Sunday, April 5, 2009

Health Care, an Alternate Proposal

OK, we have been going around about health care, so I thought I'd throw my two cents in here in my little playground.

I support a health savings account(HSA)/ high deductible insurance plan.

Here's why:

Insurance is a form of gambling. When you play the lottery, you balance the near certainty that you will lose a small amount of money against the possibility of winning a great deal of money. Insurance is exactly the same. As a group, you always pay more than you get. Therefore the goal should be to use insurance as little as possible.

Some major catastrophes are simply too expensive to save against, so we pool the risk with insurance, and accept the inevitable loss. This would be a high deductible/ high benefits plan that covers only major problems, but covers them more-or-less completely. This should be pretty inexpensive, as it would be rarely used.

To cover regular, predictable costs, you save money against need. This is the only system that removes the administrative costs and overhead associated with insurance. No one but you needs to decide if it is a reasonable expense.

The benefits would be reduction in overhead, first. Also, people would pay attention to how much their treatment costs. Going to the doctor is the only service I can think of where people do not expect to know what it costs ahead of time. Often, if you ask, they cannot even tell you. I think that it is not coincidence that this is also the only service I know of with uncontrolled cost increases.

Right now, we treat medical care as a cost no object service, and place a premium on speed of service, options, and quite frankly a 'magic cure' mentality. So that is what we get. If we apply a cost/benefits analysis every time we see a doctor, some of them will respond and gain a competitive advantage. Prices will go down for everyone.

If I am right and prices do go down, that will solve a lot of the coverage problem by itself. Also, the oft touted 'x million without coverage' is a bit of an exageration. It is not a measure of how many lack coverage at any one point in time, but rather how many lack coverage for some span within a time frame, usually a couple of years. This is caused by relying on employers to provide insurance. A HSA is not reliant on employment, so a substantial portion of those without coverage now would be eliminated.

If we eliminate the temporary coverage gaps, and reduce or at least contain costs, then medicaid can be expanded to cover the poor at a sustainable cost.

With this system, the concern about who decides what treatment is rendered moot - there is no longer a gap between who pays and the patient, they are one and the same.

Note that hybrid systems would also be possible. Making catastrophic coverage a universal system with a mild progressive tax support would fix the 'dying from lack of coverage' issue, without eliminating the cost benefits of value shopping.


TAO April 7, 2009 at 12:54 AM  

One of the troubles with high deductible plans is that the patient does not go to the doctor as often...and thus treatment becomes expensive because disease is in the last stages.

HSA you still have insurance and your healthcare costs are still managed by an insurance company the only difference is that the first thousand or more of ELIGIBLE expenses are paid by the patient from their account.

Prices in healthcare never go down and all you can really hope for is less of an increase.

Americans actually go to the doctor less than their European counterparts because Americans hate to take time off from work. That might actually be why our healthcare costs are so expensive.

There is, and your idea does not touch upon it, a fundamental flaw in our healthcare system that causes its costs to be what they are.

There is no competition within healthcare providers. With no competition there is no incentive to be more effective or efficient.

Doctors can only see so many patients and they get X amount for each patient. Normally in business you would have to maximize the efficiency of these visits to increase profitability but what doctors have is increasing tests and scheduling such in a way that maximizes their billing options. The reason most doctors cannot tell you what a procedure costs is because they have software that determines how to maximize the billing based upon a patients insurance coverage.

You see this if you switch insurance companies regularly, where under one plan you might see the doctor and have lab all on the same day while under another plan you see the doctor and have lab work done on another day and can pay a doctor visit copay for both visits.

Our healthcare system is NOT about providing services in the most efficient and effective manner possible but rather is all about maximizing profitability and exploiting insurance coverage. Its more cat and mouse than it is supply and demand.

Your plan only focusses on insurance carriers and does nothing to address our healthcare delivery system.

TAO April 7, 2009 at 5:04 AM  

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TRUTH 101 April 7, 2009 at 10:48 AM  

Let's get real here OMR. Most of the employed people I know have cafeteria plans for health insurance premiums and bills they know they will be getting during the year. These are already health savings accounts. I don't see the cost of health care going down.

A broken arm costs 15 to 30,ooo dollars. If you have 5 g's in you HSA it's gone. How much can the average American really save that would put a dent in what insurance pays?

You're a Republican. You must ralize that prices don't go down. Profits go up with your plan and it exposes the poor and middle class to more risk.

