Health-care debate with J.E. Hill, part 3

J.E. Hill's responses to previous statements made by me:

JCB's previous statement:

There are no direct subsidies to the health-insurance companies, as far as I know. The subsidies I was referring to are the enormous sums of money paid to health-care providers by Medicare, Medicaid, and other similar programs. The reason for the huge cost and spending increases we're seeing in the health-care arena is the market distortions caused primarily by the government subsidies, as well as by various ill-advised regulations.

Hill's response:

That's not what you said or "referred to". I'll remind you: "However, I would say that it is among the most heavily-regulated/subsidized."

As a matter of fact, the health-insurance industry doesn't receive one cent of subsidy from the government.

The "subsidies" you are referring to are not subsidies either. They are payment for services. There is a big difference. A subsidy is monetary assistance granted by the government to person or private commercial enterprise, such as the Community Development Block Grant, or farm subsidies where the government gets nothing in return. In this case there are services rendered and that what is being paid for.

So, the health-insurance industry is not  subsidized contrary to your previously statement.

Correct?   Yes or no.

JCB's previous statement:

http://www.newsweek.com/id/202015/page/1

"A new report from Obama's own Council of Economic Advisers shows why controlling health costs is so important. Since 1975, annual health spending per person, adjusted for inflation, has grown 2.1 percentage points faster than overall economic growth per person. If this trend continues, the CEA projects that

* Health spending, which was 5 percent of the economy (gross domestic product) in 1960 and is reckoned at almost 18 percent today, would grow to 34 percent of GDP by 2040 -- a third of the economy.

* Medicare and Medicaid, the government insurance programs for the elderly and poor, would increase from 6 percent of GDP now to 15 percent in 2040 -- roughly equal to three-quarters of present federal spending.

* Employer-paid insurance premiums for family coverage, which grew 85 percent in inflation-adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040 (all figures in "constant 2008 dollars"). The huge costs would force employers to reduce take-home pay."

The Goldhill article I mentioned in a previous e-mail (i.e., the one you said you didn't want to read) provides good explanations of the nature of these many of these distortions:

http://tinyurl.com/yendgv9

As Goldhill points out, "...it is no coincidence that the great inflation in health-care costs began soon after [Medicare and Medicaid were created in 1965]. "

Your explanation, on the other hand, is that costs have increased due to unbridled greed on the part of the health-care industry, including, presumably, the health-insurance industry. (At least that's my understanding of your view. Please correct me if I've mischaracterized it in any way.) If that's the case, why aren't we seeing similarly skyrocketing costs in most non-health-care-related industries?

Hill's response:

Oh, you mean like the financial sector? Greed is certainly a factor, but probably more so is the fact that people get sick more often than they buy cars. The biggest factor is that health insurance is it's own worst enemy. By reducing their client pool by rejecting claims, they have to keep increasing premiums to keep the profits rolling in and Wall Street happy.

JCB's previous statement:

Are those industries simply less greedy? Why would they be? What is it about health care that attracts unusually greedy people? Also, why wouldn't cost increases be even worse in industries that are less heavily bridled (i.e., less regulated) than health care? Take veterinary care, for example. I think most people would agree that veterinary care is far less regulated than health care. Americans love their pets almost as much as they love their friends and relatives. Even more so, in many cases. So why aren't we seeing even more serious cost increases in veterinary care than we are in health care?

Hill's response:

Not a real good example. If you really want me to take the time to deconstruct this I will, but it's really a waste of time to do so.

JCB's previous statement:

Or, consider forms of insurance other than health insurance. If greed is causing the price increases we're seeing in health insurance, why is it that we aren't experiencing similarly mind-boggling increases in premiums for life, homeowner's, or auto insurance? Are the non-health-care-related insurance companies less greedy for some reason?

Hill's response:

Oh, my homeowners insurance has been going up...about 10% a year and never a claim. But the short answer is it's all actuarial and (this is very important) they all have to compete for my business and I can switch companies anytime I want. Competition is a wonderful thing. This is why the health-care industry don't want it from the government or other insurers. But if you have claims or are a bad risk, they'll still insure you but it'll cost an arm and a leg. With health-insurance, I don't have choices. If you were just asking this because you really didn't get this part, I am not so sure we need to continue. I don't mean to be abrupt, but this is really basic stuff.

It really seems like your big issue is with government regulations, since subsidies are now off the table.