After an informal analysis of the health insurance system in the USA, I’ve come to the conclusion that while Lincoln may have freed the slaves, we haven’t actually abolished slavery here. In fact, it is alive and well, enshrined in law, and the Affordable Care Act is one of the few things that seeks to address that situation. Bear with me, I’ll connect the dots.
This all started when I changed jobs and went on COBRA. There was a 2-week period in which my COBRA application was being processed and in that time the insurance company told the pharmacy that I was self-pay. Like many plans, on ours we pay the retail price for meds or $10, whichever is less. Among the prescriptions that we get here at Casa de Wyatt are two maintenance meds that had always been less than a co-pay. In fact, we’d never paid more than $10 total for both prescriptions for many years. So when the pharmacy told us the insurance company denied coverage for the refill, I wasn’t worried. I can spare the $7 or $8 out of pocket.
Except it wasn’t $7 or $8. It turns out that price is not retail for these meds but rather the negotiated price under our insurance. The retail price for uninsured people was much higher.
That’s a problem. The idea of insurance is that many people pool their risk and the premium is the average of that risk. Many people may more and some people benefit tremendously, but catastrophic risk is eliminated.
But what has happened is that the insurance company represents so many people that it was able to negotiate favorable discounts on medicines through the pharmacy in return for an in-plan designation. The pharmacy then recovers those discounts by increasing the retail cost of the drugs to people not in the plan. The result is that the insurance company has not simply averaged the risk of their members, but have actually externalized that risk so that people not in their plan are now subsidizing them.
Ironically, the people complaining most loudly about not wanting to subsidize the poor are in fact being subsidized by the poor.
If that gives you pause to think you’d better sit down before going further. Are you ready?
As an uninsured self-payer, my bill for these two prescriptions that had in the past had averaged $7 ~ $8 total came to $380. That means the insurance company is being subsidized by the uninsured population – that externalized risk I mentioned earlier – at a rate of 50:1. For every dollar I’d paid over the years on these prescriptions, uninsured people were paying $50 on the same meds so that the pharmacy could recover the price concessions they’d made to my insurer.
That is one of the reasons why if you have no insurance and get sick, you accumulate lifelong debt. One accident or illness takes forever to pay off when, in addition to yourself, you are absorbing the risk of about 50 people with insurance.
That gets us to indentured servitude. Get sick or injured once and you are ever after a vassal of the insurance company. It’s a short hop from there to slavery though. We supposedly do not have debtor’s prisons but we do have collection agencies. Once you accumulate overwhelming debt, you become vulnerable to all sorts of parasites and collection agencies are the second wave of infection (coming right after the insurers). The collection agencies’ latest tactic is to file in court to recover the debt. Since they do not necessarily have the latest address for the debtor – and don’t look too hard for it – the plaintiffs often do not receive notification of the suit. The police are much more diligent about tracking down the plaintiff and so the first they know of the suit is often when they are arrested on a “Failure to Appear” warrant.
Once they are in jail, they cannot get out until they not only pay the debt but also the court and attorney’s fees. These are the third wave of parasite swooping in for their blood feast. Of course, while they are in jail they cannot earn a living and so their main hope is that friends and family can raise the funds. If friends and family cannot absorb the debt and the cost of supporting the family while one of the wage-earners is jailed, the result can be devastating. Meanwhile the person in prison ends up working in a call center or otherwise earning a profit for the prison. Their personal stipend from this work often doesn’t cover their interest on the debt, let alone pay it off.
Imprisoned, stripped of franchise, forced to work for the profit of others, little or no hope of regaining your freedom. Isn’t that the very definition of slavery?
Some light reading:
- The Atlantic: Georgia’s Debtors’ Prisons Belong in a Dickens Novel
- NPR: Unpaid Bills Land Some Debtors Behind Bars
- Charging prisoners fees, even for public defender, creates debtors’ prison
- Colorado regularly imprisons poor offenders unable to pay fines – ACLU
- The Economist: The new debtors’ prisons