Why insurance is the wrong model for health care

Insurance, in its traditional form, is the wrong model for health care financing. It is the wrong commodity to be bought and sold. We don’t need health insurance, and I will tell you why. I will also tell you what we do need.

Insurance is something you buy, and then hope you never have to use. It is a hedging of your bets against bad outcomes. Term life insurance is the best model for insurance as a commodity. When you buy term life insurance, you are placing a bet with the insurance company. They are betting that you will not die before the end of the term of the policy. You are betting that you will; or really, that you might.   Expressed that way, it is a lousy bet, and you hope you will lose.

However, the real bet you are making is that it would be financially disastrous for your family (or dependents or business or whatever depends on you being alive) if you were to die prematurely. So you buy the policy, and it is a rational decision because the premium is relatively low and the peace of mind that comes with the policy is worth the cost of the premium. Still, you hope you never have to use it.

Auto and home insurance is essentially the same, in that you buy it and you hope you never have to use it. However, these are (generally speaking) more expensive because it is more likely that you will have to make a claim. As with term life, the peace of mind that comes with the policy is generally perceived to be worth the cost of the premium.

Insurance as a commodity only truly works if the people buying the insurance policies are motivated by their own self-interest to avoid making claims.

Health care is different. I am hardly the first person to have said this, but it is clear from the bogus clamor around Obamacare that this simple fact has not sunk in for a large portion of the American population. Health care is different because everyone, at some point, will get sick. It is very unlikely that you will die before the end of the term of your term life insurance, and it is also unlikely (although less so) that your house will burn down or your car will get totaled. There is a reasonable chance that you will never need to use your life or car or home insurance, but there is no chance that you will not have to use health care. Everyone needs to go to the doctor, even if they are healthy. Everyone gets sick at some point. And when people get sick, they want to be able to go to the doctor.

Health insurance premiums, in this insurance-as-commodity model, cannot be priced affordably. The odds are very high (approaching 100%) that each insured member will have to make a claim, at some point. Therefore, the insurance issuer cannot make a profit unless the premium is high enough to cover all the costs, or if restrictions are applied to reduce the odds that insured members will have to make claims. Imagine if everyone’s house was destined to burn down at some point. How expensive would homeowners insurance become?

This is a simple, basic, and obvious fact. It is imperative that everyone, regardless of political ideology, concede the basic fact that we all get sick and we all will need to go to the doctor. This is the common ground on which health care reform must be built.

We need a health care financing system, not a health insurance system. We need a way for the inevitable costs of providing good health care to all of our citizens to be spread out in a way that is rational, fair, and affordable. The financing system needs to be effective at promoting good health maintenance for the well and high quality medical services and interventions for the sick.

How to create this kind of system is what we need to be debating, but the attacks on health care reform are all focused on bogus political rhetoric about freedom and liberty. The false arguments and blatant fear-mongering of the far right are distracting this country from the important topic that must be addressed. Freedom and liberty are promoted by a health care financing system that includes everyone. Free market enterprise is fostered by a health care financing system that uncouples health insurance from employment, and that minimizes the risk of bad medical outcomes and financial ruin for those who get sick and need care. The country as a whole is stronger if everyone has affordable access to health care.

If the almighty free-market system could have solved this problem, it would have done so by now. Health insurance as a commodity has failed, because health insurance as a commodity is the wrong model for how to finance health care. It is not wrong because of political ideology. It is wrong because of basic math and actuarial reality. The proponents of maintaining this system have endless empty political rhetoric about freedom and liberty, but not one single proposal for how to make it work in the way we need it to work.

I will never forget the first time I had a patient die directly as a result of not having health insurance. He was a man in his early 40’s, a self-employed carpenter. He had a wife and children. He had the work ethic and the sense of personal responsibility that our modern-day politicians love to canonize. What he did not have was health insurance.

He started having chest pains at work. You can all imagine where this story is going. He had a treadmill stress test, and it showed a high likelihood of significant obstructive coronary artery disease. I sent him to a cardiologist, who recommended a cardiac catheterization. The patient declined the procedure because he could not afford it. Less than a month later, he dropped dead from a heart attack at work.

As if the tragedy of this story is not enough to make one lose sleep, we all know that it was completely preventable. We know that if he had been able to get the cardiac catheterization, he likely would have been stented and back to work in a few weeks. And if that had been the case, he would still be alive, working and providing for his wife and children.

It boggles my mind that anyone, of any political persuasion, can find this story to be an acceptable side-effect of a health care system that protects our abstract “freedom of choice” by sacrificing our real hard-working uninsured citizens.

Paul Laband is an internal medicine physician.

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  • Joel Sherman

    There is no doubt that our system of private for profit health insurance is not a rational model for universal health coverage. At the very least a public option was required to keep insurance companies competing. Many systems are workable as is seen in Europe and Canada, and not all of them are even government run. Ultimately a single payer is likely the most rational, but I don’t see much hope for now until this country comes to a consensus that we all deserve adequate health care not conditioned on ability to pay as our present non system is.

    • Disqus_37216b4O

      “At the very least a public option was required to keep insurance companies competing.”

      Is there a “public option” for car insurance? For home & contents insurance? No? And yet insurance companies compete mightily for customers? So why do we need one for health insurance?

