Saturday, September 12, 2009

Is Requiring Insurance Companies to Cover Pre-Existing Conditions Immoral? No, it's Not.

My dad sent me an editorial from the Christian Science Monitor, Forcing insurance companies to cover pre-existing conditions is immoral.

I read it and responded as follows.

I am happily surprised to read of a libertarian supporting a new welfare program if even in jest. However, we have some indisputable facts.

1. The US is experiencing a health crisis and cannot continue on the current path.

2. Private insurance companies and the free market system bear responsibility for the current system.

Facts on the Cost of Health Insurance and Health Care (I chose this link in part because it was based on research from McKinsey & Co. and because the Coalition's Honorary Co-Chairmen are former Presidents George Bush and Jimmy Carter.)

“Health care spending continues to rise at a rapid rate forcing businesses to cut back on health insurance coverage and forcing many families to cut back on basic necessities such as food and electricity and, in some cases, shelters and homes.

Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management and inappropriate care, waste and fraud. These problems increase the cost of medical care associated with government health programs like Medicare and Medicaid, and health insurance for employers and workers and affect the security of families. . . ” (Bold added)

“According to one study, of the $2.1 trillion the U.S. spent on health care in 2006, nearly $650 billion was above what we would expect to spend based on the level of U.S. wealth versus other nations. These additional costs are attributable to $436 billion outpatient care and another $186 billion of spending related to high administrative costs.”

Mr. Richman asserts that companies can’t make money if they are forced to cover people who haven’t paid premiums; in many cases because they cannot afford coverage or because they were denied coverage due to pre-existing conditions.

How much profit is enough? A “McKinsey survey found that 78 percent of low wage workers don’t receive health benefits from their employers. Those not offered employee sponsored health coverage must find insurance on the individual market. . . [which] generally provides more expensive plans with less comprehensive benefits . . and they deny applications at a higher rate. . .

. . . Insurers have rigged the system to manufacture oversized profits while the country pays the price in the form of high premiums and poorer health.”

“Profits at 10 of the country’s largest publicly-traded health insurance companies in 2007 rose 428 percent from 2000 to 2007, from $2.4 billion to $12.9 billion according to the U.S. Securities and Exchange Commission fillings. In 2007 along the chief executive officers at these companies collected combined total compensation of $118.6 million – an average of $11.9 million each. That is 468 times than the $25,434 the average American worker made that year.”

“1 out of 7 Americans under 65 are uninsured.” Does Mr. Richman believe that is because none of them want it? That’s silly.

Is there truly nothing wrong with insurance companies and shareholders profiting from the sick? Not in theory; not any more than a doctor or hospital shouldn’t profit from their education or the care he or it provides. However, in practice -- at least where the US health care system has ended up— the insurance companies are in the wrong. Health insurance, unlike an Elmo toy, is important. No one will die because they lack a toy. People die everyday because they lack insurance.

Health Insurance Companies profits are good but not breaking records.

But it’s still listed as the 35nd most profitable industry on the Forbes 500 list for 2009.

Ezra Kline at the Washington Post writes, “The industry, Potter says, is driven by "two key figures: earnings per share and the medical-loss ratio, or medical-benefit ratio, as the industry now terms it. That is the ratio between what the company actually pays out in claims and what it has left over to cover sales, marketing, underwriting and other administrative expenses and, of course, profits."

Think about that term for a moment: The industry literally has a term for how much money it "loses" paying for health care.”

No insurance program, private or public, can pay for everything for everyone nor should it. Eventually, difficult choices must be made, but not because someone lacked the insurance to pay for preventative care!

Massachusetts requires that everyone have insurance. Here is a brief overview of the program.

Mr. Richman’s imagined proposal seems designed to cost the government the most possible money by not requiring the sick to pay in (as the poor are already covered through Medicaid, Medicare, CHIP etc.) and by not letting healthy people buy in to offset costs.

The actions of for-profit insurance companies are the cause of our current health care crisis and costs. Insurance companies and medical groups are colluding together to raise profits for one group or another. A classic example is Partners and Blue Cross of MA. Because my Blue Cross is based out of California I had to pay $300 extra, out of pocket, when Lizzy had a chest x-ray at a Partners Hospital.

A genuine alternative to the status quo is a public insurance alternative. It’s competition that will benefit Americans.

“…[P]ublic insurance [i]s about 10 percent less expensive for children and about 30 percent less expensive for adults. In addition to having higher medical costs, private insurance has administrative costs that, on average, are about twice those of public insurance.”

Since, Richman is a libertarian and I am a democrat we have some significant political differences. I don’t believe that unimpeded free markets are good for everyone. He asserts that “competition lowers prices, raises quality and universalizes access.” I think of the industrialized age in Europe, Upton Sinclair’s Jungle, and the general misery the poor, the working class and even some of the middle class experienced before regulation, unions and laws changed the lot for the majority of Americans and people throughout the first world.

And as for his assertion that competition lowers prices; yes, generally it does. Unfortunately, insurance companies in the US have consolidated their markets, and merged with other companies to stifle competition. Shall we wipe the slate clean and let them “fix” insurance. Insanity can be defined as doing the same thing over and over again and expecting a different result. Insurance companies have refined their process and product delivery systems to be huge revenue producers. What incentive do they have to change?

Richman and I have a basic philosophical difference. He trusts business more than I do. Business exists to make money, I think it’s na├»ve to assume it cares about people; and because I care about people more than business, I don’t want business to thrive at the expense of people.

Private insurance is a good thing but when making money is set against life and death decisions it’s dangerous, especially because any person is just a number for insurance companies – one out of the hundreds of thousands they insure. Public insurance should be an option as well; if only to keep the private insurance companies honest.

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