In today’s environment, where jobs are being cut, families are scrounging to get by, public assistance programs are being cut, and personal net worths have suffered a severe hit, President Obama is pushing health care reform.  I certainly agree that something has to be done.  Exactly what is a debate for another day.  What I want to write about is something that I thought about while shaking my head at the mobs yelling about “death panels” and “rationing”.

 Of course, any organized insurance plan has a list of things that they will pay for.  In the private insurance field, it’s called a formulary. If your preferred pill is on the formulary, they will pay X amount per prescription.  If your pill is not on that list, they usually won’t pay

a dime.

This list of drugs and treatments is put together by people in meeting rooms in some corporate office somewhere.  Typically they are experts in the part of the list they are involved with.  Cardiologists work on the heart pill section, while Oncologists work on the cancer pill section, and so forth.  At some point, there are pills and treatments that they look at and say “No, we won’t pay for that.”  So, when your doctor prescribes that pill or treatment and you try to get your insurance company to pay for it, they will say “No, we won’t pay for that.”

 This is the same situation that Democrats have proposed and have been accused of putting together “death panels”, while Republicans have been telling people to “die as quickly as possible.”  I don’t see the big deal with the Democrats plan because it is exactly what exists in the private insurance sector today.  Big companies like United Healthcare and Blue Cross Blue Shield, as well as the small ones, have panels of peoplethat decide what they will and will not pay for.  I guess, in a sense, they all have death panels.

I don’t blame insurance companies, though, because it’s necessary for a company to decide what it will and will not pay for.  It is much easier to determine what their claim costs will be so they can charge an appropriate premium to the insureds.  They can’t have Joe Blow submitting a claim for a $1 million stop smoking patch developed by his uncle Billy and be expected to pay for it.  The company would quickly go out of business.

 However, the difficult part comes in when the medical experts must sit down and parse hundreds of different drug treatments and medical procedures to decide which

ones are the most likely to be the best treatment option for the most people.  Some are no-brainers.  Applying raw pickles to your left butt cheek will not cure cancer.  Reducing blood pressure will reduce the risk of stroke.  Simple.

 But what about the thousands of variations between?  At some point, they have to say “No” to a variation that will be the best treatment option for someone, but not the best treatment option for most people.  Only by reducing the number of options can an insurance company successfully negotiate reduced rates for medicines, equipment, and treatments.  Those economies of scale help to keep insurance rates down for their clients.

 What they are really looking at is cost to benefit ratios.  How much does it cost versus how much benefit will be received.  When you look at hundreds or thousands of patients, it’s easier to think of the numbers in chances.  Drug A will cure disease X 99% of the time.  Drug B will cure disease X 75% of the time.  No brainer?  For the big numbers, sure.  But what about that 1% of people who may die while taking Drug A?  What if they would have been cured under Drug B?  Does the cost to benefit ratio make sense if you know that not paying for Drug B will kill 1% of the people?

 People die every day because they could not afford to pay for the medical treatment they

needed.  People who would have been cured if they only had the money to pay for the treatment.  However, they didn’t have the money, so their option was to die.

 Now, with the government considering a public health option, many people will believe that the government will pay for any and all medicines or treatments when they get sick.  Should a public health option pass, they will be sorely upset to find that to be inaccurate.  They’ll believe that the government has plenty of money to spend, so they should get any treatment needed;  or more accurately, they think they should get any treatment requested.   However, a panel will decide what treatments will be paid for and which treatments will not.  This is simply to control costs.  Some will say this is unfair.  Some will say they are murdering people who are too poor to pay for treatment and relied on the government in the first place.

So, in a round-about way, this led me to begin to consider:  How much is a life worth?

Say you were in a doctor’s office one day and a nurse approached you.Suppose that she told you that the person next to you had a fatal disease, but a treatment was available.  There was a single pill they could take that was 100% effective at curing the illness.  However, they needed you to decide if the government (i.e. taxpayers) was going to pick up the tab.  Some silly government regulation requires you to okay the expenditure (suspend logic for a moment.  Imagine you’re in Congress).  The cost of the pill would be divided by the number of taxpayers and each person would pay an equal share on their next tax year filing.  Sounds fair to me.

So, how much is this magic pill?  It’s $100.

Duh, give me the pen.  No brainer, right?  Sure.

What about $1,000?  Sure.

What about $100,000.  Well, okay.  Spread out across all taxpayers, that’s not that much.

What about $1,000,000?  See where this is going?  A cool million could do a lot of different things, but perhaps the person’s life is worth it. It’s a guaranteed cure, so I’d probably sign.

What about $1,000,000,000 (a billion dollars).  That could really help a lot of people, instead of just one.  I don’t know if I’d sign.

What about $1,000,000,000,000 (a trillion dollars).  I’m pretty sure I wouldn’t sign.  First, that’s a lot of money that each taxpayer is going to have to pay.  Assuming 200,000,000 taxpayers (two hundred million), that would be an extra $50,000 in taxes for each taxpayer. I’m sure most of the taxpayers couldn’t afford such a financial hit.How would you explain to them that they needed to fork out $50,000 for this stranger?