SCHIP and the Rigged Health Insurance Game

Profit-maximizing insurance companies are bad economics. They make money by denying care, which is a terrible way to try to keep us healthy.
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The House on Thursday passed a modified version of the SCHIP bill, with a vote that was seven votes shy of a veto-proof majority. There were 142 members of Congress who voted against extending health care to more poor children. Behind their rhetoric, their intentions are clear: they want to protect the health insurance market and the huge profits that go with it.

But the huge profits are killing health care. We all know that now. Profit-maximizing insurance companies are bad economics. They make money by denying care, which is a terrible way to try to keep us healthy. (The Rockridge Institute's white paper on health care security has details.)

And, profit-maximizing health insurance does more harm than that. It is also killing our sense of community. It pits us one against another to get the limited number of insurance policies, strangling the trust and cooperation we need to thrive. If we can't come together when we need each other most--when we're sick, injured or dying--without our vulnerability being used as an opportunity to maximize profits, then the U.S. is a hollow shell. The community that makes our nation a family is dead.

Huge health insurance profits are killing community because they are killing Americans. This is obvious. We know that over 100 million Americans are under- or un-insured. They can't get the insurance necessary to receive adequate medical care. So, millions of Americans remain sick unnecessarily and die prematurely.

But there is a second, more subtle impact of the profit imperative of health insurance that is destroying our communities.

In our current health insurance system, companies can't maximize their profits unless they turn people away. According to Princeton economist Paul Krugman, in any given year about 80% of us need very little medical care. Some aspirin and cough syrup, more or less. But 20% of us have an accident or illness that requires major medical treatment. That's expensive.

If everyone in the U.S. were covered by the same insurance company or were part of a nationally organized universal health care plan, then this would all balance out. In any given year, the large number of healthy people would pay for the small number of really sick people. And, the years when you are part of the 20% with large medical expenses, the others will pay for you. Spread out the risk, share the costs, and we all get good health care. We thrive. This is what every other industrialized country in the world does. Except the United States.

Currently, we don't spread the risk and costs evenly. Instead, we have lots of insurance companies all competing against each other to maximize their profits. Which they have--to the tune of billions of dollars a year. But they make their billions by not getting "stuck" with the people needing expensive medical treatment--sort of like avoiding the Old Maid in the children's card game. The more sick people an insurance company ends up with, the lower their profits. "Stuck" with too many people needing medical care at any one time and an insurance company loses some of their profits. So, insurance companies avoid people needing medical care--the Old Maids--at all costs. And we know the result: over 100 million Americans who are un- or under-insured, pushed into the health care cracks between insurance companies by the companies themselves.

And those of us with insurance have been dragged into this sick game. Those of us who have health insurance get it in a system that works by excluding some of our neighbors. With the present profit imperative of our competitive health insurance system, we have created a national Sophie's Choice: millions of people must be denied care so that the rest of us--healthier, wealthier, or fortunate enough to have employer-based insurance--can get it.

Health insurance companies are playing us in a lose-lose game, where we are the exploited and the exploiter together. They exploit our family responsibilities. I know that I couldn't live with myself, if I didn't provide my wife and daughter the insurance they need to get health care. But, having aided them (and me), I participate in the national Sophie's Choice. How do I face my uninsured neighbors now? Damned if I do, damned if I don't.

Insurance companies have dragged us into this rigged game and millions are losing. We can look the other way and pretend our neighbors and neighborhoods aren't needlessly suffering and dying. We can hope that our luck holds and that we will continue to have insurance. It might be self-denial, but if we're lucky we just might beat the house and survive. But we know some of our neighbors will lose. Whatever happens to us individually, our community is lost.

Health care doesn't have to be this way. It could actually empower community. But first we must stopping playing the insurance company game. As long as health insurance companies control health care, these problems will continue.

We already know that we can have better health care for everyone for less money, if we remove the competition and distrust that insurance company profits have injected into the process. SCHIP is a prime example of just this approach. It demonstrates what we can accomplish when we put lives before profit. Those who voted against expanding SCHIP, know that. That's their fear. And, that SCHIP might become a powerful rallying point toward rebuilding a thriving American community through health care for all.

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