Healthcare Financial Risk Higher Without Insurance

This Monday, June 19, Christy Ford Chapin wrote an article titled "How Did Health Care Get to Be Such a Mess?" that essentially blamed the issues we see in the American healthcare system on the insurance industry. I have to state that her assumption is wrong.

First I’ll start off explaining what I took from Chapin’s article. Chapin is in essence arguing that the current insurance based healthcare market is the result of the American Medical Association (AMA). She says that in post-WWII U.S., the AMA found that the insurance model was the best way to keep the government from taking over healthcare. So essentially a group of professionals intervened to secure the value of the services they provide. It’s not like you can blame them for this. Who wants their profession controlled by the government?

When you really do an analysis of the healthcare system, insurance isn’t the problem, it’s risk. Yes, insurance is about risk, but any healthcare management system is about risk, whether you use insurance or not.

Take the physician groups that Chapin mentions in her article. Sure, back in the early 20^th century physician groups may have been financially viable, but that’s because treatments and procedures didn’t have as high cost-to-cure rates. (A cost-to-cure rate is the amount of time and money needed to cure someone of a particular ailment). The modern cost-to-cure rate is much higher. An ailment that would have killed someone in the early 20^th century, and thus would end medical expenses, is now completely treatable, but of course for a price.

Obamacare helped the cost-to-cure rates skyrocket due to its hidden taxes and its failure to address the outrageous cost of prescription drugs, amongst other things. Any organization that is responsible for treating someone afflicted with an expensive medical condition is inherently at a significant financial risk. That’s why Atlas MD, the modern physicians group that Chapin mentioned in her article, still recommends their patients carry insurance for hospital admittance and specialist referrals. It says so right on Atlas MD’s frequently asked questions page.

If people were to try and create physician groups like the ones that existed in the early 20^th century, they would still ultimately have to buy insurance that would cover the group’s liability if too many patients required expensive care. And because that would be considered a significant risk, the cost of that insurance would be expensive, which would translate into the cost of the patients monthly fee. So sooner or later, somewhere, the patients end up paying for health insurance, whether that is owned by the patient or the physician group.

So should we submit to risk as being the driving force in the rising cost of healthcare that we can do nothing about? No.

In order to mitigate the rising risk associated with treatment, the narrative about healthcare needs to include market forces again. Many people do not know how to reduce the cost of their medical bills just by asking the right questions.

For instance, have you ever asked your doctor how much treatment will cost before you’re treated? Many insurers have online estimator tools that can show you if there are cheaper options in your community. Have you ever asked if a procedure can be done in an office rather than a hospital? If a procedure can be done safely and conveniently in an office rather than a hospital, you should do that as it is often a cheaper option. Have you ever asked your doctor if a test is truly necessary? If the results of a test are unlikely to change your treatment course, you should skip unnecessary and costly tests. Have you ever asked if the other professionals that will be involved in your treatment are in your network? You can avoid surprise fees from your treatment’s supporting doctors by asking them to be replaced with ones that are in your network.

The purpose of asking these questions isn’t to take on the financial risk that the healthcare system faces, but it would reduce the risk that individuals face for their non-emergency healthcare costs. If everyone was able to reduce their own medical costs, that might reduce the overall financial risk of the healthcare system. Like with our own pockets, sometimes it’s not about earning more, but making sure you’re not spending money unnecessarily.

Richard S. Bernstein, CEO of Richard S. Bernstein & Associates, Inc., West Palm Beach, is an insurance advisor for high net worth business leaders, families, businesses, municipalities, and charitable organizations. An insurance advisor to many of America’s wealthiest families, he is a writer, trusted local and national media resource and expert speaker on estate planning and health insurance. Visit his website at www.rbernstein.com. To read more of his reports — Click Here Now.