Tom, this is a terrific. I would add a conceptual layer to the question you ask at the start of the 2nd section: what would health insurance that actually functions like insurance look like? And that is, what are the medical challenges that health insurance was designed to solve, and what medical challenges does it not solve? To the first question, as you say, health insurance should primarily cover catastrophic injury/illness plus routine and elective care. However, the overwhelming portion of premium costs and system spending is for NONE of these things. It's to pay for steadily advancing chronic disease, especially relating to metabolic issues. Almost two-third of medical spending is for the approximately 30% of Americans with multimorbidity.
It's impossible scientifically, practically, and financially, to solve decades-long, chronic and complex issues using a system designed to solve short-term issues.
That's why we need two systems, not one. Health insurance for routine, emergency and elective, which would greatly reduce premiums, perhaps by as much as 75%. And life insurance for chronic and age-related. Essentially, create long-term alignment and payback horizons that reward insurers, individuals, and clinicians over time to reverse and prevent disease.
My book Life for Health explains how this can be done, starting with a focus on reversing and preventing metabolic multimorbidity, deploying it initially within self-insured employers. (Links to read more about Life for Health, see https://www.lifeforhealth.com or order the book at https://amzn.to/47U903a)
Wondering why the 75% of deductible is the unreasonable scenario. I believe I read that the median spend is $500 per year. It's more likely that patients spend a few hundred dollars yearly, then a few tens of thousands every decade or so.
My experience is that I rarely if ever met my deductible in the last 8 years. Healthy 34 YO male, with sports injuries including concussions. So gold star for your plan.
The one year I did meet my deductible was when I went hard on my persistent back pain. I’m convinced the real issue that year was the inflated sticker price of underlying services, which are inflated due to the medical loss ratio, lack of price transparency generally (I had no ability to shop for services based on quality and cost) and employer sponsored insurance (consumers can’t shop for plans either). The solution to the latter is ICHRA plans, which tie in nicely with your approach to restructuring insurance.
Maybe one caveat: how would you handle things like preexisting conditions - we need to ensure those folks remain ensured and get pooled in plans with healthier adults.
Regarding pre-existing conditions: Direct subsidies are better than mandates on what prices are allowed to be charged. All to do what you said, which is to get them insured and in the risk pool with lots of healthy people.
Just a gut feeling - I really need to dive into some long-run panel data to get a sense of how many large medical events a typical person has.
My colleague and I have also looked in the past about how much insured medical spending is below OOP maxes and above it. That's quite hard to resolve, but I think early indications are that more than half is spending above OOP maxes. To me, that trends to more frequent larger spends, on average.
Yep, difficult to find what the actual numbers are. And OOP probably a bit higher if you take the zero-cost-sharing benefits out of mandatory coverage. Which is a good thing.
Something else to factor in this is the cost difference when paying cash vs paying. deductible.
Most don't realize that by having insurance when you are spending your money for the OOP you are spending it at their contracted price.
Worse yet is when you pay the insurance contracted price with your deduct able the rebates for the pharmaceuticals and other services go back to the insurance company not you.
Tom's analysis of buying health insurance vs. just saving the premiums seems to underplay the stupendous risk in the first few years. A compound fracture of the leg, a badly broken hand and wrist, and many other conditions can easily cost $50,000. Hospitals may not wait around for the HSA balances to build up. Declaring bankruptcy may be an answer but it takes a strong stomach to do it.
Without the enhanced ACA subsidies, virtually no one would buy a health policy costing $41,000 a year. They would need an income of $500,000 a year. In MN where I live virtually all such families have someone working at a large corporation that offers health insurance. CA or Colorado might be different.
Good. But ponderous. Sorry to be philosophical but we need to ask first what health insurance is. It should insure ONLY against large losses. It should NOT cover first dollar. It should NOT be mandatory. It should ONLY cover high cost low incident maladies. Premiums SHOULD be pre tax. HSA plans should be optional and always included.
A friend has spoken to me about the idea of small scale community heath care funds. That within an agreed upon community, each person pays into the fund and it is utilized for these big health care emergency situations. More collective negotiating but also a bit less scary to consider not going it alone
Health insurance is a bad deal for healthy people and a good deal for really sick people. So yeah it being a 90/10 split or whatever doesn’t surprise me.
