The Affordable Care Act perpetuates a myth of health insurance

Is the Affordable Care Act perpetuating a myth? Yes according to physician Luis Collar (who is also a novelist, the author of A Quiet Death). Dr. Collar outlines very nicely why “health insurance” as practiced in America is a very Bad Idea. Since it’s origins as a pathway for employers to get around FDR’s wage fixing, these contracts have been shaped by their special tax treatment. Since the employer-paid coverage is not taxed as income to the employee it has been used as a competitive hiring tool for over sixty years. It is like the Zombies, very hard to kill.

The bottom line is the ACA, aka Obamacare, was formulated to satisfy progressive backers of the Obama campaign. The design of ACA carefully avoided addressing any of the real and serious structural defects of the American insurance scheme:

  1. The tax exemption for employer-paid coverage
  2. The lack of a national competitive market
  3. The bundling of pre-paid routine care with catastrophic insurance coverage
  4. The high administrative costs of erecting a whole system that intermediates between consumer and provider
  5. The complete isolation of the consumer from knowledge of pricing, and largely from any knowledge of the quality of services provided.

I could go on, but Dr. Collar does such a nice job I’ll just quote these excerpts: 

Whenever a discussion of health care policy is initiated, the importance of health insurance, of extending coverage, takes center stage. The need for insurance quickly becomes an undeniable truth, a universal imperative. And we never seem to question this premise enough before getting more patients fitted with shiny, new policies. This was precisely the case with the Affordable Care Act. But where is the evidence insurance plays any role in improving anyone’s health? Why is it assumed more coverage is always the answer, particularly for routine care? I would argue it is little more than a myth, one found nowhere else in our collective understanding of insurance.

Let’s consider our experience with insurance in other areas of our lives. In most states, it’s mandatory for drivers to carry automobile insurance. But it doesn’t reduce the incidence of accidents or extend the life of a vehicle, nor does it cover oil changes, car washes, flat tires, or any other form of maintenance or unfortunate mechanical reality. Similarly, homeowners insurance doesn’t cover the cost of repairs when your kids put a hole in the wall, the price of having your gutters cleaned, or the removal of mold due to leaky pipes or unsealed windows.

Why, then, do we expect health insurance to function any differently? There is no compelling evidence that insurance improves outcomes. In fact, of the few studies conducted, most have either failed to control for known determinants of health or shown, at best, a very tenuous relationship between the two. Access to health care matters, but we mistakenly assume more insurance is the best way to increase access. We believe coverage for routine medical care, for everything from checkups to preventive care procedures, improves our nation’s health. It does not; it only appears to because of numerous confounding variables.

What is known, however, is the total amount of money available for health care, generally some large percentage of our GDP. That number is static at any given time and cannot be magically increased. In fact, by definition, relegating any aspect of health care to insurance industry jurisdiction necessarily decreases the funds available at the bedside. These companies must extract a profit; that’s how capitalism works. Moreover, whenever the scope of coverage is increased, patients and physicians give up more control as to the nature, timing, and extent of the routine care provided.

All insurance, even health insurance, should be procured to protect one’s financial interests against catastrophic, unforeseen events. Engaging it for routine activities, including all but the most costly drug therapies and procedures, serves only to dilute valuable resources and relinquish essential control. Thankfully, offers some high deductible plans that encourage direct payment for routine care, but many of them are also HMO-type plans, plans where third parties determine the routine care that is or isn’t covered.

Physicians must regain the authority to decide what routine care patients need. Despite the increasingly popular, one-size-fits-all algorithms of evidence-based medicine, it remains a fact that, even for those of similar age, sex, race, and socioeconomic background, every patient is unique. We have conceded that the future of pharmacology points to personalized medicine, to therapies tailored to an individual’s unique genetic composition, and yet we continue to assume that generic algorithms should govern what is best for a particular patient.

(…snip…) We need to embrace a system where health insurance is procured only to protect patients’ financial interests against catastrophic injury or illness and routine, less expensive health care services are paid for directly by patients. This would require a fundamental change in how individuals view their responsibility for their own health, an increased awareness that routine care must be budgeted for like any other household expense. But this shift would help control costs and empower patients to purchase competitively priced services from independent primary care physicians free of unnecessary administrative burdens. 

Read the whole thing.