Sorry for the late response. I disagree with you 100%. The doctors *choose* to give price breaks to the insurance companies. Why? Well obviously it is still profitable for them to operate at that price level — otherwise they would literally be losing money dealing with the insurance companies and that would make no business sense.

So the conversation that goes on in pretty much every doctor’s head goes something like this: “Hmm… XYZ Corp only wants to pay me $100 to do a physical. That’s outrageous! And yet, I’m still making huge amounts of money doing that. Okay so I’ll play their game. But those poor saps who don’t have insurance… hahaha I can still charge them $200 because they can’t do anything about it!”

Or are you suggesting that doctors are willing to have “loss leaders” in the same vein as Walmart? Get them in the door with “low low prices” for physicals, then they’ll stay for the more expensive procedures later on? That doesn’t make sense either because that would be equally valid for uninsured patients.

I’m not suggesting that doctors are *conspiring* with insurance companies. All I’m saying is that doctors have a choice about what price they operate at. They give a better price to insurance companies than to individuals. It’s still profitable for them to offer the lower price or they wouldn’t do it. There’s no disputing that and thus far I’ve not heard a decent explanation of the financial necessity of charging $X for certain patients and $X + 50% for other patients.

All I can say about your “Darwinistic” approach to medical care is that I hope you are never in a position of power. You really think that insurance companies would not discriminate and abuse the authority you would grant them? The minute someone got cancer they’d be kicked out the door by each and every insurance company. As you aged the rates would slowly increase until only the very wealthiest could possibly afford to pay. The day your child was diagnosed with an sever disease they would be dropped from the policy. Unabashed capitalism / libertarianism is not the perfect solution for every problem. Regulation is needed. Free markets don’t look out for the little guy. Unless you are willing to recognize that there is nothing really to debate with you. Finally, if this is truly how you feel I hope you change your tune when someone you care about is faced with a potentially expensive disease (believe me if you have any social network at all this WILL happen to you one day).

The biggest risk factor is age. It is expensive to treat lung cancer, but the years of preventive drugs and tests and office visits that healthy people have are also expensive. As the guidelines get stricter and stricter, most people over 50 are on one drug or the other – a statin, blood pressure medication, osteoporosis prevention drug, etc. Add to this years of screening, false positive evaluations, etc. and the cost for a “healthy” person will add up. Not to mention that even a lot of formerly healthy people need end-of-life care at the end.

Obesity increases the risk of several deseases, but some of the heart attacks are instantly fatal so they cost $0 to treat. Exercising reduces risk of many condition, but those who exercise have more injuries. If the health insurance run as car insurance, the insurance for athletes will be high as well. Having a lot of children earlier reduces woman’s risk of breast cancer. Shall women who have many children early pay less and those who have children after 30 pay more?

Take another definition of “responsible behavior” – screening. In most cases, you need to screen hundreds or thousands of people for one person to benefit. This is of course extremely important to you if you are this one person, but it is expensive especially after you add numerous false positives and one little known effect of screening – overdiagnosis. Do you know how some forms of screening increase the number of people diagnosed with the desease? For those who don’t know “overdiagnosis” refers to finding cases of early cancer that are either indolent or so slow growing that they wouldn’t have spread within one’s lifetime if remained undetected. Should people who forgo screening pay more because they miss a chance of catching a potentially treatable cancer early or less because as a group they cost less; with some tests – a lot less?

The biggest risk factor for all deseases is age. So, if health insurance works like car insurance, the older you get, the more you’ll pay. But this is the time when you need your insurance the most. Do you really want your premiums go up as the chance of your needing it increases and so do your out-of-pocket costs? What about the fact that car insurance skyrockets and you may be thrown out after an accident? Do you want your health insurance to skyrocket to the amount you cannot afford just as you are diagnosed with cancer?

Adfecto, I do agreee that health care costs are increasing because of the increase in technology. I acutally work in the health care field. The stress of medical malpractice suits is also killing the medical field. However, I see a huge number of people with lung cancer that can’t wait to sneak outside to smoke a cigarette (not kidding). One morning, I rode my bike past a pregnant women hooked up to an IV bag smoking a cigarette in a hospital gown outside of the hospital (I have no idea who let her out).

My point is that people need to take personal responsibility for the poor decisions they make regarding their health.

“Everyone should pay the same for health care and equally share risk.”
This is socialism. How do you feel about the discriminatory practices of auto insurance companies?

