Insurance works on the principle that a certain number of people in a population will need help, that number is predictable, but we have no idea who among the population will be the ones affected. Therefore we pool our resources to cover everyone's risk, a few paying less than they will need, most paying more (because they will need nothing) and everyone being safe from the financial impact of that particular disaster. It is very simple logic, and works for car insurance, home insurance, and many other kinds of insurance.
It does not work for medical insurance.
The reason is simple. With the growth of scientific knowledge the pools keep getting sliced smaller and smaller. We can tell who is likely to need insurance the most, and if they are excluded from a pool. We can offer lower competitive rates to those included than can a company that does not exclude those most likely to need help. Very simple.
We see a version of this issue with auto insurance. Rates go up as we accumulate points in moving violations because we are more likely to need insurance. But unlike health insurance, we can alter our behavior so that rates go down. Or as we get older, rates go down, at least until a certain point. Here the variability of insurance rates is probably beneficial. In health insurance it is mostly a disaster.
The result is that some medical insurance that to those statistically needing it least, can be good. Others are priced out, or can get it only if they have a job that provides it. As a result in America people keep crappy jobs because of the insurance, avoid starting their own businesses because they do not want to put their families at risk,and at a rapidly rising rate, go into bankruptcy over medical bills: 62 percent of all bankruptcies in 2007 were due to medical debts, around 46 percent in 2001 and only 8 percent in 1981. The LA Times has a good summary and some heart wrenching examples.
To make matters even worse, profit-minded insurance companies are dropping the needy as soon as they can figure out a means to do so. As Businessweek reported, the author of a recent Harvard based report published in the Journal of American Medicine said:
All the pompous free market talk about the "miracle of the market" is so much blather because those emitting such sounds do not understand WHY a 'free market' works in some cases for insurance and not in others. They treat it like a magickal phrase. I am reminded of the behavior of members of a cargo cult.
All this assumes the insurance companies are honest. Now Congressional investigators have discovered they are not. I am not surprised. Corporations are designed to act like rational sociopaths, and it is small wonder that human sociopaths have an edge in rising ti the tops, men and women who cheerfully bilk people when they are the most vulnerable, to feather their already overly large beds.
Single payer is far and away the most logical form by which health insurance can be provided because it returns us to insuring the entire pool, all of us. Anyone who has taken much time to look at how it has been applied elsewhere knows that compared to the American model, by every measure of price, coverage, and overall quality that includes the population as a whole, it has proven superior.
We see a version of this issue with auto insurance. Rates go up as we accumulate points in moving violations because we are more likely to need insurance. But unlike health insurance, we can alter our behavior so that rates go down. Or as we get older, rates go down, at least until a certain point. Here the variability of insurance rates is probably beneficial. In health insurance it is mostly a disaster.
The result is that some medical insurance that to those statistically needing it least, can be good. Others are priced out, or can get it only if they have a job that provides it. As a result in America people keep crappy jobs because of the insurance, avoid starting their own businesses because they do not want to put their families at risk,and at a rapidly rising rate, go into bankruptcy over medical bills: 62 percent of all bankruptcies in 2007 were due to medical debts, around 46 percent in 2001 and only 8 percent in 1981. The LA Times has a good summary and some heart wrenching examples.
To make matters even worse, profit-minded insurance companies are dropping the needy as soon as they can figure out a means to do so. As Businessweek reported, the author of a recent Harvard based report published in the Journal of American Medicine said:
"For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments, and deductibles that illness can put you in the poorhouse," said lead author Himmelstein. "Unless you're Warren Buffett, your family is just one serious illness away from bankruptcy. "
All the pompous free market talk about the "miracle of the market" is so much blather because those emitting such sounds do not understand WHY a 'free market' works in some cases for insurance and not in others. They treat it like a magickal phrase. I am reminded of the behavior of members of a cargo cult.
All this assumes the insurance companies are honest. Now Congressional investigators have discovered they are not. I am not surprised. Corporations are designed to act like rational sociopaths, and it is small wonder that human sociopaths have an edge in rising ti the tops, men and women who cheerfully bilk people when they are the most vulnerable, to feather their already overly large beds.
Single payer is far and away the most logical form by which health insurance can be provided because it returns us to insuring the entire pool, all of us. Anyone who has taken much time to look at how it has been applied elsewhere knows that compared to the American model, by every measure of price, coverage, and overall quality that includes the population as a whole, it has proven superior.
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As a Canadian who only has lived in a single payer system, I wonder if the US has the kind of societal consensus necessary to make the tough decisions that a single payer system must. American society seems polarized on many issues that are central in a single payer system - contraception, abortion, "futile" care, assisted reproduction, etc.
Good and valid observations of government bureaucracy aside (just for the moment), the vast majority of people simply do not understand how insurance works. Gus made a good start in explaining it. It bears repeating often (though I'll refrain).
The crux of the problem is profit. A for-profit insurance approach will, by definition, fail to cover some people. How many is based on how profitable each carrier tries to be.
It actually doesn't matter how health care cost is covered. What matters is whether those covering it are trying to make a profit. Health care reform should start with the decision to make it not-for-profit, and elevate it to the same level of national mandate as national defense.
South Korea is not a communist/marxist nation. Actually I don't think there are any real communist countries left. China clearly is not really communist, and the healthcare system there is sorely lacking.
Since communism/marxism has proven to fail into simple feudalism, it will probably be as unable to provide decent health insurance as the Corporate feudalism which masquerades as capitalism in America today. The countries which have the best healthcare systems as evidenced by low infant mortality rates, long lifespans, and low levels of untreated epidemic and endemic diseases seem to be the ones with capitalist-based highly democratic semi-socialist governments.
I don't trust governments to do anything right, but I trust Corporations even less. At least government as practiced now in America is somewhat transparent and must eventually answer to the folks who elect the politicians. Corporations are entities which are legally created to shield their directors from liability for their actions, and whose goals are specifically the merciless creation of maximum profits. Either capitalism or communism, when not regulated by a self-interested and self-serving electorate, will fall quickly into feudalism, in which a few overlords hold control over most property, and everyone else winds up serving them.
No matter the name of the governing system, the core of getting good healthcare will be weeding the parasites and predators out of the system.
Sadly, it seems many of our politicians have their hands in the pockets of the parasites and predators.
Thermal
New Age Cowboy said;
June 30, 2009 10:32 PM
Gus, I lived in South Korea. I was an English teacher there. I thought I had testicular cancer and had to access the government health care via my employer. It was awesome: cheap and thorough. I didn't even need any appointments or referrals.
I dunno. Americans are suckers for capitalism. I'm starting to think that I'm a Communist/Marxist. I do enjoy benefits of marketed technologies, but at what cost to necessities?
Franklin,
I do agree with you, but you have to remember that insurance companies are there to make money, they will suck every little penny out of your pocket of you give them the chance
Franco is right - as health insurance demonstrates. What keeps it from happening with autos and such is genuine competition and genuinely big pools.
I notice that even the libertarians that occasionally comment on this blog have done nothing to challenge the logic of this post! Nor have they in other venues where I've challenged them. Ignoring an argument you can't defeat is the best approach if purity trumps truth.
As to conservative opponents - they abandoned any concern with truth a long time ago.
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