Well OK, maybe not nuke, per se, but instead disintegrate, disband, or maybe hostile-takeover it and liquidate all of its assets, then put the proceeds toward funding something better to replace it. Why? Because it is the perfect example of a useless middleman that adds cost but no value to a system that is already complex enough without it.
Other than those who are employed by the industry or who otherwise directly profit from its existence, literally everyone else in the country (i.e. the other ~327 million of us) would be better off if it didn’t exist. It doesn’t even make much sense that it exists in the first place; insurance is supposed to be a contract you buy as a hedge against something terrible happening to you. You don’t expect the terrible thing to happen, but you want to make sure you aren’t financially ruined if it does. Think of car insurance, home insurance, and life insurance policies—you hope you don’t have to use them, but you need them if the worst happens.
This might apply to truly catastrophic health issues like dismemberment or cancer, but it certainly does not apply to the majority of the care that most of us seek on a regular basis. Annual checkups, blood work, fix-ups for sports injuries, and the wide variety of chronic but manageable issues we all experience as we age are not only a regular and expected occurrence, but one for which it makes sense to proactively seek care in order to avoid the consequences of letting a minor issue turn into a major one due to a lack of early intervention. In our current system, many if not most people actively avoid seeking care except in emergencies, due to the high cost, the frustration they experience with payment and billing, and the myriad other hoops they are required to jump thru in order to get any sort of treatment at all.
Do you see where I’m going here? If not, let’s try a little thought experiment. What if we were forced to purchase insurance for something else that we all need to do all the time, and that we expect to do throughout the remainder of our lives? Let’s use grocery shopping as our example since pretty much everyone can relate to that.
In our normal, market-based grocery shopping environment as it exists today, we are free to choose where we shop, we can see prices for different items clearly labeled in store and often online as well, and if we find a better price for bananas at ACME than at Kroger, we are perfectly within our rights to buy our bananas at ACME. We don’t need anyone’s permission to choose which store we shop at, we can switch whenever we want, and we know exactly how much we are going to pay for our items when we select them. We can even do research beforehand, by looking up prices online, in order to be more confident in our choice of store before we ever leave the house.
Now let’s apply the US health insurance model to our grocery shopping environment. Right off the bat, you now have to pay at least $300 a month (and for a family of four, that’s probably low) just for the right to buy groceries for yourself, your partner, and your 2.5 kids. Now you might think that this $300 simply represents a prepayment of your grocery bill, and that it will save you from having to remember to bring cash when you go to the store. But you’d be wrong. This payment goes to your Grocery Insurance CompanyTM and effectively vanishes from existence as far as you are concerned (in reality, it vanishes into the company’s pocket, but that doesn’t help you either). Maybe you decide you’ll stock up in August to avoid having to buy groceries in September, but the joke’s on you because you’re still paying that $300 in September, even if you don’t set foot in a grocery store all month. You’re stuck giving away your hard-earned money to a giant corporation for no reason. That would suck wouldn’t it?
So, your $300/month gets you nothing except the right to enter the store. That’s pretty awful, but it gets so much worse. Because when you do decide to go get some groceries, you can’t go to the Safeway that’s 2 miles from your house because it’s not in your insurance company’s network. Nope, you get to go to the Food Lion 17 miles away, because that’s your insurer’s preferred provider. So that costs you an extra half hour in driving time each way, along with another handful of dollars in extra gas.
But surely, having schlepped the extra distance to shop at the preferred provider, you’re in for a really first-class grocery experience right? Ha! No, no you are not. This is where the real pain begins. Because once you get inside the store and grab a cart, you notice something peculiar about this store: nothing has a price on it! How much do bananas cost per pound? Who knows? Not you! You wander through the store selecting the items you need, unsure of what you’ll end up paying but committed to at least getting the essentials, since you drove all this way after all and you need food to stay alive.
While wandering the aisles and picking out your items, you spot an employee and ask them if they can give you a price list or something. They chuckle, shake their head, and walk right past you, muttering something about calling your insurance company for a pre-approval for those frozen pizzas you have in your cart there.
Are we having fun yet? Sounds ominous, doesn’t it? But anyway, moving right along to the checkout line…
As you nervously wheel your cart up to the register, you’re surprised to see that the cashier has a clipboard with a sheaf of papers on it for you. She informs you that, in order to purchase your groceries, you must first fill out each of these forms in duplicate, provide your insurance card and photo ID so she can make a copy of them, and wait while she checks with your Grocery Insurance CompanyTM about which food products you are covered for. Only then will you be eligible to pay some as-yet undetermined sum for your modest collection of foodstuffs. You have a seat in the uncomfortable waiting room chairs off to the left until you are called back up to the counter 15 minutes later, your frozen pizzas sweating in the room temperature environment all the while.
