Map of life expectancy at birth from Global Education Project.

Tuesday, April 25, 2006

More boredom: the real problems with health insurance, part I

I know, I know, this week-long vacation in Hartford, Connecticut is the least entertainment we have ever had here, and that's saying something. But it must be done. Maybe we can visit the Mark Twain house once we're done with the tour of the filing cabinets.

Now that we've figured out that health insurance isn't exactly insurance, how does moral hazard apply? Actually, it applies in a completely inverted way. If you are on so-called maintenance meds -- say for blood pressure, or cholesterol, or any other chronic condition -- have you ever wondered why your insurance company only lets you buy 30 days worth at a time (or possibly 90 days by mail order)? Wouldn't it be easier to let you get a big jar that lasts six months, so you don't have to keep hassling with refills? (Most meds don't expire for considerably longer than that.) In fact, most people stop taking their blood pressure pills after a few months, and that's one of the big reasons why -- it's a pain in the neck to have to keep going to the drug store every month, fork over a co-pay of $10 or more, and have to keep getting your doctor to give you refill prescriptions.

The reason insurance companies don't let you buy a long-term supply of meds is because you might lose or change your insurance at any time -- because you lose a job, or change jobs, or your employer changes plans. Then they would have bought you some pills for a period of a few months during which they weren't getting premiums for you. They would lose a few bucks. Of course, it might cost them a hell of a lot more if you have a heart attack or a stroke, but by the time that happens, chances are very high that you won't be on their plan. They have figured out that it's in their financial interest to make you refill your prescriptions every thirty days, even if that makes you more likely to have a stroke 10 years from now. Now that's moral hazard!

If you'll look at your co-pays, you may find that the co-pay for a colonoscopy is something like $150. That's enough to discourage a lot of people from getting one. Colonoscopies are fairly expensive to the insurer -- something like $800 or more -- but they pretty much can totally prevent colon cancer, which is far more expensive. However, once again, by the time you are diagnosed with colon cancer, 10 or 15 years after you should have gotten your screening colonoscopy at age 50, they figure you won't be on their plan any more. Now that's moral hazard!

You may have read about an experiment in New York in which people with diabetes received intensive disease management -- frequent examinations; lots of education and support to help them control their blood sugar through diet, exercise, and medications; education and support on foot care and other measures to prevent amputations. It really worked -- it was shown to be cost-effective in the long run, because an amputation costs $30,000 and up followed, of course, by disability and additional expenses. But the insurance companies wouldn't pay enough to make the programs sustainable, even though they are more than happy to pay the $30,000 for the amputations. Once again, they are betting that by the time you need the amputation, it will be somebody else's financial responsibility. Now that's moral hazard!

I could go on and on. There are tons more examples. Wow! This is really dumb! What's the answer?

Universal, comprehensive, single payer national health care. If everyone is in the same pool, and guaranteed to stay there, the financial incentive is clear: prevent disease, promote health. Spend money to save money, and to prevent suffering. What's wrong with that?

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