The Washington Outsider

Healthcare Reform: Beyond the “Subsidy Mentality,” the “Scarcity Mentality,” and Health Insurance Reform

3/10/2017

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Health insurance is supposed to make healthcare more accessible by making healthcare affordable to average income individuals and families.  Unfortunately, the costs of healthcare and health insurance, along with deductibles and co-pays, have grown to the point an escalating number of businesses and individual cannot even afford health insurance.  Legislative efforts like the Patient Protection and Affordable Care Act, a.k.a. Obamacare, and the American Health Care Act, are intended to address this growing problem.  While Obamacare favors tax credits and the expansion of medicaid aimed at helping lower-income individuals and families acquire coverage, the American Health Care Act largely seeks to ease the cost of health insurance across the socioeconomic spectrum, which means the greatest tax benefits go to higher income individuals and families.  
 
Both approaches reinforce the “subsidy mentality” feeding the National Debt and government overreach instead of addressing the affordability of healthcare. Where Obamacare was largely designed to address the issue of access to health insurance for those unable to afford or buy insurance, which was theoretically supposed to help contain costs in the long run by giving people access to far cheaper preventative care, and required followup legislation, the American Health Care Act embraces a “scarcity mentality,” which treats healthcare as a non-renewable resource in need of rationing, by reversing the Medicaid expansion and gutting the “essential health benefits” standards provided by Obamacare.  Health insurance reform and healthcare reform need to move beyond the subsidy mentality and the scarcity mentality to actually address the issue of healthcare affordability.
Health insurance eases the cost of healthcare by pooling the financial resources of the insured, which enables greater access to healthcare when it is needed.  The pooling of resources and increased number of consumers also help fund life-saving and cost-cutting innovation, yet insurance company also help reduce the cost of healthcare by giving the insured the power to negotiate prices.  When there are sufficient numbers of health insurance providers and healthcare providers to choose from within a given area, this added leverage, coupled with high standards and proper regulations, give consumers enough choice to generate the competition needed to lower prices.  In other words, healthcare is a limited resource, but increased access, innovation, improvements through efficiency, and greater consumer leverage can eventually “stretch the supply” of healthcare to cover any need that arises.
 
That said, the US healthcare industry relies on two main sources to fund the health insurance industry, which distributes funding to healthcare providers.  Because healthcare is very expensive, government offers businesses, which tend to have more financial resources than individuals, tax incentives to pay for the health insurance of their employees.  Thanks to the financial might of big business, this approach had the added benefit of forcing insurance providers to compete for large pools of clients.  It worked fairly well until the cost of health insurance outstripped the benefit and feasibility of these tax incentives.  Obamacare tried to duplicate this approach with the health insurance marketplace.  That said, the deep pockets of the taxpayer-funded government has always provided a bulk of the funding for the healthcare industry via Medicare, Medicaid, SCHIP, and TRICARE, as well as billions in other forms of funding, The problem is that even government funding has limits, which are fast approaching.
 
Consequently, money cannot simply be thrown at the healthcare cost problem.  Because the cost of delivering care has also grown with the economy and the advent of new technology, competition, and leverage alone cannot be used to artificially suppress the prices healthcare providers require.  At the same time, the strategic use of money, such as the use of expanded medicaid to increase access to healthcare for those who cannot afford it, and competition are part of the solution. Administrating healthcare and fees for service adds costs that can only be justified when enough savings are realized to more than pay for the service and the overall healthcare system is improved. In today's system, healthcare insurance providers add costs by exacting enormous profits while cutting benefits.  Health insurance exists to pull reserves of capital together, coordinate care, and allocate funds in a more efficient matter.   Anything outside of these functions leads to waste as well as unnecessary denial of care, a.k.a. healthcare rationing for the sake of profits.  Healhcare reform needs to focus on honing the role health insurance providers play.
 
From doctors to bandages, the costs of treating even a healthy person mount very quickly. How resources are utilized can be drastically improved through innovation as well as better management of care.  There are areas where private firms can do this better and others were the public sector has the muscle to force change. Affordability is a consequence of supply versus demand that can only be alleviated by decreased demand for services, i.e. cut people off, or increased supply and better utilization of medical resources. Private or public insurance has nothing to do with it.  Health insurance providers can play a role in going this.  Without the proper legal protection, insurance companies have far too much leverage over consumers and healthcare providers, thereby coming between patient and their doctors.  Containing costs and paying for coverage into the future continues to be the maintain concern of the health insurance industry, yet the healthcare system must contain costs while caring for everyone in need, instead of focusing on increasing profits.
 
