Thursday, September 24, 2009

Health care re-form XI (Sales job)

This week the administration published "The Burden of Health Insurance Premium Increases on American Families", a short treatise on insurance costs. Perusing this document one reads:
  • Health insurance premiums have increased faster than wages, and thus have accounted for an increasing share of family budgets.
  • This premium growth has also largely outpaced inflation.
  • "Consumers ultimately bear the brunt of costs as increases in hospital, physician, drug, and health plan spending are all passed down the value chain to American families, employers, and the government who pay the bills."
  • Health insurance premiums are highly variable across the country, and premium growth also has been highly variable... "... These differences lead to significant inequity for families and businesses..."
  • There is a discussion re "unjustified premium growth," the need to make sure "that insurance companies are not unfairly or excessively increasing their premiums."
OK, so clearly the purpose of this document is to "sell" the need for health care (strike that, and make it health insurance) reform (Ed note: this blogger does believe that health care reform is needed, but just takes exception to this line of argument). It does this by continuing to demonize the health insurance companies, clearly responsible for this sad state of affairs! However, this blogger has several nits to pick with this narrative.

First, while it cavils about premium increases outpacing inflation and wages the report does not suggest what comparative increase levels are appropriate... general inflation? medical inflation? some other indicator? wages? While it is unfortunate that it has outpaced wages, what exactly is the correlation between wages and health care costs? Do we have a divine right that wages increase faster than health care costs? If the answer is 'yes' here, why not the same for food cost, housing costs, indeed all costs?

Second, apparently we are expected to be outraged that the "brunt" of these increases is being borne by "American families, employers, and the government..." Ahem, it's the American families who bear all costs, it's a polite fiction that employers or the government pay for them. Where do the employers and government get the wherewithal to pay? That's right, from "American families." Where else should the money be coming from? Is there some secret magic source of funds that should be responsible? No, American families pay the employer-paid portion (e.g. as passed on costs built into products and services, in the form of forgone wages, etc.); they pay the government-paid portion (e.g. through their taxes, by paying interest on the national debt, by passing the cost on to their children and grandchildren when the government pays via debt, etc.)

So, health insurance premiums and their annual increases vary state by state. Since the report is totally silent on what level of variation is normal or acceptable, we are left with the implication that the fact that there are differences is somehow unjust or nefarious. Does anyone really think that health care costs, premium levels and/or annual premium increases should be the same in Fargo, North Dakota as in San Francisco, California or Boston, Massachusetts? Given the differences in cost of living, wage levels, housing prices, etc., etc. this is a ludicrous preposition. Yet, the real differences are cast as "bad' ipso facto, with no effort to normalize, etc. the data!

Finally, words such as "unfair," "unjustified," "excessive," "exorbitant," etc., are thrown around rather cavalierly. The examples cited don't particularly support these... OK, so an argument can be made (and some do) that health insurance company profit levels should be regulated and fixed. However, (putting aside the fact that their profit margins average an anemic 3-4%, which does not lend itself to particularly deep cuts) this report and this administration do not argue for this level of regulation. The report also emphasizes that most states are regulating these increases, thus begging the question re why federal involvement is needed.

Bottom line, this report is at best a sales brochure. True, it is full of facts and they are all correct, but without additional information, analysis, and context, might be said to be (pace Shakespeare's Macbeth) "...full of sound and fury; signifying nothing.

Previous entries on hospitals & health care:
Health care re-form X (Cowardice) - Sep 13th, 2009
Tempest in a teapot - Sep 5th, 2009
That explains it... (death panels) - Sep 1st, 2009
Health care re-form IX (Apologies due) - Aug 30th, 2009
Health care re-form VIII (More nonsense) - Aug 28th, 2009
Health care re-form VII (Nonsense) - Aug 26th, 2009
Health care re-form VI (Effectiveness) - Aug 15th, 2009
Health care re-form V (The sales job) - Aug 14th, 2009
Health care re-form IV (What is it?) - Aug 13th, 2009
Health care re-form III (Why we spend more) - Aug 8th, 2009
Health care re-form II (P4P) - Aug 4th, 2009
Health care re-form I (Issues) - Aug 4th, 2009
So? - Jul 27th, 2009
Random chart... - Jul 12th, 2009
Random charts... - May 22nd, 2009
Random chart... - May 9th, 2009
Wyeth v. Levine - Mar 22nd, 2009
Financial crisis & hospitals - III - Mar 22nd, 2009
Random chart... - Feb 1st, 2009
Financial crisis & hospitals - II - Jan 27th, 2009
Random chart... - Jan 26th, 2009
Hospitals' financial update - Dec 25th, 2008
Good for the goose - Dec 11th, 2008
Studies of intererst - IV - Nov 16th, 2008
Studies of interest - II - Nov 16th, 2008
Financial crisis & hospitals - I - Nov 14th, 2008

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