As you probably know, I don’t think very highly of the GOP’s views on how to improve (fix?) our health care system. Their rhetoric involves improving choice, lowering deductibles, and putting “you and your doctor” back in control. Worthy goals perhaps. But when forced to put together an actual plan, they failed completely to create a coherent way to implement any of these goals.
Republicans claim to be the party of personal responsibility. There is nothing wrong with personal responsibility; a market economy doesn’t work when people don’t face the consequences of their decisions. But I’m far from the first to note that health care (or, health insurance) creates a number of problems that can’t be solved by an Adam Smith-style model of supply-and-demand.
The United States needs to find a way to improve the “value” received for each health care dollar. I can list statistics until I’m blue in the face. But I’ll stop with just one – life expectancy against health spending. Every other country gets more back for what they spend. We should be able to either spend less or do better.
The GOP plan to spend less generally involves creating incentives so that people use less. This isn’t crazy – if people go to the doctor less costs should come down. But our costs don’t seem to be due to overuse of the system. The US has lower health usage than most other countries. For example, annual physician visits per capita.
When the American public talks about lowering costs, they mean something different. Specifically, getting somebody else to pay for them to use as much health care as they want to. Pretty big disconnect.
But that’s all a digression. This is my personal story of moving to a world with health care personal responsibility. It’s just intended to be a factual re-telling – you can take whatever message you like from it.
As some of you know, for 15 years I had a beautiful employer-sponsored plan. Sure, over that time it became a bit less generous – higher co-pays and co-insurances, with my contribution to the premiums increasing. But it was a really good plan – every doctor I ever tried to visit took it, and paying $20 for a prescription wasn’t so terrible.
Then, I went out on my own – for a career and for health insurance.
I’m now a part of the infamous non-group market. I have a non-exchange plan (I’m not eligible for subsidies). It’s a silver plan from a major provider – not a bad plan in any way. This move to a less generous plan has taught me about the patient-centric approach to health insurance. Maybe my situation is unique. But remember – the idea is that by passing costs onto consumers, the system has better incentives and costs go down. People will still use the care they need, but not the care they don’t. I’m not writing this to complain about my health insurance – but to look at this cost-sharing and see if it is creating the right incentives.
Example 1: Maternity Care
We had our second child recently. It was a pretty standard experience – the usual small complications, but nothing at all out of the ordinary. For those of you who haven’t been through this yet – before the birth, there are a bunch of visits with the OB on a set schedule. Then, on the big day, you go to the hospital, generally trying to arrive as late as you can stomach (hanging out at home is more pleasant than at labor/delivery). Once the child arrives, if there are no complications, mother and baby (and dad if desired) spend 1-2 nights at the hospital. We of course had good care, but nothing “extra” (for example, we didn’t get a private room for recovery). Our share of the cost: just shy of $10,000.
I’m not complaining; we could afford this. But consider the incentives created among those who can’t. As a society, we should be encouraging population growth. Having children is expensive enough – for those among the non-wealthy, there is no reason for such a bill on day one. Second, childbirth isn’t exactly voluntary – that baby was coming no matter what. Making it expensive encourages people to skip needed care. Even forgetting the obvious ethical reasons to have healthy babies, prenatal and postnatal care have clear economic value. Finally, even if this incentive made sense, we had absolutely no way of knowing what the cost would be. Economics works with televisions – if I can’t afford the 75” Smart TV, I buy the basic 43” version. But it makes no sense if the cost differential can’t be known beforehand.
Example 2: Specialist Visit
Those doctors’ bills you always see – some exorbitant price for an aspirin, but the insurance company negotiated 95% off. That’s the “in-network” price; people without insurance theoretically pay the full price. You can see where this is going.
I have a specialist that I see on a semi-regular basis. I’ve been going to her for years, she knows my issues. Several previous doctors were unable to come up with a diagnosis for years. Of course, she isn’t in network on my new insurance plan. But I like the doctor enough where I would be willing to pay out of pocket – at least as long as the price is in the vague neighborhood of the in-network price. If my annual fifteen minutes with her will cost me $3,000 – well, I’ll have to find somebody else. If they won’t work with me, they will lose a patient – so both sides are incentivized. Let’s see how our patient-centric approach works.
After numerous tries, I finally am able to get through to the billing department. But, they must have thought I was speaking Sanskrit. Get the in-network price without insurance? They wouldn’t even quote a price – they seemed to think I was maybe a bit insane. But in a personal responsibility-based system, isn’t this what we’re supposed to do? A buyer, working with a seller of a product, trying to agree on the terms. Another small example – health care does not obey the usual laws of economics.
Example 3: Dental Care
The economic basis for dental insurance is questionable. Most people just get their every-6-months checkup, x-rays, occasional filling. If everybody is buying roughly the same quantity of something, there is no reason to have insurance for it. That’s why there is no broccoli insurance. For people who have serious dental issues – well, the information asymmetry is even worse than in regular health insurance. What company in their right mind would insure people with major ongoing issues? Why would “dentally-healthy” people pay for those with real problems – if they have the choice? Even more than with health care, there is a case that only population-wide, centrally-priced catastrophic dental insurance makes sense.
After the requisite five phone calls and emails to check that they were in-network (I was not pleased when they told me to “check with my HR”), I was able to make an appointment. But the funny thing about dental insurance – it generally covers only basic procedures, with a cap on total benefits. These caps are low: $500.
Well – this is the exact opposite of the catastrophic coverage that would make sense sense. Somebody like me is forced to buy an overpriced policy in order to get the reasonable pricing of in-network providers. People with serious problems get virtually no help.
Again, these are just my personal experiences. But the way you consume healthcare is fundamentally different when you move out of employer-sponsored insurance. [End of rant]