Profit does, however, drive innovation and growth when it attracts investments in terms of financial assets, human capital, and the pursuit of novel thinking. Offering satisfactory services to patients and caregivers is one way of using profits to accomplish this goal. Building hospitals and expanding facilities with advanced technology is another. Rewarding the administrators of health insurance plans with large bonuses is not. When the for-profit insurance market solution to cut costs is increased costs to patients and employer sponsors of insurance policies with reduced benefits, their existence only adds to the inefficiency of the system. Consequently, a healthcare system driven by increased profits for bureaucrats, such as insurance providers, cannot lead to greater innovation or improved care.  In other words, healthcare reform does not necessarily hinge on preserving the health insurance industry.
 
It requires improved access to affordable healthcare, which insurance providers can help facilitate, as well as greater legal and economic leverage for healthcare consumers.  In the end, legislative acts like banning the use of preconditions, requiring standards for insurance policy, and guaranteeing people have access to the doctors they choose, which is often restricted by the healthcare provider networks insurers develop, will be the ongoing focus of healthcare reform.  Despite resistance to change, insurance companies, which will be looking to redesign for-profit schemes in an environment where coverage cannot simply be dropped or inflated, may well eventually push for a basic public option, so they can offer supplementary benefits at a profit.  Clearly, such a change will upset the insurance industry and reveal the reliance on government, but it will preserve the private for-profit and non-profit insurance market as well as access to private insurance and care.
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      • Why Hardliner Thinking in the NSA and CIA is Doing Damage
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      • Why the Middle Class and Rich Need to Support Their Long-term Interests
      • The Aristocratic Republic of the United States of America
      • Discussing the Need for Community Support
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      • The Reason We Need to Understand What it is to Be Poor in America
      • Why the World Needs to Reinvest in America
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      • US Influence: The Value of American Citizenship Around the World
      • Responding to "the Soldier as Sacrficial Victim"
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        • Is Suicide a Cowardly Way Out?
      • Defense Against the Dark Arts of Manipulators
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        • How to Understand Abuse Victims
        • Recognizing Abuse
      • The Role of Substitution in Decision Making
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      • Understanding the Effects of Groupthink in the Workplace
      • Relating Circular, Inductive, and Deductive Reasoning to the Scientific Method and Religion
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      • The Need for Greater Economic Leverage >
        • Evaluating NAFTA and TPP
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        • Eminent Domain Used Against Banks
        • Haitians Sue the UN for Failure to Help With Cholera
        • Looking at How Corn-based Ethanol and Other Alternative Energy Subsidies Stack Up
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        • Irish Sovereignty Lost Before Bailout
        • Why Sudan's Greatest Long-Term Hurdle is Our Lowest-bidder Economy
        • Reduce US Imports by Buying American Made Products
      • Ending the need for government support and tackling poverty
      • Income inequality: understanding the limitations and psychology of disadvantage
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        • On Questioning the Need to Address Economic Disparity
        • Minimum Wage is Not the Problem
        • Responding to the "Blip"
        • Why Education Is Not The Civil Rights Issue Of The Twenty-First Century
      • Considering the Impact of the Capital Gains Tax Deduction
      • Embracing a Capitalist Mindset >
        • Capitalism Versus Socialism
        • The Negatives of Socialism
      • Stealing Intellectual Property
      • Changing Business Models: From Enduring Entities to Cash Cows
      • Consumer and Investor Evolution in the Great Recession of 2008-09
      • Dealing with the Issues Surrounding the Patenting of Self-replicating Technologies
      • Is Technology Threatening Jobs?
