General Question

SquirrelEStuff's avatar

Does health insurance need to exist?

Asked by SquirrelEStuff (10007points) March 31st, 2014

I would like to keep politics out of this thread as much as possible please. This question is not about the ACA, but health insurance in general.

It seems that health care is one of the few fields that advances in technology and supplies(medicine), causes prices to increase rather than decrease.

What would happen to medical care if health insurance did not exist? Would prices of health care become affordable due to supply and demand? Would health care become more efficient due to treatment procedures dictated by doctors who went to medical school rather than insurance companies who went to medical billing school?

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38 Answers

elbanditoroso's avatar

If no insurance existed, then people who had money would get care and live, and people without funds would get sick and die. Or they would not be cared for at hospitals after an accident.

We would need about 20% of the medical infrastructure that we have today – probably one hospital per big city, and very few doctors offices.

Most medical schools would close because the economics of paying for that education, and the likelihood of ever making it back, would fall away.

Essentially, we would be about in the same position that Ethiopia and Sudan are today.

cazzie's avatar

Here in Norway, we don’t have ‘health insurance’ as it is recognised in the US. We take on the cost collectively, as a whole. We know healthcare, under this model, doesn’t make money for insurance companies or hospitals, but everyone is covered for a fraction of the cost.

SquirrelEStuff's avatar


But wouldn’t the economics of not having insurance companies make health care more affordable, essentially driving down prices to a level that people could afford on their own?
It’s like the “discounts” that doctors give for those without insurance. Once the doctor eliminates the health insurance company, the doctor can then dictate the price, not the insurance company.

I remember hearing that medical procedures that insurance does not typically cover, like Lasix, have seen dramatic price drops over the years, because the market sets that rates, not insurance companies.

elbanditoroso's avatar

@SquirrelEStuff – how? The doctors are not going to voluntarily cut their rates. They still have expenses—nurses, buildings, salaries, etc.

Labs aren’t all of a sudden going to give 80% discounts. And hospitals aren’t going to lower rates – they have tons of built in expenses that simply cannot be discounted. These are real direct costs.

Good, bad, or ugly, the insurance system (shared risk) is what makes health care work. That’s why government supported health care (like in Norway), made so much sense in the US.

zenvelo's avatar

If health insurance did not exist, there would be a need to find a way to structure the costs for providing health care.

Doctors would not be compensated all that well.

Hospitals would not provide as much care.

There would not be funding for research into new treatments or medications.

Essentially, care would drop to a minimal level, because there would not be anyone paying for more dedicated care.

@SquirrelEStuff Health care would not be any more or less affordable, that “discount” you speak of would evaporate because there would not be any one available to cover that cost. Demand would not abate, but supply would, which means prices would go up.

GloPro's avatar

I apologize for this article having some political statements, but it is more the facts that I wanted to bring up.
Primary care physicians currently cite their #1 overhead cost as the employees needed just to handle insurance claims. That overhead cost is a WHOPPING 60%, and expected to rise. That’s crazy. Many Primary Care docs are considering or have already made a switch to not accepting insurance. They are able to slash medical charges by 50% or more by doing so.
What does that one fact alone tell you about where the actual money is going? To insurance companies and job creation inside of doctor offices, NOT to patient care.
@elbanditoroso The prices would fall. Overhead costs are why they are so high. Have you ever asked for the a la carte price? It’s nowhere near what insurance claim price is.

cazzie's avatar

@zenvelo if you were correct, we’d all die here in Norway. Doctors are plenty compensated. We have a brilliant, well appointed HUGE hospital in the city I live in (not even the largest city here). We have no middle men to pay. No large insurance companies in the middle. No hospital board of directors who are behoven to the insurance companies and to stock holders of the hospital because often they are established to earn money from sick people with insurance too. To us, that seems like a great deal of wasted money.

SquirrelEStuff's avatar

I have read many articles similar to @GloPro‘s article.
One story involved someone who needed surgery. If they went through insurance, he would owe around $30,000 after insurance covered their part. The Doctor recommended they do surgery and bill the patient directly. He ended up paying <$10,000.
Do the doctors and hospitals set the rates, or do insurance companies?
I feel part of the issue is that if the both of us went to the doctor for the same problem, you insured, me uninsured, you may not even look at the bill to see how much it costs if you don’t have to pay out of pocket. You bet your ass that I’ll be looking at the bill.
If we all have insurance, will we care what health care costs anymore?

Strauss's avatar

The 900 pound gorilla in the room is insurance companies that are run on a for-profit basis This puts the financial incentives in the wrong place. CEO’s are paid multiple millions of dollars annually in order to provide profit for a corporation. Multiple health insurance options provide complexity and cost but virtually no added value for businesses or families. Approximately 30 percent of all medical spending in the U.S. is wasted money, according to a 2012 Institute of Medicine report.

Up until around 1950, insurance companies of all types were mostly mutual companies, meaning they were owned by the policyholders or members.

geeky_mama's avatar

Socialised Medical Care (as in Norway, Denmark, Japan, UK, etc.) works very well for many, many people on this planet. They don’t have to have “private” (e.g. employer provided or extra paid plans) insurance and can receive good care regardless of income.