      Maybe what we need is less government intervention, not more.

  • David Wong

    Part of why the free-market has failed is because the consumer of healthcare (the patient) and the provider (the doctor) has been completely insulated from the price/cost of care. All of the incentives of the current system only drive the cost >UP<. So I think that health insurance should be actually insurance – catastrophic, rarely used and affordable. For everything else, it should simply be paid for out-of-pocket which will bring back free-market forces to healthcare. If you look at Surgery Center of Oklahoma's model, clearly even surgeries (and in this author's illustration) an elective catheterization can be brought down to a price-point that is affordable, even if it were to be financed like say, a car. The problem is that the current system is overpricing care. If you look at Keith Smith's model in Oklahoma, they are delivering surgical care for ONE FIFTH the price of others. Also, when the market is restructured so that consumers are paying, the market will be forced to deliver solutions that the consumers can actually afford — much like what has happened with Lasik surgery — otherwise they won't sell any product at all. I truly believe that making a better paradigm for healthcare will have a much better outcome than policy.

    • http://onhealthtech.blogspot.com Margalit Gur-Arie

      Real prices for Lasik surgery have been hovering around $4,000 – $5,000 (for both eyes) for years now. How many people with incomes that qualify for Medicaid can afford to get Lasik?
      And Lasik surgery is a cosmetic type of thing, like powder and rouge, not a medical necessity, so it’s really irrelevant to medical care in general.
      Also, I think some of us are looking for a solution that includes all Americans, not just those with thousands of dollars in disposable income.

    • karen3

      Imagine the guy probably could have flown to india and had the surgery for less than $5000 grand. too bad we can’t give people the option to do that while insured and too bad his doctor didn’t recommend that.

  • Tiredoc

    No, we don’t all get sick and run up a big hospital bill. Like your patient, whose terminal disease was stupidity, not poverty, many of us don’t cost a thing to die.

  • M.K.C.

    Also, you speak of “the bogus clamor around Obamacare,” “bogus political rhetoric about freedom and liberty,” “empty political rhetoric about freedom and liberty”, “our abstract ‘freedom of choice’,” and “[t]he false arguments and blatant fear-mongering of the far right.”

    Such hyper-partisanship and such overt disdain for at least half the population of the USA who don’t approve of where Obamacare is taking us, is not going to solve any of our problems. You are dismissing half of America’s genuinely-held beliefs about freedom and liberty as “bogus”, and calling half the population of the USA “far right.”

    Demonizing half of America — the half which disagrees with you about the ACA — is not going to get you anywhere.

    • Shirie Leng, MD

      I don’t think Dr. Laband is demonizing anyone. Perhaps “Bogus” was not the right word to use, but he is pointing out that the arguments being made for and against miss the point, which is that discussing insurance is the wrong conversation to be having.

      • Paul Laband

        Thank you, Dr. Leng. It is refreshing to see comments and criticisms that are not posted anonymously. See my response above; you are right that the political theater of opposition to the ACA has drowned out any rational conversation about what the strengths and weaknesses are of the legislation.

        • whoknows

          I fully agree with you. There is only a lot of negative reactions without actually critically thinking through the issues of the ACA. To me it’s disgusting.
          In real life, hard working people have literally died from common medical problems that are treatable. All because they did not have access to insurance.
          And that seems drowned out by a bunch of noise about the ACA.
          i agree there is a lot wrong with it as well. It certainly does not regulate the medical industry to keep costs down which IMHO is the central problem. Unfortunately it is hard to get ones point across because people are so reactionary some times in ways that don’t make sense to me.

    • http://joannevalentinesimson.wordpress.com/ ValPas

      He is demonizing the half of America that doesn’t understand the problem and does not have the heart to care for those who will suffer and die without mandatory health care. It was a shame when universal health care was taken off the table by the Obama team, but the insurance companies fought that with tooth and nail. Now we are stuck with this monstrosity. We need to look at the European models. If we had universal standard health care, the wealthy could then buy additional insurance for expensive, non-traditional procedures.

      • James_04

        Claiming that anyone who doesn’t support Obamacare doesn’t have a heart, and wants to see people suffer and die, isn’t demonizing them?

        Mmmmmkay.

  • J.L. Creighton

    With either health or auto insurance, if someone (a hospital, an auto repair shop) provides services to you, and you don’t pay for them, the person you stiffed will take you, not your insurer, to court to try to get payment for services they rendered to you.

    If you were in a car accident and took your car in to be fixed, and they fixed it, and then you refused to pay because your insurance company indicated that they weren’t going to honor the claim, the mechanic will go after you (not your auto insurer). Then, if you want, you can go after your insurer in court to try to force them to pay your claim. You can’t just take $10,000 worth of goods and services from an auto repair shop, stiff them on the bill, and say “well sue my car insurance company if you want to get paid”.

  • J.L. Creighton

    “If the cardiologist, the hospital and all administrators of the hospital who could not make alternative arrangements for such a serious condition automatically be courtmartialed made to lose their license to practice in the healthcare industry and also serve time for murder through negligence…”

    Seriously?

    What kind of paramilitary authoritarian state are you fantasizing about turning America into?

