17 February 2010

The terms are the thing for defining what you want

In the 'health insurance' debacle that is playing itself out around the Nation, I have heard many, many, many terms thrown out but the question of 'covering the poor' and the 'uninsured' come out the most with the partisans in favor of large expansions of government.  Yet the first, the poor, are supposed to be covered by Medicare and Medicaid.  The 'uninsured' are not numerous particularly when you remove those who don't want insurance or refuse to buy it.  The number of those seeking insurance who can't get it is small.  Then the reasons of 'pre-existing conditions' is bandied about for why the 'insurance' system needs 'reform', which is to be expanded to cover everyone, everywhere with unlimited liability to do so.

That is a mess of terms and ideas floating around that need some rigor to them before you can even ask the question: what should we do?

You might first ask: are we doing the right thing to begin with?

Pre-existing conditions are those you get when relatively healthy or are born with that then limit your ability to get medical 'insurance'.  But are you truly looking for 'medical insurance'?  Hold that thought as we go along.

Insurance is the idea that you bet something will happen to you, like you will die in the case of life insurance, and the insurer bets that you won't.  You pay into a plan so that if you die unexpectedly or younger than would normally be the case, then a larger payout than anything you have put into the plan is then paid to those you designate.  Catastrophic care health insurance is your bet that you will come down with one (or more) catastrophic problems health-wise and the insurer covers you on the bet that you won't get them.

Health Insurance does not follow that formula.  I has you paying into it to get price breaks on seeing a doctor, getting tests run or getting medications or procedures done.  Your expectation is that you will use a certain number of visits and procedures as part of your annual needs (physicals, colds, injuries, etc.) and have a catastrophic component of a plan that will cover you in case something bad happens to you.  It is not just catastrophic insurance but has a large maintenance and minor to intermediate levels of care thrown in, plus things like reduced costs on medications.

Then there is the concept of 'managed care', in which you are trying to manage your medical expenses via pooling your risks with that of others in a given plan.  We often call this 'health insurance', especially when it has a catastrophic portion to it, but is it, really, that?  This dovetails with 'pre-existing conditions', above, as those conditions have set courses and routines to them that are generally well known.  If you are a Type I diabetic, say, there is an expectation that you will need more frequent eye exams and almost a certain course of laser work to stop degeneration of your eyesight.  Similarly people who have had any cancer in their lives need certain treatments based on the cancer type they had.  Individual with HIV/AIDS have a generally known set of problems and conditions, along with medications and treatments for that suite of conditions.  In many of these conditions if you take better care of yourself you may forestall the need to have certain procedures performed or get certain medications, thus by taking good care of yourself you move within the overall set of statistics for all patients: those who do take good personal care of themselves and those who do not.

Our current system of 'insurance' only has a negative reward built in: you don't have to pay out for a treatment you don't need in a given year.  But forestalling a need is not the same as not needing a procedure at an unknown future time.  Thus you are trying to use 'insurance' as a model for something that pays out on a continual basis for 'managing' your care and gives no incentive for you to take better care of yourself so that you follow closer to the average risk rather than shifting your risk and costs to a future time.  Without encouragement, beyond the nice talks you have with your doctors on the subject, you have no incentive to actually take care of yourself as future problems are 'in the future' and as individuals we tend to place lower value on future problems and concentrate on current costs.  It is a given that not all conditions can let you shift the need for procedures and medications and such by you maintaining your health in a better way on a personal level, but many can and do have that potential.

Thus with 'pre-existing conditions' you would like to have a system that allows for some pooling of risk, some price breaks, and some actual rewards for better health care that you do so that you do not utilize the system at an average or above average rate for your condition(s).  As we acknowledge that tangible rewards beat the absence of cost and give assurance that we have actually done a good job and should continue to do so, this means that a good 'managed care' system would then give you a return for a future procedure that comes up statistically for your condition, age and length of time that you have had it, but through your good work at maintaining or even improving your health you do not get at the average time.  For that you get a certificate that you can have a full course of work done, at any future time, within 'the plan' or its associated plans or through similar cross-accepting plans, this procedure or treatment for FREE.

This concept is called: investing.  You are investing via payments to 'the plan' and you can get 'payback' from it for full cost treatment of conditions by taking good care of yourself now.

