Good day, family and friends!
Today, we start looking at litigation, insurance fraud, and special interest legislation.
Another component that has caused the cost of doing business for both physicians and insurance providers to skyrocket is runaway litigation. Over the last 30 - 35 years, the concepts of 'Personal Responsibility' and 'Reasonable Expectation' have been either perverted or completely discarded by personal injury attorneys. People who are grieving over a personal tragedy are being convinced by these ambulance-chasers that it will make them feel better to lash out at the deepest pockets they can find. Here are two recent examples of such spurious abuse of litigation:
1) Earlier this year, a grieving family in Montana filed suit against the parent company of Louisville Slugger because their son was killed by a line drive hit by a batter using one of their aluminum bats. The jury awarded the family $850,000.
2) A woman in Oklahoma has filed suit against Samsung and Sprint Nextel because a man who was distracted by a cellphone call ran a red light and broad-sided a car in the intersection, killing the woman's mother. This suit is pending.
But the most famous case of abusive litigation that really opened the flood gates is the case of Liebeck v. McDonald's Restaurants from 1994. In case you don't remember, this is the case where a 79-year-old woman who, due to her own actions, spilled hot McDonald's coffee in her lap. Thanks to her weasel of an attorney and the twelve idiots on the jury she received a judgment of $2.86 million dollars for 'comparative negligence'. To add insult to injury, her husband filed a separate suit against McDonald's for "loss of spousal duties" because his wife couldn't have sex while she recovered. McDonald's settled his suit out of court for another $150,000.
What do these cases have to do with the cost of healthcare? They are some of the most egregious examples of the courts throwing personal responsibility out the window. This attitude that people are no longer responsible for their own actions has spilled over into every aspect of our society...including healthcare. Because of this 'victim mentality', the cost of medical malpractice insurance coverage has gone crazy. Paying the out of control punitive damages being awarded in malpractice cases have severely increased the operating expenses of the malpractice insurance carriers. They pass this cost along to the physicians in the form of a six-fold increase in malpractice insurance premiums. In turn, this increase in the operating costs of a physician's practice results in higher overall costs to the consumer for every visit to a doctor's office. As with just about every other cost in this debate, there is a wide disparity in just how much of a physician's cost is malpractice insurance...between 19% and 27%, depending on which report you read.
Next time, we continue looking at the impact of litigation, insurance fraud, and special interest legislation on healthcare costs.
Until then, best regards...
© James P. Rice 2009
07 December 2009
Intermezzo - Copenhagen Climate Conference
WARNING! Today's post is a bit longer than usual.
Good day, family and friends.
Recently, when I asked a number of my friends and family to join a social group regarding the UN Climate Change Conference that begins today in Copenhagen, I received a terse chastisement from one of my friends accusing me of ignoring the facts and blindly supporting a conspiracy theorist. I replied to this friend with a summary of the facts I have uncovered in my own research and my own reasons for my position on this conference. When I re-read it, I thought it sounded pretty darn good (if I do say so myself!) and decided I would share it with the world through this blog. The only changes I've made is to change the voice from responding to specific allegation to being a narrative. So, here we go. Enjoy!
First, I have always believed as part of my Core Principles that it is humanity’s responsibility to be good stewards of the Earth. I believe we have a duty to ourselves to continue to advance our knowledge and exploit the resources of the Earth for that advancement, but that it must be done in such a way as to impact the ecology as minimally as possible so we can leave a planet for our children and grandchildren that is better than the one into which we were born. I believe that we are overdue for a technology upgrade in how we power our society and that it will take us completely away from fossil fuels, but I also believe that forcing our society into new energy sources before they are proven efficient, reliable, and cost-effective will prove disastrous.
Second, before you conclude that I am doing nothing but parroting the paranoid rhetoric of Alex Jones, you should know I have listened to him exactly once over the last ten years. It was late at night several months ago when I was driving back from San Antonio and needed to listen to something annoying to keep myself awake. Quite frankly, Alex Jones’ position on a particular topic never enters my mind one way or another when I am researching it.
