Health- is not the same as Health Care- is not the same as Health Insurance

In any setting and in any assembly of people it is hard to avoid discussion of the current Health Care Reform debate. This weekend the five couple that forms our bridge group are on a “Bridge Retreat” in Lake Anna. In this beautiful and relaxed setting, we nonetheless did engage in strong and long debates on this issue. As a matter of fact I wrote this post from Lane Anna.

A couple of weeks back David Goldhill wrote a along article in Atlantic Magazine titled “How the Health care System Killed My Father”.


http://www.theatlantic.com/doc/200909/health-care




It is an intense article that proposes solutions that are radical and far outside the scope of current proposals across the political spectrum. I found the article thought provoking and insightful in many respects but also seriously deficient in a few. The scope is too broad so I don’t want to cram it in a single BLOG entry. Instead I will discuss it in separate BLOGS.

The central theme of the article is contained in the title of this BLOG. He further adds “happiness” as another critical factor. Goldhill correctly points out that the current debate is almost exclusively focused on health insurance industry that administers and finances the health care industry. The discussion implicitly assumes that the fundamentals of current system are correct and we need to remove some distortions and inequalities to make the system work better. He takes strenuous objections to this central thesis. He sets up a parallel with auto insurance which all of us are required to get (mandate) if we wish to register and drive our car. In this BLOG I will summarize his arguments and then expand upon it.

Wikipedia definition of insurance: Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss. (For a very interesting article, see http://en.wikipedia.org/wiki/Insurance)

In case of auto-insurance, we are insuring against accidents, thefts and other damage. All of these can be reasonably considered unpredictable and uncontrollable events. In addition to the “Collision and Comprehensive Insurance”, a car is also covered by “Manufacturer’s Warranty” that protects owner against unpredictable failures in major engine and drive-train components of the car. The owner also has an option of buying an extended and expanded coverage against such unpredictable and statistical events. Other items such as filling gas, oil changes, tire replacement, tune-ups and number of other “routine maintenance” are not covered since they are completely predictable and under owner’s control. As a matter of fact when a person purchases a car, these expenses and other owner responsibilities are made explicit in the “Owner’s Handbook”. Indeed manufacturer’s warranty (basic or extended) is contingent upon the owners fulfilling their obligations and documenting them by receipts.

This should be contrasted with the structure of Health Insurance as currently structured.

Routine and predictable expenses such as annual physicals and planned events such as child birth are expected to be covered by our “Insurance Policy”. This basically says that the so-called “Health Insurance” is really not insurance in the traditional sense but actually a benefit to employees (partially) covering their “health expenses”. In other countries like India, many companies also provide housing allowance and car with driver, also tax free.

Goldhill proposes separating these aspects of health care expenses. I am modifying on his ideas somewhat and proposing the following. Health care can be divided into three categories

1. Routine, predictable and planned;


2. Unexpected but “manageable” – short duration illnesses and minor injuries


3. Unexpected and catastrophic – chronic conditions, severe injuries and fatal illnesses
   

It is clear that the boundary between these categories is not very sharp and they can very well morph into each other, upwards as well downwards. So any system evolved to deliver care and pay for expenses of these three different conditions have to be flexible and integrated. Yet this softness of boundaries should not be an excuse for the current state of affairs where there is no clear distinction in how these three categories are handled.

Then Goldhill proceeds to describe different approaches to a combination of government, personal and insurance companies paying for these three types of expenses. He also describes different institutions (store front clinics, hospitals, specialty hospitals). Then he talks about a "consumer-centric" health care system.

This is where I started having serious disagreements. Health care is NOT like buying a shirt or a hamburger and patients are NOT simple customers/consumers of a product. The quality of the outcome is dependent critically on what the patient/consumer/customer does or does not do.

Without considering the entire health care enterprise as a cooperative, collaborative affair, no amount of reform of any kind (left, right, center) is going to amount to anything.

In a classic American fashion, the adversarial system rules supreme. Current tort system goes a long way towards setting the tone for doctor-patient relation. Same thing can be said for patient-insurance company and doctor-insurance company interactions.

My question is - Is this basic approach sustainable? I think not! More on this topic, next week.