Health Insurance on Demand: radical idea or just another scam?

 “It’s a radical idea.”

I like that. Oooh, what? Radical ideas are often good, even necessary. What is this one?

“On-demand insurance that lets customers buy some of their coverage only if and when they need it, similar to how TV viewers might rent a new release from Amazon instead of paying every month for a pricey cable package they rarely use.”

Huh? Could this be real? If it is such a good idea, why did no one think of this before? Maybe it could be the solution to the problem of the “individual mandate” that has folks so worked up. The argument for that mandate to buy health insurance, a key part of the Affordable Care Act (ACA, also known as Obamacare), was that, to work, insurance requires a lot of people who are healthy have to pay in (via premiums) in order for those who have need to have their bills paid when they need it. This is the central principle of insurance underwriting. If not enough people who do not need to use the insurance buy coverage (in the case of health insurance, are healthy, at least that year), or if too many sick people buy it, rates have to be a lot higher. This is true for all types of insurance to work – car (most people have to not have accidents), homeowners (most people have to not have fires), life (most people have to not die in any given year). The practice of assessing risk, called underwriting, is very mathematically complex and there is an entire profession of actuaries who figure it down to the finest detail, but the general concept is simple: there needs to be enough money collected to pay the claims and pay the overhead costs of the insurance company – and, of course, in a for-profit system like the one we have -- make a healthy profit.

Health insurance on demand, buying insurance only once you get sick, is the subject of an Associated Press article that appeared in the NY Times on December 17, 2018. It sounds really exciting: ‘"It's the sort of thing we need entrepreneurs to be doing," said Robert Laszewski, a health care consultant and former insurance executive. "We haven't had a new idea in managed care in I don't know how long.”’ Yes! Finally a new idea! Based on the idea of picking the shows you want instead of subscribing to cable TV! Sort of the same thing. Except, really, not having TV doesn’t kill you.

Or maybe it’s not so new. After all, we have had something like this forever. It’s called “not buying insurance”. Then, when you get sick, you get billed for the whole thing. Of course, this is more than almost everyone but the richest people can afford, thus the key reason for health insurance. Back in the old days – before WW II – health insurance, or really illness insurance – was much less common. It was more like accident, or fire, or life insurance where you paid premiums in case something you really didn’t want to happen actually did happen. On the model of all insurance, you only “won” if you “lost” – if something bad happened to you. This “sickness insurance” came to be known as “major medical”; people paid for their doctor visits in cash (or chickens, or apple pies, or doing chores), but when they got really sick and needed surgery, needed to be hospitalized, then insurance kicked in.

Then, over the next couple of decades, several things happened that together made health insurance, not just “major medical”, a virtual necessity for everyone. More treatments became available for diseases that used to be untreatable; often these were very costly to treat, and required hospitalization and expensive drugs, imaging, and surgery. The causes of many diseases began to be elucidated; perhaps the most significant was the impact of smoking. The first paper identifying smoking as a cause of lung cancer appeared in 1950; in 1964 the Surgeon General’s report made this connection, and warning labels began appearing on cigarette packages in 1965, becoming Surgeon General’s warnings in 1970. High blood pressure (hypertension) only became identified as a disease, a risk factor for heart attack and stroke, in the late 1950s and 1960s. Remember that President Franklin Roosevelt died as a result of a stroke caused, we now understand, by his extremely high blood pressure – but in those days even the President didn’t get treated for hypertension, because it wasn’t recognized as a disease (and there weren’t any drugs for it).

People began to want not only the treatment for diseases that were formerly untreatable but also for early diagnosis of, and treatment of, conditions (like hypertension) that might be asymptomatic but might put them at risk for “the big one”. New diseases, and treatments for them, began to be discovered; indeed, a cynic (me) might say that yesterday’s ‘crock’ (medical slang for a person with imagined symptoms) became today’s sick person once their symptoms were associated with a disease – usually because someone found a diagnostic test for it or drug to treat it, and now could make money selling it.

