Alice in Health Care - By Thomas Sowell
Most discussions of health care are like something out of Alice in Wonderland.
What is the biggest complaint about the current medical care situation? "It costs too much." Yet one looks in vain for anything in the pending legislation that will lower those costs.
One of the biggest reasons for higher medical costs is that somebody else is paying those costs, whether an insurance company or the government. What is the politicians' answer? To have more costs paid by insurance companies and the government.
Back when the "single payer" was the patient, people were more selective in what they spent their own money on. You went to a doctor when you had a broken leg but not necessarily every time you had the sniffles or a skin rash. But, when someone else is paying, that is when medical care gets over-used -- and bureaucratic rationing is then imposed, to replace self-rationing.
Money is just one of the costs of people seeking more medical care than they would if they were paying for it with their own money. Both waiting lines and waiting lists grow longer when people with sniffles and minor skin rashes take up the time of doctors, while people with cancer are waiting.
In country after country, the original estimates of government medical care costs almost always turn out to be gross under-estimates of what it ultimately turns out to cost.
Even when the estimates are done honestly, they are based on how much medical care people use when they are paying for it themselves. But having someone else pay for medical care virtually guarantees that a lot more of it will be used.
Nothing would lower costs more than having each patient pay those costs. And nothing is less likely to happen.
One of the big costs that have actually forced some hospitals to close is the federal mandate that hospitals treat everyone who comes to an emergency room, whether they pay or not. But those who talk about "bringing down the cost of medical care" are not about to repeal that mandate. Often they want to add more mandates.
The most fundamental issue is not whether treating everyone who comes to an emergency room is a good policy or a bad policy in itself. If it is a good policy, then the federal government should pay for what it wants done, not force other institutions to pay for it. Then let the voters decide at the next election whether that is what they want their tax money spent for.
Confusion between costs and prices add to the Alice in Wonderland sense of unreality.
What is called lowering the costs is simply refusing to pay all the costs, by having the government set lower prices, whether for doctors' fees, hospital reimbursements or other charges. Surely no one believes that there will be no repercussions from refusing to pay for what we want. Some doctors are already refusing to accept Medicare or Medicaid patients because the government's reimbursement levels are so low.
Similarly, if it costs a billion dollars to create one new pharmaceutical drug, then either we are going to pay the billion dollars or we are not going to keep on getting new pharmaceutical drugs produced. There is no free lunch.
Virtually everything that is proposed by those who are talking about bringing down the costs of medical care will in fact raise those costs. Mandates on insurance companies? Why are insurance companies not already doing those things that new mandates would require? Because those things raise costs by an amount that people are unwilling to pay to get those benefits.
If not, it would be a slam dunk for the insurance companies to add those benefits to the policies and raise the premiums to cover them. What politicians want to do is look good by imposing mandates, and then let the insurance companies look bad by raising the premiums to cover the additional costs.
It is a great political game, but it does nothing to lower medical costs.
Politicians who want a government monopoly on health insurance can easily get it, just by making it impossible for private insurance companies to charge enough to cover the costs mandated by politicians. The "public option" will then be the only option -- which is to say, we will no longer have any real option.
Copyright 2010, Creators Syndicate Inc.
Page Printed from: http://www.realclearpolitics.com/articles/2010/03/02/alice_in_health_care_104606.html at March 02, 2010 - 07:10:03 AM PST
Tuesday, March 2, 2010
Monday, March 1, 2010
Theory & Practice
I don't like discussing heathcare around my wife. This is because I tend to take very extreme positions during a healthcare debate just to test the limits of the logic. My wife thinks that I actually believe the extreme things that I say and am a nasty person. I'm not, but I understand why she might think that.
This weekend I was again expounding on the question of what are we entitled to when we say we are entitied to healthcare. I overstated the position by saying that doctors should have no obligation to treat. That was harsh. My friends pointed out that the Hippocratic Oath is a good thing and that the inherent mercy that doctors show in times of crisis is a wonderful thing. I could not agree more.
And, true, we do not want doctors asking a bleeding patient if they have health insurance before they administer first aid. No argument here.
As always with me, it is a matter of degrees.
After being treated in a crisis situation, the conversation should go something like this:
Doctor: "Hello Mr. Patient, I saved your life. The treatment was kinda expensive. Here is the bill. By the way, this is the competitive market cost to save you, not some inflated estimate for the insurance company." (I just had to get that in there).
