June 13, 2011

Ann Barnhardt On Health Care and Health Insurance in America Now (Updated with Full Transcript)

More sense about health insurance in 15 minutes than you've heard from politicians of all parties in the last 15 years.

Barnhardt from the prologue: "I would like to restate for the record how disgusting it is that I am the person apparently who has to be the voice of logic and reason and obvious common sense for a nation of 310 million people....

"Who the hell am I? I am not well educated. I have an undergraduate degree in Animal Husbandry which I consider to be nothing more than a formality. My real education consists first and foremost of real life experience and the responsibilities and performance demanded therein, which is nothing rare, along with an Amazon.com Prime account.

My modest little economics library consists of volumes by Hayek, von Mises, Belloc, Milton Friedman, and Thomas Acquinas.

I'm no scholar. I'm no super genius. I'm above average but half the population is above average so that really isn't saying much.

There should be thousands if not millions of other people saying the things I'm saying. But there aren't. And that is what is so terrifying.

Part 2

"Let's eliminate all competition and go to a zero deductible system, which is the goal of Obama care. If you think that's going to reduce costs then Barack Obama isn't the only person currently smoking crack in this country. The only thing that will accomplish will be to collapse the Federal Government which will in turn collapse the entire economy and the nation. But maybe that's the plan."

See both videos and read more from this remarkable woman at Barnhardt.biz - Commodity Brokerage

Full Transcript Courtest of Ann Barnhardt

Hello, my name is Ann Barnhardt and I am the person who says the things that everyone else is too terrified to say. 

I’m afraid that time is growing short and so I feel that I am morally obliged to inject logic and common sense into the national discussion on health insurance and the overall healthcare services market.

Before that, I would just like to re-state for the record how utterly disgusting it is that I am the person who has to be the voice of logic, reason and obvious common sense for a nation of 310 million people, and maybe even for the entirety of western Civilization which numbers into the billions of souls.  Who the hell am I? 

I am not well educated.  I have an undergraduate degree in ANIMAL HUSBANDRY which I consider to be nothing more than a formality.  My real education consists first and foremost of real-life experience and the responsibilities and performance demanded therein, along with an Amazon.com Prime membership. 

My modest little economics library includes Freidrich Hayek, Hilaire Belloc, Ludwig von Mises, Milton Friedman and Thomas Aquinas. I’m no scholar.  I’m no super-genius.  I’m above-average, but half of the population is above average, so that really isn’t saying much. There should be thousands if not millions of other people saying the things that I am saying, but there aren’t and that is what is so terrifying. 

Do you want to know what real fear is?  Real fear is not the threat that muslims might come to your house and cut your head off.  Real fear is climbing into bed at night with the full knowledge and understanding that if you don’t speak the simple truth, if you don’t state the obvious . . . NO ONE ELSE WILL.  In a nation of 310 million people.  In a civilization numbering in the billions.  In a world of 6.8 billion souls.  If you don’t say it, Ann, it will go unsaid.  That, ladies and gentlemen, is fear. And it’s not fun.

