Saturday, March 3, 2007
Some Concerns about Insurance
While I would not say that everyone should immediately cancel all of their insurance, since it is serving a useful purpose in many cases, I think that there are several potential dangers of relying on insurance that we should examine. One of the problems with using insurance is that it is expensive, sometimes too expensive for those who need it. I never had health insurance at my last job because I couldn't afford it. To many people, that might seem like a relative statement; sure, you could afford it if you really wanted to. But what I mean is, if I had purchased a family health care plan through my last employer, it would have cost more than I made some months. Even if I had saved up money in other months to cover this, that would mean I could have no other savings, couldn't have afforded to buy my house or pay taxes, and would have no chance to do anything with my life but work to pay for insurance I might never need. Maybe I should get a higher paying job, but remember, we can't have an economy where everyone makes $40,000 per year. Someone has to work in fast-food restaurants, milk cows, work in factories, etc. If we are designing a health care system, we need to think about how it will take care of the poor, not just those who have professional jobs with great benefits packages.
At one boring, tedious factory job I had, there was a woman who hated the place, but couldn't leave, because she had insurance through her job, and had some chronic health problems she needed it to pay for. If she had left, even to go to a better job, it would have been six months or so before she could get health coverage, and even then it might not have covered the "pre-existing conditions" she needed to have treated. So she was effectively trapped in that job because it provided her health insurance. I have always looked at a job as an exchange of some of my time and labor for money that I need, so I would rather not see systems that make us too dependent on jobs, and especially on keeping the same job. People should have the freedom to change jobs, or even to do other things and not have a job for a while, or start their own business. All of this is made more difficult if we need to keep jobs so we don't lose insurance or other benefits.
Just like the lottery, insurance is, on average, a losing bet. Since insurance companies need to make a profit, they have to collect more in premiums than they pay out in benefits. That means that, on average, a person would be better off with less insurance. Of course, it does help to cover disasters and losses that are not average, but we should not buy insurance to cover any possible loss we could afford to deal with on our own. That's why a health insurance policy that covers the first dollar of costs is a worse deal than one that has a high deductible. The insurance will pay you more if you have medical bills, but the higher premiums will cost more than the benefits are worth. If you buy insurance, you're paying someone else to assume risks you don't want to take yourself. There is no need to buy insurance to cover risks you can afford to take.
Because it makes health care more affordable, health insurance allows the cost of health care to rise. If you had a plan that would pay for all of your goceries, regardless of what you bought, or how much it cost, you would probably eat more expensive meals. You could enjoy lobster tails or caviar whenever you wanted. Even the price of bread would go up, since the grocer wouldn't have to worry about you checking prices anymore, and he could charge as much per loaf as he wanted. In the same way, health insurance allows expensive procedures to be performed more frequently, and removes the incentive for patients to compare prices or shop around for medical care. More spending on health care may sometimes result in better care, but not always. I had a friend once who was prescribed an antibiotic that cost $200 per bottle. He had a reaction to it, and the doctor prescribed the second-choice antibiotic, which worked just as well for $5 per bottle. The doctor had no idea what the price was for either of them, and the patient had no opportunity to compare prices before the prescription was given. I've often read about expensive procedures and tests being performed at high rates in America, despite a lack of evidence that they improve outcomes for the patients. If more of us were spending our own money on health care, rather than the insurance company's money, we might do a better job of controlling costs.
Insurance also makes medical care more expensive by increasing the paperwork that must be done. Imagine that you went to the doctor, and after your visit, you handed him a hundred dollrs, cash. Now, imagine that you go to the doctor, fill out insurance paperwork, which someone must submit to the insurance company, and then file, along with bills and payment plans, then the hospital billing department submits the bill to the insurance company, which has a whole team to analyse and approve the payments. The hospital has to deal with not one, but dozens of insurance companies, each with their own paperwork. All of the files must be kept for years, in case there is an audit. Add in the cost of malpractice insurance, government oversight of the doctor and the insurance company, etc., and for the doctor to end up receiving that same hundred dollars for examining you, someone will have to pay a lot more than a hundred dollars. It might not be you, directly, if you had insurance, but you will pay for it indirectly through higher premiums and higher taxes.
(not completed.)
At one boring, tedious factory job I had, there was a woman who hated the place, but couldn't leave, because she had insurance through her job, and had some chronic health problems she needed it to pay for. If she had left, even to go to a better job, it would have been six months or so before she could get health coverage, and even then it might not have covered the "pre-existing conditions" she needed to have treated. So she was effectively trapped in that job because it provided her health insurance. I have always looked at a job as an exchange of some of my time and labor for money that I need, so I would rather not see systems that make us too dependent on jobs, and especially on keeping the same job. People should have the freedom to change jobs, or even to do other things and not have a job for a while, or start their own business. All of this is made more difficult if we need to keep jobs so we don't lose insurance or other benefits.
Just like the lottery, insurance is, on average, a losing bet. Since insurance companies need to make a profit, they have to collect more in premiums than they pay out in benefits. That means that, on average, a person would be better off with less insurance. Of course, it does help to cover disasters and losses that are not average, but we should not buy insurance to cover any possible loss we could afford to deal with on our own. That's why a health insurance policy that covers the first dollar of costs is a worse deal than one that has a high deductible. The insurance will pay you more if you have medical bills, but the higher premiums will cost more than the benefits are worth. If you buy insurance, you're paying someone else to assume risks you don't want to take yourself. There is no need to buy insurance to cover risks you can afford to take.
Because it makes health care more affordable, health insurance allows the cost of health care to rise. If you had a plan that would pay for all of your goceries, regardless of what you bought, or how much it cost, you would probably eat more expensive meals. You could enjoy lobster tails or caviar whenever you wanted. Even the price of bread would go up, since the grocer wouldn't have to worry about you checking prices anymore, and he could charge as much per loaf as he wanted. In the same way, health insurance allows expensive procedures to be performed more frequently, and removes the incentive for patients to compare prices or shop around for medical care. More spending on health care may sometimes result in better care, but not always. I had a friend once who was prescribed an antibiotic that cost $200 per bottle. He had a reaction to it, and the doctor prescribed the second-choice antibiotic, which worked just as well for $5 per bottle. The doctor had no idea what the price was for either of them, and the patient had no opportunity to compare prices before the prescription was given. I've often read about expensive procedures and tests being performed at high rates in America, despite a lack of evidence that they improve outcomes for the patients. If more of us were spending our own money on health care, rather than the insurance company's money, we might do a better job of controlling costs.
Insurance also makes medical care more expensive by increasing the paperwork that must be done. Imagine that you went to the doctor, and after your visit, you handed him a hundred dollrs, cash. Now, imagine that you go to the doctor, fill out insurance paperwork, which someone must submit to the insurance company, and then file, along with bills and payment plans, then the hospital billing department submits the bill to the insurance company, which has a whole team to analyse and approve the payments. The hospital has to deal with not one, but dozens of insurance companies, each with their own paperwork. All of the files must be kept for years, in case there is an audit. Add in the cost of malpractice insurance, government oversight of the doctor and the insurance company, etc., and for the doctor to end up receiving that same hundred dollars for examining you, someone will have to pay a lot more than a hundred dollars. It might not be you, directly, if you had insurance, but you will pay for it indirectly through higher premiums and higher taxes.
(not completed.)
Labels: insurance
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