Know These Two Things and Healthcare Becomes Clearer

I was riding the bus to work and I overheard a woman talking to a man behind me, “I don’t understand health insurance,” she said. I elected not to interrupt their conversation.

There are two things you need to know and suddenly health insurance will make a lot more sense:

  1. It is not about your health.
  2. It is not insurance.

The World Health Organization stated (WHO), “health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.” In other words, health is more than lack of diseases.  If you are healthy, you have a state of well-being. Anything less than complete well-being is some degree of loss of health. Loss of health is not to be confused with disease.

Although WHO starts with such a wonderful definition of health, it quickly devolves to treating and preventing disease. Treating and preventing diseases are wonderful goals, but should not be confused with restoring or maintaining health.

As an example, if a person has an allergy. Determining the allergen and keeping the person away from the allergen is preventing the disease. Controlling the symptoms of the allergy is treating the disease. If the cause of the allergy could be found and corrected, that might be restoration of health.

Most of medicine is about treating diseases. While valuable, it should not be considered healthcare.

Insurance is a policy of reimbursing people for a risk of loss. Consider auto insurance. For a premium, you purchase a policy that covers you if you are involved in an accident. You do not plan on being in an accident, but you are aware that there is a risk that you will be. Insurance can cover you for bodily injury, cover repairing your car, cover you for liability to people and property, etc. Auto insurance does not cover headlight replacement, brake replacement, and other car maintenance issues that might reduce your risk of accident. It only covers once the accident occurs. Insurance actuaries can predict the risk of being in an accident and the amount of damage. Premiums are based on those factors.

Similarly, think of homeowner’s insurance. It does not cover replacing the roof on your home, painting your home, spraying for termites, etc. Those are maintenance issues. If there is a fire and your home is destroyed, your insurance policy should cover it. Insurance actuaries can predict the risk of fire and the amount of damage. Premiums are based on those factors.

What about health? What is the risk of loss of health? How would we define a loss of health? The fact is we do not know.

We do know the risk of many diseases. We know some of the treatments that are effective. Based on the risks and the treatments, insurance actuaries can set premiums based on those factors.

We can insure the risk of getting disease and provide treatment. We cannot insure health.