Health Insurance For All? Health Insurance For None!!!

Lately there’s been a big push to provide health insurance to everyone. While this is admirable, and plays really well with the voters, it’s doomed to fail. Here’s why:

Let’s start with the basic concept of insurance. The concept of insurance has been around for a while, but one of the biggest names is Lloyd’s of London. They started by insurance shipments across the ocean. This is how it worked. Sir Bob owns a ship of goods that he wants to ship to the colonies in America. Let’s say that the shipment is worth a total of 500 shillings, and the boat is 1500 shillings (back then they didn’t insure crews). Sir Bob goes up to the gentlemen of Lloyd’s of London and says, “I want to ensure my shipment to the colonies. The shipment is worth 500 shillings, and the boat 1500 shillings.” Lloyd’s of London replies, “Very well, pay us 750 shillings and we will insure your ship and your shipment.” By paying Lloyd’s 750 shillings, Sir Bob is essentially betting that his ship will sink on the way to the colonies. If the ship sinks, Sir Bob gets 2000 shillings. But if the ship arrives safely, he looses 750 shillings to the gents at Lloyd’s of London. So in essence, insurance is gambling.

Let’s add another variable into the mix. Sir Bob’s ship can either take route A or route B to the Americas. Route A is longer, but pretty safe. Route B is shorter, but it goes through pirate (ARRR!!!!!) infested waters. If Sir Bob tells Lloyd’s that his ship is going through Route B, the gents at Lloyd’s will charge Sir Bob 1500 shillings instead of the original 750. Why? Because the fellows at Lloyd’s aren’t stupid and realize that there’s a pretty good chance that Sir Bob’s ship will get raided and scuttled by pirates (ARRR!!!!) if it goes through route B. So they want a higher bet, which is pretty reasonable. They’ll only loose 500 shillings at the higher rate. It’s not their problem that Sir Bob is stupid enough to risk going through pirate (ARRR!!!) infested route B.

Now to health insurance. When you pay your monthly premium to the health insurance company, you’re saying to the insurance company that you will get sick and you will get sick with all the diseases that are covered under the insurance policy (this is what is known as coverage). The insurance company takes up that bet and makes you pay according to your health risk. If Bob is overweight, doesn’t exercise, has a family history of heart disease, and drinks a lot of beer, the insurance company looks at Bob and thinks, “You know what? I think this guy is going to get sick.” So naturally, they’re going to charge Bob a higher rate for the same coverage as Dave, who is the same age, but at a nominal weight, has no family history of heart disease, and maintains a fairly healthy lifestyle. Unfortunately, this means that there are people out there who won’t be able to afford certain coverage, or coverage at all, due to the fact that they’re considered high risk.

The *real* problem, however, is when government comes in and says it wants health insurance for all. Why? Well, let’s go back to the issue of Bob. Bob is clearly high risk, so the insurance group was originally going to charge him $250 a month for basic coverage, instead of $100 that Dave gets. But the government has stepped in and said that they cannot increase the premium for insurance based on risk. So the insurance company decides to raise the cost of basic coverage for everyone to $125. Why, you ask? Well, like Lloyd’s of London, the insurance company isn’t stupid. They know that if they cover Bob, they’re going to have to pay for a lot of medical expenses, i.e. – loose money. They’re a business, so naturally they want to loose as little money as possible (actually they want to make a profit). But they can’t raise Bob’s premium, so they figure they’ll raise EVERYONE’s premium. They’re already making money off of Dave, because he’s rarely gets sick and probably isn’t going to get as sick as Bob (statistically, anyway). So essentially everyone else who gets coverage from this particular insurance company is paying for Bob’s health problems. But what happens if the insurance company has more Bobs than Daves? And what if health care costs start skyrocketing through the roof? Well, obviously the government isn’t going to allow the insurance company to just raise the rates through the roof. So the insurance company is going to go bankrupt because it can’t pay for all the medical costs. Now you’ve gotten into a situation where NO ONE gets health insurance. Congratulations!!!

