The Meaning of Health Insurance

Feb 22nd, 2010

Last year I got a rather large and painful cyst on my neck. Since I didn’t have health insurance, I went to a Seattle walk-in clinic to get it checked out. The fee for the 10-minute appointment was $250. When I told them I didn’t have insurance and asked if I could pay cash, they instantly dropped the fee to $99.

This got me thinking. Throughout our depressing health care debate over the past year, I find it curious that no one has really asked, “What, at a fundamental level, is the nature of insurance and the scope of its proper function?” Both sides seem to take it for granted that any and all medical services rendered should be paid for through an insurance scheme of some sort. But it’s curious that we don’t do this for any other sector of the economy! We purchase car insurance for protection against accidents, but we don’t make a claim when we need a new car, and we don’t call our broker when we need an oil change.

What exactly is insurance, and what should it be for? Isn’t it something purchased with ordinary income to hedge against extraordinary expense? Something purchased to allow the ubiquity of the ordinary (everyday healthy life) to overwhelm the occasional extraordinary (illness) by spreading risk across a pool of persons? Why the hell should all health care fall under that regime? Surely basic services – checkups, prescriptions, blood work, chiropractic, physical therapy, etc – can be rendered competitively on a strict fee-for-service basis?

Thus I tentatively favor a two-tiered health care system. For hospitalizations, chronic and debilitating illness, surgery, and emergency care, etc…I favor a nationalized, single risk pool, single-payer system in which citizens are covered by virtue of their citizenship and where public taxes pay private health care providers for services. It is a matter of human rights that ability-to-pay not determine access to life-saving or long-term care. But for more basic, everyday care, why not forego the administrative nightmares of insurance entirely? Why not, as I did last autumn, just pay up front and save big?

  1. Julie
    Feb 22nd, 2010 at 18:48
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    You’re such a thoughtful writer! I’m enjoying your posts, and learning a lot from them.

  2. Clarissa
    Feb 22nd, 2010 at 22:27
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    I agree with your thought on principle, but I don’t agree that politicians can effectively choose who will receive care and who will not. There is not enough taxes to pay for all necessary health care for serious illnesses, etc. Someone will have to be excluded from healthcare. It is inevitable that the elderly would be the first to be denied health care. Those who would have “better odds” of recovering would receive care. It is a matter of human rights. In the end the weak and defenseless would be denied and neglected.

    Why not use a little tax money to teach the average citizen some basic financial responsibility? Teach americans the logic of saving money for emergencies and then buying health insurance with a large deductable. Americans can’t afford it? Food is a necessity. Most americans have figured out that going hungry (even if they can still watch MTV on their flat screen from the rent-to-own store) is not enjoyable. They make buying food a priority. It’s a matter of changing one’s mind about the priority of expenses in one’s life. This is exactly the system I use and it is wonderfully freeing. I also take better care of my body and take less risks. I can pay cash if I want to. But if I have an emergency appendectemy, I’m covered. I’ve got the best of both worlds. And let me assure you, it’s not because I have a large income.

  3. Sarah
    Feb 26th, 2010 at 16:50
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    I like this idea, and your new blog!

  4. Ezra
    Apr 25th, 2010 at 21:30
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    Under such a system, I would be afraid people would skip routine upkeep they couldn’t (or wouldn’t) pay for, instead waiting until the problem becomes an emergency. We see this already to some extent when the uncovered depend on emergency rooms because they can’t afford to pay.

  5. Paul C
    Apr 25th, 2010 at 23:20
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    First I’m Canadian so I’m coming from the view of already having public health care.

    While the two tiered system sounds nice and allows the public money to be funnelled towards those procedures that are more life threatening.

    The downside is this. Lets say we agree that procedures A,B,C,D,E,F are covered by the public health system. While procedures G,H,I,J,K you will have to pay out of your own pocket. The problem is eventually you will start to hear someone usually the rich complain that why should I pay for procedure F or E or D. And so you start down the long slippery slope where eventually procedure F is taking off the public health system and then E is taken off. Eventually you end up with no public heath care at all.

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