The Cost of Employer-Provider Healthcare Just Topped $20,000. Medical costs are spiraling out of control but supposedly this is not inflation.
The average total cost of employer-provided health coverage passed $20,000 for a family plan this year, according to a new survey, a landmark that will likely resonate politically as health care has become an early focus of the presidential campaign.
Annual premiums rose 5% to hit $20,576 for an employer-provided family plan in 2019, according to the yearly poll of employers by the nonprofit Kaiser Family Foundation. On average, employers bore 71% of that cost, while employees paid the rest.
“It’s a milestone,” said Drew Altman, chief executive of the foundation. “It’s the cost of buying an economy car, just buying it every year.”
At Elkay Manufacturing Co., a closely held company in Oak Brook, Ill., with around 1,500 U.S. employees, the cost of coverage has been going up around 5% to 6% a year, said Carol Partington, senior manager of total benefits. For 2019, the company introduced its first high-deductible plan, and put in place a new $250 penalty for employees who get imaging scans without checking prices through a price-transparency program.
Medical Care Services vs CPI
Medical Care Services vs CPI Percent Change From Year Ago
Inflation Understated
Those charts look ominous and they are. But they dramatically understate the problem.
The reason is in plain sight. The BLS measures the CPI, the Consumer Price Inflation.
Employer costs are not included, anywhere.
The Fed’s favorite measure of inflation, PCE, Personal Consumption Expenditures, does not look at employer costs either.
Self-Insured
The BLS reports a 4.3% year-over-year rise in medical care costs. It arrives at that figure by excluding all employer increases, then it averages prices paid by the self-insured with those on Medicare.
Those buying their own insurance will tell you costs are up as much as 100%, not 4%.
Percentage of Healthcare Uninsured Jumps From 8.0% in 2017 to 9.1% in 2019
On September 16, I reported the Percentage of Healthcare Uninsured Jumps From 8.0% in 2017 to 9.1% in 2019.
Here is one of many charts.
The young and healthy are opting out. And why shouldn’t they?The Obamacare design forces them to overpay.
“It’s just too expensive,” said Grace-Marie Turner, president of the Galen Institute, a public-policy free-market research organization. People are siphoning themselves off.”
Those over 65 are the most likely to have insurance. Their costs artificially lower reported inflation for every group but themselves.
Wage Growth for Men About 1/4% Per Year Since 2000, Women About 1/2% Per Year
Despite soaring medical care costs, please note that Wage Growth for Men About 1/4% Per Year Since 2000, Women About 1/2% Per Year.
Bear in mind, that chart of real (inflation-adjusted) wages assumes you believe the CPI.
Some readers challenge the chart based on advancement. It’s a false challenge. Those are “median” wages. By definition, 50% make more and 50% less no matter what the starting point.
Don’t confuse nominal wages with real wages. The median nominal wage was $568 in 2000. It is now $911. That’s a 60% wage hike in nominal terms. Inflation took most of it.
Home Prices Another Measure of Inflation Under-Reporting
Last Chance for a Good Price
The Last Chance for a Good Price Was 7 Years Ago.
Home prices are not in the CPI. Only rent is.
Those who want to buy a home quickly discover wage growth has not kept up with home price growth.
American Dream
In case you missed it, 68% of Millennial Homeowners Regret Buying a Home
The top regret “too costly to maintain”.
Meanwhile, the Fed is concerned about the lack of inflation.
What a sorry joke.
Mike “Mish” Shedlock
Anecdotal story but probably still illuminating….
My dad was an MD. Started practicing in 1965, malpractice insurance was $700 a year. Retired in 1990, malpractice was $130K a year. Both those numbers were average for his location and specialty.
He retires, but by state law can be sued for malpractice for 18 years. Malpractice was $90K a year. Even if he died, which he did, his estate could be sued for malpractice. So, he had to make enough in his career to be able to pay $90K out of pocket for nearly two decades, even if the stock market tanks, etc.
In addition, towards the end he ordered alot of tests and procedures that were really not necessary to avoid malpractice suits.
As he said, “I don’t pay my malpractice insurance, my patients do”.
So, follow the money, I guess.
I was told by an airline pilot a couple decades ago small airplane manufacturers could be sued for 21 years for bad engineering, after the FAA approved the designs. For two or three years no small private plane was made in the US, the companies all went out of business, essentially. When it was reduced to 18 years they started up again. So, that’s a government regulation story.
More people=higher healthcare cost. Add into the mix a rapidly aging population and you have constant increases in healthcare cost.Just the way it is.
More people = higher cellpone costs, as well. But not higher per phone.
And while older populations no doubt increase demand for health services, even in Japan demand for cell phones have grown massively faster than demand for health care, despite “noone” there being under 80 anymore.
So you’re claiming health care is the one industry that isn’t able to take advantage of scale? Even though the entire story of the industry for the last 40 years is about consolidation?
Oh what to do about medicine? It is a great conundrum.
If there is no state intervention, then the market will allocate resources and the very poorest will find that they cannot afford anything but the most basic of healthcare. The political fall out is more than enough to keep free marketeers out of power permanently.
Now if the state intervenes, two things happen. Firstly everyone who has to pay taxes for to the state find that they get poorer. Then the state throws those resources at the medical sector, and what happens when demand rises? Well prices go up.
It seems to me as if Obamacare mostly just have prices going up and the game ends there. In Europe, a single supplier of healthcare does allow prices to be fixed to some extent, but at a cost of waiting lists and a more limited portfolio of treatment.
Rising life expectancy adds to the total cost whichever system you employ.
Drugs companies also get to make a killing, but of course they dont develop things to cure, only to ameliorate as long as you keep taking the drugs. Sometimes the drugs simply dont work despite what it says on the packet, and other times the drugs make things worse.
I cant see how we can get any sort of system to work that well, at least until we can develop a super-intelligence which is incentivised to sort all of this out.
A lot of drug companies have coupons available for the poor. Their business model is the first dose costs $100 million and the rest cost $1, so they have every incentive to collect whatever they can.
“I cant see how we can get any sort of system to work that well, at least until we can develop a super-intelligence which is incentivised to sort all of this out.”
Its been sorted out already and the consensus of wise people is that there are only two ways to distribute the goods and services of an economy: Either fairly or not! And a fair market by definition is one where there is NO government intervention. Anything less is essentially asking “who shall we steal from?” Rich people protect themselves, so it’s the middle class that gets slaughtered.
Benefit societies and fraternal orders worked pretty well up until the mid-twentieth century. Too well, apparently, for the AMA who’s members lost pricing power when they often contracted out to these groups at a bulk discount rate. When employer provided private individual insurance became the default method of paying for health care they lost their relevancy and became the joke we see them as today.
We always focus on insurance costs. People believe insurance costs are high because the insurance companies make a lot of profit. Not true. My insurance company is a non profit and yet my costs are still high. The reason insurance costs are high is because health care costs are high. But, no politician will ever tackle that since they’re beholden to the industry on both sides of the aisle.
In the US we pay far more for health care than other nations because insurance companies and medicaid are required by law to pay whatever is charged. One of the reason health care costs are lower in other countries is because they won’t pay for something if the cost is too high. And pharmaceutical companies are better off selling things at 10% of US costs instead of getting nothing. In some ways their costs are supplemented by US citizens.
There needs to be caps on what companies can charge in exchange for patent protection.
For profit publicly traded insurance costs are higher than non-profit. Also compare executive compensation between the two. Non-profit private insurance has much lower operating cost and limited in what they can spend on management and overhead.
Most countries have legally enforced medical price control. In Korea and Japan, there’s a limit of what can be charged on each procedure. In the USA, the sky is the limit.
