Keeping health care costs down...

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It seems to me that the solution to keeping health care costs down is fairly simple.. Make people profit from keeping their own costs down...

The Health Savings Account/High deductible plan that is gaining ground in the insurance market is a good model. Rather than having a low deductible and a high premium, the customer has a high deductible and a low premium. The money that you would have spent on premiums and deductibles goes into a savings account that you can use on your health care costs. What you spend you lose but what you don't spend you keep. You get to determine what kind of care that you want to pay for. You may choose the 2000 dollar treatment that has an 85% chance of working rather than the 10000 dollar treatment that has a 90% chance of working... It is up to you.. It is your risk and your reward... If you have something catastrophically expensive hit you, your losses will be limited to the deductible.

The real problem with our current system is that each layer of transactions adds a layer of irrationality... The employer buys insurance on behalf of his employees. The employer buys the policy that keeps the employees happy with the least expense. The insurance company markets to the employer, not to the employee. It seeks to satisfy the employer, not the employee.. The doctor is paid by the insurance company, and as such he is likely to do the most expensive procedure that the insurance company is willing to pay for. The problem is that it is the patient who needs health care. Not the employer, not the insurance company. These people serve their own interests and make decisions differently than you would. Patients also behave differently because it is not their money on the line. They tend to go for the most expensive option that the Insurance company is willing to pay for, after all, that is what they paid the premiums for.

In general, the insurance companies don't have a long term need to keep costs down.. Their goal is to minimize surprises. Normally, insurance companies are expected to keep a certain percentage of the premiums as profit, so as premiums go up, the income for the insurance companies goes up as well. If costs go up dramatically because they are being forced to cover something that they did not expect to cover, they will fuss... But usually they will begin covering the new surgeries, and just up the premiums in order to compensate for the added costs.

Doctors also have little incentive to keep the costs down - the more they can charge the better. Anyone who tries to hold cost down is going to be labeled as an evil greedy corporation.

Really the key is to eliminate all of these layers of transactions and get it so that the patient pays the doctor directly and has financial incentive to buy the cheapest effective treatment rather than the most extravagant allowed treatment.

When it comes to Government run health care, it is quite clearly a bad idea. When insurance companies refuse to cover what should be covered, the regulators crack down upon them. Well over 90% of Social Security Disability claims are denied the with little review, and usually it takes a few appeals to get benefits, even when they are obviously well qualified. Any insurance company that behaved in this manner would be driven out of business. But when the government calls the shots, you have little recourse.

Moreover, our democratically elected officials have great incentive to spend money. It makes their constituents happy and wealthy, and happy wealthy constituents get you re-elected, even if that happyness and wealth was embezzled a bit from all of the rest of the taxpayers. Some gain a lot, and a lot lose a little. The winners are very happy, and the losers hardly notice the trickle.

The per capita expense for healthcare is $5,283 With today's system, that money will be paid one way or another (Through Insurance premiums, Medicare taxes, increased medical charges) It makes sense to give people control of the bulk of that money, and let them make their own decisions as to what is reasonable and what is excessive.

If we spend 2283 of that 5283 on premiums covering the financially catastrophic health care emergencies, and let people hold on to up to 3k per year, by staying healthy and being frugal, then expenses would likely go down. If you charge them the 5283 in premiums and deductibles, they are going to want to get their money's worth, and they are going to try to claim as much health care as they can.



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This page contains a single entry by Josh Reighley published on August 17, 2009 3:31 PM.

Cheap and easy internet filter.. was the previous entry in this blog.

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