Health "Insurance": A Criminal Enterprise

I have little doubt that the day will soon arrive when the CEOs of health "insurers" are dragged before Congress to face the same sort of interrogation to which the Waxman Hearings subjected Big Tobacco in the 1990s.
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Federal lawmakers have squandered much of the autumn debating how best to provide private health insurance to approximately fifty million uninsured Americans. Guaranteeing healthcare for these individuals is certainly a moral imperative. However, relying on private insurers to serve these individuals is about as prudent as hiring a band of pedophiles to run a national childcare program. Anyone who has worked as a healthcare provider long enough, and has been paying attention, eventually comes to recognize private health "insurance" is a large-scale criminal endeavor -- part Ponzi scheme, part extortion racket -- that consistently exploits patients at their most vulnerable moments. In short, private health insurance is the sort of predatory enterprise, like payday lending and loan-sharking, that should be criminalized.

Health insurance, as the late political historian Edward Beiser pointed out in his seminal 1994 article "The Emperor's New Scrubs," is a misnomer. The principle behind traditional insurance is the distribution of risk. For example, the odds of my home burning down are quite low. The odds of any other home burning in my community are similarly low. However, the odds of some home in our community burning are reasonably high, so we all pay into a reserve fund -- "fire insurance" -- and whoever suffers the misfortune of a home-burning collects the pot. This "pooling of risk" is a staple of most high school economics classes.

However, health "insurance" does not follow this model, because, over the course of time, nearly all of us will suffer the bodily ills that cause us to draw funds from the collective till. So what we are doing, by paying for private insurance, is having a third party manage our healthcare dollars for us until we're ready to use them. In return, this third party banks the interest and skims a profit off the top, employing an army of paper-pushing middlemen to manage our contributions. The very act of calling these healthcare middlemen "insurers" buys into the false belief that Aetna and Oxford are protecting us against rare occurrences, rather than merely serving as money-managers of our healthcare dollars. (They only provide true "insurance" in cases of catastrophic care for the young, a small and increasingly shrinking portion of healthcare expenditures.) Yet once consumers view these corporations merely as money managers, few sane people would ever invest at interest rates of zero for such low payouts at term.

The system I have described would be cause enough for the government to ban private insurance and replace it with a publicly-run plan. Unfortunately, the economic structure of the system is not nearly as nefarious in theory as it is in practice. Most people in this country who do have private health insurance are happy with their coverage -- until they actually attempt to use it. Once they face a medical emergency, however, they soon discover that the unspoken policy of many insurers is to deny as many claims as possible, often on legally and medically implausible grounds, until the patient or his family give up. Multiple calls, usually including direct intervention from a physician, may pressure an insurance company into changing their ruling--but the critically-ill often lack the time and emotional energy to wage such battles. So I fear that, in the drive to assure universal healthcare coverage, policy makers and the general public have missed the larger point: Having health insurance does not do you any good if that insurance doesn't cover your illness or injury.

Opponents of a national health insurance plan often lambaste the straw-man of having public officials determine which procedures will be available to the sick and dying. In contrast, they would have us believe that those determinations are presently made by individual doctors serving the needs of their patients. As a physician, I can assure them that those decisions are actually rendered by low-level employees at large healthcare conglomerates. None of these "no men" have medical degrees; many lack a college education or even a basic understanding of human biology. Their sole job in the world is to deny coverage until pressured into doing otherwise. Alas, the only practical recourse that most patients have is to sue -- after navigating a hoop of intermediate remedies such as arbitration, depending on their state and contract. That is about as realistic as telling the passengers aboard the Titanic that they have a right to sue for more lifeboats. The reality is that cancer victims in need of expensive chemotherapy and psychotic patients desperate for in-patient mental health services cannot be expected to lodge lengthy and complex legal challenges against their so-called "insurers." Given the choice between American public servants determining my coverage or private, box-checking lackeys working out of out-sourced shell offices in India, I'd side with the shortcomings of American bureaucracy any day. So would most Americans. That is why Medicare, which follows exactly such a public model, remains so popular.

From an ethical point of view, the real question is not whether there should be a "public option" but whether there should be a "private option." Once a public system of genuine universal health coverage is established, our society will have to decide whether wealthy individuals will be allowed to use their own personal funds to buy additional care that is not provided by the government. Is buying extra chemotherapy or life-support a human right? Or does it transcend a moral boundary, like buying a cornea on the black market? This will prove a difficult ethical dilemma. The government certainly has the authority to ban out-of-pocket supplemental care, much as it prevents private companies from delivering first-class mail and could prohibit the establishment of a private "social security" system. Whether the state should exercise such power is another matter. While most reasonable, progressive people may roughly agree on what ought to constitute the "floor" of health care coverage, any effort to limit costs by creating a "ceiling" will likely generate controversy. Yet, once a national healthcare system emerges and the "public option" swallows much private healthcare, that is likely to be the moral conundrum that we face.

I have little doubt that the day will soon arrive when the CEOs of health "insurers" are dragged before Congress to face the same sort of interrogation at which war profiteers were grilled by the Truman Committee in the 1940s and to which the Waxman Hearings subjected Big Tobacco in the 1990s. (The recent Congressional kid-gloves Q&A sessions are not what I have in mind.) When that day arrives, I do hope Congress permits the victims of falsely denied claims and calculated dithering to testify against them.

During a recent encounter as my hospital, upon learning that a suffering patient's need for essential treatment had been denied by his insurer, the man's social worker informed me that that this patient "had bad insurance." I had heard that line one time too many, so I asked, "What would constitute good insurance?" My colleague replied, "Staying healthy." That may be bitter medicine, but it is the horrific truth: All private insurance plans fall far short when it comes to covering necessary care. To put it bluntly, private health "insurers" sell an enormous sour lemon: a product that does not and cannot work. The best solution -- as radical as it may sound -- might be to criminalize such enterprises entirely.

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