Don’t worry, public health insurer executives have only cashed in over $2 BILLION in share sales since ACA passage. Congress Members, their staff, and families are exempt thanks to a 2013 OPM memo calling each individual congressional office a “small business”. This made them eligible for taxpayer subsidies via DC HealthLink!
EAT CAKE!
At least where I live in rural southern Oregon rent has not climbed by 35% since 2012. It has outright doubled, at least in theory, in fact you have to have a lottery winners luck to find anything available for less than 200% of the 2012 rental price. My rent budget in 2013 here was $725, I might get lucky and find something I like at a little less, or I might have paid a bit more for something special. But, $725 was my guide price. And, checking Craigslist daily gave me on average over 400 units to pick from.
2019 same priorities to size and amenities, neighborhood, I put in $700-$900 get zero returns. None. In fact I got really lucky in Las Vegas when I wanted to move back here, for health reasons, checking constantly, looking at property managers websites, I found a place for $1,300 but, it was built in 1981, prior to the invention of insulation, I go to use the hot water at the kitchen sink, it takes a full minute for the water to run hot. The floor plan blows, there are enough electric outlets for life prior to electronics, but almost every outlet needs power strips for 2019 life. It was built with a fireplace but modern air quality standards mean you cannot use the fireplace when you need to, when it is actually cold. The county has obscure rules about if they can see smoke you are breaking the air quality standards and will get fined.
To live as I lived in 2012 or 13/14 I would need to have an annual disposable income of about $70k per year. I am at $50k, and that is 8.6% more than I had in 2013/14, because that is how much (non) inflation the government says we have had since then. My income is from the US Treasury as 100% disabled vet, that pays 3,056 per month. Tax exempt. Fortunately I also get $1,065 in SS also exempt. But I am not allowed to work in any capacity, not even volunteer or I will lose $21,300 of that income.
That was middle class, well for a single person it bordered on middle class, just not that long ago. But now it just is not. Mind you I am at the near perfect median of households at the 50th percentile (in disposable income), but it does not pay anywhere near enough for an actual middle class life. buying a house is so out of the question it is not even funny. Even with veteran benefits I will not live long enough to ever buy another house. Just getting through the month requires a payday loan half the months of the year. I have almost no debt, a small used car loan and a credit card with a $1,500 limit I pay off every month. I own no toys, I have no living relatives, I do not do drugs legal or otherwise. I don’t gamble more than a few bucks a month on lottery, and I only do that because that is the price you pay in America now to dream of a secure life.
How many of you remember our beloved Lucille Ball who paid for making a movie she starred in called Stone Pillow? In her entire career she never did better or more important work. It was made in 1985. It was about a bag woman that was on social security that slept in doorways, homeless on the streets. In the late sixties old people were portrayed as eating cat food, it was not without basis. It was not till 1972 that the congress put social security (and now VA benefits) on auto pilot adjusting the increase for the CPI. Before that they had never increased benefits between the start of the program (1935) and 1950. They adjusted it again in 1952 by doubling the benefit, that was how meaningless SS had got.
“There were subsequent increases in 1954, 1959, 1965, 1968 and each year from 1970 to 1972.” Notice the gaps? The only reason the politically divided congress ever gave any raises at all was when politicians feared for reelection and even then they only raised pay to poverty levels again.
So, they passed a law, it required the US government to track prices called the CPI or Consumer Price Index. They made the law so that neither side of the political isle would get burned by the plight of elderly eating cat food. It established a COLA increase so that politicians could not be accused of playing political football with social security pay levels.
Now, the baby boomers who paid so much in all their lives and pushed the government surplus to almost 6 trillion dollars in intergovernmental holdings are said to be leeches upon the treasury, they have only known about us since we were born starting in 1946. Now it is going on 2020, I was born in 1958 and that is late-ish in the baby boom. All my life I have been at the end of a very long line of too many people for too little resources.
But, as a disabled vet I have a contract with you Mr. Taxpayer. I put my life on the line, I gave up my youth and my rights for you when I was 17, I had no right to sue if you intentionally harmed me, or were negligent. Look up the Feres Doctrine.
Now, the weight of CPI increases is too much for at least the right (and likely for the left) so your government simply lies about it.
In the seventies they had to actually send out people to supermarkets to buy a basket of goods, compile prices in ledgers on paper, average them, do a lot of math, and they just outright guessed at housing costs.
Now, they have the technology to demand from grocery chains what prices are charged/paid so why do they not do that? We read every single day on sites like CNBC about the price of housing, we have private companies that calculate it to the penny, so why is that data not used? We have the ability to track a perfect sample of payments from selected recipients of prices paid by them and yet that is not used. In fact the use of the old 70’s COLA and BLS data for the CPI is so out of date we are right back at the point where COLA’s are a political football in which the right is saying that the CPI overestimates inflation and we should get no raises at all. In the meantime we retired/disabled sink back into poverty.
Really, you should be ashamed of your own greed. Or you should work to change this. 0000000000000000000
yes, west coast left wingers have created an amazing utopia for themselves. You sound lucky. No rats, used needles, hepatitis, plague, lepracy or huge piles of uncollected garbage. You need to move to San Fran or LA for those benefits!
You may have paid your way, but I think if you check the debt levels in California the first time Jerry Brown got kicked out (in the 1970s), you will find the baby boomers as a group did not pay their way. Not even close. Boomers came of age when the USA was the largest creditor in the world, and now as they enter retirement debt levels are higher than wartime. Whatever you claim to have done personally, you collectively are a bunch of deadbeats. Your generation will get the retirement it saved for.
PS — now that you are experiencing some of the joys of San Fransisco’s government ideals, perhaps you can understand why people hate Pelosi for shoving Obamacare down our throats. We don’t want her crap any more than you do. Ditto criminals like Hilary who collected a $140 million bribe from Russia into her tax exempt “foundation” (slush fund).
Vets were promised a lot of things. The government defaulted on those promises first, while academics taught every MBA that government debt is risk free. Whoops, turns out the US Congress defaults like anyone else. Don’t worry, they are also defaulting on medicare promises to many people already, and more defaults are coming.
You are a fool to think politicians are going to look after you. In thousands of years of human history, it just never works out that way.
Are you fucking high?
Seriously. I was born in northern California in 1958 and I had abso fucking lutely nothing to do with that! How can you or your moron brain attach any blame to that?
I mean we all tolerate you and your total bullshit here, but this is just bizarre. No generation in history has ever created as much wealth as the working people of the baby boom. Nor has any population ever paid more in taxes.
Naw, you are a crap poster and I will make you this promise asshole, you can hang out at Storm Front or nay other Nazi websites that replaced it, but you come to me and say I am the leech then you are going to have to defend that bullshit with lethal weapons because I am a veteran that lost everything from the age of 17 and you will fucking pay for it.
People like you are the ultimate leech on society, you want the highways, the clean water, the electric grid, the healthcare, you want it all but you refuse to pay for it. Economics has a name for people like you, free riders, I have another name for you, Nazis. Come get me asshole, I am waiting for dumb fucks like you. I may be a disabled vet but I can still pick up a gun.
The USA was the largest creditor in the world in the early 1960s, before Woodstock and the boomer’s coming of age.
As boomers reach 65, the USA is now in debt up to its eyeballs.
I don’t know what you personally did. But boomers as a group? You took a massive credit and are returning a massive debt. That is all.
I am sort of nonplussed at your utter ignorance and obvious hate.
