Health insurance isn’t insurance, it’s an annuity. Can you afford it?

So the waters have parted and America will now provide “affordable” health insurance for all.  On an earlier blog post, I explained why health insurance is different from any other kind of insurance because everyone who is insured collects on it; and not just a little, but for hundreds of thousands of dollars.  In that respect, buying health insurance is really more like buying an annuity.

image We’ve all seen the figures on US healthcare spending; somewhere between $2.2 and $2.5 trillion a year or roughly $8000 each year for every man, woman, and child.  Statistics also tell us that most of this is spent on people with chronic conditions like high blood pressure, diabetes, heart failure, cancer, etc. (but let’s face it, every one of us will end up with one or more chronic conditions eventually).  We also know that an insane amount of money gets spent in America during the last few weeks or months of a person’s life. 

Looking at these figures another way, we could say that current spending levels on healthcare suggest that each of us will use about $600,000 worth of care over our lifetime ($8000 x 75 years).  So if we had a completely level playing field each of us would need to save more than half a million dollars (in today’s dollars) to pay for our medical care.

OK.  I know this is very simplistic thinking.  In fact, it is way too simplistic and far too frightening to share with the American people.  But the point is this; unless we do something to fundamentally rein in the cost of care, or rein in our expectations about what everyone is entitled to, we are doomed to indebtedness beyond hope of reprise.

image If we are going to entitle everyone to equal care, then we had better do something about the cost curve.  Most European nations do a better job.  Depending on the country they spend between half to two-thirds of what we spend on care in America.  Technology is part of the solution.  And frankly, I see much more focus on the role of technology in providing healthcare services when I look outside the US than I see within it.  Bending the cost curve will also necessitate a recalibration on expectations about care.  Everyone won’t get everything they want or need.  The world over, that is just a fact of life.

So, now that I’ve had a chance to vent I’ll just calm down and blissfully go along knowing that we have solved the healthcare crisis in America and that everyone is now protected from the harsh realities of life.  I feel better already.

Bill Crounse, MD    Senior Director, Worldwide Health   Microsoft

Comments (6)

  1. Bruce says:

    Thanks Bill.  Your perspective is always appreciated.  Those numbers are very impactful!

  2. I would caution your use of the word "technology".  Many would argue that we have too much "technology" in healthcare today. Of course, I am talking about expensive technologies that are probably overused, like MRIs.  Perhaps IT would be a better description.

  3. hlthblog says:

    Good point, Jonathan.  Clearly, I’m speaking of advanced information and communication technologies, not of a need for more CT scans and MRI’s in American healthcare.  We need a model that provides exactly the most appropriate level of care delivered in the most appropriate time and place by the most appropriate means.  Sometimes "care" is little more than fulfilling a person’s need for information.  Sometimes it is providing reassurance.  Sometimes it is holding the hand of a friend or loved one.  And sometimes it is indeed a medication, a procedure, or other treatment.  Properly used, ICT can be an important adjunct in providing cost effective, efficient "care" to our citizens.

    Bill Crounse, MD

  4. One of the fundamental principles of physician behavior as laid down in "Physician Charter" ( is the Principle of Social Justice. I am quoting: "The medical profession must promote justice in the healthcare system, including the fair distribution of finite healthcare resources." And "it is the physician’s professional responsibility for appropriate allocation of resources requires scrupulous avoidance of superfluous tests and procedures", that "diminish the resources available for others".

    There is a false perception amongst physicians that life must be saved or extended at all cost. Is this true when the cost is miserable quality of life for patient or financial misery for the surviving family members? I don’t think so. If you truly are a physician it is your obligation to maximize the benefit to society. Take an extreme example – you happen to be close to site of explosion and the only doctor at site – you have to make hard ethical decisions, determine who has chances of survival and give your attention to them, instead of wasting your time on the "living dead" and endangering the ones who can be saved. Well, we experienced an "explosion" and we must triage and adjust policies to maximize positive difference in outcomes. Mentality of physicians has to change. Just say "no", when there is no expected actionable result or health benefit from episode of care!

    Most countries have "sickcare" not healthcare. It used to be that doctors were paid as long as their patrons remained healthy. Today the financial incentives are misplaced causing over-utilization of services and harm to population directly and indirectly.


    Tibor Duliskovich dr.

  5. Coming from a UK perspective, i read your post with interest. At present in this country we are in the midst of a general election campaign, where the future of the UK health system is one of the most important topics of debate. The principal sticking point is whether it makes economic sense for the National Health Service to continue to provide free healthcare for all, or should the private sector begin to take more of the burden in any future system. At present around 86% of the UK healthcare system is publicly financed at a cost of around £110bn a year to the UK taxpayer. It will be interesting to see how ‘Obamacare’ unfolds, and ultimately what balance is struck within the US healthcare system.

  6. Victor Barmes says:

    This is correct, health Insurance is indeed an annual payment of an allowance or income. The best part is that these plans comes coupled with investment plans now, so in a way it is a great thing to have as an annuity. I have subscribed to <a href="">UK health insurance services</a> It is taking all care of my all the funds and investments.

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