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WHAT IS OUR CURRENT SYSTEM, BY THE WAY?
People under 65:
Currently, people with very low incomes and assets (often assets < $2000 though sometimes a car or something else may be allowed) get free medical care (Medicaid). (NOTE: In a few states, even these very poor people will not be eligible for Medicaid if they do not have dependent children.) The quality varies based on the state--in many states, they really try to not stigmatize the people getting Medicaid, and feel like they just have a decent HMO. The trick for these people is that they're really in what economists call a poverty trap. If they work hard, they'll lose their free health insurance, and be much worse off and possibly dead. In the statistics, by the way, these people all count as insured -- they are not among the 46 million (almost 1/6 of the country) counted as uninsured.
People above the very low Medicaid limits, but without enough money to pay for whatever insurance is available, when their job doesn't provide insurance, or when they are between jobs, are most of the uninsured. These people can be classified as "working poor" or "working class income" if they have lower incomes, and can't afford health insurance, and don't get it from their job. Besides working-class-level salaries, there are actually many higher-income/asset middle class people in this group. This is because, in most U.S. states, insurance can be denied due to pre-existing conditions. Further, in many states, a special "high-risk-pool" is set up by the state to cover them, but rates can hit $24,000 a year per person, and there are gaps. Also, many states have no high risk pool, and no alternate mechanism, or a humongous-gap alternate mechanism. (I took it upon to study the pre-existing condition wipeout risk to the hard-saving relatively-high-income middle class people
here in my by-state dangers table. There is a wipeout risk in 23 states if you never move between states, and 36 if you do try to move. Few people know this.)
Most insurance currently is employer-based insurance. Typically, smaller employers buy group insurance from an insurance company. The rates they pay depend on the state. In most states, nowadays for employers buying the insurance have some form of community rating or modified community rating, where they don't pay too much more for sicker employees. (This is in contrast to what happens to people in those same states when they are sick--individual policies in most of these same states that are community-rated for the employer are not community rated for the individual. This is one reason many experts are concerned about moving away from employer-based insurance without fixing the individual insurance regulations first.) At any rate, there can still be pre-existing-conditions coverage problems for employees of employers who have purchased group insurance. I am not an expert in this area, but you need to check the state specifics if this affects you.
For employer-based insurance for large employers, the employer is usually self-insured, which means that they set up an insurance plan and just pay the cost of the medical bills that roll in themselves. (They often have an insurance company administer it, but they pay them a fee and the medical bills. The insurance company doesn't assume the medical risk.) Note that these large employer plans are usually exempt from state regulations by a Federal ERISA law. I am not an expert in this area, but I have been told there are few or no regulations of the Health insurance under ERISA.
One thing I would like to point out about employer based plans is that, though Obama and the Democrats want to keep that system now, and that's OK, in the further future we might want to get rid of it. The reason is that there is a kind of manipulation or hanky-panky with freeloading on society, where employers can higher just young or healthy people, and reduce there medical costs. This keeps older and less healthy people both uninsured and unemployed. (Want an example of where this was at least contemplated--See The Walmart Memo. And I'm really not blaming Walmart -- there's a real economic force to be dealt with, and we have to engineer our system well.) Ironically, the McCain plan would have acted to de-employerize health insurance, which in itself is good, but because the plan messed up all protections for pre-existing conditions, and put people into the inefficient (65%-75% payout rate) individual system, it would have actually made things much, much, worse, as I posted
here about a month before the election when I found out the exact details of his plan.
[Incidentally (11/18/08), with the three American auto makers asking for a government bailout to stave off bankruptcy, many are pointing out that Toyota and other Japanese carmakers when manufacturing in the U.S. have lower costs than U.S. automakers manufacturing in the U.S. Though there probably are other factors, such as too many car models and dealerships for the US companies, I'll bet some of Toyota's reduced cost is that being newer in manufacturing in the U.S., they have younger employees. Think about this, and see what a mess self-insured employerized insurance can make of the economy!]
Also, though I think Obama will keep the tax-favorable treatment of employer-based insurance, as we make things more optimal in the future, we may want to give equal deductions whether insurance is individual or employer. That is, we want to break the tie of health insurance (and in fact pension, etc.) to employers, since when we don't have continuous long term employment with one employer, all those things get messed up. (We have such a stupid way of doing things! It's stupider now that young people are expected to go between 10 jobs, not 1 job, per lifetime.) Now, there would be problems dis-employer-connecting in a non-mandated system (particularly, freeloading by individual people not replacing lost employer-provided insurance). But somes of the issues of de-employerization are false: the economics-versed will realize that "employer-pays" vs. "I pay" vs. "we split the cost" is a false belief (under everyone rational, no psychological effects, and no-sticky-entanglement agent assumptions at least.)
Oh, yes. For completeness let me add that people with over $10,000,000 in assets often don't have or need insurance. They just pay cash.
And at the risk of sounding facetious, people in prison get free medical treatment, whether they have a pre-existing condition or not.
