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CHRISTOPHER TAYLOR'S BOOKS

Monday, March 05, 2012

CONSIDERING INSURANCE

"who cares, its just a co-pay"

Insurance Cost
Something frustrating for me is that any time a discussion of health insurance comes up it starts out right, then tails off in some unrelated, poor direction. The primary complaint about health care costs in the USA is that it is so expensive; and it certainly is. That's the right place to start, because quality, innovation, availability and so on are all top-notch in America.

But from there, the discussion usually goes off on a wild tangent that has almost nothing to do with cost. Arguments start over the role of government, cold-hearted cruelty, statistics of people without insurance, and so on. And the initial truth of high expense gets forgotten in all the shouting.

No government control solution reduces costs, they only spread the cost around to others. That's like complaining that your sandwich costs too much so everyone should pay into a pool to buy you a sandwich. You've done nothing about that cost, you've just demanded everyone else help pay for your food. The only way to truly address this problem is to reduce the costs of health care, thus making it less of a problem for people and lowering the expense of insurance or even negating the need for it in most cases.

One of the biggest problems with health insurance is that people have lost all concept of what it was meant to be and started out as. My brother came up with a great analogy to understand the comparison, I don't know where he got it.

I remember well when I was working for the Oregon Department of Revenue that as soon as I received full insurance benefits, I went to the doctor. I had my eyes checked, I had my teeth checked, I had a full physical, I consulted a doctor about chronic fatigue. This was stuff I didn't need to do, it was just something I had covered so cheap it was attractive to go get it done.

So imagine your car insurance worked this way. Instead of covering catastrophic damage and emergency, you used it to cover everything. When your windshield wiper was getting worn out or didn't work well, you pull out the insurance card. Your headlights need re aiming? Insurance. Your tires need rotating? Insurance. Need a tune up? Need a new battery? Need the car detailed before your hot date? Insurance.

Now consider how expensive your car insurance would be if you used it to cover everything like that. All of those expenses would have to be covered by your insurer, who would be forced to raise the cost of everyone's coverage to pay for it all. Suddenly insurance would be out of reach for most people because it would double or triple in cost.

And that's what happened to health insurance. Putting aside all the increased costs for health care this move to add more and more to coverage in health insurance is what has increased it so much. And the additions are almost always mandated by state and federal governments. The idea sounds noble - people that get regular care will be healthier and not need as much insurance - but in practice it doesn't really work out and it drives the price up significantly.

Being forced to cover regular check ups, tooth cleaning, eye exams, contraceptives, visits to the doctor because you got the sniffles and so on means that the insurers have to raise prices just to cover all these expenses. And so the cost goes up and up and up. The concept is called "managed care" and almost every state in the union has rules about how more and more stuff must be covered in health insurance.

It doesn't work (pdf file). Nobody saves money in the long run, all this concept does is give business to doctors who otherwise might not have those visits. If you have a cold, take some Vitamin C, get rest, and you'll get over it in time. You don't need to go to the doctor.

And if you do, you don't need everyone else to pay for it. Insurance should be like your home insurance or auto insurance. Pay for catastrophic events and emergencies with it, not everyday expenses.

And if you really want everything covered, that's fine: but it should be an option that costs you extra, not a standard that costs everyone. Requiring this means insurance starts being priced out of more and more people's reach.

That's just one simple way to reduce cost. But instead all we get is arguments over how much socialized medicine we should have and how much of an awful person you are to question that.

6 Comments:

Anonymous Anonymous said...

"I had my eyes checked, I had my teeth checked, I had a full physical, I consulted a doctor about chronic fatigue. This was stuff I didn't *need* to do, it was just something I had covered so cheap it was attractive to go get it done."

You had no idea if you needed to do it until you got the results. The idea of preventative care is that it's cheaper than, say, treating a long-undiagnosed eye problem - you know, that we'd all pay for if you discovered it now and didn't have money to treat it.

The trouble with preventative care is that people don't want to get it unless it's free, or close to it.

2:05 PM, March 05, 2012  
Blogger Christopher Taylor said...

Well, that and it doesn't actually save money in the long run because 99% of the time its unnecessary, and the savings on the 1% that needed it doesn't make up for that extra cost from everyone else.

I mean, maybe when you got your wiring checked on your car for a $10 copay you find a fault that would save you thousands later. But that doesn't make up for 99 other people just doing it because its cheap.

4:00 PM, March 05, 2012  
Anonymous Anonymous said...

Hmm, 99 times $10 is cheaper than "thousands," actually.

Preventative care, time and time again, has proven to save money on a host of medical problems that ago largely untreated and are expensive when they're finally caught.

Of course, you can argue that preventative care ought to be a matter of individual responsibility. But unless you're ready to kick those individuals to the curb when they don't get preventative care and turn out to have serious conditions, we're all stuck with the price tag.

4:16 PM, March 05, 2012  
Blogger Christopher Taylor said...

I think you misunderstood my point. $10 is the copay. Your insurer still has to pay the doctor the full amount you didn't pay. Every visit. Its cheap to you but only until everyone starts doing it, then you start to add up and everyone's premiums go up.

Just like with the car analogy. And its not true that preventative care has proven to save money, I linked a pdf of a report that shows exactly the opposite.

4:32 PM, March 05, 2012  
Anonymous Anonymous said...

Your link is about managed care, which is different from preventative care, although most people don't know that. The managed care notion - "if everyone meets with their doctor who tells them to exercise more, nobody will die of a heart attack" - is a liberal myth. But serious, targeted testing works. Vaccines are an example of preventative care.

The core issue, it seems to me, is whether we're going to tell people who flake off on care and/or insurance, who then develop serious conditions, that they're on their own. It's why a car analogy doesn't work. You can live without a car. You can even find another car, if you didn't take care of the first one. A body, not so much. If we're not ready to tell the young uninsured accident victim he can't have physical therapy, or the untested diabetic that he can't go to the hospital, or the measled baby with hippie parents that he's gonna die, then we need to get to a model that works.

4:42 PM, March 05, 2012  
Anonymous Anonymous said...

PS I should add that even on the managed care front, you're citing a 1993 study that's in the minority of analyses on this. But, you know, everybody has their favorite stats!

4:48 PM, March 05, 2012  

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