The babyboom generation as individuals created more than has ever been created in human history, they also paid more in to taxes than any people that ever lived. That the government transfer all that wealth and more to a few thousand wealthy oligarchs is not the working of the people who have had to struggle to make a better life for their families.
And it is not even just about my generation, my great grandmother was one of twins, her sister died young of diphtheria, my great great grandfather established a small trading empire on the Puget sound in the 1870’s. She inherited that. But along comes the crash of 1929 and because there were no rules and regulations and there was a republican president she was visited by bankers who gave her half an hour to pack up a few personal possessions and her son and take one of the cars and leave.
I would have been born into the life of luxury that my grandfather was rudely taken out of had we not been subjected to theft by politicians, and not I do not say central bankers because that wealth was created prior to 1913.
I have been robbed, we all have been robbed. But, that was also more than 100 years ago. Normal people would say get the hell over it and do something.
But this is why I hate socialism so much. Why the EU is evil. You can be middle class but only at a steep price. If you can live the way they tell you to, if you can think what you are told to, you will be fine. Any creativity or deviance from the path of the collective and you are done.
No you can’t loser. The government you voted for won’t allow you to buy a gun now that you made a clear and visible threat to another person. If the FBI reads Mishtalk, you may even get a visit!
Come see if I am a loser or can’t still pick up a gun dub ass. You are not really worth arguing with but till Mish comes to control his own web page I am going to go toe to toe with you. You small dicked keyboard cowboy!
FBI is going to be a lot more interested in your remarks than they will be mine. And no matter how you slice it I still have a right to defend my home against crap like you, nothing they can do about that!
Speaking of the mentally disturbed…
You need to get help before the FBI figures out who you are
Enough asshole, you are deluded if you think threats of the FBI are going to help your argument, trust me they do not care unless a credible threat has been made and I have not made one, I only promise to kill you if you enter my house, but I also promise to enjoy taking your inferior genetics out of the gene pool in the process.
The FBI has no part of this, you however are still a moron and an asshole.
Well, I have never seen a more ignorant and angry person post here than Country Bob. Mish, please make his personal attacks stop. It is your website.
It is insane, and unnecessary. I am a member of a healthcare co-op. We are treated like cash customers, get the cash price. I have a 500 deductible in the co-op but everything, and I mean everything but dental and vision after that is covered. It’s specifically allowed by the ACA.
I pay 450 for a family of 5 and coverage goes up to 2 million dollars.
I cannot imagine why health care costs 20k a year….except for the burden of paperwork, which is massive.
Health care doesn’t need to cost 20k a year. Co-ops have proven that a capitalistic model works better than anything the government touches.
As far as I know, the co-op model is the only purely non-socialistic model in the USA today that operates as a cash customer, is fully insured, and is a product of 100% choice.
Can you ask Mish if he will let you write a post explaining how the co-op model works in greater detail?
I run my own blog, where I will eventually publish Co-op information. I don’t post links to my blog, unless asked.
I figure if Mish wants to know more, he’ll comment, asking. He’s done that in the past about my co-op.
I would also be interested in learning more about your co-op.
But in the interest of full information, you have to tell us a bit about the membership too. The co-ops I have read about are usually connected to (and run by) a church. There is a sense of community. Church go’ers tend to go outside for fresh air (going to church if nothing else). They eat church suppers together — consisting of real food, not processed crap. Eating together gives a sense of community, destresses everyone etc. Church go’ers don’t associate with heavy drug users or drunks. Church go’ers often help other parishioners to find jobs — fewer deadbeats who don’t pay. Peer pressure tends to enforce good behavior.
Whatever one’s opinion of organized religion, Churches tend to give their members a lot of intangible benefits that aren’t directly related to religion. And those intangibles heavily impact the cost of caring for members for the better.
That aside, I would be interested in learning more about health co-ops… please add a link or comment further
The Co-op I am a part of is indeed a Christian co-op. As a result, premiums are lower than what the general population will pay. They will not pay for health issues related to alcohol, smoking, or abortion.
That aside, I’m a huge fan of capitalism and the free market system. You get rewarded for good choices, you get penalized for bad choices. The free market is the best system in the world, and when you take away consequences of bad choices, you get a worse, not better system.
The Co-op is very easy to understand. You have a 500 deductible for every event that happens. If you are able to get a 500 or more deduction from paying cash, then they will waive the deductible, and pay nothing.
For my family of 5 (wife and 3 kids) we pay 450 a month. We pay an extra 150 every quarter so that we can get another million in coverage (base coverage is a million). So really, we pay 500 a month.
I am covered for everything medical, no co-pays. There is no dental or vision, but I’m ok with that. Honestly, it’s cheaper to pay cash for cleanings anyway than pay for the insurance.
For example: I own a firewood business. Let’s say I cut my leg off with a chainsaw. I go to the emergency room, tell them I’m a cash customer. I get a 70% discount. I get the treatment I need, they send me the bill. I send the bill, which has the huge discount on it to the co-op. They pay it all. I pay nothing.
I have no idea why a much worse policy if I signed up for the ACA would cost me 3200 a month vs the current 450 a month.
The ACA offers far, far worse coverage and costs 7x as much.
It’s horrible.
My stepfather was well covered too, so he thought, till he came down with brain cancer at 52. 9 years and 5 million in billing later he died. And that was 21 years ago. It ruined my mother, cost my inheritance, and left them both for his last 8 years on SSI at less than poverty income. That is the real threat, the moment billing goes past what insurance will pay or you can afford in share of cost you have to spend down to get assistance. The land my stepdad owned had to be sold at a loss. The cars sold. They had to move into government subsidized housing with no assets in order to get help with medical costs.
My family was strong, wealthy from hard work. It was all taken, first in the depression then by a medical condition. And the loathsome of the right say that being treated at the cost of millions of dollars is a choice. It cost millions of dollars because our government does not consider healthcare to be a right.
I had changed my voter registration from democrat to GOP in July because I believe that socialists would do more harm to our nation than crooks on the right. But, remembering all this I am thinking I made a bad decision. I hate socialism, but I hate being robbed more. Socialist policy that sends wealth upwards is still socialism. Maybe it is time to take some of it back.
There’s actually a strategy now that eliminates that.
Sign up for a co-op. If a person maxes out their co-op insurance, then sign up for the ACA.
Very rare would anyone who maxed out their co-op annual limit have a high enough income to actually pay for it.
You don’t start paying for the ACA coverage until the household income goes past 65k or so, and even then, it’s a paltry amount. If you are making 65k or less, the ACA is free.
It would seem to me that the problem smaller cooperatives face wrt paying for very rare, but very expensive, treatments (like long(ish) term braincancer at a young age) could be solved by simply allowing people to sign up for proper catastrophic insurance: In this case, insurance with a $2million deductible. At least in the case of a Christian, presumably healthy, cooperative, the cooperative itself could possibly do so on behalf of its members as a group.
Essentially how reinsurance works, for massively expensive, but rare (supposedly) events like natural disasters. Heck, some individuals would be perfectly happy simply signing up for a $2mill deductible catastrophic policy, if allowed to, paying for the first $2mill out of savings…..
But, of course, here comes the government, always out to “help” again…… Help the lobbyists, ambulance chasers, and other privileged and protected actors, that is.
The Co-op I’m in covers up to 2 million.
It has about 600k members, and so is quite healthy.
Also, there is a “extra blessings” choice where you can offer to pay more each month for those whose expenses exceed the 2 million amount.
To my knowledge, no one has ever not a bill paid by the co-op as a result.
I’d say that 100% payouts for a 450 monthly amount is a much better deal than anything the government offers.
And if I had 20 more kids, it would sill be 450/month. Kids are considered one entity.
