Why High Deductible Insurance Should be Replaced

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Why High Deductible Health Insurance Should Be Replaced with Protocol Health Insurance

The problem is that many Americans can’t afford deductibles and co-payments and they either go without medical care or food or the doctor doesn’t get paid. The reason for co-pays and deductibles derives from the fact that our conventional health insurance has a lot of inefficient moral hazard inherent in its design. It lowers the price of health care without lowering the cost of health care. The fact that our conventional high deductible insurance is third party payment and procedure driven merely magnifies the inefficient moral hazard. It makes more sense to redesign the financing mechanism of health insurance to eliminate the moral hazard and other cost drivers than to compound the folly of our flawed conventional insurance design with more bad policy.  

By using Protocol Health Insurance for all non-discretionary, necessary, and emergent care and care that is not associated with inefficient moral hazard and all medical visits, pharmaceuticals, imaging procedures, hospital stays, surgery associated with the covered event we can eliminate much of the moral hazard. In addition by designing patient induced market incentives for the doctor to recommend appropriate use of medical technology we can further eliminate moral hazard without having to use deductibles and co-payments. This new design will lower the price of health insurance premiums. The premium difference from today’s more expensive health plans can be kept in an extended HSA as a tax free self insurance for all discretionary care, initial medical care before a diagnosis is made and any care that is associated with moral hazard. This premium difference can be used to fund disability and long term care insurance for all Americans at very low premiums as well. Not every patient or patient visit to the doctor requires the full court press of premier care. Most visits to the doctor result in a diagnosis of a condition that is self limited or does not require an expensive diagnostic work up. However, some visits do require an extensive work up and result in a diagnosis that requires an expensive treatment course. We need a financing system that allows the doctor and patient to cover both contingencies in an efficient manner. We can do this by bifurcating the payment system.  In this way the patient only cost shares for care that is discretionary or not associated with an insurable event. That means that when a patient is ill, and can not work, he can pay for his non-discretionary care and do it in an efficient manner with funds derived from health insurance.

High deductible insurance offers lower premiums only through the substantial deductible. High deductible insurance does nothing to address out of control cost increases and high hospital costs. It does not address any of the cost drivers associated with third party payment and our procedure driven delivery system. Protocol insurance offers a lower premium through several factors. They are: a more efficient design which eliminates inefficient moral hazard from insurance, elimination of cost shifting, inappropriate use of high tech procedures, elimination of all discretionary spending from insurance, and elimination of all cost drivers associated with third party procedure driven medicine. In addition protocol insurance has much lower administration costs and eliminates premium elevation due to all state mandates. There are no high premiums due to guaranteed issue or community rating with protocol insurance. The bottom line is that protocol insurance delivers a low premium because of its design and not because of a political mandate in the face of unresolved cost drivers.  Protocol insurance gives the patient full control over all of his health care dollar and not just the smaller deductible portion. This means that market forces are used to control high hospital costs, something not possible with high deductible third party payment.

The introduction of Protocol Health Insurance does not preclude the market from producing many new designs for health insurance. I can envision a variety of risk sharing plans and variations to fit the needs of many different people just as we now have many varieties of plans all using third party payment that  are procedure driven, The point is that only protocol health insurance  shifts the paradigm from third party payment procedure driven medicine to make the insurance low premium, efficient and direct payment by the patient that requires no deductible or co-pays.