Insurance 1.0

Can we work together?

Earlier this spring my daughter called me about health insurance. You see, we had added her to a policy we had with the state. I get state employee health insurance as a legislator. Prior to being elected we purchased individual coverage. We shopped long and hard and found a policy that covered my wife and me for around $500 a month. It was a $5000 deductible Health Savings Account plan. When I got sworn in I became eligible for a state plan (after a three-month waiting period) that cost only $75 dollars a month, with the same benefits. Am I ripping off the taxpayers? Is the state subsidizing me excessively? I asked a fiscal conservative, Wayne Hoffman this question and he immediately replied, “No, it’s because you are now in a larger insurance pool.” This is the mystery of insurance and market demand. The larger your risk pool, the lower your rates. But we want the market to drive down costs, so we need choice and selection to put the pressure on the insurers to keep their rates low. The state is facing this issue right now in terms of insurance exchanges. But we should get back to my daughter.

She called because we had added her to our policy. The Affordable Care Act (Obamacare) had made it so that you could add your children under age 26 to your coverage. She had done some research and found that if we paid an extra $7/month and went to the standard deductible she could get an “annual exam” for free. 

Dear Daughter, I told her, insurance doesn’t make anything “for free”. That is an illusion we must rid our selves of. Insurance spreads the risk, but it does not make it free. It means we are all accepting the risk for each other, which is a different concept altogether and one that our country does not easily embrace.

She probably rolled her eyes as I lectured, but she told how her roommate went to a doctor and got an annual female exam for $600.

“What!” I blurted. I used to charge $70 back when I did them.

She paused kindly and let me work through this supply and demand issue and its implications on my own.
“Dad, I’ll pay the $7 more a month if that’s what it takes to make this free. I mean reasonable, not free.”

I asked her what was wrong with where she had gotten her exams before, Planned Parenthood? 
“But Dad, that’s where you go when you can’t afford health care.”

Dear Daughter, did they do a good job?

She paused, “Well, yeah.”

Did your roommate like the service she got for $600?

“Actually, no. She said the guy was a jerk and he didn’t listen to her at all.”

Darling Daughter, if we are going to solve this health care problem we are all going to need to participate. Your choices as a consumer are valuable. They will serve you, indeed, they serve all of us. The actuarial magic of a large risk pool may reduce costs for an individual, but it cannot be mistaken for the power of the market. Nothing is free.

I am troubled that our state is not really serious about reducing health care costs while maintaining quality for our citizens. Market forces cannot be the only way to do this, as evidenced by our current situation. But an insurance exchange, if structured properly, with the goal of lower cost and good quality in mind, can help.
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About ddxdx

A Family physician, former county coroner and former Idaho State Senator
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