Health insurance should pay only for necessities

Imagine how much automobile insurance would cost if it paid for all expenses associated with owning an automobile — oil changes, engine failures, worn-out tires, brakes, rust and so on. The number of people who couldn't afford car insurance would rise dramatically, and we would have a car insurance crisis in America.

That is the situation with health care. As health plans increasingly pay for almost every service or procedure, ameliorate our every discomfort and succumb to every cultural whim and fad, the price of insurance continues to rise.

Health plans are paying for every imaginable benefit — while automobile insurers are not — because of both consumer demand and state mandates.

The demand for additional health-care benefits is greater than for additional automobile insurance benefits because many people feel entitled to have access to every possible health-care service. The costs of additional benefits are not always clear to consumers; thus, many people perceive the benefits to be "free." In response to consumer demand, health plans sometimes expand coverage on their own. In other cases, they are forced by politicians running for re-election to cover additional services or procedures.

To make health insurance more affordable, state governments should stop mandating additional benefits and rescind all of their previous mandates. In addition, both private and public insurers (such as Medicare) should agree to pay for only costly and essential medical services and procedures (similar to the way they banded together to pledge to reduce $2 trillion in health-care expenses a few months ago).

Under the system I am proposing, health insurance would pay for emergencies and urgent care, diagnostic tests and X-rays, medically necessary surgery, hospitalization, therapy and any other critical services that few people could afford to pay out of their own pockets. Individuals would pay for routine, discretionary and elective services — such as doctor visits, acupuncture, marriage counseling — on their own.

This type of system — which has not yet been tried — would lower health-care costs and make insurance more affordable for everyone, especially the uninsured, by reducing the number of health-care services that are used. When the use of services goes up, health insurers must raise premiums to pay for the increase in expenses. This makes it more expensive for insured people to keep their health coverage, while also making it more expensive for uninsured people to purchase coverage.