Patient: "Thanks Doc! You're right that is expensive, but it was totally worth it. I am lucky to be alive."
Then,
Patient: "Thankfully, I have XYZ insurance for just such an unlikely but devestating situation. I will work with them to ensure you are paid." (Notice who has primary responsibility for paying).
Or:
Patient: "I don't have any insurance, but the fact is that if not for your efforts I would be dead. I will pay out out of my own pocket even if that means I have no money left. Because I can always earn more money, and I only have one life"
Or:
Patient: "I don't have any insurance and I am indigent. I cannot pay you."
To which the Doctor replies: "I understand. This hospital and the government have safety net programs to cover people in just your situation. You will have to complete some paperwork to confirm that you qualify for this program, but if you do your expenses are fully covered."
This weekend I was again expounding on the question of what are we entitled to when we say we are entitied to healthcare. I overstated the position by saying that doctors should have no obligation to treat. That was harsh. My friends pointed out that the Hippocratic Oath is a good thing and that the inherent mercy that doctors show in times of crisis is a wonderful thing. I could not agree more.
And, true, we do not want doctors asking a bleeding patient if they have health insurance before they administer first aid. No argument here.
As always with me, it is a matter of degrees.
After being treated in a crisis situation, the conversation should go something like this:
Doctor: "Hello Mr. Patient, I saved your life. The treatment was kinda expensive. Here is the bill. By the way, this is the competitive market cost to save you, not some inflated estimate for the insurance company." (I just had to get that in there).
Patient: "Thanks Doc! You're right that is expensive, but it was totally worth it. I am lucky to be alive."
Then,
Patient: "Thankfully, I have XYZ insurance for just such an unlikely but devestating situation. I will work with them to ensure you are paid." (Notice who has primary responsibility for paying).
Or:
Patient: "I don't have any insurance, but the fact is that if not for your efforts I would be dead. I will pay out out of my own pocket even if that means I have no money left. Because I can always earn more money, and I only have one life"
Or:
Patient: "I don't have any insurance and I am indigent. I cannot pay you."
To which the Doctor replies: "I understand. This hospital and the government have safety net programs to cover people in just your situation. You will have to complete some paperwork to confirm that you qualify for this program, but if you do your expenses are fully covered."
Monday, February 15, 2010
Exactly!
February 15, 2010 Why Washington Can't Reform Healthcare
By Bill Frezza
It's not for lack of will. It's not for lack of power. It's not even for lack of money. Washington can never effectively "reform" healthcare for one simple reason. The healthcare industry runs on fake prices.
On any given day each of us makes a diverse array of price decisions. On rare occasions, like buying a car or a house, we haggle. Most often we simply decide to buy this or maybe that or instead save for a rainy day.
We make these choices based on knowledge unique to our own situation. Should I replace that moth eaten sweater my girlfriend hates? If I splurge on steak tonight does that mean Ramen noodles tomorrow? You cannot answer questions like this for somebody else.
Every purchase decision is a vote. Add them up and hundreds of millions of votes are cast every day. Each is based on a balancing of desires, means, and personal knowledge possessed by no one but each buyer.
Our votes not only tell sellers what to make but when to ship how many where, what color they should be, and how much to charge. Sellers that get it right win our votes and thrive. Sellers that don't disappear. Every day is Election Day. There's no need to wait four years to throw bums out.
Business works the same way, only with more haggling. Prices and the information they communicate are the nervous system of any market. Complex supply chains sprout, evolve, and die as every player in the chain responds to the price signals he can see. These signals tell businesses how much to pay for inputs, what to charge for outputs, when to take risks, where to best innovate, and when it's time to take a hike. If any link in a supply chain consistently loses money the chain breaks and a new one forms. Or not, in the case of buggy whips.
When it comes to running an economy, votes in Congress mean nothing compared to the votes of consumers and producers. Replace the votes of hundreds of millions of buyers and sellers with the votes of a few hundred Congressmen and what do you get? You get our healthcare system - a market whose nervous system has been paralyzed.
Imagine the world's smartest food expert with access to the best culinary research trying to decide what the right price is for a ham sandwich. Once the price is set, that's it - selling a ham sandwich for more or less is against the law. Oh, and homeless people get free ham sandwiches. Refuse to serve them and you lose your deli license.
Laughable, isn't it? Just imagine the mess freezing prices would create up and down the supply chain that makes it possible for us to walk into a deli and order lunch.
