(Originally published in the Senior Review January 2018 – UPDATED May 10, 2019)
Better Alternatives to the Health Insurance Trap
Our society has been scripted to believe “insurance is health care”.
Here’s a paradigm shift – it’s not!
The Insurance Option
Contrary to what many politicians preach, insurance is simply one way of paying for health care expenses – and increasingly it’s NOT the best option.
Health care involves skilled evaluation and treatment services by health care professionals to address injury, impairments, and disease. Skilled health care should be aimed at optimizing independence and quality of life, as well as prevention.
Unfortunately, because the payment for health care in America has become progressively politicized and socialistic, it has become increasingly unaffordable both to individual patients and to taxpayers. As a result American health care is currently in crisis – and remains so.
There is no such thing as a free lunch – someone must ultimately pay.
Although they are separate entities, the undeniable trend has been that both health care and insurance costs have skyrocketed with ever-increasing premiums, co-pays, and deductibles, yet with less coverage and fewer treatment options.
As a recent example, the Department of Health & Human Services reported a 20% increase in Obamacare premiums in Wisconsin alone during 2018. This hike is despite repeated government (tax payer paid) bailouts for insurance companies.
The Answer Is More Freedom
So how can we do better? The answer is a free market economic system – in other words, letting a free market work its magic in the realm of health care, and health care insurance.
Wikipedia defines it this way: “…a free market is an economic system in which the prices for goods and services are determined by the open market and by consumers, and in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.” (https://en.wikipedia.org/wiki/Free_market).
To better understand a free market payment perspective, consider a car insurance analogy comparison to our overly-complex and expensive current health care mess.
Auto insurance exists for accidental catastrophic events as a hedge to help ease the loss of money, which is the natural consequence when an individual is in an accident and needs to have their car repaired or replaced quickly.
Car insurance has never been, and never should be designed to be a hand out or entitlement. Car insurance coverage does not cover basic maintenance or consumables such gasoline, oil changes, wiper fluid, new tires or other commonly replaced parts or preventative maintenance items. If it did, auto insurance costs would quickly rise sky high. People pay cash for these items & shop for value with the best deals among willing sellers. Being responsible with your investment and shopping around saves money!
Why should health care be any different?
Next, what are some good free market health care payment tools?
First, consider Health Savings Accounts (HSA’s). These are tax-free savings accounts which can greatly reduce the cost of healthcare by making health care more consumer driven. Like purchasing a car or maintaining a car, this scenario encourages individuals to shop for the best health care value and savings.
For example, instead of paying $2,000 for an MRI at clinic A with a $500 insurance deductible and 80% of the balance covered by insurance (for a net out of pocket cost of $900 PLUS the monthly insurance premium which can easily be over $1,200 per month), you shop around and find you can pay $800 for the same service at clinic B, and you pay for it in cash out of your tax-exempt MSA. More consumers also would say no to some MRIs and other expensive (often unnecessary) diagnostics.
Second, another tremendous free market tool is the cash-based clinic concept allowing direct access to skilled health care practitioners (e.g. to a Doctor of Physical Therapy acting as a first contact practitioner.)
Because the cash-based clinic does not have to maintain expensive clerical staff and systems for the sole purpose of billing insurance companies (often receiving compensation that is LESS than their billing, and requiring waits of 30 to 90 days for payment) often this option can cost less than $100 a session for both effective evaluation and treatment, meaning individuals can get better and faster service while saving time & money!
Also, an individual in the 28% tax bracket (for example) paying $100 using funds drawn from their tax-exempt HSA to pay for their physical therapy treatment session, is actually saving an additional 28%, as paying $100 with after-tax money bears the additional burden of – in this case – $28 paid in income taxes on the money earned.
In other words, in order to have $100 to spend in our example, you actually have to earn $128! (And this does not take into account the additional payroll and state income taxes you are having withheld from every dollar you work for).
In addition, with a cash-based clinic practice, a patient can also have several areas worked on in one session (at a bundled rate) with NO insurance limitations or pre-authorizations being required. Now THAT’S value!
Third, for those desiring some sort of catastrophic insurance plan to guard against sudden expensive medical needs, another great additional free market innovation would be allowing insurance companies to compete across state lines.
This recent policy change now means that insurance companies outside of your state are able to compete for your business, driving down costs through competition. This means more insurance options resulting in much more competitive rates and value!
Finally, it’s becoming more obvious to consumers how both the health care and health insurance industries have been incredibly politicized, and how increasingly socialistic policies imposed by politicians and bureaucrats have failed them.
Government Solution – Or Problem?
Government too often is not the solution but the source of the problem! Given the chance to do so, the free market system WORKS, and is the key to innovation as well as to better and more affordable health care .
It CAN be done, and I believe it’s the healthiest path forward for America – and for you!