    Oh, wait. I forgot that free agency and liberty are passé these days, “bogus” ideals which only the extremists of the “far right” are concerned with.

    Carry on!

    • querywoman

      RE: courtmartialing. The cardiac patient might have had all the testing and still died quickly That’s medicine! Also, nobody could make the patient go for more care.
      I’ve been a welfare worker and a tax collector. A lot of middle class people are afraid to run up medical debt. Poor people know how to get stuff. Lots of times, I find the upper middle class and the wealthy are more willing to run up debts, etc. Accruing money involves a lot of risk.
      What I don’t understand is why an uninsured person was referred to a private specialist for extensive testing. There should have been a church or other charity medical complex within 30 miles or so.

  • whoknows

    Kidney dialysis. One of the most lucrative enterprises. Likely not based on needing one but on your ability to pay for one.

    • Neuroscientist

      It was just an unfortunate example of poor quality of care for chronic long-term treatment here. I believe that the system empowers hospitals systems as businesses rather than make them responsible for caregiving. It goes way beyond payment as renal failure generally results in the government picking up the tab. A repair shop will take responsibility and correct their error if they botch up something with a free service whereas a hospital will commit one mistake, charge for it and follow up with a charge to commit a second mistake and keep repeating this cycle till the patient dies or by a miracle, gets better and moves on. Since patients with renal failure really don’t get better, they depend on this system. The problem is not just with physicians but by the complex system with numerous technicians and various levels of care providers.

  • Disqus_37216b4O

    “I have never seen auto insurance negotiate like health insurance”

    Is that because the auto insurance industry in America is not as subject to government legislation, and thus not as protected by crony capitalism, as health insurance is?

    Let the Feds get in bed with car insurers as they have health insurers, and get back to me.

  • Guest

    “Compare statistics of 5 year Kidney dialysis survivors in America and Italy and tell me why we are so far behind.”

    American patients with government health insurance (Medicare, Medicaid) do have higher mortality rates. Maybe government healthcare in the US just sucks?

    • querywoman

      It could be because Medicaid and Medicare patients are older and sicker to start with!

  • Shirie Leng, MD

    Great conversation. I completely agree that payment for healthcare shouldn’t be insurance based at all. Or rather, we could have catastrophic coverage via insurance companies and have a universal system for health maintenance, minor illnesses, and screening tests.

  • PoliticallyIncorrectMD

    Insurance is a way to manage risk. It is done by spreading risk among all insured and making those with higher risk to contribute more. Neither mechanism is present in Obamacare as there is absolutely no incentive for people with low risk to sign up. It is not the insurance concept that is the problem, it is the government interference that makes it dysfunctional.

    • whoknows

      I thought it was the never ending escalating costs not being regulated that is the problem. Maybe they interfered with the wrong problem.

      • PoliticallyIncorrectMD

        Ironically, even before ACA the majority of the healthcare (Medicare / Medicaid) was tightly regulated. There was never a free market. Contrary to the popular belief, it is the overabundance of regulations (not the lack of them) which made the system dysfunctional. Similar is true for housing market, stock market, student loans market etc. – anything the government has tried to artificially interfere with fired back.

        • whoknows

          Oh i was not thinking about them regulating doctors or medicare specifically. That sounds horrible,
          I was thinking of the lack of anti trust laws I have been reading about with Pharmaceutical companies, as just one example. Or medicare not negotiating prices for medicare drugs.
          The rules need to change to get back to fair or at least more reasonable charges for these sorts of things. As stands now it looks like medical industry lobbyists are writing the laws.

  • querywoman

    If your patient was over the income limits for whomever you nearest public clinic/hospital system is, couldn’t you have find a church clinic/hospital to take him?
    Friday, I chatted with a waitress who cannot afford her restaurant’s health insurance. She looks better than I’ve ever seen her to look. She used to use a public hospital, and thought she had lung pains.
    Then she switched to a clinic associated with a church hospital. The hospital did her financial and she has never had a copay. The hospital did exploratory surgery. She had esophagal cancer and got ti all removed.

  • querywoman

    Nobody needs health insurance. Most people need medical care.

  • Paul Laband

    I agree: the health insurance industry is far from a truly free market, for the most part. (Then again, depending on how free you need a market to be before you call it a truly free market, you could make the argument that there are no truly free markets in the US).
    However, I would say this. There is a tiny portion of the health insurance market that somewhat approaches a free market, and that is the individual health insurance market. We have seen how that works.

    • James_04

      “There is a tiny portion of the health insurance market that somewhat approaches a free market, and that is the individual health insurance market.”

      Absolutely untrue. The individual insurance market does not even /somewhat/ approach “a free market.”

      http://mises.org/daily/3727

  • Paul Laband

    I agree, there is a ton of work to be done outside the financing model to address the problems in our health care system. Tort reform, re-invigorating primary care, reducing harmful variations in patterns of care, drug pricing reform…..the list goes on.

    However, immigrants are not a major problem in comparison to the big drivers of health care inflation. It makes sense that a large portion of the uninsured are illegal immigrants; but that does not translate into a bigger financial burden on the system. In fact, immigrants have lower per-capital health care costs than people born in the US.Here is a study which documented this fact: Mohanty et al. “Health Care Expenditures of Immigrants in the United States: A Nationally Representative Analysis,” American Journal of Public Health; Vol 95, No. 8, August 2005.