Regulations would have to specify what qualifies as a proper ham sandwich. Inspectors, accountants and lawyers would have to be roped into service to monitor compliance. Activists would picket if paying customers got fresh sandwiches and the homeless got stale leftovers. Ham sandwiches would mysteriously disappear from menus whenever pork belly prices spike.
Are you still laughing? So why don't you laugh when some expert claims he can set the right price for a colonoscopy?
Healthcare prices are fake, inflexible, and inflated because they are set not by the repeated interactions of buyers and sellers but by opaque acts of collusion between government bureaucrats and special interests. Even if this system were run by a benevolent genius who happened to set prices exactly "right" - whatever that means - these prices would be obsolete the moment they were published.
This state of affairs has turned the healthcare industry into a staggering zombie. It took several decades for Medicare price setting to swamp the price signals required to keep the market in balance, but we have clearly passed the tipping point. Lacking these signals and the constant corrections they engender, 16% of our economy is flying blind.
Add insurance to the equation, particularly insurance that the public has been encouraged to think of as free stuff paid for by someone else, and the problem only gets worse.
Can't we fix these problems by fixing insurance regulations? Contrary to popular belief, insurance companies love regulation. Regulation eliminates both business risk and pesky competitors. "Reforming" the insurance industry is not going to eliminate pricing dysfunctions, although it may eliminate insurance companies.
Who cares, you say? Wouldn't we be better off using all those insurance industry profits to pay for healthcare? One small problem. If you took all the profits that all the health insurance companies made in 2009 and used them to pay for medical care in 2010 you would cover the country's medical bills for ... two days. Then what?
Even if there were complete bipartisan comity, it is not possible for Congress to "reform" a system whose fundamental price signaling mechanisms are thoroughly broken. Howling politicians can only run up the tab as they lurch from one crisis to the next.
Bill Frezza is a partner at Adams Capital Management, an early-stage venture capital firm. He can be reached at bill@vereverus.com. If you would like to subscribe to his weekly column, drop a note to publisher@vereverus.com.
http://www.realclearmarkets.com/articles/2010/02/15/why_washington_cant_reform_healthcare_97634.html
By Bill Frezza
It's not for lack of will. It's not for lack of power. It's not even for lack of money. Washington can never effectively "reform" healthcare for one simple reason. The healthcare industry runs on fake prices.
On any given day each of us makes a diverse array of price decisions. On rare occasions, like buying a car or a house, we haggle. Most often we simply decide to buy this or maybe that or instead save for a rainy day.
We make these choices based on knowledge unique to our own situation. Should I replace that moth eaten sweater my girlfriend hates? If I splurge on steak tonight does that mean Ramen noodles tomorrow? You cannot answer questions like this for somebody else.
Every purchase decision is a vote. Add them up and hundreds of millions of votes are cast every day. Each is based on a balancing of desires, means, and personal knowledge possessed by no one but each buyer.
Our votes not only tell sellers what to make but when to ship how many where, what color they should be, and how much to charge. Sellers that get it right win our votes and thrive. Sellers that don't disappear. Every day is Election Day. There's no need to wait four years to throw bums out.
Business works the same way, only with more haggling. Prices and the information they communicate are the nervous system of any market. Complex supply chains sprout, evolve, and die as every player in the chain responds to the price signals he can see. These signals tell businesses how much to pay for inputs, what to charge for outputs, when to take risks, where to best innovate, and when it's time to take a hike. If any link in a supply chain consistently loses money the chain breaks and a new one forms. Or not, in the case of buggy whips.
When it comes to running an economy, votes in Congress mean nothing compared to the votes of consumers and producers. Replace the votes of hundreds of millions of buyers and sellers with the votes of a few hundred Congressmen and what do you get? You get our healthcare system - a market whose nervous system has been paralyzed.
Imagine the world's smartest food expert with access to the best culinary research trying to decide what the right price is for a ham sandwich. Once the price is set, that's it - selling a ham sandwich for more or less is against the law. Oh, and homeless people get free ham sandwiches. Refuse to serve them and you lose your deli license.
Laughable, isn't it? Just imagine the mess freezing prices would create up and down the supply chain that makes it possible for us to walk into a deli and order lunch.
