Can you imagine buying insurance for your car or home, not knowing what they are worth?  If the prices of health care make no sense, how can the cost of the insurance be calculated?  Or could the incalculability of health costs be intentional, thus hiding the profits of the “risk-taking” insurance companies and creating the fear of bankruptcy necessary to sell these “policies?”  

John Goodman, health care analyst and economist at the National Center for Policy Analysis, has recently published a book entitled, “Priceless.”  This interesting title was selected to drive home the idea that for our health we would pay anything, but that for most of health care, the price system doesn’t apply and is therefore unknown.  You can read my review of his book here.  He goes to great lengths in his book to compare the current dysfunctional health “insurance” system to the more rational casualty insurance model (that model which includes home and automobile insurance).  This section of his book is very interesting as this comparison points out the “prepay” nature of current health insurance.  

Here’s my point.  Almost all policy-makers seem intent on making sure that everyone is insured for health issues.  But insured for what?  A $5865 gall bladder removal at our facility or one ten times that amount across town at one of the “not for profit” hospitals?   How can an insurance premium be calculated given this discrepancy?  How would rational and transparent pricing affect the perception of the need for insurance at all?

For a long time the lack of rational pricing in health care didn’t make sense to me.  I now believe that this condition is intentional, serves the cartel well and must be maintained if their profits are to remain higher than the market would afford them.  I have had many patients tell me that after having seen our prices, they didn’t feel like they needed insurance.  They would have preferred to save the premiums (they would normally pay), than to pay them to an insurance company.  Indeed, a cancer-only policy, for instance, would fit an individual like this well.  This type of policy would operate on the casualty model, kicking in only with a devastating event like a cancer diagnosis, rather than with a sore throat.  The cartel has seen to it that policies like this have been regulated out of existence.  Insurance coverage mandates have forced people to buy insurance products and coverages that are superfluous and the big insurers have made out well as a result.  Goodman points out in his book that a young, single man cannot buy an insurance product that excludes pregnancy or breast cancer.  Pretty good risk benefit ratio for the insurance company for this part of the policy, no?!

Years ago a U.S. senator said the navy needed to address the $1000 they were spending for toilet seats on their new cruisers.  Making sure that everyone has health insurance largely eliminates the likelihood that health care’s $1000 toilet seats will ever be addressed as people will not care as long as they’re not paying for them. 

Once the health care system is cleansed of its own $1000 toilet seat issues, the market can send the appropriate price signals to buyers and sellers.  $1000 toilet seats result in high pentagon budgets just as $50,000 gall bladder surgeries result in high insurance premiums.  I think people need access to $5865 gall bladder surgery more than they need access to this irrational health insurance.  

G. Keith Smith, M.D.