CHristian Healthcare Ministries is the co-op I use, but there are others like it, just not as good.
Kaiser started as a co-op for construction wokers. It is still cheaper than most other systems in the country. Kaiser recently bought a co-op in Washington State with 900k members a few years ago. It is the model that will work best nationally IMO. This is why other systems are trying to copy it now. The doctors outside of Kaiser hate it because it holds their outcomes and patient satisfaction more accountable. A dad of my son’s friend commented how Sutter didn’t yet renew his contract because of his scores. My wife said he should try to become a better doctor.
The first co-operative in the world was set up by Socialists in Rochdale Lancashire in the 1860s. The project was encouraged by Marx and Engels. The Co-operative movement is alive and well and still sends representative to the House of Commons under the name of the Labour and Co-operative party. There are many variants of Comprehensive Health Care systems in Europe but the British NHS is based on the principles of self help and community action based on the Rochdale Co-Op. What people in America don’t understand is that all the arguments against Health care for all were made and defeated in Europe decades ago, I repeat all of them, made and defeated decades ago. These contra arguments are made to preserve the rentiers palaces in Hartford not to make the life of average American’s better. Shout out loud about your Healthcare Co-operatives, you will do your fellow Americans a great service.
Look at the “Health Insurance” subcomponent of CPI. Up over 18% y/y. This is just pure greed on the part of health insurance companies. They are ruining our economy. Makes socialist, Bernie Sander’s, call for outlawing health insurance companies seem reasonable.
Problem with Sanders is that he doesn’t want to outlaw all of them. Only all except his personal favorite one. Which will then be what every well indoctrinated progressive have been told to cheer for as the greatest construction of humanity: An officially sanctioned Monopoly beholden to the state for all it’s privileges.
Sanders admitted on video that medicare for all would bankrupt the USA in a matter of months. Bernie’s words, not mine.
Many of the insurance companies now surviving are not-for-profit organizations… they run big profits and pay their executives handsomely. The profits on the middle class and poor are used to cover losses on the people who don’t pay at all.
Thanks Mitt Romney Care. And thanks Obama for signing it into law.
Medical care costs are almost totally 3rd party transactions… combine that with excessive testing by doctors to avoid liability costs and you have all the ingredients for a financial fiasco. Nothing mysterious there… at all.
Obviously the employer costs aren’t included in the CPI, nor should they be. Why not? Because the CPI represents costs to the individual. So, where to increased costs to companies show up? They can show up one of two ways. First, companies can give lower raises, which will show up in reduced wage growth. The second choice that companies have is to raise prices to cover increased costs, and if they choose that, it will show up in CPI, after a delay.
It already has shown up in CPI via the lack of wage growth over the last 20+ years. Also does before tax money in health savings plans (contributed to by both employer and employee) show up ? That money doesn’t come home but it does go to pay for healthcare.
As an employer, I can tell you that I look at total compensation of an employee. I don’t care how much goes to salary and how much goes to benefits and how much goes to some other category. That’s for the employee to figure out. Plenty of people opt to forgo insurance at one employer, and get coverage via their spouse’s employer.
Claiming that the health insurance costs don’t come out of employee compensation is just plain naive.
CPI ignores all sorts of costs. After the Boskin commission “fixed” CPI in 1996 (I think? ’95 maybe?), it completely separated from reality
Agree with you. This is why I initially posted companies should tout what they pay in benefits as part of total compensation. My wife’s employer covers everything at 100%. That makes a huge difference.
That’s what I said. Employer healthcare costs do not belong in the CPI. Instead of being reflected in employee costs, they are reflected in their impact on wages. If you reflected them in costs, too, you would be double counting them.
CPI prior to 1996 was completely separated from reality. CPI is a poor way to measure inflation anyway. The GDP deflator doesn’t get involved in the stupidity of constant arguments of what does and doesn’t belong in a market basket.
As I have pointed out, even a small error in CPI makes a huge difference in the standard of living of those living on Social Security over a longer period. If Shadow Stats is correct, the plight of Senior Citizens must be severe, and he would have you believe their standard of living has dropped by 75% since 1996. If that is true, why aren’t their strikes of poverty stricken elderly everywhere? There aren’t because it hasn’t happened, and Shadow Stats is completely wrong.
“I’d be curious to see a chart of medical costs vs college costs vs CPI (ex: healthcare and education)…”
I have a chart somewhere – I will try to dig it up.
Let me tell you this: I went to college in 1976
The cost of tuition for a semester was $250 for a degree in engineering at the University of illinois, a very respected school for engineering
Now: “The 2019 undergraduate tuition & fees of University of Illinois at Urbana-Champaign (UICU) are $15,094 for Illinois residents and $31,664 for out of State students.”
From $500 per year to $15,000 per year since 1976.
I financed my way through school playing poker. Hard to believe that is possible today.
Everything government touches goes haywire.
Mish
Mish look at the “Health Insurance” subcomponent of CPI. Up over 18% year over year. This number is not a consumer “out-of-pocket” number but rather health insurance company net after pay-outs.
You can dance around this all you want to, but, no matter who pays it the cost increase is still inflation.
I also want to say this, 10% inflation is really high, it can’t be sustained for long. The difference between inflation and HYPERINFLATION is just as much about duration as it is about percentages. You can have a one time hyperinflation of 25%, or you can have 8% for ten years, it is still out of control. We went from one fifth of GDP to the healthcare sector in the mid nineties to one third now. It was already being called hyperinflation then.
If the capitalist markets cannot control the price of healthcare then healthcare will be nationalized and we all know that. I will tune out the bitching now, but nothing you say will change the fact that healthcare cannot be sustained at this level, it should never have gone above 5% of GDP. It will be returned to that level and what ever it takes, it is going to happen. You can be a part of wise change, or you can lose.
I went into the Air Force because I could not afford college in 1976. Back then 4 years in the service gave you GI bill to pay for what you or your parents could not.
Mish, I strongly suspect that healthcare has gone up a lot more than college, it is just that the financing of both has changed. A trip to the ER for most people means bankruptcy. A trip to a campus means deep debt. But, healthcare now absorbs almost a third of GDP and college is way back behind at about 6%.
What are factors in the insurance cost increases? Intensity – more and more services demanded by those insured, more new treatments available, older average populations need more care. Docs, hospitals and drug companies increase their charges. Services times cost = total cost equal insurance premiums less profit for the insurance companies.
If you want to cut healthcare costs, you have to ask the question of where will the cuts come from – fewer services? lower payments to hospitals? docs? or drug companies? All scream blood blue murder and yell about decreases in quality and how research will be thwarted. So prices keep rising. This has been going on since the 1980s. At that time the cost increase saviors were supposed to be the HMOs. We know how that worked out, right?
HMOs Kaiser and Cleveland Clinic actually have some of the lowest costs in the country. Many insurance commissioners in states across the country booted out HMOs before they had a chance because the insurance companies lobbied the state to do so. Turns out an integrated system does mean less profit and less middlemen. You don’t get better outcomes in fragmented systems and you actually get more mistakes. Sutter here in Northern California is becoming more Kaiser-like everyday because a 2017 study revealed them to be the highest cost and average quality. The truth is the food industry is where we need to look to get the costs down. The biggest reason outcomes are different in the United States isn’t because of healthcare. It is at the front end where the food industry is highly regulated in healthy countries but way less regulated on a relative basis in the United States. If you cut off some of what is actually sold in grocery stores and incentivize people to exercise you can actually get better outcomes.
I disagree with@Casual_Observer about “for profit” vs tax evading insurance companies. They are all for profit, just depends who gets the profits and who pays the taxes.
