Moderators: This is not a political speculation area. It's a financial analysis, please moderate political interjections.

The claims are these:
- Premiums will be given a maximum value.
- The total population will be insured.
- Current insurance will not change.
- Tax dollars will not be routed to pay for insurance.

This is as far as I can see it, mathematically impossible.



On the right hand side you also must add Reservoir for periods Claims per year is equal to the upper limit or the higher statistical variance.

Well, premiums and deductibles are are in their most basic form set to the following principal.


Or, the expected functional value of how an insured values wealth minus random loss to wages of X. Equal to the same function of wages minus the premium plus a certain corporate profit. When the Premium with a probability of 100% is equal to the potential loss variable X with a probability q, let's say .01 for a population of a value of loss 5,000 dollars for example (I can't find the actual total with all of the healthcare buzz on google).

This works when companies can be selective of either (and in this case both), their probability, and their principals. They can reject those with too high of a probability.

Okay now you seek to add people who companies consider un-insurable. Meaning...
goes up simultaneously because Meaning everyones premium goes up.

So you rectify the situation so that and Maintenance Cost is lower by 15% of current financial systems.

Okay...that's fine. I have a small feeling that Claims are going to rise exceedingly higher than current upper limit variance in claims by most industry standards. Considering the bulk of new insures will be pre-existing conditions etc etc.
Assuming that even is not true.

You're now offering the people an option to stay OUT of the government insurance. Simultaneously, government is lowering the cost of claims across the board.

Fine.

Well, insurance companies have lower claims costs, lower premiums (though undoubtedly not as low as savings) and still no incentive to insure people with high probability of claims.

So you get an insurance company that is stuck with and thus benefiting essentially no one because [tex]\bar P_{government} >> P_{legal max}. That is...unless...government subsidizes the program through taxes. Which means that essentially:


As far as I see the wealthy would be almost better off supporting a totally national plan where it was mandatory for everyone. In general the claim that prices won't raise has to be fallacious, right? What am I missing?

First I congratulate you on an unusually analytical economic post, but few (me included) will expend the effort to fully follow your argument – probably why I am the first to reply.

I think your main error is to not recognize the cost effectiveness of prevention in health care.

One of the main reasons (law suits against doctors & hospitals being another) why US medical cost lead the world, yet 49 other countries have longer life expectancies is the lack of any free preventive care for the poor.

Typically when poor person, very sick with disease, is in an advanced state they will be dropped by a quickly disappearing friend at some hospital’s emergency room. They cannot pay and the friend disappeared, so the hospital must eat the cost, which very likely are 10 to 100 times greater than the prevention cost would have been.

For example, many poor mothers get no prenatal care. Most deliver healthy babies despite this, but some premature babies many require months of intensive hospital care and cost >$300,000 before they leave the hospital.

Today in another thread, I described how Brazil avoids huge costs via universal free medical services program which has a strong outreach prevention effort. See it at:
http://www.sciforums.com/showpost.ph...7&postcount=10

Agreed Billy T. and as you pointed out Checkichips equations do not match results observed in places like Brazil, Europe, Canada, and other places around the the globe.

What may be missing is in the private system



As Claims go up, one must increase the Premium every cycle and also force the Deductible to rise which can include "not Covered part"

To increase Profits you do the same.

On a national Health Care by a non-profit entity, you can remove the Profit part initially. Then you work on Preventive care to reduce number of Claims.

I was fortunate to work on a Health Care Design for a State (Medicaid). Since each are is somewhat different, it is better to analyze after the fact and then set up policies for preventive care and also recommend other social service features that has a real impact in the well being of the citizen.

Maintenance Cost can be reduced by Business process Reengineering including the paper Work that care provider has to go through. Then Premiums can be low and thus over all health care cost.

I have no problem with your analysis but I am not sure about your list of claims.

Who's claims?
I am not sure that I have heard any pro health care reform bill Congress people put themselves on the record as clearly in a direct fashion saying that this bill will not increase insurance premiums.

Isn't the fact that Tax dollars are going to be used out there and in the open and undenied?


Quite clearly this can't be accomplished because the reductions in maintenance costs can't be large enough to pay for everything they are supposed to pay for.

This is especially true when you consider that the only area in which maintenance costs are going to be reduced is in the costs related to denying coverage for preexisting conditions. The other ways in which the American Insurance system has higher maintenance costs that other nations systems will not be affected by the health care reform bill.

I think you are overestimating the savings from prevention. I have doubts that the savings from prevention can pay for the extra preventative medicine.

Europeans exercise more and eat healthier than Americans do and that accounts for the majority of their preventative medical advantage over Americans. The American lawsuit issue plays a smaller role than is usually believed. I think I heard that .3% or .03% goes to the law suits. Because my source had a left bias I am guessing that defensive medicine was probably not counted in that cost and the legal defense was probably not counted.

The biggest cost savings outside the USA is that all the medical goods and services purchased cost less outside the USA. The second biggest savings is on lower overhead.

The biggest cost to American health care is the profits in each stage of the supply chain. The next cost is a large number of middlemen between you and your doctor. The third is the change in the business model of pharmaceuticals where one has to be on medication ad infinitum rather than taking drugs such as antibiotics for a small period of time.

There is no such thing as "Cure" any more. The top ten drug use are (it does not cure anything)

1. Lipitor
2. Toprol XL
3. Norvasc
4. Synthroid
5. Lexapro
6. Nexium
7. Singulair
8. Prevacid
9.Ambien
10. Zoloft

Maybe, but it is not nationalized health insurance.

The thread title is extremely misleading. You seem to be talking about the general structure of the "public option"; the Democrat's giveaway to the insurance companies, and the forestalling of nationalized health insurance in the US.