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+--- Thread: "Health insurance" isn't insurance: Can free market rein in U.S. health care costs? (/thread-13771.html)
"Health insurance" isn't insurance: Can free market rein in U.S. health care costs? - C C - Mar 6, 2023
Much ado about a revelation that's actually nothing new revelation-wise. Except, ironically maybe, to some doctors themselves.
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https://doctorbuzz.substack.com/p/can-the-free-market-reign-in-us-health?sd=pf
INTRO: I apologize to all those who figured this out a long time ago. As a physician who went through four years of medical school and three years of residency, and had to suffer through a fair share of “The Business of Medicine” type talks and countless conversations with patients about their issues with health insurance, I somehow came through my training and many years of practice before I understood this most basic of concepts: what we call “health insurance” in this country is rarely insurance, and the unwieldy result creates all kinds of perverse incentives for expensive and low-quality health care.
I am grateful for the patient who finally broke it down for me a few years back. Insurance is all about covering uncertain losses — whether it be car, home, or term life insurance, the central concept is to prepare for a potentially catastrophic financial loss by paying manageable amounts of money in advance into a pooled risk fund. For those without profoundly deep pockets, taking out insurance policies often makes sense.
What gets termed “catastrophic” health insurance fits into this category; a healthy person can pay a low monthly premium and have coverage for a major, unexpected health event, like a heart attack, or, in my case, an unexpected cancer diagnosis. However, especially after the Affordable Care Act attempted to require comprehensive health care for all Americans, and outlawed traditional health insurance companies from holding pre-existing medical conditions against applicants (only age and smoking status can be factored into pricing), the vast majority of insured people in the U.S. do not have “health insurance;” instead, they have membership in what the Germans more accurately term their “sickness fund.”
Some prefer the term, “pre-paid health care,” which is the term my adopted state of Hawaii chose in their 1974 law requiring employers to provide comprehensive health plans to all full-time employees. Interestingly, this is how the bill is worded:
“Sudden need?” “Emergencies?” It sure sounds like sensible old catastrophic care, but it’s not. Essentially, this was the forerunner to the ACA, requiring expensive comprehensive plans to cover all medical costs, both routine and unexpected. This is a “sickness fund,” replete with deductibles, donut holes, preferred networks, and so on. Healthy people pay in the same as unhealthy people, and thereby subsidize those with high annual expenses. It’s a uniquely American way of subsidizing a good; rather than relying on traditional concepts like those of greater means supporting those with less, the healthy, whether rich or poor, pay for the unhealthy, whether rich or poor.
Does this make sense? Of course not! More germane, the system created is riddled with perverse incentives and inefficiencies. However, we let ourselves descend to this place over many decades of strange policy... (MORE - details)