But CO is 100% correct that insurance doesn’t really matter. Its the lifestyle (stress, no exercise or fresh air) and food choices (is pizza, burgers and fried chicken a food group?) that make most of the difference. What type of insurance is going to overcome a bowl full of corn syrup and yellow #5 food coloring each morning?
When a person shows up to a doctor with high blood pressure (stress) and arteries clogged with fat — the doctor can’t perform a miracle. When the patient doesn’t get exercise and fresh air every day, the doctor cannot perform a miracle. Its stupid to argue about how a doctor collects payment when they are really trying to ‘cure’ obesity, idleness and lack of fresh air.
Few want to hear this basic fact that has been proven in health outcome studies all over the world, including the USA. Health care is about 10% of health outcomes. Most of it ( 90%) is genetics, lifestyle and diet.
Lifestyle and diet are where the US falls short. Not a financing wrapper. Please stop with the moronic notion that putting some politicians in charge of a payment scheme will fix the real underlying problem.
I don’t know about “cutting off” certain food groups at the grocery store. We have seen way too many cases where one-size-fits-all makes things worse.
What should happen (and is starting to happen in some places) is for grocery stores to offer more “prepared foods”. I mean pre-made dinners from real vegetables and real meats — you just plop it in the oven and eat.
You folks in California seem to like these pre-measured, pre-portioned meals in a box. Not my thing, but if that works for some people than great. Get the cost of that down by having more local grocery stores offer it for drive-thru pick up. Make it as easy as fast food.
Lots of other things will improve health way before you reach the doctor’s office. Get more exercise. Eat lunch away from your desk. Turn off your cell phone while eating. Have a conversation with a real human (no texting). Pet your dog. Feed your sandwich bread to birds in the park. Go for a walk around the park every lunch time.
Stay FAR FAR FAR away from your doctor.
I meant cutting out most processed food. I agree with country bob. By the time you get to your doctor and he or she discovers chronic issues it is already to late. It is also difficult for people to change their habits if it only cuts off a few years off their life. Most people like to enjoy their life regardless of consequences. It is a sad reality that no system can handle.
Finally I forgot to mention that for-profit insurance is the biggest culprit because it has a profit motive that is centered on profit and not coverage. It turns out the systems that are lowest cost in the US actually have non-profit insurance arms with investors pushing for a profit every quarter.
I don’t remember the exact percentage, but well over half of total US healthcare spending is for so-called “end of life” treatment — the patient dies within a few months. I want to say the number is 67% (two thirds)? But not sure.
That means a lifetime of bad food, stress, no exercise, and no fresh air… and somehow a CaT scan, an MRI and some fancy drugs are going to solve it all. The only thing more ridiculous than that, is the idea that an inefficient middle man like the DMV (Department of Motor Vehicles for you non-US readers) is going to make the payment scheme more effective. Insanity on top of insanity.
Lets see the people of Europe eat fatty foods their whole lives, get no exercise, and take only 2-3 weeks vacation … and then we’ll see how your hospitals and bureaucracies hold up. You don’t stand a chance
Kaiser healthcare workers plan for nation’s largest strike since 1997
Union leaders call for 80,000 Kaiser Permanente workers to be ready to strike on or after Oct. 1 link to salon.com
There is an agreement now. No strike as the unions got what they wanted. More pay and higher costs for all.
Mish, you of all people should know by now never to use the “i” word on the net. I bitch about inflation all the time, no matter where I post, no matter the forum, it is as if the GRU has the word flagged for immediate attention, within minute nasty people attack and insist that anyone saying there is any inflation is just full of %$£& and should do things like take some meds or boil one’s own head.
It does not matter that rents I have to pay are up on average more than 20% PER YEAR since the 2013/14 lease because that is NOT inflation. It does not matter that my auto insurance is up 300% because that is not inflation. It does not matter that groceries are up 50% in the same period because you guessed it, that also is not inflation. Even to the smallest items, like I went to buy a new BIC lighter the other day when mine crapped out, what was 69 cents 5 years ago is now over $2 but hey, not inflation.
Medical costs? Double digit (non) inflation for decades on end. Tuition? So much (non) inflation that student debt is now over $1.7 trillion and skyrocketing. House prices? CNBC had a good article today, they report that new home prices considered “entry level” was recently $200k but due to (non) inflation is now considered to be over $300k. New iPhone? My new iPhone in 2014 was $400, a new iPhone in 2017 over $1,100 but of course it is a better phone so well worth nearly triple with taxes right? And no matter what else that increase is NOT INFLATION! New cars? Now averaging over $37,000 and for the first time ever there is a pickup truck being sold at over 100k, but please don’t call it inflation or someone will call you a dumb ass. A loaf of decent seeded brown bread? Like Mike’s is now $6 when the most I ever paid for bread 5 years ago was $2.50, it must be the quality right? Or, maybe it is the nutritional value that allows them to say the price is actually lower when you account for the superiority of the product, as long as it is not called inflation the BLS and Fed don’t care.
On and on, in fact the only thing not explosively higher is gasoline and milk and milk is heavily subsidized.
Some of your most attentive readers here say that very thing though I doubt if they will go up against the Great and Mighty OZ, Mish, the man behind our curtain here at MoneyMaven.
And right on schedule we will be hearing an announcement October 10 that will say we are getting a 1.6% COLA for 2020, I will be making arrangements to live in my car on a near perfectly 50th percentile take home income.
And news today that Kaiser and unions came to an agreement to start paying kaiser workers across the country like the inflated bay area salary they have to give to keep people there from leaving bc of the high cost of living. If you think health care is expensive now think again. Unions threaten strikes to all hospitals and systems across the country. They think they should get paid more.
“Meanwhile, the Fed is concerned about the lack of inflation.
What a sorry joke.”
…
Yes, they live in a cloistered 6 figure world (and 7 figure as soon as they leave govt service). I doubt very many, if any, know the price of things out in the real world.
I recall Bush Sr’s infamous moment in a debate with Clinton – no clue on a price of a gallon of milk.
Has anyone ever seen a federal official doing their own grocery shopping? Or picking up a restaurant tab (not letting a lobbyist pay it)?
The chairman of the Federal Reserve lives in a gated community, with home security paid for by the Fed. Powell, like his predecessors, gets driven to work in an armored SUV driven by Diplomatic State Security officers — and he doesn’t pay for that either.
The regional Fed presidents get driven around in limos paid for by their regional Fed bank.
None of these people have any notion what things cost
I know! It sure is a good thing for us that the Constitution bans titles and grants of nobility. Our overlords have zero in common with kings, dukes and earls. Way to go Framers!!!
“True health care costs, including premiums and deductibles and out of network gouging is far far far worse than what Mish or this Kaisser study suggest.”
Isn’t that exactly what I said?
Mish “Those charts look ominous and they are. But they dramatically understate the problem.”
Yup, you did. My bad.
I got so angry about the insured vs uninsured crap that I missed that sentence
Sorry Mish… I tried to go back and edit my comment to say Kaisser study only. My change didnt take
That’s weird – I tried to edit a comment too and it accepted but did not post.
Will look into this.
Editing hasn’t worked for months
PS@[Mish Editor] — would you please stop this bull sh!t of telling us what percentage supposedly have or don’t have “health insurance”?!?!? People need affordable care, not affordable insurance. Its like Obama brainwashed you into focusing on the wrong metric.
Tell us how many people can afford to get sick. That is the important number.
And make sure you factor in deductibles and co-pays and out-of-network scams …. even the folks on Medicare get a shock when they realize how much they have to pay themselves even for a simple procedure. Doctors complain that Medicare pays 15 months late, and even then it doesn’t actually pay what it is supposed to.
