It’s time to reform medical insurance

About a month ago BDN columnist Dr. Erik Steele said it was about time we find ways to cut medical costs. Then a couple weeks later he made two suggestions, stop unnecessary blood transfusions and find a way to get the best medical practice information to physicians a lot faster. Here’s a third way: radically reform medical insurance.

Reading Dr. Steele’s estimate that $1 billion of medical expenses could be saved by eliminating 1 million unnecessary blood transfusions, I thought: “You’re telling me that a single transfusion of blood costs almost $1,000? How can that be?” Then it hit me: It’s paid for by medical insurance.

In the March 31 edition of Newsweek, Sharon Begley reported that the U.S. health care system is far from best in the world in numerous categories. What we are best at is spending money for medical services; our system costs 20 percent more than the second most expensive system (Luxembourg) and more than twice the average of the 30 wealthiest countries in the Organization for Economic Cooperation and Development.

Most forms of insurance are ways of protecting an individual from catastrophic loss, as when your house burns down, your car is totaled or the family breadwinner dies. Medical insurance is more like a maintenance contract. What do you think your homeowners insurance would cost if it covered repair and replacement of floors, walls, windows, plumbing, wiring and appliances caused mostly by carelessness and neglect?

Obesity is rampant in America. Obesity is a well-known risk factor for numerous medical maladies. So are smoking, consuming large amounts of alcohol and the failure to exercise. So the obese, smokers, heavy drinkers and couch potatoes who work for a company or government agency with group insurance or who are part of a government subsidized social service program, are they held accountable for their medically slothful behavior? Not that I’ve heard of. They get the same group insurance benefits at the same cost as those who eat, drink and exercise wisely.

We are obsessed with wonder drugs. Drug companies rush their newest offering to market promoting it with ads that urge us to run to our doctors and insist that we not be denied its miraculous benefits. Our doctors pull out their prescription pads thinking to themselves, “Well, with a little luck it probably won’t hurt you” and “if I don’t write the prescription one of my competitors will – why should I risk losing a patient?” Our medical insurers then pay the bills with a modest co-payment from us knowing they can cash in next year when they raise our premiums again.

It’s time for major surgery on medical insurance. We are an intelligent, reasonable and adaptive people. It’s time to figure out what is truly essential in health care and what is not. It’s time to create incentives for those who take care of themselves and to stop subsidizing those who do not.

One approach would be to cover expenses only after they reached a substantial threshold, like $500 per event or a total of $2,500 in a year. Cover only generic drugs with a proved record of actually reducing severity or length of recovery from an illness. Require all taxpayer-supported employees starting with the president to pay a minimum of 20 percent of their insurance coverage if single, and 40 percent of the additional cost for a family. Urge all employers to do the same. Create incentives for those who eat, drink and exercise wisely, penalize those who don’t. Create a jackpot for reporting fraudulent billing. Gradually remove the tax-exempt status for medical benefits and expenses.

My guess is that by the sixth or seventh “get lean” year, U.S. medical expenditures could be cut by 40 percent ($800 billion per year), the Medicare Trust Fund would no longer be in eminent danger of collapse, the quality of medical care could be improved, the U.S. budget could be balanced, the U.S. debt would begin to decline, and investors who hold $9 trillion of our U.S. securities, seeing the country exercising meaningful spending and debt control would breathe easier and be far less tempted to start a catastrophic sell-off of U.S. notes, bonds and stocks.

Matthew Arnett is a town councilor in Hampden. Before his retirement he worked as an engineer, a human resources manager, a professor of business administration and a Protestant minister.