Third, do I believe the climate of the Earth is changing? Yes I do. Is this climate change man-made? No. Even the most pessimistic climate reports (e.g. the UN’s IPCC and former VP Al Gore) have humanity contributing only 11% of the ‘greenhouse gases’ that are being blamed for the change in the planetary climate over the last 150 years. A look at the meteorological records going back to the early 19th century shows that, over the hundred years between 1900 and 2000, the average planetary temperature has risen 0.74 degrees Celsius (approximately 1.33 degrees Fahrenheit). That’s not 0.74 degrees every decade…that’s 0.74 degrees for the entire Century as opposed to the one degree per decade some climate change pundits claim. Not only that, but since the year 2000, the average planetary temperature has actually dropped by 0.11 degrees Celsius.
If humanity did not cause even this minimal increase in the Earth’s average temperature, then what did? Well, to counter the 2,000 scientific experts listed in the UN’s IPCC Report, there are nearly 30,000 experts from many different disciplines (meteorology, climatology, planetology, paleoclimatology, astronomy, and physics just to name a few) who have identified two primary causes:
1) the Earth is at the tail end of the warming period that followed the last ice age. This ‘mini ice age’ ran from the mid-15th century to the mid-19th century and has been identified as one of the principle catalysts for historic events such as the winter-related failure of Napoleon’s invasion of Russia and the Irish potato famine. In fact, archeologists and paleoclimatologists have determined that the average global temperature for 2000 was still cooler that the average global temperature of the year 1000; and
2) Over the last 60 years, solar activity has reached an 8,000 year high. In fact, it can now be demonstrated that the temperature increase in the last century has a more direct correlation with the sun’s irradiant output than with the level of CO2.
To be fair, I will concede that a handful (possibly a couple hundred) of the nearly 30,000 scientists are probably in the employ of ‘Big Oil’. But if you are going to dismiss their findings because of a small sub-group, then, to be intellectually honest, you must dismiss the results of the other side as well since 186 of the 2,000+ scientists listed as contributors of the IPCC report had to threaten to sue the UN to have their names removed because they disagreed with both the methods the IPCC used and the conclusions the IPCC published as ‘settled science’.
Fourth, while the concerns over the state of America’s sovereignty is usually the first concern listed by opponents of the Copenhagen conference, it is actually a summary of all the issues many people have with the draft of the proposed agreement that has been made public.
I have to concede here that I did make a mistake…one that many people have been making. The draft of what President Obama will be asked to sign at Copenhagen next week is not a treaty. Rather, it is a proposed global Accord. The UN committee that authored the accord stated they intentionally did it this way “to avoid the issues that prevented the Kyoto Treaty from being universally implemented.” The reason this distinction is important is that, as what happened with the Kyoto Treaty, Congress would have to ratify any treaty the President signed before it would be implemented by the U.S. With an accord, however, the President can implement it without ever consulting Congress through cabinet-level policy changes and Executive Orders. President Obama (as did the previous two administrations) has clearly demonstrated that he is more than willing to use these tools to get around that pesky Constitution thing.
It has been stated that, “anyone following the debate over signing this treaty should be following the issues of who is required to participate, what sanctions should be imposed, what levels of compliance are practical and attainable and other realistic concerns, not whether we are signing over our government to a world power.” With the exception of fringe elements such as Alex Jones’ followers, that is what most people opposing the accord are doing. These concerns were first brought to my attention when I saw an interview with Lord Christopher Monckton. Lord Monckton is a respected member of the British House of Lords and a self-educated expert on global climate change. As a member of Parliament, he received an advance copy of the accord and proceeded to go through it with a fine-toothed comb. Here are some of the highlights:
• The accord establishes a redistribution of wealth from industrial nations to third-world nations in the name of ‘Reparations of Climate Debt’;
• It establishes an “internationally interlocking bureaucratic entity for the purpose of governing the terms of the accord, collecting up to 2% of the GDP of industrial nations to be redistributed to un- and underdeveloped nations, and to enforce the terms of the accord by whatever means necessary”;
• It establishes a interlocking infrastructure of technical panels with the right to intervene in the economy of any nation, in spite of the laws or government of that nation;
• Defines industrially-generated CO2 as the main cause of Global Climate Change;
• Sets CO2 reduction standards for industrial nations that can only result in the reduction in the standard of living for that nation while having absolutely no effect on Global Climate Change. (When the numbers are crunched, it shows that the standards set by this accord will result in only a 1% reduction in CO2 in approximately 175 years!);
Basically, this accord will have absolutely no impact on the global climate, punishes developed nations for daring to have the audacity to advance humanity, will only serve to establish the framework for a fledgling global bureaucracy structured under Marxist principles, and will waste billions (if not trillions) of dollars that could be better used by the private sector to research, perfect, and implement the new forms of clean energy we desperately need. Remember, most of the scientists the UN are leaning on for the 'settled science' of global warming were screaming that we were about to enter a new ice age only 33 years ago!