    As for freedom and liberty, I place an extremely high value on them as well. Nowhere did I state anything which would suggest that anyone should be apologizing for valuing these core values. However, a mandate to buy health insurance or pay a small fine if you choose not to is hardly what I consider a serious threat to my individual liberty. My objection is to the use of this perceived threat as a major argument against the ACA. As I have said elsewhere, there are many legitimate criticisms of the ACA, and we should be discussing those. But threating freedom and liberty is not one them.

  • Tiredoc

    “Suffering from poverty” is the key phrase. I don’t place much faith in social science surveys of any political stripe, particularly when you’re comparing two nebulous factors like “poverty stress” and “serious medical condition.”

    It’s apparent that you don’t actually see that many Medicaid patients. I have plenty of Medicaid patients that won’t do what I tell them even though it’s free. It’s called denial, and they’re masters of it. Poverty isn’t an absence of money, but a pattern of behavior and choices that results in bad outcomes. We already fund the poor’s health care, with not much to show for it. What makes you think covering those just above poverty will do better?

    Your argument that “everyone gets sick” means the life insurance model doesn’t work for health care isn’t worth much more of a response than I gave it. Health insurance isn’t any different from any other insurance. You pay in a group for your risk as an individual for a pre-arranged period of time. It isn’t insurance for not ever getting sick, but for not getting sick that month.

    As for the anonymous, you posted under your own name that you directed your patient to see a cardiologist and he died. Unless you documented that you fired him for failing to take your medical advice, you have stated publicly your liability. Sounds stupid to me.

    For the record, from your description your patient was not actively infarcting, which means that the “large and growing” body of evidence indicates that he would have been just as likely to die after the cath and stent as not getting the cath and stent. That is, of course, if he was willing to take his medicine. So, half-baked politics or no, you’re probably in the clear.

    As for telling the patient’s wife that he was stupid, I believe I would have had that conversation with the patient, before I let him walk out the door.

    • querywoman

      Tiredoc, dear, you are one of the most sensible docs who posts here!

      • Tiredoc

        Thank you.

      • wahyman

        Sensible with respect to what?

        • Tiredoc

          I bought two pairs of Naot slip-on loafers 4 years ago that I wear to work every day. The Vibram soles still look almost new and the cork shoe bed still has spring and doesn’t collect odor like foam. If they’re dirty, I can shine them. I paid $100 for both sets of shoes, on sale of course. Very sensible.

  • NormRx

    “After all, healthcare is the single most important cause of bankruptcies.”

    Not sure if you are correct on this one. I think divorce is the number one cause of bankruptcies. At least in my little world. I don’t know anyone that filed for bankruptcy because of illness, but I know of several that have filed after divorce. Even though alimony and child support payments cannot be eliminated through bankruptcy.

    • James_04

      People declare bankruptcy because they don’t have enough money to pay their debts. In the survey being referred to, anyone is counted as “medically bankrupt” if they cite illness or medical bills as *a* reason for bankruptcy, even if other debts, such as foreclosure and credit card debt, (or other circumstances such as divorce) are the *primary* reason.

      http://www.realclearmarkets.com/articles/2009/07/30/the_medical_bankruptcy_myth_97335.html

    • querywoman

      I never declared bankruptcy, because it’s usually not necessary. But, in the old days of $200 deductible and 80% reimbursement after paying out of pocket, all the doctors wanted 100% of their cash up front.
      So I used credit cards.
      And then I used checks against credit cards to cover my COBRA insurance for 18 months. It was $147.74 per month. I eventually got a job, but my boss was teetering on bankruptcy and didn’t have insurance.
      When I became unable to pay my debts, it was technically credit card debt, but ti was really medical debt.

  • Katie McMorran

    I think this is a great context! “We need a health care financing system, not a health insurance system” thank you for sharing!

  • http://warmsocks.wordpress.com/ WarmSocks

    I agree with you that medical insurance is a problem. However, I don’t think there is anything wrong with letting individuals take responsibility for their health and their choices.

    We need a way for the inevitable costs of providing good health care to all of our citizens to be spread out in a way that is rational, fair, and affordable.
    I do not agree that we need a way to spread the cost. It is reasonable and fair to expect people to pay for their own expenses. If you want to be fair, do not take one person’s money to pay for someone else’s care (that’s what “spreading the cost out” means). What we really need is a way to bring down the price tag so that people can afford to get the care and treatment they need.

    If the almighty free-market system could have solved this problem, it would have done so by now
    We have not had a free-market system for decades. I believe that if we eliminated insurance entirely, the market would be forced to adjust prices accordingly. If doctors didn’t have to employ coders and billers and people to handle PAs, they could charge less money while taking home more. If people could call around and learn that x-rays at the hospital cost $1200, but the same x-rays at the independent clinic were only $125, the hospital would quickly find a way to lower the cost. In a free market system, Children’s Hospital wouldn’t charge twice as much as other labs. If people had to pay $100 instead of $5 to see a doctor, they might not be so quick to run to the doctor for a simple cold. The free market should be given a chance to work.

