I am rather shocked that Congressional Republicans did not have an ACA replacement written and ready to go on day 1, but it’s here now. Scott and I were discussing the proposed changes, and he was all for making older pay more to allow younger people to pay less. Because, fairness.

That’s viewing insurance premiums in yearly increments instead of over an entire lifetime. ACA isn’t making younger people pay more for other older people. It is making younger people pay more so they can pay less as they age. The electric company has a level billing option often utilized by people on a fixed income. Instead of having a 150$ bill in winter and summer with 50$ bills in spring and autumn, you have a 100$ bill each month. If viewed as just April’s bill, yeah 100$ is high. But it isn’t like your extra 50$ is going to someone else’s electrical consumption. It’s paying for electricity that you are going to use for AC in August or heat in February.

Young people don’t get screwed in the deal, really. Over an average lifetime, they are going to pay about the same amount. It’s just level billed throughout their entire life. The only way you really get screwed in the ACA system is non-medical early death (a drawn out medical problem, covered by insurance, may well offset insurance premium prepayments). Spend fifteen years paying middle aged kinda healthy person premiums in your youth and then die in a plane crash … never attaining the offsetting bonus of not paying old people premiums. But, seriously, if you die in a plane crash and the biggest downer is the money you’ve essentially wasted on pre-paying health insurance … get some priorities!

Sure, current old people got a steal (same as the first social security payments — the recipient hadn’t spent decades paying into the fund). Old people paid young healthy people premiums forty years ago. They paid middle age kinda healthy people premiums twenty years ago. And maybe they paid a couple of old people premiums before ACA became law. But they’re not looking at paying twenty years of old people premiums. They get 10-20 more years of middle age kinda healthy people premiums. Middle age people get an advantage too — they paid their twenty years of cheap young healthy person premiums and have forty years of middle age kinda healthy people premiums.

 

Aside from the silliness of declaring the whole health care thing just harder than people think — which doesn’t give much credence to people, a lot of public discourse on healthcare tries to avoid sounding insensitive. But the challenge of health care is cost. Not routine costs – even if you do not believe preventative care can reduce long term expenditures, I think we can all agree that a couple of hundred dollars a year is nothing compared to the cost of chemo, or pills taken daily for decades. Arguing about preventative care is like trying to discuss the budget without addressing military spending or entitlements. Lot of people do it, but they’re by design unable to make significant impact.

The big question in the health care debate is how much money should be spend on keeping any one individual alive? I have a friend who had a premature baby (two, actually, but the first time she worked at a med school and basically had unlimited free services through the med school). She incurred neigh a quarter million dollars in bills during the difficult pregnancy. The baby – before he was a year old – had incurred more than a quarter mill himself. Now this was before the ACA removed lifetime insurance caps, and most plans had a million dollar limit. For someone accustomed to dealing with annual physicals and the occasional course of antibiotics, a million dollars seems beyond generous. For a nine month old kid who has already used up a quarter of his lifetime limit? Not so much.

From a purely economic health care perspective, the kid should have died. Even from a general economic perspective, it is statistically unlikely that any individual will contribute millions of dollars of excess value to society (i.e. my work may contribute to society, but I also extract from society). Yeah, there’s the black swan guy who invents computers or cures cancer. Or the whole chaos theory a guy who ran a traffic light and ran over someone’s grandmother prompted a young student to choose a medical degree. The med student identifies a cure for cancer … but would he have even entered into medicine if not for the car accident? But there’s no way to assign a value to an individual’s life before it is over.

Are we OK with letting someone’s premature child die? Are we OK with telling cancer patients that they either come up with a couple hundred grand or they an languish away at home?

And if we are not OK with heartlessness in the pursuit of fiscally rational decisions, how is anything other than universal public funded health care acceptable? Health care isn’t difficult, convincing people that their own values dictate public health care … well, that’s nearly impossible.

Maintaining the role of private insurance in healthcare is hard — in an area where it is impossible to act as a rational decision maker, capitalism in health care is difficult enough to manage. Adding a couple of layers of administrative costs makes it much worse. Having two companies looking to profit makes it much worse. Spending somebody else’s money isn’t a way to make customers cost conscious. Having a system that does not encourage price shopping — often times makes it impossible to price shop — is not a way to drive efficiency or reduce costs. Company paid insurance hid the true cost of private health care insurance … until recently when companies realized they could greatly restrict wage increases because they are paying so much more for health insurance. How many employees actually sat down and calculated if they would have been better off with a real raise than 0$ and whatever the premium increase was. You can see how much your employer spends on health care — I doubt that amount has gone up 1% of your salary in the past year, and a 1% annual raise isn’t spectacular.