Thursday, August 13, 2009

Comprehensive Health Insurance Coverage: Absurd

From an excellent article in The Atlantic, "How American Health Care Killed My Father":

Health insurance is different from every other type of insurance. Health insurance is the primary payment mechanism not just for expenses that are unexpected and large, but for nearly all health-care expenses. We’ve become so used to health insurance that we don’t realize how absurd that is. We can’t imagine paying for gas with our auto-insurance policy, or for our electric bills with our homeowners insurance, but we all assume that our regular checkups and dental cleanings will be covered at least partially by insurance.

Comprehensive health insurance is such an ingrained element of our thinking, we forget that its rise to dominance is relatively recent. Modern group health insurance was introduced in 1929, and employer-based insurance began to blossom during World War II, when wage freezes prompted employers to expand other benefits as a way of attracting workers. Still, as late as 1954, only a minority of Americans had health insurance. That’s when Congress passed a law making employer contributions to employee health plans tax-deductible without making the resulting benefits taxable to employees. This seemingly minor tax benefit not only encouraged the spread of catastrophic insurance, but had the accidental effect of making employer-funded health insurance the most affordable option (after taxes) for financing pretty much any type of health care. There was nothing natural or inevitable about the way our system developed: employer-based, comprehensive insurance crowded out alternative methods of paying for health-care expenses only because of a poorly considered tax benefit passed half a century ago.

In designing Medicare and Medicaid in 1965, the government essentially adopted this comprehensive-insurance model for its own spending, and by the next year had enrolled nearly 12% of the population. And it is no coinci­dence that the great inflation in health-care costs began soon after. We all believe we need comprehensive health insurance because the cost of care—even routine care—appears too high to bear on our own. But the use of insurance to fund virtually all care is itself a major cause of health care’s high expense.


Comment from Colin: Excellent read. You'll notice that almost everything wrong about the health care sector can be traced to regulations, the tax code, and Medicare. What we need is a complete rethink of Medicare and an end to insurance as the centerpiece of health care. What's currently on the table is basically the opposite. Government got us into this mess and more government won't get us out.

Originally posted at Carpe Diem.

13 Comments:

At 8/13/2009 8:51 AM, Anonymous CompEng said...

Agreed... insurance ought to be high deductible. Anything else is more properly termed a health payment plan, and those don't appear to be good bargains today.

 
At 8/13/2009 9:24 AM, Anonymous Ian Random said...

What we think of as health insurance is really two things a discount health insurance buying club and catastrophic hospital care bundled into one. We need to split it up like medicare a and b which appears to be illegal. Then require the purchase of a high deductible hospital insurance. I think most people could manage to pay doctor's visits on their own. As you get older maybe a five year rolling deductible to insulate against a chronic conditions.

 
At 8/13/2009 9:27 AM, Blogger Colin said...

Excellent read. You'll notice that almost everything wrong about the health care sector can be traced to regulations, the tax code, and Medicare. What we need is a complete rethink of Medicare and an end to insurance as the centerpiece of health care. What's currently on the table is basically the opposite. Government got us into this mess and more government won't get us out.

 
At 8/13/2009 10:01 AM, Anonymous GregL said...

And let's end that socialized medicine program run by the VA. Just increase vet's disability payments to cover all medical costs from their disabilities.

That way tax payers only pay for the service related costs and not everything medical that happens to vets.

The savings for taxpayers will be HUGE!

 
At 8/13/2009 10:14 AM, Blogger Walt G. said...

I remember when the UAW first negotiated dental insurance in 1976. I paid $18 to have my teeth cleaned prior to getting the insurance (yes, that was the full price). The next time, just six months later or so, I got my teeth cleaned it was $36. When I asked the dentist why the cost had jumped he replied it was because I had insurance now but not to worry because I did not have to pay anything out of my pocket.

I think it is fairly easy to see how we got in this mess with that type of thinking, and I can’t see how a government-run program can solve that type of problem. Patients paying for some of their own health care so they are actively engaged in the pricing process and an open pricing policy by health care professionals (prices maybe even on the Internet) would work much better to solve the cost problem.

I like the idea of clinics in Wal-Marts (well, maybe Walgreens :)) for minor problems at the patients’ cost coupled with insurance and doctors/hospitals for more complex health problems. What we have now does not work, and an overhaul to a single-payer system for hangnails to heart attacks will not work either.

 
At 8/13/2009 10:31 AM, Blogger Angela said...

GregL,

The people that receive VA benefits were promised those benefits as compensation when they agreed (or were forced) to provide service for the government. There's a contractual exchange - labor now for health later.

And by the way, military expenditures are constitutional.

 
At 8/13/2009 12:08 PM, Anonymous Anonymous said...

Hi, Billy Mayes here!! I'm the total twerp that's been stirring a ruckus the past several days about health care; and I just want to say that while this post has a few holes in it, it's also not half-bad. This is the second day in a row with a useful post on health care.

So with a hot streak going on, I've decided I'm going to retire my smart ass alter ego and leave everybody alone. Yup, I'm walking away with my back turned to the chorus, of whom are screaming "So long, asshole!"

You guys can all go back to being evil capitalists, sending helpless canaries down the coal mines, and I'll stop rummaging this site with my ragtag Bolshevik anarchists from Baku.

See? We're all brothers in peace. In the end, I just want a slave-based economy of hapless twits, of whom supply me with an endless supply of high-fructose corn syrup for my "tooty-fruity" punch. True paradise, that's all that matters=)

 
At 8/13/2009 2:48 PM, Anonymous GregL said...

Angela said: "military expenditures are constitutional"

I was talking about a Cabinet level department with no uniformed service in it. Those expenditures are also constitutional and the VA system is socialized medicine.

 
At 8/13/2009 3:40 PM, Anonymous Anonymous said...

I agree with this excerpt; however, as someone who has to purchase his own insurance, there was very little cost savings in premiums for me to switch my family to a high-deductible insurance plan? For me, although it was an appealing option on the surface, it wasn't really a credible alternative from a cost standpoint? Can someone explain why this would be?

Maybe the additional step that needs to be made is reducing scope of practice laws, AMA's grip on industry, etc.?

 
At 8/13/2009 3:51 PM, Anonymous Anonymous said...

I have lost count of how many articles that I have read about Healthcare, Healthcare insurance and our Healthcare system over the last two months, and this one is the gold standard. It is simply the best article that I have read, bar none.

Thank you for posting this. I'm passing this one along to my friends and associates.

 
At 8/13/2009 3:54 PM, Blogger 1 said...

"From an excellent article"...

Obviously I missed the, "excellent" part....

"I’m a Democrat, and have long been concerned about America’s lack of a health safety net"...

Either Goldhill isn't a business man or he's just another he just another clueless Stabenow kind of individual...

 
At 8/13/2009 4:40 PM, Anonymous danny day said...

Yes, Absured is the word...

 
At 8/14/2009 1:59 AM, Blogger OA said...

I have an HSA. I'm self employed so pay the full premiums, but my high deductible plan runs 1/3 of what I used to pay.

The catch is I have to cover every dollar until I hit the deductible limit. Instead of high premiums and low usage costs, I have the opposite.

To me, that's the way it should be. I have incentive to be cost conscious, but if something catastrophic happens, I have the coverage. And if I don't use much services I keep the savings rather than it going toward the big premiums.

If more companies would adopt HSA plans it would give people back some better incentives.

 

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