The Problems with For-Profit Health Insurance
Mar 5th, 2008 by nick
In a recent court case, a judge awarded $9 million to a woman who had her medical insurance canceled while she was undergoing chemotherapy for cancer. The judge was harshly critical of the insurer, Health Net, saying in part,
“It’s difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that helps keep the public well and alive”
And,
“Health Net was primarily concerned with and considered its own financial interests and gave little, if any, consideration and concern for the interests of the insured”
Although I obviously sympathize with the patient, I don’t think Health Net itself is solely to blame. The problem is much more systemic than that. Health Net is a for-profit, publicly traded company. It’s in the business of making money and keeping its stockholders happy, not in “keep[ing] the public well and alive.” The fundamental flaw is the existence of for-profit health insurance companies. Whenever a company’s profit is inversely proportional to the amount of money it pays out for medical care for its customers, it shouldn’t be a big surprise to encounter situations like this one. In order to avoid these situations, we need a single-payer health care plan without the middle-man insurance companies.
A simply as I can put it forget the urban legend that the marketplace is the best method of distributing all resources. When it comes to health insurance, it is a misnomer, it is not insurance but health care administration. In the simpliest terms for a company to make a profit in health care administration is to pay out less in costs [claims] than it brings in with revenues [premiums]. There is no marketplace factor to determine who does it better or more efficiently for the client [claiment] thus having marketplace considerations determine winning standards and organizations.
Nick I have experienced this kind of treatment restrictions and even the attempt to remove me from the insurance coverage. The only way to make this work is to have some form of universal health administration be it administered by state or fed. In Canada they administer it by province, which puts the province political leadership in a marketplace to perform better than their counterparts—-meaning quality of care and control of costs. This would be like the public school system, where states like MN & WI have some of the best school systems and thus a higher quality of life than states like AK & MS even though their respective climates are different or more or less desirable. In the Chicago area, suburbs relative housing market is directly tied to the relative ratings of the suburban school systems, not location or other factors.
There is only one argument against universal health administration, the expected cost to those who are advantaged now. Access will not drop, care will not be draconian, doctors will still be paid well, and nurses not so well. The biggest problem came when during the Nixon Admin. they allowed for profit health insurance and for profit hospitals, this put us on the path to where we are now.