Finally, even if this is a treaty and not an accord, President Obama needs to make a statement to the world that he is not a ‘sheeple’ willing to go along with anything just so the World will think nice things about him. He needs to send a clear message that he will only sign on with a plan that will have a positive impact on all the people of the World, and that he honors and respects the Constitution…the document that has brought freedom, opportunity, and prosperity to more people than anything else in the history of the world…and is truly the First Defender of the Constitution. This is why he must not sign the Copenhagen Accord.
While I do believe we need to continue to monitor and study the climate of the Earth, I firmly believe that the minor warming trend we experienced over the last century is part of a natural cycle. I believe that climatology is part of a greater need to study, understand, and protect the entire ecosphere of our planet, and that money currently being wasted on ‘snake oil’ schemes to ‘fix the climate’ would better serve humanity and the Earth by being applied to research in alternative energy, alternative agricultural methods, oceanic research, extra-planetary exploration, and in encouraging ‘positive’ land stewardship habits in people instead of trying to legislate them into submission.
I encourage everyone of you to call the White House switchboard at (202) 456-1414 and politely let President Obama know what we expect of him when he joins the other heads of state in Copenhagen next week.
Best regards....
© James P. Rice 2009
Good day, family and friends.
Recently, when I asked a number of my friends and family to join a social group regarding the UN Climate Change Conference that begins today in Copenhagen, I received a terse chastisement from one of my friends accusing me of ignoring the facts and blindly supporting a conspiracy theorist. I replied to this friend with a summary of the facts I have uncovered in my own research and my own reasons for my position on this conference. When I re-read it, I thought it sounded pretty darn good (if I do say so myself!) and decided I would share it with the world through this blog. The only changes I've made is to change the voice from responding to specific allegation to being a narrative. So, here we go. Enjoy!
First, I have always believed as part of my Core Principles that it is humanity’s responsibility to be good stewards of the Earth. I believe we have a duty to ourselves to continue to advance our knowledge and exploit the resources of the Earth for that advancement, but that it must be done in such a way as to impact the ecology as minimally as possible so we can leave a planet for our children and grandchildren that is better than the one into which we were born. I believe that we are overdue for a technology upgrade in how we power our society and that it will take us completely away from fossil fuels, but I also believe that forcing our society into new energy sources before they are proven efficient, reliable, and cost-effective will prove disastrous.
Second, before you conclude that I am doing nothing but parroting the paranoid rhetoric of Alex Jones, you should know I have listened to him exactly once over the last ten years. It was late at night several months ago when I was driving back from San Antonio and needed to listen to something annoying to keep myself awake. Quite frankly, Alex Jones’ position on a particular topic never enters my mind one way or another when I am researching it.
Third, do I believe the climate of the Earth is changing? Yes I do. Is this climate change man-made? No. Even the most pessimistic climate reports (e.g. the UN’s IPCC and former VP Al Gore) have humanity contributing only 11% of the ‘greenhouse gases’ that are being blamed for the change in the planetary climate over the last 150 years. A look at the meteorological records going back to the early 19th century shows that, over the hundred years between 1900 and 2000, the average planetary temperature has risen 0.74 degrees Celsius (approximately 1.33 degrees Fahrenheit). That’s not 0.74 degrees every decade…that’s 0.74 degrees for the entire Century as opposed to the one degree per decade some climate change pundits claim. Not only that, but since the year 2000, the average planetary temperature has actually dropped by 0.11 degrees Celsius.
