Our relationship with Government and Corporate Interests as it relates to Health Care.
Please notice that the title sentence starts with the word OUR – That word stands for WE ‘THE PEOPLE’, or US, the citizens where all sovereignty originates.
The next important word in the first sentence is GOVERNMENT. We (as in We ‘The People’) have agreed to have a representative form of government. We elect officials , as our surrogates, to do our job of running the country, and in theory that representative government represents the will of ‘WE ‘THE PEOPLE’’. If we want something to happen in our nation, we elect a government to make it happen. We ‘The People’ can replace our representatives through several methods if they do not do what we elected them to do.
The founding fathers, or the guys who wrote our Constitution, have provided for a Republican form of government. That’s not Republican as in The Republican Party, but a form of government in which the people, or some significant portion of them, have supreme control over the government. This form of government is guaranteed in the Constitution in Article IV, Section 4.
As we drill down on our form of government we also find that we have a Democracy. Specifically, we have a Representative form of Democracy which is the most common form of modern democracy – also called a parliamentary democracy in which the voting public takes part in elections and chooses politicians to represent them in a Legislative Assembly like the Congress which includes the Senate and the House of Representatives. The members of the assembly then make decisions with a majority vote.
“The United States relies on representative democracy, but its system of government is much more complex than that. It is not a simple representative democracy, but a constitutional republic in which majority rule is tempered.”
We also elect a President as the executive of our government to implement the laws passed by WE ‘THE PEOPLE’ via our elected representatives, and to preside over OUR government; see Amendment XII. The election of the President is not through popular vote, but the process is still theoretically controlled by the extension of the sovereignty of WE THE PEOPLE to our representative government provided by our democratic process.
Before we leave the Constitution, let’s look at Amendment IX, Rights Retained by ‘The People’. The Constitution enumerates and limits the rights of the various parts of the Federal Government, and enumerates and limits the rights of the various States. But, if you read this Amendment, you‘l l find that WE ‘THE PEOPLE’ have no limits or enumerations on our rights. Our rights are endless and irrevocable and cannot be denied by the Government or others. Other includes ALL OTHERS both foreign and domestic.
OK, we’ve introduced the concepts of the sovereignty of WE ‘THE PEOPLE’. We’ve introduced the concept of Representative Government. We’ve also introduced the principle of Majority Rule as reflected in our Constitution.
Let’s move on to OUR relationship with corporations, and then we’ll hit the Health Care question.
According to Amendment IX, WE ‘THE PEOPLE’ have endless rights, so if naturally follows that we have the absolute right to define our relationship with corporations that seek to do business in our country. We have every right to define and enforce our will on corporations and often do through our elected representatives. We allow our publically traded corporations to form and be traded on the stock exchange through the SEC (Securities and Exchange Commission) which was established by WE THE PEOPLE to enable the regulation of corporations and regulate the sales of stocks and other financial instruments. WE THE PEOPLE can also use this office to regulate corporation to any degree we choose to regulate them. In turn, if the corporations don’t like the market provided by the over 300,000,000 folks that make up WE THE PEOPLE, they can always move. Capital is portable, but the market is not.
Now let’s look at Health Care. I was asked if I had any idea about how to solve the very real gaps we have in our health care system. Yes I do and they all come from OUR (WE ‘THE PEOPLE’’S) sovereignty and our undeniable constitutional right to define our relationship with our elected governmental surrogates, our corporations, and from my understanding of insurance in general. By the way, this is not Obama Care, I’ve modified it for reasons I hope will become clear.
First we’ll look at Insurance in general. In California, as in most states, we have an insurance commission. This commission (the commissioner is an elected official whose power has been granted via the sovereignty of WE “THE PEOPLE’) defines what types of policy will apply to the insurance products sold in our state. Let’s look specifically at homeowner’s insurance for a moment. We have many companies selling homeowner’s insurance in this state and every one sells a version of what are called the HO-1, HO-2, HO-3, or HO-4 form of insurance policies plus they can add coverage’s by way of endorsements to the basic policies. The basic insurance policy coverage forms, the HO-1, HO-2, HO-3, and HO-4 are all pre-approved for sale by the insurance commission and must meet publically agreed on minimum coverage for the dwelling.
