Getting those who can’t pay to pay, and the health insurance industry

(9 am. – promoted by ek hornbeck)

All right.  Anastasia P requested that I repost an earlier diary detailing my hopes and suspicions about “health care reform.”  I don’t do reposts; however, I am interested in an investigation of the central theme of that earlier diary, which was to look at health care in the context of a (these days) booming industry: “getting those who can’t pay to pay.”  In this stage of capitalism, it would seem, the big growth industry is in “squeezing blood from turnips,” in which it is imagined that the poor and indebted will pay their creditors whatever is owed them if only the laws requiring them to do so are tough enough, and if the collection agencies are firm and resolute enough in their intentions.

Health insurance reform enters into it.  More below.

(crossposted at Big Orange)

First, the health insurance thing.  Then I will discuss how the “squeezing blood from turnips” phenomenon intersects.  Kudos to Hunter for getting me revved up.

*****

The Romneycare model, which seems to have influenced at least the Senate in its deliberations on “health insurance reform,” is about mandates — requiring everyone to buy health insurance.  Of course, just requiring everyone to buy health insurance just compounds the problem, as Slate discovered in its analysis of the Massachusetts plan.  Here is their finding:

The expensive Massachusetts plan is not well-designed to systematically improve anyone’s health. Instead, it’s a superficial effort to clear the uninsured from the books and then clumsily limit further costs by discouraging care.

And to review Dr. Nardin’s February 2009 conclusion about the reforms which constituted Romneycare:

None of these reforms made more than a temporary dent in the number of uninsured as shown in the series of state-by-state graphs on changes in rates of uninsurance below. These incremental reforms failed because they did not include effective cost-control measures.  As health costs rose, legislatures backed off from forcing employers and the self-employed from paying ever-rising premiums and the mandates were repealed. Relying on Medicaid was fiscally problematic for states because tax revenues fall at the same time that unemployment pushes families out of private coverage. There is little reason to think that the current Massachusetts reform, or a national plan modeled on these state reforms, would have any better long-term success.

From what I can tell, the Senate response to this condemnation of Romneycare is “damn the torpedoes, full speed ahead!”  They’re going to try nationwide Romneycare, and this time, they will proclaim, they’re not going to back off.  The meaningfully-employed will be told: Pay those premiums, dammit!  So maybe they can’t contain costs without a public option?  They’ll just make the taxpayers pay more money!  Expanding Medicaid to 133% of the poverty level will be more costly?  They’ll just expand the national debt, or maybe they’ll expand the fine for not having coverage!  Or, better yet, make it an unfunded mandate!

So here is my suspicion, and my concern: Absent a real control on costs, i.e. a robust public option, Congress will try, in the final draft of this thing, to make those who can’t pay pay; it will squeeze blood from turnips.  Congress’ idea of “health insurance reform,” then, is thoroughly determined by this 21st century economic maxim: make sure you bill someone, regardless of ability to pay — this way at least you have put a debt on the books, and your claim to their money is legally enshrined.  If this sounds irrational, perhaps it is because I have taken John Bellamy Foster’s idea of “the end of rational capitalism” to heart.  As capitalist medicine’s costs mount and as its benefits are progressively withdrawn from the American people, whose finances tank further with each passing month, the insurance companies and their adjuncts in the medical billing industry will be looking for new and innovative ways to separate people from their money, and (when taken far enough) this means squeezing blood out of turnips.  This, indeed, is the economic motive the insurers bring to the table when it comes to lobbying Congress.  They actually want blood from those turnips; the more turnips they can draw into their net, the more likely the emergence of blood.

Hopefully we can stop them, which (in my opinion) will mean one of two possible outcomes:

1) a ROBUST PUBLIC OPTION

— or —

2) SHOOT THE BILL DOWN

We shall see, then, in the coming months, how it plays out.

*****  

The true story about health care finance really starts with the 2005 bankruptcy laws.  An important study conducted before the passage of the 2005 bankruptcy laws determined that about half of all bankruptcies (at that time) were largely due to medical expenses.  This, of course, ran contrary to the credit card companies’ pretext (promoted with great fanfare) that there was a lot of reckless bankruptcy going on out there. Of course, each state has its own take on the bankruptcy law that could cover those who find themselves in such a situation.

Nevertheless, the Republican Congress in power at that time decided to pass the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act.  Of course, the credit card companies who lobbied this legislation into existence are the ultimate source of money for the medical expenses which caused (and cause) most bankruptcies: a piece by the Center for Responsible Living suggests that the matrix of credit forms a “plastic safety net” which substitutes for the safety net the Republicans dismantled with Bill Clinton’s blessings.  