    The gentleman you mentioned who chose not to have recommended surgery did not die due to a lack of insurance. He died sooner than he might have otherwise because he chose not to invest money in surgery. It was his right to evaluate cost/risk and make that choice for himself. Lest you think I am entirely cold-hearted about it, I would point out that I had a similar scenario in my own family. My uninsured father died of a heart attack at age 59 when he chose not to seek medical care. Given all the classic MI symptoms, he sat down and phoned all his siblings & kids for a last goodbye (without telling any of us what was going on). He chose not to see a doctor. He chose not to incur medical bills. I do understand the pain and loss of those left behind, but I also respect that people are free to choose whether or not they want to buy medical care. While I would have been happy to contribute toward the cost of care if my father had chosen to go to the Emergency Department, I do not believe that society at large should have an obligation to contribute to the care of others.

    • James_04

      You make some excellent points.

  • Cy Chyc

    Fear mongering? Far Right? No no that’s not the left’s position at all–that is directly how the Left makes it’s money and stays in power, fear mongering and race baiting… I hope Medicaid and Medicare pay you full price, oh, wait they usually only pay .20 on the dollar. Good luck with Obamacare!

  • fatherhash

    if the war is on disease, then in your world, the patients who continue to smoke, eat unhealthy, and sit on the couch all day should be prosecuted as traitors.

  • fatherhash

    i think what you are seeing in the real world of gritty medicine is patients too used to being taken care of rather than taking care of themselves. think about some of those same poor patients with comorbidities that continue to smoke and eat unhealthy…..personal responsibility also must play a huge factor in society.

  • Dorothygreen

    I agree that “Health Insurance” is not the same as other
    insurances. But other countries have shown insurance can be incorporated into a universal health care system. It is a method of payment collection, distribution, risk management and administration. Switzerland’s health care system is all
    insurance. It works. But it is higher cost than single payer
    systems because it has choice. But even this higher cost is half what the US Health care costs. And comparing their insurance exchange options to the ACA on they are less – for
    example US is $150 per under person under 18, whereas in the Swiss System is it under $100, the maximum OOP costs are less. Employers are not mandated to pick up employer insurance tab, it is an option. The Swiss have a higher minimum wage.

    So, insurance is not the problem. The problem in the US is that doctors, hospitals, equipment co, pharma, lab, have the power to set prices independently. Every other country has recognized that the “Free Market” is not applicable to health care with the Swiss making their reforms as late as 1996. Except for the VA and Medicare part A the US should use insurance companies and exchanges for everyone – no more mandated employer insurance, Medicaid and Medicare part B, C, D E and F subsidize insurance for low income. Then we will have a health care system. This is the only way along with reforming our eating culture which is the leading root cause of preventable diseases and hence health care cost. This should include an excise tax on low nutrient,
    high caloric foods which is subsidized. It is not the farmers who profit from this, it Big Food. Everyone needs access to affordable healthy food as much (actually more) as we need access to affordable quality health care. It is the biggest National security issue.

  • James_04

    “Further, the charges are clear and can be compared.”

    Very true. We definitely need more openness and transparency in health pricing. But as long as almost no-one’s actually paying their own bills, it’s never going to happen.

  • James_04

    Fewer than one percent of Americans enter bankruptcy each year. Of those, only three to five percent are plausibly bankrupt due to medical debt. The vast majority of Americans who go bankrupt, 90% of them, have less than $5,000 in medical debt.

    That “study” that everyone keeps quoting, that “proves” that “healthcare is the single most important cause of bankruptcies”, is fatally-flawed junk science.

    The author of that study is a co-founder of Physicians for a National Health Program, an organization that describes itself on its Web site as “the only national physician organization in the United States dedicated exclusively to implementing a single-payer national health program.” An additional coauthor is co-founder and secretary of the organization. And their methodology is lousy.

    The Healthcare Bankruptcy Myth is debunked in detail here:
    http://www.realclearmarkets.com/articles/2009/07/30/the_medical_bankruptcy_myth_97335.html

  • Tiredoc

    You, apparently, have never been poor. If you actually have to eat on less than $50 a month, you don’t eat food that is bad for you. It costs $4 in oil to deep fry anything, and you can’t use the oil for more than a week before it goes rancid. The food that you make because you don’t have money isn’t bad for you. The stuff the underclass buys isn’t cheap, it’s easy. Your condescending “understanding” is nothing more than enabling pathology.

    I have poor patients that won’t get free cancer treatment, that won’t take the free heart medicine, that won’t attend the free physical therapy next door to their apartment. That isn’t “poverty stress,” it’s bad decision making. I might in 10 minutes help ignorant. I can’t fix stupid. And by stupid, I don’t mean low-IQ stupid, I mean normal-IQ rationalizations, the kind that produces the patient that dropped dead of a possibly preventable heart attack.

    If you want to feed, clothe, and house the poor, fine. Knock yourself out. But don’t kid yourself about who they are, and don’t screw up our entire health care system to benefit people that say whatever line that will shut you up so they can go home and not think about their mortality.

