I am supposed to be sitting in a movie theater watching Interstellar. The plan was in place for months. Instead, I write this post, which is commentary on health insurance in America. The two things are strangely connected, if in this or any other universe such seemingly disparate relationships are random. What’s that saying about a butterfly flapping its wings?

Here’s a nut graph, so you can decide whether to read further or stop here: America’s healthcare system is broken. Free-market forces cannot work. The 1945 McCarran-Ferguson Act laid the framework for healthcare monopolies, which nearly 70 years later act like cartels, in defiance of the 1890 Sherman Antitrust Act. The Affordable Care Act raises healthcare costs, while managing the monopolies rather than eliminating them. As such, the free-market forces that should stimulate competition and drive down prices are stymied. 

The argument I present today uses little supporting data, but relies on my personal uninsured experience and straightforward logical examples. Perhaps in a future post, I will put numbers behind the hypotheses.

That Day in May
On April 1, 2009, I earned a six-figure salary as editor for two blogs—Apple Watch and Microsoft Watch—operated by Ziff Davis Enterprise. Two-and-a-half years earlier, Ziff Davis Media wooed me from my senior analyst role at JupiterResearch. The news group planned to build online audience around journalist personalities rather than just content. Half-year after hiring me, ZDM sold off its enterprise operation, which became ZDE.

I am not privy to all the details, and wouldn’t reveal them if known, but the catastrophic stock market crash of September 2008—from the housing bubble burst I predicted three years earlier—slammed ZDE, which resulted in a dramatic change occurring in early April 2009. I believe the creditors/investors took an active role, which I cannot confirm.

But I do know that after some big meeting with them, my situation changed. My boss warned that my job might be in jeopardy. About week later, he gave me two weeks notice. My employment would end at the close of business on April 30. However, the company would gladly rehire me to write for eWeek and cut my salary by 36 percent. The change also would impose a five-story-a-day quota. I couldn’t see any good journalism coming from that.

I considered but rejected the offer, assuming that:

  • As a well-known tech journalist, I could quickly find new employment
  • I would be a slave to my computer writing to meet a quota rather than serve readers
  • My bosses wouldn’t respect me, and, as such, there would be no future advancement possible

What I failed to understand then, but grasped within a few months: News organizations across the country pink-slipped senior, and expensive, staff everywhere. Many of the freshly unemployed journalists returned to the same or similar jobs under contract for a fraction of their original salaries (and no benefits) or were replaced by younger, less-experienced, and cheaper writers. I wasn’t such just one seasoned, well-known laid-off journalist, but one of many, and my location in San Diego—where I was committed to live for the benefit of my aged father-in-law (now 92)—was a liability.

The job loss meant that on May 1, 2009, I entered the ranks of the uninsured. COBRA coverage was available, but the family couldn’t afford it, not at more than $1,000 a month (I vaguely recall a figure closer to $1,200 but kept no records).

I explored different heath-insurance options. The least-expensive plan, which imposed impractically high deductibles, would cost our family of three about $600 a month. Given the job situation, my wife and I agreed to tough it out.

While searching for work, I started reporting for BetaNews. For more than a decade, founder Nate Mook had wanted me to write for the site, and we discussed the possibility often. But he couldn’t afford me. That changed, particularly after unemployment benefits ended, but not my insurance situation. With my pay reduced, but expenses largely unchanged in high-cost-of-living San Diego, health insurance wasn’t an option, even with BetaNews adding extra to my negotiated salary for that purpose.

Fear and Monopoly
Being uninsured isn’t so much the problem as the fear of being uninsured. The “What if” question nags. What if I have an accident? What if I get sick? Multiply the questions by three, when adding spouse and child, and there is a load of worry, which dissipates over time. But, at least in California, I’ve learned there are options.

For example, my doctor charges $55 to $70, uninsured, for regular visits. The office bills insurance companies $150 or more. My lower payment is guaranteed at time of service. The medical office doesn’t incur added expense, dedicate employee work hours to processing claims, or suffer fee-reduction when the insurer chooses to pay less. There’s mutual benefit to me and to the caregiver.

Last year, my doctor conducted a routine blood test, which consequences I didn’t understand. The outside lab billed me $170 and wouldn’t negotiate lower payment; that’s the same charge an insurance company would receive. Few months ago, I visited the same lab directly for another routine test. The organization accepted $50, which is an uninsured rate. My ophthalmologist also discounts.

