National Health Care STAT!

Previous Post(s) in this series here.

So too with medical care. It's not as if I am saying my doctor is conspiring with the insurance company to keep his or her reimbursement rates secret. I don't think my doctor knows the cost of his services, nor do I think anybody in his billing department knows either. Because, you see, my doctor's medical clinic deals in aggregates of revenue versus expenses and predominantly they are negotiating with insurance companies who are doing the same. My local clinic has certain expenses, the largest being payroll for doctors, nurses, para-doctors and para-nurses, receptionists, appointments secretaries, billing clerks and insurance reimbursement professionals, and the notion of individually pricing particular services to attract a customer or class of customers is foreign to the profitability of the firm. More important is the overall reimbursements that it can receive from any given insurance company, and the overall drag on the resources of the clinic delivering the range of services necessary to get those reimbursements. And the same is true on the insurance companies side, just in reverse.

Well. Like the grocery clerk asked, So what? Why don't I simply go with the system, pay my co-pay and move on?

Because it is this one fact about the system that causes me to use my insurance policy in a quite perverse fashion. My health insurance policy in this type of system is not an insurance policy at all. An insurance policy hedges the risk of future unplanned events that might be substantial (e.g. my house may burn to the ground). But what I am really paying for with health insurance is a hedge against inchoate but foreseeable future health expenses. I will have x-number of doctor visits this year, purchase x-number of prescription drugs, get x-number of blood tests, undergo x-number of surgical procedures, and I select my insurance plan so that generally speaking, I will pay the monthly premium and have little or no other medical payments of significance in any given month. Since these are relatively normal medical events, the insurance premium I will have to pay will, on average, equal the costs of these procedures, with the profit added on that the insurance company needs to stay in business.

This is not an insurance plan, it is a medical savings plan, in which I deposit my premium each month in an account which is then used to defray my actual medical expenses as they come due. And the whole rigamarole of co-pays, partial co-pays, covered and non-covered expenses, deductibles, generic v. brand name drugs, and the rest are simply what happens over time as an insurance company learns what kinds of expenses its existing customers desire, and attempts to provide incentives to steer people towards less costly alternatives.

In other words, the insurance companies are trying to perform the function that would naturally occur between doctor and patient in a normal market: to set a proper price for medical services that balances the doctor's ability to supply the service with the demand for the service by patients.

To Be Continued......