    • querywoman

      Don’t you have some rich patients who are noncompliant also?
      But your talk of poor patients who won’t comply reminds me of my years in public welfare. A lot of my clients thought the doctors and nurses at the public clinics and hospitals and clinics were going to fix them. It doesn’t work like that.
      For the most part, unless a doctor is a surgeon or anesthesiologist, the doctor doesn’t do much of anything more than write instructions on a piece of paper, a prescription. Doctors mostly give advice. It’s up to the patient to follow the instructions.
      Also, it’s not just about taking medicine and following diets (which most people won’t do), etc. It’s also about a mental laziness.
      I’ve seen more than a thousand people get Soc Sec finally and do nothing more than sit on their rears and watch TV all day long and feel sorry for themselves. That just makes ‘em worse and keeps ‘em down. Also, chat on the cell phone incessantly nowdays!

      • Tiredoc

        You are entirely correct. My winning smile has no healing properties, my prescriptions are useless if they remain in paper form, and my recommendations are no more significant that TV static if they are not followed.

        I have noncompliant patients in all income brackets. I do find that I have more noncompliance in the Medicaid population than I do in the patients with commercial insurance, Medicare, or who are buying all of the medications themselves, with cash.

        There is a particular kind of noncompliance that is present in much higher numbers in the Medicaid population. It’s the “why should I bother” noncompliance. Money doesn’t fix that.

        • querywoman

          I always suspected my welfare clients didn’t comply.

        • querywoman

          Since medical insurance is associated with work under the current system, the insured tend to people who are responsible enough to hold down jobs.
          I worked for the IRS briefly after public welfare. Though the veteran taxpayers thought it was a nuthouse, it was easier for me to deal with people who owed taxes over the phone than welfare types in person.
          I had people screaming in my face for years, “It’s your fault my children can’t eat.”
          I got the blame for the public hospital, and their supervisors didn’t take complaints from patients like my welfare supervisors did. In welfare, my supervisors on up to 2 levels above me got their ears blasted on a daily basis.
          Now that I am on disability, I sometimes help people with food stamp or tax problems. Helping someone with the IRS is like a day off after helping someone with their food stamps! People who owe the IRS will generally give the info I need and answer my questions.
          There is one tax problem I will not dabble in: the Earned Income Credit. People with children who work can get tax refunds of up to $4000 or $5000 as kickbacks for working. Much more than they pay in!
          Sometimes, though, the mother or father is not the one in the house to get the EIC. It’s the primary wage earner. I am not going to tell some welfare snot that her mother or sister gets the EIC!
          The EIC is what I really call welfare, though it’s not called that. I always say the average life of an EIC is two or three weeks. They blow it all, and it does stimulate the economy.
          The IRS gets lots of complaints on people who claim a child as a dependent or for the EIC who doesn’t have the child. The IRS plays hardball with EIC cheats. They make ‘em pay it back and disqualify the cheat for 5 years.

          • Tiredoc

            Bless you for your service.

            My only exposure to social work, other than the disposition detail on hospital wards, was working the intake examinations for pediatric abuse victims for the city’s DSS during medical school.

            Shadowing the pediatrician examining preadolescent rape victims covered in filth and bruises, then sitting in the team conference discussing disposition is an entirely enlightening experience.

            Realizing that most of the victims already have charts at the center is equally revealing.

            I honestly don’t know why it’s called “going postal” instead of “going social work.”

          • querywoman

            CUTE!
            I worked in public welfare with a bunch of messed-up human beings.
            Only a crazy person or a religious person would do that job all day.
            It’s part of my life, my mission. My father was homeless some before he married my mother, but he was young and driven. Not lazy!
            Daddy gave money to charities when he had some to give, but he did not want to hear stories from my office.
            I was about 18 before he had some real money to send the Salvation Army. I think he sent them about $100 then and more one and off to them the rest of his life.
            I don’t care for the Sally much. I send a little over $5 a month in his memory to another homeless shelter that accepts the younger men, like he was.

        • querywoman

          On some other thread on KevinMD, someone question why Medicaid dialysis patients in the US have such lousy outcome as opposed to some other countries.
          Duh? You and I answered that here.
          It’s hard to believe, though, that the US has some of the laziest, most irresponsible people in the world. Everyone’s got ‘em.

    • wahyman

      Gee, I wish tiredoc was my doctor, he is so compassionate.

      • Tiredoc

        (sarc)?

      • Tiredoc

        Compassion, I have. Pity, not so much.

      • querywoman

        Wahyman, some people are mean-spirited enough to give you 2 dislikes here. I liked you.
        Tiredoc is just an ordinary man following medicine, his mission, and doing the best he can.

        • wahyman

          Thank you, although in the realm of mean-spiritedness, two thumbs down is not something I am going to give alot of concern to.

    • wahyman

      I believe that it is a new concept that the poor have full access to healthy food at lower prices than unhealthy food. I don’t suppose you have a citation for this?

      • Tiredoc

        Citation? Go to the grocery store and see what you can buy for $50. Vegetables: collard greens, turnip greens, onions, green beans, celery, carrots, potatoes. Calories: Rice, beans, oatmeal. Miniscule amounts of meat and cheese for flavoring and protein, generally with lots of bone. Eggs. Tomatoes in a can, on sale. Frozen fruit, on sale. Stale bread.

