Opposite of Obamacare – Part 2/4 – Separate Health Insurance from Health Maintenance.

This is part two of a four part series on the solution to replacing Obamacare. Remember that free enterprise works when the consumer makes a buying decision based on price and quality. Unfortunately Obamacare has taken the opposite approach. The result has been a disaster with rising prices and falling quality.

A major problem with free enterprise in health care, is health care products are “opaque.” No one without medical training can possibly understand the intricacies of treatment plans and what may be covered and what wont’ be. Insurance companies make this much worse by throwing everything together into a big pile, an no one knows (perhaps even the insurance companies!), what the components cost. Its not possible to shop on price and quality, we are offered only a “lump” of care we have to pay for.

We need transparency, and bundling is the enemy of transparency.

Let’s compare to your cable provider, bundling all 800 of those channels. You have to pay for all of the channels that you never watch, they will not allow you to pick and choose just what you want. The Spanish shopping channel and the Canadian weather channel are yours whether you want them or not. You have no idea the cost of the individual channels, perhaps if you could elect to pay only the channels you watch, you could get better service at a lower price.

Likewise, the trend for insurance companies is to throw everything in. Employers and group plans are like this, it makes their job easier. It also means a much higher gross profit.

Overhead for an insurance company is 40%, which means any expense the insurance company pays costs 40% more than if you paid it yourself. There is nothing sinister about this, it is not even a price gouging thing, this is just the cost of administration, plus a relatively small profit margin.

But let’s take a look at what we have.  There are two parts to the “bundled” health care plan:

First you have insurance, which takes care of things that are NOT likely to happen in an average year, like broken legs, cancer, etc.

Insurance has always been a vital service for business, communities and individuals.  It is a pooling of resources that ensures that for a reasonable cost, if they get hit by tragedy it doesn’t ruin everything they have worked for. 

While necessary, it does have a bit of a “socialist” nature to it, in that it separates the individual from the costs of services. Better to have as little going through insurance companies as is reasonable.

Also, let’s make sure insurance is really insurance and not some hybrid designed to make maximum profits for the insurance companies. Within any insurance pool, a certain number of tragedies are expected to happen. Why would you kick someone out of the insurance pool just because they met your expectations? 

Second, you have maintenance, which are expenses that have to be paid for no matter what. These might include checkups, flu shots and other standard things you need a general practitioner for. It might also include diabetes medicine, birth control, chronic skin conditions, etc.  These are not “risks,” these are known predictable expenses. 

In the case of a maintenance item, you have to pay them. If you go through the insurance company it is part of your premium. Through your insurance company you pay an extra 40%?

If you want to be able to shop for maintenance items based on price and quality, why not do a time payment plan directly with your doctor. 

As it currently stands, patients seem to judge their doctor based on his personality and the quality of the carpet in his waiting room. The patient has no concept of the cost of a visit, the insurance company pays the bill. The doctor has no reason to improve his efficiency and lower prices, since the patient is unwittingly paying ever increase prices through higher insurance rates.

But imagine having a 200,000 general practitioners competing for your business, attempting to make their service cheaper and higher quality so you will pick them over some other doctor. Imagine the doctor advertising service at a lower monthly rate, with shorter wait times, more accurate diagnoses.

The industry will figure out how to improve itself, given the right structure in the marketplace. This is what a free enterprise solution should be. Straightforward and easy to understand.

Opposite of Obamacare – Part 1/4 – Businesses Should Not Buy Health Care

Opposite of Obamacare – Part 2/4 – Separate Health Insurance from Health Maintenance.

Opposite of Obamacare – Part 3/4 – The Federal Government’s Role

Opposite of Obamacare – Part 4/4 – The X-Prize Strategy