[alexanderdou]

Created an account to comment on this, so I'm new, but I read the Welcome and Guidelines.

This is something deeply interesting to me and I'd love to see more comments around it. Here are some questions I have, as someone who has been in the health insurance brokerage space for 3 years early on in my career.

In the case of the Jordans, they had a $2K deductible that the article fingers as the main source of their obligation. However, it further says that they ended the year owing ~$8K (on top of their monthly payments of $501). That just seems like a bad plan: high deductible, low lifetime max or bad coinsurance split. So on top of a high deductible, it offers bad coverage in the case of catastrophe. To me, that brings up two things: 1) lack of savings (I think there's a statistic that like 50% of americans couldn't get $500 together in case of an emergency) and 2) high deductible plans that can bury families. This strikes me as similar to the problem of treating addiction; it takes so many people to treat addiction: psychiatrists, therapists, internal medicine, financial support, job searching, housing support. Healthcare, specifically how an employee navigates it, seems to be a similar problem, requiring budgeting, finding time to find a doctor, etc etc. Are there any companies or people working on this kind of stuff right now?

It also appears that short-termism is another factor in play here. Because of changes to the tax code, companies began offering cheaper plans, thinking that it would cause employees to be more frugal but instead it just caused them to cut back on all preventative care. Does anybody know of example companies that didn't do that? That recognized the risk up front and resisted the short term gains on quarterly guidance?

Lastly, I think it's admirable what the new Gawande-led venture stands for, but I just had a vision of a future where only giant mega-corps will have the leverage—both financially and politically—to properly insure their select few Chosen employees. Is that at all likely? Or have I been watching too much 3%?

[volkl48]

The theory behind high deductible plans (as the article notes) is that it'll make people shop around for health care and find better prices and so it should bring down healthcare costs the same way the free market works on other things.

Some of the reasons this doesn't work:

- A significant amount of care, especially the most expensive sorts of care, are not things where shopping around is something that's an option. (emergency care).

- Consumers are not and likely will never be, educated enough to actually make informed decisions about costs. Yes, generic vs name brand is typically easy. On the other hand, there's a half-dozen different medications to treat this thing, all with different price tags. Do I know if the cheaper one is good enough? No, I'm just going to follow what the doctor suggests. Same goes for most other conditions with multiple treatment options.

- Pricing is opaque, and not always unreasonably so. "What will this surgery cost?" is not a question most places can answer before you've had it done. Medicine is prone to wide variation in outcomes that make price estimation problematic. That surgery went well and you're discharged in a day? Cheap. It didn't go well and you're in intensive care for a week and with a dozen doctors working on you? Very, very expensive. Which one will you be? No one knows.

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To add to why it's breaking the market, high deductible plans are attractive to all the wrong people. They're attractive to:

- Broke people, because they get more in their paycheck, even though they can't afford the deductible if they do need care.

- The young and healthy who would be subsidizing the sickly in traditional plans, which is making the costs of those plans spiral.

[burfog]

There is a huge conflict of interest if the hospital can charge more when a surgery goes badly.

The incentive needs to go the other way. The better the outcome, the more money the hospital should get. Bad results should mean they get nothing or even pay out, even without clear malpractice. If the hospital gets less than normal pay because a procedure went badly, there are several options for where that money might go: to the patient, to an insurance company, to a government regulator... but it mustn't go to the hospital.

[perl4ever]

"Consumers are not and likely will never be, educated enough to actually make informed decisions about costs."

Most consumers have no idea how their car works. But you can get estimates, and comparison shop. You can get an explanation, even if it has shortcomings.

[jdeibele]

Yes, and I've gotten called to approve additional expense because there was more work needed than they estimated once they got in there.

Or the door latch on my van seized up. Tried two different independent shops I like and they both referred me to the dealer. If your general practitioner says they can't help you and you need a specialist, what are you going to do?

[Digory]

As for #2, I think the tax incentives make it prohibitive to offer nonconforming plans to those who want to resist. In a weird way, that’s some of what the Hobby Lobby litigation was about — you faced crazy high fines if you wanted to opt out of these “protections.”

What many folks don’t realize is that your premium is, effectively, the amount necessary to subsidize others in your pool who exceed the deductible. The premium will always, necessarily look like a waste to most people, not a “fair expense.” But it is fair, given the level and cost of heath care the market demands.