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      • The Role of Education in Creating a More Dynamic Workforce
      • Primary Education in America and the Changing Needs of Society
      • The Greatness of the American Education System
      • Ideas for Improving the United States Education System
      • Are Teachers Treated as Professionals?
      • Is Engaging Parents in Their Children's Education a Major Factor in Turning Around Low-performing Schools?
      • Should Grants Be Awarded to School Districts that Try Innovative Methods to Improve Student Achievement?
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      • On Reading the US Constitution
      • The Senate should not do more to limit the powers of the Judicial Branch
      • On the DOJ Justifying the “targeted Killings” of US Citizens
      • Corporations Do Not Have the Same Rights as US Citizens >
        • Corporate America Pleads the First
      • Discussing the Constitutionality of Per Capita Taxes
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      • Should the Bible Continue to Be Used for Swearing-in Ceremonies and in Courtrooms?
      • Should Religious Student Clubs Be Allowed in Public Schools?
      • Should the Government Control Talk Radio to Make it More "balanced"?
      • The Second Amendment: Not Outdated >
        • Are We Losing Our Second Amendment Rights
      • Eminent Domain Used Against Banks
      • Should a Woman Have the Right to Choose Abortion? >
        • Should Fathers Be Able to Opt Out of Parenthood?
      • Should Smoking Be Allowed in Public Places?
      • Is Teen Driving a Right or a Privilege?
      • Should US Companies Be Required to Provide Equal Pay to Women and Men?
      • Is eighteen too young to vote?
      • First Amendment Rights: The Priviledge of The Press
      • Do Mandatory Seat Belt Laws Violate Individual Rights?
      • Should cell phone use be banned while driving?
      • Dealing with the link between video game violence and children's behavior
      • Should police have to submit to routine drug and alcohol testing?
      • Public schools should not impose mandatory drug testing on students
      • Are High Taxes on Cigarettes Proper?
      • Should pharmacists be required to violate their religious beliefs and dispense the "Morning After Pill?"
      • Should school counselors uphold patient privacy or report students who become unstable?
  • For the record
    • Ongoing Issues >
      • Red Dawn in Ukraine: Understanding the Actions of Russia >
        • On Russia’s Coercion of Ukraine
        • The Russian Annexation of Crimea in the Eyes of the World
        • Putin Has Overplayed His Hand With Crimea
        • Ukraine in Terms of Resovereignization
        • Avoiding a Conflict Between America and Russia Over Ukraine
        • What Drives the World’s Interest in Russia’s Actions in Ukraine
      • China’s Aggressive Pursuit of Interests Demands a Global Response
      • Iran Makes a Deal: A Start to a Long-term Diplomatic Effort to Denuclearize Iran >
        • On the Future of a Nuclear Negotiations with Iran
      • America's Sphere of Influence: Retaking South-East Asia >
        • Power in Asia: Looking at the Power Shift in Japan
        • The China Paradox: Why America is Worried About China
      • Assessing US Support of Israel >
        • Tread Softly Israel for a Heavy Step May Be Your Undoing
      • Understanding the Dysfunctional Nature of the US-Pakistani Relationship
      • Recognizing the True Threat Behind the Current Unrest in the Middle East >
        • Reacting to the Escalating Crackdown in Syria
      • Assessing the Threat of North Korea >
        • Answering North Korea's Call for Food Aid: Breaking the Vicious Cycle Forced Upon Us by a Warring Nation
        • Dealing with the Restarting of the Korean War
        • North Korea Attacks South Korea
      • Dealing with the Ill-effects of Climate Change
      • Racial Inequality and Oppression Do Truly Exist in Today's Society
      • Should energy independence be a high priority in the US?
      • An overview of world wide Human Rights violations
      • Nuclear Threat from Pakistan
      • Return of The Cold War?
    • World >
      • Coverage of FIFA World Cup is a Chance to Focus on Poverty >
        • The FIFA World Cup Offers Benefits for More Than Brazilian Soccer Fans
        • FIFA Can Bring Brazilians Together as a Nation
      • Being Prepared for Any Potential Dangers at the FIFA World Cup Games
      • Treading Softly on the Politicizing of the 2014 Sochi Olympics Over Gay Rights
      • Why NATO Operations in Libya Lack a Well-defined Mission
      • China Hijacks the Web
      • Lessons from the Great Japanese Earthquake of 2011