On July 30, 1965, President Johnson signed the Medicare Act, providing health insurance to those over 65 and the blind and disabled; Medicaid, providing (limited) insurance to a (limited number of) poor people soon followed. Despite vigorous opposition to Medicare by the AMA before it was passed, doctors quickly warmed to this program, since a large portion of the sickest (because of being oldest) population now had health insurance, and they (and their hospitals) could get paid for providing care. Costs skyrocketed. In 1972, Congress declared end-stage renal (kidney) disease to be a Medicare-qualifying condition. Renal dialysis went from being an uncommon intervention (which required consensus of nephrologists, psychologists, ethicists, etc., to determine that an individual’s future prospects made them deserving of it) to available – and paid for – for everyone with kidney failure. It turned dialysis centers into money machines, and nephrologists (who ran and owned many of them) from esoteric specialists to among the highest-earning physicians. It now costs Medicare over $30 billion a year, and some are questioning its ubiquity.

Let me be clear: Access to medical care, particularly prevention, early diagnosis and treatment, as well as kidney dialysis, is a good thing. People should have it. This includes the people who resist the most valuable of medical interventions such as not smoking and getting vaccines. The problem with medical care is the incredible cost, because no one who is making money on it is cutting prices, and the cost of insurance to employers and individuals (including premiums, copays, deductibles) is out of the reach of many. So now we have suggestions like “insurance on demand”, kind of a retro-solution. If it is a solution.

So how does Bind Benefits, the company featured in the article, do it? I don’t know – maybe they can do enough volume of business that they can negotiate lower rates with health care providers, thus meaning the customer pays less. But, then, this is how the insurance market already works – insurance companies work out deals with providers to pay less than the ostensible price. Only the poorest, without insurance, actually get billed the full retail price. And then, unsurprisingly, they can’t pay it, even with repayment plans. Many of their bills get sent to collection agencies that pay cents on the dollar to the original creditor for the opportunity to ceaselessly harass those with the greatest need.

Maybe it is a gimmick to attract the relatively healthy younger crowd. But it will still leave out the most vulnerable, the sickest, oldest and poorest, and the people who need it the most. This has always been the American way, sadly.

Here’s an idea: How about we put EVERYONE in the US on Medicare, and then fund it adequately? It costs more (but not as much more as you might think since the oldest and sickest are already in it), but we STOP paying insurance premiums, copays, deductibles. We limit the profit for the biggest parasites – drug companies, insurance companies (which might administer aspects of Medicare as they do now), health systems, some physicians? We stop pretending health care is like a fire in your house, something you want to be protected against but hope doesn’t happen, and recognize that it is something everyone needs. Not partial measures, like lowering the age for Medicare to 55, or asking people to buy in, or such. Just everyone in the same system, funded by our tax dollars (and a lot less of them than we are spending now). THAT would be an idea.

Everybody in, nobody out!

A "little information" can be dangerous to your health

“A little information can be a dangerous thing.”

I don’t know who first said that; no one seems to. But it is used all the time, and as a physician I both see the impact of that little knowledge on people’s health and the difficulty of striking a balance between providing meaningful information in a form that people can use and oversimplifying to the point of danger. I have worked very hard on honing this skill, and think I do it reasonably well, but I am absolutely certain that I have failed abysmally time and time again. Hopefully, it has not hurt too many people, but who knows?

I have written before that one of my roles, as a friend and family member, is to try to interpret for them what their doctor meant by what s/he told them. Or, more correctly, what my friends and family members think s/he told them. Indeed, a key part of this is trying to figure out what the doctor (presuming they are reasonably competent) might have said that led my friend/relative to think that what they are telling me is what s/he said.

And, just as I make the assumption that these doctors are reasonably competent, I make the assumption that those friends and relatives are reasonably intelligent, or at least not particularly less so than the bulk of the population (side note: I honestly think that, on average they are far more intelligent). This is borne out by the fact that it is not just friends and relatives. From time to time, I overhear conversations between other people about their health. One of the most common places is the locker room at the gym; this is because I am there dressing for long enough to be able to overhear a conversation, and also because, as a retired person, I go in the middle of the day when all the other retired – and, therefore, older, and more likely to have health problems – people are there. Usually the conversation is bi-directional but almost always one of the people is acting as a health consultant to the other, advising based on their personal experience of having had, or having a friend or relative who had, the same thing. Or, and here is where a lot of the danger comes from, something that seems very similar.