        The cheapest fast food: McDonalds. $5/meal. 3 meals/day, $15/day. $450/month.

        You can skip fresh fruit entirely and have a healthy diet. Buy it in season when it’s cheap, otherwise leave it off the menu. Frozen fruit actually is more nutritious than fresh, due to the increased ripeness at freezing time. Infant formula is for the most part an unnecessary product.

        All of those supposed studies about how expensive a healthy diet is are ludicrous. It doesn’t take a steady supply of out-of-season ephemera from Chile to eat nutritiously.

        A large percentage of the world lives off of less than $1/day. Most of those people aren’t malnourished. Thin, yes. They do, however, have to cook their own food and not take it out of a box.

        • wahyman

          So how much nutrition information do you provide?

          I guess those poor people just like to be sick and die young. Which is their choice after all.

          • Tiredoc

            Your sarcasm is misplaced. The toughest noncompliant patients are the ones who are simply passing time before their funeral.

            I hear bizarre things like, “I don’t want to live past 50,” and “all the men in my family died in their 40′s” on a regular basis. To break into that fatalism, I have to prove myself again and again, slowiy chipping away at their devotion to ill health.

            That takes a huge amount of uncompensated time in patient education and bureaucratic finesse. Showing people that they have the ability to make changes in their lives and their destinies is empowering for them, not condescending.

            I treat Medicaid patient because I believe that I am called to do so. My success in that endeavor is evidence of my call. I believe that helping the poor to live healthier, longer lives is a moral good, irrespective of the source of their condition.

            You seem to define compassion as a set of beliefs concerning the culpability of the poor in their condition. Take that argument to your congressional representative or political action committee and quit wasting electrons on me.

          • wahyman

            I think I found something here to actually agree with.

        • querywoman

          Most people eat foods in season and always have. In the Western world, we have modern refrigeration and transportation that gives us a wide variety year round.

          • Tiredoc

            They can make a peach look like a peach, feel like a peach, and smell like a peach. They can’t make it taste like a peach. After throwing money away for years, if I don’t see the trees, I don’t buy the peaches.

  • querywoman

    With the cost of health care, it’s very hard for anyone, immigrant or citizen, to be self-sufficient.

  • John Hunt

    Give Me Liberty, or neither health or life are worth a damn. Ah, heck with it. Don’t give me liberty. It’s mine already and I will just take it back.

    I have the right to PURSUE health care, not a right to health care, and the government keeps interfering with my right to pursue it, which means the government has infringed on natural law once again.

    The liberty minded folk who are disdained in this article despise Obamacare for a very good reason: because Obamacare is crony corporatism (some would say economically fascist).

    There has not been a free market for many decades, and medical hyperinflation and centralized price controls (insanity!) has resulted from its lack.

    The politicians tend toward moral insanity (what is now called sociopathy): lying, manipulating, controlling. Why give some of the worst humans–the politicians–power over our health care, in any way, shape or form?

  • wahyman

    I believe the analysis overlooks a few things.

    1. The policy someone has now is not the policy they will die with. Therefore their current premium can reflect only their current risk.

    2. The insurance companies aren’t losing money, so the model must work for them.

    3. Some people with insurance are generous enough to die cheaply, e.g. sudden lethal heart attack, fatal car accident.. These deaths do not cost the insurance company much so there is still shared risk.

    4. At some point your health insurance company wishes you would die because you are then costing them alot of money.

  • Bob Nelson

    robertnelsonmd November 4, 2013

    Dr. Laband correctly lays out the reasoning why Health Plans, masquerading as “insurance”, are inefficient and cause prices to soar. What I would challenge is the notion that, and I quote “If the almighty free-market system could have solved this problem, it would have done so by now.”

    The reality is, we haven’t given the Free market half a chance in health care since advent of HMO’s. Given the way third-party Health Plans work, the Free Market is virtually non-existent in health care today, because there is essentially no consumer pressure on prices. The demand-Price curve is all jacked up; therefore the inflationary spiral we have witnessed in health care for the past 40 years. Dr. Laband is correct about the distorted nature of “health insurance” and why is doesn’t work as a finance tool. This is because Health Plans largely use someone else’s (employer’s) money to “reimburse” something that should be paid directly. This is highly inefficient and excessively expensive. It flies in the face of how “insurance” is supposed to work, as pointed out eloquently by Dr. Laband.

    Contrary to, and with all due respect to Dr. Laband’s view, I do think this is a liberty issue. One can’t separate personal liberty from economic liberty; the two are inseparably linked. And I am not talking about hijacking the notion of “liberty” which is easy to do on the left as well as the right side of the political isle. l I am talking about REAL liberty, which comes with true choices about how and when to spend our health care dollars and what risks we want to insure and those we don’t insure.

    While I totally agree that the third-party “insurance as a commodity” is not working, it is NOT because of a failure of the Free market. There is really NO FREE MARKET IN HEALTH CARE Sector because of many of the reasons Dr. Laband points out. Ironically, it is precisely because of the way Health Plans are structured and financed that distorts the Free Market, causing the third-party payment system to be the disaster that it is. This is largely due to the consumer-patient NOT having control of most of the first-dollar expenditures. These are tied up in premiums and networks, linked to employment and restricted to contracts that patients have no control over.

