Time and again I see discussions and writings about healthcare beginning with false assumptions and premises, particularly that Insurance should be a part of bringing care to all Americans. Allow me make a few points regarding Insurance in relation to Health Care and its costs.
Insurance is about risk management. It works by pooling resources sharing the cost of events we hope will not happen. Saying it another way is that Insurance is about risk and cost sharing.
When we talk about Insurance and Healthcare coverage we are usually talking about sharing the cost of healthcare, NOT actual Insurance. Insurance is usually a thing we purchase to protect against Big Bad Events, not for the everyday expenses and problems. Consider the very basic premise of Insurance. It is a hedge against very bad and very expensive developments, home fires, motor vehicle accidents, heart attacks, etc…, and yet today it is often used for just about every office visit for even the most minor health issues.
Imagine what would happen to the cost and benefits of Car Insurance if we used it as we try to use Healthcare insurance. Imagine using our car insurance for every tune-up, oil change, flat tire, bulb, and fuse replacement in our car? Now imagine what would happen to the price of those goods and services if it were covered by our car insurance. With the cost not coming directly out of our own pocket we tend to not care as much about the price. It gets to the point where many do not even know how much they are being charged aside from deductibles and co-pays .
Can you see how prices could start to creep upwards as consumers are not price conscious? After all, insurance is paying for it so we don’t have to care as much about the price. We are paying for insurance so of course we want to use it for as much as possible for the costs that come along. What we end up with is everyone paying in $10 dollars to the insurance but trying to get insurance to pay for $20 worth of stuff. Do you see how this can not be sustainable?
Now, imagine what the “evil insurance company” must do to stay profitable and stay in business. Payments for goods/services are soaring and so they basically have two ways to control the situation. They can raise premiums or they can start cutting benefits to no longer pay for your oil changes or flat tires.
Our use Insurance for every healthcare flat tires and oil changes without knowing or caring the price is a big part of why we have such high cost healthcare and healthcare insurance. Add in the bureaucratic and governmental regulations which heap on hassles and cost fueling the fire making it more difficult for both the healthcare providers and the insurance providers to do business.
Now consider what would happen to costs if we paid out of our own pockets. If there were no Insurance to pay for our healthcare goods and services can you see how providers and businesses would have to start competing for your money by offering the best prices, service, and quality possible?
Such competition drives down prices and improves quality. Look at the prices of Lasik and similar corrective eye surgeries. Competition has driven cost reductions and improvements in that area of healthcare where everyone generally paid out of their own pocket. It started out very expensive but over time prices came down to where more and more people could afford the procedure. That is to say that poorer and poorer people were able to afford the procedure.
The same things happens in other areas where we pay out of pocket like we do for TVs, Phones, and computers. The prices continue to go down even as technologies improve!
Healthcare security comes not from insurance and socializing the cost of care. Those are the very things that have created the healthcare monster we now face. REAL HEALTHCARE SECURITY, to the extent that it can be had, comes from taking care of ourselves and from our social networks, our friends, families, and churches. There are of course more sides and factors to this issue, tort reform, employment based insurance, corrupt business practices, and more. Becoming more responsible for the price of our care is one part of a real solution, one that works long term improving things for us all. One way to do this right now is to pay for care out of pocket and get a high deductible catastrophic insurance plan. Most who now pay hundreds of dollars a month in premiums are likely to realize a great deal of savings.
Dr. Shannon Grimes