Insurance was invented to pay for emergencies. Your home insurance doesn't pay to perform routine maintenance on your roof, but neither will it pay to repair "normal" wear and tear. Your home insurance pays when a tree falls on your roof.
Our healthcare system has co-evolved with insurance in a sort of partial free-market, partial heavily regulated environment. Arguably we get the worse parts of both: Kafka-esque beaurocratic mazes and shareholder value optimization for private firms.
There's a paradigm shift needed in how health insurance works: optimize for total cost of care.
Can the invisible hand do this when providers are offering mainly treatments with token preventative care visits thrown in?
>There's a paradigm shift needed in how health insurance works: optimize for total cost of care.
You're criticizing health insurance but payers are far more incentive-aligned with patients on lowering total cost of care than the providers. They carry the risk and have to pay out claims. Providers, on the other hand, have an incentive to provide lots of expensive reactive care that's bound to expensive labor.
I agree with the sentiment of your "only for emergencies" point and wish direct care was more affordable. The problem is providers charge insanely high rates for services because a) they can get payers to cover it, and b) they're covering the cost of labor that's getting increasingly expensive with no commensurate increase in productivity [0].
For prices to come down substantially in the US, we'd need a much greater supply of doctors or more automated care. The former is against the financial interests of current doctors and the latter is an uphill battle against FDA regs, state medical boards, and billing codes from CMS to make it reimbursable.
[0] https://en.wikipedia.org/wiki/Baumol_effect#Healthcare
Payers are bound by law to spend at least 80% of premiums on healthcare. So if they can drive up healthcare costs across the board, they can profit more (by taking the same 20% of a bigger pie).
Yeah MLRs removed an incentive for payers to fight long run rate increases as long as they can model the risk effectively and pass on the cost to members via premiums, but they still tend to fight rapid increases because they break their models and retroactively misprice existing plans. Otherwise we wouldn't see contentious contracted rate negotiations between commercial insurers and providers, but we do.
Absolutely not here to praise US health insurance companies, but they're not the ones using regional leverage to negotiate higher rates - that's the providers.
> There's a paradigm shift needed in how health insurance works: optimize for total cost of care.
Value-based care, e.g. Medicare Advantage.
The idea is that the government gives you $X for the care of a patient, with multipliers on risk factors. The government's goal is for that to be basically exactly what care costs. The provider is incentivized to treat you for less. Which sounds perverse, but if they, for instance, deny all care, a patient will end up in the hospital and cost exponentially more than they would have through proper preventive care. It is not perfect, and it should be broader, but it is a strong optimizer for providing the right care to keep a patient healthy, without providing hundreds of unnecessary tests (and especially imaging) that are medically unnecessary.
It is absolutely a system that should be rolling out to more and more patients.
Value-based care is a good idea in general in terms of better aligning provider incentives with patient best interests and controlling costs. But it doesn't necessarily equate with Medicare Advantage. Many MA health plans still operate largely on a fee-for-service basis with perhaps some minor VBC aspects.