The uninsured rates reflect market dynamics at work, rather than interference from regulated management and monopoly. When there is competition, factors like supply and demand and fluidity of the local economy determine the value of goods or services.

For example, the median price for a three-bedroom home in San Diego is $487,500, according to Trulia. Bangor, Maine: $137,788. Both stats are for the week ended Oct. 29, 2014. A home isn’t intrinsically more valuable in Southern California. Qualities of the local economy—where spending power is greater, overall cost of living higher, and competition for housing tighter—set values the local market will bear.

Keywords: Local market. When you partially nationalize anything, the dynamics change, stymying free-market forces where competition and supply and demand would otherwise dictate prices and product or service availability. The supplier can’t charge $1,000 for Product X and sell many if the average household income is $250 a month. That’s extreme example for the United States, but not for many emerging markets, which granted aren’t the topic of this essay. Nor is it extreme for many younger U.S. workers.

Auto insurance is another example of nationalized catastrophe. While regulated state by state, and somewhat subject to local economies, auto insurance pools large amounts of collected capital nationally. My agent may be local, and rates subject to California state regulation, but the insurer is nevertheless national. There is a larger capital base to claims, which conceptually lowers rates. However, the pool for paying settlements is greater for liability lawsuits. If all auto insurance was local, with the pool of capital restricted to the state (county, or community), lawyers couldn’t as easily or freely sue. It’s the law of supply demand.

Health insurance is complicated by national regulation that enables non-competitive behavior, some of which the Affordable Care Act better manages but doesn’t remove. Meanwhile, in the unregulated uninsured market, lower costs foreshadow what truly competitive healthcare could be like. I got sense of this three weeks ago today, when visiting urgent care.

The Parking Lot Incident
That brings me to explain why I write this post rather than watch Interstellar. On October 17, I drove my father-in-law to a luncheon seeking real-estate investors. The group of retirees ate at Donovan’s restaurant in La Jolla, and I put the car in the adjacent lot managed by Ace Parking. What happened later is so embarrassing, I reluctantly admit it.

To save time, being concerned about my aged father-in-law falling down (as happened once before at one of these luncheons, I took to most direct route, walking from the eatery to the parking lot, which, despite its fairly small size, uses a ticket system and swinging arm-gate. I moved through the open gate as a car exited.  Big mistake! The security thingy crashed down on my head. A witness in another vehicle asked if I was okay.

Luckily, I suffered no head trauma. But I could feel tension and compression spread throughout my back. Absolutely, the falling force injured me. I made way to the car, and as I paid at the exit observed another person walk through the open arm-gate rather than go around it.

Later, at home sitting at my desk, I felt my backbone against the chair. Was this psychosomatic or for real? My neck and face felt very peculiar, as well as my upper shoulders. I contacted the luncheon’s sponsor, which helpfully found and provided the phone number for Ace. I called and an operator connected me to the claims department, where a woman took my information; later she rang to confirm which Donovan’s location (there are two). She said someone from the lot would contact me. No follow-up call came, and my future efforts to reach her ended with voice mail messages and no further response.

My doctor’s office closed early on that Friday, and as the afternoon dimmed,  my uninsured situation slammed as hard as the parking lot barrier. What should I do? Emergency room was no option at all, not if the Wilcoxes ever planned to pay. My wife and I used Google and Siri to search for urgent care facilities, and Yelp to prioritize them. Only one, in Clairemont, looked promising and would be open late enough to see me. The fee: $129, but a printed coupon would cover two X-rays for another $40.

The overall service greatly impressed me, and the doctor on duty relieved my anxiety. He detected in my movements no injury to the skeletal structure but observed muscle tension. I returned home expecting increased pain around Monday, as he warned, but with no other concerns.

Except…my spine still pushed against my chair, and the muscle pain spread across my whole upper back. I called urgent care, which would charge $65 uninsured for a followup visit or $169 if there were two X-rays.

By lucky coincidence, the attending physician was a DO, or doctor of osteopathy. She started by asking that I move my neck, and acknowledged with nods muscular problems. The doctor then conducted a fairly thorough examination of my upper back, and she explained the Trapezius muscle that goes from the nap of the neck to middle back was essentially seized up, such that the spine shape was somewhat straightened from its normal curvature. She predicted two to six weeks healing, recommending X-rays as precaution.

