The car dealership solution to health insurance costs
By Michael R. Shannon
Bloomberg reports Obamacare premiums are scheduled to skyrocket up to 59 percent in Maryland, 38 percent in Virginia and 34 percent in Connecticut. A Baltimore 40–year–old would pay $715.00 a month for a plan with a $2,500 deductible.
Health insurance is costly for three reasons: Government interference, lack of price transparency and consumer overuse.
Here’s what would happen if we used car insurance like health insurance.
We’d expect oil changes to be covered after our $20.00 co–pay. There’d also be a long list of routine checks and diagnostics run each time your ride was in the shop, because the Dept. of Transportation requires mechanics to treat every vehicle like it was a 1961 DeSoto that had never had the oil changed.
Your $250.00 invoice would have itemized charges for GoJo, shop rags, coveralls, disposable ratchets, oil, opening the oil, oil filter and about a hundred other entries.
But that doesn’t matter, since after the co–pay, everything is free! Besides you feel sorry for DeSoto owners.
Later the car breaks down on the highway. You tell the CarFlight pilot to drop it off at the Mercedes dealer. Cost doesn’t matter once the deductible is paid, but you do demand a nice loaner while your car is in surgery.
Before leaving, you tell the mechanic to check the tires and see if they need replacing, because after all that’s what insurance is for, isn’t it?
Car insurance usage at that level would end our obesity crisis, because we’d soon be a nation of pedestrians. Obamacare would be joined by Obamacar.
Real Obamacare reform would require the health market to operate like the auto market.
I don’t mean the patient goes in the doctor’s office, negotiates for six hours and agrees on a price have his appendix removed. Then, in his weakened state, the finance manager pressures him into breast implants for the wife.
What I do mean is allowing consumer choice and provider accountability.
Smart consumers get an estimate before their car is serviced. If it’s too high, they talk to another shop. If it’s too much money to sink into an old car, you start shopping for new.
That’s price transparency. In health care we have price opacity. If you ask the hospital what it costs to have your appendix removed you get one of three replies: Uproarious, table–pounding laughter. Dead silence. Or thinly veiled contempt at such an ignorant question.
Price uncertainty might make sense if it was a brain transplant. Plenty of variables there, but that’s not the case with appendectomies.
The Annals of Surgery estimates 280,000 are performed each year. Producing a reliable cost estimate should be routine — give or take a sponge left inside.
Yet you can’t get an estimate because consumer knowledge is consumer power.
One way to begin imposing market discipline would be to require any hospital taking federal money to post turnkey prices for the 25 most common hospitalized surgical procedures; the 25 most common out–patient procedures and the 25 most common tests. All charges must match the best price offered insurance companies.
The howls this would generate from the medical–industrial complex prove how useful the information is. (More details on this in an earlier column here.)
And speaking of sponges, if you take your car in to the shop for an engine overhaul and a mechanic leaves a wrench in the crankcase, that car is going back to the shop. The subsequent repair–to–fix–the–repair is free.
That’s not the way it works with hospitals. Hospitals make money on their mistakes and get away with it because consumers send the bill to the insurance company.
That means higher premiums in the long run and it encourages incompetence. If the guy who works on your car has to fix his mistakes for free, the guy who works on your heart should, too.
People should pay for routine doctor’s visits out of their own pocket and save insurance for major expenses. When my family was between insurance policies I negotiated the cost of doctor’s appointments and lab tests by offering to pay in full right before I left. I saved 30 to 40 percent by taking the insurance company out of the equation.
Putting a middleman between the provider and the patient adds another layer of cost and bureaucracy. Hiding the cost of medical services encourages overuse.
Consumers can choose health insurance coverage options just like they can choose auto insurance coverage. Government “experts” requiring coverage simply guarantees a lifetime income to lobbyists and treats citizens like serfs.
My car market analogy isn’t perfect. Legislators protect in–state auto dealers from out of state completion, just like health insurance companies are protected now. It is certainly a start, though, and a vast improvement over what we have now.
Michael R. Shannon is a public relations and advertising consultant with corporate, government and political experience around the globe. He is a dynamic and entertaining keynote speaker. He can be reached at mandate.mmpr (at) gmail.com. He is also the author of Conservative Christian's Guidebook for Living in Secular Times (Now with added humor!).