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The problem with the "insurance" companies is that they're not really insurance companies anymore. As the current top comment by raintrees points out, our so ca
by korethr 7y ago
The problem with the "insurance" companies is that they're not really insurance companies anymore. As the current top comment by raintrees points out, our so called "insurance" is acting far less as insurance (coverage in the case of a major but unlikely incident), but additionally standard payment for regular healthcare services. And this creates all manner of perverse incentives that messes with the pricing and makes it more expensive for everyone.
Ironically, when I had a bout of un-/under-employment in the 2008-2009 downturn, my only option for medical care was to ration my healthcare services to those actually needed, and pay cash when I actually received service. I paid less per service individually by paying cash (doctors, imaging, and testing clinics, etc, all really like cash, it makes their life much simpler). And overall I paid less by paying only for the services I needed when I needed it, instead of paying into some high monthly payment to have a battery of services I may or may not ever need pre-selectedly available for me.
I think healthcare costs would come down for most if we could get back to something approximating that: medical insurance being actually and only medical insurance -- covering high cost emergencies to prevent such from breaking one financially -- and covering only that. Paying for day-to-day regular medical services can and should be handled differently. In all fairness, I don't know how to get there, and I don't know what the options for the latter would look like, or what they should be. But I do think it would be helpful in the near and long term to put our energies in that direction.
- darawk 7y agoI agree in principle, though i'll add that part of the problem is that if you insure high cost emergencies only, you incentivize people to transmute their low-cost non-emergencies into high cost emergencies. The simplest way of performing that trick is to ignore your low-cost non-emergency until it becomes a high cost emergency. This is part of the reason why insurance companies want to pay for regular checkups and things like that. It's also why they want to incentivize healthy lifestyles, to avoid hyper-expensive things like, e.g. diabetes. The problem with healthcare is that everything is connected. The low-cost regular stuff feeds back into the high cost stuff in a way that means anyone insuring you for the high cost stuff also ought to care about the low cost stuff. It's really a nasty problem.
- AcerbicZero 7y agoThe car insurance industry is by no means the most useful comparison, but it does make some provisions that resolve a number of these issues. By that I mean with car insurance, a reasonable deductible and the knowledge that submitting an insurance claim will likely result in higher premiums, tends to keep people from over-reacting to small things. Most car insurance companies also offer a variation of the "preventive" care at reduced, or even no cost, such as with window rock chips - its far less expensive to fix those rather than replace the entire window. I'm not suggesting copying the car insurance model over to health insurance, but I think there are some worthwhile areas to explore, as I don't see the current health insurance system being sustainable much longer.
- snarf21 7y agoYou are right that misaligned incentives is the #1 problem in healthcare. Health and wellness need to be something that is paid for differently. I think there is no reason that this can't be more like some kind of government funded healthcare. We also need move healthcare insurance away from employment. This is a relic of WWII labor shortages and not something we see for life/house/fire/etc kinds of insurance. When these companies have to compete on an open market, we'll have better competition and prices. Additionally, we can start charging people more for poor choices. Life insurance charges more for smokers and health insurance should too. Again, I'm talking about choices not pre-existing conditions. We will still need that protection and I admit that some conditions are the result of systemic bad choices. It could be that we can find a reasonable measure (HA1C?) for tracking poor nutrition and lifestyle to price that in as well.
- ceejayoz 7y ago> Life insurance charges more for smokers and health insurance should too. It does. (It didn't help.) https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5589079/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5589079/ > To account for tobacco users' excess health care costs and encourage cessation, the Affordable Care Act (ACA) allowed marketplace plans to impose a surcharge on tobacco users' premiums. In fact, it appears to be actively counter-productive: > Relative to those facing no surcharges, smokers facing medium or high surcharges had significantly reduced insurance coverage (-4.3 to -11.6 percentage points), but no significant differences in smoking cessation. In contrast, those facing low surcharges showed significantly reduced smoking cessation. Taken together, these findings suggest that tobacco surcharges conflicted with a major goal of the ACA – increased financial protection – without increasing smoking cessation.
- oconnor663 7y agoI think the biggest complicating factor is that everything you just said is true, but health insurance is also still sometimes insurance, as well as redistribution. So it's doing three things at once: - Paying for routine care for people who could otherwise afford it. - Paying for unexpected and unaffordable care, like chemotherapy. - Paying for routine care for people who can't afford it. Note that the third category doesn't refer only to poor people. Routine childbirth costs thousands of dollars. Any reforms targeted at the first category of spending, which hurt people in the second and third categories, are politically unacceptable. Add to that another complication: - Unexpected/catastrophic medical expenses and routine care are closely related, especially in the long tail of expensive patients. For example, the number of emergency room visits a patient makes (especially very expensive patients who make a lot of visits) is lower if the patient is making regular doctor's appointments and following their doctor's orders. But when regular care and monitoring come out of the patient's pocket, and emergency room visits don't, the incentives are horrible. So these are extremely difficult political and business issues that health insurance has, which e.g. auto insurance doesn't. Most of the solutions to one of these problems, will have negative side effects for the others.
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- entee 7y agoThe article actually provides data that belies this line of argument. 50% of healthcare users account for 3% of the cost. Essentially all that preventative care or routine care is actually quite cheap on a systems level. It's not actually the driver for medical costs. Chronically sick patients, older patients and patients with major events drive the costs. In this case an insurance model of some sort is appropriate. However, I'm increasingly unconvinced that private insurers without extremely tight regulation are the way to go. I'd choose something like Switzerland or Germany where you have a heavily regulated insurance market with price controls. They get better outcomes than we do at much better prices. Granted the docs will take cash and bill you for less, but I'm not sure that's all that it seems on the surface. If you're insured your copay may end up being less than the cost you'd pay straight up, and the negotiated price between the insurer and provider may be lower still than what you'd see on a bill. You may still be ahead, but it's complicated.
- menckenjr 7y agoDid you mean "3% of healthcare users account for 50% of the cost"?
- kevinventullo 7y agoI think they meant what they wrote, but it might have landed better as "50% of healthcare users account for 97% of the cost". Basically, the healthier/younger half of the population costs almost nothing.
- entee 7y agoNo if you look at the chart from the NIHCM about halfway down the article, you see that 3% of total costs cover the first 50% of people. The top 5% of people account for about 50% of spending and the top 10% account for 2/3 so conveniently the statement you made is actually pretty accurate too :)
- pault 7y agoUnfortunately this won't work for me since my prescription medication costs over $1,000/month without insurance. You can limit your trips to the doctor as long as you are young and fit, but many people don't have a choice.