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In Defense of the Uninsured (Part 2)

by Micah Tillman

Imagine that you want universal health insurance, and you’ve decided the government should be the one to give it to us. You could have gone with charity organizations or for-profit businesses, but you didn’t. You are, in other words, Hillary Clinton or Barack Obama.

Last time, I argued that Clinton’s health plan summary (PDF file) misrepresents the nature of health insurance. There’s no way for the majority of Americans to not overpay, even if there is a way for those who pay to pay less.

Since I wrote that piece, Clinton has gotten into some hot water by suggesting workers’ wages might be garnished to enforce her plan. I honestly thought that I wouldn’t have to bring all of this up, but the Democratic debate before Super Tuesday seems to have re-lit a fire that won’t go out.

Anyway, let’s imagine that we’re politicians who want to sell universal health insurance. We’d need to go about it differently than Clinton and Obama currently are.

Advice to Politicians — Further Clarifications
First, we should clarify the kind of entity that health insurers are. They are not, for instance, actual businesses. A business is something that engages in exchanges where both sides come out ahead. The business wants the buyer’s money more than it wants its own product, and the buyer wants the product more than his own money. An exchange occurs and both sides win — in a strictly economical sense.

We normally think of charities as the opposite of businesses. But insurers are not charities either. A charity is an entity that engages two groups, rather than one. It receives from contributors and gives to beneficiaries. Unlike a customer, a contributor experiences a net loss (in the strictly economical sense). And unlike a business, a charity also experiences a net loss after engaging its beneficiaries. Charity is about losing so others can gain. This is its nobility.

Insurers are between business and charity. For the most part, the patients act more like contributors than customers. They put in more than they are getting out. But some patients at some times — or perhaps all patients at some time — are more like beneficiaries than contributors. They get out more than they are putting in.

Insurers are like businesses in that there is always the chance that a given patient may come out ahead in the end, even while the company itself turns a profit. And they are like charities in that for one patient to come out ahead, another has to overpay, experience a net loss.

What insurers, are, therefore, is like a communal fund into which everyone gives out of the goodness of their hearts, and from which everyone can take should they ever need to. Insurance is like everyone treating everyone else as a charity case. They are an instantiation of group-love. Everyone takes care of everyone else and gets taken care of in return.

Or we might say that insurers, together with patients, are like family. There’s a lot of giving and a lot of being taken care of. Nobody’s sure who’s coming out ahead because that isn’t the issue.

The difference between insurance and communal funds, or insurance and families, however, is that there is always one party who is coming out ahead: the insurance company itself. While its patients are a mixture of winners and losers, it is always a winner. It oversees a system in which some have to lose so that others can gain, and it makes sure that it is the one party which always gains.

There is no (theoretical) balance here as there is with businesses. Theoretically, both business and customer gain by their mutual association. And the charitable role insurers play — by taking what is given by some and giving it to others — is accompanied by taking what is given by some and keeping it.

Final Words of Advice
What politicians like Clinton need is to create and sell insurance as charity. They should stop using the strange mix of corporate, “Save! Save! Save!” advertising with charitable, “Those in Need Need Help” appeals.

Politicians should be honest with the American people: the insurers we have now are a chimerical combination of business and charity. Politicians should admit that this tempts them to appeal to our “base” desire for profit. Then they should commit to rising above such rhetoric, calling on the better angels of our nature.

If politicians would tell us that buying from a national health insurance program is a way to get involved in a charitable cause right here at home . . . . If they would say that this is our chance to "give" to our fellow citizens, even if we never "get" in return . . . . If they explain that their program will enable us to know to whom (i.e., our fellow citizens) we should be grateful if and when we become beneficiaries ourselves . . . .

If they back this up by calling on insurers to go non-profit, refusing to involve for-profit insurers in their national systems. If they shift not only their talk but the type of companies they plan to use . . . .

And if they call us as citizens to neither to gain nor pity, but to sacrificial nobility . . . . Then they just might see reactions on both Left and Right change.

But it still will frighten me (and many others) that politicians want to combine charity and guns (“insurance” and “enforcement”). Even with all the clarifications I've listed, they're still going to be mixed up.

Micah Tillman is a lecturer in the School of Philosophy at The Catholic University of America. His blog can be found at http://micahtillman.com/

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Comments

I agree with much of what Tillman is saying. I was for years a health provider working under the club of HMO's and Insurers of various kinds. When you think of the medical dollar that is spent, consider how much of it goes to the hundreds of thousands of employees and bloated CEO's who control the medical process. All of those salaries, operating expenses, and legal fees come out of the medical dollar. They can get their money only by denying as much insurance repayment as possible. If we go with either Hillary or Obama, we need federal regulartion to force the insurers to pay and to be sure that their rape of the dollar is at least a little gentle. I can tell you that there were many times my patients did not get the care they needed because their coverage was denied.

"At least a little gentle" indeed.

I haven't actually checked, but are there non-profit insurance "comapanies"? Seems to me if there were, at least groups like Charity Navigator would have an excuse to keep a critical eye on them.

Chimeras are strange beasts.

# posted at by Micah

Insurance is legalized gambling.

The problem with comprehensive insurance is overuse, which leads to overdemand and higher costs on average.

If we all paid out of pocket, medical costs would be a lot lower.