Medicare pays bills within approximately 30 days. I am fairly sure that Congress passed a law requiring them to do this (which unfortunately, has lead to more fraud) See:
link to cahealthadvocates.org
I am on Medicare with one of the supplemental plans (which currently costs me an additional $120/month). I am never surprised by Medicare bills as my ONLY required payment after the usual $185 annual Part B deductible is a $20 office visit fee.
Now you can stop making these inaccurate pronouncement in future posts, yes?
Jojo you are so full of crap that I won’t even bother reading your comment
My brother is a doctor in the US, and like many others he no longer accepts new medicare patients because Medicare doesn’t pay its bills.
Well, you won’t gain anything by NOT reading proper cites. You and your bother are doofuses.
As for some ground swell of MD’s not accepting Medicare, I have encountered only ONE MD who didn’t take it in my area and I have seen plenty of MD’s over the years. Here’s a reference from Kaiser that you can also ignore. [roflol]
The vast majority of non-pediatric primary care physicians (93 percent) say they accept Medicare—comparable to the share accepting private insurance (94 percent)
link to kff.org
You are an outright liar. Most physicians accept medicare and it pays in < 30 days look it up. Payments in MI for a mid level office visit are about $76 vs Blue Cross which allows about $80. Surgical procedures are paid less by Medicare than by private insurance but most office based tx are competitive but less than private ins payments. Many physicians don’t accept MEDICAID which is completely different. It pays about 40% of what MEDICARE pays. and is what the people on free Obamacare get. I have told this to you before but you are to dense to verify it or believe it.
Most doctors have stopped accepting **NEW** medicare patients, because Medicare doesn’t pay on time. They usually continue to see existing medicare patients, but some are even stopping that. Depends on location and how many private insured patients a doctor has to cover the losses from treating medicare free-loaders.
Medicare is actuarially bankrupt — something even Bernie Sanders admitted. The annual report from medicare trustees also says the system is bankrupt.
I’m sure a bunch of Europeans who don’t even understand their own system’s funding will complain. I’m sure Obama free-loaders will complain. But the numbers and medicare’s trustees don’t lie. Medicare is bankrupt already.
Can’t bear to be proven wrong CB, eh? D’oh..
The Kaisser “study” is partially recognizing a disaster way too late.
Healthcare costs in major cities along the two coasts (where the majority of the population live) are going up a LOT more than 5%. Mish tried to play this 5% number off as an “average”, but that is way off the mark. Health care costs are skyrocketing 15-20% per year every year in major cities… and only a fool would believe the geographic middle of the country has prices falling fast enough to get a 5% average overall.
Obamacare is an epic failure, as lots of people said it would be. After paying a con-man from MIT $500,000 to design the thing behind closed doors, Pelosi exempted herself and Harry Reid and Barrack Obama. It was good enough for the masses, but not good enough for our public servants who had actually read the turd.
As many other commenters have pointed out in this and other posts — pretty much every industry with heavy US government involvement has skyrocketing costs.@SMF cited housing, health care, and education. Let’s not talk about the price of aircraft carriers and missiles and other military toys.
I wonder how many people with employer health insurance understand how much this cuts their take home pay? Employers don’t care how much your salary is versus your benefits — employers look at your total compensation. Every extra dollar that Obama steals to fund his free sh!t army is a dollar out of your take home pay.
True health care costs, including premiums and deductibles and out of network gouging is far far far worse than what Mish or this Kaisser “study” suggest.
Lock Obama and Pelosi up for fraud. Enron and Goldman Sachs would never have gotten away with this crime
Obamacare was modeled on the heath plan from Mass., which was created under REPUBLICAN Romney. D’oh.
Jojo you really are a world class a-shole.
Obamacare was designed by MIT “professor” Gruber… whom Obama paid $500,000 consulting fees while the guy was also being paid to be a full time professor at MIT (despite not being there)
And the Massachussets plan didn’t work either.
Yep. Both parties neck deep in socialized medicine. W won passage of Medicare Part D (to win Florida in 2004).
McConnell – as Senate Minority Leader – pushed hard on repealing ACA as gambit to get folks to vote Republican. Got his wish with 2016 election. Republicans controlled both houses of Congress and WH. ACA still standing. To the
surprise of no one with Eyes Wide Opened.
CORRECTION — I wrote that Mish and Kaisser were understating the severity of the increase… but Mish actually didn’t say he bought the 5% number. I tried to go back and edit my comment, but the fix doesn’t stick.
Mish was correct. The Kaisser study is understating the problem
Why your employer-sponsored insurance may ultimately not be good for you
September 9, 2019 8.53am EDT
Author – Dana Goldman – Leonard D. Schaeffer Chair and Distinguished Professor of Public Policy, Pharmacy, and Economics, University of Southern California
link to theconversation.com
And yet, medical procedures not covered by insurance and/or government has had prices drastically go down over time even with technologies improving (lasik, boob jobs, facelifts, liposuction, etc.).
Obama promising to lower health care premiums by $2500 with Obamacare…
It straight up scary to observe how powerful, and successful, the indoctrination apparatus must be; to have succeeded in preventing the dupes from recognizing something so obvious, right in front of their eyes.
It’s the opposite in developed countries with relatively non-corrupt healthcare systems. I pay around $100 a month for health insurance in South Korea. There is no deductible. There are no pre-existing conditions. An emergency appendectomy plus three nights in the hospital cost a total of $300. An aunt had a lower abdominal surgery at Tennova in Knoxville, Tennessee was billed over a half million dollars. Elective surgeries are different. They’re much cheaper in the USA since the hospitals don’t have the patient by the balls the way they do with emergency surgeries. I got a vasectomy in Korea for around $300. In Nashville, it would’ve cost around $850. In Korea, plastic surgery costs over $1000 since insurance doesn’t cover it (it doesn’t cover vasectomies either since Korea is trying to get its 0.98 birth rate up). The American system is so corrupt. As a Judeo-Christian society, the USA is proof that Judaism and Christianity are a farce and religion is just a tool for crooks to try to appear righteous.
Obamacare and other socialist mandates, must surely, out of all things, be Jesus’ fault……
Man, I couldn’t make this up if I wanted to…..
That $20000 is included as a benefit by some employers. Employers who don’t tout this are doing themselves a disservice. I’ve had so many people in my field who joined a company only to find out it was some high deductible plan where they had to foot most of the bill even though their “salary” may have been more. It wasn’t enough to offset the increase in out of pocket costs.
The full cost of employer provided health insurance should have to be added to an employee’s W-2 at year’s end and they should have to pay taxes on it as an added benefit.
The full costs of taxpayer provided health insurance to Congress and federal bureaucrats should be included on their taxes.
Also, the cost for their personal security. The cost of their private gym. The cost for their private “subway” system between adjacent buildings in Washington.
The cost of all their personal assistants and handlers. The cost of their reserved airport parking spaces. The cost of TWO barber shops, one for the House and another for the Senate, so they can primp for the TV cameras. The cost of Congress’ private pharmacy.
The meals they get from lobbyists. The “free” flights they get from lobbyists… All the bribes they get from lobbyists.
Everyone in the federal government will have to get a second and third job to pay the taxes on all the benefits they get that the public does not
Silly bob. That’s the cost of doing business. It is known as SG&A. Lol
I was making fun of that idiot Jojo
The definition of “legitimate business expense” is another scam too big to get into here. But a lot of things that the private sector is prohibited from writing off is legislated to be a legitimate expense for criminals and politicians alike
“… criminals and politicians alike.”
