Having health insurance is not the same as receiving health care

“Health insurance is not health care.”

That is not original. I borrowed it from Los Angeles County Department of Health Services Director Mitchell Katz’s JAMA Internal Medicine editorial about problems with ensuring access to health care for Medicaid recipients whose cheap public insurance usually doesn’t even pay doctors enough to recoup costs of care, let alone earn a living.

But somehow, during the impassioned political debates that preceded Obamacare, the botched rollout of Healthcare.gov, and the pointless debate about how many people got (or lost) health insurance from the Affordable Care Act, it’s easy to miss omit critical point, which Dr. Katz makes clearly: “Health insurance is a financial mechanism for paying for health care. It is not the care itself, or even a guarantee of that care.”

Most of my colleagues would say that health insurance makes it easier for people, especially those with limited means, to access health care. I’m not sure I agree (especially for inexpensive primary care services), but it’s easy to see why they feel that way. Health care spending makes up nearly 20 percent of economic spending in the U.S. On an individual level, what do you spend 20 percent of your income on? Housing? Transportation? Food? Unless you’re exceptionally wealthy, it’s hard to imagine finding another 20 percent to spend on health care, especially expensive care related to a catastrophe, such as a car accident or heart attack.

I believe that health insurance should be a mandatory financial mechanism for paying for unexpected, catastrophic health expenses, just as fire insurance will pay if my house burns down or flood insurance will pay if a hospital in a low-lying area is devastated by a hurricane. On the other hand, health insurance is a grossly inefficient mechanism for paying for expected care — that is, primary and preventive care.

Think about how insurance works when you visit a typical family physician. Depending on your plan, you may pay a fixed co-payment, or pay nothing. You receive medical services recommended by your doctor without knowing (or asking) how much any of it costs. What your doctor charges for these services has very little relevance to you and even less relevance to the insurance company, which will pay whatever price it has pre-negotiated for its members. This is the way health care financing has worked for so long that it’s difficult to step back and realize how stupid it is.

Let’s substitute food for health care and imagine there is such a thing as “food insurance.” You enter the grocery store and pay a fixed co-payment, or pay nothing. You choose food items recommended by your grocer without knowing (or asking) how much any of it costs. What your grocer charges for the contents of your shopping cart has very little relevance to you and even less relevance to the food insurance company, which will pay whatever price it has pre-negotiated for its members. Does this sound like a good way to make food more affordable? When people are poor enough that they can’t afford to buy food, governments don’t provide them with food insurance, but food stamps (or supplemental nutritional assistance) so that they can purchase food directly.

A couple of years ago, I blogged about a friend who had the misfortune to need an appendectomy while he was uninsured. You might assume that after that experience my friend, whose name is Jose Padilla, would ridicule “consumer-driven health care” and be all for insurance paying for every single medical expense, no matter how minor. You would be wrong.

Jose, who is now a candidate for Congress from the state of Nevada, told me recently that “insurance should be there for those situations where you don’t have the time to negotiate and/or the cost would bankrupt you.” In his opinion, the biggest problem with health care is that the prices are too high. The prices are too high because there is no price transparency (imagine how hard it would be to shop for groceries when you weren’t told what the food cost until a bill arrived in the mail weeks or months later), and there is no price transparency because someone else other than the patient is paying most of the bills.

As Jose’s health care platform observes, “the health care industry [is] one of the only U.S. industries where the addition of new technologies causes an increase in prices.” Why? Because medical prices will increase as long as someone else — your employer, your government, Obamacare, whomever — is willing to pay them. Why else would ophthalmologist Salomon Melgen inject patients’ eyes with a very expensive drug (Lucentis) instead of a much cheaper equivalent drug (Avastin)? Because he could bill Medicare Part B $11.8 million for those shots in 2012 instead of $500,000. In fact, 879 of the doctors who billed Medicare at least $1 million that year were ophthalmologists using Lucentis, according to the Washington Post.

If you want to know how much money your doctor received from Medicare in 2012, click here. (I received $3,201.) Kudos to the Centers for Medicare and Medicaid Services for making this information public, and for reminding us of the disconnect between having health insurance and receiving health care.

Kenneth Lin is a family physician who blogs at Common Sense Family Doctor

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  • SherryH

    I couldn’t agree with you more. Insurance is not care. And the advertising the government has done regarding the ACA only made things worse, because throughout the debate and after, they kept calling insurance “coverage”. So until something happens you pay a premium and think that when something goes wrong you will be “covered”. For those of us that have had to learn hard lessons, the truth is, insurance is more extortion than coverage. If we saved the money we spent on premiums, and if health care prices were transparent and more affordable, people would be able to directly pay for care. Insurance should only be for catastrophic expenses, everything else should take part in a free market system.

