There are some things in life that don't mix: oil and water, Hatfields and McCoys, Pepsi and milk, my mother and my father, and profit and healthcare.
While the first pairs on my list are universally known to be incompatible, the last one may come as a shock to you. After all, don't we, citizens of the United States, land o' capitalism, have access to the best healthcare in the world?
Yes, yes we do! We have the best healthcare that money can buy. And therein lies the problem. Healthcare is expensive, and those who need it the most can generally least afford it.
Remember last week when I was talking about Pareto optimization, or trying to find the best solution to a problem with multiple conflicting objectives? The problem of healthcare in a capitalistic scenario is a Pareto optimization problem, with many complicated and conflicting objectives that can be boiled down to two main objectives: 1, minimize cost, and 2, maximize public health.
There are many different solutions to this problem, each with varying degrees of practicality. Of course we could choose a solution in which no money is spent but everyone is ill, or we could go to the opposite extreme and eradicate every single germ. The best solution lies somewhere in between.
If we say that minimizing ill-health is equivalent to maximizing health, then we could use the same graph as before, substituting "Ill-Health" for "Effort" on the y-axis. Once again we have a continuum of optimal solutions, and the final solution is based on the values of those who make the decision.
The problem is that the values of those who make the decision are skewed toward minimizing costs instead of minimizing ill-health. Today's healthcare landscape is run by corporations, with the objective of maximizing profit taking higher priority than maximizing public health.
In a for-profit insurance model, the underwriter agrees to insure a number of people for a certain rate per person. (Rates for different people might be different, depending on age, status, health history, and what they want covered.) The money collected from each individual goes into a pool that is used to pay the claims of the policyholders and the expenses of the underwriter. Any money left over is profit.
This is why if you try to apply for an individual health insurance policy, you are screened so carefully and (assuming you are approved) the cost is so high. The insurance company wants to make sure that you are a good investment; that statistically speaking, you are within a certain limit of acceptable risk. They hope that you pay your premium regularly and that you never make a claim.
Group policies, such as policies provided by employers, often accept anyone without any conditions on their prior health history. Insurers make money on these policies because they have a guaranteed pool size over which any risks can be amortized, and they charge more per head than they would charge a person whose health risks had been screened.
There is a law that requires that health insurance companies offer policies to anyone who has been previously covered for a period of two years or more. The loophole in that piece of legislation is that the cost of the premium is not regulated. The sickly sister of a friend of mine was approaching the birthday at which she would no longer be covered by her parents' health insurance policy. Sure, she could have health insurance, but only if she could afford a monthly premium of $2700!
Tragically, the requirements for obtaining health insurance, namely good health and the means to pay for it, preclude from obtaining health insurance those who by definition need it the most: the ill who cannot afford treatment. But even people who have access to health insurance are often denied the coverage they need.
True story #1: A mentally ill man with full health coverage is told that he must travel one hundred miles round trip to visit an in-network psychiatrist, despite the dozens of available psychiatrists in a ten-mile radius. If he chooses to see a local psychiatrist, he must pay for the appointment himself, at a cost of $200 or more.
True story #2: A five-year-old girl is in the hospital this past November through February because her transplanted liver is failing and she needs a new liver. The family of the five-year-old girl has comprehensive health care coverage with a yearly limit of $2 million. The plan year is the calendar year. The re-insurer (the people who insure the insurance company) decides that because the bills for the November and December hospitalization were not received until January, they counted for 2006 instead of 2005, and by mid-February, the family has exhausted the $2 million annual limit.
The behavioral profile illustrated by these true stories makes sense under the charters by which corporations operate, that the short-term bottom line takes first priority. It doesn't make sense under the charters of common sense or decency, however.
In the first case, the insurance company was trying to save themselves a buck now, but neglected to consider their later losses when the mentally ill man (who was incapable of driving 100 miles round trip on a weekly basis, and could not afford the cost of seeing a local doctor) stopped receiving psychiatric care and brought harm to himself or another of their clients. (Actually, the man's family appealed the decision to their state's regulatory agency, and it was reversed.)