The technician shot five, bringing my cost for the day to $275. Uninsured. I wondered: How much more would the office bill an insurance company. My father-in-law went to the emergency room recently, and the single X-ray was $360. I know because he received a bill requesting insurance information. My cost per X-ray was $42 when removing $65 for the visit. The difference between the $210 I paid for five versus the $360 billed my father-in-law’s insurer for one is an anecdotal metaphor for free-market, competitive healthcare versus government sanctioned and partially-managed monopoly.

What does this have to do with Interstellar? Because my movements are restricted, particularly in the plane where the arms move and when tilting my head back, I couldn’t comfortably sit in a movie for more than three hours (2:45 plus previews). The theater seats slope and would pressure my back too much. So I sit out this film, because I can’t comfortably sit in it.

My malady is a reminder: Accident is every uninsured person’s great fear. Otherwise, I am healthier than ever and maybe more so because I have to be. Out-of-pocket healthcare costs are incentive to eat wisely and to exercise. But in this case of injury, my treatment is to suck it up.  Physical therapy that might speed my recovery is beyond my means without insurance.

In this instance, I had hoped to recover some healthcare costs from Ace Parking. My daughter wondered why there was no sensor, which is a good point when thinking about the gate-arm smashing down on some La Jolla hoity-toity’s BMW. Surely that’s an angry liability problem best avoided. But, as previously mentioned, Ace is unresponsive.

I have never sued anyone, and would do so grudgingly, but nevertheless called San Diego Bar Association searching for a liability attorney. Bar rep said no one would likely take the case, which is exactly the lawyer’s response. What? There’s no pain and suffering? Let me show you some.

The Subsidy Problem
If you have read this far (and surely some award is merited for such feat), there is question why my family isn’t insured under the Affordable Care Act. Simple answer: Government intervention increased costs.

About a year before the first Obamacare open enrollment, I looked at local health insurance plans. I could still obtain coverage on my own, granted with high deductible, for around $600 a month for the family. I could only hope the Affordable Care Act would  live up to its name. Be affordable.

Like so many other Americans, last autumn, I surveyed my options under Obamacare. Locally, the state-managed insurance market is Covered California, and the initial process raised my hopes. The system recommended a Silver plan with high copays ($40, if I rightly recall, as one example), for around $280 a month. But upon completing the application process, Covered California informed me that the family didn’t qualify for the government subsidy. As such, the insurance would cost $700 per month more.

A year earlier, as aforementioned, I could have purchased an undesirable insurance plan for close to $600 a month. Obamacare raised my cost by about $400 for coverage that was in some ways better, but in many more worse. Because I didn’t keep records, I can’t specifically quantify comparatively.

Had we qualified for the subsidy, my monthly cost could have been even lower—well under $200 for a Bronze plan, with ridiculously high deductible and copays. However, I would have paid more and taken the Silver one; but with regrets.

I don’t support subsidies. President Obama can argue that they give insurance to people who couldn’t otherwise afford it. But the real costs don’t decrease. They go up.

As a tech journalist, I know something about subsidies, because they’re so hotly debated with respect to cell phones. That iPhone for which you pay $199 costs the cellular carrier $649. The provider recovers the difference by charging customers data fees over 24-month contracts. The subsidy hides the handset’s real cost from consumers, but it’s still there.

While no lawyer, but still a journalist who has covered numerous antitrust and fair trade cases, I can’t help but wonder why subsidies don’t constitute price fixing. The whole point of U.S. antitrust law is to prevent consumer harm from forces that interfere with competition. While consumers pay less for the phones, prices fixed considerably higher to the carrier are arguably artificial—imposed by, say, Apple rather than the fluid competitive market. Proof point: That $649 paid for iPhone 6 is the same for the 5s, the 5, the 4s, and the 4; unchanged for at least four years. In dynamic markets prices are fluid rather than static, and where there is competition they tend to go down.

Stated differently: Subsidies obscure and raise cell phone prices to carriers, which pass the costs onto consumers. I see the Affordable Care Act in like manner. While many more people can afford health insurance because of government subsidies, costs rise but are hidden from consumers.

Coincidentally, while taking a break from writing this opus I saw a Washington Post headline about Obamacare subsidies. The U.S. Supreme Court agreed to hear a case regarding them. That’s one I’ll closely watch.

