I have come to believe that the insurance industry in the U.S. has become part of the cause of expensive medical care. I am not opposed to the idea of insurance, but here are some of the problems I see in how it works today.

I do not believe that insurance companies actually negotiate the price down. I have seen too often that the price goes up when I produce proof of insurance. While it may seem counter-intuitive, insurance companies have perverse incentives to push prices up. Even the most well-meaning insurance company will opt for certainty over potentially inexpensive. But I don't think they are well-meaning to begin with and I think that it isn't even structurally beneficial to them to reduce costs. For an example of when lower costs benefit insurers, see the price of identical healthcare purchases outside the U.S. Products manufactured inside the U.S. magically become cheaper in Belgium and Nigeria.

The insurance industry has worked with the medical industry to obfuscate the cost and price of healthcare. This is in both industries' interests. If I pay $100 for a doctor to splint a broken finger, I'm happy I had insurance to make it so cheap. I'll let my insurance company pay the other $1700 and I may never even look at the bill that shows a total cost of $1800. I won't see that they charged $25 for the popsicle stick, $25 for the tape, $5 for the pen used to fill out the medical chart, $30 for the receptionist, $75 for the nurse, $300 for the PA, $200 for the xray, $200 for the radiologist, $50 for the ibuprofen, etc. If I actually had to pay that bill, I would argue it line by line. I would absolutely refuse to pay large portions of the bill. $5 pens that they reuse for the next patient are obviously an unethical ripoff. But I don't have to pay those line items, so I don't fight it. I just have to pay a $1500 premium every month. And I'd be crazy to refuse to pay that.

We all know that insurance premiums are high because healthcare costs so much. This is because of lawsuits and freeloaders. This is how price obfuscation shifts the battle. We don't question anybody's integrity over the $5 pen because the discussion is all about lawsuits and freeloaders. If I had to pay the bill myself, I'd ask why I got billed for 4 x-rays, but only received 3. That 4th one that didn't turn out because the radiologist put the cartridge in backwards? I'm not paying for that. I'd ask why the receptionist seems to be making $500/hr. I'd ask what the lab fee was for. I'd comb my bill and question everything. $1800 is a lot of unplanned expense for me. $100? Not so much.

If I had to pay my medical bill in full then file for reimbursement, I'd fire a company with 90 day turn arounds and switch to the insurance company with 5 day turn arounds. And the next time I got stung by a bee, I'd maybe not run to the emergency room. Yes, that could lead to bad outcomes. But the current practice has its own bad outcomes.

If I had to keep fighting an insurance company for timely reimbursement and started noticing that I pay $1500x12 every year to cover 80% of my ~$6000 medical expenses, I'd start getting all kinds of ideas. I would think about putting $1000 a month into an HSA and look for a $40000 deductible policy. I'd think about pooling my HSA with 100 of my closest friends to start a healthcare co-op where I could borrow up to 1x my balance for 1 year at low interest to pay for big medical bills and then get a $60k deductible policy instead. Then, in five or six years, when I've built up $30k, I'd drop my monthly payment into my HSA to $500, and just let the balance earn interest. Then, when the unthinkable happens, I drain the account, borrow another $30k, file a claim on everything else and spend the next year paying back the $30k and lining up contingencies for any event that will happen before I can build my HSA back up. I'd start daydreaming about pooling my $12k/year with others to build and staff a very small clinic that could take xrays and treat bee stings. Just 100 founders paying the same $1000/month could generate $1.2M per year. That could secure a 15-year $3M bond to build the clinic. It could pay a long way into supplies and staffing, too. One could even imagine that members get free services (ignoring the $1000/month) while non-members could pay $1800 for a broken finger.

In other words, I'd figure out how to rely as little as possible on insurance companies. And the money I now spend to fund their paperwork and profit would stay in my account.