David Brooks’ piece in today’s NY Times suggesting some fundamental reading material for President Obama as he attempts to push forward with health-care reform contains a reference to an article by David Goldhill in The Atlantic called “How American Health Care Killed My Father”.
The article itself is excellent all the way through, but it contains something that I have long opined. Goldhill says it better than I:
But health insurance is different from every other type of insurance. Health insurance is the primary payment mechanism not just for expenses that are unexpected and large, but for nearly all health-care expenses. We’ve become so used to health insurance that we don’t realize how absurd that is…
We all believe we need comprehensive health insurance because the cost of care - even routine care - appears too high to bear on our own. But the use of insurance to fund virtually all care is itself a major cause of health care’s high expense.
Insurance is probably the most complex, costly, and distortional method of financing any activity; that’s why it is otherwise used to fund only rare, unexpected, and large costs. Imagine sending your weekly grocery bill to an insurance clerk for review, and having the grocer reimbursed by the insurer to whom you’ve paid your share. An expensive and wasteful absurdity, no?
A more consumer-centered health-care system would not rely on a single form of financing for health-care purchases; it would make use of different sorts of financing for different elements of care - with routine care funded largely out of our incomes; major, predictable expenses (including much end-of-life care) funded by savings and credit; and massive, unpredictable expenses funded by insurance.
The whole article is just right on. And, for an article so critical of insurance as a form of health care financing, it is surprisingly conservative in its basic premise: remove the distortions and moral hazard that are the natural consequence of our current reliance on comprehensive health insurance, and allow the competitive market for health services to function with patients, not insurance companies, private or otherwise, as the true consumers.