Health Insurance (a Health Issue)
The basic idea behind health insurance is the concept of shared risk. This dates to the Code of Hammurabi in the mid 1700’s BCE with its system of managed healthcare and then with the medieval guilds that supported members during sickness or death. The first national health system dates to 1883 Germany where it required compulsory sickness insurance for workers. The first early forms of health insurance date to the late 1800’s when mutual benefit societies and labor unions offered coverage.
The first modern health insurance plan was offered by Baylor University Hospital of Dallas in 1929. A prepaid plan offered to a group of local teachers provided 21 days of hospital care for a fixed monthly fee of $0.50. This concept spread where hospitals created Blue Cross plans for hospital coverage. Later in the 1930’s, physicians created Blue Shield plans to cover physician services.
The biggest driver of employer sponsored health insurance was the imposition of wage controls by the federal government during World War II. Since health insurance and other non-wage benefits were not subject to wage controls, employers started to offer these to compete for the scarce supply of workers. It also helped that the IRS made these benefits tax exempt. This led to a rapid increase in the number of people covered by health insurance. It went from only about 9% before the war to nearly 70% by 1960.
However, private health insurance remained unaffordable for the elderly and the poor. Therefore, a bill was signed into law in 1965 that amended the Social Security Act to create the Medicare program for those 65 and older and the Medicaid program for low-income individuals and families. In 2010, the Affordable Care Act was enacted to increase access, affordability, and quality by establishing marketplaces, expanding Medicaid, and prohibiting the denial of coverage for pre-existing conditions.
Nevertheless, health insurance is still unaffordable for many of us. Not only does private health insurance remain unaffordable, but so does much of the subsidized health insurance offered by big businesses and the government. Part of the answer to this would come with lowering the cost of medical care, which I discussed in the previous section. The other part of the answer comes from making some reforms in the way our health insurance is provided. I will discuss some ideas for this reform in the following subsections.
Most of us who work for a big company are likely to have access to subsidized health insurance provided as part of our company's benefits package. Of course, this coverage may be limited to just a few plans with a limited number of options. Those of us over 65 would have access to the government subsidized Medicare program. Those of us on welfare may have access to the government subsidized Medicaid program. Some of us can also get subsidized medical insurance under the Affordable Care Act. On the other hand, those of us who work in a small company, are self-employed, or are unemployed may not have access to any subsidized health insurance at all.
Several problems arise from this system. Those of us who need health coverage would find it hard to move from a big company or welfare to a small company or to self-employment. Some of us may even find it hard or impossible to move from one big company to another, because the new health insurance may not cover our preexisting conditions. We may also find that we cannot keep the same doctor, because our doctor may not be a provider under our new healthcare plan.
As I discussed in previous sections on labor and jobs, and I will talk about more in the next subsection, we need to eliminate having businesses and our government provide health insurance. For instance, businesses would pay their employees more so that they can pay for their own health insurance plan. This way, the employees can choose from far more insurance options and only pay for the level of coverage that they want and no more. With the lower costs for medical care, this should give these employees and the rest of us more affordable coverage. This also frees employees to change jobs without needing to change their insurance plan or doctor.
The first thing to do is to free us from being tied to the limited number of health insurance plans provided by our employers and the government. That is, employers and the government would be moved away from providing health insurance. Instead, we would get our own health insurance coverage directly from an insurance company or through an insurance agency that had plans from numerous insurance companies. With more plans to choose from we would be able to find a plan better tailored to our individual or family needs. The Web Sites set up under the Affordable Care Act, which allows some of us to select from different plans, are a step in this direction.
At first, many companies would still offer their own health insurance plans to their employees, but they would be required to include the option to subsidize an employee’s plan. In this case, the company’s subsidy would need to match what they would have spent had the employee gone with the company’s plan up to the actual cost of the employee’s health insurance but now paid to the employee’s health insurance provider. These subsidies could work something like direct deposit, with the money being sent directly to the employee's health insurance provider. The same would apply to the government’s Medicaid and Medicare plans, which would be like Medicare Part C.
