Medical benefits, praiseworthy past, modern scamming
Posted by Dave Bath on 2009-02-19
The disgusting report on health funding models (see Kenneth Davidson in The Age, 2009-02-18), prepared largely by commercial health finance industry figures, and largely to benefit the commercial health finance sector, is not about funding health, but about putting lots of taxpayer dollars into the pocket of financiers.
Kenneth Davidson’s article covers a range of inequities, poor outcomes, increased costs, and upperclass welfare from government-subsidies for the private health industry, but I want to step back a moment and look at the basic business model of the private insurers.
If I’ve been better off self-insuring the difference between Medicare and what I’m charged, even though I have a chronic illness needing MRIs and neurologists every few years, with regular blood work and visits to doctors, then how much is the medical finance industry ripping off most people, and why should the government fund their inefficiencies?
The old co-operative medical benefits funds were pretty much like the modern industry superannuation schemes, which consistently outperform the commercial superannuation funds that redirect funds from members to obscenely paid executives, advertisers and profits.
The co-operatives (generally known in the olde days as "friendly societies") got subscriptions from individuals pretty much like union dues, invested the pooled funds, so that even after administration costs were covered, more money was given to members than was taken in subscriptions.
The modern health insurance industry cannot do that, even with all their highly-paid "expert" actuaries and investment mismanagers.
Actually, they don’t want to.
A couple of years ago, on a Sunday-morning business show, the CEO of one of the health funds was bragging that they made over half their profit from premiums.
In other words, clients of the health insurance industry were putting their money (and those of others via government subsidies) into a bank that didn’t give the client money plus interest, but charged people for putting money into deposit accounts, all the while using those funds to loan to others (and collect interest on that)!
Would the public allow the government to say the taxpayer will fund 30% of your deposits into a bank (i.e. add in 50% of what you deposit), providing that the banks charge you for the privilege of holding your money.
It would be more efficient to keep the money under the mattress!
If the government wants to subsidize overpaid middlemen in the health finance game, and it believes in competition, it should look first at the ratio of payments out to payments in, and excluding figures that are paid out or in for discretionary ancillaries (like fashionable spectacles) and vanity surgery.
But really, if the health financiers cannot pay more to their clients than they take, those companies should be allowed to wither and die.
Government subsidies to health insurers are nothing more than a plan to ensure immoderate lifestyles of executives and large investors.
Middle-class welfare is dubious enough, but executive-class welfare is totally disgusting.