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Life Health > Health Insurance

On the Third Hand: Let's not pretend

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The core problem life and health insurers face today is that our economy is based on self-deception.

On the one hand, it’s easy to make fun of Bernie Sanders’ health system change proposal because he’s had the guts to put his views in writing and file several long American Health Security Act (AHSA) bills. 

On the other hand, he talks on the campaign trail as if his vision of single-payer health care would involves rainbows, unicorns and free pixie dust for all, but then, in the AHSA bill, he shows how he’d make his single-payer health system budget work: if costs were running higher than expected in the middle of the year, the system managers would just cut the doctors’ pay. 

Hurray! Health care system spending problems solved.

I’ve never read the original Hillary Clinton health system changes proposals from the early 1990s, but at least they were complicated enough to scare everyone. That’s a sign she might at least have been candid about her understanding of what she thought she was up against. If a health system change proposal that starts with anything other than, “Let’s eliminate all government intervention in civilian health care immediately, with no exceptions, and I mean you, Medicare, Medicaid and income taxes,” is less than 2,000 pages long, there’s probably something important missing.

But, in her latest attempt to out-democrat-socialist Sanders, she is simultaneously trying to take a firm stand for controlling health care costs while ripping into Express Scripts (Nasdaq:ESRX), a pharmacy benefit manager, for trying to hold down costs by encouraging people to use cheaper medicines, rather than very expensive alternatives.

So, OK: We’ll have this great system in which we get costs under control, pronto. But no patient will ever have to worry much about cost of medicine when deciding on their course of treatment.

Meanwhile, typical Republican candidate proposals remain hazy, but they seem to depend heavily on the idea that people with diabetes, cancer and other serious chronic conditions will be happy to return to the kinds of risk pool coverage programs that they used to be on long, long wait lists way back in 2009.

I haven’t seen one Republican candidate arguing that restricting how seriously ill people use health care is critical to improving the efficiency of the U.S. health care system. Maybe they understand in their hearts that that’s — what from their perspective — is a sad but necessary step toward making things better, but they don’t seem to be eager to talk about how necessary they believe that step to be. They have their own version of the Democrats’ health system change ponies and unicorns problem.

On the third hand, think about how hard it is, even now that stock prices have become more volatile, for any insurer to compete with the Silicon Valley darlings for Wall Street’s or central bankers’ attention. 

New, or newish companies, that help us have more fun with our phones make their owners billionaires by promising investors that their earnings will soar toward Pluto for eternity.

See also: Perks keep getting nicer—for some workers

Traditional publishers, traditional retailers, and life and health insurers that have been selling useful products and services for a century or more, have to compete with these hyped companies using actual sales and profit figures that are fine, or maybe not all that great, and are not climbing out of Earth’s orbit any time soon.

The traditional companies sit at the edge of the dance floor, wondering what they’re doing wrong, while policymakers work to keep the waltzers whirling by blowing hot air into the bubble that keeps the dance floor from caving in.

The candidates can say whatever they want, because it doesn’t have to have much relationship with reality.

The Wall Street darlings can say whatever they want, for a few years, until the investors notice that the forecasts of eternal triple-digit growth were mistaken. 

But, at some point, we’ll have to have a day of reckoning and look hard at the gap between what we’ve pretended to have and what we do have.

See also: 

Investors in for ‘wild market ride’ in 2016: Janus

Matt Levine’s money stuff: Fed Day, junk bonds and unicorns


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