    There have been many solutions proposed outside of the third-party system that most Physician live and work under now. Here is a synopsis of the key points of market-based reforms:
    1) Move to a defined contribution model for the medical social safety net, not a defined benefit (medicaid, medicare). Singapore has shown us how this can be done effectively. This is the only way to achieve fiscal budgetary sanity.
    2) Physicians (providers of care) should NOT be part of networks; they should be free professional agents
    3) Health Plans (insurance) should NOT be zoned by networks or linked to employment: it should be personal, portable, and privately held.
    4) Prices need to be transparent: a by-product of Direct-Pay medical care
    5) Insurance should indemnify against finacila risk, rather than be a pre-paid medical plan.
    6) Assuming we stick with our crappy tax system, Feds should provide a refundable tax credit to offset the cost of purchasing health insurance and all restrictions on HSA contributions should be lifted and anyone who wants an HSA should be able to have one. ALL medical expenses should qualify as an income deductions

  • 123itall

    You hit the nail on the head. Pity you’re getting some hostile responses. Yes, the wacko “death panel” rants and “he’s a commie” type stuff prevented any rational discussion of the problem. As a result, we’ve now been sold (even more than before) to the insurance companies who have even more of a stranglehold on healthcare. What should have happened was creating a sane and fair method of paying for treatment and abolishing any and all bureaucracy and any profit by parasites, corporate or government, who interfere with care. The only people who should be paid are doctors, nurses, techs, etc., janitors, building maintenance and one good receptionist. Payment should be through some simple system without needing to prove to some bureaucrat anything.

    As things stand, the interferers who don’t do anything clinical or supportive still profit from tormenting doctors and making care worse for patients.

  • James_04

    I have no issues with individual insurance. I was just pointing out that contrary to Paul’s claim, the individual health insurance model does not operate in anything even approaching a “free market”. I agree with you wholeheartedly that more free-market approach would be a good step forward.

  • http://www.waynecaswell.com Wayne Caswell

    I believe the key to health reform is getting the incentives right.

    Yes, insurance adds nothing to health care but costs, but the health care delivery system needs reform too. It currently views patients as paying customers and works to keep them coming back by treating symptoms and managing disease. There’s no incentive to keep them healthy in the first place, because that’s not where the profits are.

    Consider this hybrid model: http://www.mhealthtalk.com/2012/08/hybrid-model/.

  • Brian Mckenzie

    Paul almost got there

    1) Health insurance as it is written – IS a poor vehicle for the transactional nature of the beast

    2) FORCED consumption is NEVER free market.

    3) I have submitted the proposals several times -
    they fall on deaf ears because they are new, and some talking head lobbyist didn’t come up with them.

  • PoliticallyIncorrectMD

    Given all policy mandates under ACA, premiums are much higher than fines, hence no incentive to sign up.

  • http://warmsocks.wordpress.com/ WarmSocks

    I don’t recall advocating that we “ignore the commons.” People should give freely, not out of compulsion.

    Our society freely contributes when people are hit by disaster, be it hurricanes, typhoons, tornadoes, earthquakes, car wreck, cancer, etc.. It is normal to see benefit dinners in communities that are trying to raise money for the medical bills of one of the community’s members. It is normal to send money and labor to assist those suffering from natural disasters. Our society wants to help people who need it. We just don’t like extortion.

  • http://warmsocks.wordpress.com/ WarmSocks

    As others have pointed out, healthcare is not the cause of most bankruptcies. For those claiming bankruptcy who cite medical costs as a reason, we still need to take a closer look. Some claims are legitimate. Some are not.

    My soon-to-be-ex sister-in-law declared bankruptcy due to medical bills. Except… well, she shouldn’t have ever incurred most of those bills. She got kidney stones, went to ER, got pain meds, internist referred to a specialist. I’m ok with that and would have no problem helping with those costs if help was needed. Those were ordinary costs, though, and not the cause of bankruptcy. SIL kept getting stones, specialist wrote a prescription for a med to prevent stone formation but SIL only took it two days; she didn’t like it. She refuses to change her diet; she refuses to even drink more water as instructed. She claims that she should not have to do anything because it is the doctor’s job to fix the problem. Her solution is to keep going to the ER for more pain meds. She has even gone to urgent care to get pain meds for the horrible pain of her kidney stones that prevent her from working M-F, but don’t prevent her from going out with friends all weekend. Instead of filling the prescription, she will leave it in her purse and go to the ER for a new prescription. The database doesn’t show the previous day’s rx because it was written elsewhere and not been filled yet. She can then fill both prescriptions at different pharmacies whenever she wants. This has gone on for about five years. SO… sure, she has big medical bills, but it is her own fault. She has no money in the bank, but it is her own fault. I loaned money to make the house payment, and she instead used it to take a vacation. No responsible person would make 14 trips to the ER in one month for kidney stones. I cannot for the life of me figure out why the ER doctors just hook up an IV when she shows up, instead of giving her a referral to a drug treatment program.

    She claims that medical expenses caused her bankruptcy, but that is not true. Her refusal to take responsibility for her own health, combined with her drug addition are the real causes of her bankruptcy. I take all those “medical expenses” claims with a grain of salt.

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