Friday, March 18, 2011

Insurance is the Wrong Model for Health Care

As the citizens and legislators of Vermont consider a plan to displace private insurers from the essential care component of the health care delivery, I wonder why they wouldn't be relieved to get out. After all, the purpose of insurance is to protect the customer from an event that is possible but not inevitable, is not likely, and is terribly inconvenient, giving the customer reason to avoid the event. To me, this does not describe essential health and medical services.

For us, the people of Vermont, the services of doctors, hospitals, physical therapists, mental health therapists, midwives, chiropractors and so on, are routine, necessary, and, if not desirable, amount to the desirable response to another, actually unwanted, "event". In fact, the growth in deductibles tells us that the insurance companies don't want this responsibility either, and are doing exactly what the insurance model predicts they would do: they are offering more and more plans with larger and yet larger deductibles. Here are some numbers:

Between 2003 and 2009, premiums in employer-based plans, depending on the plan type, increased in Vermont in a range from 32% to 54%. And as a percentage of median incomes, these premiums went from 15% to 17.4% for singles, and from 14.4% to 19.4% for families. That's a painful lot of money that is cutting a lot of people and businesses out of the market. But meanwhile, deductibles for employed singles increased two and a half times (+148%), and doubled (+112%) for families with employer based insurance (Commonwealth Fund, 2010). But the deductible is the cost zone where essential care occurs, and these plans are only helpful in the event of - I am repeating myself - the unlikely and undesirable. I think the insurance companies do not want to be in the essential care business.

Simply put, the insurance model is the wrong way to pay for health care. If I buy a shirt, the retailer is happy when I take my shirt with me, and is happier yet when I wear it out and want more shirts. In the insurance business, what I buy, the seller hopes I will never use. And as the chances of my unlikely event occurring increases, the insurance salesman wants less and less to sell me any thing. His (her) best customer is the one who needs that product least, or not at all!

The problem for Vermont is that even though the insurance market does not want to, and cannot, provide what the people of Vermont want and need (universal, reliable, affordable, accessible health care), they also don't want to get out of the way so that we, the people of Vermont can provide it for ourselves. Could the insurance industry please answer this question? Why are you resisting a public system to pay for essential health care? In 2003, 58% of insured Vermonters had a deductible. In 2009, 71% had a deductible. Do you really WANT this job?

Most Vermonters think it's about the money. But how much is the essential services sector really worth to you? Is your profit in the essential care sector really worth more than universally accessible, quality health care is to Vermonters?

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