Regulations would have to specify what qualifies as a proper ham sandwich. Inspectors, accountants and lawyers would have to be roped into service to monitor compliance. Activists would picket if paying customers got fresh sandwiches and the homeless got stale leftovers. Ham sandwiches would mysteriously disappear from menus whenever pork belly prices spike.
Are you still laughing? So why don't you laugh when some expert claims he can set the right price for a colonoscopy?
Healthcare prices are fake, inflexible, and inflated because they are set not by the repeated interactions of buyers and sellers but by opaque acts of collusion between government bureaucrats and special interests. Even if this system were run by a benevolent genius who happened to set prices exactly "right" - whatever that means - these prices would be obsolete the moment they were published.
This state of affairs has turned the healthcare industry into a staggering zombie. It took several decades for Medicare price setting to swamp the price signals required to keep the market in balance, but we have clearly passed the tipping point. Lacking these signals and the constant corrections they engender, 16% of our economy is flying blind.
Add insurance to the equation, particularly insurance that the public has been encouraged to think of as free stuff paid for by someone else, and the problem only gets worse.
Can't we fix these problems by fixing insurance regulations? Contrary to popular belief, insurance companies love regulation. Regulation eliminates both business risk and pesky competitors. "Reforming" the insurance industry is not going to eliminate pricing dysfunctions, although it may eliminate insurance companies.
Who cares, you say? Wouldn't we be better off using all those insurance industry profits to pay for healthcare? One small problem. If you took all the profits that all the health insurance companies made in 2009 and used them to pay for medical care in 2010 you would cover the country's medical bills for ... two days. Then what?
Even if there were complete bipartisan comity, it is not possible for Congress to "reform" a system whose fundamental price signaling mechanisms are thoroughly broken. Howling politicians can only run up the tab as they lurch from one crisis to the next.
Bill Frezza is a partner at Adams Capital Management, an early-stage venture capital firm. He can be reached at bill@vereverus.com. If you would like to subscribe to his weekly column, drop a note to publisher@vereverus.com.
http://www.realclearmarkets.com/articles/2010/02/15/why_washington_cant_reform_healthcare_97634.html
Free Rider Problem
A story on NPR this morning dicussed provision in the Health Care legislation that would require individuals to buy health insurance. They said that not requiring insurance would bring up the 'free rider' problem in which, according to the news story, some people would not buy insurance knowing that, if they got in an accident or had a serious illness, they would be taken care of in any case and the cost of their care would be paid by those who had bought insurance through higher premiums.
Stupid question: When did it become the default assumption that the expenses of people who don't buy health insurance should be borne by those who do?
Let's take that assumption out of the scenario above. Now, if I get in a major accident I get taken to a hospital who saves my life. They then present the bill to me for services rendered. If I have insurance, it kicks in at this point. If I don't have insurance, then I must pay those bills myself. If I run out of money (not just what's in my bank account, but maxing out my credit cards, emptying my 401(k), and mortaging my house to the hilt) to pay those bills, I can apply for state aid at that point.
This may seem a cold and cruel scenario, but guess what: The risk of that kind of loss would incentivize me to buy insurance voluntarily. And wasn't that really the best idea in the first place. See? No government mandate required.
Stupid question: When did it become the default assumption that the expenses of people who don't buy health insurance should be borne by those who do?
Let's take that assumption out of the scenario above. Now, if I get in a major accident I get taken to a hospital who saves my life. They then present the bill to me for services rendered. If I have insurance, it kicks in at this point. If I don't have insurance, then I must pay those bills myself. If I run out of money (not just what's in my bank account, but maxing out my credit cards, emptying my 401(k), and mortaging my house to the hilt) to pay those bills, I can apply for state aid at that point.
This may seem a cold and cruel scenario, but guess what: The risk of that kind of loss would incentivize me to buy insurance voluntarily. And wasn't that really the best idea in the first place. See? No government mandate required.
Friday, January 29, 2010
Do I Have Health Insurance?
Until recently, I thought that the healthcare expenses taken out of my paycheck were combined with my employers contribution to buy insurance from a third-party insurance company.That is not the case.
Like many companies, my employer self-insures. This means that the company actually pays the cost of my care but they enlist a third-party to manage the process.
Using round numbers: I pay $100/month for health care. My company contributes $300/month for my health care. That's roughly $10,000/year combined. If there are 20,000 people in my company, that means that the company and its employees allot $200MM for the medical care of its employees. Over the years, the company has been able to estimate that it needs about $200MM per year to cover its employees care and pay to administer the plan and payments.