Enough about that.  Let’s start with the problem of health insurance and the resulting disorder and unnatural price inflation in the healthcare services market.  The primary reason that the cost of healthcare is going through the roof is because the paradigm of insurance itself has been completely corrupted and bastardized.  This corruption and abuse of the concept of insurance, which is nothing more than risk management and risk pooling, is itself what is artificially inflating healthcare costs.  A secondary cause of health care price inflation that bears a quick mention is indeed the out-of-control malpractice litigation culture, personified by that walking human compost heap, John Edwards.  The solution there is simple.  Cap malpractice awards and implement a “loser pays” rule to disincentivize frivilous litigation.  It’s not rocket surgery. 
The current conceptual disorder with regards to health insurance is completely untenable and unsustainable, and if not corrected very, very quickly will collapse and destroy the entire economy, at which point no one will get any healthcare at all, so you damn sure better listen up.
Health insurance is meant to be a protection against catastrophic costs and expenses.  The operative term here, people, is “catastrophic”.  It is meant to financially protect against such circumstances as being hurt in a terrible car accident or being diagnosed with a terrible disease.  Most people go through their entire lives without ever being badly hurt in an accident or being diagnosed with a terrible disease.  Again, the operative term is “most people”.  Yes, people do get cancer and other diseases and people are involved in accidents.  But most people live their entire lives without either of things happening and die in their natural old age of either a heart attack or a stroke.  Most people.  Do you hear me?  MOST PEOPLE. 
Now that we understand this, we can start talking about risk pooling, or insurance.  If MOST PEOPLE never have a catastrophic health care expense in their lifetime, what an insurance company can do is provide a mechanism for pooling that risk.  They can offer a policy whereby a pool of customers pay a SMALL premium in order to protect against the risk of catastrophe.  Since MOST PEOPLE do not experience a catastrophe, the premium revenues collected by the insurance company will be greater than the amount of money the insurance company has to pay out in claims.  That remainder is profit to the insurance company, which is the only incentive there can possibly be for them or anyone else to continue to offer the service of risk pooling. 
The reason that the system of health insurance in the U.S. is broken today is because the concept of insurance itself has been bastardized and corrupted such that the expectation of coverage is no longer merely to protect against catastrophic expenses, but to cover absolutely everything.  Simple office visits, sore throat, chest cold, minor cuts requiring stitches, heck even setting a broken bone or arthroscopically working on a torn ligament in a knee.  Yes, that’s right.  You’re hearing me correctly.  We should be paying for all of those types of medical services out of our pockets.  They are not catastrophic, they are unpleasant and inconvenient.  All of us, as a culture, need to man up and understand the difference between the two.  Popping your ACL is not a catastrophe.  Being greased by a drunk driver is a catastrophe.  Being diagnosed with leukemia is a catastrophe.  If we as a culture continue in this decadent refusal to acknowledge the difference between mere inconvenience and catastrophe, we will be FORCED to understand what real catastrophe is after our economy collapses, and no one is able to get any healthcare at all.  Do you understand?
You are not entitled to an insurance policy which covers every little thing.  In fact, if it is mandated that insurance cover every little thing, including preventative care, then the entire concept of risk pooling collapses in flames.  The more the insurance company has to cover, the higher the odds that any given individual is going to have a claim.  This would be like demanding auto insurance coverage that would pay out for a car wash if an insect hit your windshield – and not just a $7.00 car wash at the gas station, but a $300 full detail job.  If that were the case, the cost of car insurance would become prohibitively expensive.  But guys, my example of auto insurance paying out for a $300 detail job after having an insect hit your windshield is not an unreasonable analogue to today’s health insurance market.  We have health insurance today that covers acupuncture and cosmetic surgery.  If you force insurance to cover PREVENTATIVE care and purely cosmetic or non-medical procedures, then what you are doing is GUARANTEEING that every single participant in the risk pool can potentially have a claim.  If every person in the pool is guaranteed or even mandated to have a claim, then it is no longer a risk pool.  My God, how can it be that no one understands this?
The problem isn’t that insurance isn’t providing enough coverage, the problem is that insurance is now providing too much coverage.  If you really want the paradigm of health insurance to survive, and you want healthcare costs to go down, we need to be moving in the opposite direction.  We need to be setting minimum deductible levels tied to income, and I’m thinking something on the order of 10% of gross income.  If you make $50,000 per year, your deductible would be $5000.  And quit your whining.  That’s $417 per month if and only if you were to max out your deductible.  If you spend NOTHING on health care services in a year, that $5000 is still in your pocket.  You don’t have to spend that money.  Now compare that to what you’re paying for insurance today.  Are you paying more than $417 per month for insurance that you may not use at all?  Heck, what are you paying for cable or satellite service per month?  That money is gone, but you couldn’t live with a deductible equivalent to $417 per month of which you may not have to spend a single cent?  Really?  Really?
Raising deductibles would accomplish two very important things.  First, it would lower the cost of the health insurance itself because as deductibles increase, the number of payable claims would proportionately decrease.  Fewer payable claims would mean less risk to the insurance companies, who would therefore be compelled and forced by free market competition to drop their premiums commensurate with the reduced risk profile of the pool.
The second, and more important thing that raising deductibles would accomplish would be to force the re-engagement of the health care end consumer, which is us, with the market.  The primary reason that the cost of healthcare is irrationally increasing is because the end consumer has been removed from the market.  The people consuming healthcare today neither know nor care what any of the goods or services they are consuming cost, or the level at which they are being priced – and those are two different things.  The consumer consumes, and then shrugs their shoulders and says to themselves, “Meh.  The insurance will cover it.”  And you wonder why prices are inflating instead of deflating?  There is no competition in the marketplace.  If there is no competition, prices are going to go up, not down.  If the end consumer has zero incentive to compare prices or even inquire as to what the price structure is for the various goods and services they are consuming, by what magical mechanism are prices going to go down?  You tell me.