If humanity did not cause even this minimal increase in the Earth’s average temperature, then what did? Well, to counter the 2,000 scientific experts listed in the UN’s IPCC Report, there are nearly 30,000 experts from many different disciplines (meteorology, climatology, planetology, paleoclimatology, astronomy, and physics just to name a few) who have identified two primary causes:
1) the Earth is at the tail end of the warming period that followed the last ice age. This ‘mini ice age’ ran from the mid-15th century to the mid-19th century and has been identified as one of the principle catalysts for historic events such as the winter-related failure of Napoleon’s invasion of Russia and the Irish potato famine. In fact, archeologists and paleoclimatologists have determined that the average global temperature for 2000 was still cooler that the average global temperature of the year 1000; and
2) Over the last 60 years, solar activity has reached an 8,000 year high. In fact, it can now be demonstrated that the temperature increase in the last century has a more direct correlation with the sun’s irradiant output than with the level of CO2.
To be fair, I will concede that a handful (possibly a couple hundred) of the nearly 30,000 scientists are probably in the employ of ‘Big Oil’. But if you are going to dismiss their findings because of a small sub-group, then, to be intellectually honest, you must dismiss the results of the other side as well since 186 of the 2,000+ scientists listed as contributors of the IPCC report had to threaten to sue the UN to have their names removed because they disagreed with both the methods the IPCC used and the conclusions the IPCC published as ‘settled science’.
Fourth, while the concerns over the state of America’s sovereignty is usually the first concern listed by opponents of the Copenhagen conference, it is actually a summary of all the issues many people have with the draft of the proposed agreement that has been made public.
I have to concede here that I did make a mistake…one that many people have been making. The draft of what President Obama will be asked to sign at Copenhagen next week is not a treaty. Rather, it is a proposed global Accord. The UN committee that authored the accord stated they intentionally did it this way “to avoid the issues that prevented the Kyoto Treaty from being universally implemented.” The reason this distinction is important is that, as what happened with the Kyoto Treaty, Congress would have to ratify any treaty the President signed before it would be implemented by the U.S. With an accord, however, the President can implement it without ever consulting Congress through cabinet-level policy changes and Executive Orders. President Obama (as did the previous two administrations) has clearly demonstrated that he is more than willing to use these tools to get around that pesky Constitution thing.
It has been stated that, “anyone following the debate over signing this treaty should be following the issues of who is required to participate, what sanctions should be imposed, what levels of compliance are practical and attainable and other realistic concerns, not whether we are signing over our government to a world power.” With the exception of fringe elements such as Alex Jones’ followers, that is what most people opposing the accord are doing. These concerns were first brought to my attention when I saw an interview with Lord Christopher Monckton. Lord Monckton is a respected member of the British House of Lords and a self-educated expert on global climate change. As a member of Parliament, he received an advance copy of the accord and proceeded to go through it with a fine-toothed comb. Here are some of the highlights:
• The accord establishes a redistribution of wealth from industrial nations to third-world nations in the name of ‘Reparations of Climate Debt’;
• It establishes an “internationally interlocking bureaucratic entity for the purpose of governing the terms of the accord, collecting up to 2% of the GDP of industrial nations to be redistributed to un- and underdeveloped nations, and to enforce the terms of the accord by whatever means necessary”;
• It establishes a interlocking infrastructure of technical panels with the right to intervene in the economy of any nation, in spite of the laws or government of that nation;
• Defines industrially-generated CO2 as the main cause of Global Climate Change;
• Sets CO2 reduction standards for industrial nations that can only result in the reduction in the standard of living for that nation while having absolutely no effect on Global Climate Change. (When the numbers are crunched, it shows that the standards set by this accord will result in only a 1% reduction in CO2 in approximately 175 years!);
Basically, this accord will have absolutely no impact on the global climate, punishes developed nations for daring to have the audacity to advance humanity, will only serve to establish the framework for a fledgling global bureaucracy structured under Marxist principles, and will waste billions (if not trillions) of dollars that could be better used by the private sector to research, perfect, and implement the new forms of clean energy we desperately need. Remember, most of the scientists the UN are leaning on for the 'settled science' of global warming were screaming that we were about to enter a new ice age only 33 years ago!
Finally, even if this is a treaty and not an accord, President Obama needs to make a statement to the world that he is not a ‘sheeple’ willing to go along with anything just so the World will think nice things about him. He needs to send a clear message that he will only sign on with a plan that will have a positive impact on all the people of the World, and that he honors and respects the Constitution…the document that has brought freedom, opportunity, and prosperity to more people than anything else in the history of the world…and is truly the First Defender of the Constitution. This is why he must not sign the Copenhagen Accord.
