Another Essay on Health Reform and Insurance

Why is Health Insurance So Expensive?

By Jon N. Hall, 8/13/2015 (see full article)

“If insurance actuaries could predict with certainty that every year every house in Kansas would be destroyed by a tornado, how much would a Kansan be charged to insure his house against tornado damage? … After all, insurance is a business, not welfare; businesses exist to make profit.”

The article makes the point that insurance always costs more than paying out-of-pocket if what is being insured is a certainty, and it argues that that’s what health insurance has become – essentially prepaid medical care. It concludes by saying, “If America wants to preserve the private health insurance business, then private health insurance policies need to revert back to being ‘catastrophic insurance,’ just as in the days of old. That means we’d all be paying more out-of-pocket.

Beyond that, the author offered no recommendations, so I chimed in with my own.

My Comment

The article made good points and caused me to think of just how easy it is to see things through the very narrow lens of our own perspectives and bias. As we consider the proper role of government, it seems to me that policymakers need a much more holistic view of proposals with less of the corrupting influence of wealthy special interests that dominate discussions and distort them in their favor instead of serving overall public interests. Maybe it would be good to separate discussions of health, medicine and insurance for a moment and look at the bigger picture.

Since this article appears in American Thinker, lets start by defining what sort of people Americans are. If we truly believe in the Constitution and life, liberty and the pursuit of happiness, then universal healthcare (like Medicare for All) makes sense, especially given that an ounce of prevention is worth of pound of cure.

To increase GDP and long-term global competitiveness, it seems more prudent to invest in a healthy & productive workforce than to increase the incarcerated population or those on public assistance. But we don’t just cut people off or close the jails, because that’s both inhumane and dangerous, and it’s not who Americans are, or so the theory goes.

A healthy & productive workforce strategy should cause us to look at policies that support that and the infrastructure investments the public sector should make. That includes our food & water supply, environment, education, basic research, transportation systems, telecommunications, etc. Such a strategy would cause us to constantly reevaluate public policies as conditions change, questioning the widening wealth gap, or industries needing more or less regulatory oversight, or even the electoral & political process itself.

But back to the article. Our medical schools today teach diagnosis & treatment and not Health, which relies on the pillars of exercise, nutrition & sleep; or Wellness, which includes body, mind & spirit. And the medical industrial complex (of hospitals, insurers, drug companies, equipment providers & testing companies) has become perversely profitable with over $3 trillion/year in revenues. They’re naturally protective of that because they serve shareholders rather than public interests, so they spend twice as much on political lobbying as the military industrial complex.

We theoretically should be able to cut healthcare costs in half or greater ($1.5 trillion/year) and still improve outcomes, care quality & satisfaction, except for those special interests. I guess my point in this rant is that it’s immensely difficult to effect meaningful change in one part without affecting the systemic whole, often with unintended consequences. Discussions need to include all stakeholders on equal footing with priority given to public interests and then start with gaining agreement on broad goals, such as how we see ourselves as Americans.

Other Comments

I scanned the other comments and responded to one about “The high cost of liability insurance driven by frivolous law suits.”

MY RESPONSE:  From the stats I’ve seen, we have a medical errors problem, not a frivolous lawsuit problem, and tort reform may be making it worse by preventing legitimate suits and access to the court system that would act as a more natural deterrent. The insurance industry is largely responsible this by promoting fear of lawsuits so they can sell malpractice insurance policies.

Better than tort reform would be price transparency and new online ratings systems, like Yelp or Angie’s List for medicine. Given a chance, the risk-reward pressures of free-market capitalism could go a long way toward rewarding the best practitioners and weeding out the bad.

Since health reform and the cost of care is a hot topic, I’m sure some of you may have opinions to share too. You can add them below to get my reaction, since I read all of them, or you can respond directly on the original article.