It's a Lottery Ticket 

There has been a lot of attention lately among people regarding health insurance... most notably the idea that somehow everyone should have it. Somehow we've gotten this idea in our head that health insurance is a right. While I can understand the thinking... I also look at that idea as contrary to the definition of insurance.

Insurance is a lottery ticket. You pay some amount of money regularly, betting that you will be hurt later on in a way that will cost you more money than you paid. If you constantly pay your premiums, but never get hurt, you lose (at least monetarily speaking). If you get in an accident, or fall seriously ill and end up in the hospital, then you win. It's really just another distribution scheme. All those people who pay in and never get hurt pay for the people who do get hurt. Of course, the insurance companies take a cut for their services as well. It seems rather obvious, yet still is a concept few understand.

But what if you don't buy insurance? Are you truly deprived of health care as so many make it sound? All those unemployed people, or part time people who don't get insurance as part of their compensation... what of them? They can always buy insurance on their own... or the can go without. It just means that you're buying a different lottery ticket. You're betting that you won't get seriously ill. I say seriously ill... because you can still go to a doctor. If you're not forking over several hundred dollars over to an insurance company every month, that means you can probably afford $100 for a doctor's appointment for a checkup. Theres nothing wrong with that, despite what so many say about how these people go without even the most basic health care. In fact, I think that there are advantages to it. Vermont is seeking to remove that choice from people (H/T to Bebere). Someone who chooses to not pay for insurance if they don't get it as part of a job, will be forced to enroll in their state health plan according to one plan being proposed in their legislature. Of course it will be highly subsidized by the taxpayer... you know... the folks who also pay for their own insurance. In other words... they're not only paying for their own ticket, they're buying someone else's lottery ticket as well.

I'm quickly reminded of my experience with the medical profession earlier this year. It's now been several months, and I still haven't received a bill for the services I received... even though I know I will have to pay at least a portion. Never fear however, I have so far received 3 invoices labeled quite clearly "This is not a bill". Three of them. So where's the damn bill? And here in lies the reason why costs are so high. Well... it's one of two primary reasons.

People Are Too Far Removed From the Cost: I fear any "reform plan" that does not make the consumer more responsible for the cost of their health care in some fashion. I'm a big fan of Medial Savings Accounts in combination with a hospital emergency insurance plan for this reason. Making a person responsible for the cost of some of their health care is important because it will force consumers to question the cost of their health care. Why did you order that extra test? Why does that doctor cost so much more than that other doctor? People don't ask now because they don't have to. Their insurance will cover it after all. The government coming in and trying to fix prices won't do any good. Only consumers, with freedom of choice, and their loud voice can really bring medical costs under control. Most importantly... going to the doctor shouldn't be seen as trying to "make the most of your insurance". Going too often for no real reason at all can be just as costly. Feel free to voice irrational fears of people afraid to go the doctor if they're truly sick here.

Malpractice Has to Come Under Control: One jury award at a time we have raised the cost of malpractice insurance to astronomical heights, and it's killing the medical profession. Why did they order that test? Because if I didn't, you might sue me for $100 million in a few months. Even if a doctor did everything he should have, he could still be responsible for the result... because someone should pay for what happened to you. Thanks John Edwards. I've only been a juror in one trial (a criminal trial)... but I would love to find myself on a malpractice jury. Pain and suffering awards are way out of hand. So are the prominence of so called experts who draw erroneous links based on junk science. It may sound cold, but the reality is that few people's pain and suffering is worth what is given in those trials. Even worse is the fact that people don't seem to understand that this money is coming from somewhere. It's coming from their own pockets. They just don't realize it since they don't pay the direct bill.

Insurance companies have been stigmatized over the last several years as these evil corporations that care nothing about real people. I can understand how that has come about. They do seem cold... but I can say from first hand experience (my current client is an insurance company) that this has nothing to do with cruelty. It's cold, hard statistics pure and simple. Most of the insurance industry is mind numbingly boring... controlled by statistics and actuarial tables... based on real outlays for what the medical care you undergo every year. Well... that and hundreds of distinct laws enforced by every state that the companies have to abide by. They are dizzying, confusing, and costly to keep straight. But of course, the government never does wrong... right?