Health insurance: is it good for our health?
If you look around the world, it is quickly obvious no other country runs their healthcare service quite like us. At this point, most people throw up their arms and fall about laughing. Foreigners are mostly socialist or, worse, communist and have no more idea of how to run a health service than Dracula. Those with statistics at their finger tips point out we spend far more per head on health than any other nation. Curiously, this ignores two factors. First we perform very badly in comparison with other countries. We have fewer doctors and other healthcare workers per head of population, we are more heavily dependent on drugs, and people in other developed countries enjoy better lives and live longer. So we are not getting value for money. Second, the government makes the largest contribution to paying for our healthcare. Almost 30% of the population receive their care through Medicare, Medicaid and other programs funded by the state. So two-thirds of the adult population pay twice: once to buy their own health plans and second to pay for the healthcare of others through tax.
This should make us ask what insurance is for. In an ideal world, it should keep us well through preventive screening and diagnosis. If we fall ill or injure ourselves, it should provide the best possible treatment. In doing this, it should protect families from the threat of bankruptcy and avoid being a burden on the state. When taxpayers' money is spent, it should get the best possible value for money. In most other countries, healthcare is run as a public utility. Here we have an insurance industry combining with the healthcare services to produce a service too expensive for most people as individuals. During World War II, there was a shortage of labor. To protect the market, there were wage and price controls. Imagine the change when health plans were exempted from federal taxes. Employers could compete to attract the best workers by offering better health cover. This led to an explosion in employer plans. Until 1990, private insurance was dominated by nonprofit companies like Blue Cross, but they have mostly converted to for-profit over the last twenty years. They argue it makes them more efficient.
The for-profit business model is easy to understand. Insurers charge the maximum rates the market will pay and fight to pay out as little as possible. The rest is profit to be shared out as high salaries and dividends. If costs rise too much, the insurers convince us we should accept higher deductibles or co-payments. If that fails to stem the profit reductions, they cancel the policies of those who fall ill and refuse to accept those with pre-existing conditions. Worse, they start arguing with the doctors about what treatment they should give and how much they should charge. In short, they aim only to insure the healthy.
To fix this problem, we need to get back to a nonprofit approach. The first step is to force the insurers to spend more of their income on treatment. If that fails, the states or federal government should set up individual health insurance companies and run them as public utilities. That way, we would all get the chance to see cheap health insurance quotes.