While I do believe we need to continue to monitor and study the climate of the Earth, I firmly believe that the minor warming trend we experienced over the last century is part of a natural cycle. I believe that climatology is part of a greater need to study, understand, and protect the entire ecosphere of our planet, and that money currently being wasted on ‘snake oil’ schemes to ‘fix the climate’ would better serve humanity and the Earth by being applied to research in alternative energy, alternative agricultural methods, oceanic research, extra-planetary exploration, and in encouraging ‘positive’ land stewardship habits in people instead of trying to legislate them into submission.
I encourage everyone of you to call the White House switchboard at (202) 456-1414 and politely let President Obama know what we expect of him when he joins the other heads of state in Copenhagen next week.
Best regards....
© James P. Rice 2009
30 November 2009
Healthcare in America: Affordability, pt 3
Good day, family and friends!
Lets continue our look at the costs associated with healthcare insurance...
Thanks to knee-jerk reactions by both the courts and the insurance companies to the actions of a handful of miscreants, modern healthcare insurance policies are engorged with fine print designed to severely limit what the policy covers while balancing the need to provide a value to the customer with that of making a profit for the company's shareholders. Unfortunately, all this fine print creates a burden on everyone...from the customers who have to track what is and isn't covered, to the medical providers who have the additional cost of hiring dedicated specialists to handle the jungle (excuse me...'rain forest') of policies and paperwork created by the fine print, to the insurance companies themselves who are also saddled with the costs of having entire departments dedicated to handling the paperwork and interpreting the policies created by the fine print. Depending on which study you read, between 14% and 32% of the cost of healthcare are the administrative costs associated with the fine print.
Believe me, if the insurance companies thought it would be safe to operate without the fine print and its concomitant costs, they would scrap it in a heartbeat. After all, as with any publicly-traded company, they have a duty to those investors who hold shares of the company's stock to be as efficient and profitable as possible. And do you honestly believe that doctors enjoy spending any part of the capital of their practice on the clerical necessities of insurance claims?
It will probably surprise most of you that the premiums paid for insurance policies make up only a portion of an insurance company's capital. The rest of it comes from the sale of stock in the company and from investments the company makes with its capital on hand. This is why making certain the shareholders get some sort of return on their investment is so important. If the company makes no profit, there are no dividends for the stockholders. If there are no dividends, there will be no new stockholders and existing ones will begin to divest themselves of their shares. The end result is that, without the working capital provided by investors, the insurance companies will go out of business.
This is the point where I expect to hear politicians and progressives start whining about "the obscene profits insurance companies make on the suffering of the American public." How does one define "obscene profit"? Currently, there are just over 1,300 insurance companies operating in the United States that offer some sort of healthcare policy. The average profit for all of these companies in 2008 was 2.2%.
*GASP!* How obscene!
It gets even worse. The 16 largest insurance companies that account for right at 80% of the net worth of the insurance industry averaged a whopping 3.4% profit, with the single highest profit in the healthcare insurance industry for 2009 being (drumroll, please) 4.6%.
O! The Humanity! Say it isn't so!
Let's compare that to the average profit margin of...oooh, let's say...professional politicians. These fine, upstanding, selfless individuals make a profit of 100%. Or how about that planetary champion of the climate, Al Gore. His projected profit for 2009 for his 'humanitarian' efforts to fight 'global climate change' is 290%. If the 'Cap and Trade' Bill is signed and put into effect in the next 6 months, then Vice President Gore stands to make a profit of nearly 500% in 2010.
So, which profits are the most obscene?
Next time: Insurance Fraud and special interest legislation...litigation's ugly stepsisters.
Until then, best regards...
© James P. Rice 2009
Lets continue our look at the costs associated with healthcare insurance...
