Health insurance doesn’t make sense. You have homeowners insurance so, if your house burns down, you will be able to replace it, not so you can fix the toilet or replace the carpet. You have auto insurance so, if your car is totalled, you can replace it, not to replace the tires or change the oil.
But the model of health insurance is different. It isn’t just for those unlikely and catastrophic events but, for whatever reason, we have decided that it should cover day to day expenses. We have decided that it should cover carpets and oil changes. And that model is simply not workable.
Insurance “works” because it charges relatively small premiums in order to cover you in the event of a small number of very unlikely events. Of course it is not a good deal for anyone but the insurance company, but that’s OK because it protects you in the event of a catastrophe.
The “insurance model” fails when it is expected to cover most expenditures, even when there is a fixed deductible that must be met. And it doesn’t matter if that insurance is private or provided by the government. It is a classic case of socializing costs but privatizing benefits.
Once there is little or no incentive to control costs but every incentive to utilize the benefits, demand will outstrip supply and costs will rise. Sound familiar?
However, let me take one shot at government involvement in health care. Imagine that, 30 years ago, the Federal government had decided that providing access to computers was so important that we needed a government program to make that happen.
If that had come to pass, I have little doubt that our government subsidized computers would cost, not hundreds, but thousands of dolllars. I have little doubt that they would be less powerful and I would doubt that the smart phones, like the one I am using to type this post, would even exist.
It goes without saying that government has been focused for far more than thirty years on providing better health care with predictable results.
I honestly don’t know exactly how to extricate ourselves from the “insurance model” of health care but, unless we do, costs are going to continue to rise.
As always, thanks for reading this blog and have a great day!