Krugman: Health Economics 101 (damning stuff!)

[Bozita]

Got this through 'Times Select' -- Hoping that http://www.truthout.org gets this Krugman gem posted quickly.


http://select.nytimes.com/2005/11/14/opinion/14krugman.html

November 14, 2005
Op-Ed Columnist


Health Economics 101
By PAUL KRUGMAN


-snip-

To understand adverse selection, imagine what would happen if there were only one health insurance company, and everyone was required to buy the same insurance policy. In that case, the insurance company could charge a price reflecting the medical costs of the average American, plus a small extra charge for administrative expenses.

But in the real insurance market, a company that offered such a policy to anyone who wanted it would lose money hand over fist. Healthy people, who don't expect to face high medical bills, would go elsewhere, or go without insurance. Meanwhile, those who bought the policy would be a self-selected group of people likely to have high medical costs. And if the company responded to this selection bias by charging a higher price for insurance, it would drive away even more healthy people.

That's why insurance companies don't offer a standard health insurance policy, available to anyone willing to buy it. Instead, they devote a lot of effort and money to screening applicants, selling insurance only to those considered unlikely to have high costs, while rejecting those with pre-existing conditions or other indicators of high future expenses.

This screening process is the main reason private health insurers spend a much higher share of their revenue on administrative costs than do government insurance programs like Medicare, which doesn't try to screen anyone out. That is, private insurance companies spend large sums not on providing medical care, but on denying insurance to those who need it most.

-snip-

more...

[burrowowl]

1. KICK!

[Paranoid Pessimist]

7. Truthout Has it. Here

http://www.truthout.org/docs_2005/111405M.shtml

[shenmue]

2. Nasty

That's the mercenary world of health today, eh. What was that about helping people, first do no harm, something like that?

No, there's no way to do this better, this is the way it was meant to be...pay no attention to the plan behind the curtain...

;( :o :scared: :banghead:

[Mr_Jefferson_24]

3. Our health care system stinks. nt.

[papau]

4. Excellent - on point as always

:-)

[K-W]

5. Allowing insurence companies to gamble on our health

isnt the most efficient way to provide health care.

Shocking isnt it?

[Neil Lisst]

6. Insurance companies are the new company script.

Workers belong to their company because they have limited ability to get insurance. Once a person has a health problem appear in their family, they can kiss goodbye moving to a new job.