Why Health Insurance Doesn't Work

[Joanne98]

It is actually against their interest for insurers to compete on giving us the best care. It's not simply that they're not doing it, but given the structure of the marketplace, they shouldn't do it.

Ezra Klein | February 27, 2008 | web only

'The state's largest for-profit health insurer is asking California physicians to look for conditions it can use to cancel their new patients' medical coverage," said the first line of an expose in the Los Angeles Times earlier this month. The subject was Blue Cross' practice of enlisting doctors to help them deny the claims of sick individuals.

What's strange, however, is that everyone acted like the insurer was doing something wrong. Gov. Arnold Schwarzenegger accused them of asking doctors to "rat out the patients." Hillary Clinton gave the company a similar lashing, in the same tone of moral outrage used by most of those quoted in the article. Within a few days, the policy was ended.

But Blue Cross officials weren't doing anything wrong. They were doing exactly what we've asked them to do: They were following the incentives of the modern insurance market.

It's a common complaint that health insurers don't actually offer "insurance." As generally defined, insurance is a form of risk management that individuals use to protect themselves against unpredictable loss -- a car accident, say, or a house fire. Health insurance, by contrast, is a form of risk pooling that individuals use to smooth out lifetime healthcare costs. Heath insurance does not insure us against risks so much as it insulates us against costs. We pay regular premiums so we don't have to directly pay for irregular care.

Not all of us, however, make this deal with insurers. About 50 million Americans are uninsured, and tens of millions more are underinsured. There's no law that says we all must have insurance or that insurance companies must agree to cover us. Given that, it's natural that insurers -- which are, after all, for-profit companies, not government agencies or public trusts -- turn their attention to making deals with the most profitable among us and avoiding deals (or finding ways to break contracts) with the least profitable.

http://www.prospect.org/cs/articles?article=why_health_insurance_doesnt_work

[Hydra]

1. Their job is to make a profit

which is why it's insane for us to continue to think that the current system should stay in place.

Even with my employer paying half, I'd still have to pay $250 a month(not tax deductible) plus whatever costs come in when I go to see the doctor and then the pharma guy. I can't do it.

Thus, I'm on pray-go right now.

[Vinca]

2. And that, in a nutshell, is why we need single payer, universal

health care and not universal insurance. The insurance companies have a fiduciary responsibility to their investors to rake in as much money as possible. The only way to do that is take in way more than they pay out. They're happy to cover healthy 20 year olds, but can't price people in their 50's out of the plans fast enough.

[AdHocSolver]

3. Good argument for government-administered universal health care a la Medicare or the Canadian system

[CitizenRob]

4. Only in America does universal health seem like too much to ask for.

[bulloney]

5. Only in America does unbridled capitalism via insurance companies seem macho.

To suggest changing the current health care system is akin to changing our national symbol to a swastika.

[raccoon]

6. Exactly, they're not in business to pay claims, but to make money. K&R. nt

[philly_bob]

7. obama=clinton against single payer universal health care

I hope I'm wrong, but, unfortunately, I think it's the case that with both Obama & Clinton, single-payer universal is simply "off the table." When they're talking about "universal," it means everybody can buy a health plan from an insurance company.

That's why this former=Edwardsian is not around these parts much. I'll vote for the Democratic candidate when the time comes, but DU is getting less and less of my time.

[codejack]

8. Except that both "Democrats" oppose this n/t

[antigop]

9. the article doesn't push for single-payer, does it? He still wants "insurers"

And wasn't this the guy pushing Wyden's health bill?
http://www.prospect.org/csnc/blogs/ezraklein_archive?month=11&year=2007&base_name=the_wyden_bill