Health Care and Insurance: A Lost (and Crucial) Distinction
Here on TMV, we’ve discussed health care reform (often with a fair amount of heat) up and down, in and out, and every which way. Usually, the threads end up circular, with everybody back at their respective starting places; we’re getting nowhere.
So I’d like to ask a different question (and perhaps go somewhere new): Why are we stuck on the “insurance” model for health care delivery?
Insurance is (or was) intended to off-set risk of catastrophic financial loss from an unexpected event. Very useful if your ship sinks en route from the Far East, and the entire silk inventory is lost… or if somebody throws a cup of java at (and hits) the Mona Lisa… or if you fall down the stairs and break your neck.
The entire concept of insurance has gone right off the rails with health care.
What is unexpected about annual exams? How did the fall flu become a surprise? When did aging stop being a normal, fully anticipated process? Medicare and insurance don’t belong in the same sentence, because barring some unexpected catastrophe, we’re all going to get there eventually.
Where did we turn the corner from risk management (for which insurance is well-suited) to health management (for which it is not)?
When you insure your ship, you don’t expect your insurance company to pay for regular maintenance. When you insure your painting, you don’t expect your insurance company to pay for the extra security — though they will reward you with lower premiums for it. When you take defensive driving classes, your car insurance premiums go down because you’ve measurably reduced the risk of loss due to your own ineptitude — but the insurance company isn’t paying for oil changes to your vehicle.
People are right when they point out that a person’s health is different from a car or a ship or a work of art — but that doesn’t change the definition of insurance. How did we get to such an unworkable impasse?
I suspect (though I don’t know) that the health insurance companies expanded their roles in response to consumer demand. It’s also possible that insurance companies tried to capture a market they had no business entering. However it came about, though, insurance companies have not done themselves (or us) any favors.
We’re thinking all wrong about health care reform. We need a two-tier system: one for protection against catastrophic loss, and another to provide maintenance (health care).
I think insurance should return to doing what it does best, and let’s start talking about how we can help people who can’t afford it handle the costs of actual health care.
‘Cuz they’re not the same thing.
126 Responses to “Health Care and Insurance: A Lost (and Crucial) Distinction”
“so full of unhelpful partisan snipes and ideological digressions”
There are no substantial digression, and the “snipes” are identifying relevent issues. (It's identification, actually, of what is related and what affects what is happening and what might otherwise happen, too.)
The actual things that can be done instead are straight-forward to note in what I have posted.
“not all of the Democratic ideas are bad, but I think they will be much more reluctant to give up their philosophy of healthcare as a Right and something the government owes them, in order to come up with a system that actually works and is self supportive than Conservatives will be”
So true. We know that 2009-2010 at least is going to be a liberal, Democratic year, and that legislation passed in 2009-2010 is going to be Democratic, but that doesn't mean we Americans have to accept whatever (worsening) garbage that the Dems may rashly try to force on us. And we don't, increasingly.
“so full of unhelpful partisan snipes and ideological digressions”
Everything is relevent and appropriate. But if you want a limited scope, just sidestep the non-essential.
[...] more here: Health Care and Insurance: A Lost (and Crucial) Distinction – The Moderate Voice tweetmeme_url = [...]
George — I left out the most obvious cost savings: that taking insurance companies out of the health care delivery models would remove their profits from the payment calculation. They would be returned to the traditional model of managing profits against actuarial risk: how often do people break bones? how many pregnancies become 'high risk'? What percentage of the population gets meningitis each year? etc etc.
Health Care Reform…
Commentary By Ron Beasley It has become fairly obvious that we are not going to get any “real” health care reform this year or even next. There is a certain segment of the population who will oppose it because it is being pushed by a black Democratic…
Polimom–
Requiring separate catastrophic policies will mean additional administrative costs. I don't see how it can be otherwise. But it's possible that your system will save enough elsewhere to make up these costs. I guess we'll see in your future posts on this subject.
Thanks.
George, maybe I'm not understanding you. Do you see automobile insurance as an administrative problem?
