Sunday, December 06, 2009

Insurance is for Risk

Insurance is a guard against risk. Term life insurance is provision for your family in case you die young – an unlikely occurrence. Car insurance is coverage in case you get in an accident – which most people won’t. What we call health insurance is not insurance. It is a “benefit,” like a retirement plan. Our system originated when companies were competing for labor without breaking the salary cap laws.

We could have health insurance, an investment to pay large, unexpected expenses if they come up. There are a few plans that cover only catastrophic needs. These are not the kind provided by employers in our market today. Of course, if employers want to pay for preventive healthcare and common doctor’s visits, that is their competitive option. It shouldn’t be mandatory, any more than a salary cap should be mandatory.

Employers could also provide grocery coverage: the planned, necessary expense; for each employee and his family. The price of food would go up, and options would go down, and companies would do better to just pay well for their labor, letting the consumers determine the demand and value of food. Consumers are less extravagant, more cost-conscious, and diligent to hold providers accountable for their products and services.

What makes us think that paying rows of middle men for our health care payment system will result in saving money or improving care? Are these middle men doing something I couldn’t do myself? No – they’re distancing me from information about my options in health care and the shocking costs of some procedures.

My solution is this:
1. Do not require an employer to do anything for his employee that
does not concern his job: cover injuries caused by the job and keep work
environments safe.

2. Also eliminate what is essentially a tax break on the benefits
provided by employers. If wages are going to be taxed, so should the
health care benefits and retirement plans.

3. Do not require insurance companies to have a minimum amount of
coverage, nor any specifics. Instead, enforce contract law: openness of
the agreement being made and stiff penalties for either party dropping their end
of the bargain.

4. Do not require individuals to have health insurance of any
kind. If the problem is in collecting payment for emergency services
rendered to the poor, this needs to be addressed in a wider question of
bankruptcy laws and debt repayment. Leaving individuals to the option of
health insurance reduces the weight on the health care industry by discouraging
unnecessary doctor’s visits and encouraging preventative lifestyles.

5. Allow increased competition by revoking the state line
restrictions on insurance policy sales.

6. Reduce the cost to healthcare professionals by reforming the
system that allows doctors to be sued without probable cause. Our economy
and government is almost completely biased against businesses in favor of
consumers. The customer is not always right; sometimes the “customer” is
committing fraud.

To God be all glory.


MInTheGap said...

I guess I never thought about the origins of health insurance, but it certainly makes sense. It's like the laws that are being talked about now where they'll cap bonuses and salaries for Wall Street, so if Wall Street still wants to get top talent it'll find other ways to get these people.

I think that the current debate over "health insurance" is sleight of hand-- one set of goals are mentioned and yet a total other set of priorities are being positioned so as to solve the problem. However they don't come close and just make situations worse.

I like your list-- I would add (and you probably tangentially covered it) that "health insurance" should exist for individuals outside of employers. Employers could help pay for it (much like they do today), but it should be an individual thing.

I think that individuals will find the policy that fits them better than their employer could find.

Lisa of Longbourn said...

Yep, I'd say you got it. And I too believe that individual consumers are better at selecting their own health insurance - or if they aren't, deserve what they get. Maybe we'd see the field of health insurance brokers (to help individuals find the plan that is right for them) hugely increase, but that would be fine with me - as long as they're optional!

To God be all glory,
Lisa of Longbourn

MInTheGap said...

While it is true that there would be people that would stay with bad plans (there are people that do not research the right mutual funds, people that do not have savings accounts that provide the best interest rates, people who signed up for interest only home mortgages, etc...) and those that could manipulate people and the system, it does not warrant the level of government intrusion-- it just means that you have to be better at assigning those that do.

For instance, welfare was much better when managed by local communities who could see that people got back on their feet, rather than to stay on the government dole (though I know that through reform it is now very difficult to get on welfare).

Government, especially the federal government, is bad at providing solutions not simply because they are so big and bureaucratic, or even because we think that they're crooks, but because they are too far removed from the individual. Many situations cannot be resolved by a one-sized-fits-all solution (even one with multiple options) such that it, by necessity, should fall to "governments" closer to the individual if not the individual themselves.

Therefore, if there are people that couldn't make decisions about healthcare, it should fall to their families or the local government-- people that have a vested interest in the person's well being-- and not the federal government that is so far removed so as people are numbers.

Lisa of Longbourn said...

Strange how we expect our government to be made up of Renaissance men - they do everything: economics, defense, international relations, justice, energy, arts, social rehabilitation... Even if there are a few dedicated geniuses who can understand all of that - and problem solve - and propose creative new ideas, there's no way our whole government could be made up of such men. So why do we give them all those jobs?

Why are we as voters expected to have a position on all those subjects?

To God be all glory,
Lisa of Longbourn

MInTheGap said...

This leads me to two different thoughts--

1. Complexity-- we all know that it takes quite the person to be the President now because they have to be experts in multiple different fields. Whereas the President should be a person that's a decision maker, he's now supposed to be the philosopher/king that Plato talks about in his republic. It's no longer simply good enough to have a good decision-maker, statesman, with a heart for the country as President, he must be god-like.

2. Consensus-- Since the President must now have a position on everything from school lunches to x-ray scanners at airports, and since the majority of the people cannot agree on a lot of these things, it makes the person that we get for President at once all that more important and all that less likely to govern in a way to lead most of the people they way they want to be lead.

Lisa of Longbourn said...

True. So what do we call a form of government where the executive is required to be a god?

To God be all glory,
Lisa of Longbourn

MInTheGap said...

Would that be a theocracy? :)