Even the 1996 Welfare Bill reflects back upon the problem of how we are going to distribute health care goods.  Economic triage, let’s call it.  Living on the streets might save the government the money it would otherwise give you to pay rent, but it will increase your medical liabilities — the word “costs” here implies squeezing blood out of turnips again, so I won’t use it.  (As a footnote, I should add that when I lived outdoors, I made sure I had a sleeping bag good enough to keep me warm in the winter.  Not all homeless families can claim that.)

Amusingly enough, the 2005 screwing of the most indebted of consumers was to provoke a good degree of blowback.  A recent report in the blog Naked Capitalism reveals that the credit card companies have, in fact, been taking a bath on credit defaults, largely due to this bankruptcy legislation which they themselves lobbied to pass.  Turns out that people have been running away from their debts — since declaring bankruptcy has become so onerous, well, why not just default on one’s debts, and wait until the credit card companies write them off?  As Christian Weller said:

For decades, credit card companies have layered fees and excessive interest rates on their borrowers. Instead of addressing the consequences of high, complex, poorly understood credit card costs, though, the high default rates were simply explained away by declaring defaulting borrowers as deadbeats.  Now that there won’t be another round of bankruptcy reform that could be sold as salvation, credit card lenders will have to come to terms with the fact that their practices were actually detrimental to their own financial health.

Keep in mind, as you read this, that half of the bankruptcies were (before the new law) largely due to medical bills.  Actually, this year, it’s more like sixty percent.  Here’s a telling quote from the more recent, 2009 study:

“That was actually the predominant problem in patients in our study — 78 percent of them had health insurance, but many of them were bankrupted anyway because there were gaps in their coverage like co-payments and deductibles and uncovered services,” says Woolhandler. “Other people had private insurance but got so sick that they lost their job and lost their insurance.”

Remember this when some pompous paid-off Congressmember stands up and tells his audience that everyone has to have “insurance,” and be sure to consult Open Secrets when divining his/ her true motives.  They are paid off by the industry, which aims to squeeze a little more blood out of the collective turnip population.

*****

CONCLUSION

This is America, of course, where everyone wants to pursue the American Dream, which (for many) is to get rich (quickly, if possible) and live sumptuously.  I will leave it to the psychologists to criticize the American Dream as such; what needs to be added, here, is that if one is to get rich in a capitalist system, a large group of “someones” is going to have to pay for one’s process of getting rich.  For the insurers and their adjuncts in medical billing, that group is us.  First it was the insured who had to pay; then it was the sick, whose insurance did not cover them sufficiently (and note in this regard how neatly their coverage will shrink with the Senate bill); now they want to expand it to mean everyone, with “universal health insurance.”  Oh, sure, forcing those who can’t pay to pay is a stupid way to make money.  But at least if you put debts on other people’s records, your claim to the American Dream will be legally enshrined.

*****

OK, so all of this is to express my concern, here, that this “health care bill” process is all going to end up with the government as a hired agency for the private-sector tasks of getting those who can’t pay to pay, like it already is with bankruptcy post-2005.  Do I worry unduly?

*****

In Florida, meanwhile, they’ve taken turnip-squeezing to new lows, by reinstituting the debtor’s prison.  Can’t pay court costs in Florida?  We’ll put you in jail for it, and force you to pay room and board while you’re there!  So don’t tell me we’re beyond all that here in the good old U.S. of A.

7 comments

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  1. may they shed no blood.

    • Edger on August 27, 2009 at 6:14 am

    But sometimes the premium bill is very low, and in some cases the bill arrives with a zero balance owing shown.

    Everyone in every province of Canada is covered. In fact, some provinces, Manitoba for example, charge residents no premiums at all for health insurance but instead cover their residents through general tax revenues (Canada generally has higher income tax rates than the U.S.), and some provinces that do charge, such as B.C., also have premium assistance available that lowers your premiums depending on your income level, and even completely indigent or homeless people will be treated first in most clinics or hospitals and the medical coverage to pay for the services will be sorted out later, usually by a social worker.

    In British Columbia:

    Regular premium assistance offers subsidies ranging from 20 to 100 per cent, based on an individual’s net income (or a couple’s combined net income) for the preceding tax year, less deductions for age, family size and disability. If the resulting amount referred to as “adjusted net income” is $28,000 or below, a subsidy is available. See the Monthly Premium Rates chart … for full details of premium assistance rates.

    The current adjusted net income thresholds are:
    $20,000 – 100 percent subsidy
    $22,000 – 80 percent subsidy
    $24,000 – 60 percent subsidy
    $26,000 – 40 percent subsidy
    $28,000 – 20 percent subsidy

    • banger on August 28, 2009 at 6:14 pm

    …of course that is easier said than done. But it is logical for the system to try to squeeze as much money and labor from the least powerful people just like it easier to bust street criminals than the city officials that are complicit in the drug trade.

  2. You WILL BUY health “insurance” like it or not

    You WILL be told what to take by your doctor like it or not

    Your entire financial picture WILL enter your/their health decisions for you.

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