I’ve been thinking a lot about the collapse of healthcare recently and what it’s going to look like. So I’ve been talking to a lot of people about it. Both people in and outside the industry. Here’s what I’ve concluded:
The collapse is currently happening. It’s more severe than anyone thinks. And it’s starting with the middle/upper class entrepreneurs and gig workers.
Think about these people. Independent solo chiropractors. Professional photographers. Successful small business owners. They have a family. They’re pulling in a salary of $110,000 a year and they have a spouse and two kids. They’re not Super-Healthers, they’re Kinda-Healthers and Users. Remember, this is how people spend on care:
This family is mandated to purchase insurance. So they go to their local exchange and, they don’t want the cheapest plan, so they search for “Gold Plans.” They find this.
At the end of the year, this family will be out $30,888 in premiums plus deductible spend on a respectable $110,000 a year salary. Now, some of this cost is tax deductible, if you qualify. But $31,000 is the same cost as a 2018 Audi A3. And, in the end, the family may have actually consumed only $5,000 in care with a few doctor visits and a minor procedure. And if they travel, as they often do for work, and get in a surfing accident, their “insurance” won’t cover out of state, out of network care.
Now we all know that paying premiums is the basic concept for how insurance works, but the feel-good “do it for society” concept only goes so far in America, especially when it will shortly consume half of your pre-tax salary.
So what are these people currently doing? Currently, they’re playing the game purchasing the mandated coverage. But what are they going to do in 8 years when those premiums and deductibles have doubled to $62,000 like they have every 8 years for the last 4 decades? Their earnings likely won’t double as they’ll probably just rise at 2-3% or so per year.
Is this the end of the independent entrepreneur? Is this the end of the creative class?
If brought together as one unified service, a new concept of care + payments for care would help them get the vast majority of their care and commodities at a fixed, transparent cost, while also protecting each member of the group from bankruptcy for serious issues. But it totally rethinks the concept of how individuals get care and how the group pays for care while stripping out all the complexity and middlemen that stifle today’s ridiculously inflated healthcare costs. It’s not about if this service will exist, it’s about when. The market is starting to demand it, it just doesn’t know it yet.