Last time the brakes on your car wore thin (or in my case, the last time I blew an aneurysm into the sidewall of my snow tires on last year’s pothole and had to replace all four of them), you probably reached into your wallet for a credit card, a wad of cash, or a check, and paid out of pocket for the expense. Last time you got your oil changed, you probably did the same. It is notably unlikely that any warranty, insurance, or other coverage paid for these routine costs of car care.
Now remember back to your last routine interaction with the health care system. If you are so lucky as to have insurance, you probably expected it to cover at least some part of your visit to a provider for, oh, say, arthritis in your knees (roughly the equivalent of the automotive brakes that just wear out after a while), or a Pap smear (the tongue-in-cheek equivalent of an oil change – just part of the routine costs of owning a female body). You reasonably could ask that your insurer cover part or all of the doctor’s fee, the cost of labs ordered, and medications or hardware you might be prescribed to go home with – that is, the routine costs of health maintenance. In essence, this is the equivalent of expecting your auto insurance to cover brakes jobs and oil changes.
Covering scheduled maintenance and routine out-of-pocket expenses: this is the health-care equivalent of an auto insurance policy that pays for oil changes, tires, and even fluids that you might throw into your radiator reservoir between regular checks. Imagine, if you will, the exorbitant cost – and the rapid rise you could reasonably expect – of a car insurance policy that covers these niceties. To make it worth their while at all, insurers would have to charge more than they could guess that a car would cost in a year, including both routine and catastrophic maintenance; most insurers are for-profit agencies (or at least not particularly low-overhead institutions), so that has to be accounted for too. This combination would put car insurance out of the range of many if not most drivers. But this is what we expect of health insurance – and we are at least nominally still surprised that premiums go up every year, even as the list of routine services recommended (and options for non-routine services in cases of catastrophic care) rise on somewhere between and arithmetic and a geometric curve.
True "insurance" functions well as a gambling man’s bet. All interested parties pay in on the off chance that one in a few – hopefully one in a very few – hits the bad-luck jackpot of a major payout. The input should be calculated to comfortably cover the costs, and everyone who cares to join the pool throws in a little for a relatively few large payments. Insurance is a system fundamentally built for rare, stochastic disaster: totaling a car, not paying for an oil change. The concept of health insurance fundamentally emerged from a time when emergency (or occasionally obstetrical) care was pretty much the only indication to go see a doctor, and relies on a model of incremental small input from a large population that is drawn upon only sporadically in singular large outputs. You will notice that this parallels modern medicine in almost no manner at all.
To really illustrate the failure applying a basic model of car insurance to health insurance, one only has to look at the true equivalent in health insurance: the high-deductible plan that covers almost no costs until some disaster strikes that drives the patient’s balance sheet over, say, $5000, and then the plan begins to pay. This is truly a disaster-driven model, one that presupposes that the patient pay for routine health care costs (the oil changes and brake jobs of the medical world), but is protected from the realm of catastrophic cost. But high-deductible plans are a dangerous business; in the young and healthy, a $5000 bill is often enough to bankrupt the household regardless of coverage beyond that; and in the pre-Medicare demographic that tends to be the province of the high-deductible plans, 100% out of pocket costs often lead to delays in preventive services right in the age group in which preventive services (mammograms, colonoscopies, screening labs) are ramping up. True to the nature of the gamble that underlies it, high-deductible plans really only work out well for the profoundly lucky.
Moreover, pooled insurance premiums are often called upon to indirectly cover the care of folks outside of the contributing pool: an emergency room is required to take all comers regardless of payment status (and many hospitals and clinics are charitable enough to swallow unpaid claims, graciously or not), but these costs have to be covered somehow. In general, this is paid by raising the rent on paying customers, transferring those losses to the paying group in prices one must charge to keep the lights on, get the payroll paid, and maintain the doors open. (This transfer of costs also accounts for why my auto insurance rates doubled when I moved from the urban Pacific Northwest – a relatively expensive place to get a car fixed – to New Mexico, where there’s a low-rent body shop on every other corner: because New Mexico has one of the highest uninsured driver rates in the nation, so the insured drivers pick up the de facto tab for accidents involving the remainder.)