In time, companies and the government would get out of the business of providing health care coverage. Some companies might replace the subsidies by simply increasing employee salaries, but other companies may wish to continue subsidizing the cost of their employee’s health coverage up to some dollar amount or up to some percentage of the employee's salary to help encourage their employees to stay healthy.
Of course, companies should not be able to save money by hiring individuals who do not want health insurance for some reason or who have very low-cost health insurance. Any money that would have gone towards subsidizing an employee’s health coverage, but did not, would go into a medical fund for research or to help medical institutions cover losses from individuals who do not pay their medical bills.
With this option, smaller companies that could not afford to provide health coverage themselves might now be able to subsidize at least a small portion of their employees’ health care coverage. Spouses who work for different companies and individuals who work for multiple companies could have part of their health insurance subsidized by each employer. Of course, controls would need to be in place to ensure that the subsidies did not add up to more than the cost of the insurance. Any excess would go the medial fund.
This would get employers and the government out of the business of providing health insurance and streamline and simplify the way in which we get health insurance. Companies could spin off their health insurance groups to form new independent health insurance agencies. Some of the smaller agencies might then merge so that they would be large enough to negotiate adequately with the insurance companies to get the best healthcare plans for their clients.
This change would fix or reduce many of our existing health insurance problems. It would open many more health care options for us and allow us to compare the benefits and costs of each plan more easily. It would allow us to easily move from company to company without losing our health coverage or being forced to switch doctors. In addition, those of us working for small companies or only part-time, who would not normally be covered might be able to get our employer to put some amount towards subsidizing our health insurance. If we wanted, we might even be able to keep our same health insurance from cradle to grave.
We also need to increase competition between insurance companies. One way to do this is to remove the restrictions that prevent health insurance companies from selling health insurance in multiple states and enact national health insurance standards. This would allow health insurance companies to compete in many different states or even nationally.
The increased competition would force health insurance companies to bring their costs down to stay competitive. If we were to move to another state where our health insurance company operates then we would have the option to keep our health insurance. In addition, if we could shop for health care treatment options in other states where our health insurance company operates, then that would help to force health care providers to control their costs.
Although having health insurance separated from employment will make changing jobs easier, there is still a problem with changing insurance companies. What do we do about any preexisting medical conditions that would not be covered by a new insurance plan? Forcing an insurance company to cover them would not work, since we might wait to get insurance until we needed it, or we might change to a new plan to get better coverage for our medical condition.
The way to handle this would be to have each condition be taken care of under the health insurance plan in effect at the time we developed the condition, even if we later dropped that plan or switched to a new one. If some new complication arises from the old condition, then it should be covered by the old plan. Otherwise, any new condition would be covered under the new plan.
We can compare this to the way auto insurance works. If we have an accident, the insurance we have at the time of the accident should cover it and not be covered by some new plan that we got after the accident.
To prevent disputes over who pays for what treatment, strict criteria would need to be used to determine if a medical problem is a complication of an existing condition to be taken care of under the old plan or a new condition that would be taken care of under the new plan. This might include having the new insurance plan cover all medical care but bill the old insurance company for costs associated with any preexisting conditions.
It seems like a lot of individuals want and expect their health insurance to cover all their medical needs and treatments, no matter what their level of coverage. As a result, this has limited the types of options provided by most health insurance plans. Therefore, in general, the big differences between plans lie in where you can get treated, the deductibles, the co-payments, and the percentages of costs covered. There are some additional differences in what is and what is not covered, but these are usually in those gray areas around optional treatments. (Although, there seems to be enough disagreement over what each plan covers that there are numerous challenges that are made when coverage is denied.)
With the current selection of health insurance plans, we do not have much choice. For the wealthy, even the best insurance is affordable, but they probably could afford most medical care even without insurance. For most of us, there is a financial or medical risk no matter what we do. One option is to get health insurance that we cannot really afford to pay for. Another option is for us to get insurance with high deductibles, high co-payments, and low percentages of costs covered. This option may be more affordable if we stay healthy, but it can leave us with a lot more expenses if we get sick. On the other hand, we have the option to go without health insurance altogether and hope that we do not get too sick.
