Health, Health Care, and Health Insurance

I find that one of the most difficult things to convey about the debates on health insurance is that it is in fact a different market from health care, and that the issue of health may or may not be very closely related to the amount or cost of interventions. Health may be more closely related to prevention rather than intervention, and Western medicine might not always be the answer.

In our current system, the “bills” for health care are largely paid, in such a way that health care providers are decently paid, and insurers make a decent profit. Setting motivations for over provision of care aside, we do a decent job of providing health with our health care system. There could always be improvements. Health insurers must then take in more money than the bills for health care to cover their administrative costs and profits. Those administrative costs will always be there, but they could be minimized under certain circumstances. Note, in a profit-motivated system corporations are trying to maximize profits.

However, the health insurance system we currently have ignores so much of what is luck-dependent. With insurance tied to employment in most cases, we can see people lose their jobs, then not be able to afford their insurance. This is largely because we do not see the bill for health insurance, since much of it is often paid by our employer. Many of these plans also are constructed in such a way that patients rarely see a substantial bill for treatment because of copayments or coinsurance.

If insurance is not provided by an employer, it might be provided by the government via Medicaid/Medicare/Tricare, or one of the ‘dreaded’ exchanges. Individual insurance markets have not traditionally done the best job pooling risk, since again, all expenses need to be paid plus administrative costs, and these expenses for the individuals joining must be forecast. If health insurance providers are losing money, people do not like the high deductibles/copayments/coinsurance/premiums on their plan, and health care providers do not like to accept these insurance plans, then yes there is something wrong. These insurance providers, if we insist they must be non-public sector, must take in more money, either through government subsidies, premiums, copayments, coinsurance payments, or deductibles. We could demand that they trim the requirements put in place by the ACA, but these were largely applied to prevent discrimination in provision. An individual with a preexisting condition must be offered insurance that treats their condition, and under the ACA insurers cannot discriminate using price. If available as an option, some patients would choose low-cost bare bones plans that do not help defray the costs of the condition that needs treating, and jump to a better coverage plan when they are in need of treatments.