The reason this doesn’t work is America is as other posters have pointed out (and more recently @Yetanotheruser ) is that we have FOR PROFIT hospitals, and insurance companies and and terribly broken system where doctors and hospitals raise their prices to insane levels to be compensated a percentage of that from the insurance company (and the insurance company is surely making a profit, too—and not just from the premiums you and your employer pay). Also, we have a terribly litigious society. Many OB/GYNs have seen their malpractice insurance costs EXCEED their income and have had to switch fields and stop delivering babies all together.
My father, for example, was an ER physician and what finally drove him into retirement was when his malpractice insurance was nearly 75% of his wages. (Granted, his group of doctors buffered him from the actual expense..but it still cut into the bottom line.) BTW – I’d like to point out that he was NEVER sued except for once by a family that was truly horrid and the case was thrown out. So, here’s an excellent ER doctor (by all accounts, I’m not just saying this as his kid) with 25+ years of no malpractice—but he was priced out of his job by insurance required to DO his job.

All of the above said (and yes, I preferred my socialised medical care while I lived in Japan for nearly a decade)...there IS something more broken than the “for profit” mess we have in America.

There are parts of the world where there is no health insurance and it ISN’T working. Look to most of Africa. I have a good friend who lives in Tanzania and he flies twice a year to the Mayo Clinic in Rochester, MN to have his medical care.

Those who have money get care, those who don’t – don’t get as good (or any) care in many parts of developing countries.

kritiper's avatar

We need health care insurance because health care costs have risen around 4 times faster than inflation due to greed. This is true not only of the health industry, but the insurance industry as well. ALL costs need to be controlled for it to be beneficial to all equally! In reality, it’s a scam!

zenvelo's avatar

@cazzie Ah, but the Norwegian Government provides universal health care insurance to cover everyone. You don’t pay your own bills.

We are talking about NO health insurance, not even government subsidized insurance.

Single payer health care is a different issue. A good idea, but not the topic of discussion.

cazzie's avatar

@zenvelo We certainly DO pay our own bills. We pay through co-pays and our taxes. Ain’t no such thing as a free healthcare system. The trick is, the money doesn’t get wasted.

Stinley's avatar

@cazzie I know what you are saying but I don’t think we should ever believe that there is no money wasted in national health services. It’s a lot less and wasted on different things but it is wasted still…

What I don’t understand is the argument I have heard against nationalisation of health services where people ask why they should pay for someone else’s treatment. Isn’t that how all insurance works? The only difference being that the poor don’t have to pay any premiums if they can’t afford them. Why would you chose to pay $100 dollars for $25 of health care when you could pay $40 and help someone to get health care who couldn’t otherwise afford it?

cazzie's avatar

@Stinley OK… so the money isn’t used for things other than actual healthcare… much.

zenvelo's avatar

@cazzie Your taxes pay for universal health insurance.

What I am talking about in my first post and in my response to you is no insurance or coverage for anyone. And if there is no insurance at all, it’s the same as anything else on the market, people can get only what they can afford when they get sick or when they go to see a doctor.

cazzie's avatar

@zenvelo Oh, I see what you were getting at. That doesn’t seem humane at all.

But, universal healthcare is the ultimate in simplified health insurance. Every pays according to their income. No one goes without. Everyone pays into it. Everyone is covered.

Stinley's avatar

@zenvelo Ok, I see what you are saying.

If you need a repairman to fix your washing machine you will pay more if you really need that washing machine than if you live next door to a laundrette, or don’t mind wearing dirty clothes. It seems to me that anyone who needs treatment for a health problem will generally be in that first category of service user – need it and need it now. That’s going to cost. So the services would not get cheaper for emergencies or serious illness but may do for the minor ailments.

This is what gives rise to the need for insurance – to cover the unexpected costs and people are willing to pay for that peace of mind, even if it costs more than if they just paid at the time they used it

zenvelo's avatar

@cazzie We’re not talking about humane. There is very little in the U.S. healthcare system predicated on humane.

JLeslie's avatar

No health insurance would probably mean healthcare costs would come down. No more big business paying big business with totally made up charges and lies, and the consumer having practically no idea what things costs and whether it is a fair fee.

It also would mean many people would not get medical care because they could not afford it. A portion of the population would just hope for the best and never save for healthcare even if they made a salary that they could. The poor would not get any care, except emergency like they do now.

I think probably funds would develop for healthcare, like 401k’s and IRA’s for retirement. Sheltered from taxes. We already have HSA accounts that are along this line of thinking. National healthcare might really get a shot if there was no private health insurance. Wouldn’t that be nice.

bolwerk's avatar

I suppose it doesn’t “need” to exist, but I guess technically nothing needs to exist if the Lord chooses to destroy it. We live in an amoral, empty universe where stuff just happens with no cosmic purpose behind it whatsoever, of course.

