Analyzing what the President said about health care

President Barrack Obama delivered a 6,944 word State of the Union address to the American people. Of the speech, less than .01% was devoted to healthcare, which is remarkable considering the major changes in healthcare that are on the horizon if Obamacare survives a challenge in an upcoming U.S. Supreme Court case. During the speech, there were only three sentences that mentioned healthcare.

The first was this: “I will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny you coverage, or charge women differently from men.”

While the President is correct that nobody likes when an insurance company cancels their policy, denies you coverage, or charges women differently from men, there are sometimes legitimate business reasons why this happens. I will use a personal example to explain this. Recently, I applied for a long-term disability policy. The insurance company paid the costs for me to have a physical exam and have routine blood tests. After a few weeks, they sent me a letter saying that they would give me the insurance, but that they would not pay me for any type of disability related to my back since I have a history of low back pain. On the one hand, I was disappointed because I would have preferred a policy without any conditions like this.

On the other hand, I understood the insurance company’s perspective. That is, the insurance company realized that I was at increased risk to claim disability per their statistics because I have a history of low back pain. Low back pain is one of the main reasons people claim disability in the U.S., and many of the cases are exaggerated or malingered. Insurance works when most people paying into the system can reasonably be expected to be healthy because those funds are needed to pay for those who become disabled. If the number of disabled patients outweighs those paying the insurance premium, then the insurance company will lose money. Thus, they seek to identify those at risk before granting coverage and add exceptions to the contract.

In my case, I decided not to accept the deal. It is a free market and I can shop around for different policies. I realize that if I find that an insurance company that is willing to give me a disability policy without any conditions attached that it will cost me more money for the insurance. The reason is because the extra costs helps partly cover the added potential cost that to the insurance company, which is taking a greater risk. Sure, I could demand the government pass a law preventing the insurance company from making such exclusions but if that happened, one needs to realize that the insurance company will likely go out of business one day and people will be left with government run healthcare (see statement three below). While some people think that this is good, it is important to remember that many doctors refuse to take patients with Medicare or Medicaid coverage because the reimbursement is so poor, the system is filled with beaurocracy, and they do not want to take the risk of making an innocent billing mistake yet find themselves charged with fraud. To be fair, many healthcare providers have also begun to refuse to take private insurance because of poor reimbursement, denials, and tedious paperwork, although this is less common.

While it may feel like insurance companies have unchecked power, they actually do not. For example, many people do not realize that when they have a dispute with an insurance company and feel that they have been treated unfairly, they can call their state insurance agency, file a complaint, and unfair decisions and practices can be penalized and/or reversed. The state’s Attorney General’s Office also has the power to investigate insurance companies and apply sanctions against them. On the federal level, The Health and Human Services Department and the Justice Department are another check and balance on insurance companies that can and has been used many times in the past.

The second healthcare statement is the State of the Union speech was, “Today, the discoveries taking place in our federally-financed labs and universities could lead to new treatments that kill cancer cells but leave healthy ones untouched.”

While this is a true statement, it leaves out that privately financed labs and universities also lead to new treatments to fighting cancer in this manner and in many other ways.

The third statement on healthcare in the State of the Union address last night was,“That’s why our health care law relies on a reformed private market, not a Government program.”

This was the statement that I found to be most controversial. While it is true that there would be reforms in the private market with Obamacare, these reforms are not unrelated to a government healthcare program. Specifically, under Obamacare millions of citizens would be placed on government-run healthcare. To pay for the system, people who are not insured but refuse to take government-run healthcare will be fined, as will companies who do not provide the government-run healthcare option to their employees. While privately funded healthcare insurances are focused on making a profit (which some see as a bad thing), government run healthcare has no such constraints (although this can also be a bad thing). At a certain point, if a privately run healthcare system runs out of funds to support its beneficiaries, it will need close. For any insurance company to work properly there simply must be more funds coming in than going out. Private insurances cannot continue to function by simply requesting more money from Congress, much like government run healthcare can. This can be viewed as an unfair advantage that government run healthcare has over private insurances. As a result, many private healthcare companies can shut down, resulting in most people being forced to go on government run healthcare.

No matter where you stand on healthcare, expect to see this topic debated significantly during the next election.

Dominic A. Carone is a neuropsychologist who blogs at MedFriendly.com.

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  • Anonymous

    Before you praise the merits of competition among health insurance and the “freedom” to “shop around”, please consider the reality of health (and health care) in the U.S. we are the only free nation that does not guarantee its citizens the right to health care. We have the most expensive system (double the cost per capita of the runner up), and are ranked anywhere from 20th to 40th in the world for health outcomes, depending on who you ask. Hard working people, even those who are highly educated or work in health fields, are chained to their jobs to keep health insurance because of the cost. “shopping around” is not an option for most of us whose last name isn’t Romney, Trump, or Bush. Health care expenses are the leading cause of foreclosures, people are willing to go to prison in order to receive chemotherapy, hospitals and physicians’ practices are closing or turning away patients. Meanwhile, the CEO of United Health Care makes $400 million dollars per year. And the rest of the world wonders what the F@$K we are thinking…. And why are we spending so much money to be NOT HEALTHY?

