To the Editor: Automobile insurance vs. Healthcare insurance

Saturday, February 27, 2010

Auto Insurance is available from companies across the nation. It provides coverage of varying degrees, depending upon customer preference: Comprehensive or collision, coverage amounts, and varying deductibles. Customers are rewarded for good driving, and those that cause accidents see their premiums go up, or they get dropped from coverage.

Auto Insurance covers unexpected liability, while insurance holders are expected pay for routine oil changes, tune-ups, engine repairs and new tires. Most likely, these insurance holders look for the best service at the lowest price, promoting free-market competition.

Health Insurance availability is limited to the state in which the insured lives. Each state mandates that certain conditions are covered by health insurance. For example, in the state of Maryland, In-Vitro Fertilization, Morbid Obesity Treatment, Smoking Cessation, Well Child Care, Alcoholism/Substance Abuse and Hair Prosthesis are mandated to be covered. This significantly increases premiums for everyone in Maryland when not everyone needs this type of coverage.

Health Insurance is expected to cover not just unexpected healthcare costs, but routine checkups and treatments for common illnesses. The insured is not motivated to look around for the best service at the lowest price, thereby removing free-market competition. (On the other hand, cosmetic and lazik surgery is not covered by insurance, allowing consumers to shop for the best deals, and those costs are going down!) Also, there is no incentive on the part of the insured to restrain healthcare consumption.

In addition, Healthcare providers must be defensive against lawsuits, performing expensive, unnecessary tests in the event that they are sued. (Can you imagine a car owner spending thousands of dollars on needless automotive tests and repairs, trying to avoid being sued?)

As a result of state mandates, lack of competition, uncontrolled healthcare consumption and lawsuits, the cost of health care has increased at a greater rate than inflation.

Suggestion: 1) Remove state mandates 2) allow interstate purchase of health insurance to provide more competition 3) Allow for Health Savings Accounts (HSA) so that the insured can manage healthcare insurance independent of employment. Typically, HSAs have a high deductible (i.e. $2,500/year) and low premiums. Holders of HSAs are much more likely to be careful consumers of healthcare. 4) Enact Tort reform.

Before government takes control of 17% of the GDP and cuts $500,000,000,000 from Medicare, it might be worth exploring less risky paths to real healthcare reform.  
Carol Solle 


Anonymous,  February 27, 2010 at 1:31 PM  

Good common sense suggestions. Too bad the current focus of the media is on the "evil" for-profit insurance companies, instead of the underlying causes as pointed out here. Hopefully more and more citizens will make their voice heard like this, to get common sense change enacted.

David March 2, 2010 at 11:33 AM  

Free Enterprise Health Care has been rejected in every other industrialized nation. Every one of these has lower health care costs then the US. Per capita, the US spends about $6700 while the most expensive European systems all spend under $4000. Chile spends well under $1000 per capita and has health care outcomes as measured by life expectancy and infant/child mortality rates that are very comparable to those of the US. Carol's description of our current system is inaccurate. She implies that all US states control health insurance companies to the same degree that Maryland does. Maryland, as I understand it, not only mandates what health procedures must be covered, it also does what Medicare does which is mandate the rates for those procedures. As far as I know, no other state does this. (It should be noted that the jury is still out as to whether or not Maryland's mandates are improving health care in that state, although preliminary indications are that it is.) In Washington State there is no legislation allowing the State Ins. Comm. to mandate coverage of procedures (correct me if I'm wrong). However, the Commission can regulate premium rates. Also, rejection of coverage to applicants on the basis of pre-existing conditions is prohibited in Washington. For the most part, the commission accepts the rates that are presented to it by the insurance companies for the simple reason that the insurance companies can easily document the rising costs of the procedures they cover. I agree with the comment above which says that vilification of the insurance companies is not productive. The insurance companies are doing the best they can given the circumstances. Ultimately, they cannot control the rising costs of health care. I also agree with Carol, that if costs were transparent and paid for out of pocket, rates would likely decrease. I do find it interesting that Carol is only suggesting this be used for preventative services and not major medical care. Going along with Carol's idea that we would leave rates for preventative care up to the market, what would this achieve? Definitely rates would go down. But how much? For example, if a blood test for general overall health currently costs $100 would it decrease to $80, $50, $10? If it did go down to $10, I would say that nearly every American could afford this. If it went down to $80, a large number of Americans might still avoid such an expense. (In some cases this could lead to much greater costs in the long term.) As long as we have a system in which some of us cannot afford medical costs for procedures that could prevent serious illness or death, we cannot accomplish the goal of universal care. The problem in the US is that not only are we far from universal care (in which everyone has equal access to medical care) but we have a two-tiered system in which some get the best care in the world and others have to go to the emergency room to get care. So, the question I have for Carol is do you believe universal coverage is a laudable goal? If not, then why do you apparently support the Medicare system which provides universal coverage for elder and disabled Americans? What is your rationale for providing universal care for these two groups but not for the rest of the citizenry?

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