Private Socialized Medicine fails in California

Interesting story on NPR today about how California’s insurance companies are raising rates for people who are not in jobs that provide insurance for them, although I’m sure those will be next.

The story may be viewed here (click). The key paragraph is this one:

So what does WellPoint have to say?  The company got the letter and is working on a formal response. In the meantime, the insurer issued a statement saying rates reflect rising costs of health care. “Unfortunately, in the weak economy many people who do not have health conditions are foregoing buying insurance,” the statement says. “This leaves fewer people, often with significantly greater medical needs, in the insured pool.”

In other words — the insurance plan depends on healthy people to pay the bills for unhealthy ones. Farther down in the story the spokesperson for the insurance say, in so many words, that people need to be required to join policy groups to spread the costs around.

That, my friends is socialized medicine. It’s nothing new, it is how insurance works.

With medical insurance costs rising as the cost of medical care rises, the people who feel healthy enough to gamble are dropping out, leaving the sick and the non-gamblers to pay their own bills.

What I find interesting is the lack of cheering from the anti-socialized medicine crowd over California’s situation. Market forces are coming to bear, people are declaring their freedom from socializing medical care, and those who actually get sick are having to face their responsibilities, not shift them off on the rest of us. All we need to do now is get rid of Medicare, make those slacker old people pay their own bills (or their equally slacker children, which is more likely) and life in America will be free and perfect once more!

Is that not what people who deride government health care plans call for?

Maybe not. What all this really means is that the rising cost of health care, coupled with the declining economy, is going to put the business model of private and corporate medical insurance into a death spiral. As families see their insurance rates go up to really scary numbers, $20,000 or so, and that’s with a $5,000 deductible, they’re going to realize that they can pay most of the costs of medical care themselves if they’re willing to assume the risk.

Which means insurance companies will get stuck with only the horrendously expensive patients, which they’ll not be able to pay for because there are no healthy people paying in. They’ll come crying to Congress for help, and unfortunately they’ll probably get it. All those bribes-er-campaign donations will come home to roost.

What SHOULD happen is they should be forced to go broke, or to have to cancel all single policies, either way creating a national emergency because then hospitals and doctors won’t have anyone paying their bills. That will finally force the nation to do what it should be doing now: Socialize health care with a national single payer plan. Everyone would pay in because they’d all have to, but everyone would get their bills paid.

We might as well. Wehn the insurance companies go broke, and when people without health insurance go broke, we’ll all pay their bills anyway because society absorbes their debts in the bankruptcy proceedings.

 The conservative thing to do, the practical thing to do, would be to forsee the problem now and take steps to avoid it, thus avoiding all the suffering and societal upheaval while achieving the same goal.

Will that happen? Sure, right about the time pigs fly.

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8 Responses to Private Socialized Medicine fails in California

  1. Michael Trujillo says:

    Charles, you said this so much better than I have been able to.

  2. Justme says:

    I have forgotten the number that was cited on TV news, but this company also reported a PROFIT of something like $3 BILLION. (I do think that’s about right, but it may not . . . .) I’ll go Googling and see if I can find the correct number.

    I just Googled and found some conflicting numbers. According to the San Francisco Chronicle, Well Point’s profit this year was $4.7 BILLION, or $9.88 per share. But the Wall Street Journal reports it was only $2.74 BILLION, or only $5.95 per share. The Journal also points out that Well Point’s profit increased from $331.4 million, or 65 cents a share, a year earlier.

    Regardless of which numbers are correct, either of those $$$ amounts is not bad for those wealthy folks who hold those stocks. (WSJ is one of Rupert Murdoch’s “fair and balanced” news organizations, so it’s hard to tell how accurate their numbers may be.)

    My big question is this: Why the Heck aren’t sensible people out there screaming bloody murder over this atrocity?

    I wonder what Hannity, Limbaugh, O’Reilly and the rest of that bunch will have to say?

  3. ctrentelman says:

    I’m wondering myself what the right wing screamers will say — after all, this is capitalism at its finest — the company reports $3 billion in profit (or $4.7 billion, whichever) but I am guessing that is a profit it HAS to make, so if it fails to make that profit, if it only makes a $1 billion profit, it screams disaster and raises its rates. That other $2- or $3 billion in profit that it didn’t make is probably already committed somewhere else — executive salaries, Bahamian vacations, future stock or corporate acquisitions, whatever.

    So Rush, Sean et al should be very happy to see capitalism in operation, especially when it means fewer God-fearing Americans subsidizing the health care of a few because the company has to raise its prices so high that thousands, if not millions, end up dropping it.

    Then, of course, the company can no longer afford to pay the medical bills of the clients that remain, thus hurting both the patients AND the medical industry — total breakdown of the medical finance system!!!

    . That’s capitalism at its rawest. I should think they would cheer, but I bet they just blame Obama.

  4. Hyrum says:

    So… let me see if I understand this whole thing… If an illegal alien waltzes over the border pregnant we will take her in (as taxpayers) and pay for the birth of the baby. And since the baby is now American… well, it would just be cruel to send the mother home… in fact… lets invite the father over as well because an American child needs both parents. And this is not considered socialized medicine? Or at least it tolerable socialized medicine? But when citizens of the US whom have paid taxes their whole lives get sick to the point that they need to see a doctor… THEN it’s bad? Hmmm… something is very skewed in this thinking. I beleive we need to review this view of ourselves.

  5. ctrentelman says:

    not quite sure what your point is, Hyrum. Are you saying that taxpayers should get medical care courtesy of the government as well?

    Fine with me. That’s single payer.

    What puzzles me is yur reference to illegal aliens, because eliminating illegal aliens will not, in any way shape or means, address the fact that private insurance companies are raising their rates because their own commercialized version of socialized medicine is in a death spiral.

    Really, apples and oranges here.

  6. flatlander100 says:

    Just came across the following, which seemed to me to nicely sum up the Republican congressional leadership’s position on health care and… well, pretty much everything now that a Democrat is in the White House. Enjoy.

  7. RoyT says:

    I listened to Senator Bennett explain his Health Care plan a few months ago. He made the point that we are all in this system whether we want to be or not. Eventually, practically everyone will need some health care. His plan required everyone to have insurance to prevent those willing to buy insurance from having to pay for those electing not to have insurance. When the Democrat’s plan called for everyone to have insurance, he found minor disagreements to take the Republican side and completely oppose it. As a conservative and one that has seen the family financial devastation caused by illness or accident, I support a system where everyone is required to have health insurance.

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