Urgent!!! Health Care Reform

Health care seems to be constantly on the top of Bloomberg Political News, so I guess it's worth a mention, even though it's been kind of like watching a car accident and not being able to look away.

Apparently Obama wanted to get this reform through before the August recess because it's extremely urgent. It's so urgent, they might have to just overrule those nasty Republicans on this one – although I think "bipartisan compromise" is silly, I also know this plan is just wrong, so I'm still hoping for stalemate. Hang in there, 21^st century axis of evil!

Here's why this is all so ridiculous. Firstly, they say that Americans don't have health insurance, and that is an urgent, serious matter. According to Bloomberg data, only about 15% of Americans are currently without it. That in itself isn't really a tragedy. Health insurance is just a way to pay a company to handle the risk of your health. You pay a premium – in turn, they pay your claims. In reality, people pay in premiums more than the insurance company will ever pay for their health care – that's how the insurance companies stay in business. So in theory, a family that could pay anything for health insurance, even if it's not market rate, could probably save that money and have enough to cover any real emergencies.

At any rate, it's nice to have the insurance because it's no fun worrying what if…? I know from experience, dude.

The problem of having no insurance comes when something serious happens and you don't have the money to pay for it. That's the worst-case scenario. My husband and I had a rather mild brush with this – in the end, the cost was around $4,000. I was a student, he was out of work. We had no extra money. Hell, we had just moved out of our apartment and back with my parents because we were broke. So what did we do? I took out some more student loans, which we are still paying off. At any rate, I can assure you the world did not end.

The second reason this is so ridiculous is that the bill is supposed to address wild, skyrocketing health care costs. I'll agree that the cost of medical care seems high, but not if you consider the cost of medical malpractice insurance and, in some regions, the cost of free health care given to illegal immigrants. In some specialties, doctors pay more in malpractice insurance than I make in a year. If a doctor is sued, he could easily pay that much in legal defense fees alone. Assuming he doesn't have limitless money to spend on these things, he'll have to recover these costs somehow – meaning you pay higher prices. If we want to lower the cost of health care, it would be much more effective to start with malpractice litigation or illegal immigration.

Additionally, insurance only hides the cost of medical care. If I go to the doctor, I pay $20, but the actual cost could be $200 or $300, especially if I had blood tests done. That cost is paid by the insurance company, so it's nearly invisible to me. That means, when I have insurance, I'm more likely to go to the doctor even though I don't really need to, and also possibly more likely to live a more risky lifestyle. After all – I'm covered, right? That's called moral hazard.

Got a headache? Better get an MRI. Sniffles? Blood test for swine flu. You can't be too careful, especially when the Uncle Sam's footing the bill.

Here's an example. In the year and a half I was off of health insurance, I never saw a doctor. Couldn't afford it. If I got sick, I'd have kind of a miserable week but end up just fine, and the $200 dollars were never spent, and the doctor has more time to see other patients.

This past year was my first having health insurance in awhile. During that time, I've seen the doctor three times, plus a specialist twice, a chiropractor, and a dentist. I've also had blood tests done. All because it costs a tiny percentage out of my pocket, so I can afford it now for the sake of peace of mind. Just me getting checked out for every little thing, I've probably cost my insurance company several thousands of dollars, for practically nothing!

If the insurance company is the government, that means it's the taxpayers paying that extra cost of seeing the doctor for a runny nose because it's nearly "free" to the patient. But if the plan goes into effect for all the Americans that currently do not have insurance, that's 46 million people making similar choices. Although the plan charges a small premium, almost by definition a government plan will lose lots of money because it is paying for the risks the private sector cannot bear at low prices.

So in all actuality, hiding the cost of health care from more patients effectively does two things. First, it places a lot more demand on doctors' time as patients decide to see them for less and less important reasons. For those of you out there familiar with economics, that means doctors will have to raise their prices in order to ration the time they have available. Second, the total cost of health care will go up, not only because of rising costs due to increased demand, but also due to people using more health care than if they personally must pay for it. That means more taxes.

But because the government is paying the costs, the prices won't actually be able to rise that much. It's the government we're talking about. When health care providers deal with insurance companies, they negotiate to mutual agreement. The insurance companies would have to bear the higher costs because they can't simply refuse to pay their contractual obligations. They'll just raise premiums. But the government can say, 'No, you can't charge that much. That's wrong.'

So suddenly it becomes less worth it to be a doctor. They can't charge what their time and expertise are really worth; meanwhile they must figure out how to treat more patients without being sued more. Using more medical supplies and equipment also costs them money. So, some aspiring doctors would decide to pursue other, more rewarding careers, and some established doctors may as well. That means, not only do we have rising demand from people trying to see doctors for trivial reasons, but we might also have less doctors to care for them. Quality suffers in a big way – and before you know it the British will be joking about our bad teeth! We'll be hearing of 13 year-old girls getting breast implants while people with serious illnesses die on waiting lists to get in to surgery. That is the hidden, and more sinister, cost of placing more demands on health care without allowing prices to rise enough to attract more providers, as they would in a free market.

The legislation before Congress looks like a simple wealth redistribution scheme from the majority with insurance to the (purportedly bottom) 15% without it. Make it cost less for the less fortunate – and everyone else bears the burden. In the process, the burden becomes bigger and bigger, the cost greater and greater. The end result, as with any such scheme, is lower standard of living; however, in this case it's in one of the most important areas of our lives: health care.

America's health care standards have always excelled over other countries precisely because of the lesser extent of government intervention in that area. Now, it appears this advantage we enjoy is the problem that urgently needs fixing.