Posted on 10/03/2007 10:13:37 AM PDT by Kaslin
Candidates for president have plans to get more people health insurance. Some would compel us to buy it; others would use the tax code to encourage that. Regardless, insurance is the magic that will solve our health-care problems.
But contrary to conventional wisdom, it's not those without health insurance who are the problem, but rather those with it. They make medical care more expensive for everyone.
We'd each be better off if we paid all but the biggest medical bills out of pocket and saved insurance for catastrophic events. Truly needy people would rely on charity, not government, because once government gets involved, unintended bad consequences abound.
If people paid their own bills, they would likely buy high-deductible insurance (roughly $1,000 for individuals, $2,100 for families) because on average, the premium is $1,300 cheaper. But people are so conditioned to expect others to pay their medical bills that they hate high deductibles: They feel ripped off if they must pay a thousand dollars before the insurance company starts paying.
But high deductibles may be the key to lowering costs and putting you in charge of your health care.
Five years ago, the Whole Foods grocery chain switched to a high-deductible plan. If an employee has a sore throat or a sprained ankle, he pays. But if he gets cancer or heart disease, his insurance covers it.
Whole Foods puts around $1,500 a year into an account for each employee. It's not charity but part of the employee's compensation. It's money Whole Foods would have otherwise spent on more-expensive insurance. Here's the good part for employees: If they don't spend the money on medical care this year, they keep it, and the company adds more next year.
It's called a health savings account, or HSA.
CEO John Mackey told me that when he went to the new system, "Our costs went way down."
Yet today, some workers have $8,000 in their accounts.
"That's their money," Mackey said. "It builds up over time because the money is compounding for them."
It will cover all sorts of future out-of-pocket expenses.
Most important, since employees control the money, their behavior changed. Whole Foods workers started asking "how much things cost," Mackey said. "They may not want to go to the emergency room if they wake up with a hangnail in the middle of the night. They may schedule an appointment now."
There was no need to ask about costs before because the insurance company seemed to pick up the tab. But that drove up costs for everyone. Now, saving money makes sense to employees because the money belongs to them.
HSA critics ask whether individual accounts will encourage people to save money at the expense of their health.
Mackey has the right response. "The premise in those kinds of questions is that people are stupid. They're not smart enough to make these decisions for themselves. It's sort of an elitist attitude. The individual is the best judge of what's right for the individual."
And apparently, most individuals are making smart choices.
Harvard Business School professor Regina Herzlinger says studies show that "people who have these high-deductible health-insurance policies take a lot better care of themselves. They have more yearly physicals. Because they're saying, 'If I keep myself healthy, in the long run, I'm going to be spending less money.'"
The critics also argue that spending on health care is too complicated and important for individuals to control.
Mackey isn't buying it. "Should we allow people to make decisions about whether they have children or not? I mean, that's a pretty important responsibility!"
I pointed out that most people know nothing about complex cancer treatments.
"I don't know anything about cars," he said. "But if I buy a Toyota or an Audi or a Lexus, I know I'm going to get a pretty good automobile because competition ensures that it will be that way."
It does. And competition will do the same in medical care. All we need to do is put the individual in charge of his own money.
Next week: Where competitive health care is already working.
I’d be all for it...but the problem is, people with pre-existing conditions will be denied insurance.
“I’d be all for it...but the problem is, people with pre-existing conditions will be denied insurance.”
Usually if you currently have insurance you don’t have an issue getting a different policy. If no insurance then the emergency room is your doctor.
I believe Mackey is a libertarian, and Ayn Rand fan.
He was under media assault for being a ‘cut throat’ capitalist, against wild oats some time ago. lol
News flash, people with pre-existing conditions are already denied insurance.
I think this would be the best single method of controlling health-care costs. Catastrophic insurance, subsidized by the government for children, seniors, or the disabled, with a $10,000 or even $20,000 deductible. Tax-advantaged HSA's for routine minor illnesses and injuries, funded by employers or charity.
Allow the surplus to be rolled into the IRA at retirement, and now you've got some serious self-interest working towards controlling health care expenses.
Physicians and hospitals could charge much less, because they wouldn't be battling the insurance company for payment on every bill.
Of course, the insurance companies will fight tooth and nail to prevent this.
I think eliminating taxpayer-funded ER visits for anything but life-saving measures plus a high minimum allowable deductible would go a long way toward returning market sense to health care.
emergency room is a horrible substitute for insurance. It is unbelievably expensive They will run you down and get every last cent out of you, as well. If you can’t pay it, they will hound you into bankruptcy
emergency room is a horrible substitute for insurance. It is unbelievably expensive They will run you down and get every last cent out of you, as well. If you can’t pay it, they will hound you into bankruptcy
Mackey has the right response. "The premise in those kinds of questions is that people are stupid. They're not smart enough to make these decisions for themselves. It's sort of an elitist attitude. The individual is the best judge of what's right for the individual."
