The coming end of the Affordable Care Act (ACA) should spark a new day in the development of free market healthcare initiatives. Healthcare can be more cost effective, more intuitive and more effective by remembering the past and looking to the future.
Insurance & Self Insurance
The current approach of treating health insurance as a health payment plan is a broken system. Insurance in every other industry and situation applies to things not planned. Forcing patients to buy an ‘extended warranty’ on themselves is clearly not controlling the cost of healthcare. The ACA forced everyone to buy comprehensive coverage – even if you were a low-cost Honda, you had to buy the insurance coverage for the Formula 1 Mercedes Silver Arrow.
The next iteration of health insurance must allow individuals to choose from a menu of coverages and a broad range of deductibles. Those items not selected or under the deductible would then be paid by the patient. This opens the door for a 22-year-old to only choose coverage for injury or ailments that fall into a statistical anomaly for their age range. This also allows a wealthy individual to determine how much cost they want to buy out of pocket under a catastrophic plan. Let the actuary earn his keep.
Most individuals will admit they want health insurance to cover the unexpected trips to the emergency room, surgeries and tragic diagnoses like cancer. They understand the majority of costs occur in the final stages of life. Most will welcome the opportunity to carve out the well care they receive and pay for those services out of pocket. Under today’s system, they lack any choice in the matter – put the cost on the payment plan and then either lose the benefit or use the service when it is not needed to get your value out of the required premium.
Illness v. Preventative Care
The market will carve out the treatment of problems and illnesses and the majority of physicians will focus their efforts on caring for sick or injured patients. Hospitals, surgery centers, diagnostic centers and physicians will be well served to refocus their energy and resources on treating patients in need of problem solving. Those companies will be able to create environments tailored to serve a focused target market. They will be more efficient for the focus.
The transition to a philosophy of insurance instead of the current health payment plan will foster new alternatives to preventative care. A minority of physicians will transition into a preventative care model that focuses on wellness. This group will be able to better serve patients on wellness, genetic profiling for diseases, diet, exercise and psychological wellbeing. Some will be old-school hand holding in function, others will be technology based like the example here: (This Startup Is Making the Doctor’s Office of the Future – Bloomberg).
The transition to a choice based model will require the special interest to be ignored. The cluttered insurance coverage mess in the market today is derived from the effort of entire industries to bundle themselves into the grand market described as ‘Healthcare’ to access an easier stream of customers and revenue. We need to peel the elective out of the realm of insured and return the system to an actuarially quantifiable system of use and cost that targets the unplanned health event.
Reducing the complexity of the insurance system will serve the individual well. Too often in the business of healthcare we face difficult conversations with patients over what an insurance company covers v. the patient’s perception of their coverage. The complexity baffles many patients across all socioeconomic groups, educated and uneducated.
It is time for the individual to buy health insurance that covers accidents and anomalies. The preventative maintenance can be planned by the individual. Doing so will build trust between the healthcare provider and the patient – and that will make us all healthier.
This post was written by Brian White