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Health Insurance or Self-Insurance?

TRIPLING Your Healthcare Costs?

Health insurance premiums are consuming a growing share of Americans’ income.

This promises to grow even faster as millions of baby boomers become “senior boomers” and use far more medical services.

Over 30 million newly-insured Americans under health reform will cause further spikes in medical spending.

This will prove especially true in the first few years of coverage as they catch up on deferred medical needs. This isn’t itself a criticism of health reform – it’s what it’s intended to do.

Incomes DOWN, Health Costs UP

Even before health reform was enacted, the trend was unmistakable.

A 2009 report by NPR found almost a third of employed Americans were spending over 10% of their income on health insurance and healthcare.

Over half of self-insured Americans did the same (“What Health Care Overhaul Means For You”,

Healthcare costs are projected to roughly double over the next decade.

By our account, they’re likely to TRIPLE in terms of Americans’ average out-of-pocket costs. This is discussed in more detail in Health Insurance Under Health Reform: Rethinking Your Health Insurance – And Your Healthcare.

Average income for Americans is going in the opposite direction.

graph representing Americans' average incomes decliningAccording to a study by former Census Bureau officials, average U.S. income declined by almost 10% from June 2007 through June 2011 (“Post-recession, pay kept falling”, The New York Times, 10/10/11).

This is the worst income performance in over 60 years.

Let’s think about this.

Declining incomes while health insurance and out-of-pocket healthcare costs spiral out of control, threatening to TRIPLE over the next ten years.

You don’t need to be an economist to see where this is headed…and it won’t be pretty.

Health Reform Misses the Mark on Spending

Almost two out of three personal bankruptcies in America are due to unpaid medical bills – and 75% of these people HAD health insurance.

This is why health reformers missed the mark with the tepid measures in health reform to curtail medical spending – most of them delayed for many years.

Independent review of hospital spending. for example, won’t even BEGIN until the year 2020. That leaves plenty of time for industry lobbyists to prevent it from EVER taking effect.

How many  million more Americans will have declared bankruptcy by then due to exorbitant health insurance and medical bills – much of it fueled by medical greed and incompetence?

Making the Government Look Frugal

If you’ve read Our Healthcare Sucks – or even the FREE Introduction (available here) – you already know the state of America’s healthcare system.

The commonly-used term to describe it – “dysfunctional” – is another of those feckless terms like “unnecessary” and “inappropriate” that grossly understate our true medical condition as a insured individual about to step into an open manhole

“Dangerous” and “deceptive” are far more accurate descriptors (see “Time to Call a Spade a Spade“).

Health reform barely touches these fundamental failings that are driving so much of our health insurance premium increases and our medical over-spending generally.

If a fraction of the public ire about government misspending were redirected at our spendthrift medical profession, we might reclaim some of the hundreds of billions a year we waste on “medical misadventures” – the quaint term used by doctors for medical mistakes that cost us plenty.

We might also rein in the rampant medical greed that pads the bills of patients and the incomes of too many of our doctors.


There are those misguided souls who defend all this as capitalism at work.

But they’re as off-base as the naive health reformers who believe doctors and hospitals will reverse their current practices and start coordinating our medical care more efficiently and effectively because of superficial changes to their payment schemes.

The folly of this assumption is addressed in Our Healthcare Sucks, which notes that doctors and hospitals always find ways to game health insurance payment systems. The experience to date with global payment systems eventually envisioned under health reform confirms the realism of this view.

medical stethoscope and moneyMany doctors currently “game” these alternative payment formulas by simply ordering more tests to increase the “risk profile” of their patient population. They get paid under these health insurance arrangements for their patient population, not their individual patients’ care requirements.

As a result, many learn to inflate or pad their patients’ risk profiles with unnecessary tests rather than pad their patients medical bills directly with unnecessary tests.

New Ways to Game the System

Under the current fee-for-service payment system, you’re likely to be billed directly for unneeded tests and procedures. Under global payment formulas slated to replace fee-for-service payments, you’re likely to be billed indirectly through higher health insurance premiums driven, in part, by an inflated patient risk profile of your patient panel or group.

The higher the risk profile of the patient panel, the higher the payments doctors receive for that patient panel.

The incentive to order unneeded tests is more indirect, but it’s no less real.

The fact that many doctors choose to exploit these unintended incentives reflects the deteriorating ethics underlying much of medical practice in America.

As long as insurers, regulators, and employers tolerate these unethical practices, they’ll persist no matter what health insurance payment formulas are applied. Unethical people always seek and find ways to game the system, and doctors are no different. Our current experience bears this out in spades.

The difference with doctors is their unethical behaviors cost us not just in dollars and cents, but in human lives lost due to their income-padding medical practices.


We’ve invented a term for this in Our Healthcare Sucks – “predatory medicine”.

It’s predatory medicine that’s driving much of our excess medical spending – and our excess medical mistakes.

And it’s predatory medicine that’s bankrupting America – and an increasing number of its families and small businesses.

Isn’t it time we demanded that this change?

Tell us what you think below.

Have you experienced “predatory medicine” in your own care or that of a family member?

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