Why For-Profit Insurance Doesn't Work for Health Care

First, let us dispense with the comparisons (used by both sides) with mandatory auto liability and collision insurance. Auto liability insurance pays the person you hit when you damage their vehicle. Collision/comprehensive insurance pays for things that happen to you or your vehicle when it is hit by another. True, health insurance can cover when you fall off a ladder and break your arm, or crash while skiing and break a leg, but most of the health care claims are not for accidents.

Health insurance is more like an extended warranty or maintenance agreement for your body. It covers defects in design (genetic diseases), manufacturing (congenital abnormalities) and other things that break down after you're born. And that's where we begin to see the problem.

For-profit corporations have a mandate to operate in the best interest of their shareholders. And it is not in the best interest of the shareholders to have customers who continually cost nearly as much - or even more - than those customers pay in. So the customer who uses the insurance the most is the least desirable customer. There is little incentive to retain people who actually use the services of the insurer. Ideally, an insurer would have customers who never make a claim, so there is no reason to make the claims process easy or to try to keep those customers who make claims. In essence, the controls which tend to drive most businesses to a balance of cost and quality to maximize those who use the service actually work backwards here to lower the quality and drive up cost for those who use (need) the service most, while driving up the quality and lowering cost for those who use (need) the service least.

What we end up with is excellent, affordable insurance for the healthy and expensive, poor quality insurance for the sick.

It doesn't take a lot of thought to see why this is a lousy model from the standpoint of the sick.

For those who respect the Hebrew scriptures, I offer this:

Behold, this was the iniquity of thy sister Sodom, pride, fulness of bread, and abundance of idleness was in her and in her daughters, neither did she strengthen the hand of the poor and needy. - Ezekiel 16:49 (KJV)

For those who respect the words attributed to Jesus, I offer this:

"When the Son of Man comes in His glory, and all the holy angels with Him, then He will sit on the throne of His glory. All the nations will be gathered before Him, and He will separate them one from another, as a shepherd divides his sheep from the goats. And He will set the sheep on His right hand, but the goats on the left.

Then the King will say to those on His right hand, 'Come, you blessed of My Father, inherit the kingdom prepared for you from the foundation of the world: for I was hungry and you gave Me food; I was thirsty and you gave Me drink; I was a stranger and you took Me in; I was naked and you clothed Me; I was sick and you visited Me; I was in prison and you came to Me.'

"Then the righteous will answer Him, saying, 'Lord, when did we see You hungry and feed You, or thirsty and give You drink? When did we see You a stranger and take You in, or naked and clothe You? Or when did we see You sick, or in prison, and come to You?' ⁴⁰ And the King will answer and say to them, 'Assuredly, I say to you, inasmuch as you did it to one of the least of these My brethren, you did it to Me.'

"Then He will also say to those on the left hand, 'Depart from Me, you cursed, into the everlasting fire prepared for the devil and his angels: for I was hungry and you gave Me no food; I was thirsty and you gave Me no drink; I was a stranger and you did not take Me in, naked and you did not clothe Me, sick and in prison and you did not visit Me.'

"Then they also will answer Him, saying, 'Lord, when did we see You hungry or thirsty or a stranger or naked or sick or in prison, and did not minister to You?' Then He will answer them, saying, 'Assuredly, I say to you, inasmuch as you did not do it to one of the least of these, you did not do it to Me.' And these will go away into everlasting punishment, but the righteous into eternal life."- Matthew 25:31-36 (KJV)

Yet this is also a lousy proposition for the healthy. When your healthy children go to school with the sick uninsured child, your healthy children are exposed to Influenza H1N1 or TB. When you eat at that restaurant, you are exposed to the illnesses of the kitchen help who could neither afford health care nor a day off from work. And while you say "they can always go to the emergency room", remember that the cost of a visit to the emergency department is much higher than a visit to a clinic or general practitioner, especially if the illness has worsened over the time the patient delayed treatment he or she couldn't afford. And that cost is paid somewhere: higher costs for paying patients at the hospital, lower quality care for paying patients at the hospital, or higher taxes.

So whether you care about others or only yourself, it is a good idea to make sure that everyone has access to health care. And the preceding should make it clear why for-profit health insurance makes the problem worse instead of better.