Every policy discussion on health insurance should begin with a single fundamental question: What is the purpose of insurance?
Insurance began during the time of global trade with wooden ships. Due to the high risk of losing ships at sea, merchants would pay into a pool before their ships headed out, hoping the ships would return and the insurance was unnecessary. However, if a ship was lost at sea, the merchant received payment from the pool to help recover the cost of the lost ships and goods. The basis of insurance was as a means to recover from a catastrophic loss.
Today we see this idea of insurance all over society with home, automobile and life insurance being the most prevalent. In these cases, an individual will pay a low monthly rate with the hope that he or she will never have to file a claim. They hope the insurance will ultimately prove unnecessary. However, due to the risks of life, most individuals believe that insurance is worth it, even if a claim is never made. After all, the risk of losing a home in a fire is too great to not have insurance in case it does happen.
However, health insurance has taken on a completely different meaning over time. Today, health insurance is really no longer insurance. Rather, it is simply prepaid health care for those with insurance and unpaid health care for those without insurance.
This has happened because individuals do not look at health insurance as a precaution which they hope not to have to use as they do with home or automobile insurance. Instead, individuals look at health insurance as coverage for most, if not all, of their health care. Routine checkups and stomachaches are now regularly considered covered under today’s health insurance, whereas health insurance under the original philosophy would be reserved for catastrophic issues, such as terminal cancer or strokes.
This change in philosophy has led to problems in the arena of health care. With the ship insurance, many merchants paid into the pool so the pool was large. Claims were only made when ships were lost, meaning that the pool only decreased when catastrophe struck.
Today, however, the pool decreases with every doctor’s visit brought on by a sneeze or ache. This means that there is less in the pool as a whole to pay when catastrophe does strike. Also, individuals tend to use up a significant portion of their own pay-in with such claims since it is viewed as prepaid care rather than true insurance.
Indirectly, increased claims are breaking the system by leading to the need for more workers, both at the insurance companies and the hospitals/doctors’ offices, due to the paperwork that is required to handle the process of claims. This increase leads to higher expenses on both ends which are simply passed along to the patient.
Now this is not to say that preventive care is not one way to go, since it has its own benefits. However, it is to say that the philosophy of insurance is not truly being applied in today’s health care system, which is a major cause of the current health care problems.
Trenton Winford is a senior public policy leadership major from Madison.
-Trenton Winford
tgwinfor@go.olemiss.edu
