A Policy Decision: Choosing Between Health Insurance and Medical Care

Those who control the language, control the debate.

The question on the table in the U.S. today is, “What is the most efficient and least costly way to provide health insurance coverage to everyone?”

Coverage is such a nice word. Uncovered is cold and uncaring. Coverage means having health insurance, but the reality is that having health insurance coverage does not automatically guarantee a person has access to medical care.

To change the discussion and find different answers, perhaps a better question is, “What is the most efficient and least costly way to provide medical care to everyone?”

In this context, let me suggest a radical overhaul of the way we think about providing medical care in the U.S. so we get more care for less money than we are spending now. It also requires re-examining the role of insurance.

As a premise, we can gauge our success by controlling the cost of healthcare as a percentage of GDP.

Historically, healthcare has risen from about 5% of national GDP in the early 1960s to nearly 18% today. More patients, new technology, higher prices and a rise in costly comorbidities all contribute to the rise. Beyond these inputs, some structural and regulatory changes also contributed to the cost increases. We have to wonder whether we are getting a commensurate rise in value for the nearly fourfold increase in investment over the last 50 years.

With some changes in basic philosophy, the government’s expenditures and policies can support working people who need to keep their money to access the care they need when they need it, and to make sure the money they spend goes directly to pay doctors and hospitals who right now have to go hat in hand to the insurance company to get paid for caring for them.

A low premium catastrophic health insurance policy coupled with a health savings account plan allows working people to put aside several thousand pretax dollars a year in an interest-bearing savings account to use for medical bills and costs such as prescriptions, eyeglasses, dental work and other health-related expenses. They retain their hard-earned money and designate it for the care they need instead of paying health insurance plans for services in a defined benefit policy that may not cover all their needs.

A Few Stories of the Uncovered Insured

Health insurance is not coverage.

One grad student and research assistant who needs to stay current on his medical care due to an ongoing medical condition is concerned about an issue but can’t afford to go to the doctor for tests because the copays for his health insurance plan are prohibitive.

Another person needs dental work…thousands of dollars of dental work. Dental work is not covered as part of her health insurance plan. She had half the work done, and is paying monthly installments until it is paid off so she can start phase 2 of the dental work. Meanwhile, she continues to pay premiums for health insurance coverage that leaves some of her most acute medical needs out in the cold.

A third self-insured, self-employed person is afraid to use his insurance for his annual exam. If something is wrong and he can’t work, he can’t pay his premiums and would therefore not be insured against medical costs any longer.

A fourth person with employer-sponsored insurance worries with every annual physical that she won’t be able to work any longer and will lose her job and health insurance, leaving her sick and uninsured. Each clean bill of health is a celebration.

The Insurance Function

Some public health insurance plans work for people who qualify for full subsidies and public assistance. For average people making working wages and buying health insurance, the system is not affordable. The government boasts that 85% of ACA enrollees are subsidized. It begs the question why there are so few buying in at full price.

Here’s the radical thought I suggested earlier: We need to revisit the function of insurance. People who are not employed do not need health insurance. They need primary medical care that is not prohibitively costly. Most doctor visits and treatments are simple. Babies with sniffles. Kids with broken arms. Moms with diabetes. Dads with high blood pressure. A doctor visit here. A generic prescription there.

After all, the function of insurance is to provide protection against loss of valuable assets. Most of our health insurance in the U.S. is provided by employers who are insuring their human resources. When people are unemployed, their wages and productivity do not need to be insured. In that case, health insurance for the indigent effectively protects providers against loss for providing medical services to those who can’t afford to pay.

Put another way, when an indigent person needs expensive medical care, it is the provider who needs to be insured against the loss of treating them if they are going to uphold their mission to treat everyone who comes through the door. The indigent person needs medical care; they do not need to be insured against any personal loss if they are judgment proof.

Finally, health insurance companies or health plans have become a clearinghouse for patient information, albeit an imperfect one. Health technology allows patient information to exist without a health plan as a hub, and the information can exist more completely and privately when held by the patient.

A Revolutionary Thought to Redefine the Debate

We need affordable and accessible medical care for everyone. Then we need to assess who and what needs to be insured against loss, and revamp the health insurance mechanism accordingly. Insurance has a valuable function; when applied properly it protects the assets of people who cannot self-insure against loss.

Right now, the government, employers and patients themselves are subsidizing the insurance industry to provide coverage for services that some members can’t afford to access and with whom providers often need to fight to get reimbursement. The insurance industry has a function but it is not functioning optimally under the current paradigm.

If you think the current way of structuring healthcare is keeping down cost, I refer you to an earlier paragraph where we see the cost of care closing in on 20% of GDP.  When we critically assess what we are getting for nearly quadrupling the country’s investment in the health of our citizens, the answers are at best uneven.

Different countries have ways of handling health care that works in the context of their histories, culture, political and economic systems and available delivery mechanisms. Given our own unique circumstances and assets, it may be time to consider stepping back from what has evolved as an expensive and uncoordinated system cobbled together to appease different political and corporate interests, and instead build one from the ground up that best utilizes our available resources and leverages our desire to provide the best care to everyone at the lowest possible cost.

The government is the largest payer of health care in the U.S. There may be ways to get a much bigger bang for a much smaller buck by reconsidering the validity of our fundamental premises regarding the role of health insurance in healthcare.

The American experiment in government requires a uniquely American experiment in universal medical care.



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