What Does An All-Inclusive Resort Teach Us About The Healthcare System?

Several weeks ago, I visited an all-inclusive resort In the Caribbean.  While I should have been relaxing and disconnecting from work, my mind kept drifting back to how this model reflected the challenges of our current healthcare system:

1) Overuse of benefits: Anyone who has been to an all-inclusive resort or cruise knows that there is an endless supply of food.  I found myself grazing on snacks throughout the day and having multiple meals even if I didn't need more food.  Although those meals provided no additional benefit (and probably hurt me – did I really need that last plate of nachos?), I ate and drank because it was there and it was free.  Similarly, people with more generous insurance benefits may use more than their fair share of services, which is costly to the system and does not always mean better outcomes for the patient.

2) Subsidizing high cost consumers: Given that a lot of people were eating a lot of food, how do these resorts stay in business?  Serving low cost products is one answer, but they also benefit from the people who don’t consume as much.  These guests are far less costly, but still pay a similar, flat price, helping to subsidize the other guests.  Insurance companies do the same thing, offsetting older, sicker, more expensive patients by balancing their risk pool with younger, healthier, and cheaper consumers.

3) Misaligned incentives for healthy behavior: The resort also offered excursions like scuba diving and zip lining that sounded like a lot of fun.  These trips could have been the best part of our trip, but we chose not to participate.  Why?  It took extra effort to book the trips (we wanted to make as few decisions as possible), they weren't pushed aggressively by the resort (they were provided by other companies), and they cost extra money. 

The public makes similar calculations when deciding between healthy or less healthy behavior.  For example, cooking healthy (or cooking at all vs. going out to eat) requires planning, time that many people may not have or want to invest.  Health foods are also marketed far less aggressively than fast food and processed meals (especially to kids), meaning consumer awareness of their options may be lower.  Finally, anything “healthy” has a stigma (whether true or not) of being more expensive, which dissuades people from making these better decisions even if it’s better for them in the long run.

Interestingly, all of these issues are addressed in the Affordable Care Act (i.e., eliminates Cadillac plans, requires individual mandate to pay for higher risk individuals, allows for free preventative services).  I’m not advocating for or against healthcare reform, but I do think addressing those problems moves our healthcare system away from being a hedonist escape for a select few towards a more balanced, sustainable model.