That’s a perfect example of how WE ‘THE PEOPLE’ use our democratically elected representatives to define our relationship with corporations who want to provide insurance coverage in our state. Most states, if not all states, do the same thing. All states participate in the national banking system and that system won’t fund or allow standard forms of home loans (conventional loans) unless the accompanying insurance meets minimum national standards of the secondary mortgage market. These standards are referred to as ‘REGULATIONS’ as they regulate the product and administration of the insurance company, and they regulate the purchase of insurance by consumers. That insurance is mandated both by the private sector, and the consumers. The REGULATIONS come directly from Amendment IX, Rights Retained by The People – WE ‘THE PEOPLE’ have the absolute right to define our relationship with corporations via our elected representatives.
WE ‘THE PEOPLE’ demanded standardized insurance coverage for our homes (really for our Real Estate Wealth) so we could protect ourselves against catastrophic loss. Now when we go into an insurance office, we can choose the HO-1 (the cheapest policy which offers the least amount of coverage), or the HO-2 which costs more but adds coverage elements that are not included in the HO-1 policy form, or we can buy the HO-3 policy which gives the greatest amount of coverage, and carries the highest premiums. The standard coverage can be enhanced by the insurance companies for competitive proposes, but cannot be diluted.
By this system, WE ‘THE PEOPLE’, protect our assets, wealth, families, and fortunes. The insurance companies make money and we’re protected against loss as we’ve demanded.
You may have noticed that the insurance companies advertise often in an effort to acquire new customers. This is because they want to make a profit, which is a good thing. There are only two ways to influence a company’s profit that I can think of, one is to reduce expenses and the other is to increase revenue. Let’s say an insurance company has used their staff of actuaries, statisticians, and accountants to determine they will make 2% profit on revenue of $10,000,000 in monthly premium (given the losses are within predictions). If they’ve determined that costs are static at 98%, they then have to increase revenue to make more profit…2% of $10,000,000 is less than 2% of $20,000,000. Or, the companies can reduce expenses, say by denying claims or reducing the work force, or cutting benefits, or by increasing the effective use of technology to streamline the operation and administration of the claims and company.
The economic principle at work here is called “The Economy of Scale”, or “The Economies of scale”
The principle of “The Economies of scale” indicates that there should be more profit for the insurance company is they build a bigger base of ‘customers’ as long as they control costs.
WE ‘THE PEOPLE’ want them to make a fair profit, we actually need them to make a fair profit and develop reserves to be used to pay unexpected and wide spread claims in the event of an unforeseen catastrophe so we won’t have to bail them out.
The government, through the power conveyed to them by “WE ‘THE PEOPLE’”, also requires that the insurance companies must provide coverage for what would normally be risks outside of their underwriting guidelines. Underwriting Guidelines are a way the insurance companies regulate their risk. Your HO-3 policy may be more costly than my HO-3 policy because you may have higher risks. WE ‘THE PEOPLE’ understand this and agree it’s not only fair, but essential for the insurance company to regulate costs and provide competitive rates. But “WE ‘THE PEOPLE’” recognize that insurance must be universal in its availability, if not in its cost. We would all be subject to instability if only part of our collective wealth is protected, so we legally require the insurance providers to cover dwellings outside of their underwriting guidelines, but we allow for them to rate for the risk.
In homeowner’s insurance, two types of coverage are not available through the private sector, flood insurance and earthquake insurance. In the U.S. we have a national flood insurance program that has NEVER lost money, and in California we have a publically administered Earthquake insurance program that has NEVER lost money either. The premiums collected by our appointment representatives in these agencies collect enough in premium to offset losses from claims.
