Isn’t this what insurance is for?

Health insurance is a strange beast in the insurance world. For most kinds of insurance, you pay a certain amount of money into a system and the system doles out cash in a systematic way to people who need it. The simplest and broadest examples are housing and auto insurance. You and your neighbors or fellow drivers pay into a pool with everyone else, if one of you gets into a wreck or a tornado damages your home, the money from everyone’s premiums goes to you. The system relies on people not really using or needing it now or forever.

But that’s on a home and a car. Those are tangible things. They have costs that are easy to figure up because tires cost what tires cost and shingles cost what shingles cost. Human beings, however, are a little more difficult to grapple with in the realm of health insurance.

It’s easy to just say, “Make health insurance like car insurance!”, but that’s missing the point that a set of tires is drastically different than a new liver. Not to mention a car or house can be totaled and you can just say, “That’s okay, I’ll go get a new one.” You can’t just go buy a new body, and unlike a home, at some point everyone’s body is going to need healthcare.

How did we get here?

Health insurance in the United States rose in popularity because during WWII the Federal government, in an effort to keep the economy stable, froze salaries. Companies like GE, Ford, GM and others had problems with workforce retention. How can you operate a business if you can’t attract the best people, especially in then-fast-growing industries like automation and industry? This is where the idea of employer-provided benefits comes from. Since companies couldn’t raise or lower salaries, they started offering benefits like retirement pensions, vacation days, and health insurance. It added money to a person’s income by way of reducing expenses on things they already needed or paid for and it got around the government’s salary freeze.

We just never evolved out of that process after the war was over. Today most Americans get insurance through their employer, which puts the self-employed, unemployed, and underemployed in a position without healthcare or being able to afford it because of their lack of individual purchasing power.

Innovation vs. morality

Because the country was paying for health insurance through private employers into private companies, there were some interesting advancements to come of this. Because prices were stable and competition was allowed to flourish between enterprises, American healthcare became much different than elsewhere in the world. Government research dollars and private enterprise raced to fund advancements in healthcare, both for the benefit of our soldiers and citizens. Like Hollywood, much of American’s greatest exports are in research, education, and creative fields that don’t involve manufactured widgets.

This has resulted in amazing medical achievements like face transplants, hand transplants, organ regrowth, prosthetics, and replacements for practically every bone in the human body. This came with a cost, though.

While costs were steady and the pools were manageable for insurance companies, the cost of healthcare started rising in America. People who were uninsured or underinsured and completely unable to pay for healthcare expenses meant hospitals were spending money and not receiving any payment. So the bills started rising on the people who did have insurance, and that begat the cycle we find ourselves grappling with today.

As a result, America’s innovation is being tested against its morality. We’ve long subsidized the cost of innovation for other countries. If we want to ensure that everyone is covered by insurance to a high degree, then something has to give and it’s frequently assumed that will be America’s ability to produce breakthrough drugs and procedures. will diminish If a cure for Alzheimer’s is to be found, it may cost millions or billions of dollars. Is that money going to be spent on a cure, or subsidizing coverage for low-income Americans for checkups and other healthcare needs?

Health insurance is for more than letting people go to the doctor whenever they want, and it’s not at all like home and auto insurance we’re all familiar with. It’s also about helping healthcare providers and doctors and pharmaceutical companies discover and research and innovate. It’s why when you buy a car, you don’t get a subsidy for the cost of the car. You’re paying the car companies for that innovation.

Health insurance has been so intricately tied to employment and a specific pool of people for so long that we’re just starting to wrestle with what’s important: innovation versus morality, and where’s the money going to come from to do as much of both as possible?

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IndyAHU is a partner of NAHU

NAHU represents more than 100,000 licensed health insurance agents, brokers, general agents, consultants and benefit professionals through more than 200 chapters across America.