About six months ago on another blog, I was participating in a lengthy thread about the healthcare system, transparency, and insurance. A Massachusetts OBGYN named Amy Tuteur made a very interesting comment. She broke our healthcare system down into three pieces as follows:

1. Well Care / Routine Care -- This includes everything from routine physicals, screenings, minor ailments, colds, etc. For this piece, most people can pay out of pocket. The segment can easily work like a normal market, and pricing transparency should be easy to provide.

2. Catastrophic Care -- This includes serious accidents, cancer, heart attacks, and the like. Relatively few people are affected in any given year, everyone wants to be covered by insurance for the cost, and few of us could afford to pay out of pocket. For this segment, the traditional insurance model works best. Most of us will pay more in premiums than we use in benefits in a typical year, but we all have the peace of mind that comes from knowing that we are protected financially.

3. End of Life Care -- This includes dementia, alzheimers, late stage cancer, kidney failure, etc. There are potential treatments that are very high in cost but often are either futile or will only prolong life for a short time. For this segment, she recommended "rational rationing" which could mean using QALY metrics or something like it to determine whether treatment is worth its cost in particular circumstances.

Assuming we could find a reasonable approach to taking care of the poor and truly needy, this struck me as an excellent analysis which I completely agree with.
BC | 10.19.06 - 3:48 pm | #

Can not argue the point that insurance is there to provide some financial protection for you. But why do the premiums have to be so high. How can the insurance companies justify the rising of premiums when what they pay to the health providers do not go up. Also saw a chart recently that show over a 30 year period premiums rose about 70% where wages only increase about 30%, where is the justification?
coyote | 10.19.06 - 4:49 pm | #

Coyote,

A coupla things:

1) As John F has commented (repeatedly), the cost of insurance rises because the cost of health care rises.

2) The cost of health insurance has nothing to do with wages.

3) See #1

4) I have deleted the references to your home page because it is simply advertising; there is no original content. If/when you include such, I'll be happy to let it through.


The_Prof (H G Stern, LUTCF) | Homepage | 10.19.06 - 6:02 pm | #

Coyote -

How much have the average prices of houses risen in that same 30 year period? How about gasoline? The cost of treating cancer, spinal cord injuries, burns & premies? How much has the stock market risen during that 30 year period? How about wages of professional baseball players or for that matter the price of tickets to a ball game? How much has tuition increased at 4 year colleges?
Bob | Homepage | 10.19.06 - 7:30 pm | #

"How can the insurance companies justify the rising of premiums when what they pay to the health providers do not go up."

Last month I bought a rake at the hardware store and paid 12.00 for it. This month my son and daughter in law came to visit and I bought two more rakes for 12.00 each.

Well, I just got my mail and doggone it my rake bill this month is 24.00! 24.00 is twice what I paid last month. How can the hardware store justify the rising of the cost for rakes when what they charge for rakes did not go up!!??

I ask you.

I mean you, coyote.
John Fembup | 10.19.06 - 8:46 pm | #

A rake for your daughter-in-law. How touching. I am sure she appreciated recieving it as much as you did giving it . . .

The good news is, your rake copay did not increase!
Bob | Homepage | 10.20.06 - 6:41 am | #

Yes costs of gas goes up, cost of houses go up everything we buy will sometime have rising prices, but they also have falling prices, like the gas now. What about insurance premiums, they go up but in my experience of 60 plus years, I have never seen them go down.
coyote | 10.20.06 - 11:08 am | #

There is a direct correlation between premiums and claims. Claims are a function of frequency & magnitude. Insurance premiums will come down when utilization drops and the underlying cost of health care does likewise.
Bob | Homepage | 10.20.06 - 2:16 pm | #

So your saying that claims never drop but always go up. Amazing, I thought there was always curves in everything. Example the earth gets warmer, the earth gets cooler. I beleive one of the underlying costs of healthcare are premiums.
coyote | 10.20.06 - 6:09 pm | #

I beleive one of the underlying costs of healthcare are premiums.

I chastised Marc for using the "s" word, so I'll bite my own tongue (no hypocrite, I!):

That may be the single most inane comment ever posted here (and that puts you above the illustrious Mr Quigley).

"Premiums" refer to the cost of health insurance. They have nothing to do with the cost of health care.


The_Prof (H G Stern, LUTCF) | Homepage | 10.20.06 - 6:16 pm | #

Have a little problem with logic, do we?

You really don't see the inherent contradiction in your statements, do you?

Pity.


The_Prof (H G Stern, LUTCF) | Homepage | 10.20.06 - 10:52 pm | #