  • http://frugalnurse.com/ Frugal Nurse

    I agree with Dr. Lin. Using health insurance to cover preventive and primary care is like using car insurance to pay for routine oil changes and tune ups. Please bring back my catastrophic health insurance with the low premiums and high deductible!

    Now I have high premiums and a high deductible, and I feel I am grossly overpaying (prepaying) for that annual exam, mammogram and cholesterol level. There is not good evidence that any of these preventive measures are useful on an annual basis, so let me and my physician decide how often I need them. Don’t make me pay for yearly exams and tests I don’t want or need.

    • Mike Henderson

      Perfectly correct in my opinion. Mammograms do not clearly show a decrease on overall mortality. Whether or not you get one depends on what you value the most. I should not be incentivized to recommend mammograms or psa’s when it is clear the evidence is NOT CLEAR as to their overall value. Labs should not be routine – any monkey can order them but if you don’t what you are looking for, won’t be able to interpret them.

      • querywoman

        It seems like they only incentivise medical services that people will not voluntarily seek.
        Nobody incentivises dental care, which lots of people need.
        Massive public health screenings also provide subjects for referral to medical schools for training and board certification purposes.

  • RenegadeRN

    Reading the title of your article, I immediately thought of a good friend who is newly insured.
    For many reasons she has only worked low paying (but with a lot of responsibility, not like fast food) positions that did not offer benefits.
    She has deferred all healthcare as a result of no extra money beyond basic necessities. She is law abiding and signed up for the mandatory insurance, that has a sky high deductible so the premium would be affordable, even with subsidy.
    I casually mention the other day that she should go get some health issues looked at now that she has insurance…. Her response is key here-

    “Why? I can’t afford the treatments they will prescribe anyway!” ” I have done without this far, I don’t see the need now”. WOW! I did not see that coming, but I understand what she means. To her, having insurance is just another bill to pay. She does not expect to receive any real benefit from it.
    I quickly told her to look into the details on the policy she bought as preventative care may well be covered for nothing but the copay. She had not even thought about that as that is not in her realm of thought on the matter. Stated she “might have some reading to do”

    My hope is that if she will go just once, a caring provider will help her to see what is available and affordable to her and she WILL get some health benefits for that premium.

    Paying for an insurance policy in no way guarantees health care for the policy holder.

    • http://frugalnurse.com/ Frugal Nurse

      Even through annual exams and some preventive care are covered without cost sharing, the burden is on the patient to know which screenings tests those are. Doctors can and do order many screening tests, for example a DEXA scan before the age of 65 or the popular vitamin D level, that are not covered and the patient is then out of pocket.

      Or routine mammograms, although covered, frequently result in inconclusive results and require more films, exams and even biopsies. Those extra costs are on the patient, and many of us now have really, really high deductibles (mine is $12,000).

      I think it’s debatable whether all these preventive services are really helpful, or just open the door to more medical expenses. Because of my high deductible, I will definitely think twice (or more) before making an appointment for non-urgent care.

      • RenegadeRN

        Good points all. I am worried she will just not utilize any of the system if she perceives it to be too complex and full of land mines – like multiple tests and inevitable bills.

    • querywoman

      I have looked at the subsidies for Americans under 300% of the poverty for the ACA. Assume that the full premium is $600 per month.
      She might get an advance tax credit for $550 and still have a $6000 deductible.
      Therefore, she’d probably have to pay $600 per year for a policy that is only starts paying for hospitalization after about a week. Most people get out in under four days.
      The ACA does not help hard-working people like her.
      I don’t know why she got signed up since she’s probably under the limit.
      Did she get a $600 per year raise on her various jobs?

      • RenegadeRN

        Ha! Not hardly!

  • http://frugalnurse.com/ Frugal Nurse

    Absolutely. I was about to say the same thing. Too complex and just too expensive, even for ordinary care. Earlier this year, it cost me $300 out of pocket to treat a bladder infection! And I didn’t even see the doctor. I work in the system, but it scares me. I really worry about people who have no clue how to navigate health care and health insurance.

  • querywoman

    The bizarre practice of charging wildly divergent prices for services to different classes of people would be illegal in any other American industry.

  • querywoman

    What are the insurance companies going to do with the $7200 combo of government and personal premiums for each working insured and the $6000 of the first annual medical costs that each company will not be paying out for an insured’s health care?
    Will insurance companies pay high federal taxes on their ACA bounties?

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