Consumer Focused Health

There’s an interesting take on how to insure the currently uninsurable written by Bob Hopper on the HSA Crusader Web Log (via CDH Compass). Its a conversation at the ground level of an insurance agent speaking with a potential customer.

I was talking with a 44-year old about applying for an individual health insurance policy. This person was not happy with insurance companies. Frankly, the following is not my favorite conversation to have with a client:
“I’m afraid the insurance company will decline your application for health insurance.”
“But why? I’m healthy!”
“I understand, but let me see if I can explain the problem. You are indeed healthy, but you are also taking three quite expensive medications. You take a cholesterol medication, an allergy medicine, and a sleep medication. The cost is about $300 per month or $3,600 per year.” (To show the client the real cost of prescriptions, I usually visit a site that shows prescription drug prices, such as www.drugstore.com.)

“Well, can I get a plan without prescription drug co-pays? I only want insurance for the big expenses.”
“That’s a reasonable request. Normally, when people are declined for coverage, they realize they want insurance for what it was intended to do — provide protection from large, unexpected medical bills, such as a three to four day hospital stay that averages $30,000.

“Can’t they just exclude drug coverage altogether?”
“I wish they could, but virtually all plans include benefits for prescription drugs and office visits.”
“Can’t they exclude coverage for these conditions and give me insurance for big problems, such as a serious accident, heart surgery, or cancer?
“Insurance companies in California no longer exclude certain conditions; they accept or decline your coverage.”
Finally, the client says with frustration, “What good are insurance companies?

His take is essentially that people with existing conditions, even at absolutely low risk for a catastrophic medical incidence are unable to afford any insurance, because so many other things are bundled in (e.g., pharmaceutical, office visits, etc) even in high deductible plans. It sounds like he wants a more customizable insurance plan (with riders, etc) that in theory could look like the policies you receive in auto, where collision is separate from liability. This could address some of the moral hazard issues raised in Matthew Holt’s commentary (from 2003) on individual plans and some of the issues with free-market insurance. Essentially, by eliminating most of the benefits associated with sub-catastrophic events and you could have a much cheaper, emergency only or event-driven policy that would pluck more from a community pool, similar to how cancer-only insurance works today.

I think it really brings home how distorted the market is– and for those who want to buy an insurance product and can’t due to regulations–its a sign that the regulations have gone too far and failed those they are trying to protect. While I know the individual insurance space is murky and hard to understand, clear choices for non-comprehensive insurance should be available for those who would rather shop for their own care when they can and get coverage only for those events that are truly emergencies.

The medical system is becoming increasingly expensive and complex– with exponential growth of additional symptoms, diseases, fellowships, technology, standards of care, research studies, journals, and quality metrics on a yearly basis.

Thinking about all that is complex– and yet we expect our physician colleagues to run ever faster and do ever more with ever shrinking reimbursement for their time. Its no wonder they’re at wits end!

The problem in healthcare is a focus on doing/ knowing/ fixing more rather than doing what is necessary– making ever more investments in the “nice to have” without the financial counterbalance at the point of service.

Charlie Baker of Harvard Pilgrim highlights an excellent article in the Boston Globe titled “The folly of the 1% policy“. The premise of the article is the position that “if there is a 1% chance of , we must prepare for it as if it were a certainty”

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