04 Apr 2006
Is Insurance the Problem?

I spotted this article on the legalization of private health insurance in Quebec earlier this week, but it was the followup (as noted by James) that really got my attention: it seems as though nurses in the province are protesting this move, claiming it would drive up costs and overwhelm the public healthcare system that Canada "enjoys".

I put "enjoys" in quotes because, by all accounts, enjoyment is not an attribute of the Canadian (or British) or any other system of socialized medicine. The waits are long and tiresome, even for necessary procedures, and the cost is, well, hidden more effectively by being cloaked in government bureaucracy, but I can only assume that a goodly percentage of taxes in our northern neighbor go to pay for the system.

Not that I'm sure our system is any better. If you can afford health insurance here, it ain't too bad - for you. But the insurance companies are continually being nailed by providers with rate increases, whilst facing pressure from their consumers to keep the costs down. They're literally between the proverbial rock and the hard place: anything they do is going to be wrong by somebody.

I can give a good personal example of the above: when my eldest daughter was born in 1977 we had no insurance. My wife had exactly two prenatal visits, and no extensive testing. A mere five years later, at the birth of my last child, we had medical insurance, and my wife underwent three tests for venereal disease over the course of 9 months, each at a cost of over $200. One test I could see, but when queried, the doctors actually replied "Well, Mr. Haxton, we just need to be absolutely sure! And what's to worry - your insurance will cover it!". I complained to my insurance carrier - they were amazed to actually get a call from somebody asking them not to pay a claim, but they agreed with my assessment and denied the charges, which I also refused to pay. The doctor dropped the bill.

Another interesting side effect of our current system is that price breaks actually go to the insured, and not the uninsured. Thus, for example, as an uninsured patient I would be charged more for the same procedure than my insured neighbor, because insurance companies buy the services of providers in bulk, and get a corresponding "wholesale" price. The consequences for being uninsured are thus multiplied - if you can't afford the insurance, you probably can't afford the procedure at "retail" rates.

A second thing that few commentators note about the private health insurance system here is how much it resembles a socialized system: the consumer is completely divorced from the payment to the provider: there is little or no incentive on the part of the consumer to complain about costs, and little or no incentive on the part of the provider to control them - "... what's to worry - your insurance will cover it!"

I am becoming increasingly convinced that health insurance in any form, private or public, is the problem, and not the solution, to rising medical costs. Insurance was originally designed to spread the cost of risk among consumers - and risk implied something that might happen, not something that will happen. Thus automobile and fire, accident and homeowners insurance does not show the same degree of out of control cost spiraling that medical insurance does: not everybody's house will burn, nor will we all have an auto accident, but we will all eventually sicken and die.

Would we be better off (as a society) without any kind of health insurance? I'm starting to think maybe we would ... for starters, there would be few of us who could afford a $250,000 bypass operation, so either there'd be a massive number of unemployed cardiologists or the costs would come down. The market would have an incentive again to reduce costs: otherwise, it (the market) would cease to exist. Patients would have an incentive to question the bill carefully, and providers (mindful of being stiffed) would have a care to discuss costs and options more carefully with patients prior to procedures.

Not that I think this'll ever happen, mind you - but it is, I think, an interesting thought.

23:00 /Politics | 3 comments | permanent link