While I have some reasonably strong opinions about health care reform, I'm kind of bored of the whole thing so this post isn't about pushing my opinion.
As I've been listening to the debates about health insurance one aspect strikes me as odd. Part of health insurance really is insurance. You pay a regular set amount and in exchange the company will pay on the unlikely chance that you have a problem that costs a large amount of money. The insurance company has low risk because they pool a large number of uncorrelated risks and you pay them more than your expected costs because they take on your risk.
But there is another aspect to health insurance. In addition to paying for unexpected events they also pay for regular check ups and other expected expenses. It's like if your car insurance paid for oil changes. Some of those expected expenses like regular check ups aren't even so expensive that you need insurance against them. There are other events that may not be 100% expected, but are sufficiently likely you don't need to average with other people. Such as going to the doctor for a cold or flu or other minor issues. It will vary some year to year, but the variation is probably small enough you don't really need to insure against it. Maybe the insurance would be if the number of visits were to exceed some large number.
There's also pre-existing conditions and prescriptions. If someone has been prescribed a medicine they're going to take for the rest of their life then the next year when they renew their insurance, they're not really insuring against needing the prescription. They know they're going to need it, it is not about paying to share their risk with others.
I'm absolutely not saying that these items that aren't really insurance should not be covered. I'm just saying that it seems like what we buy is more like a monthly subscription fee rather than insurance. It may just be a change in phrasing, but it could help reshape how the problem is viewed. Such as if you consider them insurance companies then it is kind of weird for them to insure against a condition someone already has. But if you consider it paying a monthly subscription fee, then as long as the person (or their employer or the government or...) is paying for their plan then they should get treatment. And I think it is easier to make the argument that everyone should be allowed to pay for health care through a monthly subscription fee regardless of existing conditions. It could also be a way of by-passing insurance companies by allowing medical groups to directly offer these plans.
Saturday, October 24, 2009
Subscribe to:
Post Comments (Atom)
4 comments:
Some insurance plans do only cover you if you go over a certain number of visits to the doctor (or whatever). A lot of plans have deductibles: You pay the first $500/year of your medical expenses and then your insurance kicks in and takes care of the rest. Up until recently, I had "catastrophe" insurance, meaning a super high deductible (like $5000). Any normal stuff that came up, I'd have to pay for myself. But if I need an organ transplant, that'd be covered :-) So my plan didn't cover oil changes.
As for subscription fees & pre-existing conditions, I think you're right... but the business model fails if only sick people get 'subscriptions' (and that's more insurance-like than subscription-like, imo)
Fascinating perspective!
There's also the shared-negotiator principle, that I think is very important (it's an additional reason why uninsured people get extra screwed for no good reason).
Even if you're under your deductable, a carrier will say "if you want to accept Cigna, you can't charge more than $X for treatment Y". So your bill will say "Charge $Z, Cigna disallowance $(Z-X), you pay $X". The uninsured don't have this.
My suspicion (I haven't researched it) is that there's a game here. Doctors and hospitals nominally ask for an absurd number, knowing the disallowance will knock it down. It's negotiations. The end result is that health care is more costly than it needs to be, and the uninsured pay the biggest bite of that (even if they're filthy rich uninsured). And that far too much money is spent on the overhead for the 2 parties fighting each other.
I don't know how to solve that one either.
Yeah, my mom talks about that part a lot... how the insurance companies don't actually pay what's charged. And she says that for anything they don't have insurance for, she argues with the people to get the price down to insurance levels. Visiting the doctor isn't like going to Target, you can bargain :-) My mom says she's even done it with hospitals, so it's definitely possible!
Post a Comment