<p>@ Shraf - maybe next time actually reading the responses will make your contribution to the thread a little better. Only part of one post so far has concerned BDM’s insurance rationale.</p>
<p>@ sakky, fair points - I’ll respond to them as best I can when I get some free time.</p>
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<p>so you’re cluttering a thread that has lots of potential with off topic arguing?</p>
<p>It’s not off topic. My and sakky’s posts discuss a notion asserted by BDM in his first post; Dbate and babydragon are discussing an issue pertaining to rising costs. It seems a little silly that people need to wait for BDM to bring up something before they’re “allowed” to talk about it. Yes, BDM’s knowledge will be the main focus of the thread, but if someone has a relevant topic it’s fine for them to bring it up, this isn’t middle school.</p>
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<p>Personally, I don’t understand why insurance companies can’t offer cutrate coverage that relies on cheap offshored medical services in the Caribbean, Mexico, or Asia. You can undergo bypass surgery at a JCI-accredited hospital in India for a tenth of the cost it would be here. </p>
<p>Now, obviously, such an insurance system would have to cover emergency services in the US. But much, probably most, of the cost of the health system is incurred via long-term, chronic care. Cheap insurance coverage that relies on medical offshoring may not be the most convenient coverage to have, but it’s still better than no coverage at all.</p>
<p>@Sakky, I don’t know about other nations, but in India for example one really does not have to worry about medical malpractice. The doctor can run as few or as many tests as he wants to make a diagnosis. However, in the US doctors are forced to have consults, run extensive and some times painful tests to simply have a defense if there is any case against them. While I don’t disagree with medical malpractice, I do agree with Obama’s plan to limit the maximum on medical malpractice. This should help keep some costs down which would reduce the cost of healthcare (hopefully). </p>
<p>Also the cost of living in those countries are much lower than the US. For example if an Indian doctor was making 100,000 indian rupees a month, he would be considered to be very well off in India. However that only translates to $2000 a month. As you can see most likely doctors will be paid less, but still live well in India.</p>
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According to his speech to the AMA – at which he was roundly booed – Obama has stated that this is not part of his plan.</p>
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<p>Obviously the lack of defensive medicine practices and differing costs of living are major reasons for why Indian health care costs less than US health care. </p>
<p>But I’m not talking about why the costs of health care differ so greatly from nation to nation. I’m talking about why insurance companies, or if necessary, Obama, doesn’t take advantage of that fact. Like I said, maybe a health insurance plan that relies upon offshored medical providers may not be as of high quality as regular insurance that relies upon US services (although even that is debateable as a lot of US providers frankly aren’t that good) - but it’s probably going to be cheaper. More importantly, such insurance is better than no insurance at all, which is what millions have.</p>
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<p>Done. See [Outsourcing</a> the Patients](<a href=“Bloomberg Businessweek - Bloomberg”>Bloomberg Businessweek - Bloomberg) an [Health</a> care tourism, now covered by insurance?](<a href=“Archive blogs”>Opinion: Health care tourism, now covered by insurance?)</p>
<p>Ha! These are precisely the types of articles that I had posted myself in a prior thread in which I discussed how medicine is not immune to outsourcing.</p>
<p>But what I’m talking about here is why haven’t insurance companies (or politicians) haven’t devised a low-cost insurance policy that relies on medical tourism/offshoring that is specifically targeted towards the millions of uninsured. An insurance policy that forces you to travel to India for non-acute treatment may not be the best policy around, but it’s surely better than no insurance at all, which is what millions have.</p>
<p>I would guess it is because it is still not politically good for politicians to propose this as of today. It does not mean that it will never happen in the future.</p>
<p>Politicians may also devise a scheme that has been adopted by many tech companies all along: import doctors and nurses. Both (outsourcing patients and importing doctors) look very bad politically as of today. An even more profitable scheme is to rotate the doctors in and out of this country regularly, as it would be even more profitable for the insurance companies and cheaper for the consumers.</p>
<p>I hope none of these will happen.</p>