Most people are not professional healthcare workers. So they really do not know if that nagging pain is utterly negligible--or, say, early-stage cancer.
It can reasonably be argued that the current system encourages some people to overuse the healthcare system, since medical insurance picks up most of the tab. But let us not delude ourselves: With the ultra-high-deductable plans, many people--especially those at the economic margins--will simply rationalize, and assume that the nagging pain is really nothing at all.
Some will be correct.
Others, sadly, will not be.
That is a trade-off I am simply not prepared to entertain.
bump
“Usually if you currently have insurance you don’t have an issue getting
a different policy. If no insurance then the emergency room is your doctor.”
Emergency room: Great option for illegals and other “victim”
groups that don’t pay.
More like a bankruptcy option for legal US Residents/Citizens
without medical insurance (for whatever reason).
They can be hunted down and made to pay.
Yes, I know that’s a simplistic view.
But it’s just about the truth from what I saw during my years in Southern California.
And the real, realistic answer to the current healthcare situation
is certainly “above my paygrade”.
since medical insurance picks up most of the tab.
I would argue that if you PAY for your own insurance (versus employer) that that statement is not necessarily true.
My insurance is over $500 per mnth. I see a doctor every 3-6 mnths and take no prescription meds thru my insurance.
There is no way my insurance is paying for anything. If anything, I am way overpaying. The insurance company is making a bundle on me.
I am sure there are millions out there like me.
People would educate themselves a lot more about health/medical issues, if they knew they had to make their own decisions and own payment for medical care. And this sort of education should be part of the public school curriculum every year from K-12, with a requirement to pass an exam to graduate. Not only would this reduce medical care costs, but it would result in people overall being much healthier than any amount of medical care expenditure could make them.
“And the real, realistic answer to the current healthcare situation is certainly “above my paygrade”.”
In my experience most people make a choice. They are willing to pay $500 a month for a nice car but won’t pay that for medical insurance.
I’d be happy to pay cash for routine visits and such if I got the rate insurance companies get.
If you go from one group policy to another, you can’t be denied. But drop your group and try to get private insurance with a pre-existing condition and you won’t be able to get it.
“If you go from one group policy to another, you can’t be denied. But drop your group and try to get private insurance with a pre-existing condition and you won’t be able to get it.’
I’ve done it but it may depend on the condition. Please don’t get me wrong, I hate insurance companies and the drug companies. Insurance companies routinely reject claims just to see if people will pay for them. Drug companies put out good drugs but are more concerned with treating symptoms than curing disease. Their claim that R&D drives costs up is bogus. They spend more on dining doctors than on R&D.
I could easily afford my doctor visits, because I only go about once every six months, and that’s for blood work. But I couldn’t afford my med (I have MS and use an injectable)...it’s expensive. We pay about $300/month for our group policy, the employer picks up the rest, but if we were even able to purchase the same policy privately (with no pre-existing condition clause) and it was $1100 per month, I’d still come out ahead to pay it because the med is much more than that per month.
The catch 22 is, say I purchased private insurance with a rider on it for a pre-existing condition, MS for instance. They agreed to pay for other illness, but nothing MS related. Well there would be so many judgement calls because if I fell and broke my foot, the insurance company could say it was because of the MS, and not pay the orthopedist bill. If I got pneumonia, the insurance company could say it was the MS that led to it because of lack of being able to exercise or move around normally, or if I developed vertigo and fell and broke my hip, they could say the vertigo was from the MS, the MS caused the fall, thus the hip fracture won’t be covered because it’s caused by a pre-existing condition. I know these examples are far fetched, but I also know insurance companies, and that’s the kind of games they’ll play when given the chance.
Doctors often have to perform a test--sometimes multiple tests--to determine what the underlying disease may be. I simply cannot imagine that any amount of K-12 education could supersede such testing.
Granted, some tests, performed by some doctors, are defensive in nature--which is to say, they are superfuous, and only add to the total cost of healthcare in the US.
But many others are not. And I would prefer to live with the ills of too much healthcare than to live with too little healthcare.
My insurance is over $500 per mnth. I see a doctor every 3-6 mnths and take no prescription meds thru my insurance. There is no way my insurance is paying for anything. If anything, I am way overpaying. The insurance company is making a bundle on me.
HSAs, just by definition, create groupings of winners and losers. In general, the young and healthy are the winners; whereas the older and less healthy are the losers.
The current healthcare system is much more egalitarian in nature. And healthcare is not the proper place for a meritocracy. Although serious illness can be the result of longterm abuse of one's body, it can also be the result of old-fashioned bad luck--including a genetic predisposition to chronic diseases.
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