NCPA - National Center for Policy Analysis


November 5, 2007

Health insurance should operate more like auto insurance to help target one of the root causes of soaring health care costs -- the practice of billing insurance companies by procedure, says the Utah Association of Health Underwriters.    

Under this model, consumers would get a credit from their insurer and then shop around for a team of providers who agree to charge a lump sum.  The idea might not fit emergency medicine, but would work for chronic care.  For example:   

  • A severe diabetic might be awarded $5,000 to cover a year of treatments, including quarterly blood testing, two checkups, medications, four acute visits for other health complications, enrollment in a support group and a nutritional counselor, which few plans currently fund.  
  • If the patient improves, needing only $3,000 the following year, the insurer could financially reward the patient and doctor.    
  • Currently, the system rewards doctors for ordering tests and procedures, 40 percent of which have zero impact on patients' health.   

Hospital systems in other states have undertaken similar experiments with positive results:   

  • Geisinger Health System in Pennsylvania switched to flat-rate billing for elective bypass surgeries in 2006.
  • Patients are guaranteed treatment under a 40-step protocol developed from decades of research.
  • Overall, ProvenCare patients are less likely to return to intensive care, spend fewer days in the hospital, and are more likely to go directly home instead of to a nursing home.

Source: Kirstin Stewart, "Health care: What if we treat people like cars?" Salt Lake Tribune, November 5, 2007.

For text:


Browse more articles on Health Issues