Now let’s take these ideas and apply them to Health Care. First some givens:
Remember that the desire of WE ‘THE PEOPLE’ has been expressed through our elected officials. We want a National Health Care program. Some of our elected officials who have embraced our mandate include: Theodore Roosevelt, the AMA (1914 in support of AALL -not elected but big at the time), The California Social Insurance Commission (1917), Franklin D. Roosevelt in 1935 and again in 1939 (remember he was elected by landslide to serve as President 4 times), (non elected but powerful) Henry Sigerist of John Hopkins University who helped form the American Public Health Association, the Senate Bill known as the Wagner-Murray-Dingell Bill in 1943 and on through 1953, President Harry Truman submitted a plan in 1945 before he became President, President John F. Kennedy supported a National Health Care program, President Johnson supported National Health Care and during his administration the AMA again submitted a proposal for seniors but not for the general population, this was passed and we call it Medicare and at its inception it covered 19 million elderly Americans who pay for it out of their Social Security checks and from payroll deductions when employed, President Richard M. Nixon introduced a plan during his 1974 State of the Union address which was very comprehensive, William J. Clinton was for Health Care, and finally President Barack Hussein Obama fulfilled the desire of the Majority of the Electorate. He did not do it alone, he did it at the direction of the electorate, and the majority of Americans supported this. IN a NY Times poll published on June 20, 2009 as many as 85% of polled Americans were for Health Care reform. And 72% supported a government administered insurance plan. By the way, to cost of administering Social Security is 1% of the annual benefits that are paid out which is far far less than a public sector administration could do it for.
We have already established the concept of Majority Rule by the sovereignty of WE THE PEOPLE right?
OK, so what if you and I (as in WE ‘THE PEOPLE’), told our elected officials, who act as our surrogates in a democratic form of government which relies on Majority Rule, that we wanted some standardized Health Plans to choose from? And they in turn told the Health Insurance Industry that same thing. Not as voluntary participation, but by universal participation to keep cost down through the Economies of scale?
Like an HP-1 that would cover Accidental injury, and Hospital Care. Maybe like a minimum type of coverage at a lower price in theory.
Like an HP-2 that would be more like HMO coverage and might have co-pay and offer services like an HMO.
Like an HP-3 that operated more like a PPO with options for endorsements like lower co-pays or better prescription coverage?
Like an HP-4 for dependants as stop-gap coverage while in school and just starting out in life?
The Economies of scale are that something like 33,000,000 people that currently don’t have Health Insurance, so it surely appears that the insurance companies could and would make money if they could manage costs. I mean, it’s a no brainer. As a banker, if someone offered me a pool of 33,000,000 customers who all needed my services I’d have been a fool to say no to them. In reality, if the insurance companies offer standardized coverage they could capture larger pools which would include those who already have insurance. As a thought, we don’t buy our auto or homeowner’s insurance through our places of employment, I don’t really see any reason we should have to buy our health insurance through work if we establish hug pools of potential policy holders for the insurance companies. That rose out of the union movement and worked great in collective bargaining.
So there is your answer, perhaps a plan like an HP-1 (just a term I made up for convenient writing) would cover people like the guy who lost his job, then lost his insurance, the lost his lung.
The Economies of scale also indicate that the insurance companies would have more leverage with negotiation costs because they would represent larger pools of consumers. Also, the Economies of scale indicate that the insurance companies could negotiate lower costs for drugs from Big Pharma, something the government can’t do right now due to some lame agreement made years ago.
WE ‘THE PEOPLE’ want the health insurance so the only question is how to pay for it, and if we mandate universal coverage, we should have universal coverage. In my mind the government is empowered by the people, and the government has spoken through us to the insurance industry.
Some things WE THE PEOPLE have to keep in mind, some groups have more risk than others and therefore merit higher premiums. But that’s no reason to deny insurance, but it is a reason to rate for risk.
In the case of the folks who can’t afford this, we the people have also spoken through our elected representatives. We will subsidize them for a period of time through paying a slightly higher premium that we normally would. This is exactly how your auto insurance works. You pay a bit higher premiums if you live in an area where there are more uninsured drivers, it’s just that simple.
Please express your thoughts below…