Social Update: Why Is Healthcare So Complicated?

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Why is healthcare so complicated? I know, I know, that's a very loaded question. Healthcare is complicated because it has always been complicated, right? Not really. If conservative politicians are right about one thing, it's that healthcare only really became extremely complicated when the decision was made that healthcare should be available to all. Before these Obama era guidelines, if you had a pre-existing condition, you simply paid your bills or you died. It's more complicated than this, obviously, but that is the gist of it. It all came down to a matter of opinion. Should healthcare be available for all? If you think the answer is yes, then you need to be accepting of the fact that healthcare will be for now and forever, a complicated mess. Let's explain why. 

To understand why healthcare bills, particularly liberal healthcare bills, are so long, you need to understand the complexities that come with it. So far, for this example, we agreed that healthcare should be universal. The business of providing insurance is a cat and mouse game. The idea is that the insurance company is making bets on your health. For example, let's say that in a given month, your health insurance premium is $200. You and the insurance company are making a $200 bet that you will stay healthy that month. If you stay healthy, you lose and need to shell up the money. However, if you win (strange in the sense that getting sick is not winning), the insurance company spends way more than $200 in doctor visits, hospital costs, medications, and procedures. 

Now, if we agree that healthcare should be universal and available to all, then you also need to understand that people have a wide range of costs when it comes to their health. However, on average, younger people tend to be healthier and so they tend to have lower costs associated with their health. On the other spectrum, elderly people have huge expenses when it comes to their healthcare. Much more frequently than younger people, elderly patients are visiting doctors, hospitals, specialists, take more medication, and rack up expensive bills. Because of this huge gap in costs, younger people tend to decide that it isn't worth it for them to pay $200 dollars a month for insurance, when they don't feel as though they would pay that much a month in costs associated with their healthcare. What ends up happening is that the pool of people in the insurance market gets older and sicker. Not only that, but inevitably, those younger people who were once healthy will all inevitably get sick at some point. They then attempt to crawl back to get insurance only when they're sick, and if insurance companies cannot deny them because of their pre-existing condition, this completely destabilizes the market and makes it unsustainable for insurance companies to operate. If the pool of people buying health insurance are all sick all the time, insurance companies would go under. 

You've probably heard the words "individual mandate". If you don't have health insurance, you have definitely heard it when you go to file your taxes and see your tax return evaporate once they take out a huge chunk for the individual mandate. What the mandate does it stabilize the markets once more. Assuming, and rightly so, that healthy people will opt out of insurance until they are sick, the individual mandate penalizes them for being a burden on the rest of the insurance pool. This money is then used to prop up the insurance markets and make it profitable for insurance companies to continue to offer plans at a relatively affordable price. 

Let's go back a bit. Even with the individual mandate in place, we have a problem. The insurance pool will still be very old, very sick, and very expensive for insurance companies. What current healthcare regulations also do is put a cap on the amount of money that can be charged to an elderly person in regards to their healthcare. However, this also puts a strain on the insurance companies. Because of this cap, inevitably, the cost of healthcare is going to exceed what the insurance company is legally allowed to charge the person. This leads us to something else, government subsidies. 

These government subsidies allow the insurance companies to continue to offer relatively low priced plans to elderly patients. Knowing full well that the caps imposed on health insurance companies will make it unprofitable for them to offer plans to the elderly and sick, the government pays the insurance companies in the form of subsidies in order to keep the markets afloat and prevent a collapse. 

This only briefly scrapes the surface of what goes into healthcare when you decide that everyone should be allowed to purchase insurance at rates that won't put them into bankruptcy. Remember: there is an alternative. We've lived through it. I remember a time when you needed to decide what was more important, your health and well-being, or your electricity bill. Before the ACA (Affordable Care Act aka Obamacare), this was the law of the land. Insurance companies would not pay for your pre-existing conditions because it simply did not make sense to them on a business level. The premiums required to make it profitable to offer plans to a person with a serious disease or disorder would be astronomical, because the costs of healthcare are costly. It all comes down to what you believe to be acceptable. If you believe in small government, by association, you believe that healthcare should not be universal and that's fine. However, when the tables are turned and your healthcare costs begin to rise, we only hope that you still believe in small government.