More seriously, insurance doesn’t have a lot to do with lowering costs but rather just preparing for them and coping with them. @JLeslie is right that discrete services may be cheaper without insurance because, yes, whoever provides insurance (typically a capitalist enterprise in the USA) will skim some off the top. However, one also needs to consider tradeoffs: more dead babies mean more work for coroners. More healthcare problems mean fewer able-bodied workers to pay taxes.

And insurance buys a lot of stability. Everybody knows their body will need maintenance now and then. And a few people will win the lottery and get some terrible disease, and they will need coverage. Otherwise, they’ll just die – but we don’t need them anyway, amirite?

JLeslie's avatar

This Q wants me to ask a Q about how much medical services cost out of pocket without insurance and see how many jellies can answer the question. The truth is most people don’t know. Most doctors don’t even know I bet.

@bolwerk It seems to me not everyone knows they might need medical attention or maintenance now and then. I keep hearing young people should not be forced to take out insurance, because supposedly they don’t need it.

bolwerk's avatar

@JLeslie: well, they won’t. But the idea behind ObamaCare specifically (politics – sorry, @SquirrelEStuff) is having a pool of risky and not so risky payees.

Plus, something catastrophic could still happen to them. But for a discrete buyer, the only people net negatively impacted at all in practice are high-income young people.

JLeslie's avatar

@bolwerk In a social system all you pay in during those young ages when hopefully your care isn’t expensive you feel ok about when you get older and burden the system more. If we had a private system where your insurance transfers in some way it would be the same, but as it stands now, if you pay blue cross for ten years and then quit insurance for a year and happen to get sick that year, everything you paid in those ten years means nothing. This happened to a friend of mine who wound up needing GYN surgery and then heart surgery when our company closed and there was no COBRA available. She had been paying insurance her entire working life, almost 40 years, and then had none when she needed it most. Moreover, women are “sick” in their twenties. To be prudent they need to go to the doctor every year and if they become pregnant they are obviously, hopefully, using the medical system. The men might not be using it, but the women carrying their babies are.

I wonder if people in socialized medicine who are 22 and healthy complain about paying into the medical system? I doubt it. I don’t know anyone who lives in a western industrialized nation who has socialized medicine would give it up, or want the American system.

Strauss's avatar

@JLeslie @bolwerk The whole idea of insurance is to spread out the risk, which is why insurance-for-profit makes no sense to me. The idea of having a widespread pool from risky to non-risky is the whole idea of insurance, to spread the risk so that no individual would theoretically have to face a catastrophe alone. This is why the original insurance companies were mutual companies, owned by members.

trailsillustrated's avatar

Of course no one wants an American type system. And yes, people complain about it sometimes- having to have ‘private cover’ if they make over a certain income, while we po folks get totally free healthcare- but for the most part, people in general agree that healthcare is a basic right and to ration it is inhumane.

bolwerk's avatar

Mandate systems aren’t that uncommon. Several Central European countries have them.

JLeslie's avatar

@Yetanotheruser Yes, spreading the risk makes sense to me and I think it is for the common good. Maybe we sail through life with no illness, but someone we love will likely have something happen. As a civilized society we should care about all our members. The healthier everyone is the healthier the society is not only medically, but also economically, and in other ways too.

rojo's avatar

No. Several countries have already shown that it health care is possible without the parasitic insurance agencies acting as middle men.

stanleybmanly's avatar

The reason our ACA is so convoluted and complex that NO ONE can claim to understand or explain it is precisely because it was written and pushed by insurance companies in order to assure that they harvest a substantial portion of the revenues devoted to health care. People don’t need health insurance. They need health care. The principal reason that health care costs are so extravagant in the United States as compared to ANYWHERE in the world for comparable results is due almost EXCLUSIVELY to the fact that a parasitic insurance industry is inserted between people and their doctors. It puzzles me no end that people can’t recognize that the most efficient answer to astronomical insurance costs lies in having the GOVERNMENT insure EVERYONE. It is a solution that could not possibly be more expensive or confusing than the the mess either before or after the ACA. If the destitute and hard scrabble economy on the island of Cuba is able to provide universal, comprehensive quality health care to the ENTIRETY of its population, what possible excuse can we have for the farcical tragedy of health care coverage allowed to embarrass us in the wealthiest country on earth.

Strauss's avatar

IMHO, our health care system (not to be confused with our health insurance_system) would be much more efficient if we went not to a single _payer plan, but to a single provider plan, using the Veterans Health Administration for a model. The VHA, which is part of the Department of Veterans’ Affairs, provides veterans of the US Armed Forces with low-cost or free medical care, not only for service-related conditions, but in many cases for any general medical condition. The Pharmacy Benefits Management group of the VA not only provides medications, but provides ”...evidence-based practices that promote, optimize, and assist VA providers with the safe and appropriate use of pharmaceuticals while allowing for formulary decisions that can result in substantial cost savings.” (Source: Health Economics Resource Center [HERC]

bolwerk's avatar

@rojo: national healthcare is still technically insurance.

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rojo's avatar

Biggest difference in my eyes @bolwerk is we are talking dealing with peoples health matters and not their pocketbook.

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