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Should health insurance be more like life insurance?

April 14, 2017

It kind of looks like if we ever get a so-called health insurance compromise from Congress, it won’t be much better than what we have now.

That may be due to a misdiagnosis of the problem.

First, our government is not debating about providing health care.

This discussion is, as it has always been, about paying for healthcare.

That discussion is producing some interesting ideas, but they may never make it to Washington, or Blue Cross or anywhere else that matters.

There have to be more innovative answers than the ones on the table now.

At one kitchen table brainstorming session one man even came up with this slightly weird but definitely intriguing possibility.

Why not purchase a guaranteed dollar amount of care that could be used for anything healthcare-related? Maybe in increments of $5,000 for instance, much as life insurance works now. Like life insurance, the amount could be easily increased as your spendable income increased.

Life insurance only cares that you are dead.  It doesn’t care if you died from old age, or from an auto accident. It pays out in the amount you contracted for in either case.

Why can’t paying for healthcare work more like that?

No weird qualifiers or searching through 10,000 billing codes, just turn in the bill and the check goes out to the provider until the money runs out. All the provider would need to do is verify that funds were available to pay the claim. It’s sort of a combo approach to medical savings accounts and insurance.

The insurance companies would then write checks to providers until the money ran out.  If the insured person chose to spend it foolishly, so be it, because once it’s gone, it’s gone.

If the person then wanted to pay for a catastrophic plan, say for expenses above $20,000, they could purchase that coverage separately.

Think maybe people would care more about costs, if they had a dollar limit?

That’s no more the whole answer than any other “solution” has been, but at least it would allow people to have real choices and it would cut out a lot of the massive bureaucracy that spends billions of dollars deciding how much to pay for setting a broken leg.

There are certainly questions. For instance, should the catastrophic plan be subsidized for low-income persons and people with pre-existing conditions through a payroll tax or a nominal general health tax added to some or all of our purchases?

To think like that requires a realistic assessment of why we buy health insurance now, and what we get for the dollars we spend.

Just having health insurance, whether that insurance is affordable or not, does not guarantee better health.

Even when health insurance only existed for most of us as a private market option, many people used it as though it was catastrophic coverage, depending on the size of their individual coverage’s deductible and co-pays.

That’s become even more true since all deductibles and co-pays  have risen in relationship to both the high deductibles and co-pays under Obamacare.

The people that do benefit from health insurance are not the healthy, and they never have been.

It never made a lick of sense for the average healthy person to pay out thousands of dollars for the premiums, and still have to pay out even more thousands in co-pays before they could actually utilize the benefits.

Like life or auto insurance, what you are buying is peace of mind that when and if that one horrible health event happens, you are less likely to be either denied care, or be bankrupted by the costs of surviving that event.

Since one catastrophic accident, or one single disease can run into the hundreds of thousands of dollars to treat, what you are really doing is buying treatment on a nationwide collective installment plan.

The exception to that rule is preventative medicine, like vaccinations or annual checkups.

And that’s where low-cost or even subsidized health insurance makes sense for the estimated 30 (some sources say as many as 60) million people who can’t even get in to see a doctor without paying up front.

If you don’t have that $100 to  $1,000 to pay up front, then you just take your chances that you or your kids will stay healthy. The law of averages being what it is, at some point, that’s not going to work.

So why can’t the all-knowing, all-seeing government figure out how to bring those realities together?

Combining the life insurance model with the health insurance model might actually work, but we’ll never know if we never even discuss it.

From → op-ed

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