It's Time To Bet On Health Insurance Reform

By now you know that "health care reform" is a misnomer. It should be called "health insurance reform." Chalk up the missed opportunity to the Democrat's pluralist mode, but a little message discipline might have gone a long way here.

What's the message? Insurance companies are corporatized casinos. It's still gambling. Actuaries perform the same function as bookies: discover how to get more money out of you than you can get out of them. In theory, this is fine if the bets are being placed in a neutral arena. Health care is not neutral.

Moral hazard is a term used in insurance circles. It refers to a tendency among the insured party to engage in risky behavior or seek expensive services because the insurer will absorb the financial consequences.

The theory says that a person with good health insurance is more likely to go shopping for cures of things that do not actually ail them. It is the reason insurance companies require a co-pay, the theory being any out-of-pocket expense will reduce the desire to spend money that rightly belongs in the insurer's risk pool. These companies make a lot of money knowing how to maintain the size of that pool so that it's always bigger than their exposure to risk, even if it means slippery strategies of questionable origins and changeable rules.

All's fair in the realm of corporate rapacity when betting on the odds of a sixteen-year-old boy crashing a car or on how likely it is for a house to catch fire. Insurance companies work a bunch of angles, crunching crime statistics, school performance numbers, tax revenues, and many other factors to figure out how to place the odds on the myriad eventualities that the replacement cost for, say, a house and its contents can be attached. There may be some legal mumbo jumbo designed to increase the vig, but it is all measurable. Also, if your insurance company tries to wiggle out of paying for a ding in your car, it is not the end of the world. There is time to fight back.

There is no time to fight back when an insurance company refuses to pay for a new cancer treatment. Moral hazard comes into play here. It is against the law for a third party to take out a fire insurance policy on your home, because arson would become a real risk. The fine print of an insurance policy is an institutionalized form of moral hazard in reverse. It's the price of doing business in America, and it's something we've learned to accept with regard to the property we choose to protect with insurance. It is not morally defensible when the issue is a human life, and that's the point we've lost sight of in the health care reform debate.

If folks get a little doctor-happy when they know someone else is paying, insurance companies might tend to get a little miserly. Both are expressions of moral hazard, and no one is to blame. The very nature of the health insurance industry is antithetical to its stated reason for being: helping people stay well and to get better.

Only a sick society allows its institutions to bet on the lives of human beings. It's the stuff of ancient Rome. The chances of a person surviving a particular form of cancer are known, but they should not predicate whether or not you receive the best care. In the same way you can't bet on your enemy's house being burnt to the ground, insurance companies should not be able to bet on human life. This is a moral issue.

Rep. Alan Grayson said the health care situation in America is like the Holocaust. Is it true? Are millions being passively allowed to die because it costs to much to care for them and/or bilked unfairly of hard-earned wages. Of course they are. We have become our own most willing executioners by tacitly opting into the current paradigm of the health insurance industry in America.

Where is the million-person march to protest the nation's insurers huddled over the furnace of financially ecstatic schadenfreude?

Senator Orrin Hatch has said the public option is a Trojan Horse for a single-payer system where the government picks up the tab for your health care. Single-payer health care has always been the true Democrat position. The pubic option has always been the centrist compromise. By leading with the compromise, this "Yes We Can" era has once again snatched victory from the jaws of defeat.

Will we get a public option? Yes we will. Should we ask for more? It would help Obama, and ourselves, if we did.

First published by Air America.

 

 

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Comments

[Carl Caroli]

The advancement and costs of health care has made using insurance as a model to pay for it, dead on arrival. Virtually everyone will use more health care dollars than they contribute in premiums over the course of their lifetime, consequently insurance companies have only two options to remain profitable - deny policies and claims and keep raising rates. Insurance companies are more interested in profits that they are in actually providing health care - without redefining the solution, the problem will never be solved. Unfortunately too many of our legislators depend on these companies for campaign contributions and are unwillingly to bite the hand that feeds them. We've reached a point in our society where the profit motive has tipped the balance of power towards the corporations, and our legislators enabled that situation and now are too corrupt to fix it. We are on a slippery slope and headed for a quick fall from being the great country our founders established.

