It’s an election year, which means healthcare is again in the national spotlight. Bernie wants Medicare for All. Mayor Pete wants Medicare for All Who Want It. Joe Biden wants to serve up Obamacare with a Biden garnish. Elizabeth Warren wants what Bernie wants, but in a way that Only Elizabeth Warren Can Take Credit For. And so on. Meanwhile, the Trump administration has done its part over the past 4 years to weaken and eviscerate Obamacare – which is probably good, because Obamacare has been basically a nightmare in implementation.
The political debate has polarized, predictably, into two extremes: the left basically wants socialized medicine, and the right basically wants free-market-directed private health insurance. In this post, I want to make the case that both sides are missing the point. So let me begin with a story.
One of my college roommates lives overseas, working as a Christian missionary in sensitive areas. A few years ago, when he was back in the States, I asked him how his medical coverage worked. He explained to me that his missions agency practiced a form of Christian healthcare cost-sharing, and that he and his family LOVED it. I balked. “You mean you don’t have health insurance?” I asked.
“No. I find health insurance ethically problematic,” he replied. And then he walked me through an exercise that left me pondering for months.
“What’s the aim of your health insurance company?” he asked. “Why do they exist?”
“To help me pay for medical care,” I replied.
“Wrong. Your health insurance company exists to make a profit for its shareholders.” He was right, of course, and I began to see where he was going with this line of questioning. “And how, exactly, do they make that profit?” he continued.
“By taking in more in premiums than they disburse in expenses,” I replied.
“Exactly. Health insurance is about profit. That’s why insurance companies deny coverage; it’s why they drop people from their rolls; it’s why they raise premiums regularly. It’s capitalism, plain and simple. Health insurance is not the same as health care.”
This is exactly the problem that Bernie Sanders is willing to name (and then to wildly gesticulate about): the insurance companies and the prescription drug companies exist to profit off the medical needs of Americans. Perhaps you’d argue that they have a right to make a profit; and in a perfect world, I might even agree with you. But this isn’t a perfect world. The dangers of unfettered capitalism grow more and more apparent as the years go by. Bernie is right: the medical lobby is powerful, and they have a choke-hold on healthcare in America. If you doubt that, please read the court documents for the Massachusetts Attorney General’s lawsuit against Purdue Pharma. Or talk to my friend Paul, who had to go on the evening news to pressure his insurance company to approve treatment for his brain cancer. (Other cancer patients around the US affirmed that this is normal: insurance companies routinely deny treatment unless and until they receive massive public pressure. When the PR consequences of being mean start to outweigh the cost of treatment, they relent. Welcome to health care in America.)
As long as insurance companies stand between patients and their doctors, we’ll never have a humane health care system in America. The system is rigged in favor of the insurers: poor people can’t afford coverage; at-risk people can’t get coverage; and even those who have coverage can be denied treatment at will based on the insurance company’s whims. The whole system revolves around the insurance companies. Doctors hate it; employers hate it; and you probably hate it! To really fix what’s broken, private health insurance must go.
This should be a pretty simple premise for biblically-minded Christians to agree upon. I’ll admit: it took me a while to get there. I come from basically conservative, free-market, pseudo-libertarian assumptions, and it seemed reasonable to me for insurance companies to exist. Until I began to think about the difference between health insurance and health care. My roommate was right: insurance companies don’t exist to ensure that we have health care. They exist to make money. And they do that by charging us more in premiums than they pay out in expenses. In many areas of our society, such a profit motive is fine and good; but when it comes to life and death, that’s a terribly inhumane and unjust proposal.
(Before you comment: I know there are good people who work at insurance companies, and this would affect their livelihood, and it would involve a massive realignment of a whole segment of our national economy, and so forth. And while those are important emotive concerns, we need to set them aside for the sake of the broader debate. We’re not taking anyone’s job away just yet. We’re debating first principles for the sake of the greater good. Stay with me.)
A few paragraphs up, I said “Bernie is right.” Now we get to talk about where he’s wrong. Replacing insurance companies with the federal government is a recipe for disaster. And that’s what the single-payer and Medicare-for-all proposals seek to do. I admire Bernie for his courage in acknowledging that major systemic change is needed. But he’s crazy if he thinks the federal government is a realistic solution (a folly that most of the other Democratic candidates share). Anyone been to the DMV lately? Been stuck in a TSA line? Had a run-in with the IRS? Placing the federal government in charge of healthcare is a guaranteed recipe for waste, fraud, abuse, and inefficiency. A system that places the federal government between patients and their doctors is no better than a system that places insurance companies between patients and their doctors.
Which brings us to the real solution: we need to get rid of the middleman. It won’t be easy, frictionless, or without challenges. But the only way to a humane healthcare system in America is to both abolish private insurance AND keep the federal government out of health care.
This is where the distinction between health care and health insurance becomes important. Christian convictions should incline us toward a system that provides true health care for as many people as possible. In my opinion, the best way to accomplish that is some sort of a cash-pay system that puts patients directly in charge of both their health care and their healthcare expenses. Smarter minds than me will have to adjudicate the details. But as long as insurance companies and/or the federal government are at the center of the conversation, I think we’re still having the wrong conversation.
Two years ago, of my own free will, I stepped away from my employer-provided private insurance plan. That conversation with my college roommate had been bouncing around in my head for five years, and I couldn’t avoid its implications. My family and I joined up with Samaritan Ministries, a Christian health care cost sharing ministry. It’s an amazing model. We pay cash for all our healthcare expenses, and when we face an expense that’s beyond our ability to pay, we submit a “sharing request,” and Christian brothers and sisters across the country chip in to cover our need. Likewise, every month, we commit to invest a certain amount of money in the direct medical needs of other members.
