Words are just words, and yet they are very, very powerful, because they shape the way you look at the world.
I contend that much of the challenge we face with health care in the United States results from a basic misapprehension that most of us never stop to think about: We keep talking about “health insurance.” Whatever it is, it isn’t insurance, at least not in any sense that most of us would recognize.
Think about the other kinds of insurance you have in your life.
You pay for life insurance, hoping to not use it for a long, long time. Therefore, it’s relatively inexpensive (at least, term life insurance, which is pure insurance with no investment vehicle) because its use is very rare.
You pay for car insurance, hoping to hardly ever use it, except in rare, almost catastrophic circumstances.
If you wanted your car insurance to pay every time you changed windshield wipers, changed your oil, bought new tires, you know it would cost a lot more, right? in fact, it really would no longer be insurance at all. It would just be a way of making regular payments toward maintenance activities you would normally do anyway.
Since it would be a certainty you would use it, you would just be using a third party to pay to providers. That would lead to higher costs for a couple of reasons.
For one thing, all the people at the “insurance” company would need to get paid on the way from you to the provider, so that will add expense.
Plus, when you take your car to be worked on, you will only “see” the deductible or the co-pay. You don’t see the actual final cost–only the third-party payer will see that. Sure, you can see it if you ask for it, but most people won’t.
The third-party payer will make a profit because there will be plenty of people who go longer between oil changes than they should, or who don’t change their windshield wipers. But they’ll build their premiums based on the likelihood that people will use those services.
If your employers picks up part of the premium (because making sure your car can get you to work is in the employer’s interests), you’re even more insulated from the true full cost of taking care of your car.
You can see this at work in one of the few areas of health care that doesn’t involve insurance. According to the National Center for Policy Analysis, the cost of plastic surgery has actually fallen in the last 20 years (adjusted for inflation), even though demand has shot up.
When patients pay their own medical bills, they are conservative consumers. Economic studies and common sense confirm that people are less likely to be prudent, careful shoppers if someone else is picking up the tab.
I don’t know what we should call the system, and simply using a different label won’t fix the problem. But it could, perhaps, help people to notice what is actually going on. Perhaps we would at least recognize the third-party payer reality, which might change what we decide to do about it.
Think about it. How does your view of the world change depending on the way you label it?