And I don’t just mean people who get sick randomly. I mean that most really sick people have pre-existing conditions and will chronically cost more then their premiums unless their pre-existing conditions are priced in. But if their pre-existing conditions are priced in then they couldn’t afford it.
So what “health insurance” really is, is a backdoor way for healthy people without pre-existing conditions and subsidize people that do have them. To make healthy people swallow this bad deal we’ve got tax breaks and exchange credits and mandates and we bundle the catastrophic coverage they actually want in with the whole kitchen sink.
The individual exchange plans are particularly bad because they are guaranteed issue. So the game theoretic solution is to not pay until you get really sick and then buy a plan where you know the insurance company is going to lose money on you.
Our healthcare system isn’t broken. It’s working exactly as designed—to profit off suffering.
This is NOT the fault of frontline staff. Nurses, aides, techs, doctors—they’re drowning. The blame sits at the top: hospital boards and executives who treat staff like disposable parts. And when staff are treated like shit, patients suffer.
Unsafe staffing ratios
Mandated overtime
Nursing assistants with 12+ patients
Patients bankrupted by a single hospital stay
Hospitals are businesses. They will never eat the cost. They will always pass it down to us—the people with no choice but to show up when we’re sick.
So when you see my anger, my outbursts, my rage—understand this: it’s not aimed at individuals. It’s aimed at an industry that values money over human life.
If you’re not furious, you’re not paying attention. And if you think this system will spare you, wait until you get sick.
Health "insurance" isn't the problem. The problem is variable and uncapped pricing for healthcare services (and Rx) which employers are incentivized to support through tax exclusions. That tax exclusion translates to a tax "expenditure" of ~$300 billion - each year. We don't NEED single-payer (which does work) but we ABSOLUTELY need single-pricing.
Weaning people off of commercial coverage doesn't change the underlying pricing structure - which is HIGHLY variable AND uncapped.
Tom, this is a terrific. I would add a conceptual layer to the question you ask at the start of the 2nd section: what would health insurance that actually functions like insurance look like? And that is, what are the medical challenges that health insurance was designed to solve, and what medical challenges does it not solve? To the first question, as you say, health insurance should primarily cover catastrophic injury/illness plus routine and elective care. However, the overwhelming portion of premium costs and system spending is for NONE of these things. It's to pay for steadily advancing chronic disease, especially relating to metabolic issues. Almost two-third of medical spending is for the approximately 30% of Americans with multimorbidity.
It's impossible scientifically, practically, and financially, to solve decades-long, chronic and complex issues using a system designed to solve short-term issues.
That's why we need two systems, not one. Health insurance for routine, emergency and elective, which would greatly reduce premiums, perhaps by as much as 75%. And life insurance for chronic and age-related. Essentially, create long-term alignment and payback horizons that reward insurers, individuals, and clinicians over time to reverse and prevent disease.
My book Life for Health explains how this can be done, starting with a focus on reversing and preventing metabolic multimorbidity, deploying it initially within self-insured employers. (Links to read more about Life for Health, see https://www.lifeforhealth.com or order the book at https://amzn.to/47U903a)
Wondering why the 75% of deductible is the unreasonable scenario. I believe I read that the median spend is $500 per year. It's more likely that patients spend a few hundred dollars yearly, then a few tens of thousands every decade or so.
My experience is that I rarely if ever met my deductible in the last 8 years. Healthy 34 YO male, with sports injuries including concussions. So gold star for your plan.
The one year I did meet my deductible was when I went hard on my persistent back pain. I’m convinced the real issue that year was the inflated sticker price of underlying services, which are inflated due to the medical loss ratio, lack of price transparency generally (I had no ability to shop for services based on quality and cost) and employer sponsored insurance (consumers can’t shop for plans either). The solution to the latter is ICHRA plans, which tie in nicely with your approach to restructuring insurance.
Maybe one caveat: how would you handle things like preexisting conditions - we need to ensure those folks remain ensured and get pooled in plans with healthier adults.
Nice work!
