Health Care's True Price

Health-care wonks worth their salt will tell you that the big issue in the current effort to reform our abysmal health-care system is cost control. They say if we don't do something to rein in the spiraling cost of health-care, it will eventually bankrupt us all. This is also a key argument made by advocates of what has become the ideological fulcrum of the health-care reform debate: the public option. Those who want to give Americans the choice of a government insurance plan have talked a lot about the public option's potential to save money over private coverage. And it would -- not only because the government could negotiate lower reimbursement rates but because it wouldn't have to spend money on the things that private insurers do, like underwriting (figuring out whom to avoid covering), marketing, multimillion-dollar executive salaries, and of course, profits. Competition from a less expensive public plan would also force private insurers to become more efficient.

That's all true. But for the most part, we haven't heard the best argument for a public option: security. It's what ought to be at the center of this debate, and it's the one thing private insurance companies will never offer.

The single-payer and hybrid systems in place in every other country in the developed world have many admirable features: lower costs, universal coverage, and better health outcomes. But what ought to make us most envious is their security -- it's what they have and we desperately need. If you live in Canada or Germany or France or Japan, there are some things you need never fear. You need never fear that your insurance company will tell you it won't cover treatment for your asthma because you had asthma before they signed you up. You need never fear that you will bankrupt your family because of expensive treatments for a serious illness. You need never fear that you will find yourself without coverage after your insurer dropped you or you lost your job. You might fear getting sick, but you won't fear that your life will be destroyed by not being able to pay for getting sick.

In the United States, unless you're over 65, extremely poor, or a veteran -- thus, already covered by a government health insurance plan -- you do have to fear all that. That's because the central pathology of our deeply pathological health-care system is that most of us have no choice but to get health coverage from an entity whose sole reason for being is to take our money and then try to avoid paying for our care when we get sick.

That may sound harsh, but let's be realistic: The purpose of a private insurance company is to make money, as much money as possible. In this, it's like any other business. But insurance is fundamentally different from other businesses. When you buy a soda, you know exactly how much you're paying for it. And when you take your first sip, you know whether you like it or not. If the soda company wanted to give you the shaft, it would only have two ways to do it: It could give you a bad-tasting product or charge you lots of money for it. Either way, you'd only end up buying it once.

But when you buy insurance, you enter into a complex relationship with a company that promises to pay for services you haven't yet used. You start paying it substantial amounts of money right away, but you don't actually use its service until some time in the future. You're also required to sign lengthy, intricate documents full of conditions and exclusions and legalese that few people are equipped to understand. You are at the company's mercy, which makes its incentives and inclinations so important.

The private health insurance market is dominated by four gigantic insurers: UnitedHealth, WellPoint, Aetna, and Cigna. In the last five years, these companies have combined to earn over $44 billion in profits; UnitedHealth alone has made over $17 billion in profits over that period. "On Wall Street," the Los Angeles Times has noted, these companies "showcase their efforts to hold down expenses and maximize shareholder returns by excluding customers likely to need expensive care, including those with chronic diseases such as asthma and diabetes. The companies lobby governments to take over responsibility for their sickest customers so they can reserve the healthiest (and most profitable) for themselves."

And you can see it if you go to their Web sites, each of which contains a photo montage that cycles through as you look at the page. The photos are certainly not of sick people, or even of doctors and nurses performing their duties. They're of healthy people, mostly younger adults, doing things like gamboling through meadows, looking adoringly at their children, and smiling in the deep contentedness that comes from knowing they will never, ever get sick.

Perhaps a reform bill without a public option could regulate the insurance companies enough to keep them from engaging in their most despicable business practices. We could outlaw the practice of rescission (in which they cash your premiums, then kick you off your plan once you get a serious illness). We could make them accept anyone, regardless of pre-existing conditions. We could set up an insurance exchange, a kind of managed market where people could easily compare different plans and have a variety of choices. As part of the deal for getting access to this pool of customers, we could force the insurers to accept "community rating" -- charging everyone within a population the same price, no matter their age, gender, or medical history. Those regulations would certainly go a long way toward curbing the worst abuses.

Call me cynical, but I can't help but assume that even if we do all that, the insurance companies will still come up with a dozen creative new ways to cut people off, avoid paying claims, and generally pad their profits at the expense of their enrollees' health and security. There's a reason why they'll fight against the public option with every ounce of strength -- and every dollar -- they can muster (insurance companies spent $74 million on lobbyists in 2008 alone). It's because the presence of a plan that offers security is a dire threat to their business model. It's possible that the health-care system could be improved without a public option. But as long as most people have no choice but to get coverage through a private insurance company, security is the one thing we won't have.

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