Health "Insurance": A Criminal Enterprise

Federal lawmakers have squandered much of the autumn debating how best to provide private health insurance to approximately fifty million uninsured Americans. Guaranteeing healthcare for these individuals is certainly a moral imperative. However, relying on private insurers to serve these individuals is about as prudent as hiring a band of pedophiles to run a national childcare program. Anyone who has worked as a healthcare provider long enough, and has been paying attention, eventually comes to recognize private health "insurance" is a large-scale criminal endeavor -- part Ponzi scheme, part extortion racket -- that consistently exploits patients at their most vulnerable moments. In short, private health insurance is the sort of predatory enterprise, like payday lending and loan-sharking, that should be criminalized.

Health insurance, as the late political historian Edward Beiser pointed out in his seminal 1994 article "The Emperor's New Scrubs," is a misnomer. The principle behind traditional insurance is the distribution of risk. For example, the odds of my home burning down are quite low. The odds of any other home burning in my community are similarly low. However, the odds of some home in our community burning are reasonably high, so we all pay into a reserve fund -- "fire insurance" -- and whoever suffers the misfortune of a home-burning collects the pot. This "pooling of risk" is a staple of most high school economics classes.

However, health "insurance" does not follow this model, because, over the course of time, nearly all of us will suffer the bodily ills that cause us to draw funds from the collective till. So what we are doing, by paying for private insurance, is having a third party manage our healthcare dollars for us until we're ready to use them. In return, this third party banks the interest and skims a profit off the top, employing an army of paper-pushing middlemen to manage our contributions. The very act of calling these healthcare middlemen "insurers" buys into the false belief that Aetna and Oxford are protecting us against rare occurrences, rather than merely serving as money-managers of our healthcare dollars. (They only provide true "insurance" in cases of catastrophic care for the young, a small and increasingly shrinking portion of healthcare expenditures.) Yet once consumers view these corporations merely as money managers, few sane people would ever invest at interest rates of zero for such low payouts at term.

The system I have described would be cause enough for the government to ban private insurance and replace it with a publicly-run plan. Unfortunately, the economic structure of the system is not nearly as nefarious in theory as it is in practice. Most people in this country who do have private health insurance are happy with their coverage -- until they actually attempt to use it. Once they face a medical emergency, however, they soon discover that the unspoken policy of many insurers is to deny as many claims as possible, often on legally and medically implausible grounds, until the patient or his family give up. Multiple calls, usually including direct intervention from a physician, may pressure an insurance company into changing their ruling--but the critically-ill often lack the time and emotional energy to wage such battles. So I fear that, in the drive to assure universal healthcare coverage, policy makers and the general public have missed the larger point: Having health insurance does not do you any good if that insurance doesn't cover your illness or injury.

Opponents of a national health insurance plan often lambaste the straw-man of having public officials determine which procedures will be available to the sick and dying. In contrast, they would have us believe that those determinations are presently made by individual doctors serving the needs of their patients. As a physician, I can assure them that those decisions are actually rendered by low-level employees at large healthcare conglomerates. None of these "no men" have medical degrees; many lack a college education or even a basic understanding of human biology. Their sole job in the world is to deny coverage until pressured into doing otherwise. Alas, the only practical recourse that most patients have is to sue -- after navigating a hoop of intermediate remedies such as arbitration, depending on their state and contract. That is about as realistic as telling the passengers aboard the Titanic that they have a right to sue for more lifeboats. The reality is that cancer victims in need of expensive chemotherapy and psychotic patients desperate for in-patient mental health services cannot be expected to lodge lengthy and complex legal challenges against their so-called "insurers." Given the choice between American public servants determining my coverage or private, box-checking lackeys working out of out-sourced shell offices in India, I'd side with the shortcomings of American bureaucracy any day. So would most Americans. That is why Medicare, which follows exactly such a public model, remains so popular.