Current System, for People 65 and Up:
Medicare, a program which has been in place since the mid 1960s, insures people for a modest fee. (Funding from a payroll tax.) There is no pre-existing conditions exclusion. The standard version of the program has a notoriously high efficiency measured by "payout ratio" of around 98%. There are also certain controversial private alternatives, which cost the Federal government something like $1200. more a year per person, due to the administrative inefficiency and cost of marketing the private alternatives. (Republicans generally support these alternative plans, indicating that they believe that though not the case now, ultimately the private plans will manage to squeeze costs down. At the moment, in my area of upstate New York, it looks like much of that $1200. is going into the ads I see on TV for the various private Medicare plans, and the sales people. Several different companies offer on TV to send a sales person (the ads say "health insurance advisor") out to the older people.)
Do note that Medicare falls short in some areas, so people with assets to lose often purchase supplemental plans. I do not myself know about the problems people with pre-existing conditions have with supplemental plans. I do believe that at least in certain states, if you purchase a supplemental plan when you first hit 65 and start Medicare, you are O.K.
Since so much of the medical system is Medicare (older people use a lot of care), you would think no one would sensibly object to the Obama plan, which has less of a government roll than Medicare. But, the explanation is that the current system for under 65 year old people is where the profit lies for many, many insurance companies. That is, those 65% to 75% payout ratios on individual policies mean there is 25% to 35% of premium left to be spread around to insurance agents, insurance company employees, and profit.
Current Sytstem and Hidden Cost Shifting--Hidden Cost Shifting Now Worsening Due to Economic Meltdown
The current system shifts the cost of medical care of those without insurance, and with lesser insurance, to the rest of us in a dishonest, hidden way. (An honest way would be to pay in an explicit way where the costs are calculated and announced-- e.g., the government budget with taxes. A dishonest way is just to have it all added to our medical and insurance bills, with nobody knowing what the amount really is. Hospitals and doctors rarely dare calculate the number, because if they have to tell you a third of your bill is really for other people, you might not pay.)
The cost shifting is from the uninsured, who are required to be stabilized by law in a hospital whether or not they will be able to pay. Also, it occurs for hospital and doctor "charity" care. It occurs commonly for Medicaid -- when the state governments set doctor and hospital reimbursement rates too low. (And for example, in New York State, they've had a budget emergency due to the meltdown, and announced (11/12/08) a plan to cut the Medicaid payment amounts. So the cost will get shifted to all not-on-Medicaid state residents.) There is also cost-shifting in the patchwork of state government programs designed to help some of the uninsured, with a little too much income for Medicaid, get medical care. Those usually involve some government money, and also often involve an unrealistically low payment rate to doctors and hospitals (often with a law requiring that the doctors and hospitals accept that unrealistically low payment). This is yet more cost shifting, and of course this should get worse as state governments go into budget troubles.
YOUNGER PEOPLE NOTE:
You may be too young to know that in the early Bill Clinton Presidency years, around 1993, we were on the verge of getting universal healthcare in place when the special interests came in, ran these "Harry and Louise" ads to scare the people away from it. And it worked. (Thus, unlike the current financial meltdown, you can't really blame the government leaders--some of them were alert --you can blame the special interests, and the ability of some of the people to be mislead.)
Since you, young people, can expect to have not one steady job, but rather 10 shorter-term jobs, over your lifetime, lets hope your parents and grandparents will let you have reliable and steady health care.
Video: Economic Journalist Peter Gosselin and others discuss his book High Wire, about the increased risk of sudden financial catastrophes to families in America due to health insurance and other reasons.
Frontline with Full Video on 5 Country's Systems
Documentary Showing how well the current system is working for the working poor . The people followed in this documentary are all in the lower-middle and working-poor class. I find it a flaw that they missed the more well to do middle class, which is also at high risk. Though the better-off portion of the middle class has a lower likelihood of having no care or far inferior care most of the time than the working poor, the system still leaves no care and inferior care all too likely. And further, it gets combined with the likelihood of losing say $600,000 worth of savings all at once. (The working poor simply don't have that much in assets to lose.)
American Prospect Special Report on Universal Health Care--May, 2008 .
The following articles strike me as particularly lucid: Ezra Klein on two of the major proposals and their variants, Marcia Angell on the Massachusetts reform, and Anthony Wright on the California attempt.
Cross-Insurer Database of Pre-Existing Conditions:
Some people are not aware of it, and think they might give a try at just not putting down a pre-existing conditions. The health insurance industry maintains a large cross-insurer database of pre-existing conditions. Note below, my own policy's privacy statement indicates they can do that, as below, circled. ("Medical underwriting" is precisely pre-existing-condition-screening. The industry prefers that term, because it sounds more innocent, and most people don't know what it is.)
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Who am I? I am Norm Spier, a mathematical statistician who has spent most of his life in Metro NYC, Upstate New York, and Connecticut. Recently (3/2010), I moved from Vestal, in Upstate New York, to the Five Colleges area of Massachusetts.