Healthcare and health insurance are different. Completely different.
Yet we confuse these two ideas and often use them interchangeably. Let’s explore the differences, starting with a very brief history of health insurance in America. (A less brief history can be found here.)
A century ago, almost nobody had health insurance. They didn’t need it, because healthcare costs were minimal, affordable, and hospital care was inexpensive. As hospital care became more advanced and expensive, insurance for hospital care grew to become the norm.
By the beginning of the 21st century, most Americans had health insurance, and coverage was quite broad, for outpatient services and rehab as well as hospital care. Today, we have broad mandates and regulations governing health insurance, and healthcare costs have skyrocketed, being a significant portion of household income and being a huge factor in many bankruptcies.
Back to the topic at hand. Healthcare and health insurance are different.
Health insurance is meant to be a method of risk sharing. You (or your employer on your behalf) pay a monthly premium. This money is pooled with other people’s money, and when tragedy strikes, like an appendectomy, heart attack, or accident, you get financial help for those huge bills. Straightforward and easy to implement.
Somewhere along the line, we began thinking that all of our healthcare had to be covered by insurance – quick visits with the doctor, preventative care, routine medications, and the like. And voila! Overnight, health insurance became thought of as a necessary means to access healthcare.
I can’t tell you how often people (doctors and patients alike) make a healthcare decision solely on the basis of whether or not it’s covered or paid by health insurance. Somewhere along the line, we collectively started thinking we can’t pursue healthcare if we don’t have access to a particular service through insurance.
Now let’s talk about actual healthcare (not health insurance). Health is what you do for yourself to stay well. It’s getting your sleep, your nutrients, your exercise, your stress management, your social needs met. Healthcare is when you seek the services of a healthcare provider in order to help you with your health.
Sometimes little things go wrong and you need your doctor’s help – strep throat, a cut that needs stitches, an ankle sprain. That’s healthcare. Sometimes you’re fighting something more chronic and you need a little more of your doctor’s help – high blood pressure, anxiety, arthritis. That’s healthcare. Occasionally, something happens and you need to be hospitalized, have surgery, and see a few specialists – pneumonia, heart attack, joint replacement. That’s healthcare, too.
The question is, does it make sense for all healthcare to be administered through insurance? Or does the old model of risk sharing for larger expenses make more sense?
In the case of a high deductible plan when all of your healthcare is subject to and managed by insurance but isn’t actually paid by the plan until you meet your deductible (which most people don’t), does using insurance add more roadblocks and expenses than the value derived from it? Does it actually aggravate the process of seeking affordable routine healthcare? Could it actually be more affordable, streamlined, and convenient to pursue routine outpatient healthcare without insurance?
As a means to answer these questions in a very real way, let’s look at what it might look like if your homeowner’s insurance worked like your health insurance.
First of all, I’m guessing all the roofers, plumbers, and builders would be very happy, and a lot of work would get done, whether your house needed it or not. They might offer to do expensive repairs that may or may not work, and you might agree to it, because you aren’t paying for it and these kinds of repairs have become commonplace.
In the healthcare world, that’s called overutilization, and it happens a lot. In a fee-for-service system with third party payers, everyone benefits from you using a lot of services and being “in the system”. (By everyone, I mean providers, pharmaceutical companies, hospitals, insurance companies, agents, medical IT companies….the list is frighteningly long.) The only people who pay more are employers and you.
Now let’s say you have a leaky faucet in your kitchen sink and can’t figure out what’s causing it. You’d call your in-network plumber to come and take a look. He comes over a few weeks later – you miss work to meet him at your house. He diagnoses the problem.
Turns out it’s just a corroded washer. The plumber also recommends changing the out of date faucet. He doesn’t tell you this, but the plumber doesn’t get paid his incentive bonus if he leaves the old faucet in place, because those old ones aren’t in the current guidelines. A study done by the faucet manufacturer shows the new ones to be statistically significantly better at not leaking.
Now you have to call your homeowners insurance company for prior authorization for the recommended washer and faucet. After some phone tag, and after your plumber’s office sends in paperwork proving the necessity of such products, the insurance company sends your auth to the nearest in-network hardware store, which is a terribly big store with poor customer service and not in your neighborhood.