Private for profit health insurance companies are almost all diversified financial services businesses. There is nothing charitable about them, and by law their one and only goal is to make profits for their stockholders. My brother is a major executive at a large national company and he explained to me long ago that the main criteria for whether the health insurance arm of the company would pay a medical claim was whether their underwriting investigators determined that the claimant could afford a lawyer, or not. If the claimant was well of enough to have a lawyer to fight for the claim, it was paid immediately. If not, the claim was denied. He said that it unfortunately resulted in those who least needed the coverage always getting it, while those who were least able to afford a denial of coverage were always denied. He defended the practice, saying that unfortunately that was the common practice of all insurance companies, so if his did not also deny care on that basis they would not be competitive with the others. He didn't like the health insurance branch of the company, so he moved on to spearhead the companies' marketing of subprime mortgages to the low income Hispanic community nationwide. Nice business to be in. These companies sell financial services, and always make a profit.

There used to be nonprofit health insurance companies, but one by one they are all converting to for profit companies.

The Clinton health reform plan calls for severe regulation of the insurance companies, puts a percentage cap on the amount a family will spend on health insurance, and creates a nonprofit Medicare like public program for people to obtain insurance from if they do not with to patronize private insurance. It could be the seed of a national health insurance program if enough people choose it.

# posted at by Jay Kallio

As an anarcho-syndicalist, I am a big fan of firms not only self insuring, but also self providing medical care. This would only be for larger enterprises or enterprises with large locations - however I see no reason why it is not a more feasible alternative if you employ thousands of people in a city to hire a medical staff to take care of them - to the extent of hiring these individuals while they are planning to go to med school, paying their way (and if you have millions of people, having your own med school) and requiring at least an initial term of service to pay back the med school costs.

Malpractice goes from lawsuit to company discipline and there is not paperwork for the insurance company since such things will not be required.

This is how the military services handle medical care and education. GM and Chrysler could do the same thing.

Self-insurance by large companies perpetuates the chains of "job lock" that hold employees to jobs they dislike and that do not utilize their talents or inspire their dreams, and makes the employees' medical care contingent upon the success and failure of the large corporation that employs them. Their medical care is constrained by the skills and experience of the company doctors, who cannot master all the skills necessary for every ailment and injury. The corporation mandate to, above all, turn a profit for stockholders, is a conflict of interest with every patients need for appropriate care, if costly to provide. There is often a significant compromise of medical privacy when the employer also holds the reins on medical care for their employees, and many companies have decided to penalize employees financially for what they perceive as lifestyle choices that could potentially increase health care costs for the company. How this information could impact the employees' future opportunities for employment and health insurance availability is cause for concern. Limiting employee access to medical expertise, especially by hiring inexperienced providers, is too often a recipe for higher costs later when inexpert diagnosis and treatment results in more catastrophic and permanent illness later. It is often valuable to understand that "saving" in the primary care end of medical care too often results in higher overall costs, it is not a zero-sum savings, it is a matter of "a stitch in time saves nine."

There is often a benefit to "company medicine" in that it is usually arranged to be convenient and very fast for employees, getting them back to work quickly, and that convenience can result in earlier and better care if overall quality and comprehensiveness is comparable to alternate means of care provision. Much depends on the company deciding to maintain quality of care through economic ups and downs, when the temptation to reduce costs may overwhelm the responsibility to care for employees.

The VA system is a nationwide system that enjoys economies of scale that reduce prices, as well as retaining the right to negotiate for pharmaceutical products, which reduce it's costs significantly. The VA also pioneered the use of electronic medical records, which has improved their quality of care beyond that of other health care systems, including top tier private health care facilities. Only where rural conditions prohibit the availability of VA facilities does VA service suffer, as it does in the greater health care systems all over the world, due to the very low number of patients that cannot economically sustain the facilities they need and deserve.

Malpractice and what is known as "defensive medicine" are not the significant drivers of health care costs that many people believe they are, far more important are the marketing of so called "new" technologies and devices, and "me too" drugs that increase prices without any evidence that they are an improvement over established medical practices. If malpractice was completely eliminated for the picture it is estimated that under 5% savings would be achieved in overall health care costs (many estimates put that at 2%), while eliminating patient's only recourse in the event of egregious medical error or neglect.

Companies should make cars or whatever their products and services are, trying to take over medical care for their employees in order to save money is not within their expertise, and is a conflict of interest.

# posted at by Jay Kallio

If the employees were the sole shareholders, many of the problems you cite would not occur.

Once again, the reason health insurance is both expensive and often nonresponsive is because they have no competition; we're all locked into a monopoly or, at best, a duopoly situation by our employers, at the behest of the government. The company I work for might be a good place to get my insurance, but I don't want it to be my only choice! (Though I can tell you, the insurance companies probably like the situation just fine.) I seriously doubt locking us all into a single company will improve matters.

As to the analysis of insurance as a combination of business and charity, I don't think that is correct. Insurance is not a charity of any kind. It is a pool of funds created by people who agree that some particular bad thing (a car accident, a debilitating disease) will happen to one or more of them, but not all of them, and that it is impossible to accurately predict which of them is the one to whom this bad thing will occur. So they all pool their money, so that if any of them experience this bad thing, that person will have money to draw upon they otherwise would not have access to. It is not a charity, since nobody is allowed access unless they are a contributor.

The insurance company is a business, and they provide a service to their customers: that of managing the pool of money in a manner that ensures nobody abuses the system (bad driers pay more, for example).

# posted at by Tarvok [TypeKey Profile Page]