Sound and Fury Is Not Responsible Health Reform
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Rep. Henry Waxman, Chairman of the House Committee on Energy and Commerce, and Rep. Bart Stupak, Chairman of the Subcommittee on Oversight and Investigations, sent a friendly little letter to a number of health insurance companies today (PDF here). In addition to extensive financial and compensation information, it asks for incredibly important things like "a table listing all conferences, retreats, or other events held outside the company … and all expenses incurred, including transportation, lodging, food, entertainment, or gifts." I guess the Committee has determined that the quality and quantity conference meals and gift bag goodies is critical to understanding the healthcare challenges faced by our country!
Obviously, this is an attempt to paint the private insurance industry as bad and, more particularly, make the argument that profits in the health insurance are bad and should be appropriated by the government – through a single payer, public option or other similar system. This is despite the fact that more than 80% of the customers of the private insurance industry are satisfied with the industry’s products. In fact, the President has had to go to great pains to promise everyone that they will be able to "keep what they have." (I wonder if 80% of the public is satisfied with any government program – or if people will be able to "keep what they have" when the private health insurance industry is pushed out of existence?)
The bottom line is that private health insurers are not charities. They are competitive businesses that sell financial management products that people need, like and want. Driving them out of business because some find the concepts of "health" and "profit" to be inconsistent is not going to make the public happier or healthier.
There is fundamental confusion about what health insurance is (as I have blogged about before). The party primarily responsible for payment of your healthcare costs is – you. All of us, at all times, have the option of just stroking a check and paying for all of our healthcare costs directly. The trouble is that healthcare costs can be both (i) very high, and (ii) uncertain (as to both timing and amount). Therefore, a private industry grew up to help people manage this financial risk, and the U.S. government gave huge tax subsidies to employers and employees to encourage that these products be purchased in connection with work. This system has functioned very well for a whole lot of people, as evidenced by the public’s massive – and growing – consumption of healthcare services over the last 50 years. In fact, the system has worked so well that we are now able to do many, many things that are historically unprecedented (like eat lots of bad food, be sedentary -- and continue to stay alive).
I do understand that the system does not work well for a large number of people, including the unemployed and employers who face ever increasing insurance premiums (and, thus, personnel costs). But the answer isn’t to drive private health insurers out of business and federalize 17% of our economy. Profits in this industry are not bad or immoral. They drive innovation and efficiency. Further, the public simply doesn’t want the federal government to take on the massive new obligation of providing all healthcare options to everyone all the time. The public doesn’t trust the government to do it well, and we all certainly know that it can’t afford to do it.
Chairman Waxman would do better to spend his time working with the private health insurance industry to develop sensible insurance market reforms that would make the good products the industry already produces more widely available to all the people who could benefit from them.