Healthcare and Home Prices in the State of the Union

Health care and home prices. Two little things covered in Wednesday’s State of the Union Address from President Obama.

I’m not going to address political issues here as much as economic issues.  Health care and home prices are real issues that impact everyone since they are dealt with on a regular basis and consume a huge portion of personal spending, while also being responsible for a huge number of jobs.  The two points I make below are addressed at both Republicans and Democrats as neither party seems to view these issues as I do.

Health Care

In regards to health care, below are a few of the first paragraphs of the speech that refer to health care:

“I took on health care because of the stories I’ve heard from Americans with preexisting conditions whose lives depend on getting coverage; patients who’ve been denied coverage; families –- even those with insurance -– who are just one illness away from financial ruin.

After nearly a century of trying — Democratic administrations, Republican administrations — we are closer than ever to bringing more security to the lives of so many Americans.  The approach we’ve taken would protect every American from the worst practices of the insurance industry.  It would give small businesses and uninsured Americans a chance to choose an affordable health care plan in a competitive market.  It would require every insurance plan to cover preventive care.

And by the way, I want to acknowledge our First Lady, Michelle Obama, who this year is creating a national movement to tackle the epidemic of childhood obesity and make kids healthier. (Applause.)  Thank you.  She gets embarrassed.  (Laughter.)

Our approach would preserve the right of Americans who have insurance to keep their doctor and their plan.  It would reduce costs and premiums for millions of families and businesses.  And according to the Congressional Budget Office -– the independent organization that both parties have cited as the official scorekeeper for Congress –- our approach would bring down the deficit by as much as $1 trillion over the next two decades.  (Applause.)”

What is the central theme of the discussion here and it seems in all discussions about health care? Insurance.  My question is why?  Why is it only with health care that insurance is billed from the beginning (with the exception of a deductible)?  While watching, my wife brought up several great points in comparing health insurance to auto insurance:

  • We are required by law to have auto insurance but not health insurance
  • If you show up at an emergency room, they have to treat you even if you don’t have insurance
  • Health insurance is automatically billed for check-ups, medicine and everything else when you see a doctor
  • If auto insurance was the same way, it would pay for gas, oil changes, new tires etc.

So the question is, why do we expect health insurance to pay for everything?  If I want a check-up, why is it so hard for me to get one for a cash price?  When I walk in the door of a doctor’s office they ask for my insurance information as opposed to telling me what a service costs. In California an auto repair service provider must provide a written estimate for all repair work. Why don’t doctors do the same thing, with the exception of emergencies, and allow me to choose if I would like to pay cash for that service?

Why not save insurance for big things, like you do with your car?  If I have a cold and go to the doctor wouldn’t it make more sense to pay cash and not involve insurance? The windshield on our car cracked this week. I’m not going to file an insurance claim, I’m going to call the glass repair company, pay $200 and get it fixed.

The crux of the point is that we are trying to reform insurance, and I think we should be trying to reform behavior and the business of health care itself.

Home Prices

There was one line in the SOTU that really hit me about home prices, financial planning and our overall economic priorities:

That’s why we’re working to lift the value of a family’s single largest investment –- their home.

Why do we position homes as an investment? Why can’t we just buy a place to live and raise our family. If the price of a home factors in that people should view it as an investment, aren’t we creating a market that is focused on increasing long-term value as opposed to a market for people to buy a place to live?  This would make me think that houses are more expensive because they are viewed as investments.

I own a house (OK I have a 30 year mortgage on a house where we live) and write a big check every month for health insurance and I think that both of the costs would be substantially reduced if we just changed how we as a society view what they are both for.

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