Individual Choice And Health Care

In my view, one of the most significant problems with health care is that the consumer has been taken out of the loop for financial decisions. Comprehensive health care has been routinely offered as a benefit to employees. The cost to the consumer, if any, is essentially fixed regardless of the costs incurred.

Imagine, for a moment, if auto insurance were provided the same way. Your employer offers a fixed policy that covers not only major collisions, but also tuneups, oil changes, inspections, and any other work that your car may need. The policy is provided at no cost to you, and your only out-of-pocket expense is a token annual deductible that is far smaller than your annual expenses. With such a system, you have no incentive to shop around or do the work yourself. You will choose your service based on your perception of quality alone, and will not likely care at all what the cost is.

Both you and your garage have a great incentive to do every bit of service that might possibly be beneficial. In fact, you might even have a few extra tests done now and then, just to be safe.

Of course, you don't bear the costs of neglect or carelessness, so you might not be as conscientious as before. Add in the prospect that you will likely sue the garage if your car breaks down, and you have the recipe for an auto insurance system which might cost just a little more than what we are doing now.

I believe that health care is a fundamental human need. Every adult should be responsible for their own needs and the needs of their dependents, and I don't see any reason to treat health care any differently than food, shelter, or clothing.

We are fortunate to live in a society that is compassionate enough to help those who are unable to provide for themselves. We should decide how much help we are willing and able to provide, but let recipients decide how to allocate their budget among their needs.

For the rest of us - those who can provide for our own needs - we should have maximum freedom of choice and control over the type, quality, and amount of health care services that we use.

A Consumer Focused Approach

In any system, the person or entity that pays also makes the decisions. In our present system, the insurance companies decide what is and is not covered, and which providers they will allow you to use. If you don't like the options available to you, you can appeal to the insurance company, appeal to government regulators or the courts, switch insurance companies, or pay for services yourself. While providing some protection against arbitrary decisions, none of these options represents being in control.

If the government is paying for the services, your options may be much more limited. Appealing to the government or the courts is not likely to be successful, and some countries with government funded health care (Canada for one, until recently) forbid paying for health care services with your own money. This also fails to accomplish the objective of empowering the individual.

So, how can we increase the power of the individual in making health care decisions? The best way to accomplish that is to get the employers, health insurance companies, and government out of the picture as far as possible.

Employers should get out of the business of providing benefits and concentrate on making hamburgs, widgets, or whatever they are in business for. Employees should be paid the same money that is now going to buy benefits, and the employees should then decide how to spend it.

Insurance should be purchased by the individual, if desired, for the rare and catastrophic problems that would otherwise create financial hardship. Day-to-day expenses should be paid directly by the consumer to the provider.

My expectation is that 250 million consumers actively trying to reduce their health care expenditures might prove more effective than a government bureau.