I’m sorry if I come across cold and condescending, but this is a serious problem with the idea of trying to give health insurance to EVERYONE in America. Universal health care is not much better, but I will get into that another time. In trying to provide health care to everyone, you either A) Provide less health coverage to everyone than before or B) Not provide health coverage at all because the insurance is too expensive or the insurance company went belly-up. There is no perfect system, but the current market-based insurance system rewards people for taking good care of themselves. Isn’t that a good thing?

The cost of the war

How much is the war in Iraq costing? Well according to Strategy Page, it cost $4.4 billion a month in 2003 and $8 billion a month in 2006.

Why the increase? Well most of the equipment sent over to Iraq in 2003 has been shipped back to be repaired or rebuilt. Combat uses up the equipment much faster then peace time training.

Also while the refurbishing of equipment (helicopters, tanks, APC, trucks, etc) is going on, the military isn't just restoring the equipment to the way it was when it was sent to Iraq. They are taking the opportunity to add the latest improvements to the equipment to make it even more effective on the battlefield. Also, a lot of the increase costs is R&D expense so when the equipment is being refurbished, the latest upgrades are available.

Its one way the military is getting improvements to its equipment which in the long run will help make our troops more effective, but it also adds to the cost of the war which has become a political issue.

Hybrid Update

Back in November 2004 I wrote a long entry on Hybrid cars. Basically another blog was saying the Toyota Prius and other Hybrids were over hyped and that they were not worth the price of the car. The main arguments against hybrids were:
1. Mileage claimed by the manufacturer wasn't achievable in real world driving.
2. Acceleration is sluggish that makes the car dangerous to others, especially on the highway.
3. Drive without the A/C or walk to save the planet.

Well its now January 2007 and wanted to revisit the complaints the original author had against hybrids.

Mileage: Well the EPA is looking to revise how the official MPG is calculated and I believe ALL cars and trucks will see their mileage go down. Hybrids may go down more then other cars.

I'm still getting 46.5 miles per gallon on city driving, freeway is now 49-50 miles per gallon. That's real world driving. A co worker who just purchased a Prius is getting 50 MPG on the freeway and 52 on the city, his real world. My sister-in-law is only getting 25-30 MPG because she drives more assertively, with more acceleration and hard stopping.

The mileage isn't as good as the EPA estimates, but we have all cut our gasoline consumption in half from our prior cars. That isn't too bad.

Acceleration: I've taken the car on trips to Las Vegas and all around So Cal and have not had any problem keeping up with traffic getting on or off the freeway. Acceleration is fine. No, the sports cars won't have to worry about my overtaking them, but I'm not holding anyone but street racers back.

No AC or walk: Walking to work is not a practical option, I live over 12 miles away from work and it would take several hours to walk each way. No AC? Well turning off the AC may help a car get 1 to 2 MPG improvement, but I haven't seen any car that is getting 46 MPG in the city, real world not just EPA MPG.

4 people have purchased Toyota Prius' after I recommended them (they didn't buy the car because of me, but they did seem to value my opinion of the car) and they are all happy with the cars.

So hybrids can be useful in helping to reducing the amount of gasoline the US uses every day. They are not the solution to the energy questions, but they are part of the solution.

Sen Warner is a fool

I didn't see the President's SOTU speech last night, was in class learning about data mining and how SAS provides tools to make data mining easier and how businesses can make better use of the information. There are lots of other places on the web talking about the SOTU speech and will let you go see them.

Story in the Washington Post is just amazing to me. Yes, I'm quoting from the story because they've written parts of it better then I would have.

The setting:
General Petraeus, new head of the forces in Iraq (I don't think he's head of CENCOM because he is only a Lt. General (3 stars) and not a full General (4 stars)) was testifying before the Senate Armed Services Committee.

The question:
Senator Lieberman asked Gen Petraeus

if Senate resolutions condemning White House Iraq policy "would give the enemy
some comfort."

The answer:
General Petraeus answered: "That's correct, sir."

