FRESH
OBAMACARE: Capitalism is Not Democracy, and Health Insurance is Not Health Care
This ditty was recently found in an insurance company claim file for a soft tissue injury resulting from a rear end auto collision:
“Lizzie Borden took an ax, gave her doctor forty whacks, when she saw what she had done, gave her lawyer forty- one. For the insurance adjuster, she dropped the hand tool and tedious calculations and used the wood chipper.”
The concept of “insurance” dates back to ancient Babylonia; caravan traders took out loans on their goods until they arrived and were sold. The lender was then repaid, with interest, from the profits. The “tontine” was a precursor to the life insurance policy, where each contributor received dividends during their lifetime, but the last contributor remaining alive got the pot. Medieval Guilds insured their members from shipwreck and fire, provided ransom money from pirate captivity, protection from destitution and funeral expenses.
It was maritime trading that led to insurance contracts- the earliest still in existence was written in Genoa and is dated 1347. Lloyds Coffee House in London, England, was where merchants met to negotiate business and in 1700 as Lloyds of London it became one of the first modern insurance companies. The name “underwriter” originates from the practice of a group of investors who would document the amount of risk they would assume, and then sign their name beneath. It now defines the profession of risk calculators; and the Actuary uses this data to set the premiums.
The astronomer Edmond Halley (of comet fame) was an underwriter of sorts, he devised the first statistical mortality and compound interest table in 1693, and age was not factored into this table until 1756. In 1720 the first charters for insurance corporations were issued, and as a British colony American laws were founded in British law. Under these laws the first insurance companies in America were established for fire and marine.
Health insurance in America dates from the mid- 1800’s, when it was offered by various social and professional organizations to their members or employees and typically only covered lost wages, not medical bills. In the 1930’s the Blue Cross pre- paid plans fundamentally changed American health insurance. People paid a monthly premium of up to fifty cents to a Blue Cross company to cover expenses of hospitalization. At the end of the 30’s the new Blue Shield plans paid for physician services. These new premium pre- pay plans served to ensure a steady revenue stream for doctors and hospitals during the years of the Great Depression.
Theodore Roosevelt first proposed national health coverage for Americans in 1912, and presented a bill in 1915 that was swiftly defeated by Congress. Opponents in Congress, and the American Medical Association, criticized it as socialist medicine. Medical coverage for the elderly and indigent was again proposed by President Truman in his 1945 Fair Deal program, and by Kennedy’s New Frontier in 1961. The Medicare Bill passed in 1965 during the Johnson administration’s Great Society. In 1965 fifty percent of all medical care costs were covered by some type of government program, in 1966 the Medicare Medicaid Act was passed; and in 1993 seventy percent of medical costs were paid by government programs. Currently, government programs directly cover 27.8% of the population, and public funds account for half the total amount of national health care spending.
Enumerating the number of ways the government pays for “socialist medicine”: veterans benefits, benefits to active duty and retired military personnel and their dependents, civilian military personnel, all level of government employee health plans, the Indian Health Board, State Children’s Health Insurance Program, (SCHIP), State Risk Pools, state university health programs, Social Security Disability Insurance, as well as Medicare and Medicaid and emergency services to the indigent. In fact, the price tag is much higher because 67 percent of personal bankruptcies are a direct result of medical bills. The estimated lost income tax revenue from HMO’s is 150 billion dollars annually, because the health insurance benefit has not been taxed since 1954.
In 1973 the United States Congress passed the HMO Act, which provided grants to employers who provided health coverage to employees, bypassing hospitals and insurance companies. Regardless, HMO premiums tripled within 20 years and the national health care bill escalated from $75 billion in 1970 to $817 billion in 1989. In 2007, the U.S. spent $2.26 trillion on health care, or $7,439 per person, up from $2.1 trillion, or $7,026 per capita, the previous year.
Following the losses of the Great Chicago Fire in 1871 “reinsurance” was devised, where insurance companies themselves could pool their risks. This engorged aggregate pool of funds, and the mergers of over 200 insurance companies, created an entity of unparalleled and unprecedented international financial clout. Following World War II the United States government began regulating insurance companies under the commerce clause in the US Constitution. Up to this point each state had regulated the insurance companies doing business there. After this, insurance companies were allowed to offer more than one line of insurance and after the merger dust settled, the industry was dominated by a few mega- conglomerate corporations. Premiums and the number of uninsured both skyrocketed. The quality of insurance products declined, insurers regularly offer plans that piece and parcel out coverage, and deny basic coverage to more people. Many plans are written in such a way to be worthless and do not cover anything at all. It now appears that insurance schemes have become so complex that they are virtually unregulated.
Actuarial tables were used by investment analysts to determine risk of the derivatives responsible for the worldwide economic meltdown in 2007. No other method existed to determine the instrument’s unknown risk. In the same category is the future of health insurance in America. There exists no instrument or formula to predict the future of an industry whose product has far outstripped its consumers ability to pay. Health insurance premiums have seen stratospheric increases, and the cause will predictably vary by whomever funds the study. Pharmaceuticals claim it’s increased utilization, doctors claim it’s pharmaceuticals, malpractice insurance; and hospitals point at insurance companies, etc. In fact, there is only one cause- insatiable, grasping Greed.
The Clinton administration’s attempt to revive universal health insurance in 1993, termed HillaryCare, was the precursor to the recently passed ObamaCare. This mandate requires every American to have a health insurance policy by 2014 or pay an annual fine of one percent of income. However, exemption from the penalty only applies when health insurance would cost more than eight percent of income. That leaves seven percent of every American’s income for insurance companies to leverage.
This legislation fails to address many of the fundamental flaws of pre- paid health insurance, whose initial purpose was and remains, to only to ensure a revenue stream for insurance companies. The entire structure of premium- based insurance has run its course. We must demand a health care system that is concerned with health care.
Sources: The Columbia Encyclopedia Fifth Ed., 1993, Columbia University Press
www.wikipedia.org