Thursday, October 8, 2009

Spending Money to Save

My wife's grandfather admitted to me what I'd long suspected: It is not unusual for him to spend several hours and waste a ton of gas driving all over town in order to pay a slightly better price on some insignificant product. "Spends $20 to save $2" is the cliché the family uses.

Well, "Spends $829 billion to save $81 billion" could well be the working title of the latest health care proposal. If you understand and can explain why this makes sense, please comment on this post and explain it to me (politely), because I sincerely do not understand. I'll also admit that I'm largely ignorant (I don't have time to read the 1,500+ pages of legal mumbo-jumbo).

The principle "problem" that this legislation attempts to solve (aside from Obama being able to claim his first victory) is to provide health insurance-type coverage for the roughly 50 million Americans citizens 'inhabitants' of the United States that currently only receive medical care by way of government-funded programs for the uninsured.

This latest solution, over which congressional Ds are practically wetting themselves, will reduce that uninsured total by half; meaning this huge solution that has been dominating the headlines for the past few months does not even solve the original problem. Originally, they were talking about $1.3 trillion to cover everybody. Now the bill is $829 billion to cover only half as many people (people, you'll recall, that are already 'covered' through government-funded programs).

Question #1: If the health care legislation will "save" us money, why does it "cost" so much money? Is this like how I can buy a $30,000 solar array for my home that will "save" me 27% on my monthly power bill and take 40 years to pay for itself - which is 15 years beyond its useful life? Or is it more like how us taxpayers each pitched in $4,500 to everyone with a 19 mpg car so that they could buy a 22 mpg car, a process which sparked the robust economic recovery we're now enjoying and saved the planet from cooking itself all in one sweet maneuver?

Question #2: What about the remaining 25 million people still left without health coverage? Will there be an additional piece of legislation in our future costing an additional $829 billion? I imagine their medical expenses will continue to be covered under the current plan. I don't know how much the government is spending on the 50 million people now, but I can't believe it amounts to $829 million billion over 10 years.

Here are the numbers: $829 million billion works out to $33,160 for each additional person (half of the 50 million people) covered during the 10 years of the plan. A family of five effectively gets $166k to cover its medical expenses. Does that seem like a lot to anyone else? Aside from some catastrophic injury or illness, how could any family spend anywhere close to that amount on medical care in 10 years? Major medical insurance policies are relatively inexpensive - like $30-$50/mo with a low deductible.

In other words, it would be a lot less expensive in the end if grandpa would simply pay the extra $0.10 for the loaf of bread at his local market than it would be for him to spend an hour driving 40 miles to a bakery that sells bread for less.

What would I do? My plan: If they want to control escalating health care costs (which is a worthy cause), go ahead and do it. But do it through laws and regulation - two powers actually granted to Congress (read: they are not appointed to provide services such as health care, auto manufacturing, etc.). I want to buy health insurance like I buy auto insurance. I want to be able to select coverage amounts, deductibles, and choose services from a menu. Why should a 55 yr old single man have to buy a one-size-fits-all plan that includes, for example, maternity care? Why should someone that does not consume tobacco or alcohol have to pay for services to treat those particular vices?

The real solution, as I see it, once again comes down to jobs. Most reasonable people will pay for their own health insurance when they can reasonably afford to do so. But when your choice is between food/clothing/shelter or health insurance, it is not a tough decision to make. Basic necessities. Unfortunately, jobs are currently disappearing at a 1/2 million per month clip. I'm not saying that everything was fine before Obama - it wasn't. But it is much more difficult to develop quality higher-paying jobs right now because all of the focus HAS to be on stopping the bleeding and then recovering the jobs lost already. Any jobs. We can't afford to be picky.

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Sierra said...

Please let me know where you can get medical insurance for $50 a month!

Ducheznee said...

I said "major medical", which is type of policy that covers only the big, expensive stuff. As opposed to the more familiar type of policy where most everything is covered, including relatively inexpensive things like x-rays and injections. With a "major medical" policy, you basically pay out-of-pocket for the normal stuff. This is not a good idea for families. It is best suited for the young (pre-children) or healthy empty nesters.

SMDStudio said...

Is it $829 billion? or million? They seem to be used interchangably once you get about half-way through the article.

Ducheznee said...

Thanks. It's "billion". Post has been updated.