Politicians and public policy experts love to say that we have a healthcare problem in the U.S. They cite tens of millions of uninsured people as evidence. However, the problem is not one of access or delivery. It is one of lousy insurance.
To demonstrate the point, ask yourself what it would be like if your auto insurance were structured like your health insurance. Just imagine using your car insurance policy the same way you use your health insurance benefits. It wouldn’t be long before you’d have to drop your auto insurance because you couldn’t pay the premiums.
Running to the Doctor
Think about what most people use health insurance for these days. They run to the doctor for every little thing. In the old days, visiting the doctor for anything other than catastrophic care (surgeries, hospitalizations, etc.) meant paying for services out-of-pocket. Back then, people didn’t run to the doctor for every sniffle.
How things have changed. Waiting rooms are filled with patients who really don’t need to be there. Meanwhile, doctors dispense antibiotic prescriptions like candy. After all, they are expected to do something.
Who pays for it all? Health insurance companies. What if your auto insurance worked in the same way? Your insurance company would pay to replace your tires. And because preventative maintenance is the best way to keep your car from getting ill, it would also pay for oil changes, tune-ups, wiper fluid, wiper blades, scratched paint, and on and on.
Rest assured that if your car insurance operated like your health insurance, your premiums would go through the roof. You probably wouldn’t be able to afford your policy. So then what? Should the government step up and subsidize everyone’s car insurance? Should the government just take over the car insurance industry?
Not Genuine Insurance
In a recent blog post, Dallas-based BenefitMall described increasing insurance premiums as a pain point for employers and employees alike. Employers are frustrated by having to constantly pay more with every new enrollment year. Some have to cut the coverage they offer to keep premiums manageable. Likewise, employees grow frustrated because they feel like they keep paying more while getting less in return.
All of this is the result of American health insurance not really being insurance. An insurance product covers you against catastrophic loss. It is not intended to be a go-between that takes money from you and turns around and pays your bills for you. U.S. health insurance is not genuine insurance; it is a brokered bill-paying service. That is why it costs so much.
Return to Catastrophic Coverage
Our current health insurance system not only creates an environment of constantly rising premiums, it also artificially inflates the cost of care. Healthcare providers, pharmaceutical companies, et al are not forced to compete with one another because insurance companies pay the bills. This gives them license to raise their prices as high as they possibly can. Customers don’t know the difference because they never see the bills.
The way to improve insurance access and simultaneously bring about drastic price reductions is to get rid of the HMO system. Instead, we need to go back to the old days of catastrophic care. When people paid for catastrophic health insurance and covered everything else out-of-pocket, prices were kept in check. And no, people were not denied basic healthcare because they could not pay.
What if car insurance were like health insurance? Nobody could afford to drive. Thankfully, that’s not the case. So why not change health insurance to make it more like auto insurance? Think about it.