater burden on insurance plans by covering medically ineffective “therapies” while adding to the cost of insurance for everyone.

  30. Stephen S. Rodrigues, MD
    It is a tangled web even without money and the politics. Here’s why accountants and insurance companies, won’t sort it out, so they pretend it’s simple! This is only one area of healthcare:
    Pain is by nature complex. Pain most commonly experienced is peripheral and a mechanical explanation can be identified even if a nerve is involved.

    Central neurogenic pain is of many types and can be coupled with mechanical soft tissue pain. In cases of complex pain, medical health, hormones, stress, depression and anxiety all effect pain experienced. It isn’t unusual for a person who has had pain for more than a few weeks to then develop effects which then play back into the cycle of pain. If there is substance abuse this adds another layer. Untangling the mess is both frustrating and rewarding. If treatment helps someone with straight forward problems I always think it’s only to be expected. To help where the case is more complex is a result. People often have wrong ideas or beliefs about their pain and ensuring they understand the truth is a real palpable help. Too many practitioners unwittingly place an over emphasis on their own importance and they are left with a patient who thinks they “need” treatment. They must go back for their “maintenance”! Never believe anyone who charges you in advance.

    An illustration of the complexity can be appreciated in the opposite situation where the patient who’s MRI or X-ray looks dreadful but the patient is symptom free or reporting mild dysfunction

    The next patient may be in significant pain or ‘constant severe pain’ with little or nothing to show on imaging or on examination. This illustrates the usefulness of imaging on it’s own and what a puzzle diagnosis can be. It is too easy to blame one suspect structure on an image and elect for surgery straight away. This is more likely to be done in private medicine than in the NHS where patients are treated conservatively first. Even in straight forward cases of sports injury assumptions are still made with regrettable outcomes.

    Conservative management in the first instance gives better surgical outcomes and sometimes surgery is no longer required. Physio’s have more time with people and a chance to establish that which can’t be discovered in a brief consultation.

    Alternative treatment is named so for a reason. If a patient pays someone or uses some gadget and determines that their remedy ‘helps’ I would handle that very carefully.

    I don’t believe acupuncture gives any effect greater than placebo. Any passive input should be used only to facilitate exercise or to do what the patient can’t do themselves.

    Steve e,
    Knee replacements are 40% surgery 60% patient effort with their exercise or physio. Patients electing to undergo the procedure are supposed to be informed so they don’t get a nasty shock. Occasionally a patient will have very little incision/surgical pain but this is rare. I am glad that your father was rid of his knee pain but shame, 10 years is too long.

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