In this article I will be expanding on the finances of health insurance, how the industry functions, and who benefits. To set the stage for this discussion, remember the President would have you believe your health will improve if only you have a health insurance policy. Our elected politicians, in one form or another, are saying essentially the same thing because they want your vote. I declare that a health insurance policy has nothing to do with your health, and health services are overpriced because of health insurance. First, can we agree that health insurance is really not about your health? When you are sick, you do not make as appointment with a health insurance company; you make an appointment with your doctor, and hope he will honor your insurance.
A health insurance policy is really just a financial document, so let's begin to understand the health industry by looking at the words of an economist with no knowledge of health care, nor does this economist understand the workings of a doctor. He talks about the economic side effects of the Affordable Care Act (ACA), sometimes referred to as Obamacare. How the costs outweigh the benefits. He also points out that our economy is mostly based on labor and work, and that is what he addresses the most because he is not a worker in the health field.
The key economic concept required to understand the labor market effects of the ACA is what economists call "tax distortions." Tax distortions are changes in behavior on the part of businesses or households for the purpose of reducing their taxes or increasing their subsidies. Those actions are then called "distortions" by economists, because the distortions do not occur in real businesses. The distortions occur because of our crazy tax code. A good example of a tax policy that creates distortions is the ethanol subsidy. Technically the ethanol subsidy is a tax credit, not a tax subsidy, wheree gasoline refiners are subsidized on the basis of how many gallons of gas they produce and mix with ethanol.
Another economic element that does not get much publicity from the news media or politicians is that that creating ethanol from corn is expensive. The cost of creating ethanol then becomes a "zero-sum-gain" when we use it to dilute gasoline in our vehicles. It's typical of our government to create these crazy regulations and the bottom line is that health insurance is a distortion too. Just like ethanol does not do anything to make your car run better, health insurance does not do anything to improve your health.