Somewhere along the way in the past 20 years or so, health insurance has morphed. It has changed. It is no longer health insurance but a prepaid health plan. When I say this to most people, they don’t really “get” what I mean. Once upon a time insurance (of any kind) was something you paid to reduce your risk of being wiped out financially. It didn’t cost much, but if needed, it would save you from financial ruin. Smart people have used insurance for centuries. When our government started to tilt to the left and reduce our freedoms, they started to make everyone buy it, at least for automobiles. Then for mortgages. And the list grows longer each year. This is part of the long, slow slide from freedom to tyranny. But I digress.

Health insurance used to be like auto insurance. You purchased it, but hoped you would never have to use it because it meant you or a loved one covered by that insurance had a very serious illness that would bankrupt you (without the insurance) and perhaps end in death for the person afflicted. But then something happened and health insurance changed–perhaps because companies expanded the plans in a bid to attract and keep good employees, perhaps for other reasons (who knows?). Now, office visits are covered. Prescription drugs are covered. EVERYTHING is covered to one degree or another. So instead of an individual paying for these services out-of-pocket, the employer now pays for it via high insurance premiums. My point? Doctor’s visits, hospital stays, medicine, etc. still get paid for by the end user. The payment just comes from a different “bucket” nowadays. It used to be directly from the individual, but now it’s the company/employer paying via the high premiums in an “insurance” plan, and that insurance plan is a benefit for the employee and the employer certainly counts that as part of the employee’s compensation package.

So why is that bad? Hey, if companies want to attract and keep good employees, and if paying their health costs will help them achieve that goal, why is that so bad? Well, on the surface, it’s not a bad thing for a company to provide benefits to score good people. But the bad part is this: By changing who pays from the individual to the insurance company, we have buried the true cost of health care. The true cost becomes obscured in a fog of paperwork. Personal example: I recently changed jobs and needed to get my own health insurance plan. I selected a high deductible plan offered by CDPHP (via the local Chamber of Commerce). On my old plan, which was Blue Cross/Blue Shield PPO, I would go to my doctor every 3-4 months for a checkup per her instructions. Each time she would do a blood workup on me to be sure blood sugar levels, cholesterol levels, etc. are OK. I would pay my $20 co-pay and be on my way and life was great. I didn’t know and didn’t care how much the doctor’s visit cost, nor the cost of the blood tests. I recently went again (under the new high deductible plan) and just got a bill in the mail for the blood work. Over $300! So I’m paying $585 a month for a family plan health insurance policy that basically covers me if my family hits $10,000 a year in medical costs, and I pay everything else up to that point. You better believe I now care that I’m spending $300 for a blood test!

What has happened is this: Since individuals don’t care how much it really costs, because it’s covered by “someone else,” those costs have gotten out of control. I personally don’t think $300 is the right cost for blood tests. They are not that complicated. The price should be much lower. But those prices are being controlled by state government, hospitals and insurance companies in an unholy alliance. It is not being left to the free market to control, which is where it belongs. If individuals paid for it directly, I believe there would be a rapid realignment in health care in this country. Costs would come down dramatically. As long as there is a middleman (the insurance companies) providing payments for all of our health care, the system will continue to be broken.

Why would insurance companies do this? Money, of course! The more money that flows through their coffers, the more investments they can make and the more money they make. I’m not against profit and making money! But insurance companies need to get back to being insurance companies and stop being health providers making health decisions. Try finding a health insurance policy that would cost you a few hundred dollars a year so if your health costs ever get above, say $25,000, it would kick in and cover you. In other words, a true insurance policy that would prevent you from complete financial ruin. Folks, I’ve looked and it doesn’t exist! It’s time such policies did exist once again.

How about you. Agree or disagree? Do you have thoughts about how insurance has changed? Leave me a comment below.

Technorati Tags: Binghamton, health insurance, health care costs, CDPHP, Blue Cross Blue Shield