Stingy insurance is not the answer
When you’re talking about health-care spending, you always need to distinguish between things that’ll save a bit of money next year and things that’ll actually cut the growth rate of health care. Saving a bit of money next year is nice, but it’s not that big of a deal. It’s cutting the growth rate that matters. If you don’t cut the growth rate, then any savings you achieve get wiped out in no time. It’s like tapping the brakes without taking your foot of the gas.
Giving people less generous and less comprehensive health care falls into the “tapping the brakes” theory of cost control. The thing that costs money in the U.S. health-care system is sick people. About 5 percent of the population accounts for 50 percent of the spending. And it’s not because their insurance is super-generous. It’s because they’re really, really sick, and in many cases, because their illnesses are chronic and poorly managed. The problem with just giving them less-generous insurance is that they get sicker, and need to be rushed to the hospital more often because they’re not getting the medications and diagnostics needed to keep their conditions in check. More on that here.
It’s very important that health-care reform leaves a lot of room for insurers to experiment with different benefit designs and ways to keep people healthy. That could slow the growth in health spending, which is why I think the administration should be as vague as possible when defining “essential benefits.” But just making insurance progressively less generous doesn’t do you much good, and may in fact do you some harm. It’s hard to imagine any good that’s going to come from a deductible that’s above five figures: If you’re paying $10,000 out of pocket for health care in one year, you’re probably quite sick and just doing whatever the doctor tells you. Meanwhile, the sorts of intensive insurance programs that might keep people from getting so sick will probably be fairly generous, even as they’re cheaper in the long-run. When you’re thinking about this issue, it’s important to keep the sort of cases and costs that Atul Gawande outlines here in mind.
| March 4, 2011; 4:31 PM ET
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