[PlaceboStudman]

insurance of any kind = Making money off of other people's misfortune or perceived risk of misfortune

Sick, sick, sick

[drricklippin]

You are correct. This boils down to the fundamental moral character of our nation.

How can any nation, for that matter ,that professes to be a moral one not at least provide BASIC health care to all of it's citizens?

This is not "playing the morality card". This is not a card game-or a political game. These are very real human lives and fellow citizens we are addressing.

OUR NEW YOUNG PRESIDENT IS FACING A FUNDAMENTAL TEST OF HIS MORALITY NOW- BECAUSE HE CAN MAKE LONG OVERDUE HISTORY IF HE LEADS.

Dr.Rick Lippin
Southampton,Pa

[humpfree]

Doctor. How much do you charge for a 15 minute office visit? Are you willing to take 1/2? A third? If so, you have my respect. If not, you need to reset your compass. The skyrocketing cost of service is the reason our system is in peril. Everything from contrived losses chocked up by our not for profit hospitals as uncompensated care, to specialists running patients through their offices like cattle, has lead us to where we are today.

The high cost of health coverage is a direct result of the high cost of service. If there's going to be any meaningful change it needs to start on your end, with your industry.

[MoeJava]

Dr Lippin - You are so right.
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we all see what uncertainty there is in the economy.
one minute you're comfortably prepared for life, thinking a job is secure or you've invested your funds well, and then *poof* your pension value sinks like a stone, your house has depreciated rapidly, leaving you upside down and drowning, you lose your job or some illness zaps your health, money, family and ANY future plans.....
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you'd figure every elected politician, regardless of party affiliation, would want this same safety net for their constituents as well as their own family's use.
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example: the madoff victims thought they were "set", until bernie made-off with their life savings. all those church groups and pensioners, as well as attorneys, artists, and actors. no walk of life is exempt from a changing economy.
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health insurance reform belongs to all of us, and we all have the mantra "there but for the grace of god go i..." so let's see real reform. not just some bumperstic­ker-inspir­ed rally cries.
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universal single payer would eliminate alot of the stress Americans feel by containing cost and assuring equal access. public option would work if we can't negotiate "medicare for all".
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thanks for your imput, Doc.
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[lgillooly]

I think Obama could not begin with Single payer because of what he said during the campaign, but now it is being worked out by Congress and we just saw the Insurance Industry show their true colors with their bogus report from PWC. Now, we could say, this is a game changer. It is obvious that they want to kill any reform and will do whatever it takes to keep their profits at the expense of American lives. Sinlge payer is simple and smart. They could still sell insurance for the 20% that would not be covered and make a lot of money if there is a mandate. The question is simple public health or wall St wealth. Personally, I think wall st. got enough this year.It is time for Americans to get a bail out for a change. Not to make millions, but just to be able to get care if they get sick. Is that asking too much ?

[upriser]

In an ideal world, you would be right. However, in the corrupt world of Washington, what matters most are the special interests. In this case, that would be the health insurance companies. They contribute millions in campaign contributions to both parties and they contriburted quite a bit to Obama's campaign. Obama campaigns as if he opposes the special interests, keeps up the rhetoric even now, but cuts side deals with the insurance companies. Rahm Emmanuel is talking to Reid, Dodd and Baukus today to cut another deal - a deal to weaken the public option. All this talk about Olympia Snowe is just blowing smoke to divert us from what we know is needed - strong Presidential leadership. If we don't get a strong public option, it won't because Obama tried and failed. It will be because for Obama, the public option was just a foil to make us all feel he is progressive. He probably never really wanted a public option, once he received promises from the insurance companies of plenty of cash for his re-election. That's the deal, folks. All those small donations he received to finance his campaign in 2008 was just to get his butt in the White House. Now, he doesn't need us anymore. He's hoping to triangulate his way to re-election. We've been had.