Why we want health insurance (a thought experiment)

Why do we want health insurance? Let’s take an honest look at this and related questions.

Does it train new doctors? No, at least not directly.

Does it guarantee care? No. Even if everyone had health insurance, the health care industry is distinct from the health insurance industry. More insurance does not guarantee care.

Does it save money? That depends, but for most cases, in the long run, it doesn’t save money. This is obvious, of course, because profitable companies cannot spend more on claims than they take in.

What does the government get out of it? Money from insurance company lobbyists, of course. In a perfect world, that would be zero. But seriously, the thinking is that the more people  insured means a healthier populace which means more working and more tax revenue.

What does the health care industry get out of it? Insured patients are paying customers. Out of pocket customers often do not pay, leading to higher costs for everyone. This is akin to the effect of shoplifters on retail prices.

What if there was no health insurance? The money employers pay and that employees have held out of their paychecks could instead go to wages. This would result in more choice for the consumer. Medical bills could be paid in installments. Certainly, for some that could prove to be more expensive than their budgets allow; however, it should be noted that these are the same people that do not buy insurance anyway. In fact, since wages would be effectively higher, the poor would have more disposable income. Those expecting to have large medical bills could then plan ahead for treatment. Only unexpected medical issues would pose greater strain on the patient/consumer in this scenario.

What benefits arise from health insurance? Theoretically, health insurance offers the option of multiple plans tailored to meet multiple needs. Also, it converts a payment-after-treatment service into payment-anticipating-treatment service. This is the sole convenience that insurance companies sell, and it actually ends up costing more in the long term due to the fact that insurance companies must answer primarily to their stockholders.


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