“They would be returned to the traditional model of managing profits against actuarial risk”
“Traditional” would mean the following:
1. Experience rating. The problems with pre-existing conditions (no insurance, a much higher premium that makes insurance unaffordable, limitations and exclusions for such conditions and a higher premium as well, reliance on the high-risk government poll that has much higher premiums and is unaffordable) would remain, just at lower cost with true (catastrophic care) insurance than with comprehensive care.
This can be ameliorated by something I've noted before: Go to “community rating” over a sufficiently large population (likely with mandatory purchase to spread the per capita cost over the complete pool sought).
2. “Health care delivery” (comprehensive care) would revert from insurers (who acquired HMOs) to HMOs.
(Prior to the insurers, HMOs were the frequent villain in the health care scene.)
“Requiring separate catastrophic policies will mean additional administrative costs.”
George, you're right. This is whether or not there are two parties (true insurance, comprehensive pre-paid care) or three (also government, whatever agent you can identify, which would help low-income people at least if not engage in something I mentioned earlier, taking the role of preventive and related medicine).
DLS — yes, the HMO's are a possible delivery vehicle for health care. So, too, are the “co-ops”. But when we're talking about point of service care, the dynamic changes because we're not trying to price toward a minimum number of people to achieve a pool rating. There are any number of options when we remove the “insurance rating” limitations.
Re: pre-existing conditions. Because of the mess we've gotten ourselves into, this is far and away the most challenging situation (imo). I've been mentally playing with a few different thoughts, but I'm thinkin' care for someone who has already been diagnosed with a heart condition (ongoing care related to the heart condition) falls under “routine care”, after a certain point. I also think it's downright ridiculous (and appalling) that they are cut off from the current system for routine care, generally.
“Prior to the insurers, HMOs were the frequent villain in the health care scene”
Actually HMO's are essentially just insurance companies.
Davebo, as was pointed out downthread — the HMO's were evolved by the insurers. I don't know why they have to stay that way, though. Essentially, they're a group of medical providers linked together to provide care. Such an approach isn't a bad thing when seen as health care rather than insurance.
Polimom:
This is one of the most enlightening, thought-provocative and civil discussions I have had the pleasure of reading at TMV–I am learning a lot.
Thank you for bringing up the subject and for keeping it on track (I now feel kind of bad for my off-topic remark referring to Sir Winston Churchill)
Perhaps one of the reasons it has been so instructive and “readable” is that most “commenters” have tried to keep the partisan politics out of it…with one notable exception.
While the particular writer may have some excellent ideas, comments such as the ones below (while they may appeal to the partisan reader), IMHO only serve to–to be frank–turn the objective reader off and cause him or her skip over what may have otherwise been some excellent comments:
…” a silly magic device by the Left (as well as a mechanism with which to engage in social engineering to various degrees, associated with politics and faddism regarding lifestyle, food, and so on, as well as political correctness in a more general sense) .
What the silly children on the left believe…
…rather than what the Dems want to do (if they know really what they are doing; their effort is sloppy and when not pathological, looks to be, as usual, haphazard and without coherence and other attributes that require thought rather than aimlessness that their experimentation or bungled efforts typically reveal), let's say that eventually the federal government is going to be more interventionist (and more intrusive, etc.) in health care, and that a program of prevention (not encompassing the stupid “wellness” features and language, hopefully)…
We know that many on the far Left (who normally are represented by the liberal Dems in Congress and as he has revealed openly now, by Obama currently) are fans of “public health,” and what that term typically means. (It's a definite leftist entity insofar as politics related to it are concerned)…”
This is great emotional fodder for the pro-Dem-effort kiddies and those on the margin of this group,
The effort (and the reputation of the Dems, by their own hand) is failing, which is why the Dems are stooping, such as to appeal to envy from the resentful children who still support this effort or may have recently wavered but might be lassoed and returned to the herd if the right emotions are approached.”
Thanks again
Polimom, did you see the post I had that pointed to an article along these lines. Also a simple thing about real health practice reform.
Polimom, did you see my posts about similar things (here and here)?
“”Prior to the insurers, HMOs were the frequent villain in the health care scene”
Actually HMO's are essentially just insurance companies.”