Legislate and Litigate
The objective to make healthcare affordable and available to more people is enviable. But in an already managed insurance market, largely because of the McCarran-Ferguson Act, subsidies increase costs on the back end. American tax dollars cover the difference. I don’t want to subsidize large private businesses that should compete on merit of service, while charging fees that are oppressive. Do you?

This week’s mid-term elections put Republicans in control of both houses of government, and there is already increased chatter about killing the Affordable Care Act. Defunding is one approach and probably easier than repealing. But the 2010 law isn’t the problem but the one from 1945. The McCarran-Ferguson Act exempts health-insurance companies from antitrust enforcement.

As such, the answer to America’s healthcare cost crisis was never more legislation but its repeal and then more litigation. Insurance companies should compete, and those that don’t must be prosecuted for the cartels that they are. Real competition will bring down costs and allow more people to afford healthcare. Long-term, that’s a more effective method than subsidizing insurance companies and in the process driving up healthcare costs.

I am reminded of the old AT&T’s breakup into five separate Bell System companies. The monopoly provided great service and arguably on the cheap. Back home in Maine, if something broke, Ma Bell sent out a tech to fix it. But after breakup, costs rose. You had to buy the telephone, which no longer came with the service cost. Also new: Service charge should the technician enter your home to repair lines. Long-distance fees increased, too.

AT&T’s fracture increased costs where I lived, and as a young twenty-something they hurt. But as competition increased, prices fell, starting with the long-distance rates. I am convinced the wireless industry wouldn’t exist as it does today, if it all, with the mighty Ma Bell monopoly aggressively protecting its landline business.

Sherman Act enforcement brought a world good, but only after inflicting a seeming universe of pain. Healthcare in America is not a free-market. The antitrust exemption bandaged by legislation and regulation is no remedy for the illness. Doing away the competition-limiting aspects of 1945 and 2010 laws would be analogous to breaking bones and resetting them to heal. The process will hurt.

Obamacare open enrollment begins again next week, and I will most certainly investigate options. Back injury is something new to me, and it’s impetuous to try again for affordable insurance coverage. But I would gladly pay more now, if in the long-term prices declined and services increased because of free-market competition.

Short of serious illness or injury, right now the most affordable health insurance for the Wilcoxes is none. If I paid the nearly $1,000 a month under Obamacare for 11 months, my premiums for insurance would be $10,672. The family’s out-of-pocket expenses paying uninsured rates is less than $3,000—and the figure would be well under $1,000 if not for back injury and treatment to fully restore my vision. At the subsidized rate, we would nearly break even before factoring copays. The point: We do better in the competitive, underground uninsured market. Sad, isn’t it?

By the way, the Wilcox family does have dental insurance, available at lower rate because we are Costco members. I renewed for another 12 months on November 1, paying the same rate as last year: $212.13, for three people. That’s the annual payment, not monthly. Now that is affordable healthcare.

One thought on “My Uninsured Life

  1. I commend you for tackling this topic. I find it daunting to put into words, but generally agree with everything you say about competition, insurance monopoly, and price fixing. I have been “self-pay” for years and have only needed to visit the doctor once a year to renew my thyroid med prescription and make sure the dose was right…been doing it for 20 years now.

    At one point I had a full-time job that offered group insurance, but the family plan back in 2000, was 50% of my monthly take home pay. Why would I pay nearly $800 monthly ($9,600 a year) to visit the doctor 1 time to renew my annual prescription (out of pocket, self-pay was about $150). The plan would have reduced my monthly prescription cost from something like self pay of $30 to $20, an insurance co-pay. That was back in 2000. Then Wal-Mart started offering my meds for $4 a month!

    I am no math wiz, but even I could figure out what was cheaper.

    Granted the family plan would have covered my adolescent kids, but they also were healthy and would never have used $9,600 worth of doctor visits a year.

    Today, I feel somewhat coerced into taking on the Affordable Care Plan and trying to make it work for myself and my spouse. (Grown kids have their own coverage.) After all we are getting older and he has diabetes and high blood pressure. We do qualify for subsidies and do not pay But the Maryland system has been a frustrating disaster and now the impending open enrollment letters say our current plan has changed from $0 annual deductible to $1,500…wow! Mind-boggling!

    I share your anxiety about life without coverage and the risks it poses, but I have always felt I had no choice. I mean, I do not drive a Jaguar–because I can’t afford it. Maryland CAR insurance is MANDATORY. I accept that.

    High-cost medical insurance is something I had learned to live without.

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