By Steve Strayer Guest Commentary
THERE IS LOTS OF HAND-WRINGING among the medical establishment and politicians over the “uninsured,” those people who choose, for whatever reason, not to purchase medical insurance. The term “uninsured” (often linked with “the poor,” as in “the poor and uninsured”) is used as if it refers to some homogeneous underclass to be pitied or despised as a sort of blight on society.
Let’s step back and investigate the reality of the issue. Why have medical service providers, who care so deeply about your well-being, closed their collective mind to alternative ways to fund medical costs? What do you gain by trading a substantial portion of your income for the promise by an anonymous middleman to cover the costs of any future medical problem you might encounter?
Oops, did I try to sneak something past you? Isn’t medical insurance provided free by “good” employers as an employee benefit? Well, is it really free, or does somebody have to pay for it? Do employers pay insurance premiums from some separate money bucket, or is it quietly deducted from what the company can afford to pay its workers? If it’s not clearly listed as a salary deduction, do you know how much this “free benefit” is costing you? When you are a customer of a business that provides its employees with medical insurance, doesn’t that business have to charge you more to compensate for its employee benefit costs?
Advocates of medical insurance typically attempt to frighten us by quoting costs for treatment associated with acute long-term conditions, implying that insurance coverage gives you something for nothing. The unstated truth is that insurance companies almost never actually pay the full quoted costs of medical services. The seldom mentioned fact is that for the vast majority of policyholders, the cost in premiums over a lifetime is many times the cost of medical services actually needed and paid for. The reality is that medical insurance adds an extra layer of costs, risks, and delays to the delivery of medical services while transferring decision authority over medical care from the patient to insurance company administrators.
If I have no insurance and want medical services, I simply visit the provider of my choice, receive services under mutually agreeable terms and pay the bill. If, on the other hand, I want services covered by insurance, I must first submit to examination at a facility approved by the insurance company. If the treatment needed is expensive, I then have to wait for negotiations between the insurance company and the provider, live with whatever decisions they make about my case, and hope the company eventually pays the bill as promised. If the insurance company reneges on its promise, I’ll be billed directly for the treatment.
Most of the money paid in insurance premiums is consumed by overhead, taxes, corporate profits and labor costs for salespeople, administrators, attorneys and executives. Insurance multiplies the lifetime medical costs for a typical family by roughly four times, while reducing the quality of service to patients.
Why does the medical establishment have such high regard for insurance? I’m pretty sure it has very little to do with altruistic concern for you and me. I believe the following are some of the benefits to the medical establishment from your insurance dollars: • Insured patients are more likely to submit to unnecessary or overpriced medical services since they don’t pay for them directly. • Insurance companies can serve as scapegoats when patients are dissatisfied with services. • Insurance allows providers to avoid uncomfortable discussions with individual patients about financial issues. • Insurance helps established medical service providers discourage competition from new or innovative providers. Insurance administrators will likely favor the familiar over what they might view as risky new procedures. • Am I suggesting that nobody should carry medical insurance? Of course not. What I am saying is that each of us should be allowed the freedom to decide for ourselves how to cover the costs of our individual medical needs based on accurate information.
Unfortunately, information presented by the medical establishment and the government is usually one-sided and deceptive. I believe promotion of medical insurance by the medical establishment, especially the portion of it supported by government, constitutes a conflict of interest. I think it is unethical for medical facilities that tax everybody for their support to discriminate against taxpayers who elect not to purchase insurance.
STEVE STRAYER spent five years in the Air Force during the Vietnam era. He completed MBA coursework at California State University, Hayward.
Originally published in the Santa Monica Daily Press print edition on September 28, 2007. Read the original PDF.