The Health Care Gamble
Maybe you disagree with the measures currently being proposed in Washington and in town hall forums across the country to reform the health care system. The Devil is the details. But if you think the best way to run the health care system in the United States is to force people to rely on private insurance carriers then you are a sucker.
Insurance is a bet. A health insurer bets that you won’t get sick enough to require more in health care payments than you pay in premiums. You, on the other hand, bet, perversely, that you will get sick enough to require more in health care payments than you pay in premiums (or, as with most people, that you will get sick enough to require more than you would be willing to pay all at once for health care). However, you are also not a masochist: you will attend your own health with a certain level of diligence. You want to be healthy, and to stay healthy, so you have a reason to see to it that you lose your bet.
Imagine going into a casino to play some roulette. You bet on black, over and over and over again. The casino happily takes your money every time you lose. And the casino owners know something that makes them even happier: you are deliberately rigging the roulette game so that black never comes up. You are helping the casino take your money. Moreover, if black ever does come up the casino owners will send someone to the table to make sure that you didn’t place your chips too close to the edge of the betting box, or upside down, or any of a thousand other violations to the game that have nothing to do with the bet itself, so that it can refuse the payout it owes for losing its bet. And you will do nothing, because you realize that you agreed to abide by these rules when you sat at the table.
It doesn’t matter if there are a thousand casinos or only one, if you have to sit at the table and play these two elements will remain: (1) The casino won’t play unless the odds of losing its bet are insignificant. (2) You will help the casino take your money by rigging the game. Competition in the gambling game doesn’t improve the outcome for the gambler at the table.
Actually, there is an important difference between insurance carriers and casinos: casinos actually want to lose, and lose impressively, every once in a while. They want to publicize how often they lose because casino patrons have a choice about whether they are going to play the game and there are no consequences to not playing. Casinos want to lure you in with the chance of winning. Insurance carriers have no such incentive: you will gamble with them out of the crippling fear you feel about losing the bet even when you aren’t playing. You don’t lose to the insurance carrier if you don’t play, but you still lose.
It is a problem to allow health care to be managed by entities who have even less reason to play fairly than casinos. If you think otherwise you are just the mark they are looking for.
32 comments
Very well put.
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The one thought I keep coming back to (and don’t kick me for being naive or whatever) is why not just take the amount you’d pay to an insurance company and put it into the highest interest bearing savings account you can find (that allows you to take the $$ out whenever you want). When the time comes YOU are in charge. Of course this only works when the cost of healthcare is REASONABLE, which I tend to think it IS NOT. And even if you have tens of thousands saved, a brutal diagnosis and treatment can be hundreds of thousands.
It’s not just the insurance that needs reformed I think.
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Backpacking Dad Reply:
August 13th, 2009 at 10:44 am
Part of the gamble is that no one thinks they can save enough to pay for health care in the three, five, ten, or twenty years they’ll be saving before getting sick. So they buy insurance, which will pay out a large sum even after the first premium is paid, whereas if you’d put that premium in a savings account you would only have that amount available to pay for you health care costs. If you could save all of your premiums over the course of your life then you might be able to put as much toward your catastrophic health care as the insurance company. But they would STILL be able to afford to pay more than you on your own because they’ll have won the bet against so many other people and have that cash on hand to cover you.
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Jana Reply:
August 13th, 2009 at 11:09 am
You also have to look at what you would pay for private pay vs. insurance pay. Insurance companies get a HUGE discount and most private payers do not, or do not get a significant discount, so you really wouldn’t be getting the same “bang for your buck” as it were.
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Backpacking Dad Reply:
August 13th, 2009 at 11:56 am
That sounds like a reason to socialize healthcare, not one to keep it private. Because if the problem is that only insurance carriers have the bargaining power to keep doctors from charging high prices then the solution isn’t to give yourself over to the insurers entirely, but to change the way health care providers are compensated.
I’m not, myself, advocating socializing healthcare. I don’t know what the solution to the problem is, I just think I see that the problem is the game that’s being played, and those who would deny that the problem is the game are getting in the way.
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The description of the game? Excellent. The implied notion that the government has significant reason to play “fair”? Quaint. Fair , after all, is in the eye of the beholder.
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Backpacking Dad Reply:
August 13th, 2009 at 10:46 am
I’m actually not implying that the government would play fair. I’m not saying trade the casino-opponent for government-opponent. I’m saying that the system that is based on a bet in the first place is the mistake.