Well, comprehensive health care (providers as well as provision, even) under the guise of “insurance.”
* * *
“IMHO only serve to–to be frank–turn the objective reader off “
CORRECTION: ” … subjective [who dislikes it or doesn't wish to face it]“
It's all relevent. Some may be unnecessary (and you are trying to be creative and contrive a fictitious moral high ground, perhaps, as your way of resenting it). Had you said that only (i.e., leaned toward truly being objective) you would have been on firm ground (rather than expressing resentment and repeating text in a way that truly was unnecessary).
The distinction between true insurance (which in health care would mean catastrophic care) and what we often are discussing instead, which I insist on clarifying frequently (it is comprehensive health care, what is meant by “health care”) needs to be made; aside from the political and related quasi-philosophical issues raised by use of “insurance” to mean something more broad and general, this also involves what is the subject as well of what should or shouldn't be provided by government (not only that decision, but the scope and size of what is to be provided as well as the cost).
[sigh]
Yes, the distinction needs to be made and is being neglected, or the word “insurance” misused, currently.
I disagree. Essentially they are a health insurance company that limits which doctor you are allowed to see and what that doctor is allowed to charge for various things.
The doctors enrolled still see other non hmo patients and are merely contractually obligated to always take on new patients.
Insurance companies also effectively limit what doctors are reimbursed, just not under prearranged agreements.
In the end, an HMO is an insurance company that limits what doctors/hospitals you can utilize.
@ D.E. Rod
” This is one of the most enlightening, thought-provocative and civil discussions I have had the pleasure of reading at TMV–I am learning a lot.”
I'll fathom a guess that the lack of a partisan thread headline was a contributing factor to this. If you start out with a shot at the other side, is it any surprise that you will get a fair amount of partisan commentary for good or ill?
Davebo — I see why you are saying that. But let's do a thought exercise. Let's pretend I've waived a magic wand and now insurance companies are not involved directly in health care.
If I'm a doctor, and I decide to get together with a bunch of other medical folks (pediatricians? oncologists? orthopedic surgeons?), and I put in a lab. And then we, as a group, decide that we want to expand our client (patient) base by offering them a set of services at a discounted price.
Am I still part of an HMO? Don't I sound, though, like I'm part of exactly that?
I dunno if this will work [Disqus keeps saying it's going through but it's not!] but I had a few posts about similar things last week (here and here), including a link to an article.
Polimom, thanks for the follow-up.
“[W]hen we're talking about point of service care, the dynamic changes because we're not trying to price toward a minimum number of people to achieve a pool rating. There are any number of options when we remove the 'insurance rating' limitations.”
Well, aren't we, in this case, trying to change it so that there are no limitations (exclusions) at all?
I should have added (would that have been welcomed?) that “community rating” has long been sought by reformers, including the “Medicare for All” “single-payer” people, with the assumption that nobody would be excluded from the community — that all would be included in the community sought (typically, the entire nation). The point here being that the main thing is to ensure everyone gets what they need or want, in theory.
Note that this is separate from the the distinction between comprehensive care and true insurance; the assumption is made that whatever it is that is wanted to be provided to everyone is agreed on or reasonable. But sooner or later, what everyone should be able to get would have to be addressed.
* * *
“I'm thinkin' care for someone who has already been diagnosed with a heart condition (ongoing care related to the heart condition) falls under “routine care”, after a certain point. I also think it's downright ridiculous (and appalling) that they are cut off from the current system for routine care, generally.”
Oh, there are a number of reasons why almost everyone is in favor of some measure(s) of not only health ["]insurance["] reform, but health care-in-general reform.
