Health Insurance isn’t the Cause of our Woes, it’s the Effect

Here is an article you must read. Its about a man whose father was killed by a hospital. And not a poor hospital in a rural area, but a New York City hospital. Although the man was elderly, he was still working when he entered the hospital.  And then, instead of getting better, he died. This led David Goldhill, the author, to ask:

How can a facility featuring state-of-the-art diagnostic equipment use less-sophisticated information technology than my local sushi bar? How can the ICU stress the importance of sterility when its trash is picked up once daily, and only after flowing onto the floor of a patient’s room? Considering the importance of a patient’s frame of mind to recovery, why are the rooms so cheerless and uncomfortable? In whose interest is the bizarre scheduling of hospital shifts, so that a five-week stay brings an endless string of new personnel assigned to a patient’s care? Why, in other words, has this technologically advanced hospital missed out on the revolution in quality control and customer service that has swept all other consumer-facing industries in the past two generations?

Like Karoli and me, Goldhill spent some time studying the system as it now works. And here’s what he concluded:

Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value. These are the impersonal forces, I’ve come to believe, that explain why things have gone so badly wrong in health care, producing the national dilemma of runaway costs and poorly covered millions

The entire system is incentivized to do more, rather than less. It is incentivized for sick people, not for healthy people.

health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy.

This is brilliant thinking that has not even entered the debate on reform. Listen to where Goldhill, who is a former investment banker and a businessman, goes from there:

health insurance is different from every other type of insurance. Health insurance is the primary payment mechanism not just for expenses that are unexpected and large, but for nearly all health-care expenses. We’ve become so used to health insurance that we don’t realize how absurd that is. We can’t imagine paying for gas with our auto-insurance policy, or for our electric bills with our homeowners insurance, but we all assume that our regular checkups and dental cleanings will be covered at least partially by insurance. Most pregnancies are planned, and deliveries are predictable many months in advance, yet they’re financed the same way we finance fixing a car after a wreck—through an insurance claim.

Comprehensive health insurance is such an ingrained element of our thinking, we forget that its rise to dominance is relatively recent. Modern group health insurance was introduced in 1929, and employer-based insurance began to blossom during World War II, when wage freezes prompted employers to expand other benefits as a way of attracting workers. Still, as late as 1954, only a minority of Americans had health insurance.

This article really caused me to think. As a child, I had no health insurance. My parents paid for their care out of pocket. Insurance was relatively new, and people DID save up money to have a baby. But gradually we were relieved of the responsibility for our own care, and look what we’ve become. We’re no better than a bunch of drug-addicted welfare mothers living off the dole, having child after child. We should be ashamed of ourselves. We don’t have the right to bitch about the insurance companies; we have invited them into our lives.