Health Insurance is not health care. So what?

[Welcome Kaiser Network readers!]

InsureBlog consistently points out that health care and health insurance are different animals. When media and pundits and politicians confuse the two – and it happens with depressing frequency – we think that’s misleading, and we say so. Maybe you believe that's just semantics. Or maybe you reply, so they’re different, so what? Well, let’s look at it.

1. Observe that high health insurance premiums result from high health care costs. If health care were not expensive, health insurance would not be expensive. If the cost of health care were not rising, the cost of health insurance would not be rising. The cost of health care is the deeper problem.

2. The problem of high health care costs is not solved by finding clever ways to shift costs to somebody else via insurance premiums. Insurance is inherently a cost-shifting device, whether private or public. And sometimes the cost-shifting is just politics. Either way, shifting of health care costs does not reduce them by a nickel.

3. It's fine to seek the best & fairest way to allocate health care costs via insurance premiums. But even the optimal manner of setting premiums won't reduce health care costs by a nickel.

4. The problem of high health care costs is not solved by a strategy to subsidize health insurance premiums. That is an aspirin tablet that treats a symptom (high insurance premiums) but ignores the disease (high health care costs). When one has a bad headache, an aspirin is helpful. But if the headache persists for, say, FORTY YEARS, perhaps stronger medicine is needed.

5. And so understanding the distinction between health insurance and health care leads us to the insight that the high cost of health insurance is not primarily an "insurance" problem - it's one of the problems within our present health care delivery system. And in order to eliminate some significant part of the high cost of health care, our attention must be focused on reforming the delivery system.

If there is confusion from the start between health insurance and health care, the analysis will be confused and still more ineffective "solutions" will result. This is why we think understanding the distinction between health care and health insurance is so important.