A Short Rant on Health Insurance and Health Care

So now that I’m a “grown up,” I’ve become the holder of several insurance policies. Some by legal requirement, others by choice—but for the most part, I want them.

I pay State Farm every month for car, home, and life insurance policies, even though I hope I never ever have to file a claim. It’s not a lot of money, but I’m still forking it over with the intention of never getting anything back. Nothing directly, anyway. I’m paying for the peace of mind that if something catastrophic happens, I’ll be fine.

This is obvious, though. Everyone knows how insurance works: many contribute a little for the few who will need a lot. Most people won’t total their car, have their house burn down, or die at a young age.

But why has our society accepted this model for our health care? Health care is something that literally every single human being on this planet will need at multiple points in their lives. Some will need it for the unfortunate life-threatening injury or disease. Most of us will need it sooner or later for minor, but chronic conditions like allergies or arthritis. And all of us should be seeking out health care for regular check-ups and preventative action.

So how does the insurance model work for an industry in which everyone will be trying to cash out their benefits? The answer: it doesn’t.

Premiums and deductibles have been rising at a crazy rate, leading to a rise in the uninsured and a decrease in the privately-insured (see Figure 12). Family spending on health care costs has reached an all-time high, resulting in fewer people making trips to the doctor. Maybe it’s just me, but I’m seeing little evidence that the private insurance model is an efficient way to provide health care to Americans. I mean, insurance providers don’t even provide the actual health care. They’re simply the gatekeepers to accessing it. Gatekeepers whose incentive isn’t providing access to health care, but simply making a profit.

In fact, the only positive gains in health care coverage are thanks to public programs or mandates. SCHIP programs have ensured that virtually all children have health coverage. Medicaid and Medicare enrollment increases nearly every year. Even the increased private coverage for 19-25 year olds over the last couple of years is due almost entirely to PPACA (I hate the term Obamacare, but I’ll get into that another time).

But what really bothers me is that we have many other models for serving public needs that we’ve ignored when it comes to providing health care to Americans. Taxpayers fund schools, roads, the military, and hundreds of other public services that we all rely on (whether directly or indirectly). And we already provide public healthcare to children, the poor, and the old. Why not Medicare-for-all?

But if that’s too “socialist” for you, how about an independent agency that’s part taxpayer funded, part customer funded? The United States Postal Service has been working under that model for a long time (over 200 years in operation, more than 40 as an independent agency). And before you tell me that the USPS isn’t doing so well, let’s remember that that’s entirely Congress’s fault.

So maybe the USPS is a bad example, or we want to keep our health care providers privately-owned. Why not just regulate consumer costs, provider profits, and guaranteed service? We already do it all the time with electricity, gas, and water—even cable TV and phone services. So why not add health care to the list of necessary utilities that Americans get with strong, mandated consumer protections.

I really don’t know what will fix the health care problem in this country, but I’m sure that the private insurance industry isn’t helping. It’s making it worse and it shouldn’t be part of the solution.

Notes: While researching stuff for this post, I came across an article by Nobel Prize-winning Economist Paul Krugman. I’m basically making the same point as he did a few years ago, but his piece comes at it from a fairly different angle. Plus he has a freaking Nobel Prize so his is probably better. Probably. Also, that CDC article I cited above is pretty fantastic. You should nerd out and read it all.

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2 Responses to “A Short Rant on Health Insurance and Health Care”

  1. Dave Gonet Says:

    One thing that has perpetuated the Health Care Crisis has been increases in costs. Insurance, albeit esoteric and nebulous in nature, was never intended to be a pay and provide for service. Most Americans, going back 20 to 25 years ago, had a major medical policy that covered catastrophic loss up to say $2000. The insurance would then pay for the cost of hospital care, beyond the deductible, just like your car or house, What has happened, and God knows the singular, if there is one, cause of all of this, is the projectile escalation of costs in regards to services. Therefore, the general concept and paradigm of what insurance should do and how it should fit needs to be entirely re sculpted and configured.

    Here’s the litmus test premise. You are standing on the street and someone, not you, is injured by a taxi cab running them over. Would you expect this injured person to receive treatment? Now, despite the legality and the litigious nature of the situation, can we say the same if the same person next to you, instead of being hit by a car, falls sick to an swollen appendix?

    As Hamlet says, “Ah! there’s the rub.” Is it a case of insurance or health care? Perhaps, that’s the distinction we fail to make.?

  2. Matt Davis Says:

    Ryan, very well stated and accurately captures some of my own thinking on Health Care the past several years. Thanks for writing!

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