What’s been amazing to me is how much our doctors love it. They get paid right away – no haggling with insurance companies, no Medicare bureaucracy, no quibbles over whether the visit was coded correctly according to each insurer’s protocols. Most of the time, we get a significant discount on the spot simply for being a cash-pay patient (similar to the up-front discounts various insurers negotiate with doctors). We haven’t had any catastrophic needs yet, so how the system works for a major medical expense remains to be seen. But as the kind of person who does my homework, I’ve talked to lots of people who HAVE had such expenses, and they’ve been satisfied with how the system works.
I realize that scaling such a system to a nationwide level creates a whole new set of questions and complexities. And I don’t claim to have all the answers. What I DO know is that removing the middleman from my family’s healthcare world has been an amazing experience. I feel more connected to my doctor; I take more personal responsibility for cost-checking and avoiding unnecessary procedures; and my doctor’s office saves time and money in billing.
A properly Christian doctrine of original sin should lead us to be skeptical of both the federal government and the insurance industry. The simple polarities of left and right are both wrong. A Christian approach to medical care will prioritize health care, not health insurance. Out of concern for the good of all citizens, it will seek to remove profit motive from the equation as much as possible. And it will move the locus of the conversation back to the simple relationship between patient and doctor.
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Bob … first Brexit, now health care. Respect your willingness to tackle these meaty topics. Im not especially informed on Brexit, but as far as anecdotal experience with private insurance, Ive had some amazingly good experiences and a few frustrating ones. Overall, its been a blessing. You rightly point out some of the pitfalls of the current system and proposed system and the cost sharing has become more popular. But it would also be interesting to run the numbers on a massive shift to cost sharing. Would it be financially feasible? For example, I have a relative who is going through a kidney transplant process. How well are extreme expenses like this handled? How well are the increasing medical expenses of an aging population handled? Still, appreciate presenting an intriguing solution to this on going issue.
The middle man… whether health insurance or government “insurance” plays a significant role in driving up the costs of healthcare due to the problems Bob has mentioned in his article. One doctor told me that the costs of dealing with insurance payouts accounts for nearly 50% of the patients “health care costs.” This is the inefficiency of introducing a third party.
Thank you for sharing my brother Paul’s story as it pertains to this topic. I appreciate the way you framed this post to describe health insurance as a solution (and likely not the best solution) to the underlying problem of health care. That framework is desperately needed in our national conversation. about this topic.
Full disclosure. I make a living helping health insurance companies make money. I’m also pretty familiar with health cost sharing ministries. I spent 3 years using Medi-Share before switching to a high deductible health insurance plan with and HSA.
I’ll throw out a few things to consider related to health insurance products and profit.
• Primary health insurance products (the type of products you’re referring to) are required by regulation to pay at least 80% of premiums out in healthcare benefits.
• Most pay 80 – 85% of premiums out as benefits
• The general profit margin for health insurance products is around 5%
• The remaining 10 – 15% is used to pay commissions, administrative fees, marketing, etc.
I can’t help but notice that your description of your health sharing ministry is essentially describing insurance. A group of people pool money together for purposes of helping a subset of the group pay for healthcare expenses when they’re in need. Note: I do like the very personal way in which your money is sent to the actual individual in need (I think this is unique to Samaritan).
I also generally had a positive experience with Medi-Share, though my main reason for liking it was simply that it was far cheaper than health insurance. Here is why it’s cheaper.
• They typically don’t cover pre-existing conditions. Because of this, the pool of individuals is healthy. Likely few individuals with chronic diseases, which is one of the main drivers in rising healthcare costs in the US.
• There is typically a maximum amount they will pay out. This removes the extreme cases.
• They are unregulated and are not held to the same capitol and reserve requirements as insurance companies.
• They don’t cover preventative check-ups “first dollar” like health insurance plans
• Health sharing ministries are non-profit. However, they also have overhead/admin/marketing expenses. From what I’ve seen, about 80 – 90% of “membership fees” are shared.
In other words, health insurance products and health sharing ministries both pay about 80 – 85% of revenue toward healthcare benefits.
Why is one good and the other bad?
Excellent points Jared, and good questions. You say, “your description of your health sharing ministry is essentially describing insurance.” But I think the key difference is the difference between managing risk and managing cost. An insurance company’s business model revolves around managing risk. That’s what “insurance” is and does. Managing risk, as a business strategy, may be well and good – but it’s an entirely different thing than managing (or sharing) costs.
Here’s one way that difference plays out: let’s say my doctor instructs me to get an MRI. If I’m on insurance, I’m not going to bother to call around and see where I can get the cheapest MRI. I’m just going to go to wherever the doctor tells me, and get it done, because I’m only paying a co-pay or a deductible anyway (and either way I’m probably going to hit my max this year). But in a cost-sharing plan, because I’m footing the bill and asking others to reimburse my actual expenses, I’m incentivized to call around and do some research. I have a personal responsibility to the other members to do my part to keep costs down. Turns out not all MRI’s cost the same. Same thing for lab work, x-rays, almost any medical test. Placing some of the financial responsibility in the hands of the patient makes for a more efficient system, because the patients start to pay attention to costs.
You are correct that healthcare sharing ministries are more efficient because they tend to have a pool of healthy individuals. However, I’d also argue that’s one of the unique things this kind of model can offer. An insurance company can’t really tell you “don’t use tobacco;” they just spread the risk across the pool, which is why everyone’s costs are rising. But a health-care cost sharing ministry CAN ask its members to eschew the use of tobacco as a prerequisite to joining – and in so doing, can eliminate one of the significant contributors to poor health. I think this model could be effective more broadly in helping people make healthier lifestyle choices.
You are right that chronic diseases, catastrophic accidents, and so forth would be key variables that would need to be addressed.