The perfect example of this that we can all relate to is Lasik vision correction.  Even if we have never had Lasik ourselves, we have heard and seen the commercials for it on radio and TV.   When Lasik was first introduced 15 years ago, it cost upwards of $5000 dollars per eye, using first generation technology.  Today, I found several advertisements online for Lasik priced at $299 per eye using technology vastly superior to that which was used 15 years ago.  Why is this?  Why has the price structure for this medical procedure dropped in excess of 90% in 15 years while the technology was simultaneously becoming more sophisticated?  It is very simple.  Most people have to pay for Lasik out of their own pocket – their insurance does not cover it.  Therefore, people are incentivized to shop around and seek out the best combination of low cost and most modern technology, and Lasik providers have been forced by this FREE MARKET COMPETITION to offer the lowest price.  Now understand that if Lasik was widely covered by insuance not only would it still cost $5000 per eye, it would, in all likelihood cost closer to $10,000 per eye today because it would track the cost inflation curve of all other surgical procedures covered by insurance.  If Lasik was covered by insurance, people wouldn’t even ask what it cost and the Lasik providers certainly wouldn’t advertise the cost.  Now imagine what would happen if people were again forced to fully pay for their own routine and elective healthcare.  Imagine what would happen if the power of free market competition was turned loose on office visits, emergency room visits, MRIs, childbirth and prescription medicines.  These services and commodities have become so unnaturally inflated by the improper use of insurance that I think a 90% reduction in the price of some of these services would not be unreasonable.    
Now, let’s go in the other direction and make this situation as bad as we possibly can.  Let’s go to a single-payer healthcare system that has a deductible at or near ZERO.  Yeah, let’s eliminate even the competition that currently exists between the health insurance companies, who do haggle to some extent with healthcare service providers.  Let’s eliminate all of that and go to a zero competition, zero deductible system, which is the goal of ObamaCare.  If you think that is going to reduce costs, then apparently Barack Obama isn’t the only person currently smoking crack in this country.  The only thing that will accomplish is to utterly collapse the Federal Government, which will then, by default, collapse the entire economy and the nation.  But then, maybe that’s the plan.  Maybe none of this has anything to do with healthcare at all.  Maybe it is all just a scheme to collapse and overthrow the United States and set up a new Global government of some sort.  Ya think?     
Now let me lay out a very simple example of how this might work, and this is admittedly incredibly simplistic and is not meant to be an exhaustive plan.  All I’m trying to do is lay out a very rough template and get you to start thinking about what a path forward might be.  Let’s go back to our example of a $50,000 per year income with a $5000 annual deductible.  What an insurance company might do is offer medical escrow accounts.  If I post my full deductible amount in my escrow account, the insurance company could then offer me a reduced monthly premium because A.) they know that I’m good for my full deductible amount AND B.) because they have the use of my money, which would essentially be an interest payment dynamic.  They could then issue a charge card that I could then use to pay for all of my medical expenses, replenishing my escrow account balance as needed.  This would allow me to easily track all of my medical expenses and would incentivize me to both comparison shop, which drives down prices in and of itself, and NOT over-consume, because I would be spending my own money out of my own escrow account.  If I have to pay for everything myself, in this case up to 10% of my gross income, maybe I’ll think twice about going to the doctor and demanding a 28 day course of antibiotics when all I have is a simple chest cold.  Or, maybe I’ll think twice about snowboarding off the trail or on super-difficult terrain, because if I pop my ACL, I’m going to have to shell out a lot of money to pay for the surgery to fix it.  Yeah.  Funny how that works, huh?
Additionally, a person could choose to deposit more money in their medical escrow account than the 10% of gross income required as a deductible.  This excess could conceivably then be used to either voluntarily raise my deductible further, thus reducing my monthly premium even more, OR the overage could be tapped not unlike a home equity line of credit – after all, it’s your money.  OR, this type of account could be used by the relatively young, like me, to save up for the golden years when simple common sense dictates that medical expenses will be more frequent and premiums will be higher than they are in a person’s youth.  So while older people would have reduced incomes after retirement and increased healthcare expenses on average, that reality would be offset by the fact that they would have had more earning years, including all of their peak earning years, to save and build their own healthcare escrow account.  Planning ahead.  Saving for old age.  Personal financial responsibility.  What a concept. 
Now you might be asking yourself, what about people who are indigent and can’t afford any insurance at all?  Do we leave them out in the cold?  Absolutely not.  We do what people have done with regards to the poor since time immemorial.  We cover them through voluntary charitable giving, be it religious or secular.  Caring for the sick and the poor is one of the main worldly functions of the Church.  That 10% tithe that God asks for – a lot of that is supposed to go for caring for the sick and the poor.  Here’s the funny thing.  If the free market is allowed to work, and insurance is used properly by those who are not poor in a society, competition will increase thus driving down costs, thus reducing the cost to care for the poor.  In a proper, healthy, free economy, people have larger disposable incomes and thus will be able to be more generous in their tithing and/or secular charitable giving.  So, in review, we would have increased revenues streaming into charities charged with serving the poor (and this is a proven historical empirical fact, by the way) AND the cost of caring for the poor would fall at the same time.  Oh, and let’s not forget that in such a circumstance wherein the economy was healthy and competition controlled costs, people would have more free capital and more incentive to engage in entrepreneurial activities, thus creating jobs, and thus reducing unemployment and medical indigency itself.  I think that could be accurately characterized as a WIN-WIN-WIN situation. 
So, in review, the answer to our healthcare problem is less health insurance, not more, and everyone is either too stupid, too chicken or too evil to speak this obvious, obvious truth.  My name is Ann Barnhardt and I don’t want your money, your vote, your praise or anything else, which is why I’m willing to stand here and tell you the truth, and why you would be very wise to listen.
God bless you. 

