Republican Health Care Proposals Run Up Against Basic Economics and Can Never Succeed | By David E. RePass

Republicans are trying to defy three basic economic factors with their health insurance proposals: 1) the large costs inherent in private insurance, 2) the market (supply and demand) model cannot be applied to health insurance, and 3) insurance works on an actuarial basis.

First, let us enumerate the many costs of private insurance.

1)  Profits must be good enough to satisfy shareholders.

2)  Outlandish salaries of CEO’s and other executives.

3)  Costs of advertising.

4)  Cost of a large staff of screeners who doctors must consult to get prior approval for a procedure.

5)  Cost to doctors of time when calling for approvals from insurance company screeners, and of hiring a clerk who can keep up with the provisions of the many different insurance companies.

6)  Puts the businesses who sell overseas at a comparative disadvantage.  Foreign businesses do not have to buy health insurance for their employees.

7)  Productivity is diminished when workers are too sick work.

8)  Preventative medicine can catch diseases at the early stages and save the cost of more expensive procedures later (and also save lives).  Private insurance usually does not provide for this.

9)  Without a mandatory requirement that everyone must get health insurance, the costs of medical care (in emergency rooms) of those who did not get insurance is borne by the insurance companies and hospitals.  Insurance companies cover this cost by charging higher premiums to those with insurance, and government (taxpayers) must help by subsidizing hospitals.

All of these costs add up to an enormous amount of money that could go to providing health care.

Second, the free market, supply-demand, model does not work in the case of health insurance. The demand for health care is inelastic; if price goes up, demand remains constant.  People cannot do without health care unless they are willing to suffer or gamble that they will never get sick. For decades, health insurance premiums have…

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