Adfecto,

“The idea of paying people who take preventative measures does get discussed and some employers are implementing these types of policies. This is not what my article addresses, which is insurers or employers charging more for covering “unhealthy” people.”
this is only a perspective difference — paying ppl to take preventative measures accomplishes the same goal of charging unhealthy ppl more (see the end of this post). Your article focuses on the nitty gritty b.s. of true costs and exact calculations of health/unhealth…and briefly touches on the true meat of your reason for posting it…”Everyone should pay the same for health care and equally share risk.”

———-
1. How do you decide who is unhealthy?
I don’t. See question 2.

2. Who decides if someone is unhealthy?
the insurance companies. in a free market economy, the insurance companies should make these decisions. if the public then disagrees, the insurance companies will meet the demands or face competition from another insurance company that pops up and offers a package that is more closely tied with the public’s demands.

3. How much extra should someone pay if they are unhealthy? 10%, 20%, 200%?
see question 2.

4. Where do we draw the line? If you are very unhealthy should you no longer qualify for any insurance?
see question 2.

5. Does it matter why you are unhealthy? What if a person was unlucky? What if a person was born unhealthy?
darwinism.

6. Why should unhealthy people pay more? Do unhealthy people really cost more to insure?
this is the only debatable point that i see in this whole post of yours.

don’t get me wrong, I’m all about positive reinforcement (compensation for healthy lifestyle) over punishment (higher premiums for unhealthy ppl) but the end result is the same. where would the compensation for a healthy lifestyle come from (tax write offs for healthy food, gym memberships, etc)? it would eventually be tracked back to the health insurance companies who would then subsidize it over everyone’s insurance premiums…and in doing so would have the same effect of costing an unhealthy person more for insurance.

I think it would be helpful to the discussion if people were willing to try and comment specifically on the six questions I outlined at the beginning of the post. It seems to be a good way to directly debate some of the issues. Anyone want to volunteer to give it a try?

I hope you aren’t confused about my hypothesis. Everyone should pay the same for health care and equally share risk. In part 2 I reference the same article you bring up.

@ Bill

The idea of paying people who take preventative measures does get discussed and some employers are implementing these types of policies. This is not what my article addresses, which is insurers or employers charging more for covering “unhealthy” people. It seems you have either missed the point of the article or simply disagree, but in that case add some just justifications to support your position beyond (I’m healthy, I deserve to pay less / he is fat and smokes thus deserves to pay more).

@ Jon

I think you are on to something with the Big Group plan idea, but the idea of individual health insurance is backwards. How do you share risk if your policy is priced for one person or even just a small sample size? You can’t unless the insurer is using a system of writing offsetting individual policies, such as one high risk for one low risk. But then, why even bother with the high risk? That person does not provide a profit motivation so instead only give insurance to very healthy people, still charge them high rates, and reap a huge profit. Everyone loses but big business.

@ dong

Who’s business is it if a person smokes? Do we legally requirement to answer a questionnaire about their personal habits? Do we require a person to submit to step on a scale and make that data available to the employer and insurer? I think all of these “decisions” constitute my person life choices that are nobody’s business but my own. If my employer ever asked my weight to assess how much I should pay for insurance I would lie (unless it was under oath or under legal order) or I would refuse. It is my business. Period.

@ Saving Diva

Health care costs are not skyrocketing because we aren’t taking care of ourselves. They are skyrocketing for several reasons, first because people are living longer. The second reasons is that there is an expansion of the types of treatment for more focused ailments. You can get treatment for things never before treatable. Third, there is demand. We have seen the benefits of medicine and everyone feels entitled to the latest, greatest, and most complete treatments available. When before we would have a $100 X-Ray we now have a $1500 CAT scan and a $3000 PET scan as well. The sheer number of treatments has skyrocketed. Next, medical professionals are taking on massive debt and working their butt off in school and they require huge salaries to compensate them for that. Finally, there is the ever increasing cost of malpractice insurance. What I’m saying is that people today are healthier than they have ever been and that is both the cause and the effect of ballooning health costs.

@ kitty

Your last two comments are right on the mark. I want to second what you have said.

@ All

Thanks very much for your contributions. I am glad to have opinions from both sides of the argument.

This comment represents a misunderstanding of how insurance companies work with doctors. Doctors don’t give insurance companies “special breaks” because they choose to. Insurance companies say “hey, if you want to take our insurance at your practice, we will only pay you $X amount of dollars for this procedure/test/whatever, and you have to accept that. also, you can’t charge the patient anything to make up the difference.” For a lot of procedures and tests, the amount the insurance companies pay is less than the doctor’s cost to perform it. The doctors have to make up the loss on other procedures, or by charging patients without insurance a more standard rate. And ALL insurance companies do this, so it’s not like doctors have the choice of avoiding the ones that do.