To me, even the “thinnest” “broad” kind of health care, such as should probably fall into the category of “public health” and be administered for, example, by the Federal Public Health Service I had written about earlier, could be used in a way like this. Note that some preventive measures like even testing or screening are not cost-effective over large populations (including the entire US population), so no matter how good they are in theory (including their future-cost-reduction potential), they can't and won't (or at least shouldn't) be applied to everyone. But we could at least have a “multi-tier-” effective set of tests that people could get. Say they get the basics (the cheapest stuff) during annual or biannual exams. If these basic (cheapest) tests show anything wrong, then more tests would be done (as part of “insurance” or as part of a federal or other government public-health measure, as a routine act). And in theory, anyone who had a chronic condition would have more tests or more other kinds of care as a routine matter — testing, long-term pharmaceuticals, or whatever all could be under the public health system, which would be integrated with one's “personal [individual] health” care “world” by the ideal “liason” for this: one's personal (general or specialist, if a chronic condition) physician.
(These things are easy for anyone to conceive, but I also write from experience of facing progressive chronic illness, diagnosed almost thirty years ago.)
In the example you're thinking of, the person with a heart condition would not be under routine (needed) care, but possibly (or likely) under the care of a cardiologist rather than a G.P. (though you can always say that there's more than can be done to empower GPs in addition to the “wholistic” role they can play).
“and we put in a lab while we're at it (and staff it). And then we, as a group, decide that we want to expand our client (patient) base by offering them a set of service”
1. Some would frown deeply on self-referrals as unethical, but I've found it greatly convenient in practice, as a patient who needs lab work. Visit the doctor, get the blood drawn right then and there is the way!
2. Someone asked a while ago, What do we do with abandoned Detroit over-bloated dealership casualties post-bankruptcy? Why not labs, clinics, community medical centers? (currently neglected tangible stuff)
* * *
“Am I still part of an HMO”
Semantics! HMOs always were about health, or more precisely, they used the “insurance” guise (as a way to avoid and reduce costs, and charge better prices than they would without lack of suitable cost-related information) . HMOs are nominally and legally insurers under this “insurance” guise, but again, the product is not insurance (against unforeseen, avoidable, avoided events) but comprensive care.
HMOs acted as “insurers” providing comprehensive care, were money-makers, and so were attractive to the conventional, true insurers to acquire — it was natural, in that sense.
* * *
“If you start out with a shot at the other side”
Or if there is shooting (elsewhere on this site, and with this subject, everywhere, currently) … the shooting and the motives are all relevent, if unnecessary in the strict sense. In this case, some not only fail but refuse to distinguish between true insurance and the broader scope involving health care, and there are so many other related issues and goings-on…
I see what you are saying Polimom but I've always thought of it as more of a top down process.
Regardless, I think we should be looking to detach our healthcare provider from our employers and for a lot of reasons.
Take the boom in recent years in employee leasing companies like Administaff. Part of it is obviously lowering insurance costs through large groups. But there is also incentive to provide management (real employees) with much better benefits than workers without breaking the law.
Additionally in an economic downturn as a business owner you can face a choice between layoffs, or decreasing or eliminating completely the portion of the insurance cost paid by the employer. At this point employees are faced with a choice. Pay the difference themselves, attempt to get their own coverage, if possible, or begin looking for employment elsewhere at the worst possible time.
I still think single payer with the option to go private is going to be the only answer. And I mean smart single payer with negotiated volume drug discounts, etc.
[...] up and down, in and out, and every which way. Usually, the clothing modify up. Read more here: Health Care and Insurance: A Lost (and Crucial) Distinction | The … Posted in Health, Uncategorized | Tags: a-fair-amount, and-down, and-every, and-out, [...]
I've always thought of it as more of a top down process.”/em>
You and everybody else, Davebo. That's why I'm trying to stay so closely focused on this discussion today. Changing the landscape requires a difficult mental shift.
“I think we should be looking to detach our healthcare provider from our employers and for a lot of reasons.
I agree, also for a lot of reasons. I'm hoping to start talking details in follow-up posts.
[...] the original post: Health Care and Insurance: A Lost (and Crucial) Distinction | The …SHARETHIS.addEntry({ title: “Health Care and Insurance: A Lost (and Crucial) Distinction | The [...]
[...] (often with a fair amount of heat) up and down, in and out, and every which way. Read more: Health Care and Insurance: A Lost (and Crucial) Distinction | The … Categories: Health Tags: a-fair-amount, and-down, and-every, and-out, care-reform, end-up-, [...]