Any individual 'plan' is not insurance, then, but investment management via managing your pre-existing conditions in a better fashion in the short term, so as to stave off secondary or consequential impacts of not doing so at a later date.  And as such treatments usually require follow-ups, re-testing and such, if you continue to keep up your good health then as those come on their normal and expected times from when you would, on average, have required such follow-ups, then you continue to garner free benefits for an entire course of normal treatment for you condition(s).  Even if you leave the plan or go to another one or get laid off, the certificates remain valid and have a definite value to them in the form of the cost of a procedure that is vested in the certificate.  Mind you it may not be a paper certificate, but an electronic one keyed to a banking or financial institution, insurance company, or medical management group.

At this point the concept can now be broadened to the general population in which individuals have a set of risks associated with their genetic background, current lifestyle and health, as well as other factors.  This concept of paying an up-front set of costs for guaranteed treatment with defined parameters is something that will go beyond those with 'pre-existing conditions' and extend to those who have 'pre-existing tendencies' towards a condition or set of conditions, often due to family heritage, but they have not manifest at that point in time.  Individuals could start pre-investing in treatment plans for those conditions, get certificates for the typical types of work done and necessary courses for a given condition years or even decades in advance of possibly getting such problems and pay a substantially lower cost, up-front, than when the actual on-set happens.  Thus if you are prudent with your health, invest a minimal amount in your future health when younger, you can then have assurances that major problems that often happen in your family are covered by those early investments.  And if you get another condition or problem, you can then either trade or cash-out those pre-paid investments for treatment courses you need, now, via utilizing your investments.

This, too, is 'managed care' but done by individuals willing to pay into treatment risk pools due to their background, jobs, or other conditions that indicate a future risk of certain conditions.  Competition for this comes from groups able to offer better sets of treatments, wider arrays of affiliates beyond the immediate plan or such things as paying for research into the specific condition(s) 'the plan' covers.  The latter would be investment plans into better future treatment or even ameliorating and removing the condition completely.  At which point you can cash out your investments for their last face value cost before the cure was found, or trade them for other treatment plans.

Like stock you can pass these on to your children if you die before utilizing the treatments.  It can be argued that cash may be a better investment, but that has become taxable so many times through current investment systems that it isn't funny.  As these certificates have real value attached to them, that is an actual set of treatments, tests and procedures, which can vary across a set of affiliates, there is no set cost to a given certificate, only a 'high-low' range.  Further, when you utilize the certificate for that treatment, it cannot be taxed as it is a deferred service being rendered, not an actual good or cash payment.

This can be applied to medications, as well, as conditions often need medicines or durable equipment.  A given plan may associate with pharmaceutical and durable equipment companies to include certain name brand medications and durable equipment, or their future successors in improved medication or equipment, so that the level of treatment for a given procedure gets better over time.  Purchase a treatment plan that relies on generics, now, and in the future you get the generic equivalent of what is standard for the treatment at that future time.

Covering those with 'pre-existing conditions' no longer centers on the current cost, but on the future need for treatment.  Joining a plan that covers a condition or set of conditions then allows you to move into a known risk category and have some minor pricing breaks immediately and then rewards you for keeping yourself healthy once you join such a plan (perhaps after a given vestment period in it, say 3 years).  Once you are vested in a plan that works for you and that allows you to demonstrate that you can have a positive control over the course of your disease, the rewards are lowered future costs and even getting the ability to know that necessary future treatments will not take a bit out of your budget because you have practiced a healthy lifestyle to avoid complications.  This changes our systemic viewpoint from paying and 'let the insurance company handle it' to having some price breaks because you are in a pool with known risks and then getting rewards for shifting the actualizing of those risks further into the future.  The plan you join is centered on managing your care and treatment, not on your 'health' save to help you lead a good life so you need less care and treatment in the immediate future.

At that point only the critically and terminally ill are left to deal with, and for that we do have charity.  Of course if you had spare treatments available to you, and spare medication guarantees that you aren't likely to use, you could donate those directly to a charity that cares for the ill so that they could match up those people with good care givers at no cost.  And you could invest money to replace a treatment if you needed to do so, also.

I am less than impressed with 'health insurance' as it does not center on critical factors of coverage, health maintenance and rewarding good health in a positive fashion that is tangible.  If we were serious with verbiage that makes our health an 'investment' and started treating as something we can invest in, then we might just find out that we had the wrong idea about our own health in the first place.  And that the individual is the best person to judge risk, cost and expectations.  And you could still purchase catastrophic care insurance if you really needed a backstop, too, for the unexpected future.  But you can take care of the expected and probably future on your own far better than 'insurance' will ever lead you to do.

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