Insurance Revisited
“Health insurance” isn’t really insurance at all, but maybe the world would be a better place if it were. Most Americans view health insurance as the vehicle that pays for their health care. The uninsured are that way partly because health insurance is expensive, and that’s because healthcare is expensive, and that’s because the insurance industry pays for healthcare. Where’s the incentive to make it more efficient? If it were more efficient, healthcare costs would drop, health insurance rates would fall, insurance industry revenue would decrease, and executive pay would diminish. Now who would want to do that?
With respect to the uninsured, Mark Smith writes, “... there are all these people out there who aren’t part of our system, and we need to find a way to buy them into our system at more or less our system’s price, at more or less our system’s configuration, and more or less maintain the incomes of everybody in our system — that is a very different question from how can we make the underlying asset more affordable.” And it can be cheaper. There are wide variations in the cost of a given healthcare service, by geography, and by setting within a given location. As a corollary, there is no relation between the quality of care and the cost of care. All we lack is the will to direct care to the high quality low cost providers, and as long as insurance pays the bills, patients are not going to lead themselves down that path.
Some years ago, an employee balked at our $5,000 deductible healthcare plan. He and his wife were planning to have a baby, and they wanted health insurance to pay for it. Last time I check, having a baby was an elective and predictable event. Plan ahead. And if you think OB is expensive, wait ‘till the kid goes to college.
We need incentives to drive efficiency in individual healthcare services in order to reduce costs for everyone.
With respect to the uninsured, Mark Smith writes, “... there are all these people out there who aren’t part of our system, and we need to find a way to buy them into our system at more or less our system’s price, at more or less our system’s configuration, and more or less maintain the incomes of everybody in our system — that is a very different question from how can we make the underlying asset more affordable.” And it can be cheaper. There are wide variations in the cost of a given healthcare service, by geography, and by setting within a given location. As a corollary, there is no relation between the quality of care and the cost of care. All we lack is the will to direct care to the high quality low cost providers, and as long as insurance pays the bills, patients are not going to lead themselves down that path.
Some years ago, an employee balked at our $5,000 deductible healthcare plan. He and his wife were planning to have a baby, and they wanted health insurance to pay for it. Last time I check, having a baby was an elective and predictable event. Plan ahead. And if you think OB is expensive, wait ‘till the kid goes to college.
We need incentives to drive efficiency in individual healthcare services in order to reduce costs for everyone.