@ Davebo
“I've always thought of it as more of a top down process.”
Thats pretty much whats gotten us into this mess, and a lot of other ones. We haven't taken JFK's words to heart, “ask not what your country can do for you, ask what you can do for your country.” We tend to think in terms of “whats in it for me” rather than “whats best for the nation” We want the security blanket but we don't want to pay for it, We want good healthcare, but we are not willing to work for it” “We want to help the poor, but we want government to take care of it instead of reaching into our own pockets and donating”, etc. Change does not start from the Top Down, change starts with US, anything from the top down has a pricetag attatched of political favors, backroom deals, someone making money off the efforts of others, etc. “Change you can believe in” is when you as a patient decide that you don't need an x-ray when you are just getting stitches. When you decide your just having a bad day and not suffering from depression and need that new pick me up pill even though your insurance covers it.
Also @ DaveBo
“Regardless, I think we should be looking to detach our healthcare provider from our employers and for a lot of reasons.”
One you didn't mention is the burden that healthcare via employers places on US companies in global competitiveness with countries that have socialist healthcare systems. That along with our high corporate tax rates compared to other nations and the fact that we tax our companies globally and not territorially put us at huge disadvantages. But thats another discussion.
Leonidas
Believe me, I know about that burden. But the problem with detaching health insurance from employers is that it can be an incredibly complex undertaking to shop price versus coverage. Hopefully a business has someone, even if only a consultant, who can wade through the print of an insurance policy.
I remember thinking last year sometime that perhaps what the government should do is certify a selection of policies. Lay out in clear terms what is covered and what isn't. What deductibles and maximum payments will be, and allow insurance companies to submit policies to the government for a variety of costs/coverage levels and “certify” that this policy meets the criteria of policy “X”. Set a scale from all in covered to catastrophic only.
No insurance company should be required to submit policies for certification. But those that did would have a marketing advantage and consumers could compare apples to apples which is very difficult for the average person to do today.
But the problem with detaching health insurance from employers is that it can be an incredibly complex undertaking to shop price versus coverage.
And if you keep to the premise of this post, wherein insurance isn't the conduit to health care? Is it still complex?
Polimom,
One concern about a two-tier system is we'd pay more premiums for less coverage.
Another thing I haven't seen seriously looked at is the differences in cost for drugs and other services in the US so much more than in other countries?
@DaveBo,
Sure business has a person that can wade through, to find the best deal for the company, not necessarily the individual. People need to take responsibility. Now I'm not opposed to the government establishing a database to facilitate people searching for insurance across state lines. Thats actually a positive governmental approach that empowers the people instead of trying to put them to sleep.
Hi Rambie, thanks for joining in.
One concern about a two-tier system is we'd pay more premiums for less coverage.
I don't see how. “Premiums” in the context of this post, would be for “catastrophic coverage” — and are typically much much lower.
[...] posted here: Health Care and Insurance: A Lost (and Crucial) Distinction | The …SHARETHIS.addEntry({ title: “Health Care and Insurance: A Lost (and Crucial) Distinction | The [...]
A liberal argument so open-minded that the proponents cannot agree even with their own side.
Sorry, I WANT HEALTHCARE NOT INSURANCE!
FULL nationalized healthcare is the ONLY answer. Its just a matter of time before this capitalist pig paradise becomes the last nation to institute that which is obviously moral and just!
Open Minded? HA! We only come out of our corner TO FIGHT!
VIA LIBRE`!
“Have a database, invite everyone into it and have prices and terms of coverage in a simple uniform format, let the people do the rest. If people want to see ratings they can go to consumer report or another consumer advocacy site.”
I think that sounds great…and why not add a public option to that list while we are at it
While I really like the different approach and the spirit of this thread, I've lived in a health care system where both public and private options were available…and things were cheaper and simpler in that system.
No matter what happened to you…you are were covered. 10 Euro copay for the first visit and that was it.
I might end up moving back some time soon…we'll probably go private this time. Why…because with the more expensive private care you get access to the chief surgeon, not just any surgeon. In the private system you get any drug you need, not the generic equivalent or the cheapest of the 5 different options.
