Public versus private health insurance

A key element of Barack Obamas health proposal is the option for a public insurance organisation which would compete with the private offerings. Private insurance companies typically work with an administrative overhead of 25 % whereas the public insurance works with much lower admin overhead of < 5 %.  The CEO of the largest public insurance company in Germany with 7 Million customers gets a salary of < 400 k $. (Just check out the salary of the CEO of your insurance company.)

In contrast to the situation in US the German government forced the private insurance companies to offer private insurance at the same level of services as the public insurance. Surprise – their offering is typically 100% more expensive than the  public option although they have more good risks. The price of public health insurance  in Germany is about 15 % of the income up to a maximum of 68 k $ income. The insurance is really a family insurance and covers children as well as non working spouses without additional charge. The employer pays 50% of the health insurance for its employees. The private insurance companies collect the maximum of 10 k$ from every customer. Although they don’t serve the high risk group of customers with low income.

The private insurance companies really don’t want (yes we can’t) to serve the lower end of the health market with low profit margins. I guess this is also true for US insurance companies. It’s really strange that people in US do not compare  the cost/performance of their health insurance with other countries. They even seem to be happy to pay premium prices for average health care. Three cheers to the health industry lobby.

Mandatory Health Insurance – for free

The German government has passed a law which forces private insurance companies to accept any customer who applies for health insurance. However, it turned out that many of these newly insured don’t pay their insurance fee! Now they get free insurance because the law does not allow insurance companies to stop their service.

This is just one trick to get health insurance without paying for it. There are numerous other tricks which people play to get mandatory health insurance for minimum insurance fees. This is a major problem of mandatory health insurance when all people start to play tricks instead of paying their fair share.     

How to reduce public health care cost?

It is well known that in most developed countries there is a low correlation between the cost of health care and the actual health of people served. However, there is an almost linear correlation between number of doctors/capita and the cost of health care. The health industry has marketed the idea that you can become more healthy when you spend more on doctors and medication, which is certainly not true. Too much health care can result not only in more cost but also in more health problems. It is well known that doctors are very reluctant to see their colleagues because they know abut the risks! In a recent report the Mayo clinic has demonstrated that excellent health care can be provided at much lower cost, if the doctors are not paid by case but receive a (good) salary.

Public health care systems must have a system to control the cost. However, simple systems like the health system in UK where the doctors are not paid adequately result just in poor service and substandard health care for the public. The German system where doctors are paid for every service in detail but total amount of money for all doctors is not very effective either because good doctors are frustrated when they are outsmarted by “money makers”.  A Swiss model seems to be rather reasonable. Doctors get a flat base fee for every patient they serve. Thus good doctors will attract more patients and will also try to limit unnecessary services. Doctors will also be interested to have “healthy patients” whereas most public health systems force doctors to declare normal patients as “crititcal” or “high risk” because this will increase their income. The problem with this system is that people with chronic health problems may not be adequately served. This problem can be served by assigning these people to specialized care centers or hospitals. 

Regardless what public health care system the US will install, it will be a good idea to look around in the world and learn from the experience different countries made.

  

Slimming down increases health care cost

Health care and insurance for every citizen seems to be the #1 theme for the Democratic candidates Hillary Clinton and Barrack Obama. However, health care is probably the most complex problem in modern societies. US health organisations seem to be obesessed to slim down the nation. It is common belief that slim people live healthier and cause less health cost to occur over their lifetime. However, a recent statistical study in the Netherlands in the PLoS Medicine Journal   “Does preventing obesity lead to reduced health-care cost” comes to the conclusion that slim, non-smoking people accumulate the highest health-care cost ( 420 k$, 84.4 years) compared with obese people (375 k$, 79.9 years)  and the real low cost smokers (330 k$, 77.4 years) over lifetime. The major reason for higher health-care cost is the longer lifetime of the slim people and the fact that there is a high probabalilty that they will get very costly deseases like Alzheimer and Parkinson in their last years. In contrast heavy smokers die early and fast!   

Certainly the study reflects the Netherlands health care system. However, the scientist found strong evidence, that obesity is not increasing overall lifetime health cost. There are many other factors in favor of slim people like better quality of life, better chances to get better jobs or finding more attractive partners. But the assumption that obese people have higher health care cost seems not to be true. 

In fact slim people probably have exactly the same health-care cost as obese people if you assume that they pay a minimum of 10 k$/year for their health insurance. The message: don’t believe in the messages of insurance companies, health care organisations and doctor’s associations.