Can health insurance premiums become a financial incentive to stay healthy?
If you get one too many speeding tickets, your car insurance rates to go up. If you don't pay your bills, your interest rates on loans goes up. So how are health insurance rates determined? What's the formula? What are they measuring? Can you predict a car accident or a flood with more accuracy than predicting a heart attack?
It made me wonder. How exactly do health insurance companies come up with that "premium" number? Your zip code? Your height and weight? Your age? What does that have to do with my current health status?
How do health insurance companies make money? By hedging bets? We hear in the news that to control rising costs of health insurance is to cut and cap costs. Yet from a business perspective, how much money are health insurance companies losing by making bad underwriting bets based on archaic actuarial and probability models? Given the information technology and diagnostic science available today, when batting averages, online poker, and Super Bowl Sunday have more precise analytical tools than what it takes to determine your health insurance rates, something here is totally out of whack. Most of us bet around $400 per month that one day we are going to be unhealthy. You hand that wager over to your health insurance company each month, and never question the price. Why? On a scale of 1-10, do you know how risky you are? What exactly are the odds your health insurance company will have to payout a big catastrophic claim on you? How many blind bets do these insurance companies make?
HEALTH DISCRIMINATION?
Do you tell your health insurance company that you smoke one pack of cigarettes every day? As long as you work for a company who provides health insurance as a perk, go ahead, smoke away. Yet if I want to buy health insurance on my own and I had a cancerous mole removed, or have heart disease or diabetes in my family, these same companies assume you will cost them money and will either turn you down, or may charge you a $1000 per month "pre-existing condition" premium based on out-dated actuarial data of a large group of people. Again, do insurance companies know out of that large group of people how many of their insured eat Cocoa Puffs every day for breakfast vs. oatmeal? Either way, I do not want to be forced to pay a premium based on assumptions. I want it based on fact. I want a fair price for exactly how risk adverse I am right now. And with that data I want to be rewarded with a lower premium for maintaining good healthy habits that not only enhances the quality of my life, it saves the health insurance company money on decreasing potential catastrophic claims. Then just like when I get one too many speeding tickets and my car insurance rates go up, next year, if my health scores become risky, I'll pay more. This is called risk equalization in Europe. There is all this "talk" about prevention and wellness. Let's act on it. Let's put our money where our mouth is and see exactly how many people are acting on preventing illness. Or not. Needless to say, a wake-up call to face facts is the first step to health. No one wants to die. That is how you save money on health insurance and control rising prices.
SOLVING THE PROBLEM AT THE RIGHT END OF THE STICK.
Pundits say that reducing costs while increasing access are irreconcilable issues. That "incentives" for preventative care and treatments of chronic diseases will sometimes result in better health but will always result in more spending. Why? I respectfully disagree for the reasons stated above. Right now each insured is paying top dollar for a "pre-existing chronic condition". In this proposed "pay-for-performance" free market model, why not allow an individual's current health status to set insurance prices and measure health progress. Then empower each insured to choose how much, in a dollar amount, they can afford to insure their health management and risk. The riskiest cases may qualify to ask for further aid and choose a health maintenance program subsidized by the government.
If we measured each insurance applicant before billing to assess exact risk and associated cost, insurance companies will profit simply by including everyone as a customer. Also, by aligning per person costs with an annual action plan to achieve health vs. blindly wagering top dollar to expect the worst, in less than 5 years this will turn the whole system around. To the positive end of the stick. We require an health incentive plan, not a health insurance plan. Perhaps begin with the hardest to cover "pre-existing condition" cases that insurance companies won't touch. If we required a health assessment diagnostic blood test first to determine exact costs to get you healthy according to an annual schedule, well, now we have a real health "plan" to work with.
Employers don't have to offer health insurance anymore. Relieve them from this paperwork mess. Work environments are essentially communities or similar to a "village". For employers who create healthy work communities, determined by the health data of their employees, will be awarded health incentive funds from the government. Employers will use these as perks in the form of "health gift cards" to distribute to employees to use specifically for health care according to their individual annual plan. This is simply a reallocation of the same "tax benefits" employers get now, but this is not just handing over money. This creates a dynamic "community" health plan for individuals based on positive action with rewards for positive results
COMMUNITY HEALTH GIFT CARDS!
Let's take the burden off employers and put the individual consumer in charge. Give individuals tax credits and incentives for improvements on their individual health performance. Let's provide the insured health guidance and coaching. Like the Peace Corps, this will be a nationally organized, community based, health corps organization, perhaps franchised across the nation. Individuals who participate in employer based health maintenance an wellness programs will then be distributed health insurance credit as a "health gift card".
PAY FOR PERFORMANCE HEALTH CARE SYSTEM
Yes, technology to track health progress will make administrative process easier, but a blood test can empower any patient and health insurance company to pinpoint exactly how risk adverse you are, or no and base costs on real datat. To qualify for health insurance you will take a biophysical diagnostic blood test each year and pay your premium according to real-time individual health data, not an arbitrary premium. Let's give doctors real health data scores to work with to create an annual health plan for each "universal" insured patient. And can insured's have an incentive to stay healthy to save money on insurance premiums? Yes. To start what if we took that same $4700 per year or $400 per month and invested it in a day-to-day health plan to bring your health scores to optimal levels. The cost for the annual diagnostic biophysical blood test will be amortized into your monthly premium. Then your your doctor can use your annual health scores to map out a plan of action for the coming year to get your numbers in healthy range. Then just like when I get one too many speeding tickets and my car insurance rates go up, if my health scores become risky, next year I'll agree to pay more. When I improve next year, I pay less. This will be a practical use of your annual premium, but now it becomes an investment in yourself; not a payment. Once you have real data to determine exactly what your costs are to bring your health scores into healthy range you can buy insurance for a price based on real cost; just like you do for your home.
Right now doctors only make money if you stay sick! This is because the current health insurance system pays doctors per treatment...the more tests and treatments they order, the more money they make. One doctor told me he makes $24 for every health insured patient he sees. And $12 goes to his office management costs before he ever gets into the room with you, the patient. It is now a volume based business. He has to book 30 patients per day (1 patient every 15 minutes) to stay in business. With this new plan, doctors will be rewarded financially by putting them on the prevention side of the fence rather than being paid on volume, per treatment. Under this pay for performance plan doctors with the most patients that show progress of getting health scores within range will help health insurance companies save money and allow them to offer lower premiums by reducing risk on the number of payouts on expensive claims.
NEVER BUY INSURANCE FOR SOMETHING YOU CAN AFFORD TO REPLACE
Yes, it may be best to exclude coverage of health maintenance services with low priority or value. For instance, your car insurance company does not pay for changing the oil on your car. These common health maintenance services would be itemized in your annual health incentive plan that you receive when you apply for insurance. In most cases for teeth cleaning or remedies for colds or minor infections, you will save money paying for yourself rather than paying for all the insurance paperwork involved with a co-pay. Only buy catastrophic insurance and buy it based on a specific number. The health status report from the diagnostic blood test will give you levels of potential risk that a hospitalization may occur and the price for treatment for various scenarios. This will enable the customer to purchase insurance based on exact risk for their individual health status from $100,000 (covering an average cost for one week in the hospital) to $1,000,000 (for one year of cancer treatments). When your health improves each year your annual investment in catastrophic health insurance can be reallocated to your annual health maintenance costs in "points" in a health gift card.
Let's expand the system and manage it so anyone can apply.