So we have the option of going with a private insurance that offers higher quality for a higher price or the public option that is cheaper, but not as good.
Not exactly a terrible thing.
Father Time
” Sorry, I WANT HEALTHCARE NOT INSURANCE! “
Your wishes are answered
http://www.goarmy.com/
“I think that sounds great…and why not add a public option to that list while we are at it
”
There already is one:
As a former Senior VP of Prudential Healthcare I have found this discussion interesting. After reading 60 plus comments here are my thoughts on what has been said so far.
1 – The advent of full comprehensive medical coverage started during the Korean war. There was a wage freeze at the time so generous health benefits were awarded by corporations as a way to get around the wage freeze. It was not a political ploy by the Democrats but Insurance companies certainly did not object to the added revenue. This was strictly a capitalist reponse to problems retaining qualified employees given so many men were overseas at war.
2 – There is no question that HSA's and high deductible plans will save money in the short run. However, they can start to have problems in the longer run. Namely, the reluctance of people to spend money on preventive health. One of the ways, I overcame this is by providing a premium discount for the following year if the insured had an annual exam. This could be expanded by providing further discounts if the insured followed up on the physician's advice.
The other long run problem is the high deuctible plans exacerbate the cost differences by age. In other words for young healthy people the high deuctible plans are a real advantage. Utilizing this advantage makes the pool for older works hgher cost to the point premiums on the catastrophic portion start to rise dramatically. In effect the excess premiums that insurance companies collected on the young are lost, making premiums on the rest of the people higher.
Another problem is that purchasing medical care is unlike any other market driven practice. If you are really sick, you end up doing whatever the doctor tells you and thus are not controlling anything. Also because there are so many parts and participants to the health care process, it's impossible to quantify pricing. For example, if you have a heart attack you go in whatever ambulance arrives to an unknown price. The ambulance takes you to a hospital, maybe even one you are unfamiliar with. Said hospital may or may not be in your network. The ER doc does a bunch of tests and gives you a bunch of pills – no cost information available. You end up in an operating room for an angiogram and you are subject to the mercy of whatever cardiac surgeon and anesthesiologist happens to be on call that day. Cost differences for said personel can vary by tens of thousands of dollars. While under 100% high deductible plans this will not make much difference – such plans are on their way out and 80% plans will be primary in the future.
3 – HMO's are insurance companies. The idea that a group of docs could get together and run their own plans died in the early 90's. They simply did not have the administrative saavy and financial resources to run such plans. All it took was a couple of premature babies and the docs were bankrupt. It takes many millions of dollars to be able to handle the risk in healthcare expenses. As soon as the docs start hiring administrative, business, marketing and financial people they are no longer just a bunch of docs that got together but a full-fledged business subject to the profit pressures of their financial backers. Kaiser and Group Health up in Seattle are the only two full fleged non-profits left. Even the BX-BS plans are changing to profit making insurance companies.
4 – Pricing in healthcare is very complex full of jargon. It's all driven by CPT codes and there are thousands. The hospitals are driven by DRG codes and there is no such thing as given a person a set price for a knee replacement. An estimate can be given but as the case with mechanics and contractors, the price never comes in at that number. The entire pricing model of health providers would have to change in order to have a consumer friendly pricing policy.
5 – The idea that allowing insurance companies to cross state lines will save a lot of money is bogus. United Healthcare, Aetna, Cigna, Humana, Wellpoint etc etc already operate in 50 states. They can easily handle association plans and goups of small employers. The only ones who could gain anything by waiving state regulation are the small fly by night organizations who collect premiums and then disappear leaving insureds holding the bag.
6- The big money in claims come from chronic conditions like diabetes, cancer, and heart ailments. Controlling costs here is critical and the way to do that is with comprehensive preventive care – not high deductible insurance.
