This is a slight elaboration on a comment I made yesterday, so please don't go looking for a link.
Healthcare insurance is not the healthcare industry, just as automobile insurance is not the automobile industry. What we're seeing with the Affordable Care Act is not healthcare reform, because it's not really reforming the business of healthcare. It's technically healthcare insurance reform. But it isn't even that. | Hear, hear!! |
In world ruled by mathematics, the insured are therefore protected from a specific risk event, or risk events for a fee, with the fee being dependent upon the frequency and severity of the event(s) occurring.
Example: A cargo from Singapore bound for Amsterdam in the hull of a ship certified by a host nation whose flag it flies, sailing with a competent and certified crew, traveling on a safe route, will have a lower risk-level than a cargo traveling from Singapore to, say, Mombasa, in the hull of a ship flying a flag-of-convenience, with a pick-up crew, with the route traversing down the coast of Somalia.
Hence the people that are shipping the cargo on the latter ship will pay higher fees for insurance against loss of the cargo than would the shippers on the former vessel (the shippers in the latter instance would likely pay lower shipping costs, but that's for another time.)
Back to healthcare insurance.
What the Affordable Care Act (ACA) is, is a mandate that healthcare insurance be purchased by the denizens of the United States for themselves and their dependents, hence creating a 'risk pool', i.e., a fund for transferring or distributing risk among those mandated to buy healthcare insurance.
In the case of health risks it depends on a lot of factors as well. For example, if you're older, you'll likely have knee problems. If you're overweight, you'll likely have cardiac issues in addition to knee problems. And so forth.
In order for an insurer (private or governmental entity) to not lose their metaphorical shirt paying out on claims, they attempt to manage the risk. That could be done by increasing the risk pool (the purpose of the Affordable Care Act (ACA)) using statistics to determine the risk of loss or an event, or establishing loss or event parameters up front - suicide not being covered by life insurance, for example. Additionally, certain items may either be not covered or reimbursement schedules will be at the insurer's discretion.
The "tweak" here with the ACA is that the risk pool has deep-shallow payment. Low-risk insurance purchasers. like the young or very healthy, or earning a decent income will pay more for their low risk of incurring a medical event (pay more for being in the shallow end of the risk pool), in order to subsidize the insurance of those with high risk factors or lower incomes (being in the risk pool's deep end). The need for healthy young people with low health risks to purchase health insurance is thus required in order to financially cover the health care costs of their statistical opposites.
In essence, it is a perversion of what would normally and sanely be defined as "insurance." But this isn't a normal and sane situation.
Additionally there is a social engineering aspect applied to the ACA. Income is a factor in what one will pay for a policy. If one looks at the the Wikipedia entry on insurance again (go ahead, I'll wait,) one doesn't see where one's bank account or annual income should be a factor. In essence and stripped of politics, it's a redistribution of assets.
Another social engineering factor is the ACA addressing social/economic inequities. There is a high healthcare risk among pregnant lower-income women both prepartum and postpartum due to many economic, geographical, and most important, social factors. In order to cover this tragic problem and to standardize policies (as a way to keep administrative costs low) people are being mandated to pay for insurance policy features they may not or will not need, i.e., a post-menopausal woman being required to pay for maternity care features provided in her policy.
The other problem with this so-called healthcare reform is that it has the same issues as Medicaid and Medicare. It is payment-reimbursement driven. There really is no reform of actual healthcare-business issues.
Take for example, the legal side of healthcare. Obstetrics is a high-risk medical field; factor in the conditions of increased risks from social conditions (lack of or ignoring prenatal care, use of drugs during the pregnancy, poor physical health, etc.) and the risks become higher.
However, the legal system does not necessarily take those factors into account when a malpractice suit is filed. Insurance fees for insuring against malpractice claims in fields like obstetrics, neonatal medicine, and cardiology are astronomically high. Practitioners in those fields will then take steps to mitigate the risk of a lawsuit, adding to healthcare costs.
Another issue is that nowhere in the ACA (so far) is a list of defined costs for medical procedures, tests, treatment, etc. In fact, medical costs for the same procedure vary widely across the United States. That too is based on risks, on how expensive it is to "do business" in a given locale and also socially-imposed costs that have to be absorbed until reimbursement is made (if it ever is made). The mandate that treatment must be provided at emergency rooms regardless of ability to pay, for example. Southern California, particularly the Los Angeles area, has had hospitals close because the costs of operating them are not reimbursed or covered by incoming payments for treatment. Demographics also factors in heavily.
What is covered and not covered, and the quantity and quality also varies widely. Taking the maternity care cost issue, for example, is partially addressed by standardization under ACA, but imposes costs on those insured that will never use maternity care. It also leaves open what will be covered and not covered, and what will be paid for and not paid for.
We haven't even touched on reimbursement. That too varies widely. Nor are there transparent and publicly available defined reimbursement definitions and schedules available.
A nationalized health care plan adds in healthcare management, but that does not remove managing the risks or mitigating the costs of healthcare. Two things must still be controlled: expenses and income. I'll leave it to the reader to elaborate on both, but demographics, politics, and social engineering factors still play a role.
To repeat: A healthcare system is not healthcare insurance. What is being called healthcare insurance under the Affordable Care Act, is, for the most part, presently neither healthcare reform nor insurance reform.