Some of us may feel that any amount is worth the peace of mind provided by knowing that all our medical needs will be taken care of with whatever treatment is needed. On the other hand, some of us may want to have more money to spend on necessities such as housing, food, and clothes, and on enjoying our lives, so we may just want to have some good basic catastrophic health care coverage. In some cases, we may prefer to die rather than have our lives extended through expensive, intensive, or painful medical treatments. Since the potential cost of providing these levels of health care would be very different, we should all pay according to our own level of coverage.
In a free society, we should have the right to decide how to spend our money. We have different priorities when it comes to quality of life and what we want to do with our lives. In addition, we should have the right to balance our spending between the here and now and the future, and to decide how much risk we are willing to take.
Of course, this should also apply to health insurance, which means we should demand and be given more health insurance choices. We should be able to choose between how much we want to spend and what medical needs and treatments we want to have covered. Therefore, insurance companies should provide a full range of health insurance plans with a full range of coverage options, with detailed descriptions of what is and what is not covered.
For instance, a low-cost plan might only cover basic preventative and emergency care. With a moderate cost plan, cancer treatment might cover the surgery to remove the cancerous tissue, and some radiation or chemotherapy treatments, but not cover some other more expensive or experimental treatments. On the other hand, a high-cost plan might cover every possible procedure and medicine that exists or that comes along. With a very expensive top-of-the-line plan, a patient would have access to the best medical facilities and personnel and to every possible treatment that exists or comes along to care for whatever illness they might ever get. Of course, each health insurance plan would still have a full range of options for deductible, co-payment and percentage of costs covered.
As a result of these greater coverage options, we should all be able to afford at least some basic health coverage. In addition, insurance companies could better plan their potential expenses, since each plan would clearly state what is and what is not covered. For instance, new and often expensive medicines and procedures would not be covered unless explicitly stated in our plan. Therefore, insurance companies would not have to charge higher premiums to cover any new treatments that may or may not come along. We would then be given the option of whether to add any of these new treatment options to our plans or not, along with any associated higher premiums.
Of course, a simple and low-cost option for those of us who do not think we can afford insurance is to get a high-deductible plan. In most cases, these plans would cost a fraction of what a low deductible one would cost. With a plan with high deductibles, we would end up paying for most of our routine medical needs but would be covered in case of a major illness that could otherwise have bankrupted us.
Many current health insurance plans give premium discounts to individuals who have certain healthy living habits. The logic behind this is quite sound. On average, those of us working to keep ourselves healthy do not need as much medical care as others, so our health insurance companies would not need to pay out as much for us in medical bills. It only makes sense that the insurance company should pass along some of their savings in the form of discounts to those of us who have healthy lifestyles. Therefore, the restrictions that some states have that prevent these discounts should be removed.
There are many things that we can do to stay healthy such as not smoking, exercising regularly, drinking in moderation, eating a balanced diet, maintaining a healthy weight, having safe sex, staying away from illegal drugs, and refraining from other risky behavior.
The problem for insurance companies is ensuring that we are maintaining the healthy lifestyles for which we are getting a discount. Nevertheless, since it is in the best interest of the insured and the insurer for us to live a healthy lifestyle, insurance companies should give discounts for as many things as they can verify.
Healthy lifestyle verifications could be done during regular medical checkups or, if needed, during special verification exams. If we maintain the healthy lifestyle habits for which we are getting discounts, then we would continue to get these discounts on our health insurance premiums.
Another interesting idea would be to have insurance companies combine health, disability, and life insurance options into single insurance packages. For insurance companies, it would no longer be about minimizing the health care costs versus minimizing any litigation over denied coverage. Instead, insurance companies would want to ensure that they provided enough health care to keep an insured person healthy and alive long enough, so they would not have to pay out any extra disability or life insurance benefits.
Of course, we would have the right to choose the coverage levels that best fit our idea of our own worth, which could help determine how much health care coverage we get. However, by combining health, disability, and life insurance into a single plan we might stand a better chance of getting the best healthcare coverage we could get for our money.
Judicial Issues -
Introduction to the Judicial Issues affecting Our Future Path.
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