Friday, December 3, 2010

Health Care (in response to FB)

The following may be out of context as it's a continuation of a discussion on Facebook that I wanted to take off that forum.


I'm not sure why some people feel that insurance companies shouldn't behave rationally, mitigate their risks, and attempt to earn a fair profit just like any other business. I think it's because people feel entitled to health care because without it, you might die. The same could be said of food, but I haven't heard many people saying that grocery stores should give food away for free because we're all entitled to eat. Obviously if they did, they'd go out of business, and then nobody would eat.

Insurance companies are in the business of taking on risk. That's what insurance is for. If health insurers didn't exist, and government didn't serve in that capacity (mostly the case in the U.S. except for medicare/medicaid and similar programs until the recent reform legislation), people would have to self insure, meaning that you'd pay a full fee for service every time you went to the doctor and most would not be able to afford anything other than basic services. So in that regard, insurance companies have a very important function. Those of you who don't have insurance probably know what I mean.

No company that is fiscally responsible would take on risk without being adequately compensated. Paying for insurance doesn't seem to be an issue for things like automobiles, but for health people see it as unfair, because we've come to expect that our health care system will take care of us no matter what. I pay my car insurance premium and I don't see that as paying money for nothing, even though I haven't filed a claim. Similarly with health insurance, I pay my premiums and I try to stay healthy and I have peace of mind knowing it's there if I need it.

Nobody in their right mind would go into business to take on other people's risk unless they had a method of limiting their exposure and unless they were adequately compensated. I don't care how altruistic you are, any other business plan would be a bad idea. If you try this experiment and take on too much risk you will soon be out of business, because your pockets aren't infinitely deep. Neither are the insurance company's. Know also that the amount of profit they are allowed to generate is regulated closely by the state departments of insurance.

By contrast, the government's pockets are "infinitely" deep. So if you replace private insurance companies with government, the risk simply gets spread to ... you. If you pay taxes you will be footing the bill in some form, or your children will.

I personally don't want to pay taxes into a system that uses my money to take care of people who ride motorcycles without helmets and smoke and eat McDonalds 3 times per day. I would be happy to pay taxes into a system that uses my money to care for people who contract a serious ailment through no fault of their own, get injured in an accident that doesn't involve their own drug or alcohol abuse or stupidity, or are born with a disability. Unfortunately I don't get to choose who benefits from my tax dollars with a government system, nor do you. It is still unclear how much our taxes will increase to fund the new health care system and whether the government will be able to administer the system as efficiently as private companies. Premiums vs. taxes - we'll still be paying for health care one way or another.

This is a very basic explanation, and of course it's not really this simple. But people like to reduce the argument to its most basic terms. Many also expect that "someone" will pay for health care. They generally don't want that "someone" to be themselves.

Full disclosure: I work for an insurance company (disability and life, not health). I have had two hip surgeries costing over $200,000 and I am not in love with my own health insurer; I have bitched about Aetna on this very blog. I am damn happy that I had insurance coverage when I needed it. BTW, I am a socially liberal and fiscally conservative democrat and that is how I vote most of the time, but not always. There are tradeoffs in every decision. I value the opinion of those who educate themselves about the issues and don't simply repeat the party line.

1 comment:

Gordon said...

Well said, Terri.

I think the fact that health insurance is used to cover routine care muddles things a lot. I don't expect my car insurance to pay for my oil changes or brake jobs, but my health insurance pays for routine checkups. It muddles things and I have to think it's really inefficient.