A portion of that money also goes to buy actual insurance, but not 'health insurance' per se. Instead, my company buys a policy that protects them from the risk that any given year's ACTUAL spend exceeds $200MM. Think for example of a company building fire, where suddenly a large percentage of employees require unusually expensive care at the same time.
Now, I work in a relatively safe company compared to other industries like coal mining or deep sea drilling. Firms like that can be virtually guaranteed to have higher medical costs per person than our company. Given that, why would my company want to buy insurance from a company that covers these other companies as well? Such coverage is almost certain to be more expensive than my company's current approach because of the risk sharing involved.
In later blogs I'll extend this analogy to ask why I, as a relatively healthy and health aware person, would want to be a part of a pool of people who are less healthy or at a greater risk of needing medical care.
Like many companies, my employer self-insures. This means that the company actually pays the cost of my care but they enlist a third-party to manage the process.
Using round numbers: I pay $100/month for health care. My company contributes $300/month for my health care. That's roughly $10,000/year combined. If there are 20,000 people in my company, that means that the company and its employees allot $200MM for the medical care of its employees. Over the years, the company has been able to estimate that it needs about $200MM per year to cover its employees care and pay to administer the plan and payments.
A portion of that money also goes to buy actual insurance, but not 'health insurance' per se. Instead, my company buys a policy that protects them from the risk that any given year's ACTUAL spend exceeds $200MM. Think for example of a company building fire, where suddenly a large percentage of employees require unusually expensive care at the same time.
Now, I work in a relatively safe company compared to other industries like coal mining or deep sea drilling. Firms like that can be virtually guaranteed to have higher medical costs per person than our company. Given that, why would my company want to buy insurance from a company that covers these other companies as well? Such coverage is almost certain to be more expensive than my company's current approach because of the risk sharing involved.
In later blogs I'll extend this analogy to ask why I, as a relatively healthy and health aware person, would want to be a part of a pool of people who are less healthy or at a greater risk of needing medical care.
Thursday, January 28, 2010
What Do We Have A Right To?
I agree with the statement that people have a 'right' to quality, affordable health care. But once you get past the good feeling that statement engenders, you have to consider the question: What does it mean? What exactly do we have a right to? Quality compared to what? Affordable to whom?
Most reasonable people would agree that there have to be logical limits to this statement. But where?
Starting with an absurd example: There is a medical procedure that will keep someone alive for one more day and it costs $1MM dollars. They don't have $1MM. Do they have the right to expect that someone else (i.e. the rest of the USA via the US Government) will pay for that? Even in this extreme example, I would not want to be the person who says 'no' to that person. Would that everyone could have everything. But of course we can't.
What about $100,000 for an extra month of life? $10,000 for a year?
I'd be willing to pay $10,000 of my own money for an extra year of life. But, again, if I couldn't afford it, do I have the right to expect someone else to pay for my extra year of life?
Whichever entity (insurance companies, government) that we expect to subsidize care that we cannot otherwise afford on our own will have to establish limits to what they will and will not cover and at what price. As heartless as that may sound, there is no alternative since insuring everyone for everything is clearly not a realistic option.
In conclusion, one could say that we have an absolute right to any healthcare that we can pay for ourselves. But if some third party is going to paying for our healthcare, there will inevitably be some limit to what care we will receive. So, make sure that whichever third party you choose to assist you with your healthcare expenses mission is in line with your own values and care objectives.
Watch for future posts about rich vs. poor and 'fairness'.
Most reasonable people would agree that there have to be logical limits to this statement. But where?
Starting with an absurd example: There is a medical procedure that will keep someone alive for one more day and it costs $1MM dollars. They don't have $1MM. Do they have the right to expect that someone else (i.e. the rest of the USA via the US Government) will pay for that? Even in this extreme example, I would not want to be the person who says 'no' to that person. Would that everyone could have everything. But of course we can't.
What about $100,000 for an extra month of life? $10,000 for a year?
I'd be willing to pay $10,000 of my own money for an extra year of life. But, again, if I couldn't afford it, do I have the right to expect someone else to pay for my extra year of life?
Whichever entity (insurance companies, government) that we expect to subsidize care that we cannot otherwise afford on our own will have to establish limits to what they will and will not cover and at what price. As heartless as that may sound, there is no alternative since insuring everyone for everything is clearly not a realistic option.