But you repeat yourself.
Some plans were taxed under Obamacare. But that’s over too.
What more people need to comprehend is cost of regulation and how it ties to average pay. If a company did not have to pay healthcare and other taxes, then they could pay their workers more.
You can also see how prices go up the more government gets involved in an industry, like housing, healthcare, and education.
Does anyone believe companies would have paid their workers more ? Companies will love it if someone like Bernie takes healthcare costs off their back.
If a single payer system is enacted, yes, superficially corporation will reduce costs, yet, someone has to pay for it. Thus, there will be new taxes imposed on them to replace the health insurance premiums. The more things change, the more they stay the same.
Right now we have 4 systems of insurance and pricing. Anything to reduce this to a single system would help. There is actually a solution that is in the middle that no one has proposed.
The West used to have 4 or so political parties. While the Soviets, ever enlightened progressives that they were, figured it would help to reduce this to one…….
Problems of excessive pricing power, and lack of innovation, always arise due to lack of consumer choice. Never de to too much of it.
Instead of going Soviet, get the heck out of the way and let Migrant Chinese and Mexican (and Canadian and European..) doctors build clinics anywhere they feel like, and charge whatever they want for whichever service they feel like offering. Including surgery specifically contracted for with a clause preventing any lawsuit for any reason whatsoever, at least without a criminal conviction for breaking properly valid, timeless laws. The let insurance companies do whatever they want as well. And let anyone from India, or Canada, sell any drug he fancies to anyone in the US. Etc., etc. And I can guarantee you, prices will drop like rock.
The further you get from that sort of “system” (In reality lack of a “system”), the further away you will get from prices dropping like a rock.
Most states don’t have enough tort reform to prevent lawsuits and malpractice. Malpractice for the surgical professions for small practices costs more not less than an HMO because they have no volume, leverage or negotiating power. Malpractice insurance operates based on number of patients operated on and the limits of legal liability X number of years after a surgery. I agree with you somewhat that more competition is necessary but know if you let China in to do anything they will flood the market with fake drugs too. They still find ways in to the US supply chain and supply chains globally. It is nice to think we can have a system where we let anyone do anything but that only makes quality go down not up.
“Most states don’t have enough tort reform to prevent lawsuits and malpractice. ”
OK: Fix that. Focus on nothing else until that is done. Then one real, as opposed to imaginary, serious problem with American healthcare, as with America in general, will be solved. Then, move on to the next.
It cant happen because it would require 50 state legislatures working together. And federal law defers to states on insurance regulations.
Ok guys I’ll bite: What’s wrong with malpractice lawsuits? We don’t trust judges and/or juries anymore?
The central wrong with them, is they crassly violate the basic human right of freedom from harassment, unless one is proven, BEYOND ANY REASONABLE DOUBT, to have done something specifically wrong. If one is not, civilized states have no business interfering at all.
The reason why the burden of proof in civil courts are much lower, is because civil courts exist to help decide between disagreeing interpretations of voluntarily entered into, specific contracts, not to assign blame.
The entire ambulance chaser industry is built upon the sleight of hand of confusing the two, for the purpose of profiteering from the resulting shakedowns.
In a civilized society, one with proper protections: Unless you have voluntarily entered into a contract specifically with a party, and which you are then accused of breaking: First you have to be found criminally guilty of something, then and only then does the whole possible “liable for damages” charade even come into play. If, OTOH, you didn’t sign any specific contract promising a certain outcome, NOR were proven, by a criminal court, to have done something wrong; as far as the state and its courts are concerned, you are presumed innocent. Hence in no way, shape nor form liable for any shakedown involving any court.
Thanks. Sounds like you are saying that if two parties disagree on what they agreed to (which happens about a million time a day in business), then one of them acted criminally. And that sounds way off.
I think you’re getting it backwards. Two parties almost always disagree. Having system of courts they can go to, instead of having to shoot it out every time, is a good thing.
But when there is no disagreement over an agreement, since there was no specific agreement in the first place, those courts have no business being involved. As all they are there for, is sorting out disagreements over how to interpret contracts.
In addition to those courts, there are entirely separate ones, which exist to assign “blame” and to determine that someone has done something “wrong.” Those courts have much, much higher standards of proof.
For some doctor to be “liable” to someone, those second courts are the ones which apply, as you can’t, out of the blue, suddenly be “liable” for something you cannot be blamed for.
Those second courts are criminal courts. Which have nothing to do with two people disagreeing over a contract interpretation. But are the only courts with any business interfering in anything other than disagreements over a contract interpretation. Which includes malpractice, unless a doctor and patient explicitly signed a contract specifically stating that this, that and this outcome leads to this, that and this liability.
Well you keep mentioning “specifics” in “contracts.” I think reality is messier than what you are implying … even when there are written contracts, they are open to interpretation and application in later situations. That’s just the way it is, because we humans can’t write a perfect contract that accounts for the infinity of possibilities in the future. And this is why we need judges and juries, to make these interpretations in an objective way — when 2 parties are interpreting the application of an agreement they had differently.
Also seems like you are implying that there’s no such thing as an implied agreement, or a reasonable expectation. Now really, when I buy coffee at McDonalds should I sign a contract about what I expect, with specifics about the temperature and the nature of the cup and the lid and ….? I of course bring up that example because of the famous “hot coffee” case. In my mind there was an objective reasonable expectation that the woman who got burned was going to receive some HOT coffee, seeing as that’s what she ordered, and the judge/jury should have thrown her claim out as groundless. … But are you saying that someone injured by reasonably using an item they purchase, SANS contract, should have no recourse to a civil court??
By the way, for the 4 systems of insurance we have they don’t compete against one another. At the end, I don’t think healthcare operates like other businesses because aggregate risk for the insurer is about the same across the board. The only way to truly change the system is to incentivize lower cost for those that take preventative action and take tests to lower their own costs periodically. Some companies now do this with their employees and it works. Risk-based pricing will never be done because from a legal standpoint it is easy to prove that everyone is a risk to die and cost money.
“I don’t think healthcare operates like other businesses”
It doesn’t. BECAUSE all the actors in it, are banned from treating it as regular business. Patients are mandated to carry coverage decided on not by them, but by lobbyists for those who sell coverage. Patients are banned from buying the cheapest drugs obtainable on the planet (or off if you’re Musk..). They are barred from inviting the cheapest doctors and nurses from anywhere over to treat them. They are barred from seeking a better deal by offering to cut the ambulance chasers out of it.
While practitioners, as in anyone who feel like giving it a shot from anywhere, are barred from setting up shop offering services cheaper and or better than lobbyist protected incumbents.
At the same time, budding facility owners are barred from building new facilities anywhere they find a few square foot to fit them into. Which all but guarantees their facility costs will be way higher than it would be if they could just build new ones willy-nilly.
And budding insurers” are barred from doing exactly what insurers are supposed to do: As precisely as possible figure out the riskiness a certain potential customer, based on genetics, lifestyle and whatever else, poses; and tailor and price policies accordingly. As a result, noone knows anything, everyone instead just running around mouthing off opinion about how bad “smokers” are etc., without any free, competitive bidding in place to provide more properly accurate prices which people could use for guidance.
Etc., etc. Left free to do so, people always will seek a better deal. Hence turning any area into a “business.” It’s only when barred from doing so, they instead direct their focus towards advancing in The Party, lobbying and all the other pathologies of totalitarian societies.
Not if he makes up for it by way of “other taxes.”