It’s a broken system. It results in patients without insurance paying more for procedures than patients with insurance. It results in doctors and hospitals pushing perhaps unnecessary but more profitable procedures/tests/surgeries to make up the difference on the stuff they lose money on.

However, to suggest that doctors are in bed with the insurance companies in order to rip off uninsured patients is totally wrong.

This is an example of why some preventive measures while beneficial and maybe even life-saving are actually expensive. There are these interesting concepts in epidemiology: NNT (number needed to treat) for drugs and NNS (number needed to screen) for screening. It sounds so simple – “it is cheaper to take statins than to treat heart attack”, “it is cheaper to do test X than to treat cancer” – until you calculate how many people actually need to be treated/screened to benefit one person. This is an example of how what “seems obvious” isn’t always true. Obviously, prevention has a lot of value. But cost savings isn’t always one of it. So maybe before you talk about charging someone more you have some real evidence that it’ll save money?

As to skyrocketing health care costs, it is an oversimplification to think that the lifestyle is the only cost. Defensive medicine – doctors ordering unnecessary tests to protect themselves from lawsuits has a part in it. There has been a study that showed that over half of the doctors order unnecessary, non-recommended tests at annual physicals. Each of these tests cost money; each of these tests can result in false positives requiring more expensive tests. People demanding tests because they saw an ad on TV is a large part of it too. Prescription drugs far outpaced the inflation. There are a number of reasons for higher costs. And btw – people do live longer.

BTW – I’ve never smoked, I hate smoking, and I am slim.

As to the employer insurance – it allows to spread risk. You don’t know when you are going to need care or cost money. Certain lifestyles increase risk of some conditions, but there are plenty of healthy fat people and sick thin people. A lot of people who do everything right – don’t smoke, exercise, eat right – still get sick. Living healthy lifestyle may decrease the risk of some conditions, but it will not eliminate the risk. Bill may not want to pay for one’s fat co-worker, and if he is still young, he doesn’t want to subsidize his over-50 co-workers. But would he thinks the same when he is 50? Or if he gets sick in spite of all the right choices and his individual insurance decides not to extend his policy?

Bill, actually I am arguing against taxing the unhealthy and explaining why, so I don’t quite understand your example. But unlike you, I am not going to resort to name-calling. The discussion here is about cost and not whether prevention is beneficial to you as an individual. Nobody wants to die young – I don’t, I assume you don’t either. Prevention has its value other than cost. But yes, from the insurance company perspective, if we die from an immediately fatal heart attack at the age of 56 – as my very unhealthy cousin-in-law did – we’ll save money. At any rate – I included a reference to a paper published in a reputable medical journal. Have you bothered to read it? Are you saying the doctors who write in a medical journal are dumb, the reviewers of their paper are dumb, but the politicians and you know better?

I have a hard time watching health care costs skyrocket because Americans aren’t taking care of themselves. I do find it a little frightening that there will be health standards created. However, I’m pretty confident that if we base the standards on the American public they can’t be too strict.

Consider health insurance like car insurance, would you want your insurance bill to go up because your next door neighbor has 3 DUIs and has totalled a vehicle. If you’re a responsible driver, you should be rewarded with lower premiums. I think health insurance should be though of in a similar light.

I heard an interview on NPR with one of the author’s of that study. He said they (purposely) didn’t take a lot of stuff into account like increased economic productivity of healthy people. The study only serves as a starting point that focuses only on costs of being healthy.

Also, many costs were specific to the Netherlands. For instance, the chief cost driver in the study was the cost of state-provided nursing homes, which (iirc) the author said cost about 20,000 euros per year. In a less socialist society like the USA, many of the costs won’t apply.

Anyway, that said, I want to pose this question: why should people employed at big companies get the benefit of group insurance rates? Why is it okay to charge individuals more if they smoke, but not if the same exact individuals are under a group plan? That doesn’t make sense.

Personally, I think group plans need to go. They are unfair and discriminatory. We either need to have universal coverage based on taxes (i.e. 1 big group plan), or purely individual coverage (no group plans). Doctors and hospitals should not legally be allowed to charge people different prices. I think it’s really disgusting that doctors will give special breaks to insurance companies that they won’t give to individuals without insurance.