Want to talk about throwing your money down the drain? Good Lord! Here's a good example of why we're in such deep debt and deep kimche in this country. A news story today from the Associated Press states:
"President Barack Obama, citing a new White House study suggesting that small businesses pay far more per employee for health insurance than big companies, said Saturday the disparity is "unsustainable — it's unacceptable."
"And it's going to change when I sign health insurance reform into law," the president said in his weekly Internet and radio address.
A new study by the White House Council of Economic Advisers said small businesses pay up to 18 percent more to provide health insurance for their employees. As a result, fewer of them do so and the number has been shrinking further in these hard economic times."
No Sh*t Sherlock. Anyone could have told you that. You didn't need a bunch of highly paid bureaucrats to do a White House study of small businesses, at god-knows how much money spent, to develop that information. It's simple economics and economy of scale!
When a large company negotiates with an insurance carrier, they do it on the basis of numbers. If they insure several hundred, or a thousand employees, they get a better rate than if they insure a few, It costs the insurance company less to process in bulk, they assign claims people based on customer numbers, and can project costs better when they have a solid base to do so. Plus, an insurance company can negotiate buy-down costs from health care providers from a position of strength when they have hundreds or thousands of employees in a plan, rather than a few. That's why an HMO can have the bill for a $19,000 surgery cut to $2,000 and the patient only have to pay several hundred dollars from their pocket. The negotiated pricing is gained from having a large client base, and you can't agglomerate all employees from every company into one plan. Thus each company and plan has different costs and pricing.
I'm not on the insurance company side here, but I do understand the cost/benefit relationship of bulk buying. If you go to a wholesaler and purchase in bulk you save money, thus the concept of Costco, Sam's Club, etc. Or the bulk packaging at some supermarkets. Buy more and save more. Go to the local store and get a small individual portion and you pay more. It's just simple economics that just about everyone understands.
Yet it takes an entire team of economic advisers on the government payroll to tell our supposedly intelligent president this? Nothing like spending millions when it isn't your money, eh?
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