There’s been lots of discussion recently on transparency. Whether that means getting a receipt for the income tax we pay and what it’s used for or providing a price list to consumer/patients for different medical procedures in a geographic region, the buzz of transparency is everywhere. All this talk has gotten me thinking about renewing my auto insurance - Bear with me, I swear health care costs are related. When I asked for a quote, I got to see exactly how much I pay for each point of coverage. Having auto insurance liability coverage is required by law in my state, but for other types of coverage, I chose the level of coverage that best fit my own risk tolerance. After playing around with different levels of coverage I received a calculate premium payment. I knew that 50% of the premium was for liability coverage, 30% for collision, 10% for additional medical coverage and 10% for services that save me time. Then I took that same standard language and shopped it around. There is lots of competition, and I have a vested interest in getting the right coverage for me for the lowest cost. I own a lot of the responsibility for controlling the premium and the costs of my coverage are very transparent. I have a direct incentive to encourage me to drive safely and to take care of my car. While I could not tell you the statistical likelihood of me getting in an accident; I know that if I do my best to avoid accidents and take care of my car then my risk is reduced and so is the increase in my premiums. My behavior doesn’t eliminate the risk entirely, but then that’s why I have insurance, isn’t it?
I sure wish health insurance worked this way. I have insurance coverage through my employer. Don’t get me wrong, I’m really grateful for it. But my employer gets to figure out what is the most cost effective coverage for them and only then do I get to choose from the couple of selections that they provide. I feel very disconnected from the cost of insurance. Even though I only pay a portion of the total premium, I know vaguely that I might play a role in keeping health care costs in control by diet and exercise and regular checkups, but I don’t have a very visible way of seeing the impact. I sort of know what my health insurance covers. For instance, I know my employer ensures that all major plans cover approximately the same thing. But then my choice is based on which doctors I have access to and the overall portion of the premium I pay. I also know what my co-pays are and what my deductible is. But I don’t know how much of my health insurance premiums go to catastrophic coverage, preventive care services, chronic care management, prescription coverage, etc. I feel very disconnected from the premium cost and even more disconnected from how I impact that premium.
Out of curiosity, I asked the insurance agent from whom I purchased auto insurance whether their health insurance quotes were itemized in the same way as their auto insurance quotes. Let’s just say that the lack of transparency is not just a symptom of employer coverage.
We keep asking for transparency on health care costs thinking that it will help align consumer and practitioner incentives to use health care effectively. Maybe we could start by asking for transparency on the costs we, as consumers, have a real relationship to, the amount we pay for insurance. It’s all well and good to know how much a triple bypass costs at the different hospitals in my town; I just don’t know that knowing the difference would induce better health behavior on my part. What is relevant to me is what my premium actually buys me and where I might play a role in controlling it.