People get annoyed at insurers who will deny treatment but most of the time you can just pay it yourself. The government has decided that everyone should pay for health insurance but you'll never be denied care if you pay for it yourself.
So if you think you do require some care, just ask the medical practice whether they accept self-pay and then you can decide if it's worth paying or not. If you think it's not, it's unlikely someone else will if they have to pay on your behalf.
Essentially, place yourself in the role of each participant:
- patient: wants to maximize care, money no object since it isn't theirs
- medical practice: wants to maximize money spent on care
- insurer: wants to minimize money spent on care
Normally, the first two would be happy to collude to charge the third any amount of money since they'd both get what they want. And that is indeed what happens. So you get the natural result that the insurer doesn't want to support certain payments even if they were kind and pure-hearted. That they don't want to when they're neither should then not be a surprise.
You can remove that pressure by turning the interaction into:
- patient: wants to maximize care with minimized cost
- practice: wants to minimize care with maximized cost
The pressures between the two parties are now opposite and you can find the market equilibrium. With this opposition you'll suddenly find that patients start complaining about doctors ordering unnecessary procedures and so on, just like insurers claim in the other model.
You can also work through with the other versions to model where equilibrium will set in and see if it's where it does. Most of the time you don't need to assume any moral valence for the participants. They might as well be machines. It is their roles that determine how they act, not their personalities.
>So if you think you do require some care, just ask the medical practice whether they accept self-pay and then you can decide if it's worth paying or not. If you think it's not, it's unlikely someone else will if they have to pay on your behalf.
Ok, hear me out for a minute.
What if I wanted to pool with several people, so that if any of us had unexpected medical needs, it wouldn't bankrupt any of us. Knowing that most of us would not need it.
And then, since we're all on the hook for each other's general health, we also agreed to share the cost of preventative care, because it was literally cheaper for us to all pay for preventative care than to try to just solo it and then hit the group with the cost of terminal cancer care instead of catching it early and doing a small excision. (and other such examples.)
And then what if we made the pool HUGE, to even further spread out the costs?
Sure wish there was a system that just did that, without trying to also generate insane profits off it.
> Sure wish there was a system that just did that, without trying to also generate insane profits off it.
Health insurance companies in the US must pay 80% of premiums to providers. All their overhead (e.g. their accountants and actuaries and so on) comes out of the remaining 20%. What's left is their profit. People have this fantasy that all the money we spend on healthcare is secretly going to greedy insurance companies while doctors struggle to get by. But insurance company profits are a drop in the bucket.
The real villains are the doctors who recommend expensive MRIs and act like it's a complete surprise that the bill they give you is so high. And then go lobby the government to limit their competition. I would love to have a doctor in france look over my radiology and tell me if I have cancer. But that's illegal, I need to hire an American. Coincidentally, the average radiologist in San Francisco makes $660,000/year (about $400/hour).
It's almost as if, then, providers know they can push their rates up, and reimbursement rates go up, since all that means is that premiums go up. And by a stunning coincidence, how much that 20% is goes up.
And then they buy/create PBMs which aren't covered by those limitations, and then force their customers into using them. "Oh, you want a convenient 90 day refill? Sure. If you go through our wholly-owned mail order pharmacy. From your pharmacy? No. You can keep going there every 30 days for your meds."
Their overhead (e.g. their accountants and actuaries and so on) spend a lot of time inserting paperwork and delays in between hospitals and patients, fighting hospital invoices and fighting patient claims, doing marketing, and any profit the insurance company makes is money customers "spent on healthcare" which didn't end up being spent on anyone's healthcare.
> "Health insurance companies in the US must pay 80% of premiums to providers."
How was that figure decided upon, and why isn't it higher? Why isn't it "pay overheads and salaries, and return the rest to the customers"?
The benefits of allowing people to make money by starting businesses are a separate discussion. I only meant to say that insurance companies are already legally prohibited from making "insane profits".
But to answer your question, there are many people looking to invest their time and money into profitable enterprises. Because insurance is a good that is very beneficial for society, we want people to invest in making it a thing. Therefore, we set up a system where the people who invested in its creation get a tiny fraction of the benefit it generates. There are many areas of life where this works great, like providing food and shelter, and I guess it wasn't obvious that insurance would be an exception for some reason.
