Introduction, Exposed: Why Our Health Insurance Is Incomplete and What Can Be Done About It

Abstract

The toxic battle over how to reshape American health care has overshadowed the underlying bipartisan agreement that health insurance coverage should be incomplete. Both Democrats and Republicans expect patients to bear a substantial portion of health care costs through deductibles, copayments, and coinsurance. In theory this strategy empowers patients to make cost–benefit tradeoffs, encourages thrift and efficiency in a system rife with waste, and defends against the moral hazard that can arise from insurance. But in fact, this cost-exposure consensus keeps people from valuable care, causes widespread anxiety, and drives many patients and their families into bankruptcy and foreclosure.

Marshalling a decade of research, the book offers an alternative framework that takes us back to the core purpose of insurance: pooling resources to provide individuals access to care that would otherwise be unaffordable. It shows how the cost-exposure consensus has changed the meaning and experience of health care and exchanged one form of moral hazard for another. It also provides avenues of reform. If cost exposure remains a primary strategy, physicians, hospitals, and other providers must be held legally responsible for communicating those costs to patients, and insurance companies should scale cost exposure to individuals’ ability to pay.

Keywords: health care costs, deductibles, copayments, coinsurance, moral hazard, insurance reform