Health care and swim club problem

Last month, I referenced David Goldhill's excellent piece in the Atlantic, describing the absurd combination of perverse incentives that have led to our health care system, where consumers pay more and more with little information as to how or why.

He describes the absurdity with the following analogy:

Health insurance is the primary payment mechanism not just for expenses that are unexpected and large, but for nearly all health-care expenses. We’ve become so used to health insurance that we don’t realize how absurd that is. We can’t imagine paying for gas with our auto-insurance policy, or for our electric bills with our homeowners insurance, but we all assume that our regular checkups and dental cleanings will be covered at least partially by insurance.

His solution is, in part:

In place of these programs and the premiums we now contribute to them, and along with catastrophic insurance, the government should create a new form of health savings account—a vehicle that has existed, though in imperfect form, since 2003. Every American should be required to maintain an HSA, and contribute a minimum percentage of post-tax income, subject to a floor and a cap in total dollar contributions. The income percentage required should rise over a working life, as wages and wealth typically do. All noncatastrophic care should eventually be funded out of HSAs.

I couldn't put my finger on why this bit bothered me, until I remembered a question I asked my mother when I little. We used to join a swim club every summer so we could go to the pool. I asked (apparently a consultant from birth): "If we paid each time we went, how many times would we have to go to get to what we pay for membership?" My mother replied, "A lot. But, then we'd think about whether we really needed to go each time, and would often wind up not going. This way, we can go for a swim whenever we want."

Under Goldhill's plan, when I sprained my ankle last month, I would have likely thought twice about going in and paying $600 out of pocket getting x-rays to be sure it wasn't broken before I came out to Japan. I would have relied on my doctor-father's free no-equipment diagnosis, and toughed it out. (It wasn't broken and got better in a few weeks.)

Here in lies the problem. If all American pay for routine care out of pocket (like haircuts and car washes), some of them will wait until the they really need it, and some will wait until it's too late. We want Americans to go to the doctor when they feel sick, and not have to make a calculation about whether the price is worth it to them.

Goldhill's right that, utlimately, Americans collectively wind up paying for all the care they get (as my premiums and co-pays with my co-workers in aggregate basically paid for my x-rays). And greater up front price disclosure so I can go to the doctor with the lowest x-ray prices who has a good online rating would be great. But I'd much rather pay for insurance up front and take the risk I'd over pay than have to debate with myself about whether I really need to go see a doctor or not.