Thanks to knee-jerk reactions by both the courts and the insurance companies to the actions of a handful of miscreants, modern healthcare insurance policies are engorged with fine print designed to severely limit what the policy covers while balancing the need to provide a value to the customer with that of making a profit for the company's shareholders. Unfortunately, all this fine print creates a burden on everyone...from the customers who have to track what is and isn't covered, to the medical providers who have the additional cost of hiring dedicated specialists to handle the jungle (excuse me...'rain forest') of policies and paperwork created by the fine print, to the insurance companies themselves who are also saddled with the costs of having entire departments dedicated to handling the paperwork and interpreting the policies created by the fine print. Depending on which study you read, between 14% and 32% of the cost of healthcare are the administrative costs associated with the fine print.
Believe me, if the insurance companies thought it would be safe to operate without the fine print and its concomitant costs, they would scrap it in a heartbeat. After all, as with any publicly-traded company, they have a duty to those investors who hold shares of the company's stock to be as efficient and profitable as possible. And do you honestly believe that doctors enjoy spending any part of the capital of their practice on the clerical necessities of insurance claims?
It will probably surprise most of you that the premiums paid for insurance policies make up only a portion of an insurance company's capital. The rest of it comes from the sale of stock in the company and from investments the company makes with its capital on hand. This is why making certain the shareholders get some sort of return on their investment is so important. If the company makes no profit, there are no dividends for the stockholders. If there are no dividends, there will be no new stockholders and existing ones will begin to divest themselves of their shares. The end result is that, without the working capital provided by investors, the insurance companies will go out of business.
This is the point where I expect to hear politicians and progressives start whining about "the obscene profits insurance companies make on the suffering of the American public." How does one define "obscene profit"? Currently, there are just over 1,300 insurance companies operating in the United States that offer some sort of healthcare policy. The average profit for all of these companies in 2008 was 2.2%.
*GASP!* How obscene!
It gets even worse. The 16 largest insurance companies that account for right at 80% of the net worth of the insurance industry averaged a whopping 3.4% profit, with the single highest profit in the healthcare insurance industry for 2009 being (drumroll, please) 4.6%.
O! The Humanity! Say it isn't so!
Let's compare that to the average profit margin of...oooh, let's say...professional politicians. These fine, upstanding, selfless individuals make a profit of 100%. Or how about that planetary champion of the climate, Al Gore. His projected profit for 2009 for his 'humanitarian' efforts to fight 'global climate change' is 290%. If the 'Cap and Trade' Bill is signed and put into effect in the next 6 months, then Vice President Gore stands to make a profit of nearly 500% in 2010.
So, which profits are the most obscene?
Next time: Insurance Fraud and special interest legislation...litigation's ugly stepsisters.
Until then, best regards...
© James P. Rice 2009
29 November 2009
Healthcare in America: Affordability, pt. 2
Good day, family and friends!
Last time, we established that most medical professionals are working hard to earn a living in what they believe to be their true vocation. Quite frankly, anyone who chooses to pursue a medical career in our overly-litigious society deserves a warm round of applause and a hearty pat on the back.
Now, to continue with the analysis...
The second component we have to look at when asking why healthcare costs what it costs is insurance. Thanks to a concerted effort by certain politicians, a growing entitlement mentality spreading through our society, and a very few bad apples in the insurance industry, healthcare insurers have been painted as demons in the healthcare debate. The biggest reason for this is that most modern Americans have a skewed vision of exactly what insurance is.
As a result of the creeping efforts of the Progressive movement over the last 75 to 80 years, most Americans now view their insurance premiums as payments for entitlements. They believe that, as long a their monthly payment is made, they are entitled to access to any healthcare they desire, no matter the cost or availability, as long as they also pay their token co-payment and a small deductible. This warped view of insurance is why many people are unhappy with their healthcare coverage.
The truth of the matter is that insurance is nothing more than a legal form of gambling. When your premium is paid, whether by your employer or out of your own pocket, a wager is placed with the insurance company (the House) that you are going to need medical assistance and that they, within the 'rules' of the wager, will pay for all or part of it. When they accept your wager (premium), the House (insurance company) is betting that you will remain healthy and hale and won't need said medical services. Unfortunately, most bettors (you the customer) let themselves be distracted by the bright shiny lights that is the marketing campaign for the insurance policy and fail to actually read and understand the rules of the wager (i.e. the fine print). Additionally, most bettors also forget the first rule of gambling: "The odds are always in favor of the House."