The presence of insurance also dramatically increases costs as well. In the absence of health insurance, people would price shop, and the free market would work. With insurance, they just go wherever they want, and don’t care at all about costs. I would be very surprised if the cost of auto collision repair hasn’t increased at a rate significantly higher than inflation as well, for the same reason, and there is no governmental involvement in collision repair.
Worst system in the developed world. By far.
Indeed. Maybe they need to nerf the lobbyists:
‘Spending $3.9 billion over the past 20 years, the pharmaceutical and health products industry has far outpaced all other industries in lobbying spending’
Nothing good ever comes from throwing two supposedly opposing groups into the Coliseum for the masses entertainment.
Instead, get out the way, and leave anyone who don’t feel well served by the current “system,” free to route around the facets of it which he finds suboptimal. Replacing those facets with whatever other solution he can come up with, which he thinks may work better. Keep at that, and people will iterate towards something better. Leaving the bad behind.
This has always been the difference between free people and serfs: The serfs oppose and fight eachother for their masters’ aggrandizement, while free people simply route around the nonsense and over time make the world a better place as they leave the bad behind for something better.
…And only getting worse. Year in, year out. Just like every other “system” in the developed world.
There are two things I don’t understand. 1) Why does American Industry and Commerce tolerate these needless costs? 2) Why does anyone defend the Rentiers and price gaugers that are your HMOs?
Because my remainer-friend…..you can make lots and lots of money on sick and dying people! Somehow, a tiny bit of socialism -in the form of universal healthcare- wouldn’t hurt.
I should have phrased my question better.
We do have socialism. It’s called Medicare and Medicaid. And it destroyed our system.
When things go bad, you don’t double down.
I think in this discussion, there’s too much focus on socialism vs capitalism. It’s probably my fault, because I should’ve said ‘socialized medicine’. I do know that using the term ‘socialism’ is extremely polarizing, so my apologies. Again, I doubt that the healthcare system in the US is neither of those terms, it’s just one big giant mess. A broken system, made worse by implementing a flawed ‘socialized’ system isn’t going to work. And also, earlier I pointed out this paragraph regarding lobbyists: ‘Spending $3.9 billion over the past 20 years, the pharmaceutical and health products industry has far outpaced all other industries in lobbying spending.’
I want brownie points for this intervention. The more I learn about the American internal market the more I realise that they need to read up about how to make a single market work. Internal trade in America appears to be medieval in construction. I can see why the Americans don’t like the EU.
No, thanks. We are a federal system (at least that’s what the Founders wanted), premised on the idea that state governments — being closer to the people — are better able to legislate most things. It’s not perfect, but its WAY better than handing unchecked power to 536 elected officials in DC plus their army of bureaucrats.
Let’s not forget the army of lobbyists.
First, you have to realize that large segments of the population are subsidized: either directly through various government programs (most state run), or by their employer via group plans. The plans themselves also negotiate lower prices than any individual can get. second, you have to realize that what can actually be called an insurance plan is also regulated by each State. Obamacare may mandate various pricing plans, but a lot of what a plan is required to cover is also mandated by each individual State. Add to this the fact no prices for anything are posted anywhere for a consumer to compare, and the fact you cannot shop across state lines to buy a health plan, and you get the current American system. Emergency Room care is a given,all have access to that. If you go to the various European style plans, costs will be capped but access will be controlled via other means. Either you get waiting lists, or multiple tests will require separate individual authorizations (a waiting list by a different name).
What “industry and commerce?” There’s hardly anything left of any of it. Instead, “we”‘re all just feeding of seedcorn now. The only way to make enough money to afford influencing policy, is to be in on the rent seeking rackets.
I’d be curious to see a chart of medical costs vs college costs vs CPI (ex: healthcare and education)…
IMHO they both increased outlandishly for the same reasons. One is that the person receiving the service – patient or student – is not the one paying the bill – insurance company or parent/G.I. Bill/government loans. The second is that the government started funding healthcare via medicare and college via GI Bill and student loans. So the healthcare and educational institutions took what amounts to guaranteed streams of revenue and went nuts. Classic case of unexpected consequences and no good deed goes unpunished.
Holy Moses, Mish
This is insane! This has to be rampant capitalism, greed or corruption. Pick your poison. And it ties into your previous article regarding the fallen behind wages.
See, here is the problem. actual capitalism (as in free market) is a good thing and so “rampant capitalism” is akin to saying “rampant physical fitness” or “Rampant well being”
I suspect what you mean to say is “rampant crony capitalism”
I know what I mean by rampant capitalism. I think you do too.
Capitalism is the best system we can come up with, but there are downsides to it, which are excessive greed, corruption or….wait for it….rampant capitalism.
What’s the right amount of capitalism Harry? How many angels fit on the head of a pin?
About the same as in Scandinavia, Germany and France, mixed economies work.
France is an outlier there. The US and Denmark and Germany have similar levels on the Index of Economic Freedom, but France is down the list.
60% of wealth in the US is inherited. That is the end result of capitalism: the creation of an elite class of nobility that controls everything, is above the law, all because of unearned riches.
Back when America was more capitalistic, most wealth was earned. Then, the progressive movement sank it’s always and everywhere nothing but leeching teeth into what was prior a fairly free country…..
In free societies, people are free to simply route around idle wealth. So they do. Leaving it worthless. America hasn’t had much in common with laissez-faire capitalism for 150 years. And hasn’t had anything in common with it AT ALL, for the the past 50. THAT’s why most wealth is inherited. And the rest stolen, on behalf of the privileged by The Fed and regulators. Capitalism, which hasn’t existed here for a century and a half, surely has nothing to do with it.
@Harry-Ireland — did you actually read up on the subject before shooting your mouth off? You might live in Ireland and not be familiar with the US system, but since you don’t know, you should do a little research first.
Obamacare is not capitalism. Medicare is not capitalism. Both are US federal government programs
Your current system is not capitalism either. Rentiers and price gaugers are utterly condemned by Adam Smith.
Bob, I understand perfectly how your system works. And maybe it doesn’t hurt to hear an outsider’s perspective on this sick system…I don’t pretend to know it all, but I sure recognize a broken government program when I see one. And perhaps it’s a combination of a flawed design, corruption and greed.
You say you understand our system.
Then you say Obamacare and medicare are capitalism
Apparently you have a basic reading comprehension problem
You can’t socialise a broken system where greed is out of control. I agree that both programs don’t work, I’m merely trying to point out that it’s neither socialism, nor capitalism. It’s an out of control stinking mess, bloated and corrupt.
Greed has nothing to do with anything. The issue is whether property rights are preserved or not in a given system. Your neighbor’s “greed” doesn’t hurt you if he can’t TAKE your stuff. If he can greedily offer to SELL you things, oh nos!
What the US has anymore is a very complex system in which people legally take each other’s stuff in a billion different ways. It has the trappings of free markets, but it is essentially no kind or flavor of capitalism. It’s not “xyz capitalism”, because it’s not capitalism at all.
And nothing is “crony capitalism,” because that is an oxymoron.
You can’t socialise anything, without turning it into a broken mess. Absent accurate price information, which is only made available by truly free interactions between truly free individuals, even on the impossible offchance that those running the socialised system have nothing but the best and most altruistic intentions in mind; they are still doomed to fly forever rudderless.
And Goldman Sachs didn’t sell shitty products?
It’s not capitalism. It’s CRONY Capitalism. Privatized gains and socialized losses. Rentiers, parasites and cartels seeking to enrich themselves at the expense of the broader public. Trickle-down government policies, particularly Federal Reserve policies, have facilitated this for decades. It’s now a central feature of the U.S. economy. Healthcare, higher ed, finance, criminal justice. take your pick.