As we continue examining the American Health Care Plan advocated by Independent Green Party Candidate Floyd Bayne who is trying to unseat Republican Incumbent Eric Cantor, I must admit that the research and detail is impressive. Dr. Lanzalotti has obviously put in a great deal of work on this, and judging by his comments on my previous post VA-07 Candidate Floyd Bayne Has Some ‘Splaining To Do is not very receptive to opinions critical of his program.
My guess is that the Doctor and Floyd Bayne will like this opinion even less.
This plan will shift huge numbers of people from good jobs in the Medical Field to the ranks of the unemployed. I notice there is one area of research missing from the Bayne endorsed plan: Job Impact Study.
Now if such a study is tucked away in the rather voluminous plan, I am unable to find it. Please, if anyone is able to find this information, please let me know and I will be happy to retract what follows.
There is no doubt this plan would create great efficiency in the way we obtain and pay for health care. But these inefficiencies create millions of jobs.
Each payment gives the patient an appropriate amount of money for the particular complexity of their illness or injury so that they have an appropriate budget from which to pay for all of their non-discretionary care at market value. Another advantage to this system is that this computerized system eliminates the need for the doctor to have to file claim forms to get paid. He can also eliminate several staff members that now handle all of paperwork associated with filing claims. This means less overhead for the doctor, lower doctor fees, and more time to spend with the patient.
A quick look around shows that in 2003 we had around 800,000 doctors in the US. The statement above that He can also eliminate several staff members assumes that each doctor (he) can eliminate several staff members. Several would be more than one. So, conservatively speaking, doctors could lay off 1,600,000 people if several only means two.
If these additional efficiencies in the Plan negate the need for 1,600,000 people to file the claims, then the insurance companies would require far fewer employees to process claims, perhaps doubling the conservative 1,600,000 figure. We now have, conservatively, 3,200,000 jobless folks, but this plan is not done making things more efficient.
We will enjoy savings from fewer “unnecessary” tests being done according to the plan. This will translate to job losses for lab technicians and the ripple effect will effect medical equipment suppliers, medical salespersons, manufacturing jobs and the maintenance staff and technology sales needed to support far fewer workers.
And the savings the plan will create will cause less money to flow through insurance companies.
The dirty little secret few people outside of the insurance industry understand is exactly how most insurers make money. As an insurance agency owner and licensed agent, insurance is an area in which I believe I have ample experience and qualifications to at least rise above the level of layman. Did you know that most insurance companies suffer what is called an underwriting loss every year? What that means is they paid out more in claims than they collected in premiums. Yet they still make billions in profits.
How can this be? Simple. They deal in massive amounts of money flowing in and out. They keep enough liquidity to pay claims and invest the rest in safe investments. These investments in today’s market don’t pay very much, but when you are dealing with massive pools of cash, a percent or two adds up to millions or even billions of dollars. So, most of the evil insurance companies actually charge you less than it actually costs them and make their profits from investments, not the person. How cool is that?
But under this plan, the volume of money flowing in and out of the insurance companies would drop dramatically. Which means the money insurers have to invest, and the return on those investments would necessarily drop dramatically. Insurance companies would no longer be able to take an underwriting loss and their profit would have to be taken from the insured, or at least a large part of it. The result? Premiums would have to go up.
And consider the effect on the markets. Insurers would be forced to halt most of their investments and take their operating profits like any retail business, by charging more. The dollar volume on the American markets would drop by billions, probably trillions of dollars. Causing another ripple effect on the economy.
Making our health care system more efficient is one of those things that seems, at first glance, to be a brilliant idea. But one man’s inefficiencies is another man’s job. The calculations used in the American Health Care plan Bayne plans to push give absolutely no economic impact data or predictions beyond the savings the plan would (theoretically) create. Unemployment, diminished insurance company investments and the net effect and ripples these “savings” would cost us is not a part of the plan.
In defense of Dr. Lanzalotti, the questions of strict constitutionality and the total economic impact (including loss of jobs and commerce) were never part of the scope of his research and work. The practical impact and total economic impact were never a part of this exercise. The Doctor has done a wonderful answering the question “How can we maximize efficiency and cost savings with the American Medical system”. He has done an exhaustive and impressive job answering that question. My only criticism is that he never addressed the total economic impact. But that was outside of the scope of this thesis.
Floyd Bayne, on the other hand, has a higher burden and duty to the voters. His lack of experience and understanding of the impact of his choices are brought front and center with his decision to support this plan. He does not have the savvy and understanding that is necessary to avoid backing a plan that has horrendous implications and impact on jobs and the economy. His myopic vision and inability look at the big picture are so glaringly obvious with this choice. Bayne is simply too inexperienced to look beyond the first stage.
I truly do not mean this as a personal slight to Floyd Bayne. He is an upstanding man and his heart is absolutely in the right place. I am very proud that he sees a problem in Washington and is willing to stand up and offer his help. Running for office is one of the most difficult things anyone could do, and he is to be commended for his efforts and his belief in our Constitution. Floyd is a true patriot and I mean that from the bottom of my heart.
But this task is beyond his experience level. It is another league entirely. But the shortsightedness on this issue I see in Bayne convinces me beyond the shadow of a doubt that Eric Cantor is the man we need right now in Washington DC. Cantor understands that one must look beyond the short term “pie in the sky” ideas like this Health plan and consider how much the savings will end up costing us. This is not something a novice can be expected to comprehend. And experience is the best teacher. And as unpalatable as it may sound, a career politician like Cantor is not prone to rookie mistakes like this.