Wednesday, May 3, 2017

Health Insurance Is Not Insurance

I believe that there is a huge misunderstanding about what insurance is when it comes to health care.  What most people think of as health care insurance is not how one would define as traditional insurance.  The concept of insurance was designed to protect people from catastrophic events.  For instance, when you buy automobile insurance, you pay a reasonable premium into a pool of funds that will pay out if you experience a huge, costly event such as an accident, or a car theft or massive vandalism. 

The problem is that what most of the world calls health care insurance is exactly not that.  Think about this.  What if every time you went and got your oil changed in your car, you made an insurance claim.  Or each time you get windshield wipers put on your car, you made an insurance claim.  How about each time you had to get new tires for your car, and tires are expensive.  But what if you made an insurance claim for your tires?  If this were the accepted status of what car “insurance” was, then premiums for Allstate, or whomever you use, would be in the tens of thousands in order to cover the cost of every shmo who wanted their air filter changed. 

And that is exactly what the problem is with health insurance.  What most people think health care insurance is, ain’t insurance.  It could only be called insurance if it covered catastrophic events such as the breaking of an arm, or cancer, or a heart attack. 

But because everyone expects that their insurance should cover a blood panel, or a stop by a doctor for a soar throat, or an appointment to have a vision checked, the expectation that these incidental visits should be covered for them somehow greatly increases health care premiums to a level that neither the health care industry nor Congress can figure out what to do about it all.  I had a friend who worked in the entertainment industry who, each and every time he got the slightest of soar throats, he would make an appointment with his doctor which was covered by his union’s health care coverage.  That seemed like an enormous waste of resources to me and was probably more in the line of psychological soothing for him. 

The other effect that this type of thinking has had is to allow the health industry companies to charge astronomical prices for their products because they know that it’s not the individual that is paying for their services and products, but rather, huge insurance companies and government entities that basically provide no accountability for expenditures are fitting the bill.  For if it were the individual who paid for a blood panel, or for an Epi-Pen, the cost would immediately drop from six-hundred dollars to something more reasonable, or else those companies would quickly go out of business.  But somehow everybody has it in their head that nearly everything should be covered, and so it’s an unending cycle.

One might react with, “See, it’s the capitalistic system of these huge pharmaceutical companies that is allowed to go rampant,” but it’s not quite the case either as I see it.  The problem is that there right now exists a combination of a socialist type of mentality about health care in what people expect should be paid for, versus a capitalistic health care and pharmaceutical industry.  You can’t have both co-habitating notions working harmoniously.  Either you make health care totally socialistic in both expectation and by how it’s carried out in controlling the health care and pharmaceuticals companies’ activities, which I would definitely prefer not to have.  Or you allow for a completely capitalistic health care system. 

This would mean lowering expectations of what should be covered by health care coverage, which would create an actual “insurance” role, and also by allowing the health care companies and pharmaceutical companies to have capitalist freedoms.  In doing so, when people can’t afford to pay $1,200 for a visit and a few drugs, then the health care companies and pharmaceutical companies will cease to make money, forcing them to lower costs of products and services to reasonable levels. 

And how do you deal with the necessary R & D?  Maybe that’s where you allow government to step in with funds where needed. 

Because lowering expectations on the consumer end and not thinking that every little piddly thing will be paid for will hit the health care companies and pharmaceutical companies in the pocket, and we can then have a reasonable health care insurance system in which just the catastrophic items are paid for and in which health insurance premiums are normalized as compared to other types of insurance.