Published: 2010-01-30 19:41:25
Author: Stephen Hyde | Right Side News | January 19, 2010
I buy collision and comprehensive insurance on my car, but after talking to my State Farm agent, it might as well be called collision and incomprehensible. With seven layers of coverage, most of it is as clear to me as the details of health insurance are to many others. But it has two aspects I do understand.
First, it doesn't cover gasoline, oil changes, or worn-out tires. Those are predictable, normally affordable consumer purchases. Even if I could buy such coverage, I wouldn't. It's not worth the added insurer overhead and profit-not to mention the cost inflation on gas and tires once sellers discover their customers no longer care about price. I'm better off shopping around for reliable service, low price, and credit card convenience.
The other part I understand is the deductible. If my car gets accident damage, I pay the first $2,000 to fix it. Insurance pays the rest. I could get a $100-deductible option, but that costs an extra $183 per year. I'd rather save the money and drive more carefully-even if the two gents who've run into me during the past 40 years didn't. I'm still way ahead.
Health insurance ought to work the same way. It shouldn't have to cover normal maintenance services (otherwise called primary and preventive health care), and everyone should be allowed to accept deductibles as high as they can comfortably afford.
Then we could all rest easy knowing our insurers would pay for unexpected, unaffordable medical costs, while we would regain the ability and responsibility to shop for the best and lowest-priced providers for all the ordinary doctor visits, lab tests, and low-cost prescription drugs we know we're going to need during the next year or two. Not only would this significantly cut insurance premiums, but doctors, labs, and drug companies would have the mirror ability and responsibility to compete for consumers with transparent prices and quality. Innovations would abound in both.
Take my doctor's current billing system...please. Every time I see him for a periodic physical or minor injury, he bills my insurance company about 250% of what he will actually collect. I have a substantial deductible that always leaves me paying the full and final amount due, but he doesn't have a clue about how much to charge me when I see him. Instead, we both have to wait for the tango to conclude between his billing people and the insurer's paying people, culminating in the amount I must pay-a value-subtracting process that consumes an astonishing 31% of all medical costs.
Why not drop primary and preventive care from insurance coverage? Then my doctor could tell me his price before (or immediately after) my visit and I could pay with a credit card-with transaction costs an order-of-magnitude lower than with the corrosive current system. If he could do that, he would immediately see a big increase in take-home pay, having rid himself of all those billing clerks, consultants, computer systems, and financing costs he now has to pay just to collect fees averaging less than $100 each.