This article demands attention.
What can be done?
One potential solution is an idea of mine (and perhaps others) based on something closer to term life insurance, and somewhat like a mortgage.
Imagine at age 25 you buy a 'health emergency" term policy-- one with a fixed term of perhaps 30 years. Let's say this entitles you to $500k of medical expense payments. Term life insurance of this kind would be veyr cheap-- perhaps $25/mo in most cases. Consider that low price in the context of the two variables: the probability of death (very low on average) and the liability to the insurer: $500k.
For a major health emergency policy, the probability of payout is much higher; after all, most people are far more likely to get sick than to die.
However, the payout liability is also much lower. Many major illnesses can be treated and resolved for less than $500k .
Each time a person draws on their $500k entitlement, they value of their entitlement is reduced by that amount. If a person completes the end of their term with residual value in their account, they are awarded some proportion of that residual value as "cash value" at the end of the term.
With this approach, the insurnace company is not involved in making care decisions and managing cost. Instead, the consumer does. When he runs out of money in his plan, he runs out. The policy will be fulfilled and terminated when cumulative expenses reach the face amount.
This not only frees the consumer to make his own decisions, but also gives him the consequences of shopping wisely or poorly for medical care. Moreover, it would also have a minimum deductible (within a rolling 12 month period) that would have to be met before one could draw on the benefit.
The actuarial value of the policy is really just based on a series of cash flows and timing, and is pretty easy for actuaries to value.
Insurnace companies need to be removed from any decision making about what care is appropriate or not. All they need to know is what something cost and how much benefit remains to the insured.