From an ethical point of view, the real question is not whether there should be a "public option" but whether there should be a "private option." Once a public system of genuine universal health coverage is established, our society will have to decide whether wealthy individuals will be allowed to use their own personal funds to buy additional care that is not provided by the government. Is buying extra chemotherapy or life-support a human right? Or does it transcend a moral boundary, like buying a cornea on the black market? This will prove a difficult ethical dilemma. The government certainly has the authority to ban out-of-pocket supplemental care, much as it prevents private companies from delivering first-class mail and could prohibit the establishment of a private "social security" system. Whether the state should exercise such power is another matter. While most reasonable, progressive people may roughly agree on what ought to constitute the "floor" of health care coverage, any effort to limit costs by creating a "ceiling" will likely generate controversy. Yet, once a national healthcare system emerges and the "public option" swallows much private healthcare, that is likely to be the moral conundrum that we face.

I have little doubt that the day will soon arrive when the CEOs of health "insurers" are dragged before Congress to face the same sort of interrogation at which war profiteers were grilled by the Truman Committee in the 1940s and to which the Waxman Hearings subjected Big Tobacco in the 1990s. (The recent Congressional kid-gloves Q&A sessions are not what I have in mind.) When that day arrives, I do hope Congress permits the victims of falsely denied claims and calculated dithering to testify against them.

During a recent encounter as my hospital, upon learning that a suffering patient's need for essential treatment had been denied by his insurer, the man's social worker informed me that that this patient "had bad insurance." I had heard that line one time too many, so I asked, "What would constitute good insurance?" My colleague replied, "Staying healthy." That may be bitter medicine, but it is the horrific truth: All private insurance plans fall far short when it comes to covering necessary care. To put it bluntly, private health "insurers" sell an enormous sour lemon: a product that does not and cannot work. The best solution -- as radical as it may sound -- might be to criminalize such enterprises entirely.

 

 

Comments

[jarank77]

And do you know why Medicare is so popular? Because people are receiving vast amounts of benefits in excess of what they pay into the system. Do you understand that this isn't going to last much longer? After then it will be a terrrible system.

And this idea that health insurance companies have a bunch of lackeys sitting in some back office arbitrarily approving/denying coverage is a joke. You apparently went to law school, and so you should have some idea what this type of protocol would bring in the way of lawsuits and tremendous court damages. Give me a break. This article is just so over the top ridiculous it's almost a waste of time to respond.

This idea of it being an "ethical dilemma" of whether a person could purchase private insurance in a public system model is just outrageous. Are you going to tell me that it should be against the law for me to receive additional treatment if I had the funds to pay for it in a public system model? Do I need to explain why this is just so absolutely absurd?

[medicare4all]

Professor Appel -- That is the most thought-provoking essay on U.S. health care today that I have ever read. The obvious criminality of the private, for-profit health "insurers", AND THEIR USELESSNESS, ARROGANCE AND VENALITY is what makes me despair about the "reform" taking place today. Congress is are treating these criminals as if they were "doing good". DOING GOOD ?!?!?! There should be debates involving people like you all over the airwaves. Why the silence? Because the media and our leaders are corrupted by them, the vested interests, and worker-bees are too exhausted to let their voices be heard. We, of activist bent (doing quite a few media-worthy stunts), are ignored by the media and politicians.

I hope Bill Moyers of PBS, and Amy Goodman of Democracy Now , and Thom Hartmann, the radio show host, have the good sense to interview you, and you the good sense to accept. It would be a way to reset the discussion on health care reform, and could be a start for meaningful reform that shatters the unsustainable status quo.

T.R. Reid and his "Sick around the World" documentary shone light on how the rest of the world (except us) treats health care, not as a commodity, but as a human right, and Wendell Potter got many interviews on his "inside the belly of the -health 'insurance' beast" experiences, but for now, YOU, sir, are the breath of fresh air on this momentous issue. Thank you.

