Health Insurance Is a Racket

People who get insurance through their jobs often think the premiums deducted from their paychecks are the entire cost of their insurance.  Or, they might dimly understand that their employer chips in part of the cost, too.

But the reality is something else entirely.

This guy explains it pretty well. Note that he’s talking about his own employee benefit health insurance:

My family’s generous health insurance costs about $20,000 a year, of which we pay only $4,000 in premiums. The rest is subsidized by taxpayers. You read that right. Like virtually everyone else on my block who isn’t old enough for Medicare or employed by the government, my family is covered by private health insurance subsidized by taxpayers at a stupendous public cost. Well over 90% of white households earning over the white median income (about $75,000carried health insurance even before the Affordable Care Act. White socialism is nice if you can get it.

Companies can deduct the cost of their employees’ health insurance while employees are not required to report that benefit as income. That results in roughly a $400 billion annual transfer of funds from state and federal treasuries to insurers to provide coverage for the Americans least in need of assistance. This is one of the defining features of white socialism, the most generous benefits go to those who are best suited to provide for themselves.

This has been going on since the post World War II years, and because The System hides the real cost of insurance from most Americans, they have no idea how expensive it really is.

There’s a thing called the Milliman Medical Index that figures out how much health insurance costs. “In 2016, the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $25,826,” the Milliman Medical Index says. And this was the lowest increase in premium cost they’ve seen for many years. The lowest, mind you.

So how come everyone was squawking about insurance going up last year? Milliman noted that employees share of cost took a leap last year, pushing up their health care paycheck deductions while employers gave themselves a break. If you were paying for private insurance purchased on an exchange, I understand that the insurance companies decided to crank up their prices for this year because they’d been lowballing in previous years.

In other words, Obamacare didn’t do anything to make insurance more expensive. This was the insurance companies’ doing, or your employer, or both.

It gets better. It’s hard to find anyone who actually likes the Republican’s Obamacare replacement plan. But the plan has one enthusiastic supporter — Anthem, the country’s second largest insurer. Here’s why.

Anthem, which is based in Indiana, is already the largest insurer in California, Kentucky, Virginia and elsewhere. Two years ago, its chief executive, Joseph Swedish, made a big bet. He decided to put public pressure on Cigna, another major insurer, to accept a merger. Eventually, Swedish succeeded, and Anthem agreed to pay $48 billion to buy its rival.

But the Obama administration’s Justice Department filed suit against the merger, arguing that it would force consumers to pay higher prices. Last month, a federal judge agreed and blocked the merger. Cigna isn’t happy with the deal anymore either and has filed a $14 billion lawsuit against Anthem. None of it makes Swedish look good.

Anthem’s best remaining hope for the deal is probably to persuade the Trump administration to take a different view of the merger and unblock it.

Against this backdrop, Swedish wrote a carefully worded letter last week to Congress praising the Republican health bill. He stopped short of supporting the entire bill, as Jordan Weissmann of Slate has noted. Rather, Swedish lauded a few provisions (which would clearly help Anthem’s bottom line) and offered enough kind words that the White House could claim Anthem supported the bill.

“The time to act is now,” Swedish wrote. The bill, he added, “will ensure more affordable health plan choices for consumers in the short term.” More objective evaluators of the bill — like the Congressional Budget Office — are less sanguine.

Regardless of its accuracy, though, the letter seemed to make the White House happy. “Progress on repeal & replace: Major insurer supportive,” Kellyanne Conway tweeted, linking to Politico’s story about the letter.

More significantly, President Trump and Tom Price, the Health and Human Services secretary, granted Swedish a private meeting this week. At it, Swedish lobbied for changes to the bill that would benefit Anthem, according to reports in Bloomberg and Modern Healthcare.

Anthem’s chief financial officer, John Gallina, all but bragged the next day at an industry conference about the meeting’s success: “We feel very good, very encouraged, by the fact that the president and his team are listening and actually making changes based on feedback that the industry is providing.”

Translation: We’re going to kiss Trump’s ass, and he’ll see to it we get our merger.

Of course, health care itself is expensive. There are few more naive than a young person who has never had to pay a hospital bill. Such as:

It’s lunchtime at the Main Street Grill. The place has a rusted metal sign swinging above the front door. There’s a TV that plays Fox News a lot. On the wall, there’s a sign from the original Ellaville High School and photos of teens who worked here before going off to the military.

Blake Yelverton is taking a break with a burger that doesn’t cut any corners. Cheese and bacon and everything. He’s 23, a burly young man with a big red beard, and he works on his father’s cow farm.

“I don’t believe it’s the federal government’s job to provide health care,” he said. “It’s communism, socialism anyway.”

Yelverton hopes Trump trashes the whole thing, and he’s not too fond of the GOP plan being discussed in Congress either. “They’re doing a lesser evil of Obamacare,” he said.

His insurance?

“I’m on my parents’ plan,” he said.

So, Yelverton, it turns out, benefits from Obamacare. That’s because the law allows parents to keep kids on their insurance until age 26 — a widely-popular element of Barack Obama’s signature health law that Republicans intend to keep in their replacement plan.

Confronted with that information, he pauses for a moment.

“I haven’t been to the doctor in four or five years,” he said.

The young folks often don’t see the point of insurance because they have absolutely no idea how ruinously expensive medical care is. This kid has no clue that only the extremely wealthy can pay for it out of their own pockets. The rest need tax subsidies, whether we’re getting them directly through the exchanges or indirectly through an employee benefit plan.

But it’s becoming increasingly clear that the health insurance companies aren’t adding any value to this system even as they take their own cut.

And then there’s Paul Ryan, the absolutely useless dimwit and chief author of the Republican plan, who said that insurance cannot work if healthy people have to pay more to subsidize the sick. Which, um, is exactly how insurance works. The healthy pay for the sick. The people who didn’t crash their car into a tree pay for the one that did. The guy whose house burned down will get a new house paid by the homeowners who never filed a claim. That’s how it works.

Maybe we should send the whole country to night school to study how health insurance works before we continue to shoot ourselves in the foot with stupid health care plans.