Posted by Vanderleun at June 13, 2011 4:15 PM
Bookmark and Share



"It is impossible to speak in such a way that you cannot be misunderstood." -- Karl Popper N.B.: Comments are moderated and may not appear immediately. Comments that exceed the obscenity or stupidity limits will be either edited or expunged.

It ain't Rocket Surgery will be the catchphrase of the Tea Party from here on out!

Posted by: Jewel at June 13, 2011 5:22 PM

Oh, for the system we had before WWII in this country. People who got sick went to doctors and paid them with barter or time payments. Very few had insurance. Hospitals were built and run by churches and counties. Medical care for the truly indigent was done through charity. We didn't have all the whiz bang treatments we have today, but her example of what has happened with lasik surgery is well taken. Various non-insurable cosmetic surgeries have gone down in price as well. When given a chance, the market does work.

The system of employer paid health care was one of the worst things that ever happened in this country. It was the gateway drug to an addiction to "free" health care. Without it we probably never would have fallen into the Medicare trap

Two things that could be done immediately. Either make emlployer health care insurance taxable income or give individuals buying health care in the market the same tax breaks. That would level the insurance playing field and introduce competition into the market. Then set up a health savings account system (Ann's escrow account) so that everyone is using that to pay most of their health care costs and using insurance only for the big items.

Medicare? Well, it has to become a means tested program and people should have to shop for care. Not good for our present old timers (of which I am one), but as more people get used to looking at price, it would force geriatric care costs downward as well.

Posted by: Jimmy J. at June 13, 2011 8:54 PM

God, I love that woman.

Posted by: ahem at June 13, 2011 9:44 PM

"Do you want to know what real fear is? "

Earlier today, worded in this manner for the first time, this thought occurred to me:

In our lifetime, we may see the end of the Republic.

That had pretty big impact. But the next thought that came made even bigger impact:

Who will be our Oligarches?

Bankers? Health Care CEO's? Insurance Industry?

Posted by: cond0010 at June 13, 2011 11:05 PM

Maybe those who attended the Bilderberg Group meeting would know.

Posted by: cond0010 at June 13, 2011 11:07 PM

Cond0010: Do you want to know what real fear is?

The fact that the Insurance Industry, Health Care CEO's, Bankers and Oil Industry are already our Oligarchies. Any president who is in power at this point in time, is nothing but a figure head and is an impotent puppet manipulated by them.

Posted by: Cilla Mitchell, Galveston Texas at June 14, 2011 3:32 AM

If your theory is correct, Cilla, then they soon can end the charade of it being a republic and get down to the business of really governing us without all that silly nonsense about 'rights'.

