Health insurance serves as a safeguard against the financial burden of medical treatment, but it’s essential to understand its true nature. Many perceive it solely as a reimbursement system for conventional medical expenses and may feel let down when certain costs aren’t covered. However, health insurance is more nuanced, encompassing both costs and benefits. When a third party like employers or the government pays for the expenses, the costs may become obscure, leading us to overlook the potential downsides.
Private health insurance plans purchased individually offer more transparency. With direct premium payments, we better grasp the insurance’s purpose. Co-payments and deductibles, though sometimes frustrating, play a role in keeping premiums reasonable. Nevertheless, the confusion persists about the scope of coverage, particularly when it comes to specific medical costs and providers.
Seeking more from the insurance system than it’s designed for leads to inefficiencies. Whether we pay excessively out of pocket, employers spend unnecessarily, or governments overspend, the system becomes strained. As individuals, we might have limited influence over positive changes, but understanding how insurance should function is crucial. It shouldn’t be a means to conceal healthcare costs but rather fulfill its role as insurance.
Unfortunately, the current structure of health insurance often stretches beyond its intended purpose, artificially inflating demand and contributing to soaring medical treatment costs. Whether we pay directly or indirectly, the expenses are ultimately borne by us. Reducing out-of-pocket costs doesn’t address the core issue.
Health Insurance Should Not Cover Everything
When dealing with any form of insurance, including health insurance, it’s crucial to recognize that we are essentially paying a premium to purchase coverage, whether directly or indirectly. To illustrate this concept, let’s consider an everyday item like food. Imagining we pay a premium to insure ourselves against the need to eat and then seek claims on our grocery bills, we would end up paying more for groceries. This is because the insurance company needs to make a profit above the cost of groceries, leading to additional expenses. Administration costs would further contribute to the overall cost, making the idea of insuring groceries seem ridiculous.
If our employer provided this grocery coverage, the absurdity might be somewhat obscured, but the core issue remains the same. The money spent on grocery insurance could instead be given to us as increased compensation, as it forms part of our overall income.
When it comes to government-administered grocery insurance, the lack of transparency persists. However, the funds for such insurance are derived from taxation, inefficiently spent on this coverage. In this scenario, people may expect every single grocery item to be covered, without fully realizing that this would significantly increase the overall cost of living.
While some may argue that there’s a substantial difference between groceries and medical expenses, especially for minor and routine medical costs that don’t cause significant financial strain, seeking insurance coverage for such expenses is no different from insuring against manageable costs.
Understanding how insurance should function leads us to recognize that we shouldn’t expect coverage for expenses we can handle ourselves. Therefore, it’s reasonable to accept responsibility for the first part of any claim, regardless of its size, in line with the true purpose of insurance
The Effects of the Narrow Scope of Health Insurance
People also complain about the narrow scope of health insurance coverage, where it only tends to cover the most conventional of medical treatments, and generally disallow claims for any treatment that falls outside this realm, even if it is delivered by an MD. There are many medical practitioners these days who use a combination of standard and natural treatment protocols and even though this form of medical treatment may be more effective and cost efficient, health insurance will not reimburse for these treatments.
While this does serve to sway people away from what we call functional medicine, where they are captive or at least see themselves as captive to conventional medicine, the reason why insurance companies take this approach is that they are naturally inclined to exclude things unless there is sufficient demand to force them to pay out for certain things.
Insurance companies are ultimately businesses and they really don’t have an agenda here aside from making money, even though it might be true that they do not have a very good understanding of how preventative medicine and more effective treatment protocols may reduce the amount they pay out.
There is no question that among the various approaches to health care, conventional medical care is by far the costliest, and obscenely so these days. The people do speak though and this is the type of treatment most people want, so this is what ends up being covered by policies.
It actually makes sense to cover conventional procedures and not so much other types of medical treatments because it is the conventional ones that are very expensive and can easily well exceed people’s ability to pay for them. You can wipe out your entire life savings and then some from a single incident, which isn’t so much the case at all with non-conventional medical treatment, which relies on helping the body heal itself more and therefore tend to be far less costly.
Health insurance has greatly increased the demand for these very expensive treatments though, because otherwise people would not be able to afford them, although they of course miss the part that they are paying for these things in the end one way or the other.
To the extent that these treatments are truly necessary to preserve one’s life and well-being, then we could say that we are fortunate to have such a structure in place, but this is not always the case, and often health insurance drives excessive spending on a number of things of dubious value and even ones that may be detrimental to our health instead of benefiting us.
This happens in part at least because the costs are hidden from us, and we therefore don’t do much of a cost benefit analysis when it comes to health care spending, and generally just select whatever is prescribed to us, whether they be worthwhile, necessary, or even wise.
The health care industry, which is also a business, gets to therefore write their own ticket so to speak and drive a lot of business from patients who simply follow their direction without the normal constraint of due consideration, including if enough value is obtained or even if these recommendations are of benefit to their health even if they were provided free of charge.
Expanding the Focus of Health Insurance
The role of health insurance in the escalating medical costs is a critical issue that needs to be addressed through potential health insurance reform. With healthcare expenses continuously rising year after year, it becomes evident that the current system has shortcomings that must be examined and rectified.
One significant problem is the hidden costs within the health insurance system. Unlike other forms of insurance, the costs of health insurance are not as transparent, leading to excessive spending on healthcare. This lack of visibility can drive spending beyond reasonable limits.
The demand for healthcare services also plays a major role in this issue. The high demand for medical spending can overshadow insurance companies’ focus on managing risks and expenditures effectively. Health insurers should aim to reduce overall payouts and incentivize people to protect themselves against potential losses.
To achieve this, health insurance companies must broaden their focus to include prevention strategies that can lower the frequency and severity of claims. Currently, our culture heavily relies on conventional medicine, which is not as prevention-oriented as it should be. By adopting a more proactive approach, insurers can reduce the financial burden on both the insured and the insurance companies themselves.
Data plays a crucial role in decision-making for insurance companies, and this should extend to health coverage as well. By studying the evidence on how people’s health should be managed and reevaluating their strong bias toward conventional medicine, insurers can make more informed and cost-effective decisions.
The ultimate goal should be to minimize spending on claims, and this should be a top priority for health insurance providers. Embracing reforms that encourage open-mindedness in healthcare management and expanding the scope of health insurance to encompass preventative measures can lead to a more sustainable and efficient system for all parties involved. There is much work to be done, but it is essential to passionately pursue these reforms for the betterment of healthcare as a whole.