To be fair, most of that fine print is as complex and convoluted as the worst example of an ambulance-chasing shyster could make it, so it does take a considerable investment in time for the average American to read through and understand what they are getting. Unfortunately, all that fine print evolved over time in response to economic pressures placed on the insurance companies by gradual changes in litigation. This is where some of those 'bad apples' come in; unscrupulous men who would describe a policy to a potential customer as being one thing when it was something completely different just so they could make a sale. Thus, the actions of a few resulted in the implementation of policies and procedures within the insurance industry that were designed to minimize the damage caused by future bad apples and protect the interests of their shareholders. In other words, the only people who won at that table were the lawyers.
Next time, we continue to look at the costs involved with healthcare insurance.
Until then, best regards...
© James P. Rice 2009
Last time, we established that most medical professionals are working hard to earn a living in what they believe to be their true vocation. Quite frankly, anyone who chooses to pursue a medical career in our overly-litigious society deserves a warm round of applause and a hearty pat on the back.
Now, to continue with the analysis...
The second component we have to look at when asking why healthcare costs what it costs is insurance. Thanks to a concerted effort by certain politicians, a growing entitlement mentality spreading through our society, and a very few bad apples in the insurance industry, healthcare insurers have been painted as demons in the healthcare debate. The biggest reason for this is that most modern Americans have a skewed vision of exactly what insurance is.
As a result of the creeping efforts of the Progressive movement over the last 75 to 80 years, most Americans now view their insurance premiums as payments for entitlements. They believe that, as long a their monthly payment is made, they are entitled to access to any healthcare they desire, no matter the cost or availability, as long as they also pay their token co-payment and a small deductible. This warped view of insurance is why many people are unhappy with their healthcare coverage.
The truth of the matter is that insurance is nothing more than a legal form of gambling. When your premium is paid, whether by your employer or out of your own pocket, a wager is placed with the insurance company (the House) that you are going to need medical assistance and that they, within the 'rules' of the wager, will pay for all or part of it. When they accept your wager (premium), the House (insurance company) is betting that you will remain healthy and hale and won't need said medical services. Unfortunately, most bettors (you the customer) let themselves be distracted by the bright shiny lights that is the marketing campaign for the insurance policy and fail to actually read and understand the rules of the wager (i.e. the fine print). Additionally, most bettors also forget the first rule of gambling: "The odds are always in favor of the House."
To be fair, most of that fine print is as complex and convoluted as the worst example of an ambulance-chasing shyster could make it, so it does take a considerable investment in time for the average American to read through and understand what they are getting. Unfortunately, all that fine print evolved over time in response to economic pressures placed on the insurance companies by gradual changes in litigation. This is where some of those 'bad apples' come in; unscrupulous men who would describe a policy to a potential customer as being one thing when it was something completely different just so they could make a sale. Thus, the actions of a few resulted in the implementation of policies and procedures within the insurance industry that were designed to minimize the damage caused by future bad apples and protect the interests of their shareholders. In other words, the only people who won at that table were the lawyers.
Next time, we continue to look at the costs involved with healthcare insurance.
Until then, best regards...
© James P. Rice 2009
21 November 2009
Healthcare in America: Affordability, pt. 1
Good day, family and friends!
Well, its been over 2 months since my last post. For those of you who have been following this series, I apologize. However, I receive no compensation at all for my blog and activities that pay the bills must come first.
As I started looking into the affordability of healthcare in America, the question I started with was, "why does it cost what it costs?" There are as many different opinions as to 'why' as there are corrupt politicians in government. Some have claimed that costs are set and controlled in secret by a consortium of medical insurance corporations and pharmaceutical companies with a goal of padding the bottom line. Some claim that the healthcare providers themselves are just greedy individuals who are demanding every dime the traffic will bear. President Obama even went so far as to suggest that physicians are performing unnecessary surgeries in order to collect higher fees from MedicAid/MediCare. In fact, the truth is that modern medical technology is simply very expensive to develop, learn, acquire, and maintain, and that rampant insurance fraud and out-of-control litigation makes healthcare coverage prohibitive for the underwriters.
