I’d rather be writing about something else, but the Medicaid mess in the Montana Legislature is, at its core, being driven by the crazy-stupid (and insanely increasing) cost of “health care.” Pass or not, the problem of cost growth won’t be changed by this Legislature.
The cost of medical services has outstripped inflation for at least four decades and shows no sign of slowing. The Kaiser Family Foundation analyzed costs in “constant dollar” terms from 1970 to the present. In 1970, Americans spent a little under $2,000 in current money on health care per capita, about $8,000 for a family of four. That was pretty stiff, even then.
Today, the per capita, using “same” dollars, is $10,500, or $42,000 for families – $875 per person a month, even worse than the $800 figure I extracted for a prior column. Why does that matter?
Well, used to be, fixing the usual dings and dents of normal life wouldn’t bankrupt the average American family. Even chronic illnesses were somewhat, sort of, manageable, with catastrophic illnesses like cancer, or catastrophic injuries and infections, being what scared people most.
Today, it’s all scary. Keep in mind that the $42,000 above is the average, including the senior bracket. Well, the Millman medical index, which tracks annual health care expense for the “typical American family” WITH “average employer-sponsored preferred provider” plan, posts an annual cost of $28,111. That’s for normal people – in their prime of life up until retirement from a good job. That includes premiums, and not every family in that pool runs up a $28,000 bill each year. But on average? That’s a lot, and it signals that those in the plan pools who do actually get care are getting really expensive care.
But why does the cost of care seem to have no limits? And how could “health care” costs be downsized to at least a proportionate share of our “cost of living?” Well, it boils down to two factors: One, insurance covers the risk of needing something we don’t want. Two, insurance mostly involves “other people’s money.”
Remember the example I used showing that certain “medical” procedures are “cheap” while the cost of everything else medical is past lunar orbit? That’s because, for the cost-stable procedures, there’s no risk.
Let’s remember back to the Obamacare fight, when that great feminist Sandra Fluke was invited by Congress to whine under oath how her student insurance program wouldn’t pay for contraception. Are you kidding me? Last I checked (Me Too aside), activities that induce a need (well, that’s optional, too) for contraception were, in the vast majority, voluntary activities chosen by the, ahem, participants! There’s nothing uncertain or unforeseen, no risk to insure!
Nose jobs and tummy tucks are voluntary acts, optional, things you choose to do, after considering the costs (which you pay yourself) and benefits (which you get). The important thing here is, your decision is economically based on input and output. You decide whether or not it’s worth doing. There’s no risk for an actuary to calculate premiums upon.
Imagine if optional procedures such as plastic surgery were insurable, or “insured” as in covered by your “health care plan.” Who wouldn’t want, say, vocal cord surgery so we could sing like Pavarotti, or whatever it takes to look like Ann-Margaret, or as some advocates want, reassign ourselves to be Ann-Margaret? Or run like Usain Bolt? Or see like a fighter pilot?
Can you imagine the premiums for any insurance pool where, after you’ve cooked your deductible for the year (and a lot of people don’t understand deductibles), you could have a liposuction, chin implants, tooth caps, tattoo removal or whatever you want? Sure – but there’s no such thing.
What about a pool for whatever drugs you want, not just the lifesavers, but the feelgoodies? Unlimited doctor visits for the hypochondriac? No such thing, or more specifically, no such insurance thing.
But the killer is, even if there were, would the price charged for these goodies go down? No, because everyone would think “Oh, that’s paid for, so I might as well,” and the demand would go up. I’ll get into that next time.