FORCED INTO THE 'NANNY CORPORATION' INSURANCE WAGER
So, what if you're a smart guy, maybe even went to Harvard, and you get caught up listening to gents like Woolsey (who hopefully is getting a few gruff, "two-word messages" these days, rather than giving them). Do you forget to run the numbers?
Suppose you sit down and realize that (a) insurance companies make a profit, even after their big overhead, on average, which means that you lose, on average, twice over; (b) that there is circa $100 million in at-notice lobby-money around to keep the status quo and a compliant Congress; etc., etc.
OPTING OUT - A LOOK AT SELF-INSURANCE, BETTING AGAINST DUMMIES
Imagine a world in which you could opt-out of the "Nanny Corporation" (NC) and self-insure. Could you exploit the fact that the insurance companies are making profits from all the other people who take the increasingly worthless insurance that their NC's provide?
Imagine a world in which you could opt-out of the "Nanny Corporation" (NC) and self-insure. Could you exploit the fact that the insurance companies are making profits from all the other people who take the increasingly worthless insurance that their NC's provide, for whatever "reasons" (I mean, as if the choice were rational to begin with ...)?Here's a scenario. Suppose you graduate Crimson-like and you set out for the worldly slog, in 1993, just as Hilliary is getting ready to go up to the Hill to battle on healthcare.
You figure out that she is going to lose, by around January, 1994, so you hit your parents up for $2,000 bucks and you chip in $1,500 that you scrounge around for on your own, to self-insure.
WOW!
If you take that small sum and buy equal amounts of stock in the "providers" (*cough*), Aetna, Cigna, United Health, and Coventry. Instead of paying a health insurance company, your NC gives the money to you (woo-hoo!), which you invest on a monthly basis.
Today, you would have an estimated $232,380, before whatever your small, annual costs for what you might fairly assume are 'routine' colds and medication. You would have been behind during the tech boom in the late '90s, but there is "liftoff" as Bush and the GOP free wheelers come to town!
From graduation to age 40, an investor in good health tries to self insure, by investing premiums that would have otherwise been paid by his 'Nanny Corporation' in the stocks of select health insurance companies. [notes: premiums are at $392 in 2007 change each year going back by 5% (no premiums invested after 2007, resulting in highly conservative estimate). Initial investment is $3,500. Add about $30K to final wealth if premiums continue to be invested until age forty, when investor is assumed to no longer have full access to the health insurance market at reasonable rates and has mounting health risk(s)].ASSUME YOU GET FIRED AT FORTY
Of course, your employer has an incentive to start to cull you out of their private insurance pools around age 40 (especially if they are self-insuring), no matter whether you've changed jobs a few times to get to them. If you have any of the risk factors for diabetes or heart disease, you could be S.O.L.
Today, in 2007, you have 'a lot' of money on hand. So, you opt to 'play it safe' with the investments until you are 40. At 5% in 'risk-free' investments, your stash grows to $320,532 by 2014 (probably significantly more, if you get some good bond advice).
IS THAT ENOUGH?
No one can answer that question. I'm not expert enough to offer the probabilities, either. But, if you look here, you get the sense that you can start to afford having paid for your wife to have kids, say, paying for a variety of the common, serious illnesses, perhaps even some chronic ones. As for long-term care, this long-term planning tool suggested that this self-insurance amount was in the ballpark (they gave me $68,000 lifetime average, with amounts over $150K at circa 1% chance). These folks reported that the lifetime cost of diabeties might be $106,500, so the stash, at $320K, is looking adequate, even if some other costs are settled.
THE OTHER SIDE OF THE CAP OR THE EXCLUSION - CATASTROPHIC HEALTH COVERAGE
So, after all that, for your complete peace of mind, what you really need is catastrophic health insurance, something to insure against a combination of ailments, something to cover the kids maybe, something to cover long-term illnesses, like Alzheimer's or certain cancers, that may require things outside of disability insurance, if any applies.
WOULD YOU RELY ON THE PRIVATE INSURANCE MARKET FOR THAT?
Well, as long as insurance companies are making money from NCs (Nanny Corporations), it stands to reason that a deep and efficient market for helping those who opt out is not going to get their capital attention. Still, there are plenty of ways to lay off the risks of 'catastrophe', through risk sharing (re-insurance markets, etc.), so it's possible.
Ultimately, everyone cannot 'opt out' and take advantage by investing in the companies that are profiting from 'the dummies' who stay in. What's more, some people won't be able to handle all that money properly, especially if there are other woes, like a bankruptcy, and creditors sop it up.
In the end, it's best just to have a single-payer system, rather than let people opt out and possibly handle it poorly. It seems unlikely, also, that companies are ever going to give money to employees to buy whatever insurance they want (or to self-insure), so again, it's best just to have a single-payer system. Single-payer ends up like a weird equilibrium point, from that perspective.
YOUR HEALTH, THEIR FREEDOM?
