Thursday, July 05, 2012

The Problem with the Insurance Argument

After the Supreme Court ruling, the question of health insurance has come back to the front with Democrats celebrating and Republicans vowing to repeal.   Democrats should not be celebrating and while the Republicans might be able to repeal the Affordable Care Act but they have no solution worth real discussion.

First off, the free market does not and can not work with regards to health care.  The consumer has no power to influence the market at all.  You can't shop for the lowest cost when you've just had a heart attack.  Add that there is often only one hospital nearby and the physician on duty is the physician on duty.  Most of us also have no control over what, if any, insurance is available to us and even less over what is covered by that policy.  Employers may shop for the lowest price on insurance but it is very seldom that they do so while comparing two identical products and the dissimilarities may not be obvious until the product is used and the patient discovers that a specific lab or physician is not covered by their insurance.  And the coverage is constantly changing so a physician covered one year may not be the next year.  Which services and providers are covered by a given policy rarely if ever have anything to do with quality of care.  Market forces simply do not work when it comes to health care so if we rely on them to control costs or quality, we will only see failure.

Second, there are some things that should not be sold for profit.  Health care is one.  In a for profit business, the business always has a primary responsibility to make money for the stock holders.  There is a legal responsibility to do that regardless of whether they are producing widgets, automobiles, or providing health insurance.  The first responsibility is not to the client, it is to the stock holder.  Obviously, in the free market, a better product is more likely to produce higher profits for the stock holder, but the primary job of any for profit company is not to produce widgets, automobiles, or sell health insurance... it is to make money for stock holders.  For health insurance companies, that means denying coverage.  If they can deny a procedure, they have made more money.  It is no surprise then that for profit insurance companies have employees whose job is to find ways to deny coverage to the patients and they get bonuses when they do so.  At least a panel of government agents making decisions around coverage would have the well being of the larger population as their primary concern. 

The bottom line is that the current system, even under Obamacare, cannot solve the problems we face and will remain the most expensive health care delivery system in the world while at the same time being far down the list in terms of almost all of the significant metrics for outcomes.  The good news is that there are models around the world that actually work.  All we need do is swallow our pride and embrace a model that delivers health care to all of our citizens at a more reasonable price.

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