Have you bought car insurance, life insurance, or home insurance lately? If so, you know how it works. The insurer assesses your risk of asking for a payout. The risk event cannot be volitional; that is, something you do in order to get the payout. You cannot, for example, set your house on fire. To make sure, insurers have investigators.
The insurer does not particularly care what the risk factor is. Teenage boys are going to pay a higher premium for auto insurance than girls. The reason is that the data show that boys are more dangerous drivers. It’s not their fault that they are men, but they pay the price anyway.
It’s the same with home insurance. If you live on a flood plain, your premiums will be higher. If you have a sprinkler system in your home, your fire insurance premiums will be lower. This is what the actuaries have determined. Their job is to make sure that insurance stays a profitable business even as they promise a payout for random accidents.
The actuaries also incentivize change. Nonsmokers will pay $1,000 a year for life insurance, but smokers will pay $3,500, 3 1/2 times as much. If you are a smoker, you are paying not only for cigarettes but also for higher premiums. The smoker coughs up an extra $60 per week for the privilege of puffing away. Quitting is a great way to save money, and many people do simply for that reason.
Now consider what we call medical insurance. Your premiums can be adjusted by age and by how many the policy covers. It can be adjusted by other factors such as where you live. But by law, what cannot be taken into account is anything about your actual individual health risk. This is what the Affordable Care Act, commonly referred to as Obamacare, caused to happen. With that one step, the insurance aspect of medical insurance was taken away.
It is no longer insurance worthy of the name. If actuaries are not at work assessing individual risk events and calibrating premiums based on that risk—while forever tweaking their models based on new inputs—we are talking not about insurance but about something else.
And here is another factor that foreign peoples can hardly even fathom. Once you have the so-called insurance contract, that entitles you to nothing. You still have to pay when you see the doctor, even if your plan requires that you do (wellness checkups). If you have more than a routine visit and instead need further diagnostics or treatment, you pay out of pocket up to a certain amount, which is called your deductible. Why is it called a deductible? Because this word is like everything else in this industry; it makes no sense and is designed to cover up what it is.
So your insurance gets you nothing other than the right to pay more. How much you have to pay depends on your plan, your income, the product or service, and the circumstances of time and place. Everyone is different, making it impossible to generalize about the overall experience. In fact, the whole system is so crazy, cockamamie, and complicated that it is impossible to describe or even understand. That’s a major reason why it is never reformed, even if everyone hates it.
What we really need are more exit ramps. You might think that the answer is more plans that offer only catastrophic payouts, something such as cancer or injury from a skiing accident. But that is not possible so long as actuaries are forbidden from assessing individualized risk. This is why they are available only for people under the age of 30. Even these plans come with mandated coverage for “preventative care,” which is really just a sales funnel to market pharmaceutical products and services.
What if insurers really could offer genuine catastrophic plans without wellness checkups and with individualized risk premiums? How much would you pay? I’ve asked every artificial intelligence engine and checked the answer with actual experts. The estimate is a shocking $100 a month. Now you can see why politicians won’t allow that. Everyone would flee the current system and use these plans instead.
Remember that the whole American medical system is set up not for patients and customers but rather for industry. If you understand that, you understand all that you need to know. You are seen not as a patient or a human but rather as a wallet to pickpocket should you get sick and need service. It’s not more or less complicated than that.
Another possible outcome would be to permit universal health savings accounts. Right now, you can have them with some limits. But there is one condition: You have to be part of a medical insurance plan already! If these were available for the whole population without the insurance mandate, of course people would choose them, which is precisely why they do not exist.
Another idea: Why not let workers take their medical insurance in the form of salary instead? These would free up the labor markets. It would also emancipate businesses with more than 50 employees to hire more people without paying an immediate out-of-pocket $28,000 for this supposed benefit.
Such plans do exist. They are called ICHRAs, individual coverage Health Reimbursement Arrangements. But get this. If you are a business or employee who wants to take advantage of this, you are absolutely required to go to the exchanges and buy high-price medical insurance. It is far more expensive than business-provided coverage, so it is essentially a rip-off. This is why so few people use it.
If ICHRAs were allowed such that the employee could use health savings accounts or a customized private care arrangement instead, of course everyone would flee out of the existing system and do this instead. Again, this is precisely why the politicians have not made this an option. They are all paid off by the regular industry, to the benefit of which the entire system has been built. That’s why it is not allowed.
There are other options out there, such as crowdsourced health insurance, which works differently and better. But there are so many restrictions and barriers that the growth of these services has been slow. Everything about the present system is designed to funnel as many people as possible into the corporatized system via employer-provided care. That’s how the politicians like it.
You can see the problem here. We are not lacking for solutions to fix the absurdly expensive model of American medical provision. Everyone knows the answer. The problem is that the industry has locked up the paths for change. We desperately need liberation from the system, but who is going to give it to us? These are good questions for the political class.
