There are many sad tales appearing on the internet which present people who are angry because they feel mistreated by their insurance company. Those personal anecdotes are designed to raise an individual’s ire and natural desire to do something about it. The reader may notice that conveniently attached to such stories are mentions of a solution to the problem: healthcare reform as being debated into law by Congress.
The setup seems almost too easy. David, the little man (or woman, or child, or family) gets beaten on by a Goliath (big insurance company) who treats them as mere numbers in a soulless quest for ever increasing profit, only to have Congress and others swoop in to save the day. Someone should create a comic book about that story because it would be entertaining – and fictional.
Yes, we are cynical and skeptical at heart and are willing to wager that many of our readers who come across such saccharine tales of heartache also immediately think “what are they selling?“. Being cynical and skeptical to a degree one notch below annoying is a trait commonly found in scientists because it is an important part of the scientific process. Not all of you are like that (yet), so for those of you who are new to all this, buckle up and hang on for an interesting ride.
Why would insurance companies do silly things, like deny coverage to an unusually heavy baby, if the bad publicity is so damaging to their reputation?
The answer is because insurance companies use statistical tables to make decisions, and anyone caught at the tail end will have a rough time. Here is the most interesting quote from the story of baby Alex Lange:
The frustrated parents said their child was the odd infant out in a cruel numbers game. A chart by the Centers for Disease Control and Prevention used by insurers puts Alex in the 99th percentile for weight and height for babies his age.
The BMI chart is an example of flawed statistics being used, but it is also not entirely inaccurate for a population wide assessment. In general, someone who has a BMI above 30 is far more likely to be unhealthy than to be an athlete. The problem is for those in the middle, in between normal and obese, who are merely considered overweight.
One flaw in the system is that while most people in the obese range are unhealthy, the same cannot be said for those in the overweight range. Pay close attention the next time you are at the park or the gym to those chunky guys who can outrun you. In fact, someone with low body fat who is athletic in that range between casual Frisbee player and professional athlete can often be classified as overweight.
Insurance companies can get away with using the BMI to classify people into broad categories, which then affects their premiums or if they are eligible for insurance at all because the government continues to use it, even though it is flawed. According to the CDC:
BMI is a fairly reliable indicator of body fatness for most people.
If the BMI chart is based on an illogical formula concocted over 200 years ago and can only give a general assessment of obesity in a population while failing on an individual level, why is it still in use by the government?
The answer is because government loves to create problems for which it is the solution. Pay close attention to what is happening here because this is a pattern that repeats over and over again.
First, the CDC called more than one million people between 2006 and 2008 and collected their information. The fact that the data are suspect because people routinely lie about their height and weight should be obvious even to a non-scientist. Second, after the data was gathered and processed, a conclusion was reached:
Experts believe there are several reasons for the differences. People with lower incomes often have less access to medical care, exercise facilities and more expensive, healthier food. In many places, minorities are disproportionately poor.
“Poverty is a very strong driver of obesity,” said Kelly Brownell, director of Yale University’s Rudd Center for Food Policy and Obesity
The differences being referred to are the differences between the African-American communities and other communities in terms of obesity. We already know the reason for those differences, and it is the reason the BMI chart is racist. So, where does that conclusion lead to?
The only way to deal with our “obesity epidemic” is to address the “poverty epidemic” — of course, as measured by yet another government psuedo-science statistic called the “poverty line”. And how do we deal with that? You guessed it, create more entitlement programs, programs to be run by the very same government that is funding the study, a study based on a statistical measure that is meaningless, where the statistics are unreliable and unverifiable but all point to the same convenient conclusion — the government needs more of your money.
And the media will now happily play along, running b-roll footage of some fat dude at Disney shoving ice cream in his pie hole or a fat mother and her fat kids waddling along through Frontierland, their butts bouncing up and down, as they stroll through the theme park in too-tight shorts and too-short t-shirts.
Laugh if you want but this is the same government that wants to ration your health care. Guess what? Fat people move to the back of the line under such a government-run health care system. Still laughing?
Although baby Alex Lange’s story inspires outrage, it is the insurance company taking all the heat, rather than the government. If the government banned the use of the BMI chart because of its flaws the insurance companies would be forced to evaluate everyone on an individual basis leading to fairer premiums. Individualized healthcare is one result of a market based system because a fair market needs to distinguish between a healthy 200 lb. person and a 200 lb. couch potato. Currently, they are both considered equally risky to insure and such a system does not foster individual responsibility.