<p>Remember that politicians are willing to do anything when doing so will get them elected.</p>
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<p>Health insurance providers wouldn’t do that because it would be a bad business decision. Even if the same good is offered and is of comparable quality the mental value is not always the same i.e. bypass surgery is bypass surgery but Americans would much rather go to an American trained practice because medical education in America is seen as being high caliber. Therefore consumers of health insurance would not want to take on a plan that essentially outsources a service that is inextricably linked to quality on a mental level. So it would be bad for business, which is the bottom line.</p>
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<p>This already happens. Nurses and physicians are able to come to america and practice already. It is not bad politically as most of the time it is under the radar and if these individuals preform their job effectively and also speak in a manner of English that is common noone knows who is or is not a foreign medical graduate.</p>
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<p>But that’s precisely the problem. You’re talking about (current)consumers of health insurance. What I’m talking about are the millions of (current) nonconsumers of health insurance. </p>
<p>Americans may prefer to be treated by American doctors, but surely they’d prefer to be treated by foreign doctors rather than not being treated by anybody at all. And that’s precisely the problem faced by millions of Americans: they don’t have any insurance and hence have no treatment beyond what is available in hospital ER’s. </p>
<p>I would argue that, contrary to the notion being bad for business, it would be absolutely excellent for business. History is replete with examples of ‘disruptive’ low-cost products targeted at those who can’t afford the regular ‘high-quality’ products and hence aren’t even consumers (yet).</p>
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<p>Well, what looks worse politically - outsourcing patients/importing doctors, or just having patients not receiving treatment at all, as millions of Americans now are? </p>
<p>I strongly suspect that somebody who has heart problems would rather receive bypass surgery in India rather than not receive any treatment at all.</p>
<p>**So fire insurance is basically a means of reducing my risk. Usually, I lose a little money but I buy certainty. The insurance company makes some profit by helping me pool the risk.</p>
<p>So how come my health insurance has a lot of things that don’t seem to have anything to do with risk?**</p>
<p>Two answers: taxes and social safety nets.</p>
<p>During World War II, President Roosevelt was very concerned about inflation. He was worried about prices getting higher–so he capped them. He was worried about wages rising – so he capped them.</p>
<p>(If this sounds idiotic to you, you are right.)</p>
<p>What were employers to do? They wanted to attract employees but were forbidden by law from increasing their wages, so they began offering fringe benefits instead: longer vacations, company cars, and… health insurance.
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Is this why we get health insurance from our employers?**</p>
<p>Yes. You’ll notice that no other countries rely on employers to the extent we do. Most don’t even involve them at all.
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Is the reliance on employers a good or a bad thing?**</p>
<p>It’s a very bad thing. A very very bad thing. For one thing, it means that people often lose their jobs and their insurance in one fell swoop – a double whammy when they can least afford it. For another thing, it means that people are very reluctant to leave their jobs even when better jobs are on the horizon, a phenomenon known as “job lock.” Finally, it really reduces people’s options in insurance markets, meaning that insurance companies have less incentive to compete.
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So getting your insurance through your employer is uncompassionate, bad for the economy as a whole, and unhealthy for the health insurance industry specifically.</p>
<p>But at least my health insurance is free this way. My employer pays!**</p>
<p>Wrong. Remember, health benefits first came about as a *replacement *for salary. It still is. Your employer doesn’t care about what you take him, he cares about how much you cost him. If he wasn’t buying your health insurance, he’d be happy to pay you that difference.</p>
<p>This is a rough approximation; sometimes employers do incur some costs. But mostly, it’s paid for by a lower salary.**</p>
<p>So why is this still part of our system?**</p>
<p>Because people think it’s free, and they’re very reluctant to part with something they think is free. Privately, I suspect insurance companies like it too, as a means of protecting them from competition. The most important reason, though, is tax benefits.