7 – Purchasing coverage as an individual is a daunting task. Even if you can read and understand the coverages and limitations and exclusions that's only about half the battle. The company's claim practices are crucial- What is their Usual and prevailing fee structure look like, what is their policy on new surgical procedures and techniques, what is their definition of medical necessity etc etc. Group coverage has the advantage of having the corporation as your advocate and believe me that works when it comes to claim problems. As an individual, you have zero power in disputes and little in the way of cost effective ways to fight.
8 – Tort reform is a minor issue in health care costs. The total expenditure on malpractice annually is $60 billion less than 3% of the total health costs. How much defensive medicine is practiced and it's costs is anyones guess. More tests means more money so who is to say those extra things would not have been done anyway.
9 – Community rating and doing away with pre-existing conditions is absoluely essential. However, we do have to come up with a way to handle people who drop out of the insured market until they are sick. This can be handled with premium surcharges for a certain number of years or two year benefit cutbacks.
Anyway, my wife is calling me for dinner – so maybe more later.
jdleddell, thanks for the post. You made many of the points that I was thinking of after wading through the comments. I think much of what you are talking about are some of the essentials of health care that make it exceptionally complex and confusing policy area to talk about, much less reform. Many aspects of health care are inherently difficult to deal with because they are classic market failures–imperfect information, large externalities, large barriers to entry for producers. Asking people to comprehensively price and 'efficiently' make decisions is a dream. Certainly we can do it more efficiently.
I fear that decoupling preventive (maintenance) care from catastrophic will just lead to less preventive care. As people have to pay more directly for doctors visits and routine tests (which add up), they will demand less, as the consequences of their (lack of) action is really not very clearly tied to the action itself.
On top of that, where do you draw the line between maintenance and catastrophic? What about pregnancy? It is certainly a choice, why should others have to bear the cost (semi-sarcastic), either through tax dollars or increased private premiums? What about aged care, which as our health technology increases only lasts longer and racks up more costs? These are routine costs that are very expensive and difficult for individuals, especially poor ones, to bear.
In the end we need to do something to increase the price signal to consumers, albeit with the understanding that health care provision will never be a perfect market system. I think that decoupling is a good start, both decoupling of coverage types as well as insurance coverage from employers. But there also need to be incentives for preventive care and decisions that restrain costs, as well as some sort of redistributive system that assists the poor (*this last one is a largely normative proposition that certainly can be disagreed with).
Thanks for the thread Polimom and (most of) the posters!
jdledell — thank you for your thoughtful input. There's a lot in there to think about, and as APR says, your comment illustrates a great deal of why this is all so very complex and difficult to reform. I've argued in other threads that expecting consumers to pick and choose specific treatments because they're paying for them is asking a bit much.
I'm going to have to come back around to some of your specifics in the morning — it's been a long day here. In particular, I'm interested in further discussion of how we (as a society) can encourage ongoing maintenance / preventive care, while simultaneously decoupling some of these components.
APR — I agree that reduced preventive care is a totally undesirable outcome. But there are incentives and approaches unexplored, I suspect. I think that conceptually, though, this is an interesting track, and it clearly moves thinking in a more creative direction. Thanks for coming into the discussion.
A couple of fast thoughts before I close down the computer (and my eyes) for the night:
Pregnancy is one of a number of medical issues that supports the argument for more individualization in the system. And your comment about aged care is congruent with jdledell's input regarding chronic conditions.
All in all, much food for thought.
And I don't disagree at all with your final normative proposition.
:->
@ jdeldell
” The idea that allowing insurance companies to cross state lines will save a lot of money is bogus. United Healthcare, Aetna, Cigna, Humana, Wellpoint etc etc already operate in 50 states.”
Are those policies exactly the same in each state or are the prices and coverages different? Are there administrative costs to tailoring the plans to each area? Do these practices protect the largest insurance companies from competition as smaller companies do not have the resourses to engage in all these markets despite sometimes providing better service.
Seems to me your position is a big insurance talking point in order to preserve competitive advantage and profit margins. I've defended big insurance in the past, but I'll only defend big insurance to a point. Since your a former Senior VP of a big insurance provider I appreciate your experience, but I question you potential bias.
