The Illusion of Free is Killing Us

If you ask someone who gets their insurance through their employer how much they pay for health insurance, most people say they do not know. They sign up for a plan upon open enrollment and they never see the money taken out of their paychecks. However, the average employer-sponsored health insurance premium for a family in 2017 is $18,764.

Then, ask people how much it costs them to visit the doctor. Most answer with whatever their co-pay is. But as Chili’s pointed out last week:

Then ask them how much their deductible is. Again, most answer with crickets.

And, finally, ask them for a description of all the line items in the medical bills they get in the mail.

It’s all so complicated, so they just give up.

These are educated, extremely intelligent people working on big problems in the world.

Obamacare increased confusion by saying that preventive care via a doctor is “free” and covered by your insurance. Certain types of visits, like annual physicals and vaccines are at no cost to a person. But, doctors were able to get around this by billing for the annual physical plus the rash. And you’ll have to pay for that rash visit that just so happened to be talked about during your annual physical. So, @subtlerbutler, there’s your real answer.

Because health insurance is often provided via employers, employers frame the issue as a benefit to employees. Benefits are supposed to be “free” so employers do everything they can to obfuscate the real costs to employees.

But, the real costs for people means, because of the massive increase in the cost of health insurance and your contribution to your monthly premiums and deductibles over the last decade, your net take home pay has decreased despite a raise in your salary.

And then health policy folks are worried, rightly so, that, if doctors are too expensive, people won’t get care and put things off until they’re more serious, more expensive, and more deadly. So, they’re doing everything they can to help the employers and the insurance companies obfuscate first dollar cost as much as possible. They couldn’t bear to see a poor person have to pay $1,000 for an office visit but they’re failing to ask themselves why in the hell is that office visit $1,000 in the first place?

Co-pays and co-insurance are the insurance industry’s answer to making healthcare affordable. But that just means the cost of going to the doctor vs. the cost of receiving care are disconnected. You’ve already gotten the care and then weeks later you get billed for it. And most of the time, people simply don’t pay the bills (only 20–30% of those bills are actually collected later). Splitting up value and payment leads to massive collection problems. So, co-pays aren’t the answer. That money has to be made up somewhere no?

But there’s a bigger problem here. Employers, insurance companies, and health policy wonks are too busy obfuscating the real costs of care and not admitting to themselves that the care is what’s broken. Fix the process and payment of basic care, incentivize innovation, and drive the cost of care down to the point where we don’t have to obfuscate costs because almost instantly accessible primary care can be delivered for a tiny fraction of today’s massively inflated costs. Everyday basic primary care for everyone is bundled into the costs of $2 million ICU stays for one person. That $2M ICU stay is equivalent to 7,000 urgent care visits for the rest of us. They are two separate markedly different things with separate business models and health problems to be solved. Split them up. One’s a service for 90% of us who don’t need the ICU and this should compete on accessibility, quality, and cost. And the other is a complicated service for the 10% of us who need highly specialized, intensive care.

That literally means 90% of us could have the best healthcare system around for the vast majority of our needs. And then the 10% of us who need complicated care should be 100% protected from financial ruin with care delivered by a system of specialists for a fixed price for each person.

Single payer won’t fix anything if we’re paying for the same old thing. We need two systems. One that competes on experience and cost. And the other that competes on fixing super complicated health situations for a fixed cost.Unhealthy people should no longer be looked at as cash cows. Hospitals literally salivate over people in their last few months of life. Where do you think their revenue comes from?