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I like the way my kids orthodontist does business, I pay a set fee every month and during that month it covers everything he does in the office. No fighting with the insurance company on what they will and will not pay. Doctors’ could do the same and base it on how healthy you are. Prepaid medical you know.
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I’m well on the outside of this debate at the moment, but I can’t get passed the idea that a person or a family getting the basic health care they need can depend on how much money they have.
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I think everyone agrees that some things need to change with healthcare, but what everyone should know is that government-run care is definitely NOT the answer. If you want an example, just look at Medicare. At least by paying premiums we can get the best care because we pay for it. Take that away and you are taking away the reason to provide the best care for patients.
What we need is for private insurers to have to compete with each other. Then we all get what we want.
I, personally, at least want the choice to be my own. I don’t want someone telling me that we all have to pay for everyone elses care. I see way too many people laready getting treatment who don’t pay for it for me to want to be the person making their payment.
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Backpacking Dad Reply:
August 13th, 2009 at 11:52 am
It’s absolutely not the case that what we need is for private insurers to compete and we’ll all get what we want. No matter how many casinos open in Vegas they are all still going to win those bets most of of the time, and if you play you will lose, and if you don’t play you will lose. Imagining that because you have a thousand casinos to choose from means that you are better off only means that you are going to try to convince other people to go to Vegas with you.
Maybe government run healthcare isn’t the solution, but it’s clear that the problem is that we are treating our health and well-being like a game of roulette, except that even when we win we’ve lost. Insurance carriers are gamblers, not service providers.
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Backpacking Dad Reply:
August 13th, 2009 at 12:05 pm
And, you already do pay for everyone else’s care. If you pay a premium you aren’t paying for your own care, you are paying for the chemo-patient’s care. In fact, you are hoping that you are paying for someone else’s care, because otherwise that means you are sick. You also pay for those who can’t afford health care by exposing yourself and your family to diseases that spread throughout the population because they are untreated.
You want the choice to pay as much or as little as you want for the breadth of coverage you hope you’ll need. You want the choice to gamble. But what that means is you want me to gamble too. And I have no desire to gamble with you. So, if the freedom of your choice means that my choice to not gamble is curtailed, how do we balance that against my freedom of choice which would mean that your choice to gamble is curtailed? Whose freedom of choice do we preserve?
Freedom of choice isn’t a premise that gets you the conclusion that you want. Your choice condemns me as much as you think mine would condemn you.
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kyooty Reply:
August 13th, 2009 at 12:38 pm
Along with this idea is eventually you have so much choice that no one is offering you anything different. I’ve had it both ways in my adult life, and the option to go to a hospital or dr when I’m sick is huge. I may not like that the want to ship me out the door the same day though.
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Michelle Reply:
August 14th, 2009 at 4:46 pm
I don’t understand how me wanting the choice to “gamble” affects you?
Maybe we need to change how doctors are paid. At Mayo they are paid the same rate no matter what, while at other places they are paid for each text they run and how many patients they see. This fosters corruption and costs the patients more money.
But the big problem in hospitals is Medicare. That’s where all of the money is lost. So why do we want to put more healthcare in the governments hands?
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I have strong feelings about health care reform in America. And your post is spot on. Most be because of your Canadian roots.
Heh.
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This makes a lot of sense. I wish the opponents would listen and try to understand instead of freaking everybody out. I am so sick of half of the country yelling all the time without listening, all the while claiming to be the unsung majority. Whatever. It’s hard to respect your point of view when you’re calling everyone who disagrees with you names.
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I completely agree with your assessment. And with your comments. Spot on.
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I totally agree that something needs to change, but having OUR government run our health care scares the living daylights out of me, I mean you know we are doing such a BANG UP job taking care of our vetrans right?? After losing a loved one in the VA hospital system that I 100% believe was preventable. It turns my stomach to think that one day I will likely be in a system just like it. To me it comes down to this, the government can’t properly run what they have NOW, do we really think adding more will magically make them better at it?
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That just gave me the worst headache. Both because there were far too many words (that were far too complex for me to comprehend after just inhaling a large blizzard) and because the topic at hand is just migraine-inducing for the most part anyway. Gah.
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What about the idea that Health Insurance companies should not be for-profit entities? I know that’s not on the table as far as the national debate is concerned, but I always wonder why it isn’t.