Wow, 71 comments. I'm sorry I don't have time to read them all (something I always try to do before commenting). Your post brings up similar points as a previous post on TMV which I responded to: http://themoderatevoice.com/43298/health-reform…
I agree with you for the most part, that part of our problem is that insurance is paying for routine care, but I object to the use of the example of filling up your car with gas, and how your car insurance company doesn't pay for that. The difference is that if your car runs out of gas, it stops running, and your car insurance company doesn't have anything to do with that. However, if you don't get preventive care, you could get very sick and your health insurance company will have to pay for that. So, the health insurance companies have an incentive to make sure you're getting the appropriate amount of preventive care.
One possible compromise I suggested might be this: Your health insurance company pays for a few routine visits a year, to give you the chance to meet with your doctor and discuss options for potential tests you might want to run based on your age/health condition. But, beyond those routine visits, the consumer pays for their health care up to a maximum (maybe 3000 or 5000 dollars), at which point the insurance company starts picking up the tab. This would allow consumers to make an informed decision about the cost/benefit of doing particular diagnostic tests and elective procedures (thus decreasing the cost of health care overall as consumers choose to reasonably ration their own care, rather than having and insurance company or the government decide for them), while still covering the patient in case they need more extensive health care.
Is this plan perfect for everyone? No, but it would make sense for some. Would I advocated mandating this sort of system? Absolutely not. But it underscores the need for more choice in the system, which is severely hampered mostly by the employer-based insurance system. But I digress.
Polimom–
I certainly think there is more to car insurance than just writing a check to the shop that fixes your car.
I've never been in an accident, but a few years ago my neighbor's car was hit by someone who made a left-hand turn without looking for oncoming traffic. My neighbor was bleeding, so he got a ride in an ambulance to the nearest emergency room. (His injuries were minor.) The other driver walked away without a scratch, but since the accident his fault he was issued a ticket by the police.
In spite of that, since the other guy got home first, he called his insurance company first. He told his insurance company that my neighbor was at fault. They rented him a car to use while his car was in the shop. When my neighbor finally got home and reported the accident to his own insurance company, they (his term) “laughed” at him, because they'd received a report that the accident was his fault.
Since the other guy had been issued a ticket, my neighbor's insurance company eventually got a police report exonerating my neighbor. They called him at work the next morning and (he rolls eyes when he tells this part) “apologized profusely”.
By that time, of course, my neighbor had already called a lawyer.
So sure, I see automobile insurance as an “administrative problem”: hospital, repair shops, rental cars, many lawyers, adjudication through some court, someone to answer the phone and laugh at you, someone else to call you back and apologize profusely.
At any rate, it's obvious I'm not understanding the benefits of your idea. Since you're planning to write more about this topic, I hope you'll clarify them.
Again, thanks.
I must disagree, Dad. If health insurers have a stronger incentive than you do to to keep yourself healthy, the system is already seriously broken. If they can get you a better price for routine care than you can get on your own, that's broken too.
Poli,o,
Coming in real late to this one, but thanks.
It occurred to me that there is a way to implement the two tier system in the cheapest way.
Maintenance costs are well defined and is a service that would benefit from negotiated pricing.
With the government's 3.5% overhead as demonstrated in medicare, could a pseudo public plan covering everyone be an option? I hated to say the 'p' word, but private insurance could get then get back to insurance,:rating catastrophic risk over a pool a people.
I'm not trying to start a policy debate, but it seems to me it solves George's concerns and gives us all benefits.
Sound reasonable?
Dr. J,
Good point, but I don't think it's a question of who has more incentive. Both I and my insurance company have an incentive to keep me healthy. So they have an incentive to help me do what I can. We're both generally free market advocates I believe (if I'm wrong, forgive me for supposing). So what do you have against an insurance company wanting to do something proactive to help the consumer stay healthy, which is in their interest? Now, if they cover too much stuff (which you can argue they do), that would work against them because their costs increase due to the principle of diminishing returns. Therefore, it seems to me a sensible insurance plan would cover some basic preventive services, and then the catastrophic stuff (another difficult question is what is catastrophic), and leave the patient to cover the stuff in between. Again, in my view this would just be one option of many.