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Monday, March 09, 2009

From Economist.com (Mar 9, 2009, "The view from West Virginia"):

[Obama] insists that Americans who like the health insurance they currently get through their employer can keep it. But Michael Tanner of the Cato Institute, a libertarian think-tank, predicts that government insurance will crowd out private insurance. The government could offer insurance cheaply by dumping part of the cost on future taxpayers, and so crush its private competitors.
If that happens, hospitals will be squeezed. Currently, patients with private insurance cross-subsidise those in government schemes. (A typical hospital enjoys a profit margin of 48% on each privately insured patient and suffers a 44% loss on each patient covered by Medicaid, the government programme for the poor, according to McKinsey, a consultancy.) If that subsidy disappears because there are fewer private patients left to pay it, hospitals will have to cut back. European-style queues may form, the sceptics fret.


Firstly, why would anyone keep the crap insurance they now have? That's what I want to know. Too expensive, too many restrictions, and too bothersome. Oh, and too wasteful and unfair.

Second, I don't believe the statement that a typical hospital enjoys a profit margin of 48%. Why? Because I've seen this kind of statement before, usually on the financial records of insurance companies. These kind of statements are all pie-in-the-sky reports. They count on the credit side anything and everything, but leave out all the waste and the instances that debits pile up off the books. It's like Aetna or United Healthcare saying that they've saved the average customer X amount of dollars. Yeah, IF you don't count all the time and money you've pushed off onto doctor's offices (hiring new staff for all the authorizations and phone calls) and pharmacies (ditto).

It's easy to say you've saved everyone SO much money IF you don't count this and that.

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