The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Throwing Out the Baby . . .


I attended a fascinating lecture late yesterday by Carolyn McClanahan, who is both a physician and a financial planner.  She has actually read the entire bill on ObamaCare and has become one of the leading experts on the subject.

When she wears her hat as a financial planner, she doesn’t like the individual mandate.  However, when she wears her hat as a physician, she lists the many things she does like about the bill.

Both humorously and sadly, but before saying something good about ObamaCare, she felt it necessary to show her Republican credentials and showed a photograph of her and Mitt Romney sitting together on a plane.  Nonetheless, several financial planners did get up and walk out when she defended the medicine behind ObamaCare.  Has the subject really become something one doesn’t discuss in polite company?

Anyway, her point was that the Supreme Court should not “throw the baby out with the bathwater.”  I was surprised to learn how much has been done already.  Billions of dollars of work has already been done, and billions more would have to be spent if the Court trashes the entire bill.

She pointed out that, under ObamaCare, insurance companies now have limits on the amount of overhead they can charge.  For example, large insurance policies must spend 85% of dollars on healthcare, with only 15% on overheard.  The industry standard has been 25-30%.  In England and France, it averages only 5%.  Germany’s average overhead is 10%.  Interestingly, Germany has the model she likes the best.

In Germany, there is a basic health package that everybody gets and is more oriented toward prevention than treatment.  That part is “socialized.”  However, if you want insurance coverage for medical expenses above the basic package, you are free to buy a policy on the open market.  At first blush, that seems to capture the advantages of both systems.  Their annual healthcare costs per person (governmental plus individual costs) is only about one-third as much as ours.

Several times, she railed about the cost of obesity in America, which is estimated at $160 billion every year.  She doesn’t think it is a laughing matter, when that money could be used for people who better control their diets.  (FYI — McDonalds was the best performing stock on the New York Stock Exchange last year.)

She also talked about the waste of end-of-life expenses, pointing out a 3-month stay in ICU by a Medicaid patient costs taxpayers a cool million bucks.  But, don’t focus on the Medicaid aspect.  Do you really want to spend a million dollars to keep youself alive and miserable for three months, whether it is paid with taxpayer money, insurance money, and your money?

There was much discussion whether financial planners have a responsibility, to discuss this problem of end-of-life healthcare costs, with their clients.  I expect that will become another “best practice” in the near future.  If so, there will certainly be a form for the clients to sign.

Finally, I have found a real expert, who doesn’t have a political ax to swing at the politically incorrect.  I will be reading her blog at — —  and will recommend it to everybody  else as required reading.


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