The actual minimum medical loss ratio is 85% for most large health plans. In practice most of the large payers are at a higher ratio due to competitive pressures. As to how that figure was decided upon, when Congress passed the Affordable Care Act (Obamacare) they just picked a number that seemed reasonable — it wasn't based on a quantitative economic analysis or anything like that.
Yes, you can do that. HealthPartners[0] is such a consumer-governed non-profit. It is entirely opt-in. It is not illegal in America to do that and, as you can see, others have done that.
In HealthPartners' case, they do deny claims despite having the structure you mentioned. I think if you wanted to run such a pooled insurance company that advertised that it would pay any and all claims made to it and would deny precisely zero claims, you could and you would find it very easy to onboard both patients and providers to it, at least so long as its fund was solvent.
There's nothing stopping you from starting your own non-profit health insurance company. If greedy health insurance companies are really the root of the problem, you should be able to out-compete them fairly easily.
You are correct that health insurance companies aren't the problem here. But there are a lot of things stopping you from starting your own non-profit health insurance company. Medical insurance is heavily regulated at the state and federal levels. Launching a new one takes years of work just to get through the paperwork and legal compliance issues.
That assumes the humans will do their best to take care of themselves but given the ability they will be bailed out, they let their health go knowing they don't need to actively take care of themselves.
There are two differently behaving conforming things in reality of these I think. Both Medicare and the UK/CA NHS in my knowledge conform to your description.
In Medicare, this incentivizes maximizing patients on 'recurring revenue procedures' like dialysis.
In the UK NHS (which I know better), it leads to the government denying certain kinds of care depending on the Adjusted QALYs / pound spent that the intervention will provide.
TANSTAAFL after all, but yes, perhaps the interesting thing about the government being in that model is that patients can control government in a way that they cannot control insurance companies (i.e. they're not strictly oppositional) and consequently when the insurer is the government you get spend-bias in the direction of who has government power. In the US, that turns out to be old people. Additionally, governments have non-health-related sources of revenue so a government health plan can be used as a redistribution mechanism.
But I think it leads to these outcomes predictably with a splitter placed on how much control the government exerts over the practice and how much control the patients exert on the government.
> but you'll never be denied care if you pay for it yourself.
If you can pay. You're still required to have insurance anyways. Which is a regressive tax and harms the people most in need of these services. It's a cruel joke.
Those living paycheck to paycheck are screaming at you right now.
The problem is that patients are usually not in a position to determine if the care the doctor says is needed is really needed or not. This is the same as taking your out-of-warranty car to the mechanic. How do you know if the mechanic is telling the truth?
Still, this would be better than the current system. Even when you don't know if the doctor is telling the truth you can go by their reputation for telling the truth. Reputations will matter more, and doctors will care about maintaining their reputations in their community.
Reputation is pretty much worthless. Patient reviews are largely based on how nice the doctor seems (bedside manner) and have no correlation with actual clinical outcomes.
The ones who can't afford it (<200% federal poverty level) are covered in Texas. Friend who gave birth in Austin, TX talked to other mothers in the ward and one was having her second under that. There's lots of programs that cover this. Abortion should be legal, yes, but you won't be out that amount if you don't make enough.
System seems fine, though I think I'd prefer if we completely subsidized childbirth and 12 months after for all (because those are people who will keep us solvent in the future).
So if you think you do require some care, just ask the medical practice whether they accept self-pay and then you can decide if it's worth paying or not. If you think it's not, it's unlikely someone else will if they have to pay on your behalf.
Essentially, place yourself in the role of each participant:
- patient: wants to maximize care, money no object since it isn't theirs
- medical practice: wants to maximize money spent on care
- insurer: wants to minimize money spent on care
Normally, the first two would be happy to collude to charge the third any amount of money since they'd both get what they want. And that is indeed what happens. So you get the natural result that the insurer doesn't want to support certain payments even if they were kind and pure-hearted. That they don't want to when they're neither should then not be a surprise.
You can remove that pressure by turning the interaction into:
- patient: wants to maximize care with minimized cost
- practice: wants to minimize care with maximized cost
The pressures between the two parties are now opposite and you can find the market equilibrium. With this opposition you'll suddenly find that patients start complaining about doctors ordering unnecessary procedures and so on, just like insurers claim in the other model.
You can also work through with the other versions to model where equilibrium will set in and see if it's where it does. Most of the time you don't need to assume any moral valence for the participants. They might as well be machines. It is their roles that determine how they act, not their personalities.