Posted by: cond0010 at June 14, 2011 4:49 AM

Thanks very much for the transcript Gerard; I've flagged, copied and pasted it on the London Spectator's Coffee House Wall blog. Our NHS is going through yet another overhaul and I've suggested that David Cameron and Andrew Lansley the Health Secretary invite Ann over and pay her a fat consultancy fee to dismantle it and start again. Our exalted PM is reputed to take advice from Anita Dunn and her Marxist spouse (and Cameron professes to be a 'Conservative)- which puts our Health Service into perspective, I suppose.

Can't you persuade Ann to pitch for POTUS, if not has she any English heritage? I'd vote for her to be our PM! Barnhardt? Sounds German. Same lineage as our Royals, so that's alright then.

Posted by: Frank P at June 14, 2011 6:25 AM

Thank you, Ann.
I am a Registered Nurse (R.N.).
Because our hospital has, once again,
given away 10's of MILLIONS of $$$ this
past fiscal year, there will be no raises.
Although management will, for sure, be
recieving bonuses for a job well done.
That would include increasing nurse:patient
ratios to dangerous levels, cutting ancillary staff, cutting benefits and enacting multiple useless programs to be "more efficient".
The new federal guidelines include a Medicare
payment system in part based on patient
satisfaction. Think about it.
I love being a nurse. And do it "in spite of".
Even while caring for a meth-addict who just
recieved a free cardiac pacer, an illegal alien
on free hemodyalisis or free care to an alcoholic with a stomach ache.
The freebies are a HUGE contribution to the
We tithe 10% of pre-tax income. My wife is
a stay-at-home mom. We home-school. We're,
once again, not going on a vacation this year.
We make do on one income. We volunteer. These are choices we've made.
Every voting adult in this country needs to be
a good example. Israeli officers are taught the
command "Achari"- Follow (After) me! Let's do
the same.
Praise God. He is in control.

Posted by: DavidB at June 14, 2011 11:40 AM

"It's not Rocket Surgery."

Or Brain Science, for that matter . . .

Our county hospital that was built in 1951
(and which has had several remodels since) was deemed too out-of-date & small to serve our citizens. Many big city clinics come in to address the cardiac, gastro-intestinal, dermatology and neurological needs. We have no mortgage, so to speak.

What we do have is our county seat town of 70% illegals. Who routinely stiff the hospital and doctors. Currently we absorb said stiffing because we have no mortgage. Next week, however, everything moves out to the new hospital on the hill. Now we have a mortgage that must be paid. One answer was offering dialysis to get more revenues. However, that does not speak to the continued stiffing by the illegals.

Oh, and another thing the new hospital will have?
A "healing garden." To the tune of $350,000!!!!! Supposedly it was funded by private donations. Killer detail I omitted? New hospital is considerably smaller than the old one . . .

Posted by: NeeNee at June 14, 2011 12:38 PM

We need more Ann Barnhardts in America. She needs her own talk show.

Posted by: RedCarolina at June 14, 2011 7:37 PM

She must have been reading my mind. Just the other day I used the term "rocket surgery" and that without reading or hearing of her.
She hits all the nails on the head dead square.

Just wish one of the candidates could read this and explain it to the rest of the citizenry.

Posted by: tomw at June 15, 2011 7:00 AM

Pay as you go is essentially how U.S. dentists reclaimed their practices from insurance companies. By offering discounts for cash payments for routine treatments (cleanings, flillings, etc.), dentists reduced overhead, maintained their incomes, enabled patients to save money, and screwed the insurance companies, all at the same time.

While it's true that dentistry is a more circumscribed field than medicine, in that only so many things can go wrong with teeth, batteries of tests are generally not required, and the treatments are well-understood, medical doctors could still take a page or two from the dentists' playbook. It's worth a try.

Posted by: waltj at June 15, 2011 9:28 AM

The points made here are worth making but Ann Barnhardt is hardly the only person making them. The comparison of health insurance to car insurance is old-hat. The idea that having people spend their own money is the best hope of reducing medical costs has been made over and over. (It is the basis of Paul Ryan's Medicare reform.) The distortions caused by disconnecting the person receiving the service from the cost of it has been emphasized and re-emphasized.

As for the idea of capping out of pocket at some percentage of income, see David Goldhill, Martin Feldstein, and Brad DeLong. Goldhill and DeLong both advocate some type of roll-over of (essentially) HSAs to build up savings for major medical expenses, including those of old age.

It's always worthwhile to make these points again. But claiming to be the only person in the world making them causes Ms. Barnhardt to appear to be less than a serious student of the issue.

Posted by: Elise at June 16, 2011 8:44 AM