The insurance mindset is the wrong perspective to use to pay for healthcare. Insurance was designed to be a way to help people, corporations (I know it is redundant to list them separate from people) and other interests “manage” risk. Insurance is for situations that are supposed to be fairly rare but would have catastrophic consequences if they happened to you, such as your house burning down or suffering a long-term disability. The idea is to spread the risk out over a large number of people, charge each person covered a defined amount of money each month and pay out when a covered loss happens. These situations lend themselves to probability theory. Statisticians calculate the probabilities of said events, their projected costs and set the rates so that the company is assured a profit. Conceivably, you could go your entire life without your house burning down, getting in a major car accident or suffering a disability. But you buy insurance to cover your bets. The job of the insurance company is to take in as much as possible in premiums and pay out as little as possible in damages. That is why they often put up so many hoops to jump through when you have to make a claim.
But what are the chances that you’ll need healthcare at some point in your life? If you include preventative services, the screening tests that we’re all supposed to get, for example, the chance is 100%. So what is the risk that is being managed? Perhaps the insurance mentality got applied to healthcare in the early days because at that time people didn’t go to the doctor that often. They were much more versed in home remedies and many believed that hospitals were places to go to die.
Early health insurance plans were almost exclusively catastrophic. Regular healthcare wasn’t that expensive and wasn’t covered. Over time, our society’s relationship with healthcare has changed, and what we want our insurance to cover has changed. Health insurance is no longer just covering catastrophic events; it is paying for regular services. By moving toward larger and larger deductibles, insurance companies are trying to move their role back to that which is more appropriate for insurance, only covering potentially ruinous catastrophes, but is that what we want?
Goals to Aim For –
Healthcare costs have increased. People’s expectations have increased. It is time to reassess what we are doing and devise a better, more appropriate way to pay for healthcare. These are the goals I think we should aim for:
- Universal access – that is, everyone is covered
- Everyone has access to the same quality of care. No one gets discriminated against because of how their care gets paid for.
- The cost gets spread out over the entire population
- People who utilize more healthcare pay more
- Financial incentives for everyone to be healthy are built-in
- Competition and innovation are encouraged and rewarded
- The system remains in the private sector and is not run by the government
- Health insurance companies as we know them go away. They have done incalculable damage to our society and have abused too many people. For them, we need to institute a corporate death penalty.
Communal Services –
There are several communal services that we as a society have decided to offer to each other and pay for communally. We have public roads, public education, public water, public utilities, public transportation, public libraries, police and fire protection and a public military. What would it take for us as a society to decide that healthcare is also something we are going to offer to each other?
If you look at any given stretch of road, you don’t know when or how it is going to need to be repaired, but you know that it is going to need to be repaired at some point. So government agencies in charge of that stretch of road set up a repair fund. Every time you buy gas, a certain percentage of what you are paying for the gas goes into that road repair fund. When you buy your gas, do you feel like you’re buying road insurance? (Public tax money also goes into those funds.)
A similar argument can be made for an individual. We don’t know when or how much healthcare that person is going to need, but we know that they are going to need some healthcare at some point. Instead of private health insurance companies to pay for healthcare, we ought to have public utilities that pay for healthcare.
One Idea –
One idea is to divide the country up into five or six geo-cultural regions. Within each region, three public utilities would be licensed to offer healthcare plans. The utilities would be not-for-profit and would be run by public boards and all their financial records would be open to the public. Each utility would devise plans that they think would meet the needs of people. The bare minimum plan would offer the same level of services that Congress votes for themselves and get fancier from there.
We would achieve universal access by compelling each person in each district to choose the utility and plan that best suits their needs. (Such compelling has already passed Supreme Court scrutiny.) Then each person, each month, would get their “health utility bill.” If your employer wanted to give you a perk, it could pay your health utility bill for you. If you qualified for public assistance, the government would pay your health utility bill. There would not be different coverage for different classes of people, just as rich and poor alike drive on the same roads. We would be able to do away with Medicaid, Medicare, the VA, Basic Health and many of those similar levels of complexity that just add cost to the delivery of healthcare.
A simple way to build in “user pay” and at the same time financially incentivize healthier lifestyles would be to add a “poor choice tax” to foods, alcohol, tobacco, motorcycles and such in the amount statisticians calculate that using that item adds to the burden of healthcare for the population. For example, the lifetime healthcare cost of a pack of cigarettes is estimated to be around $10 per pack. That tax would be added to the price of the cigarettes. Each month, the poor choice tax that was collected in each region would be divided among the health utilities proportionately to the percentage of people in that region that are signed up with that utility. This money would be used to help defray the cost of healthcare for everyone. Organic fruits and veggies would have no or low poor choice tax, while foods full of processed junk would have a higher tax. We have the data now to calculate lifetime healthcare costs of most lifestyle choices.
When we all have healthcare and it is easy to trace the money through the system, the financial incentive of the whole society would shift to real prevention. Right now, nearly every player in the healthcare system profits more the sicker you are. This is the real, unspoken reason for run-away healthcare costs that no one can seem to get a handle on.
Could something like this really work?
For a system like this to really work, though, we would have to also heal healthcare. People would need choices. I do not think it is right to compel people to participate in a system of healthcare that is currently the major cause of death in our society. That’s right. Today, going to your doctor for conventional medical treatment is now the third leading cause of death in our society. What would the medical profession look like if it were ethical to compel us all to participate in it? To be continued.
Copyright 2012 Steven M. Hall, MD