So, let's start with the physicians. Most physicians start their careers at least $200,000 in debt from their education. Additionally, the average start-up cost for a new medical clinic for a General Practitioner is between $300K and $500K. If the clinic is for a medical specialty (e.g.: Endocrinology or Orthopedic Surgery), add another $200K - $300K. This means that a new doctor opening a new clinic incurs between $300K and $800K in additional debt before they ever see a patient. This plus the desire to have access to a pool of experience causes most new physicians fresh out of their residency to become employees of an established clinic.
While it is true that these highly-trained medical employees usually do make a salary in the low six-figures, they earn every penny of it. These men and women are usually the ones pulling the long and undesirable shifts. Most averaging 68 hours of work per week and only 8 days total of vacation in the first five years after they complete their residency. These new members of the clinic are usually the ones on call during the holidays. Basically, they work hard to establish themselves with their patients and the local hospitals at which they have privileges. In other words, they are 'paying their dues.' On top of that, most physicians spend an average of 36 hours per year in additional training on new procedures, equipment, and medications.
In addition to the cost of employing these medical professionals, the clinics themselves also have a staff of highly-trained nurses, physicians' assistants, and medical receptionists/clerks to pay. Their overhead also includes items such as the facilities themselves, routine medical equipment maintenance, cleaning crews that specialize in medical facilities, and medical/laboratory courier services. Finally, they usually have at least two medical billing specialists just to deal with the complexities of the plethora of insurance options available to their patients. After all that, most medical clinics (with the exception of clinics specializing in 'elective' procedures) barely clear a profit of 6% at the end of the year. Not exactly an easy way to get rich quick, is it.
Next time, I'll look at what goes into the cost of healthcare insurance and address the abominable suggestion made by the President.
Until then, best regards...
© James P. Rice 2009
Well, its been over 2 months since my last post. For those of you who have been following this series, I apologize. However, I receive no compensation at all for my blog and activities that pay the bills must come first.
As I started looking into the affordability of healthcare in America, the question I started with was, "why does it cost what it costs?" There are as many different opinions as to 'why' as there are corrupt politicians in government. Some have claimed that costs are set and controlled in secret by a consortium of medical insurance corporations and pharmaceutical companies with a goal of padding the bottom line. Some claim that the healthcare providers themselves are just greedy individuals who are demanding every dime the traffic will bear. President Obama even went so far as to suggest that physicians are performing unnecessary surgeries in order to collect higher fees from MedicAid/MediCare. In fact, the truth is that modern medical technology is simply very expensive to develop, learn, acquire, and maintain, and that rampant insurance fraud and out-of-control litigation makes healthcare coverage prohibitive for the underwriters.
So, let's start with the physicians. Most physicians start their careers at least $200,000 in debt from their education. Additionally, the average start-up cost for a new medical clinic for a General Practitioner is between $300K and $500K. If the clinic is for a medical specialty (e.g.: Endocrinology or Orthopedic Surgery), add another $200K - $300K. This means that a new doctor opening a new clinic incurs between $300K and $800K in additional debt before they ever see a patient. This plus the desire to have access to a pool of experience causes most new physicians fresh out of their residency to become employees of an established clinic.
While it is true that these highly-trained medical employees usually do make a salary in the low six-figures, they earn every penny of it. These men and women are usually the ones pulling the long and undesirable shifts. Most averaging 68 hours of work per week and only 8 days total of vacation in the first five years after they complete their residency. These new members of the clinic are usually the ones on call during the holidays. Basically, they work hard to establish themselves with their patients and the local hospitals at which they have privileges. In other words, they are 'paying their dues.' On top of that, most physicians spend an average of 36 hours per year in additional training on new procedures, equipment, and medications.
In addition to the cost of employing these medical professionals, the clinics themselves also have a staff of highly-trained nurses, physicians' assistants, and medical receptionists/clerks to pay. Their overhead also includes items such as the facilities themselves, routine medical equipment maintenance, cleaning crews that specialize in medical facilities, and medical/laboratory courier services. Finally, they usually have at least two medical billing specialists just to deal with the complexities of the plethora of insurance options available to their patients. After all that, most medical clinics (with the exception of clinics specializing in 'elective' procedures) barely clear a profit of 6% at the end of the year. Not exactly an easy way to get rich quick, is it.
Next time, I'll look at what goes into the cost of healthcare insurance and address the abominable suggestion made by the President.
Until then, best regards...
© James P. Rice 2009
Subscribe to:
Posts (Atom)