Health Insurance: Consumer Good

Deadline-ClockAfter an 11th hour extension, today’s the day on which all, well most, Americans are supposed to be enrolled in a health insurance plan. And as a million users are trying to access a hopefully functional website, here’s my take on health insurance.

There’s been social media buzz about health care/health insurance costs, value, and the choices we make, and a general pondering about what these new exchange plans will actually provide. We’re reluctant to pay for health care, especially if we are young and well and believe in our own immortality. Though we gladly pay for vacations, we resent paying for health insurance. We don’t complain about the rising costs at Disneyland the way we do the rising costs of a PET scan or a prescription drug. And of course it makes sense – we work hard, if we can work at all, and the American Dream teaches that we should have some joy in life. When paying to stay alive is all we can do, resentment/frustration/anger follows naturally.

In fact, it is so bad that in 2013, according to a NerdWallet Health study, medical bills will be the leading cause of bankruptcy effecting about 1.7 million American families. And as we heard at this year’s SABCS conference, people (NerdWallet says over 25 million people) are not taking their prescribed medications because they can’t afford them.

So that we are all clear, in no way do I endorse where we are at! It is shameful that, in the name of democratic values, we can fight wars abroad but that we don’t care for our own. Our national priorities, in my opinion, are entirely messed up. Our schools are failing, our people are sinking into poverty, and so many are not getting the basic social services they need. None of it is acceptable in what we want to believe is a great nation. But we are also a democratic nation, and a market economy. Change isn’t easy…

I believe that most Americans want to work hard for a day’s wage; they want food in their bellies and a roof over their head; they want better for their children than they had; they want to know there will be a few good years to enjoy when their hard work is done; and they want to know that if catastrophe strikes, they will get through it. I know not everyone operates in good faith: some run up credit cards, declare bankruptcy, default on their payments and get in line for unemployment, but I don’t think that’s most people.

Right or wrong, insurance is where we turn when things go bad. It’s the system we’ve developed and it is based on assessed risk – for the insurer, at its root, its a gamble. They may, like the house at a casino, have the odds in their favor, but it’s still a gamble. Theoretically it’s not the only system, but it is deeply entrenched and I don’t think it’s going anywhere.

Enter health insurance: We know that health care expenses are not distributed evenly, so we’ve come up with this system that takes a large group of people and averages their risks, spits out a charge for the service and then covers (some/most of) the expenses. It’s all driven by actuarial tables that assess potential risk. We pay our premiums. The risk for the insurance company? It is possible that they will collect less than that cost of care.

For us as the insured, health insurance seems to be a consumer good. We think about it as purchasing a product, not necessarily as the bet put on the table. As a consumer good, how does it stack up?

  • Would I go to the grocery story with $25 and collect a bag of food without being quite certain what the contents are or how to use them or what to do when a crucial ingredient is missing? Yet we almost never know what’s in that bag of insurance benefits.(P.S. If it takes an insurance company 2-3 days to figure out if I’m entitled to a given benefit – say an MRI – is it reasonable to expect me to understand the minutia of my policy?)
  • Do I get added benefit from a drug when I pay twice as much for it as the person in the chair next to me in the treatment center, and ten times more than the person who takes it in Canada?
  • When I sign up for cable television, am I always guessing which channels will be there today and how long it will take for them to come on?
  • Do I pay for a 5-star vacation only to be told I’m entitled to the 2-star budget version once I arrive, such as with generic drugs?

I suspect one reason we resent paying for health insurance is that we want it to be a reliable product at a fair price. Also, like when I play craps, I’m not quite certain I fully understand all of the rules. Instead, In exchange for our ante, insurance a closed system of who gets what decided by reviewers who make life and death decisions from behind the veil of anonymity. (And if Michael Moore is to be believed, they stand to benefit financially by finding a way to withhold care. All of this before the supposed ACA “death panels.” To extent that there are death panels, the insurance companies already have them in place, folks!) We intersect with our insurance companies at a time of greatest need, perhaps deepest desperation, and they hold the power of wellness, even life and death, over us. We need something from them, and even if they are going to eventually give it they tend to deny first. It’s hardly a fair fight from a hospital bed…

Like it or not, health insurance, like most any industry, also has to make a profit. They have shareholders who expect that; if the insurer can’t deliver the shareholders are just as happy to invest in Apple or big tobacco. And if that happens the company won’t be able to insure us.

(c) Wall Street Journal

(c) Wall Street Journal

I think we need to draw a distinction between health insurance, a regulated consumer good, and health care, or what we need to stay/get well. We have come to see insurance as the quid pro quo for healthcare. In a country where healthcare has grown to about 17.7% of GDP (Next in line? Australia at 11.9%), we must remember that access to health insurance is only a proxy for access to health care, and I believe it is the health care system that is in dire need of attention. The health insurance industry is a messed up, and the ACA is theoretically designed to fix that. Love it. Hate it. It doesn’t really matter, because it is a Band-Aid on a broken system. Band-Aids are great for cuts and scrapes, but the health care industry is really much more like a ruptured artery. It is a system that needs to be re-evaluated from the ground up, and that is the change we must demand, where our attention must be focused.

I don’t have answers – I hardly ever do, but I have lots of questions! I don’t know who John Green is or where he gets his statistics, but I found the video below a little more on target than our ongoing fight about health insurance, and many of his questions are mine. I look forward to hearing yours!!

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