Private Health Insurance versus Government Health Plans

As a young man, I imagined that the people running our nation were exceptionally smart and knew more than average people how to solve problems. Now that I am let’s say, middle-aged, I realize that half of the people in government don’t have the good sense that God gave a Billy Goat, and many are corrupt. For the remainder of this article, I will refer exclusively to the well-intentioned officials and bureaucrats as government officials. I will not reference the corrupt officials and bureaucrats who live and breathe to steal our money. 

Unfortunately, many government officials and most bureaucrats have no real-life experience as participants in the private marketplace. The Law of Supply and Demand is an alien concept to them. Yet, because they have impressive academic credentials, they are convinced that they know more about how to run the economy and businesses than those who sign payroll checks for their employees. They think they, the government, can do everything better because they are smarter and morally superior. They are not greedy corporate types who are only concerned about profit.

One subject in which the government and I are especially interested is health insurance. We have opposing opinions on who should decide what health insurance private citizens are allowed to buy and sell. Once again, some are pushing to ban private health insurance and give government bureaucrats a monopoly on designing health insurance plans for Americans who are too young for Medicare. They are calling this scheme their “Medicare for All” plan.

Although excruciatingly painful, I listened to a fancy university professor explain how he's spent fifty-years as an economic professor and has the entire alphabet of credentials behind his name, read so many books by people who also spent their lives in classrooms studying theories written by other acidemias. While he was in the classroom, warping minds about economic theories over the past fifty years, business owners were participating in the economy under the confines of the Law of Supply and Demand, which is not a theory. He still gets his taxpayer-funded paycheck if he is wrong about the economy. If a business owner is mistaken about the economy, he or she could lose everything they own, including their home. I know that from personal experience.

The Billy Goats point to Medicare as an example of how well the government can provide healthcare for the citizens. Notice that I wrote healthcare and not health insurance. That wasn’t a mistake. If you listen to the numb skulls carefully, you will notice they don’t know the difference. They also don’t seem to know about cost-shifting.

Cost shifting is what takes place when the government exerts price controls. Government-rub Medicare establishes the price for which medical providers can charge Medicare patients for performing specific procedures such as surgery. Those same medical providers charge patients not on Medicare a lot more for the same procedures. Classroom geniuses will Google this subject and find surveys disputing this and use it as an argument for their case that this isn’t true, but if you’ve heard me explain an insurance industry term called “referenced-based pricing,” you will know the truth about cost-shifting.

More and more health insurance companies and self-insured plans are adopting reference-based pricing as their policy for determining what amount they will and will not pay for claims. The most common factor they use is Medicare times 1.5, which means that most insurance companies will accept health claims as usual, customary, and reasonable for under-65s, which is fifty percent more than the Medicare allowance. In other words, medical providers know they can charge us spring chickens FIFTY PERCENT more than seniors on Medicare. If that’s not cost-shifting, I need to go back to school.

Now, I have only one college degree, so I may not be really book smart, but it seems that if Medicare covers everyone, there won’t be anyone else to shift those costs to. What happens then? Hmmm, well what happens when the government makes something the public demands illegal or attempts price controls? Rationing? The Black-Market steps in?

Entrepreneurs innovate. This is most beneficial in a free market, but you can see that even in the semi-socialist and semi-free market that we have today, free-market innovation beats government-run health insurance hands down. For more evidence, click here to watch a short video called “Too Good to Be True,” which compares government-designed and controlled individual health insurance (Obamacare) to private health plans that have been created by exploiting loopholes in the law. By the way, if the government Billy Goats were to pass Medicare for All, we would end up with a system like they have in Great Britain, where there is a crappy public plan that is paid for by taxpayers and a private system that is optional and paid for by premium payers who are also likely to be taxpayers.

To give you a better idea of the genus of the bureaucrats who think they know what’s better for you than those who make a living in the insurance industry, the professor I referenced above has another bizarre theory.

The guy who spent fifty years becoming an economic genius and lecturing to elite college students about how the government should have a monopoly on health insurance, thinks the government should “seize shareholder’s interest in corporations and give to the employees.” He opines that this would be fairer and more democratic.  He spent a lot of time selling this logic, squinting his eyes, and projecting an angry expression every time he spoke the word “profit.” This wouldn’t be so disturbing if I hadn’t noticed that he had over one million viewers. 

Imagine how successful Walmart would have been if the people who can’t tell you what aisle the empty shelf is where the baby formula is supposed to be were making corporate decisions or if the employees of Tesla had been making all the corporate decisions instead of Elon Musk. The people who think this is a good idea are the same ones who want to take over your access to health insurance. 

Make no mistake, I believe in education and educators, but I was taught that the university is the place to learn how to learn and to make connections that would benefit me after graduation, which is when my real education begins. It's when lifelong educators indoctrinate students who go to work for the government to pass policy and regulations on those of us who live in the real world that I'm talking about. 

To make a long story short (as if that were possible for me), we currently have two options: a government-run health plan, which I am willing to (figuratively) wager that will experience rapid inflation, increasing deductibles, and out-of-pocket maximums and deterioration of network providers, or private health plans which must provide satisfy market demands at a price the market is willing to pay. If you don’t make your opinion heard loudly and often before the next election, the cost of health insurance is going to make gas prices look like chump change.

The good news is that those of you who have individual health insurance plans that are guaranteed renewable to age 65 have nothing to worry about because those are unilateral contracts, and the United States Constitution bans ex post facto laws. So, your policy will remain in force and be grandfathered in, or grandgenderlessed in.