The reaction from the fool (Sen Warner)

Sen. John W. Warner (R-Va.), until recently chairman of the Armed Services
Committee and a co-sponsor of one of those resolutions, later explained to the
general that he needed to be more careful about appearing to wade into a
political debate and warned Petraeus to not let himself be trapped into
portraying members of Congress as unpatriotic for disagreeing with President
Bush:

When I worked for Uncle Sam many years ago (civilian side, not military), I was told I had limits placed on what political activities I could partake in. Basically I couldn't work on political campaigns anymore and attending political rallies were actively discouraged. It might give the appearance of violating the rules. However, no one ever tried to take away my 1st Amendment right of free speech. Especially when asked a question from a superior, I was expected to answer truthfully.

I admit I haven't been in government service for a long time, but I haven't heard anything saying federal workers and especially military personnel are to not answer questions when asked by their lawful superiors as long as the question is not illegal. So if Sen Lieberman asked a lawful question (will these Senate resolutions provide some comfort to the enemy), the General was bound to answer it. If he didn't, he could have been held in contempt of Congress and put in jail.

For Sen Warner to take General Petraeus to task for answering a lawful question truthfully shows how much respect Sen Warner has for the rule of law the rest of us citizens must follow, ignorance of the military tradition (tell the truth even if its not what the superior wants to hear aka as duty and honor) and himself to be a fool.

I can't talk too much because Boxer is one of my Senators and she is a bigger fool then Warner, although Warner seems to want to give her a race for the title of biggest fool.

Hat tip Lucianne.

Where the money is going

Two more items from Strategy Page (yes they wrote the news and I'm relying it and linking to it).

Future Combat System 1.1

They have tested sending images from a UAV to an AH-64 that was 75 km away. The battlefield internet is starting to come into being. It will be interesting to see how the troops can utilize the information and if the leaders will devise a way to prevent information overload. If too much information flows in, people will be so busy looking at the data, they won't have time to fight and then will taking casualties they should have.

Procurement

What is the real direction the Army is taking in regards to the Future Combat System or any of the other new wiz bang weapons that have been in the press? Well, while statements from Army leaders is important and looking at how the Army is spending its R/D is important, the best indicator is what the Army is spending to buy for its troops.

The bulk of the money is NOT being spent on helicopters or UAVs or on ammunition or missiles, but on the more mundane things like radios, truck and armored vehicles.

US and Chinese aircraft

Two items from Strategy Page today.

Chinese JH-7, their version of the F-15E. Sounds bad from a Yankee view point. The F-15E is one of the best air to ground planes in the business, and its really not comforting to hear about a possible adversary having a plane that capable. But the story goes on to say the plane is underpowered, has an operating radius of 900 KM (around 400 miles) and a 5 ton bomb load.

The plane could be used to help blockade Taiwan, but the PRC would have to station the plane close to the coast and it would be difficult to reach beyond Taiwan to intercept the shipping. The PRC could end up like the German ME-109 during the Battle of Britain in WW2. The plane's operating radius is just long enough to get into combat and too short to effectively do its job once it gets there because it has to return to base to refuel.

The second item is a change in tactics in the operation of the AH-64 Apache helicopter. The AH-64 was originally intended to operate in the tree tops or use buildings to shield them against the enemy. If they flew higher, they would be easier targets for SAM's and other fighter aircraft. Well, in Iraq, there aren't any fighters to worry about and the only SAM's are small shoulder launched ones. There is however, a lot of ground fire. By staying higher in the air, the sensors can see more and the helicopter can avoid the ground fire which helps the maintenance folks keep the AH-64 in flyable service.

For the person who has everything

That subject doesn't include me.

Even though my birthday was last week, I didn't get any of these gifts from my lovely wife, she knows I'd do something silly like try to fly them. Ok, so I haven't had a flying lesson yet, getting one of these for my birthday would be a great encouragement to take lessons. The fact that we can't afford them either is beside the point right?

Planes for sale:
1980 Dassault Mirage F1 (basic info on plane)

1953 Lockheed T-33 (basic info on plane)

1972 North American Northrop F5 (basic info on plane)

So, anybody got a spare million or 5 I could have??? The T-33 or F-5 would be my preference.

Information on planes available for sale at http://www.aviatorsale.com/default.asp