In conclusion, one could say that we have an absolute right to any healthcare that we can pay for ourselves. But if some third party is going to paying for our healthcare, there will inevitably be some limit to what care we will receive. So, make sure that whichever third party you choose to assist you with your healthcare expenses mission is in line with your own values and care objectives.
Watch for future posts about rich vs. poor and 'fairness'.
Insurance Does Not Equal Health Care
First, we need to separate the question of how much we pay for healthcare from the question of who pays for health care.
In its most basic form, insurance allows individuals to pay a little to protect themselves from something that will cost them alot but has a low probability of occuring.
For example: In my hypothetical, greatly simplifed world, I pay about $1,000 per year to insure my car. If something catastrophic happened to my car, I would expect that to cost $20,000 that would be covered by my insurance. If I had to pay $20,000 out of pocket, that would be a hardship for me. So, I am willing to pay the $1,000 each year to avoid that potential hardship. Insurance 'saves' me money if I have to make a major claim.
Insurance companies can do this because they have lots of people paying them $1,000 a year. They pool our risk. If 20 people buy insurance each year and one person in that group has a $20,000 accident each year, then the insurance company breaks even.
Of course, basic auto insurance doesn't cover every automotive expense. Oil changes, new tires, car washes, etc. I pay those expenses myself. But becuase an oil change is only about $30, that's not a hardship for most people the way a $20,000 accident would be.
What if insurance covered oil changes - one $30 oil change per person per year? The insurance company would expect to have to pay out $600 per year ($30 x 20 people). How much would they charge their customers for this oil change insurance? At least $30, of course.
And because the insurance company has pay an employee to handle the paperwork, and buy them a computer to track the paperwork, and heat/cool the office in which they work, the company would have to charge their customers more like $32.
Why would you pay an insurance company $32 to insure yourself against an expected $30 oil change? That doesn't make any sense.
Putting this conversation back in the health care realm - Why would you pay an insurance company to cover your routine doctor visits? If you have a annual physical exam that cost $200, and so does everyone else, then you can expect your insurance for that exam to cost you MORE THAN $200 for the reasons we discussed above.
Therefore, I conclude that health insurance should be used to cover high cost, low probability medical events not every single medical expenditure an individual may incur.
Obviously, this first post ignore many issues about how insurance companies work (profit motives, ability to bargain for prices) and the fact that costs of medical services are very difficult to determine in advance. We will cover these topics further in future posts.
In its most basic form, insurance allows individuals to pay a little to protect themselves from something that will cost them alot but has a low probability of occuring.
For example: In my hypothetical, greatly simplifed world, I pay about $1,000 per year to insure my car. If something catastrophic happened to my car, I would expect that to cost $20,000 that would be covered by my insurance. If I had to pay $20,000 out of pocket, that would be a hardship for me. So, I am willing to pay the $1,000 each year to avoid that potential hardship. Insurance 'saves' me money if I have to make a major claim.
Insurance companies can do this because they have lots of people paying them $1,000 a year. They pool our risk. If 20 people buy insurance each year and one person in that group has a $20,000 accident each year, then the insurance company breaks even.
Of course, basic auto insurance doesn't cover every automotive expense. Oil changes, new tires, car washes, etc. I pay those expenses myself. But becuase an oil change is only about $30, that's not a hardship for most people the way a $20,000 accident would be.
What if insurance covered oil changes - one $30 oil change per person per year? The insurance company would expect to have to pay out $600 per year ($30 x 20 people). How much would they charge their customers for this oil change insurance? At least $30, of course.
And because the insurance company has pay an employee to handle the paperwork, and buy them a computer to track the paperwork, and heat/cool the office in which they work, the company would have to charge their customers more like $32.
Why would you pay an insurance company $32 to insure yourself against an expected $30 oil change? That doesn't make any sense.
Putting this conversation back in the health care realm - Why would you pay an insurance company to cover your routine doctor visits? If you have a annual physical exam that cost $200, and so does everyone else, then you can expect your insurance for that exam to cost you MORE THAN $200 for the reasons we discussed above.
Therefore, I conclude that health insurance should be used to cover high cost, low probability medical events not every single medical expenditure an individual may incur.
Obviously, this first post ignore many issues about how insurance companies work (profit motives, ability to bargain for prices) and the fact that costs of medical services are very difficult to determine in advance. We will cover these topics further in future posts.
Subscribe to:
Posts (Atom)