[This is the time to review, either via YouTube or its transcription on one of my old blogs, "Eggs Benedict" and "Choosing Wisely": often the best thing to do is nothing, the Woody Allen bit “Eggs Benedict”.]

Things that seem similar may not be the same – or even similar. To a health professional, there is a huge difference between an orthopedist (a bone surgeon) and an orthodontist (a dental specialist who straightens crooked teeth), but to a regular person they sound a lot alike. And it is not only confusion of words; lots of conditions that are very different sound very similar (you know, a lot of diseases end in “-itis”, which just means “inflammation of”). And even conditions that are very similar – or even the same – manifest differently in different people depending upon a lot of personal characteristics (just to name a few: age, sex, weight, co-existing conditions [another term that doctors use all the time that people may not understand], and duration and exact character of symptoms and findings). Lots of stuff is treated differently in its early stages than in its later stages, and often many different treatments are available. Maybe the one the doctor chose for you isn’t the best, and maybe the one you see advertised on TV or the home remedy advised by your aunt will work better. Or maybe not. Maybe, even, there was some scientific rationale behind that choice of treatment.

Which, of course, leads inevitably to a short discussion of direct-to-consumer advertising of drugs, particularly on television. I see these a lot more than I used to, not because I sit around in retirement watching daytime TV but because of the same gym; while I’m on the elliptical I am often unable to choose shows (ones with plots) because someone else has already chosen the program on the group TV, and there are a lot of ads. Many of them for treatments for pretty uncommon diseases. Which is, by the way, a guarantee that they cost a fortune. After all, why advertise on TV, a very expensive proposition, unless you stand to make a lot of money either because a lot of people have the problem your drug treats (e.g., arthritis) or the drug you are selling (clue: anything whose generic name ends in “-ib”, made from recombinant DNA) is so expensive that even a small market will make you a fortune? There is absolutely nothing at all good (and I’ll say that again!) about direct to consumer advertising of drugs on TV (“ask your doctor about whether [incredibly expensive] ‘Blorkamib’ is right for you!”). Except, of course, for the drug company that makes it and advertises it. These ads create unrealistic hope and expectation, create doubt as to whether your doctor is up-to-date on the latest treatments (you know, s/he is busy seeing patients all day so may not see the ads on daytime TV!), and sets you up to expect miracles. (By the way, there are very few of these.) If you must watch such commericials, I suggest you only focus on the fine print possible – often common and very bad – side effects in the small print at the end.

The late, great Hawai’ian singer Israel Kamakawiwo’ole makes a valiant effort on the last cut of his album “IZ” to explain the cause and treatment of the congestive heart failure (along with, and in part caused by, his tremendous obesity) that eventually killed him at the age of 38. It’s a pretty good discussion of the role of oxygen, although it doesn’t quite get it right, but it may have helped some of those who heard it. He had great influence; his recording of “Somewhere over the rainbow” mixes up the lyrics from different verses, but I suspect that for many people, hIZ lyrics are now the ones they know (so if they seem disconnected to you, don’t blame original lyricist Yip Harburg!).

But it is not just singers who have trouble with it; being educated and smart doesn’t make one medically knowledgeable. I know this from treating lawyers, accountants, engineers, English professors, and even medical school faculty in the basic sciences (although the physiologists, unsurprisingly, understand heart failure better than IZ…). It makes it hard to try to convey accurate information, as completely as possible, without losing people’s ability to grok it and without using metaphors that, while intended to help, may unintentionally send folks off to the wrong conclusions. It is important to try, though, and to ask not if people understand (usually they’ll say yes) but what they understood, so you can correct any misinterpretations.

People will probably do what their mother tells them to anyway.