Add in the bogeyman of profitability, and you have a system in which the sole driving trend over time will be an astronomical upward titration in the cost of insurance premiums. And sure enough – I need convince no one here – the trend has proven true.
But I am not, as you might be thinking, building an argument against covering routine care. I am building an argument that the traditional insurance model is fundamentally incapable of managing modern medical concerns. Disaster-based insurance models are simply not cut out to take care of modern health needs. What might work better then?
One, a functional system needs contributions from all comers in order to stabilize the rate of rise of premiums. Health care is not optional good, and contributions should not be optional. Blaming people who cannot access health insurance for not paying in is somewhat cruel (nevermind moot), but there are systems that demand proportional contributions from all to dole out the same in return: tax-based single payer systems. Everybody throws in a share, and everybody draws out. This forces coverage to move away from the gambler’s model and toward a system where everyone is in it together.
Two, a sustainable system may need to be a largely closed, self-contained system with a minimum of entries and exits from the insured pool instead of the fluid cherry-picking of today's privately insured groupings. As it stands now, the catastrophic gamble underpinning health insurance means that an insurer fares better if most patients never darken the door of a health care provider: cheaper for the insurer in the short term, and the insurer limits liability for the long-term consequences of delayed care (preventive and otherwise) by instituting maximum benefits, lifetime caps, 80-20 payment splits, and other policies that end-run the consequences of limiting the outlay up front. (My all-time favorite catch-22 is the employer based insurance that is canceled as soon as a person becomes disabled enough not to work: this is truly one of the heinous inventions of the American insurance enterprise.)
A closed system tightens the loopholes that make delayed care profitable. There are many examples of closed systems to examine, but three very diverse models come to mind: the Veterans’ Administration hospital system, the UK’s National Health Service, and the Kaiser Permanente system on the west coast (an HMO which functions as both insurer and provider to its enrolled members – a paradigm that seems ripe for conflicts of interest, but has turned out to foment some truly innovative shifts in effective medicine aligned with cost control). All of these systems share two things in common: one, they lack the ability to shift cost outside of their own budget (by choice in the case of Kaiser, by legal fiat in the case of the VA and the NHS), and each has consequently put an enormous emphasis on preventive care and/or systems reform. Since each one takes the brunt of its own preventive failures, it behooves them to take care of their own patient pool. Essentially, the closed system model unwinds the deck-stacking inherent to the gambler’s model, and makes the insurer necessarily responsive to the imperative of prevention and effective early care.
Finally, a model that pits patient versus physician versus insurer in a battle to the bottom of the resource pool is one that is destined for redundancy, unnecessary paperwork, and intentional up-ramping of bureaucracy. Health should be the underlying goal of the entire enterprise; entrenched conflict between the various stake holders is one of the great understated reasons why our healthcare system is so disproportionately expensive for the outcomes we achieve (if you don’t believe me, you can follow me around work for a day or so and watch how many hours of my MD salary goes into filling out prior authorizations for supposed first-line medications rather than seeing patients).
Going back to the metaphor we started out with, there is a fundamental impossibility of covering the needs of a medicalized health system with outmoded models that only account for only the health equivalent to totaling a car. Pap smears are not oil changes; disasters like cancer are often preventable in ways that rollover accidents are not. Health is not as stochastic as the vagaries of highway disasters, and clinging to the gamble against fate that underpins our health insurance serves only as a detriment to both health and cost control. The transition from "insurance" to "coverage" is a tough one, but there are models that show us some promising ways. But mostly, we are all in this together: it's time we start acting like it.
Cross-posted from my recently relocated and relaunched blog at America, Love it or Heal It.