In the second case, the insurance company was trying to get out of its obligations by bending its rules and looking for any possible violation of the rules by the little girl's family. This is a tactic used by the mentally ill man's insurance company too, and I anticipate that should they be forced to reverse their decision, the girl's family will have a hard time getting them to honor their obligations.
The problem is that with all the focus on profit, the insurance companies have forgotten about what they're really insuring: people. If I lose my house in a mudslide, it's traumatic, it's scary, it's unfortunate, but it's just things. If I get really sick, on the other hand, it's my life that could be lost if the money to pay for the care that I need doesn't come through.
I'm a numbers junkie (I was counting sheep by 17's last night!) but I know where the realm of numbers leaves off and the realm of real people takes priority. The well-being of my fellow human beings is a whole lot more important than the dividends I get to record on Schedule D of my 1040 form. But of course the dividends can be a big temptation for some folks, which makes it all the more important to remove the for-profit aspect from the equation.
What is the solution to this problem? Well, there is no single solution to this problem, as I have already indicated. I just think we need to move along the curve of Pareto solutions away from maximizing profits and towards maximizing public health. I think that doctors and nurses perform a valuable service to our society, and should be remunerated handsomely. I think that hospitals should be run efficiently and the managers of the hospitals should be sufficiently rewarded for their work. But they should operate clinics and hospitals under the concept that the care of patients is the foremost priority, and I strongly believe that all hospitals and clinics should be run as not-for-profit organizations.
I think that similarly, health insurance companies should be not-for-profit organizations, to eliminate any temptation to stiff real life human beings in exchange for a fatter bottom line. I would support a national health insurance program; for example, expanding Medicare/Medicaid to include premium-paying workers.
I know I've lost some people to the rhetoric against government programs by now, but quite honestly, if working people paid premiums to the government instead of to a private insurance company, there would be no change except that the premium would go down.
We already pay our money into a pool. (In fact, we pay twice: once for the indigent and elderly [Medicare tax] and once for ourselves.) My employer and I pay more than $900/month to a large health insurance company. Jeff and I don't use anywhere near that much in coverage every month. The money goes into a pool that pays for my colleague's asthma medication, or the neighbor kid's strep throat, or prenatal checkups for a woman I've never met. It also goes to pay the salaries of the insurance company's employees, but a big chunk of it goes for corporate overhead, such as shareholders' dividends, advertising, and nine-figure bonuses for the CEO, for example, overhead that would be eliminated from a government plan.
Some reports say that a single-payer Medicare system could be supported on a 9% payroll tax: 2% coming from the employee's pay, and 7% coming from the employer. If that were the case, my employer and I would be paying about half of what we're paying now for health insurance. Sounds like a deal to me!
People rail against the inefficiency of government (myself included), but Medicare is actually the most efficient health insurance company in the United States. Less than a nickel of every dollar is spent on overhead. In contrast, the best private insurance companies spend roughly twelve cents per dollar on overhead. According to some reports, my insurance company spends more than a quarter of every dollar on overhead! Wouldn't it be nice if that money went to saving lives instead of fighting against legitimate claims by mentally ill men or critically ill children?
I hate taxes too. I can count my money with the best of 'em. But I don't think that paying for the well-being of my fellow citizens is such a bad thing. (As we've seen, I'm already doing it when I pay my private health insurance premium.) The thing I don't understand is how we in this country can place such a high priority on the unborn (e.g. South Dakota's recent anti-abortion laws and my own state's proposed constitutional amendment) and such a low priority on the already born!
A man who is near and dear to the hearts of most Americans once said, "Therefore, whatever you want men to do to you, do also to them, for this is the Law and the Prophets." (Matthew 7:12, ESV) (This is not to say that the Golden Rule is unique to Christianity.) It bewilders me that so few people actually heed his words. If I were ill, I would like for others to help me get over my illness and get back on my feet. It's only fair that if I want others to do this for me, I should contribute my part in doing this for them. Let's take care of each other like we're supposed to!
There is a lot more to say about Pareto-optimal healthcare, but I had to Pareto-optimize this post for length, substance, and time spent researching and writing, so this is all I have to say for now. There are many interesting articles out there on the topic. Two comprehensive articles that I found were
and I encourage you to read them both.