On the bright side, you’re pleased to find out that most of what you have in your cart is covered in some way by your plan. Now, this doesn’t mean it will all be free of course. You’ll still have to pay a co-pay for this trip to the store, and then you’ll have to meet a deductible on all the items that aren’t considered strictly “essential” by your insurance company.
First you fork over the $50 co-pay, and then you get to the fun part. Milk, bread, eggs, bananas, and cereal qualify as preventative, so they’re “free” and the $15 the cashier just rung up on the register disappears. You smile to yourself and think maybe this isn’t such a bad deal after all—you just got some free food! (But no, actually you didn’t, because remember that $300 premium you paid earlier and the $50 co-pay you paid 10 seconds ago? You’re still $335 in the hole there champ…plus the extra gas money you spent to get to this far-flung store, let’s not forget that).
Next up are the “elective” items: the yogurt, cheese, strawberries, sour cream, soda, and tortillas you selected are not considered a necessity by your insurance company, so they’ll be covered at 75% because you’re shopping in-network, but only after you’ve met your $3,000 annual deductible. So, you’ll be paying full price today (and probably next time, and the time after that, and so on). Add $22 to your bill. Why are the bananas preventative and the strawberries not? Lol, you’re not really getting the point here yet are you…
Now, you might be thinking that I forgot all about those half-thawed pizzas. Lucky for you, I did not. You glance anxiously at the beads of condensation glistening on your semi-frozen pizzas, and note with no small amount of apprehension the distinctly un-preventative nature of the other items remaining in your cart. Cake mix for your daughter’s birthday, frosting and candles for the same, vitamin supplements because you’re running low, and a bar of dark chocolate because, hey, after all this effort and expense to put food on the table for your family, you deserve a little treat right?
No. No you do not. Why would your insurance company cover something YOU want when they can instead just keep your money and spend it on something THEY want, like an executive bonus or a share buyback? Not only are the cake components, vitamins, and chocolate bar not covered, but because they are not on your insurer’s list of approved products, they won’t even count toward your deductible. Hahaha! Fuck you! Add another $19 to your bill for the day.
Now at this point, you think pretty hard about just putting the pizzas back, especially given your earlier run-in with the head-shaking chuckler in the freezer aisle. But you are not some meek wilting flower, and you will not be cowed by the man (spoiler alert: yes you will). You wave off the cashier’s offer to simply restock the item for you, ignore the little tsk noise they make at your answer,and press on with your Quixotic pizza purchase.
It turns out that they’re a specialty item, so not only are they not preventative or elective, but without a pre-approval, you’re not allowed to buy them without signing a waiver stating that you understand you are personally responsible for any and all costs associated with them. In your exasperated state, you sign the waiver without really reading it and fork over another $12, wondering in the back of your head why they are making such a big deal about something that only costs 12 bucks. Well, you’re gonna find out later, but for now you can go on your way in comparatively blissful ignorance.
Before we get to the truly infuriating part of this analogy, let’s take a look at the scoreboard and see how you and your insurance company are both doing so far. We’ll throw the “provider” a.k.a. the grocery store into the table too, just for completeness.
Who’s benefiting here and who’s losing? Well, the Insurance company’s sitting pretty at plus $285, and the grocery store is also looking good at plus $118, but you’re hurting pretty bad there at minus $335.
And in reality that food you bought from the grocery store cost them something to acquire in the first place, so their net benefit would be much smaller than $118 (and grocery margins are notoriously small so in reality they’re probably only making 6 or 7 bucks on the whole transaction). But this is a simplified example so we’ll leave it how it is.
The takeaway here is that the grocery store acquired the food, then you paid the grocery store for that food, and so something of value changed hands in the transaction and you both benefited from it. The grocery store benefited by making money, and you benefited acquiring food to feed your family—market economics at its finest!
Guess who didn’t create any value here, and in fact only made the transaction more costly, time-consuming, and frustrating for everyone else, but is still reaping by far the greatest benefit? Ahhhhhhh now we’re catching on aren’t we…
Now, to close out our little scenario, we need to get to the bottom of the pizza problem. You might have thought you were free and clear after you paid your bill and enjoyed your tasty pizzas, but your Grocery Insurance CompanyTM has one more trick up its sleeve to screw you over and ruin your day (and maybe your week, your month, and your year, if they can manage it).
Fast forward 3 weeks and you receive a strange bill in the mail. It’s from your Grocery Insurance CompanyTM and it informs you that, after a thorough review of your policy, the $12 you paid for the pizzas was only a tiny fraction of their true cost. According to Grocery Insurance CompanyTM you are now on the hook for an additional $2,345, because the pizzas you chose were a) not covered, b) the name brand rather than the generic version, c) purchased without obtaining the proper pre-approval, and d) produced and provided by an out-of-network pizza company, even though they were sold at an in-network store (yep, this is a thing that actually happens quite a bit). You scoff at this preposterous amount and think that surely there must be some mistake. But 7 phone calls and 4 hours of your time later, you receive verbal and written confirmation that yes, in fact, this is the right amount, you do owe it, and it’s due in 30 days or you’ll be sent to collections.
