When Replacing ObamaCare, Remember Health Insurance Isn’t Health Care
The confusion between the two guarantees that costs will rise
Big Louie whispers to you, “Say, Mac. The fix is in. The Redskins are throwing it to the Browns. It’s all set. Guaranteed.”
“No, kiddin’, Louie?”
“I’m tellin’ ya. Now listen. I want you to bet me the Skins win.”
“Wha…? But you just told me ….”
“You aren’t paying attention. What’s wrong with you, Mac? You want trouble? I said the Skins will lose and you will bet they’re going to win. Now gimme sixty bucks that says the Skins will win.”
“Hey! You don’t have to be so rough …”
“Say, these twenties are new! Considerate of you. Listen. Don’t be so glum. You’re contributing to a good cause: me.”
What Insurance Is
Any of this remind you, Dear Reader, of the insurance business? It shouldn’t. Yet the word insurance has undergone a strange metamorphosis, which is caused, as you won’t be surprised to learn, by government.
Insurance used to be a bet you would make that you hoped you wouldn’t win. You went to an insurer and made a bet that something bad would happen, say, you got cancer or your house would burn down. The insurer figured out how much it would cost to pay you to fix the bad thing. He then said, “Okay, gimme Y dollars, and if the bad thing happens, I pay you X.” If you didn’t like Y or X, you negotiated with the insurer until a pair of numbers were mutually agreeable — or you agreed to part ways.
But suppose you told the insurer, “I have cancer. It will cost X to treat. I want to bet with you that I get cancer. What’s the minimum Y I should pay you?”
The insurer would either laugh you out of his office, as he commiserated with you about the sad state of your health, or he would pick a Y greater than X. Why? Because it was guaranteed that the insurer would pay out X. Why would he ever take an amount less than X?
The Government “Fix”
Because government, that’s why. Because your cancer is a “pre-existing condition” and it was seen as cruel and heartless for the insurer not to lose money on your behalf. But government forced the insurer to lose money. Government enjoyed playing Robin Hood. Hood as in criminal, crook, confidence trickster (did you not know that? Big Louie knew).
However, because the entities that comprise government move in and out of insurers (and their banks), the government also took pity. Government knew insurers had to make up their forced deficits. So it mandated that citizens who did not want to make a bet with any insurer had to give the insurer money for bad things that would almost never happen. ObamaCare became Big Louie muscling twenty-somethings to insure themselves against Alzheimer’s.
Thanks to Supreme Court Justice Roberts, you being forced to fork over funds to a private entity was called a tax. (Same thing Big Louie calls it!) Thus, not only was the word insurance gutted of most of its actual meaning, so was tax. Orwell lives.
Of course, insurers assisted in their own demise. They, like everybody else, were happy to let folks conflate the incompatible terms health insurance and health care. Once people could no longer keep these separate in their minds, the end of insurance was guaranteed.
What Insurance Isn’t
Insurers blurred these distinctions by separating themselves from the purely betting side of business, by dealing with people’s employers and not people (a condition ensconced by further Government mandates), by paying doctors and hospitals and not people, and by writing blanket instead of specific contracts. It came to be seen as normal for a person to expect “insurance” to pay for their kid’s visit to the doctor for sniffles.
Having the sniffles is almost guaranteed; it is thus numerically no different than a pre-existing condition. Having an insurer pay out on these “sure bets” meant that an additional layer of bureaucracy had to be built to handle the paperwork and shuffle funds around. Insurers unwisely moved to make a profit on these sure bets, which caused them to be penurious when paying out on large claims. Doctors had to increase their staff to handle the busywork. Monies that would have gone to pay for “bettable” diseases had to be diverted to pay for aspirins and bandages. Every step along the way caused premiums to be driven higher.
Now no one understands the true cost of care. Worse, we’re at the point where the true meaning of insurance is under active attack. A recent article in Bloomberg complains that it would be better if insurers used data to calculate a person’s chance of this or that disease — which is exactly what insurers should do. The author of that article also frets that insurers might “once again [be] allowed to charge extra for pre-existing conditions, an idea currently being debated in Congress.” In other words, the author is worried that insurers might once again be allowed to do what insurers are supposed to do, and what they must do if insurance is to work.
When Congress scraps ObamaCare, they must not replace it with any scheme that confuses insurance and care. This confusion guarantees that costs will go up and the bureaucracy will grow.