Tuesday, March 06, 2012

Why Do We "Insure" for Routine Meds?

Let's all agree that Rush Limbaugh is a vagrant little sac of pus (okay, one of those words is a lie).  Still the question remains--why do we pay an insurance company to cover routine medical expenses?  After all, you don't expect your auto insurer to pay for an oil change.  Aren't we just round-tripping money that we could perfectly well spend on our own?    I can think of four (maybe three and a half) possible reasons.

One--the most plausible in fact, I am sure--is because of taxes.  The employer gets to deduct medical; we don't pay tax on it.  A sensible employer ought to be willing to pay as much of our compensation as lawful in the form of medical insurance, and we ought to be glad to pay for the privilege (i.e., in the form of lower aggregate compensation).  So we try to cram everything we can into the "medical" pigeonhole.   Given the state of current tax law, this makes sense.  But it's a stupid law.

Two--quite apart from tax law, there is the point of motivating cost-effective behavior.  The medical insurer really doesn't want to pay out on, e.g., lung cancer losses for a pool of smokers.  So it makes economic sense for him to pay for, e.g., stop-smoking remedies, even classes.   I suppose we can imagine a world in which your right to catastrophic coverage is based on your showing that you met some cost-reducing preconditions.  But we know we would never stick to our guns on that one so we don't try.

Three--children.  We find a social interest in protecting against childhood, even prenatal, health issues, even if the parents don't want to.  We could try--we do try--to police the parents through the criminal law but it's an expensive blunt instrument, not all that effective in the best of worlds. So we go ahead and pay up.

Finally--group buying power.   Folks in our shop can buy a vision care package.   People talk about it as "insurance," but it's really nothing of the sort: it's just a group buying plan, with attendant economies of scale and buying clout.  Now, if only we had a national medical program, we could whip those gouging providers into line. Oh, right.

Note, I can think of a fifth possible factor in the debate, although I am not sure quite how far it counts a reason.  That is:  we think that medical care is just too damned expensive, and we've become habituated to having "somebody else" pay for it. 

Anecdote: the Wichita bureau reports on a relative--a schoolteacher--who has tolerated a lowish salary partly because the district is picking up so much of the meds.  Now, of course, the employer is trying to cut back on medical coverage, but they aren't offering to raise pay.  Seems to me if they are determined to make an absolute cut in compensation, it would hurt less to cut the taxable earnings first.


mike shupp said...

Consider. You're a young woman, and you want contraception. What do you do in this society? Make an appointment with a doctor, go to his office, hand over the copay, see the doctor, maybe get a brief physical exam, certainly get asked embarrassing a/o detailed questions about your previous sexual history and behavior. Get a prescription. Go to a pharmacy, make the copay, get the pills. A month later, go back to the pharmacy, repeat the precedure. A month later, same thing. The month after that, back to the doctor.

Looks like something for insurance to cover, to me. Imagine you're a guy with a urinary infection. What do you do? Doctor, copay, inspection, prescription, copay, pills. Same damn deal. What's really different?

Ah! Contraception is voluntary! Got it. All this rigamarole was unnecessary. A woman needing contraceptives should just pick them up like aspirin at any drug store or larger supermarket and forget the silly doctor's exam. And of course, ignore the pointless copay. Something like buying condems,in other words.

But oh no oh no oh no! This won't do! THE WHOLE POINT OF THE EXERCISE is that contraception is so critically! vitally! spiritually! emotionally! God-blessedly! IMPORTANT that it's just not thinkable that we put The Pill in the hands of young women without the supervision of a licensed Medical Doctor and a licensed Professional Pharmacist (and without each and every one of those always essential copays). It isn't anything at all like buying condems! It's completely different! Trust me, GOD KNOWS THE DIFFERENCE! Kittens will die if these protocols are broken! School buildings will collapse! TV stations will broadcast test patterns! Do you want to be responsible for this?

Okay. Contraceptives are Medicine in this society. Big big big BAD medicine, and as long as we're absolutely determined to treat them as capital-M Medicine, then the insurance companies can damned well capital-P Pay. It's the price we pay willingly for our freedom!

steve shaw said...

Can anyone please explain why insurance should be tied to employment?

Former and Adoring Student said...

In California at least, health plans are NOT required to cover prescription medications--they are not considered "basic health care services," which must be covered and provide a floor of benefits. Why do we insure for routine meds? Big Pharma. Who else but health plans (including Medicare Part D) with their pooled purchasing power could afford to keep Big Pharma in business?

Buce said...

Student, sweet of you to say. But you narrow the search set so much as virtually to destroy anonymity.

Ken Houghton said...

We (need to) insure routine meds for the same reason we (need to) insure preventive care--because there should not be a monetary incentive to defer care.

Apparently Discovered Former and Adoring Student said...

I am fine with you knowing who I am (do you really?), but best not to let my employer run across my rant against Big Pharma. This was my first time EVER responding to/commenting on a blog--thank you for the opportunity!

Buce said...

Student--not to worry, your secret is safe with me. And, in point of fact, from me, which is just as well for all concerned.