Insurance does not create money, it redistributes it. The money coming in via premiums or taxes must be equal to or greater than the payments for services and the expense of the bureaucracy (whether government or private) that manages the system. (With government programs we have chosen to ignore the imbalance between what is coming in and what goes out. Eventually, we’ll have to face it.)
The system depends on lots of healthy people paying in more than they get back in services. That offsets the folks who need lots and lots of care.
Here are some costs (yes, this term can mean a lot of different things):
- Type 2 Diabetes — Annual Medical expenses of $13,700 with $7,900 attributed to diabetes.
- High Blood Pressure — costs of $733/person in 2010.
- Stroke — Average cost for first 90 days after a stroke is $15,000.
- Breast Cancer — Average annual cost of $22,000 to manage the early stages with management of stages 3 and 4 costs in excess of $120,000.
Some of the ways insurance companies made sure they took in more than they paid out:
- limited the amount paid out over a lifetime — reach a million and you are on your own.
- refused to cover pre-existing conditions — your diabetes will cost a lot, so we won’t cover it. (This also kept people from waiting until they were sick to buy coverage.)
- charged “sick” people significantly higher premiums — you have diabetes and HTN likely to cost $1000/month, so your premiums will be $1300/month.
Most of us were bothered by these limitations (especially when we think of individuals – your patient, your cousin). The PPACA eliminates or greatly limits these practices — you can’t be denied coverage for pre-existing conditions, there are no lifetime limits for EHB, and premiums are determined by age and type of coverage, not medical status. These changes force the companies to pay out more per person, and limits what they can take in per person.
To keep premiums from being unaffordably high many healthy people need to pay into the system. This is why the PPACA requires everyone to buy insurance or to pay a penalty. It is also why the system collapses if everyone expects to get services equivalent to (or greater than) what they pay in premiums.
If someone pays a $150 monthly premium and expects to get ten acupuncture treatments/year, and you “deserve” $700 or more for those treatments, there isn’t much left to cover the bureaucracy or the costs of their neighbor with cancer, their father who just had a stroke, or their own colonoscopy, broken arm, or appendectomy.
This has real implications for your acupuncture practice — whether or not you are a participating provider, whether or not acupuncture is an EHB in your state, and whether or not you expect the AAAOM’s federal legislation to succeed. Stay tuned for more.
(Here is an NYT article looking at medical choices and costs.)