Weighing In

I just tried to google some resources to differentiate between the terms "health insurance" and "health coverage" because, in my mind, they are two completely different terms that I hear thrown about interchangeably. I came up empty, unless I was just using bad search criteria.

I think we all want the same thing here: affordable healthcare for as many people as possible. I believe we achieve that by getting back to "health insurance" provided by a private entity, and I don't believe we achieve that through "health coverage" provided by any entity, private or public. Insurance is the transfer of risk from one entity or individual to another. Where you enjoy healthcare coverage, instead of transferring risk, you're transferring responsibility.

I'll preface by saying that I know where we need to go, but I have no idea to how to reign it in and get there. Don't ask me "how" because I'll concede I don't have the answer to that. I just know it is out of control right now, but I see an end goal.

We need to get away from employer-provided healthcare plans (*gasp*) and into a system where we, as individuals, seek our own high-deductible health insurance plans, leaving ourselves responsible for our day-to-day care.

The problem we currently have is that our healthcare is being provided, almost in full, by our coverage plans, paid for by insurance companies with much deeper pockets than we have. The system is completely devoid of free market controls that we, as direct consumers, aren't bringing to the table.

Why is an MRI performed on a paid-in-full machine billed to insurance at $2,000? Because the insurance company can and will pay a large, negotiated portion of that. What if consumers were largely responsible for these types of procedures? Could a doctor charge each customer that comes through the door $2,000 for an MRI like it can an insurance company? Nope. The competitive marketplace would have to determine the appropriate price point for an MRI.

Currently, healthcare seems so outrageously expensive to the individual because we're getting charged at the rates that insurance companies are billed (and actually the insurance companies typically pay at a negotiated rate less than what was billed). It's apples trying to pay in an economy dominated by oranges (how cute was that analogy?).

Why does it cost let's say $12,000 to provide coverage for a small family? One, because it's comparable to what your employer is paying for you, but more importantly, the likelihood that the insurance company (and I use the term "insurance" here lightly) will have to pay for some amount of healthcare is almost a certainty. The better option is putting your insurance company only in charge of insuring against the much smaller risk of you becoming catastrophically ill or injured. The amount that the insurance company projects that it will have to pay across the pool of insureds for catastrophic events is much smaller than the amount it will have to pay for catastrophic events plus the certainty of routine care at jacked-up prices, and your premiums will directly reflect that.

As for pre-existing condition coverage, I am with most people. I don't want to see someone SOL because they had cancer under a past policy that no longer exists. The problem is that if you mandate that insurance companies provide coverage for pre-existing conditions, there is absolutely no incentive for an individual to carry insurance on a consistent basis. Just dodge that premium for as long as you can, and then the day you're diagnosed with cancer, you can go out and have your insurance company underwrite the certainty of your condition. When everyone bows out until coverage is needed, then insurance companies are only underwriting certainties and no longer underwriting risks; they'll be out of business pretty quickly.

After the system is reigned in, I like Clark Howard's idea of a 2-year waiting period for coverage on any medical condition where the applicant can't prove continuous insurance. In that scenario, it'd be okay for a cancer patient to be on one plan and seek another, with the requirement that the next company continue coverage for the condition. It would not be okay, however, to reward the cancer patient who never carried coverage in the first place to hop on board after the fact, at least not until 2 years post-diagnosis (and, well, knowing I probably wouldn't make it 2 years post-diagnosis, I'll opt for the insurance).

This would provide a remedy for those who've had the condition and not put them out for the rest of their lives but still put a true assumption of risk on those who don't insure themselves. I am not about the government mandating anyone to purchase insurance, but I am about people understanding that not purchasing insurance is a calculated risk you take.

I think the government needs to somehow to reign it in with this end goal, and then let's let the private sector do what it does best when everyone's back on the same plane. In no scenario do I trust the government with my healthcare.