Why does any discussion of health care always revolve around “health insurance”? I question if there’s any such thing.

Why?

Insurance implies spreading risk. For catastrophes with low probabilities of occurrence, it works fine. Only about one in 300 houses will experience a serious fire, so instead of setting aside $300,000 to rebuild your house in the event of such an unlikely tragedy, you and 299 other homeowners can kick in $1,000 apiece and share the exposure. That’s fire insurance.

But what are the odds of us getting sick and requiring health care, especially later in life? Pretty much 100 percent, right? So there is no pooling of risk, which vitiates the whole notion of health insurance. Instead, we ought to be thinking in terms of health savings accounts, which in effect is what we have now, but with a diabolical twist or two. Consider …

This figure is hard to pin down, but averaging the estimates published by various sources, a typical American pays about $400,000 in lifetime health costs. (That number is way higher than it ought to be, but that’s a different column.)

Now assume that you have 40 years to save up that amount, and that health care costs will rise at an effective annual rate of 3 percent (by “effective rate,” I mean that health care costs will rise at a rate that’s 3 percent higher than the rate at which you can invest your money). That means you’ll have to set aside $1,432 per month to pay for your lifetime health care costs.

Now look at what you’re actually paying for health care.

First, figure out what your real health care premium is, not just what gets taken out of your paycheck. For an individual, $700 a month is a ballpark figure.

Add in your deductibles and co-pays: Does $2,400 a year – or $200 a month – sound about right? Then there’s your long-term care insurance premium – $150 a month or thereabouts.

Now consider your Medicare payroll taxes – typically about $400 a month. (To simplify things a bit, this number includes the amortized value of your post-retirement premiums and other payments.)

And don’t forget Medicaid – you may never need it, but you pay for it anyway. These vary from state to state, but $150 a month will do for now.

All told, that’s $1,600 a month, more than the savings rate we calculated, and even that increases sharply as we age. Ergo, we don’t buy “insurance” with our premiums; we just make deposits into a health savings account. Now here come the diabolical twists.

We don’t pay nearly enough for Medicare. Most of us incur two-thirds of our lifetime health expenses after we retire, after many of us have exchanged our former health insurance for Medicare. So that $700 a month we pay in insurance premiums only yields $233 in benefits; the insurance company keeps the rest – which is why Medicare is such a mess. On average we receive three times more in Medicare benefits than we pay because the money we put into health insurance isn’t available when we need it. Unless we agree to triple our Medicare contribution – not too likely, I’d say – our progeny will get stuck with the bill.

But the really diabolical twist is this: If suddenly we find ourselves out of work and unable to pay the full health insurance premiums under the COBRA law, we lose it all – possibly hundreds of thousands of dollars gone because of one missed payment. Until the Affordable Care Act came along, if you were old or sick, you probably never would be covered again. No, we don’t have health insurance; we have a health savings account, but in the name of an insurance company.

Is this insane, or what?

Instead of paying into all these different buckets that don’t overflow into each other – health insurance, long-term care insurance, Medicare, Medicaid and out-of-pocket – wouldn’t it make a lot more sense to just pay into a single bucket? And instead of insurance companies, to have health care brokers who, for a fee, bargain on our behalf for the best rates and provide gap insurance between what we’ve saved and what we might need?

Moreover, wouldn’t such a scheme be a boon to entrepreneurs and small businesses, who’d be out from under the disproportionately heavy burden of supplying health care to themselves and their employees?

The rest of the world seems to think so, but they’re not Americans, so what do they know?