Health Insurance vs Health Coverage

There seems to be a lot of confusion in Congress and among the public between health care insurance and health care coverage. Politicians often seem to consider these two terms interchangeable, but they are not.

Think about it. We don’t expect our auto insurance to pay for gasoline or tires or routine maintenance. We expect it to pay for rare and expensive events like accidents. We don’t expect our home insurance to pay for window cleaning or painting the siding. We expect it to pay for rare and expensive events like fire or a tree falling on the roof.

So why do we expect health insurance to pay for routine medical services, like annual physicals or an office visit for a minor cold? Medical insurance should cover rare and expensive events like hospitalizations, non-elective surgery, accidents, and major or chronic illnesses. We should expect to pay for routine medical services out of our own pocket. If we did (a) insurance costs would be a lot lower, and (b) since we were paying for it ourselves, we would ask a lot more questions about whether treatments were really needed and whether the most expensive treatment or drug was really what we needed.

Of course employers could offer full medical coverage as part of an employee’s wages, and there is something to be said for encouraging people to participate in screenings and to get annual physicals, so perhaps there is economic justification in covering those as well. But in general, universal insurance coverage ought to seek to protect everyone from catastrophic medical bills, NOT ordinary everyday medical expenses. If Congress took that approach, it might cost a lot less than the $1 trillion+ that the current proposals appear to cost.

The overall objective ought not to be to pay every medical bill for everyone – it ought to be to protect everyone from catastrophic medical costs.