It seems to me that the idea that these companies have shareholders they are beholden to is part of the problem too. The point of a public traded corporation is to make money and do what’s in the best interest of the company and the shareholders. Paying money out is not in the best interest. Perhaps I’m naive, but the idea that taking care of people is a for profit industry seems to baffle me.
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Great post. My Canadian upbringing has always made me question the US healthcare system.
I like what Rockhopper Dad said, and completely agree that for starters health insurance companies should not be for profit. I think that would help take a lot of the gamble out of it.
I don’t know what the right solution is, I just know the current system isn’t working.
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We were just discussing this at work today. The “don’t get health care and put your money into a savings account to pay for your care yourself” gamble only works when you’re young and have no medical bills. My Mom just spent 7 weeks in ICU, 6 times to the ER, then rehab, etc. Let’s figure out if they would have had enough money saved to pay for that.
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Vegas710 Reply:
August 14th, 2009 at 8:31 am
Young and not having any children. We spent two years paying off each baby and that was WITH insurance.
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My son has coverage through the state, or he wouldn’t have any at all. Thank you for paying taxes, Georgians.
I have no insurance. If I get sick, I’m just sick. Unless it’s dire, I weather it. Usually, even when it’s dire, I weather it. I don’t have money for the doctor, the labs, the medication…I can barely cover groceries from week to week, especially now, let alone extraneous medical care.
I don’t have answers, either. I don’t believe that any one should be forced to bear the burden of another’s care unless they had a hand in making that person. I hate asking anyone to pay for my son’s care, but my need for him to remain healthy, to have care when he needs it, is greater than my pride. One day, I WILL find a way to pay it forward.
I believe in compassion, in kindness, in reaching out a hand to help someone up…but I don’t believe in making anyone else do the same. And I don’t have an answer to this one…
Shade and Sweetwater,
K
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You’re so right about the gamble. We choose to pay health insurance because we’re scared into it by all the ‘what if’ scenarios. Here in Australia we have a national medicare system where you can be treated for $0.00, but if you have a private health fund you can get your treatment much quicker, although you will find yourself $$$$ out of pocket.
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I do want health care reform. However, this particular bill, as it stands, is much to ambiguous. Yes it does say you can keep your insurance. Yes it does set it up so your insurance provider has to quit covering you. See? Both sides are right, both sides are wrong. Americans lose either way.
Yes we need reform. We don’t need government take over.
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I really like this analogy.
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Insurance companies are there to make money. Just like Casinos. To make money. They are not bad or evil. Thye are a business. Healtcare REFORM needs to start with the Insurance companies to make sure they play fair and can still make money.
Another problem is that employers tell their employess which casino they have to play in…most of the time people are stuck with their coverage. They do dnot have a choice.
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The betting against yourself analogy is spot on. So what is the alternative? Should healthcare just be reasonably priced? Should all health care just be paid for by the government without the need of insurance? Paid for by taxes? If the government had to pay for all the sick peopel in America I bet they’d put a little more money and effort into prevention of disease and education about health. Ah. Wouldn’t more education be nice? Seems to solve almost any problem.
Also, there are non-profit health insurers, but their numbers have been greatly reduced in recent years.
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Succinct and right on.
I’d never thought of it in casino terms before, but it’s very apt.
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Wordy McWorderson. I don’t know the solution either, but the way it’s set up now doesn’t work.
As I drove home the other day, I was pondering insurance in this same way. Except it was car insurance. I pay $70 some-odd dollars a month for car insurance that I HAVE to have in my state. I’ve never had an accident in 17 years of driving. I’ve only had one ticket, which I received in the last year (and I actually went to contest it b/c it was so lame, but surprise! I lost).
As an American who is struggling to make ends meet, insurance is sticking in my craw lately. I’ve got a 6-year degree, I have a decent job, I live in a dinky house, and I drive a used car, yet I’m STILL struggling to make ends meet for me and my child. If I had those monthly insurance premiums back? Might not be so hard. Although reforming or getting rid of the insurance industry would probably prove to be pretty crippling to the American economy, which is already in a pretty fragile state.
And I’m not for big government controlling health care. Am just not. I’m not for big government controlling anything. A commenter said something about the government being more concerned about diseases and such if they were paying for it. I would argue that exactly the opposite might happen.
Someone more smarter than me has to figure this one out, and I hope they do, somewhat soon.
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