Friday, January 15, 2010

Is the problem the cost of the insurance or the cost of the collision centers?

I want to go on record that I am in favor of some health reforms. I am also a news junky. I read many articles each day from Google News, which comes from all sorts of reporting and opinion sources covering all sides of the health reform debate.

Let me begin by stating the obvious - health insurance is expensive. Whether it is Medicare, Medicaid, group or individual, insurance products are expensive. This is because of the unlimited nature of the coverage. The proposed removal of any connection between our personal usage of the service and the cost of the coverage will only make matters worse.

All of the above insurance policies (yes, Medicare is like an insurance policy) are expensive because we (the insured) are priceless, and we routinely use services ranging from preventive to critical care. Providers of care are analogous to car repair shops that change oil, sell new tires, perform major and minor collision work to repair fender benders, or declare a car “totaled” if it’s involved in a head-on or t-bone crash.

However, the business of fixing humans is different from the business of fixing cars. There are many times we don’t fix the paint chips, small dings or even windshield cracks because the damage is minimal and we would have to pay for it out of our own pockets. Car insurance simply does not cover all damages, and it certainly does not cover oil changes and new tires (preventive exams and hip replacements – get the connection?). Sometimes we choose to pay out-of-pocket because we don’t want our rates to go up. When does this happen with health insurance?

We have come to expect health insurance to cover everything – from soup to nuts – from knees to sneezes and wheezes. What’s more, the repair and collision centers – hospitals and doctors’ offices – are incredibly expensive and their prices have a broad band width. We have little control over the cost of repair. Further, we generally cannot get an estimate in advance of the cost of the service, and pricing is inconsistent based upon the type of “payer” that pays the bill. I do not get the same discount that Anthem BCBS would get and Anthem does not get the same discount that Medicare (the U.S. Government) gets. Thus, we all lean on some form of “health insurance” to finance our way forward.

So, everyone already has access to health care. The problem is that health care is expensive and not everyone can self pay for all of the health care they need. Further, our present system says that if you do not have any money, just go to the emergency room and you can get treated without any cost to the patient. Try that at a collision center or car dealer.

We can’t do that at a Doctor’s office either. So why doesn’t someone just make a Doctor’s appointment, see the Doctor in his or her office, and pay the $80 when they are sick? Isn’t that access to health care? Is it because people don’t think they have to pay for the service? Is it because they can’t afford the service? Should this be covered by insurance?

Health insurance really is needed for most of us (except for guys like Gates and LeBron) as a way of financing something that is very expensive: Repairing our worn knees, hips, hearts, lungs, bellies, bowels and brains. What is weird though is that our government wants insurance to pay even when we have not been overly responsible. When you drink and drive and crash, people can die, go to jail, lose driving privileges and lose automobile insurance.

When we eat too much, drink too much, exercise too little and live unsafe and unhealthy lives, we don’t lose our right to eat and drink. Government reform says insurance must cover the collisions that come from our poor lifestyle choices and wrecked bodies and lives. By the way, insurance companies won’t be able to charge different prices to different people either. Bad drivers get good driver rates. How does that work? I guess good drivers will pay more and bad drivers will pay less.

Despite the frequently negative perception of insurance companies, they are still not the core of the problem. The problem is twofold:

1. Covering chronically reckless lifestyles without personal consequence; and
2. The cost of all underlying services.

You see, if insurance must cover the cost of prevention and repairs – for the sick as well as the healthy (both the good and bad drivers) -- we need to bring down the cost of hospitals and other care providers so that the insurance can also come down.

One final thought and I think we can agree on this notion – when we get our cars fixed after they are in a wreck most of the cost is wrapped up in the actual repair work to our cars. It is not in the adjuster, the administrative costs that the insurance company has to administer the claim, or even sending us the bill for the auto policy. The expense is mostly in the cost of the collision center - to the ones repairing the cars. The same is true with health insurance.

Mark Alder, President of Herbruck Alder - -