Tuesday, September 25, 2007

Health Insurance

Here's one for you to ponder. John Stossel has some interesting thoughts about health insurance, at Townhall.com. What he has to say runs contrary to currently popular political speech on both sides of the aisle, which bemoans the under-insured state of many Americans. Stossel suggests instead that Americans have way too much insurance, rather than too little. That's something of a counter-intuitive statement, given the discussion that's going on in political circles these days about how to get more coverage for more people, but I tend to agree with him, based upon my own experience and that of my family.

I'll give you a few examples. Several of my close relatives have to provide their own insurance, for various reasons. Being farmers. my in-laws have no employer to provide it as a perk, so they have opted for the most cost-effective option available to them. They have very high deductible insurance. They pay for routine medical out-of-pocket, and save the insurance for the big-ticket medicine, saving them money on premiums, but still ensuring that they don't lose the farm (literally) over catastrophic illness or accident. They decide for themselves what doctor to see, and how often, and whether a given medical procedure is worth their hard-earned money. They may have to plan a bit to make sure they have the money available when it comes time to go to the eye doctor, but the big stuff is covered and they're not paying through the nose for the monthly premium.

My sister's family, on the other hand, pays for HMO-type insurance (Kaiser), which supposedly covers every scratch. When they can get in, that is. This costs them a staggering amount of money monthly, and also has the disadvantage of putting their medical choices in the hands of a very inefficient bureaucracy. Not only does the HMO chose for them which medical treatment is covered, but because the system is in many ways unaccountable, important decisions get lost in the system. My sister was once diagnosed with a serious medical condition, and didn't receive proper treatment for eight years. The right hand didn't know what the left hand was doing. I grant you that this is anecdotal, but it still influences my opinion of insurer-makes-the-decisions healthcare. I can only imagine how much worse it would be if that insurer was the federal government. Can anyone say DMV?

My husband and I have a different, and much better, situation than my sister. Our insurance, although employer-provided, shares some of the better aspects of his parent's self-insurance arrangement. Ked's office went the HSA (health savings account) route a couple of years ago, and we love how the whole thing works. Instead of low-deductible, high-cost insurance, we now have high-deductible, low-cost insurance. You may be asking, "What's to love about a high deductible? Doesn't that mean you have to pay for more of your medical expenses yourself?" Well, that's where the HSA comes in. Because the insurance company doesn't have to pay for the minor and routine medical stuff, Ked's boss saves money on insurance premiums. He passes those savings on to his employees. He deposits enough money to cover that high deductible into the HSAs, which are under employee control. We pay for routine medical out of that account, and--here's the good part--we get to keep what we don't spend, like it's in a retirement account. This gives us incentive not to run to the doctor for every sniffle, while still covering us for major health issues. We and our doctor decide what to spend the money on medically, and we get a retirement savings bump if we're frugal.

Stossel's article is quite interesting. He has some convincing things to say about how much is added to the cost of medicine in America simply because the insurance industry is so intimately involved with it. He also discusses how it came about that insurance got so interconnected with routine medical care in the first place, and whether the push for government intervention is a good idea. (Interestingly enough, he makes the case that government is responsible for the current state of affairs in the first place.) You may agree with his conclusions; you may not, but have a look.