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Tax benefits?**</p>
<p>Yes. If you try to buy health insurance on your own, it’s paid for out of after-tax income. But your employer gets to pay for it with pre-tax income – in other words, the government helps subsidize employers, but not single purchasers.</p>
<p>This arose soon after employers started offering health benefits.
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So why does my health insurance include all kinds of non-risky things? Things like checkups or things I am sure I’ll need?**</p>
<p>This is precisely the reason. Anything you can get through your employer’s health insurance is tax-free, so it’s a third (or even half) off. So even though it doesn’t make any sense to insure a “checkup,” you want to put it into your health insurance plan. Even though it doesn’t make any sense to insure against diabetes meds when you know you have diabetes, you’ll want to put it into your health insurance plan.
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Remind me why it doesn’t make any sense?**</p>
<p>Insurance companies make a profit, and in exchange they reduce your risk. But if there’s no uncertainty involved, then they’re just making a profit from you.</p>
<p>Except this time it’s tax-free for us. So really, we’re making a profit off of the government.</p>
<p>Exactly. This is why health insurance, unlike fire insurance, includes non-risky elements: things that we are certain we’ll definitely need.
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Is that efficient?**</p>
<p>Definitely not.</p>
<p>First, it’s an imprecise wealth transfer. It means that regular taxpayers are subsidizing sick people. That’s normally okay, except that some of those taxpayers are poor and some of the sick people are wealthy. If you want to use a subsidy, you should use a much more precise one.</p>
<p>Second, it encourages overspending on unnecessary items. Putting things under an “insurance umbrella” means that you’re going to get things that you otherwise wouldn’t need. If the government helped subsidize a “car purchase insurance” plan, you can imagine that a lot more people would buy Lexuses and BMWs.</p>
<p>This phenomenon is called “moral hazard.” We’ll explore it a little more in the future. It’s a little weird, because it has nothing to do with morality, but that’s the term people use.</p>
<p>If it encourages overspending, that will increase the demand. And as demand rises, price goes up. And as price goes up…</p>
<p>…we find ourselves in a national health care crisis. Yes.</p>
<p>Is this a major problem?</p>
<p>Yes, it might be. Just the moral hazard element alone was found to be a huge driver of costs – as much as 30%, according to an experiment done in the 1970s. Of course, that’s now a very old study. But if moral hazard is 30%, then you can imagine how much of a problem it is when it’s combined with job lock, loss of competition, and inefficient transfers of wealth.</p>
<p>So what are the parties proposing to do about this? Should we start taxing health benefits provided via employers?</p>
<p>People who have proposed that as a solution have gotten hammered politically, and Barack Obama is saavy enough to staying away from that.</p>
<p>George Bush and John McCain both wanted to make personal insurance purchases tax-free also. Bush met with some success on that front. That would help alleviate some problems, like job-lock, but it wouldn’t help the fundamental “moral hazard” problem. In fact, it would make it worse.
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You said there were two reasons, taxes and the social safety net. Can we talk more about that?**</p>
<p>A+ post. I’m a fan of how easy it is to follow in this format.</p>
<p>BDM for surgeon general</p>
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^44 .</p>
<p>Cool posts!</p>
<p>When you say we are making profit off the government, is that because we aren’t paying taxes for the health services we get through our employer insurance?</p>
<p>Just making sure I understand this. I like your style.</p>
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<p>Yup, exactly.</p>
<p>Person A makes $100. He pays his taxes, $30, and goes to see the doctor and pays $50. He gets $20, the doctor gets $50, and the gov’t gets $30.</p>
<p>Person B makes $100, but his employer pays $55 of that in health insurance benefits. He goes to see the doctor, and the insurance company pays the doctor $50 while keeping $5 for himself. That leaves Person B with $45, and he pays $15 in taxes. He gets $30, the doctor gets $50, the insurance company gets $5, and the government gets $15.</p>