It's not really a challenge to see why health insurance companies are part of the problem of healthcare today. You only have to look at the business model to understand why the average patient deals with the day-by-day hassles.
So as I understand it, an insurance company is like a big pot of money that we all pay a little into. If one of us gets sick, we can take more money out of that pot than we put in with the understanding that the odds of everyone getting ill at the same time are slim. Then, whatever money is in the pot at any given time, the insurance company is free to use to turn a profit. Of course with a little help from Smith's invisible hand, insurance companies should vie for our business and this creates competition that drives down the cost of premiums.
This system doesn't work for a lot of reasons:
1) Competition is pretty much non-existent. When we start work many of our businesses have a single health insurer they use and we don't have great options if we opt out, especially if we have a pre-existing condition.
2) Health insurance companies vary from state to state. This means that competition is artificially restricted to where we live at any given point.
3) The insurance companies are for profit. A company's profit is higher the less money it pays out.
The first two reasons aren't that hard to overcome. Insurance can certainly be untethered from businesses and state. But it's that last point that's the killer, the less money an insurance company pays out, the more profit it gets to keep. This point bears repeating. The less an insurance company pays out to sick people, the more it gets to put in its pockets. I feel like if I pulled any one person off the street and told them about this great new idea where they give me a couple hundred bucks every month, and then when they want it back they have to fill out some forms, wait 8 to 10 weeks and they may or may not get it back I would get punched. But this is exactly the crap that we've accepted when it comes to our health.
I know that a lot of you are saying, "but Chris, what kind of heartless cold bastard would exploit people's health for gain?" And I'm sure there are those companies that explicitly try to screw their customers, but I can only speculate so I won't go into it. The real money lies in the unconscious things these companies do that end up benefiting them in the end. One such thing is the dreaded customer service representative.
We've all encountered this beast before. Our cable goes on the fritz and the next thing you know you're listening to the stylings of Kenny G waiting for someone on the other end to lead you through a series of confusing, convoluted steps to regain your TV. The conversation, though, inevitably ends with the need for a "service visit" that requires a week of waiting. Of course when the cable company shows up they say that your cable box is broken and you'll need to fax in a copy of the original form with the repair receipt before you will be reimbursed for a new box, and so on and so on and so on.
This system is so unruly that newspaper articles have cropped up called "the fixer" and all they do is report on and attempt to fix the boondoggles that customer service reps create. Yet if you find yourself needing a kidney transplant, this might become your life or death reality. Now imagine you have a few months to live, but someone on the other end of the insurance company never got a fax from your doctor and you're claim is denied. Unfortunately this is a reality every day in this country, and these insurance companies have no incentive to fix the problem, because lets face it, a kidney transplant is expensive. If you die while the insurance company was busy pushing paper, that’s a couple hundred thousand extra in their pocket.
And this is reality. We get a job, have to put up with the one insurer our company uses, and then have to deal with a company that has zero incentive to pay for expensive procedures. Even if we wanted to buy our own plan outside of work chances are the costs for a family plan is so prohibitive that we don't even attempt.
It's my thinking that the best would be a shift to non-profit companies. Rather than each state having a hodge podge of insurance companies, I think we'd all be better off with 4 or 5 non-profit companies in charge of that big pot of money. This would eliminate that temptation to deny healthcare to turn a profit. And if one of the 4 or 5 companies was terrible at their job we could always switch. Because there's no profit involved there's no benefit in price fixing. With little emphasis on gain, these companies could focus on streamlining medical records and billing, as well as study patient safety. The hope would be that non for profit companies would attract young talent interested in improving healthcare rather than business school grads looking for unlimited profit. We could get college grads excited about the work by offering loan forgiveness for employment and effort and improving healthcare.
Would this system work? I would hope so, but I'm sure there are a million economists lined up to tell me how this is a terrible plan. But hey, lets face it, we need to start generating new solutions, because what we've got now stinks