[Trainer12]

Finally, someone is saying what I believe is the truth. the for profit health insurance companies are criminals. They are murderers. They should be arrested for negligent homicide and criminal conspiracy to commit homicide for denying coverage, claims, and access to treatment and care to sick, injured and dieing patients because of "preexisting conditions" or "exceeding lifetime coverage amounts" or "having a gap in their insurance coverage because of unemployme­nt"because of a "loss of COBRA coverage" because they couldn't afford the payments. I hope an Attorney Journal in some state or city somewhere indicts them for murder and being part of a criminal conspiracy under RICO (Racketeer Influenced Corrupt Organizations Act). AHIP (Association of Health Insurance Plans) should also be indicted for murder and criminal conspiracy under RICO. They are the real "death panels". They should be put out of business or "nationalized". They have bought the votes of the 535 members of Congress and the President of the United States signature. Medicare for all now. Pass HR 676 and SB 703 or at least allow the Kucinich Amendment to allow the states to enact their own single payer laws for universal coverage or Weiner's amendment to substitute the language of HR 676 for the present bill HR 3200 or Pelosi's latest bill HR 3426, I think. It is hard to keep up with all the different bills in the Congress and the Senate.

[Bethab]

Fantastic article. Thank you for your clear explanation!

[raker]

Today on The Toady Show, Matt Lauer and Jean Chatzky were hyping super high-deductible health insurance. (People pay in, but never take out. Pretty sweet racket.) And they were touting the old, failed model of splintering the population so as to promote adverse selection. (That's health insurance jargon for when the sick people choose the pricier comprehensive plans while the healthy people choose the cheaper high-deductible plans with meager coverage, thus making the comprehensive plans ever more expensive because of high utilization and untenable to keep in business because all their members are sick.)

One of the good aspects of the universal health care plan that will never be would have been having a huge, varied risk pool, full of healthy and sick people and everyone in between. That's a key to controlling costs.

Chatzky even suggested that getting non-group coverage can be cheap and easy. This is patently dishonest. People ought to realize that NBC News and all its cable iterations are bad for your health. They are promoting the health insurance industry's interests, while GE employees enjoy single-payer coverage that does not waste money on a third-party insurer's profits: they are self-insured, like universal health care in microcosm.

[noweknow]

It's more than just a racket. It's the biggest Ponzi scheme in American history.

[adawg]

what about medicare?

[Hiphopcrates]

That day will never come until all politicians are prohibited from soliciting or accepting any campaign funding other than publicly funded support. We need first to replace 95% of Congress with honest legislators.

[adawg]

I think you are completly wrong. Your argument seems to be based on the idea that insurance companies cheat people out of money by not coming through with payment for medical needs. I could assume this is true in some cases, yet not all. Therefore, as a student of ethics, is it right to punish all of those in the industry, even those that do not engage in these practices? It seems this is what you are calling for, which I would say is unethical. I would propose that in order to deal with such an issue such as denial of coverage, legislature should mandate that you can not do such a thing. therefore, the basis of why you aruge for a public option would seem to be negated, since the pracitce you so outwardly condemn would be erradicated. also, I would call the attention to your emotional appeals (liking insurance co.'s to pedophiles) as well as the entire basis of your argument being on a hypothetical situation. doesn't seem a sound argument to me.

[janiceh]

It sounds like your solution is to simply make illegal the practices of dropping coverage, discrimination for preexisting conditions and rescission. What would you propose to do about the insurance industry's wasteful cost structure that includes excessive CEO salaries, advertising expenses, lobbying expenses, etc? This wasteful cost structure consumes almost a third of all health care dollars. Single-payer reduces this "administrative" or "overhead" cost from 20-30% down to 3%. With the money saved with single-payer, we could easily pay for the uninsured and underinsured.

[adawg]

As I stated in a lower post, a regulated yet competative market of cross state line purchases would create a competition that would force insurers to..stay competative. I would ask where your percentages come from though, since we don't have a single payer, I would assume it's a hypothetical. Also, as a curiosity, why did you put quotes around administrative and overhead?

[Marcus01]

Healthcare for profit is a fundamentally flawed concept. Without strict regulation, which we don't have in this country run by bought and paid for politicians, it inevitably leads to abuses and deaths in the name of profit.

[Mixpixlix]

Remember as long as the only real concern of a health insurance company is to satisfy Wall Street and institutional investors nothing will change. Teddy Roosevelt turned monopolies on their head and return a level playing field to the American consumer. Health insurance is a monopoly the was allowed out through a loophole at a time todays reality was considered impossible.

