Health insurance isn’t insurance, it’s an annuity. Can you afford it?

So the waters have parted and America will now provide “affordable” health insurance for all.  On an earlier blog post, I explained why health insurance is different from any other kind of insurance because everyone who is insured collects on it; and not just a little, but for hundreds of thousands of dollars.  In that respect, buying health insurance is really more like buying an annuity.

image We’ve all seen the figures on US healthcare spending; somewhere between $2.2 and $2.5 trillion a year or roughly $8000 each year for every man, woman, and child.  Statistics also tell us that most of this is spent on people with chronic conditions like high blood pressure, diabetes, heart failure, cancer, etc. (but let’s face it, every one of us will end up with one or more chronic conditions eventually).  We also know that an insane amount of money gets spent in America during the last few weeks or months of a person’s life. 

Looking at these figures another way, we could say that current spending levels on healthcare suggest that each of us will use about $600,000 worth of care over our lifetime ($8000 x 75 years).  So if we had a completely level playing field each of us would need to save more than half a million dollars (in today’s dollars) to pay for our medical care.

OK.  I know this is very simplistic thinking.  In fact, it is way too simplistic and far too frightening to share with the American people.  But the point is this; unless we do something to fundamentally rein in the cost of care, or rein in our expectations about what everyone is entitled to, we are doomed to indebtedness beyond hope of reprise.

image If we are going to entitle everyone to equal care, then we had better do something about the cost curve.  Most European nations do a better job.  Depending on the country they spend between half to two-thirds of what we spend on care in America.  Technology is part of the solution.  And frankly, I see much more focus on the role of technology in providing healthcare services when I look outside the US than I see within it.  Bending the cost curve will also necessitate a recalibration on expectations about care.  Everyone won’t get everything they want or need.  The world over, that is just a fact of life.

So, now that I’ve had a chance to vent I’ll just calm down and blissfully go along knowing that we have solved the healthcare crisis in America and that everyone is now protected from the harsh realities of life.  I feel better already.

Bill Crounse, MD    Senior Director, Worldwide Health   Microsoft

Technorati Tags: health reform,health insurance,healthcare spending,HIT,ICT