My plan takes the profit motive out of health insurance cost. Your plan my look like it gives patients more choice. But get real with that also. Ask a typical patient how the heart, liver or kidneys work. Then ask them how he thinks he should be treated when they failing. He understands how much it would cost to repair and that's it. My plan takes that out of the equation and lets doctors determine the best course. Not how much money treatment will cost.

BB-Idaho April 7, 2009 at 11:33 AM  

If that would take our $7900 yr per capita down to say, the Germans or French level (about half with universal coverage) it might be a more viable system.
psst..don't tell big Health Ins or big Pharma....

OpenMindedRepublican April 7, 2009 at 1:52 PM  

Tao - You are I think misunderstanding where I am going. The goal here is not about the first $1k or so before insurance, it is about removing insurance from the equation. The only area where that is not feasible is serious disaster type scenarios, cancer, major car crash, etc. High deductible insurance would be for that alone, talking $5k, $10k deductible, maybe higher. Let folks raise their deductible as their savings increase.

If insurance is rarely involved in health care, the whole problem with insurance companies setting prices just... vanishes.

I do not accept that there is no chance that health care costs will go down.

Also note that if you go to a mechanic to get your car worked on, you will get one price if they are billing insurance, another (usually substantially lower) if you are paying cash. From accounts I have read, this is already true with doctor visits also.

Truth - I pay just over $1100 a year in health insurance. My coworkers with families to cover pay upwards of $5000 a year. If that money was put into a HSA, it would not take long to cover a $10k deductible if the worst happened. Disasters do not happen every year.

Also, the cafeteria plans as they sit now are deliberately hobbled, especially the use-it-or-loose-it scam, and the $2k limit. If you could save year to year, with a more realistic limit, it would be whole different ball game.

And no, the tiny fraction of health care spending that comes from the existing HSA plans does not affect pricing; It does not necessarily follow that a massive portion would similarly fail to do so.

Also, I am not sure where you got your price for a broken arm, the worst I found in a cursory search was $12k, and that was with pins and surgery and therapy. Most were under $2k, and that was with the totally unnecessary emergency room visit.

TRUTH 101 April 7, 2009 at 8:10 PM  

11% of my paycheck goes to family health insurance. If that went instead to a HSA then I would have after two years I would have $9360. The broken arm just wiped it out. Next month I have $360 in my HSA. One of my kids goes to the doctor with a sore throat that turns out to be tonsilitis. M$360 is gone plus I now owe the hospital and surgeon another who knows how much. I stand by my single payer plan OMR.

OpenMindedRepublican April 7, 2009 at 8:21 PM  

Well Truth, I didn't actually figure to convince you, any more than I expect you thought you'd convince me with your post :)

A question. How much would you say you have paid in insurance in your life, vs how much you have spent on medical?

For example, I calculate that I have paid about $15k in insurance so far, and I have had about $5k ib medical expenses, of which about $2k were paid for by insurance.

TRUTH 101 April 8, 2009 at 4:50 PM  

Wife's gall bladder was over 28 grand. My son's broken wrist was a little over 3 grand. My deductible is 1,500 a year but I forget what the calendar year is for the insurance provider. My mother had ungodly bills. 80 grand was one of them my Dad showed me. You still want us to save up so we can afford to get sick OMR?

OpenMindedRepublican April 8, 2009 at 4:51 PM  

Truth - Over how long a period?

THE EDITOR April 8, 2009 at 6:37 PM  

Insurance is mitigating risk with a large group. Your plan has one person assuming the risk for catastrophe.

As for the math, good question OMR. Family plan hs always been app. 11% but I make more now than then. Best estimate for the 15 years we were paying family would be $75 a week for those years. But I ask you in return to tell me how my mother's bills would have been paid. You're hoping nobody ever gets sick. You don't have to be that ill to rack up devastating bills.

Sorry. Was signed into my sister site. Truth101

OpenMindedRepublican April 8, 2009 at 6:48 PM  

Truth - "Insurance is mitigating risk with a large group. Your plan has one person assuming the risk for catastrophe."

Actually, catastrophe is the case where I do think insurance is needed.

Consider - $75 a week X 52 weeks X 15 years is just under $60K. Now look at the bills you listed and compare that. Add in that if you had catastrophic coverage, it would have covered more than half your wifes surgery. Of course, you have to consider premiums for the insurance.

Thing is, and I cannot say this enough, the average person/family will always pay in more than they get in any insurance or even government plan. There is literally no possible way to avoid that.

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