Among the first changes to get real reform must be to reign in the insurance companies, regulate rates and make it possible to try management in civil and criminal court.

[adawg]

I don't see how this is a problem. By attempting to satisfy shareholders a company makes itself more efficient, thereby cutting out the wasteful spending commonly associated with a bureaucracy. Looking at recent profit margins of these companies (ranging from 2.6 - 5.6 percent) I wouldn't say that they are evil. You seem to be against monopolies, I am to. With many companies in the current market you can't say we have a monopoly. But how about we make it that much better? How about allowing people to purchase out of state plans?

[Macawmom]

Those profits are after paying CEOs and Senior Managers their salaries. The problem with insurance being only responsible to Wall Street is that they then want to please the stock holders and make their stock option worth more. It does not mean wasteful spending disappears - quite the opposite in my experience. I know of more than one company on the verge of bankruptcy where employees have stayed in $700/night hotel rooms - and the stockholders neither knew nor cared. The "wasteful"spending that disappears is expensive but necessary treatments. It's not CEO salaries or hotel stays.

I recently went to a gastroenterologist to check for possible cancer. Turned out to be nothing, but my insurance company paid less than 30% of the office visit. I was responsible for the rest. Apparently, I get one office visit a year they cover, but I'd better not need any more. For this, I pay $430 a month - just for me, and I'm healthy.

[LadyXoc]

I see you weren't a shareholder of Enron, WorldCom or GM.

[mansterEZ]

GREAT POST!! Politicians really began to be bought in the 1960 election and it dominates all conversation now. That is something which I can pen (sic) on the Kennedys. When mandatory auto insurance became a reality in 1994 in California, I wanted to just shoot myself fearing it would lead to what we have today. Reason will only prevail if the half of the apathetic population crawls out of their hole to see the light. Unfortunately I have very little faith and hope that will happen in my lifetime. I'm 60 and feeling very old mostly because of my purposeful desire to avoid greed, corruption. avarice, fraud, lies and innuendo. One way out of this quagmire is to avoid beliefs as a way to express opinion. Beliefs do not require facts as supported by provable evidence.

Nuf said

[yakmeat]

Will someone please get this guy an appointment at the White House?

This is one of the most lucid articles on the subject I've seen.

[MaToo2]

I greatly admire the courage and truth to power in this entry. Brilliant summation!

You're more hopeful than me in one aspect: "I have little doubt that the day will soon arrive..."

I doubt this day will come "soon" because too many Dems and Republicans are bought by insurers. Look at Lieberman. Maybe if more brave health professionals document what's happening from the front lines, that exposure would prompt the day to arrive "sooner" instead of in a few decades.

[janiceh]

Great article. Thank you for having common sense.

[Romeover]

I have been saying exactly this for a long time now. Glad to see I'm not alone.

[apoyo]

This racket is akin to the mafia collecting protection money.

[adawg]

wow, how do you feel about taxes?

[medicare4all]

Taxes are what you pay for your food safety, clean air, clean water, roads and snow removal, hospitals, education, police, military, fire fighters, coast guards, lighthouses, public transportation, air traffic control, beautification of your surroundings, museums, trash removal, etc. -- the "commons"*. That which villagers around the world decided was worth "pooling our resources for", for the common good. It's still that way, mostly, around the world, except for here, since Ray gun, and the following warmongers (wars for war's sake), at great cost to us all. This insane mantra of "no new taxes" is what is destroying our communities. The previously hidden motive of 'starve the beast' (cut off the tax base) is now plain for all to see and experience. Who would have thought that "Back to Dickens/robber barons" was a template?

Keep electing republican­s/conserva­tives, and you'll get to your "free market/warmongers" paradise, at great cost to society, your society, adawg. Your children's, and their children, too.

BTW --"food safety, clean air, clean water, roads and snow removal, hospitals, education, police, military, fire fighters, coast guards, lighthouses, public transportation, air traffic control, beautification of your surroundings, museums, trash removal, etc. -- the "commons" used to work very well for everyone until Reagan, etc. Not so much anymore. By design. Demonize public efforts so as to defund them-- Example Katrina.