      • A Modernizing Cuba Offers an Opportunity for Capitalists
      • The Seeds of Democracy Take Root in the Middle East
      • The Rebirth of Democracy in Tunisia
      • What May Come from the Hurt Revolution in Libya
      • Responding to the Violence of Qaddafi and Other Besieged Leaders
      • Embracing the Rise of a Democratic Egypt
      • Protests in Afghanistan Turn Deadly for Coalition Forces and UN Personnel
      • Haiti: Another Failing Humanitarian Investment
      • What Karzai Can Learn from Calderon
      • START II: A Necessary, Easy Success that Nearly Failed
      • Why Does the U.S. Government Support Independence for the Breakaway Serb Territory of Kosovo but Oppose Independence for the Breakaway Georgian Territories of Abkhazia and South Ossetia?
      • Iraq's Electric Issues: When Human Wants Trump Economic Sense
      • The International Community Reacts to Wikileaks: We May Be Moving Toward a Third World War in Cyberspace
      • On Climate Gate
      • Assessing Obama's Afghanistan War strategy
      • 2009 Iranian Presidential Election: The Fallout
      • Resolving Sri Lankan Conflict through Free Media
      • What are the Global Consequences of Russia's Invasion of Georgia
      • The War in Iraq: an assessment of President Bush's surge strategy
      • Drug War: Actions of Venezuela, Columbia, Ecuador in terms of Resovereignization
      • Is the Iraq Refugee Crisis America's Responsibility?
      • US support for a united Kosovo, Abkhazia, and South Ossetia: why?
      • Should the US withdraw from Iraq?
      • Setting a Timetable for Troop Withdrawal from Iraq is a Terrible Mistake
      • War on Terrorism is needed
    • Law and Order >
      • Rape in the US Military
      • Ethics of Force-feeding Guantanamo Bay Detainees
      • Reacting to the Aftermath of the Tucson Massacre
    • Economy >
      • Affordability Drives Fear of Obamacare and the Individual Mandate
      • Is the Economy Built for a Job's Recovery?
      • Gutting Healthcare Reform of the Individual Mandate
      • Arizona Budget Cuts Lead to Lethal Healthcare Rationing:
      • Shameful Collection Practices of American Banks
      • The Fed Reveals it Actually Undertook an International Bailout
      • Thoughts on French Budgetary Reforms
      • Seniors Start Businesses
      • The Case for Slimming Down the US Military to Make it Better
      • Looking at the Obama Administration's New Approach to Economic Policy
      • Should the Government Regulate the Credit Card Industry?
      • The Big Three's Big Chance
      • The Unhealthy Tone of the Healthcare Reform Debate
      • Should the federal government offer a bailout for home owners?
      • Environmentalists: Do They Do More Good Than More Harm?
      • Responding to Scott Walker's Contribution to the War on Unions
    • US Government >
      • America Needs to Focus on the Impending Fiscal Crisis
      • Reacting to the Bush Era-tax Cut Extension Deal
      • Quitting the Obama Revolution: The Fickle Nature of American Politics
      • John Boehner's Circus
      • Is the Fed Putting Itself in Jeopardy?
      • Wikileaks Goes After the US State Department
      • Discussing the Political Environment Surrounding the 2011 Budget Debate
      • What the Democrats Can Do to Ensure a GOP Year in 2012
      • What the 2010 Midterm Actually Said
      • Congresswoman Kathy Dahlkemper
      • Democrats Minus Nancy Pelosi Equals Opportunity
      • Terrorists Go Postal: The Terrorism Threat Reexamined
      • Victory in the 2008 Election: Reaction to Barack Obama'a Win >
        • Expectations for Barack Obama
      • President Obama's first one hundred days
      • John McCain's Negative Campaign
      • Reasons People did not Elect John Mccain
      • History judges the George W. Bush Administration
      • Should the next US President focus on domestic issues?
      • President Bush, should he resign or be impeached
      • Should the Ban on Government Sponsored Assassinations be Repealed
    • Off Topic >
      • A Face of America’s Greatest Generation
      • A Story About a Man Who Made the World a Better Place
      • Making the World a Better Place
      • The Bipolar Ethical Nature of Google
      • Learning Computer Plays Jeopardy
      • Verifying Medicine is the Real Thing
      • Taking a Practical Step Forward in Optical Computing Using Slow Light
      • Scientists Take a Closer Look at How Lithium Batteries Work
      • Remarking on the First Blizzard of the 2010-2011 Winter Season
      • Driving in the Snow: Acceleration is the Key
      • How People in Northwest PA Are Coping with the Increasing Cost of Oil
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