    The idea that health services should be provided with the primary aim of making a profit is misguided at best, but is generally perverse. The reason is that these profits are gained mostly by externalities costs to society, and by exploiting the public via a basic and undeniable human necessity. The costs are staggering, and if the United States continues down the road to privatizing everything in health it will only get worse.

    So what is there to do? Build an EXCELLENT public system. And yes, we can do it, but the public system must hold the interests of the public above the almighty dollar. REPEAL CITIZENS UNITED, TAKE THE MONEY OUT OF POLITICS, ANDBUILD A SYSTEM BY THE PEOPLE, FOR THE PEOPLE.

  • Anonymous

    Opponents of universal health coverage seem to like to use other insurances to make analogies. They don’t work – that’s how exclusions for preexisting diseases was used.  Some people should pay most because of their behavior particularly for unhealthy food consumption that is the greatest risk factor for the chronic preventable diseases – there is as much or more evidence for this than tobacco smoking  being the leading risk factor for lung ca People should not be penalized if they lead a healthy life but get a rare cancer, a kid with leukemia etc. There is really only one fair way to do this and that is treat the substances known to be addiction as is done in the tobacco model.  The substances in food that can cause a food addiction are sugar, fat and salt. Using this model provides a message as well as revenue to pay for these diseases and ease the burden to taxpayers.    Yes, it means taxing these substances. It can be done and needs to be done.

    This is worth repeating.

    ” So what is there to do? Build an EXCELLENT public
    system. And yes, we can do it, but the public system must hold the interests of
    the public above the almighty dollar. REPEAL CITIZENS UNITED, TAKE THE MONEY
    OUT OF POLITICS, ANDBUILD A SYSTEM BY THE PEOPLE, FOR THE PEOPLE”

    We do not yet even have a health care system. Adam Smith and
    Benjamin Franklin would been in favor of a National Health Care system- they
    have been so misinterpreted. We have dug ourselves into a deep, deep hole at
    the expense of public health with so many maintaining that unfettered
    capitalism is the basis of healthcare. Medicare and Medicaid are too expensive
    because Congress allowed it to happen starting at its inception by allowing
    hospitals and physicians to milk the programs for many years, because Big Food
    has rendered most of our food unacceptable to our DNA, and because too many of
    us have become addicted to unhealthy food and a sedendary life style,
    Skidiocmmco gave many facts, as so many have done on this blog.

    I encourage the writer of this blog to get some real
    information about how a health care system works overall, without focusing on
    the small warts these systems have – like a patient coming to the US from Canada for a procedure she claims
    she could not get through her countries health care system. It is not that such
    things don’t happen but overall we have some BIGGER warts. I suggest you read
    T.R. Reids book’s The Healing of America – the Global Quest for Better,
    Cheaper, and Fairer Health Care.

    Hyman Minsky, an economist who died in 1996, little known by
    most, knew where we were headed long before anyone else in the crash of 2008.
    Smart economists understand his theory – even a non-economist can understand
    the basics when put into plain language. Basically capitalism is not bad, it
    is, by its very nature, unstable and we need smart regulations to hold us ALL
    back, when we get in a greedy frenzy like believing “house prices will
    never fall” and to keep from totally destroying our economy. This was his
    primary gift. He didn’t talk about health care but he did talk about doing away
    with welfare as we know it in exchange for jobs programs, unemployment
    insurance, MORE tax brackets and that Government needs to be bigger than Big
    Finance. Are We the people if  we can’t have a voice.

    Fixing Health care is not only essential and urgent but it
    must be done so that it is minimally affected by the instability of capitalism
    and it must not be done on the backs of the taxpayers. I too believe it can be
    done.

  • Anonymous

    Seems to me all that Republicans kept doing during the debate process over the Affordable Care Act (ACA) was complain about its 2300 or so pages. Whining and crying and complaining about volumes and volumes of pages echo in my memory. Now that the thing is passed and enacted, Republicans want to hear more about it? Here’s what needs to be heard about the new ACA. It’s working! Millions of Americans are seeing its benefits already and it’s not completely rolled out yet. In spite of the continued whining and crying from the obstructionists in the failed 112th Congress, the ACA is the best thing to ever happen to health care consumers in a very long time. Finally, health care consumers aren’t on the bottom rung of the ladder any longer. Finally, the corrupt and greedy insurance companies, corrupt and greedy doctors, corrupt and greedy drug companies and the corrupt and greedy hospitals have some hard rules that need to be followed. Republicans are very vocal about repealing the ACA but when asked what they have to replace it, they get real quiet. Why? Because they have nothing! They never did and they never will. They just can’t stand the fact that a Democratic President got the credit for their original ideas. The individual mandate? That was a GOP idea! In fact, Newt Gingrich has written volumes in support of the individual mandate. How does Mitt Romney feel about the individual mandate? He got the exact same thing passed and enacted as Governor of Massachusetts! Today, virtually every resident of Massachusetts has health care coverage. Hospitals in Massachusetts never again have to worry about treating uninsured people in their emergency rooms. Why? Because virtually everyone coming through the door has comprehensive and affordable health care insurance coverage. Every resident of Massachusetts has quality health care coverage and they have no problem paying for it. Republicans need to find something else to argue about in 2012 because when it comes to the ACA, every single idea in the new law was originally a GOP idea. For Republicans to argue against the ACA, it’s the height of hypocrisy!