Healthcare Reform Begins with Recognizing the Problem
How did we get here?
Insurance originally was created as compensation for loss. Two things affect the premium. One is the degree of risk of loss. If the risk of loss is high, the premium should be high. If the risk is low, the premium should be lower. The second thing that affects premium is the amount of the loss itself. If the amount is high; the premium is high. If the amount is low, the premium should be lower.
Car insurance pays if you have an accident. If you drive recklessly, you will pay a higher premium. If you drive an expensive car, you will pay more to insure your car. Increased risk and increased possible loss is easy to understand.
The case is similar for homeowner’s insurance. You insure your home in case something bad happens to your house. Fire is the most common. Insurance doesn’t pay for you to paint your house every five years. It doesn’t pay for you to put a new roof on it. It may not even pay if you have a flood. If there is a fire, your insurance will probably pay.
Life insurance is really death insurance. It pays when the covered person dies. Insurance companies may require a physical exam to determine the risk of death and the resulting payout.
What about health insurance? It used to cover risk of loss. It paid for medical care if you became ill or got hurt. It didn’t cover all risks and it didn’t try to reduce risks. I remember talking with an agent when my wife and I were young. He explained that adding obstetrics care would cost more. We paid more to have pregnancy covered.
In an effort to sell more policies, insurance companies began covering things that were supposed to keep you healthy. A certain number of wellness massage visits, acupuncture, chiropractic, etc. were allowed every year. In addition, health club memberships were sometimes covered.
Where is the risk of loss? The Office of the Insurance Commissioner regulates insurance companies. Why did the Insurance Commissioner allow insurance companies to offer services for health promotion?
The reason is public demand. A former executive director of our Washington State Chiropractic Association told me that he met the president of a large insurance company at a social function. The director pulled the president aside and told him that chiropractic care could save his company a lot of money in treating their subscribers. His reply, “I don’t care what will save us money on the back end. I want to know what will sell policies on the front end.”
Allowing insurance companies to offer coverage for wellness care blurred the difference between what should be covered by insurance and what should not be covered. People thought it was a great idea that their insurance company wanted them to stay healthy. Costs continued to rise.
If we want the cost of health insurance to go down, we have to go back to covering risk for loss for covered conditions. We must realize that health insurance does not pay for everything. It does cover certain treatments for covered conditions.
What conditions are covered and what treatments are reimbursed should be a matter of science – not politics. However, the problem is that politicians have already rigged the system. Research funding goes primarily to allopathic medicine. The fix is in and costs continue to rise, because health insurance is not about health or insurance. It is about getting your money.
(The above is a chapter from my book, Dupe ‘em and Dope ‘em available for immediate download for Kindle.)