Healthcare costs have been a hot topic of discussion for as long as most of us can remember. They have been the source of political debate since the introduction of the HMO in the 1970s. Yet for all the discourse, we seem to keep making the same mistake over and over: assuming that more and better health insurance will bring healthcare costs down.
If health insurance were the answer to rising healthcare costs, we would have licked the problem decades ago. And yet, healthcare costs continue to rise faster than the rate of inflation. For all our scheming over health insurance, we have not managed to reduce the price of healthcare delivery by one penny. So maybe it is time to stop obsessing over insurance and start trying to figure out the real reason prices continue to spiral out of control.
Not Legitimate Insurance
What our culture fails to understand is that health insurance is not legitimate insurance in the true sense of the term. An insurance policy is a financial instrument you purchase to indemnify yourself against financial loss in the event a covered circumstance occurs. You purchase homeowners insurance to protect your finances in case your house burns down. You purchase car insurance in case you get in an accident.
With health insurance, you are not talking about indemnifying yourself against events that may or may not happen. Think about it. Why do HMOs exist? They were conceived around the idea of lowering healthcare costs by encouraging people to practice preventative medicine.
The result of the HMO mindset is that people use their health insurance to pay for things like well-child visits, immunizations, sports physicals, and so forth. In reality, they do not have a health insurance plan. They have a plan that forces them to pay someone else to pay their medical bills on their behalf. Guess what? They still pay their medical bills through premiums, deductibles, and co-pays.
Doing the Best They Can
To be fair, consumers are doing the best they can within a terrible system that was thrust upon them by politicians some 50 years ago. Likewise, benefits brokers and general agencies are doing their best to make the current system as usable as possible. But all three groups are trapped in a health insurance system that does not reduce costs and will never do so.
General agencies, like Dallas-based BenefitMall, should have the opportunity to offer legitimate insurance products to the carriers they represent. Benefits brokers should have the opportunity to offer the same products to their clients. But right now, their hands are tied. They can only offer third-party payment plans disguised as insurance.
Consumers Have Few Choices
Modern health insurance cannot reduce healthcare costs because it offers no mechanism for doing so. In a free-market economy, the most effective mechanism is consumer choice. And under most health plans, consumers have very few choices. They are restricted to provider networks. They must get referrals from their GPs if they want to see specialists. Their plans are limited in what they cover.
The only way to legitimately bring costs down is to take control of healthcare away from insurance companies, service providers, and government agencies and give it back to consumers. When consumers have the final say over what they will pay for and how much they will pay for it, the market responds accordingly.
In the meantime, insurance companies offering new plans under the guise that they will reduce healthcare costs will continue. But costs will keep increasing year after year. You can bet your life savings on it.