Health insurance is not health care

The title of this post is not original. I borrowed it from LA County Department of Health Services Director Mitchell Katz's JAMA Internal Medicine editorial about problems with ensuring access to health care for Medicaid recipients whose cheap public insurance usually doesn't even pay doctors enough to recoup costs of care, let alone earn a living. But somehow, during the impassioned political debates that preceded Obamacare, the botched rollout of Healthcare.gov, and the pointless debate about how many people got (or lost) health insurance from the Affordable Care Act, it's easy to omit this critical point, which Dr. Katz makes clearly: "Health insurance is a financial mechanism for paying for health care. It is not the care itself, or even a guarantee of that care."

Most of my colleagues would say that health insurance makes it easier for people, especially those with limited means, to access health care. I'm not sure I agree (especially for inexpensive primary care services), but it's easy to see why they feel that way. Health care spending makes up nearly 20 percent of economic spending in the U.S. On an individual level, what do you spend 20 percent of your income on? Housing? Transportation? Food? Unless you're exceptionally wealthy, it's hard to imagine finding another 20 percent to spend on health care, especially expensive care related to a catastrophe, such as a car accident or heart attack.

I believe that health insurance should be a mandatory financial mechanism for paying for unexpected, catastrophic health expenses, just as fire insurance will pay if my house burns down or flood insurance will pay if a hospital in a low-lying area is devastated by a hurricane. On the other hand, health insurance is a grossly inefficient mechanism for paying for expected care - that is, primary and preventive care.

Think about how insurance works when you visit a typical family physician. Depending on your plan, you may pay a fixed co-payment, or pay nothing. You receive medical services recommended by your doctor without knowing (or asking) how much any of it costs. What your doctor charges for these services has very little relevance to you and even less relevance to the insurance company, which will pay whatever price it has pre-negotiated for its members. This is the way health care financing has worked for so long that it's difficult to step back and realize how stupid it is.

Let's substitute food for health care and imagine there is such a thing as "food insurance." You enter the grocery store and pay a fixed co-payment, or pay nothing. You choose food items recommended by your grocer without knowing (or asking) how much any of it costs. What your grocer charges for the contents of your shopping cart has very little relevance to you and even less relevance to the food insurance company, which will pay whatever price it has pre-negotiated for its members. Does this sound like a good way to make food more affordable? When people are poor enough that they can't afford to buy food, governments don't provide them with food insurance, but food stamps (or supplemental nutritional assistance) so that they can purchase food directly. So it should be with health care.

A couple of years ago, I blogged about a friend who had the misfortune to need an appendectomy while he was uninsured. You might assume that after that experience my friend, whose name is Jose Padilla, would ridicule "consumer-driven health care" and be all for insurance paying for every single medical expense, no matter how minor. You would be wrong. Jose, who is now a candidate for Congress from the state of Nevada, told me recently that "insurance should be there for those situations where you don't have the time to negotiate and/or the cost would bankrupt you." In his opinion, the biggest problem with health care is that the prices are too high. The prices are too high because there is no price transparency (imagine how hard it would be to shop for groceries when you weren't told what the food cost until a bill arrived in the mail weeks or months later), and there is no price transparency because someone else other than the patient is paying most of the bills.

As Jose's health care platform observes, "the health care industry [is] one of the only U.S. industries where the addition of new technologies causes an increase in prices." Why? Because medical prices will increase as long as someone else - your employer, your government, Obamacare, whomever - is willing to pay them. Why else would ophthalmologist Salomon Melgen inject patients' eyes with a very expensive drug (Lucentis) instead of a much cheaper equivalent drug (Avastin)? Because he could bill Medicare Part B $11.8 million for those shots in 2012 instead of $500,000. In fact, 879 of the doctors who billed Medicare at least $1 million that year were ophthalmologists using Lucentis, according to the Washington Post. If you want to know how much money your doctor received from Medicare in 2012, click here. (I received $3,201.) Kudos to the Centers for Medicare and Medicaid Services for making this information public, and for reminding us of the disconnect between having health insurance and receiving health care.