$183,500: The Top, Level I salary, for U.S. political appointee, such as the Administrator of the Medicare/Medicaid system that pays over a billion claims a year to millions of health care providers and accommodates dozens of private health insurance providers.
versus this small data sample:
| Grand Total | $655,638,272 | |||
|---|---|---|---|---|
| Annual Totals | 2006 | 2005 | 2004 | 2003 |
| $277,998,393 | $116,735,303 | $96,496,711 | $164,407,865 | |
| Aetna | $60,858,180 | $23,191,253 | $12,785,116 | $27,016,683 |
| Chairman, Chief Executive | $19,802,476 | $7,606,884 | $4,047,449 | $9,100,491 |
| Former Chairman | $25,092,722 | $8,817,441 | $5,010,815 | $12,038,223 |
| Senior Vice President and | $4,561,374 | $2,236,975 | $1,241,532 | $2,870,648 |
| EVP, Regional Businesses | $3,410,341 | n.a. | n.a. | n.a. |
| SVP, Strategic Planning | $4,095,043 | $2,479,475 | $1,316,149 | n.a. |
| Senior Vice President, Chief Investment Officer | $3,896,224 | $2,050,478 | $1,169,171 | $3,007,321 |
| Cigna | $42,189,600 | $21,644,450 | $19,091,568 | $24,063,103 |
| Chairman and CEO | $21,014,500 | $12,509,730 | $11,985,033 | $15,101,100 |
| Executive Vice President and CFO | $6,068,300 | $3,318,165 | $3,187,683 | $4,215,900 |
| President, CIGNA Health Care | $3,134,700 | $1,793,930 | n.a. | n.a. |
| President, CIGNA International | $3,497,800 | n.a. | n.a. | n.a. |
| EVP, Human Resources | $2,690,100 | $1,859,940 | $1,875,753 | $2,156,003 |
| Retired EVP, General Counsel | $5,784,200 | $2,162,685 | $2,043,099 | $2,590,100 |
| United Health | $51,347,933 | $22,767,179 | $22,680,009 | $21,600,342 |
| President and Chief | $15,549,028 | $5,565,870 | $5,826,608 | $5,678,782 |
| EVP and Chief Financial Officer | $3,339,278 | n.a. | n.a. | n.a. |
| EVP and President of Commercial Services Group | $4,325,612 | $1,612,400 | $545,072 | n.a. |
| EVP and President of Public and Senior Markets | $3,812,299 | n.a. | n.a. | n.a. |
| EVP and President of Individual and Employer Markets Group | $4,194,685 | $1,582,262 | $1,763,404 | $1,505,335 |
| Former Chief Financial Officer | $2,782,142 | n.a. | n.a. | n.a. |
| Former Chairman and Chief Executive | $12,049,699 | $12,397,442 | $12,820,859 | $12,631,485 |
| Former General Counsel and Secretary | $5,295,190 | $1,609,205 | $1,724,066 | $1,784,740 |
| Wellpoint | $74,075,752 | $21,249,661 | $20,585,825 | $60,063,187 |
| Chairman, President & CEO | $23,886,169 | $8,923,139 | $5,999,779 | $46,612,719 |
| Vice Chairman, Chief Financial Officer and EVP | $8,415,077 | $3,657,133 | $3,448,807 | n.a. |
| President & CEO | $6,554,745 | $2,699,912 | $2,869,133 | n.a. |
| EVP, Integration | $6,651,786 | n.a. | n.a. | n.a. |
| CEO Commercial & Consumer Business | $6,622,360 | $2,544,098 | $2,840,816 | n.a. |
| Former EVP, President, CEO Central Region | $6,385,520 | $3,425,379 | $5,427,290 | $13,450,468 |
| Former EVP, President, CEO East Region | $15,560,095 | n.a. | n.a. | n.a. |
| Humana | $14,964,213 | $8,004,317 | $8,510,152 | $16,620,014 |
| President & Chief Executive Officer | $5,798,613 | $2,802,774 | $2,581,806 | $5,982,767 |
| Senior Vice President & Chief Financial Officer & Treasurer | $2,103,072 | $1,117,601 | $2,522,475 | $906,907 |
| Chief Operating Officer | $2,778,690 | $1,639,456 | $1,282,980 | $3,724,576 |
| Senior Vice President & Chief Innovation Officer | $2,086,710 | $1,199,098 | $1,075,608 | $2,644,423 |
| Senior Vice President & Chief Service & Information Officer | $2,197,128 | $1,245,388 | $1,047,283 | $3,361,341 |
| Coventry | $34,562,715 | $19,878,443 | $12,844,041 | $15,044,536 |
| Chief Executive Officer | $12,937,001 | $6,580,139 | $3,153,428 | $4,646,057 |
| EVP, CFO & Treasurer | $3,402,288 | $2,491,775 | $1,246,293 | $829,536 |
| President | $9,432,787 | $4,249,022 | $5,027,314 | $4,693,581 |
| EVP, Customer Service and CIO | $4,670,942 | $3,806,739 | $1,976,905 | $2,685,735 |
| EVP, Government & Individual Plans | $4,119,697 | $2,750,768 | $1,440,101 | $2,189,627 |
GOOD INVESTMENTS BECAUSE EFFICIENCIES ARE RISING? - HARDLY :
Rough estimates of the rise in administrative costs per enrollee among private health insurers:
Now, if administrative costs are rising so strongly yet profits are doing great, that suggests something is being allowed to get way out of wack, right?