Regarding pre-existing conditions: Direct subsidies are better than mandates on what prices are allowed to be charged. All to do what you said, which is to get them insured and in the risk pool with lots of healthy people.
Just a gut feeling - I really need to dive into some long-run panel data to get a sense of how many large medical events a typical person has.
My colleague and I have also looked in the past about how much insured medical spending is below OOP maxes and above it. That's quite hard to resolve, but I think early indications are that more than half is spending above OOP maxes. To me, that trends to more frequent larger spends, on average.
Yep, difficult to find what the actual numbers are. And OOP probably a bit higher if you take the zero-cost-sharing benefits out of mandatory coverage. Which is a good thing.
Something else to factor in this is the cost difference when paying cash vs paying. deductible.
Most don't realize that by having insurance when you are spending your money for the OOP you are spending it at their contracted price.
Worse yet is when you pay the insurance contracted price with your deduct able the rebates for the pharmaceuticals and other services go back to the insurance company not you.
Tom's analysis of buying health insurance vs. just saving the premiums seems to underplay the stupendous risk in the first few years. A compound fracture of the leg, a badly broken hand and wrist, and many other conditions can easily cost $50,000. Hospitals may not wait around for the HSA balances to build up. Declaring bankruptcy may be an answer but it takes a strong stomach to do it.
Without the enhanced ACA subsidies, virtually no one would buy a health policy costing $41,000 a year. They would need an income of $500,000 a year. In MN where I live virtually all such families have someone working at a large corporation that offers health insurance. CA or Colorado might be different.
I am trying to post a longer comment. this is a test comment to see if I can get this working.
Good. But ponderous. Sorry to be philosophical but we need to ask first what health insurance is. It should insure ONLY against large losses. It should NOT cover first dollar. It should NOT be mandatory. It should ONLY cover high cost low incident maladies. Premiums SHOULD be pre tax. HSA plans should be optional and always included.
A friend has spoken to me about the idea of small scale community heath care funds. That within an agreed upon community, each person pays into the fund and it is utilized for these big health care emergency situations. More collective negotiating but also a bit less scary to consider not going it alone
Health insurance is a bad deal for healthy people and a good deal for really sick people. So yeah it being a 90/10 split or whatever doesn’t surprise me.
And I don’t just mean people who get sick randomly. I mean that most really sick people have pre-existing conditions and will chronically cost more then their premiums unless their pre-existing conditions are priced in. But if their pre-existing conditions are priced in then they couldn’t afford it.
So what “health insurance” really is, is a backdoor way for healthy people without pre-existing conditions and subsidize people that do have them. To make healthy people swallow this bad deal we’ve got tax breaks and exchange credits and mandates and we bundle the catastrophic coverage they actually want in with the whole kitchen sink.
The individual exchange plans are particularly bad because they are guaranteed issue. So the game theoretic solution is to not pay until you get really sick and then buy a plan where you know the insurance company is going to lose money on you.
Our healthcare system isn’t broken. It’s working exactly as designed—to profit off suffering.
This is NOT the fault of frontline staff. Nurses, aides, techs, doctors—they’re drowning. The blame sits at the top: hospital boards and executives who treat staff like disposable parts. And when staff are treated like shit, patients suffer.
Unsafe staffing ratios
Mandated overtime
Nursing assistants with 12+ patients
Patients bankrupted by a single hospital stay
Hospitals are businesses. They will never eat the cost. They will always pass it down to us—the people with no choice but to show up when we’re sick.
So when you see my anger, my outbursts, my rage—understand this: it’s not aimed at individuals. It’s aimed at an industry that values money over human life.
If you’re not furious, you’re not paying attention. And if you think this system will spare you, wait until you get sick.
Health "insurance" isn't the problem. The problem is variable and uncapped pricing for healthcare services (and Rx) which employers are incentivized to support through tax exclusions. That tax exclusion translates to a tax "expenditure" of ~$300 billion - each year. We don't NEED single-payer (which does work) but we ABSOLUTELY need single-pricing.
Weaning people off of commercial coverage doesn't change the underlying pricing structure - which is HIGHLY variable AND uncapped.
http://hc4.us/oneprice