Health Insurance: The-More-The-Better, Or No-More-HMO?

By Irina

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In movie "John Q," Academy award winner Denzel Washington fights HMO restrictions to provide necessary cure for his dying son. When such a lackluster topic like health insurance generates enough drama for a Hollywood movie, you know that something must be seriously wrong...

The problem indeed is severe. Almost 45 million Americans are uninsured and number continues to rise. Those still insured are frustrated by double-digit premium increases outpacing all other sectors of economy. High costs and HMO limitations discourage seeking an immediate medical help. As a result, "little aches" often develop into life-threatening illnesses and financial disasters for some unfortunate individuals and further escalate already intolerably high health care costs for rest of us.

To endure existing health care crisis, we all must recognize one simple fact. There are TWO DIFFERENT LEVELS of health care needs that must be covered with two separate tiers of payment. One level is catastrophic illness - and for that, insurance may still be answer. Policies that carry a high deductible (say $5,000 a year) are relatively inexpensive, even when coverage is very high ($1 million or more) or unlimited. That is because most people do not get catastrophic illnesses or injuries.

By Irina

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Five years ago, average health insurance premium was equivalent of a car payment, now it's more like a mortgage. More and more people are faced with a tough choice: indefinitely postpone their next visit to doctor or start depleting retirement savings in order to pay medical bills.

There should be a better way to keep our families healthy...

Let's begin with terminology. The generally accepted definition of an "insurable event" - be it a traffic accident, a house fire, or an earthquake - is something that (a) comes without warning; (b) is very unlikely to happen and (c) is definitely undesirable. Now try to apply this definition to any routine health maintenance event like teeth cleaning or annual physical and you will discover that very term HEALTH INSURANCE contains a built-in contradiction.

From financial considerations, any INSURANCE system works best when fewest number of participants actually use it (i.e. make claims). This way an insurer makes profit and is able to lower premium which, in turn, brings more paying participants who are happy NOT TO USE insurance, especially if it does not cost them too much. Remember, we are talking about real insurance and truly "insurable event" - something that is definitely undesirable. On contrary, HEALTH CARE system works best when most people use it (i.e. get checkups, tests and vaccinations). The financial structure and goals of two systems are incompatible.

It was in an attempt to reconcile these differences that concept of managed care was developed. Unfortunately, that system satisfies nobody. It enrages health care practitioners and consumers alike when it limits or denies payments on grounds that particular treatment or service is not medically necessary. It also frustrates insurers by mandating payment for routine services, whether they are really necessary or not.

There's another basic problem with current system: it's assumption that health care is a benefit of employment. So if you are unemployed, self-employed or employed by someone who lacks negotiating power of big businesses - health insurance is not for you. Even if one has an employer provided coverage, recent premium hikes can price him/her out of range of affordable health insurance. Why? Unlike virtually any other commodity, contracts for health care services are negotiated not by affected parties (physicians, hospitals and consumers) but by insurers and employers.

The list goes on, but even without considering numerous other "symptoms" it should be clear by now that current fundamentally irrational HEALTH INSURANCE system is designed for conflicts and lawsuits rather than providing best health care at best prices.

So, is there a common-sense solution to this crisis? The answer is YES, but it's not universal. The right solution for you and for me may vary due to different circumstances, health care needs and risk tolerance. It is important to realize, though, that each of us should be able find that optimal balance!