You throw the bill in the trash and resign yourself to a ruined credit score, hundreds of annoying phone calls from a collection agency, and several years of sending every spare cent you have to this evil monster of a Grocery Insurance CompanyTM all because you were prevented from having the necessary information available to you when making your pizza purchase.
This is the reality of the US healthcare system. This is what we are all forced to deal with every time we seek care, even for something pretty routine like an Emergency Room trip for a child with a broken arm. And it’s not like this by accident. It has been deliberately designed, in the most obnoxiously complex and labyrinthine way possible, to cow you into submission and dissuade you from ever seeking care of any kind.
Because even though YOU pay your premium (and your employer pays an equal or greater amount that you don’t normally see), and YOU pay your copay, and YOU have to meet your deductible, any time your insurance company has to pay a claim (i.e. fulfill their supposed purpose in this whole mess) THEY lose (your) money.
Your well-being is an expense to them, and corporations are nothing if not great at minimizing what they consider to be unnecessary expenses. This is why they create all those tricks, traps, and thick tomes of policy documents that even industry experts with decades of experience often have difficulty parsing.
They have crowned themselves kings of care decisions, thereby removing that power from the people with whom it should rightfully reside (you and your doctor). They will only willingly allow you to receive the procedures and prescriptions that satisfy their cost optimization equations, and they intentionally make it expensive, exasperating, or downright impossible to obtain other treatment, even if it’s recommended by your doctor and necessary for your health.
The plain truth of the matter is that health insurance companies are parasites, sucking value from healthcare providers and patients alike, while providing nothing whatsoever in return. They are not a necessary component of an efficient market, but rather an unwanted interloper whose goals run directly counter to those of the patients and providers they are supposed to be serving.
Why is the system set up like this, you may ask? The simplest explanation I have been able to find is that health insurance companies are basically a relic of an earlier era when employers began offering health benefits to their workers as a way to increase their compensation during a period (WWII) when wage freezes prevented them from increasing cash pay.
And because it was inefficient for those thousands of employers to each manage their own different health plans, middlemen sprang up to take over and consolidate plans across companies and industries. At the time, this setup made at least some sense, since we lacked the national will and infrastructure to administer such a system at the federal level.
However, fast forward 75 years and we now find ourselves locked into this untenable, inexcusable situation that prioritizes insurance industry profits over quality of care, treatment outcomes, price efficiency in the market, and ease of use for healthcare providers and patients alike.
Nobody benefits from the existence of these massively inefficient corporations other than the executives that run them and the wealthy investors who own shares of their stock. Yes, their employees draw a salary, so that’s a current benefit to them, but surely their talents would be better spent doing a job that actually creates something of value in the economy, rather than wasted on obfuscating the process for getting the treatment we need and finding creative new ways to deny our prescription drug claims.
We already have a national health infrastructure in the form of Medicare and Medicaid, and these programs are able to provide equally good treatment outcomes at a far lower price point than any privately insured plan. An obvious solution here is to simply allow anyone and everyone to opt into one of these programs depending on their age, income, and needs for care.
For a fraction of the cost of the average monthly private insurance premium, every single American could be covered by these programs and receive the care they need faster and more cheaply than they currently do under their existing private plans. This would eliminate many of the administrative and financial burdens borne by patients and their employers alike, and would have the additional salutary effect of significantly increasing the purchasing and negotiating power of these already widespread and successful programs.
Are they perfect? No. Will everyone get exactly what they want, when they want it, at their preferred price? Also no. But that is simply the reality of any market for a scarce good; supply will rise or fall to meet demand, and products will be priced at whatever point the market will bear. Some regulation and control will be required in order to ensure that, for instance, life-saving care is provided to those who need it most while elective procedures like cosmetic surgeries will only be available to those who can afford them.
But again, that’s how a market works. What doesn’t work is our current system of deliberate price obfuscation and arbitrary treatment decisions being made by insurance company bureaucrats rather than health care professionals.
This is why every other advanced nation has declared healthcare a human right and created a national system to manage and fund it. Yes, some do have an ancillary private insurance industry that offers premium plans to those who wish to secure extra coverage above and beyond what is provided to all citizens, but for them, participation in these plans is a choice. For most of us, it is a requirement. Even if we wanted to opt into our national programs, we can’t. And even if we just wanted to skip the insurance game and pay our own way on an as-needed basis, we can’t do that either, because the uneasy alliance between insurance companies and healthcare providers simultaneously keeps prices secret from patients and drives the cost of even basic treatment into the stratosphere.
It is a broken, inefficient, and unfair system that results in higher costs and worse outcomes than most other developed nations. And it does not have to be this way. So let’s consign these fossilized leeches to the ash heap of history and move forward with a better, more equitable approach that costs less, helps more, and delivers better treatment outcomes for everyone, rather than just for those at the very top of the economic food chain.