People are even angrier today according to newspapers because a report which concluded that the healthcare reform bill recently approved by the senate finance committee would end up costing everyone more money is false – at least according to certain members of Congress and economist from MIT.
After an insurance industry report said that premiums would rise sharply with the passage of comprehensive health care legislation, Jon Gruber, a health care economist at the Massachusetts Institute of Technology, said he evaluated the report Monday at the request of Senate Democrats and found it deeply flawed.
Coming from a prestigious academic institution does not guarantee that Jon Gruber is telling the truth but it does lend him a lot of credibility, so he will be taken seriously. We are skeptics and our site is geared towards teaching non-scientists, so how can a non-expert determine if someone with fancy credentials is telling the truth when what they are saying goes against logic and common sense?
In this instance the answer is amazingly simple.
Mr. Gruber, who helped Massachusetts with its effort to provide universal health insurance coverage, said that the industry report failed to take into account administrative overhead costs that he said will “fall enormously” once insurance polices are sold through new government-regulated marketplaces, or exchanges.
We need to examine the situation in Massachusetts since they implemented universal health insurance in a way very similar to the proposals in the Baucus bill. Depending on how the situation turned out, it will either serve as a model for the current bills in Congress or a dire warning against them and will establish the reader establish Mr. Gruber’s real level of credibility.
The Wall Street Journal talks about the situation in Massachusetts (and other states, so go read the whole thing):
Guaranteed issue alone, the argument goes, results in slightly more expensive premiums, which drives healthier individuals out of the risk pool, which in turn further drives up premiums. The end result is that many healthy people opt out, leaving a small pool of sick individuals with very high premiums. An individual mandate, however, would spread those premium costs across a larger, healthier population, thus keeping premium costs down.
The experience of Massachusetts, which implemented an individual mandate in 2007, suggests otherwise. Health-insurance premiums in the Bay State have risen significantly faster than the national average, according to the Commonwealth Fund, a nonprofit health foundation. At an average of $13,788, the state’s family plans are now the nation’s most expensive. Meanwhile, insurance companies are planning additional double-digit hikes, “prompting many employers to reduce benefits and shift additional costs to workers” according to the Boston Globe.
And health-care costs have continued to grow rapidly. According to a Rand Corporation study this year, the growth now exceeds state GDP by 8%. The Boston Globe recently reported that state health-insurance commissioners are now worried that medical spending could push both employers and patients into bankruptcy, and may even threaten the system’s continued existence.
That certainly paints a cheery picture. There is more wonderful news from The Boston Globe:
The state’s major health insurers plan to raise premiums by about 10 percent next year, prompting many employers to reduce benefits and shift additional costs to workers.
Increases will range from 7 to 12 percent, capping a decade of consecutive double-digit premium increases, according to a Globe survey of the state’s top health insurers. Actual rates for 2010 will depend on the size of the employer and the type of coverage, with small businesses and individuals expected to be hit hardest. Overall, premiums are more than twice as high as they were 10 years ago.
The higher insurance costs undermine a key tenet of the state’s landmark health care law passed two years ago, as well as President Obama’s effort to overhaul health care. In addition to mandating insurance for most residents, the Massachusetts bill sought to rein in health care costs.
The failure of the Massachusetts system is far from hidden. Who is Jon Gruber hoping to fool by flashing his academic pedigree? Is the general population reading the news so incapable of examining the issues in any depth such that Mr. Gruber can brag about the wonderful state of universal health insurance in Massachusetts without the rubes bothering to check and see how things actually turned out?
Many newspapers and other outlets reporting on this situation are in favor of universal healthcare becoming law, damn the facts, and so reports on the subject tend to be biased by omission of key details which would entirely change the outcome of the story. The real anger is by citizens who are frustrated at being ignored by their elected officials and maligned by some members of the media.
When a layperson expounds about a subject in a way that it is clear they are out of their depth, we excuse the ignorance or quickly sniff out the agenda. However, we must hang our heads in shame when a fellow scientist abuses their position of trust and respect to mislead the general public. Jonathan Gruber’s motivation for lying is not important, simply because such lying is unacceptable. Studying science is about shedding light on the world’s mysteries, and so we have fulfilled our responsibility by illuminating this situation with sunlight, the best disinfectant.
Exit question: What are you going to do about it?
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