scratch-mark

The Principle at Work?

Balko points to a summary of why and how government grants and guaranteed student loans increase the cost of college education.

Well, duh! It’s easy to spend other people’s money. In all the myriad permutations — whether you’re talking about outright grants, or loans that you would otherwise be unable to obtain — the underlying principle is all the same.

But it’s not just in education. Health care is another example. I’m not all that nit-picky about prices for things. They are what they are, and you just factor it into whatever you’re doing and if it works, it works. But even I am regularly just dumbfounded by the cost of health care. We recently had a young man at my company do a couple of days in the hospital — nothing really fancy — and the bill was $40,000. Paid by the medical insurance I provide, of course.

So it’s no wonder that for only about a dozen of my employees on our plan (others are on their spouse’s plans), mostly young, I pay around $100,000 per year in insurance premiums. Yea.

But do you know why costs are so high? It’s because we’ve developed a culture where multitudes of people now believe it unreasonable to pay their own way when it comes to their routine medical care (but not their groceries — at least not yet, mostly). Of course, employees are paying for it themselves; it’s just wrapped up in a "benefit package," such that they may delight themselves in the fantasy of getting it for "free," but that’s another topic altogether.

People don’t want to pay for their doctor visits or their prescriptions, so they get jobs that offer such benefits (in lieu of pay they might otherwise negotiate for?), and, well, if you want to have good people working for you (and I cannot overemphasize how that factor outweighs all other considerations), you have to compete with other companies, and so you offer "free" health care too, and because it’s "free," people don’t mind at all going to the doctor for every little thing, and what do doctors do but write prescriptions most of the time?

When you go to the hospital or the doctor and have to sit in a waiting room with dozens of other people also waiting for services, what is that telling you? Well, what would happen if there was a line going out the door at every supermarket in town? There’s no place anyone could go for groceries where they would not have to wait. What do you suppose the supermarket could do, pretty much at will? Raise prices? Why not? Why wouldn’t they? If you operated a business and there was a forever line for your services, what would you do to your prices?

Let me pause to interject that I’m not making light of serious medical problems, and I’m very happy to provide relief for what could be financially devastating costs for a lot of people. It’s for this reason that I fret a lot less than I otherwise would about the costs.

Mostly, we’ve lost sight of the notion of what insurance is. It doesn’t mean you get something for nothing. for most people, It means that you spread short-term large cost spikes over a long period of time and small periodic costs. At the extreme end of the bell-curve, you have those who make out like bandits ($1 million claim for a few hundred in premium) and those who get "screwed" (pay for a lifetime and never have a claim). Insurance, properly obtained — health or otherwise —  should cost a relatively small amount, be rarely (if ever) used, and protect your person and property (and that of others to whom you inadvertently cause harm) from serious harm or loss. Note the emphasis on serious.

Now, given all the above, where do you expect that all the talk of "40-million (or whatever) uninsured in America" leads to? Can you guess? Given that virtually anyone in America can already obtain treatment for emergency problems whether they’ve got a dime to their name or not, that reduces the scope of what we are talking about quite a bit. Then you’ve got the old folks already covered by Medi-Whatever, so you’re probably left with a small sector of relatively young people uninsured for catastrophic illness, but mostly what you’ve got are people who don’t happen to have the fortune of not paying very much for doctor visits, routine procedures, and the normal range of prescriptions now and then. I’ll reemphasize that as of yet, they’re still paying for their own grocery bills as well.

So there you have it. Now, final question: what’s going to happen once we get all these 40-million needy young people on "insurance?" Well, for sure, they’re going to go to the doctor a lot more than they did before, and often when they don’t need to, just as a lot of people do. And, quite predictably, that will increase costs even more. And guess what? I’ll tell you what: single payer (socialized medicine) is "lookin’ better and better all the time."

I recall that it was about a decade ago, between having full medical coverage in the Navy and getting to a comfortable place with a business I was endeavoring to launch and grow, I made the choice to forgo the expense of medical insurance. Then I developed a planter wart on the bottom of one of my feet, which is quite painful provided you walk places. I knew very well what it was, as I’d had one years earlier and knew I could suffer through it for a while, which I did. Finally, the pain became too excruciating and I recall it was between the Christmas and New Year’s Holiday, because I called all over before I found a podiatrist who could help. She even answered her own phone, as her staff was all on vacation. She asked me what insurance I had, and when I told her I’d pay cash, I’d have though she thought she was dealing with a space-alien. At any rate, she took me right in, sliced off the callous and froze the sucker and it never came back.

One treatment. The best $112 I ever spent.

Richard Nikoley

I'm Richard Nikoley. Free The Animal began in 2003 and as of 2021, contains 5,000 posts. I blog what I wish...from health, diet, and food to travel and lifestyle; to politics, social antagonism, expat-living location and time independent—while you sleep—income. I celebrate the audacity and hubris to live by your own exclusive authority and take your own chances. Read More

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