The store would call you for an appointment. It’s in three weeks, and you’ll have to miss work for it. When you go to the store to pick up your supplies, you’ll have to fill out a bunch of paperwork and then wait for an average of 47 minutes before having access to your products. And only certain faucets are covered by your insurance, but you’re not sure which ones those are, and your plumber and the store employees don’t know either. Also, there are no prices on the faucets or washers. You have to purchase them in order to find out how much they cost.
Once you decided on a faucet, you’d pay a small amount at checkout (your copay), but the store wouldn’t give you the final bill until after they sent a bill to your insurance company. This takes a long time, about 60 days. You haven’t met your deductible yet, so even though you chose “covered” products, you have to pay the whole cost for the washer and faucets. You’re floored at how much they actually cost – the price has risen dramatically in the last decade – and are totally unprepared to pay the whole amount.
Meanwhile, you’re supposed to meet the plumber a few days later at your house at noon. You leave work at noon and rush home, just in time. Boss isn’t happy about a third missed workday for this problem. The plumber is an hour late. By 5pm, you finally have a new faucet.
The plumber’s biller sends his bill to the insurance company. They hear back several weeks later. The biller then sends a bill to you. Turns out your deductible still hasn’t been met, so now you’ve also got to pay for the two house calls the plumber made. Again, you’re surprised and disappointed about the high cost. It doesn’t add up, but when you ask him, the plumber tells you he needs a lot of extra staff to work with your insurance company.
You and your spouse argue about how to pay the plumber and the store, the escalating premium for the homeowner’s insurance, and still pay the mortgage too.
Sounds insane, right? But this is exactly what we do when we confuse routine healthcare with healthcare insurance. We let our health insurance manage our healthcare.
You have homeowner’s insurance for when something bad happens – a storm drops a tree on your roof, a theft of all your valuables and identity, a big plumbing leak that soaks your entire house. When these things happen, you get help paying for the big bills because you’ve been paying your homeowner’s insurance faithfully, and it’s affordable enough to keep doing so. The underwriter essentially administers risk sharing for its customers.
For routine home maintenance and small repairs, you just pay out of pocket to stores and service professionals that bill you directly, not through your insurance. And you do it on your own time. It’s both convenient and affordable.
Health insurance, while it’s nice to have when the wheels come off the bus, is crazy expensive. Modern policies have broad “coverage” (in quotes because “covered” doesn’t mean your insurance is going to pay). In fact, most people with high deductible plans don’t usually meet their deductibles, so they have to pay for pretty much all of their routine care despite it being “covered” or managed by the insurance company.
Also, routine healthcare, when run through insurance, is more expensive than direct pay services. If you haven’t met your deductible, you’re paying that aggravated higher cost for your day-to-day health needs.
What if we moved toward managing our own health, and our own healthcare? What if we had a direct and affordable financial relationship with our healthcare providers and for routine services like medications and labs? What if we only had to use our healthcare insurance when something really bad happened?
We don’t have to ask anymore, because it’s now a reality. Table Health was created so people could pursue health without all the fuss and expense, and so doctors could do what they do best without all the distraction. Full access, membership-based primary healthcare is at your fingertips.
And many affordable cost sharing options exist for when there is a larger need. Learn more about cost sharing here.
It’s important to keep in mind that health insurance is not the same as healthcare. We’ve come to use the terms synonymously, but they are very different. Everybody needs healthcare. And most of us need some form of risk sharing for bigger medical expenses. But healthcare for maintenance and routine needs, and also for risk sharing, can be done a lot of different ways. It doesn’t necessarily have to be done with a conventional insurance product, if that’s not the best fit for you.
Health is personal. Managing and financing it should be, too. To get more information for you, your family, or your business, or just to chat about options you might not know existed, reach out to us.
References:
https://www.einstein.yu.edu/uploadedFiles/EJBM/19Ross129.pdf
https://eh.net/encyclopedia/health-insurance-in-the-united-states/
https://www.ncbi.nlm.nih.gov/books/NBK235989/
https://www.cigna.com/employers-brokers/insights/informed-on-reform/employer-mandate
https://www.cms.gov/About-CMS/Agency-Information/History
https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html