Health Insurance Part 2: Other Reasons To Favor Universal Coverage (Applications Of The Logic Supplied In Part 1)

(A continuation of How The Free Market Fails At Health Insurance)

THE FOLLOWING ARE some other reasons I favor a system of universal coverage in health insurance rather than a free market. These reasons are essentially consequences of the logic I presented in the first part. In some ways, they are less rigid and more personal, and I want to emphasize that counterarguments for these situations do not answer the fundamental problems laid out in Part 1. Nonetheless, these issues seem important to me.

1) Restricted Movement
2) Administrative Headaches At The Worst Possible Time
3) Unfair To Small Businesses

1) Restricted Movement. A free market for health insurance can restrict peoples movement, both between locations and between jobs, as it can make it difficult for people to make a move to a new state or a new job if they have a preexisting or chronic condition and the move will require them to get a new insurance policy. It is easy to see how this would happen in theory, but I also happen to know of at least one case where it happened in practice. It also discourages entrepreneurship, as it is so much harder for a self-employed person with a preexisting condition to find health insurance.

Now, I’ve heard these reasons bandied about by some as evidence that the private insurance market in the U.S. is holding back our economy, by hamstringing the employment market (making it less free and efficient) and discouraging the entrepreneurial risk-taking that pushes the relentless progressive drive of the free market. While it is again easy to see how this would happen in theory, it doesn’t seem to be having much of an effect in practice, considering that the U.S. still has the highest per capita output in the world save for a few countries with populations under 10 million. The U.S. is still far and away the richest large country in the world, so any negative effects that private insurance is having on our economy seem to be pretty small, or are being outweighed by the negative effects of universal coverage in other countries.

But I make this argument on a more personal note, because freedom of movement and freedom of employment are very dear to me personally, and while some reasons for such restrictions have to be accepted, health insurance once again seems like such an utterly arbitrary reason. It’s not because there is a lack of money or resources within the entire system to keep someone insured and their medical coverage consistent between jobs or from state to state, but just because there is many times a lack of a way to get from here to there, a lack of a bridge between two circumstances.

2) Administrative Headaches At The Worst Possible Time. A free market for health insurance can result in a tremendous amount of increased stress for a person in dealing with their insurance company when they get sick, precisely at the moment when they are stressed about being sick. There are so many loopholes and blank areas where no coverage is provided in a free market for health insurance, whether it’s because the insurance company is able to demonstrate that something is a preexisting condition, or because you happen to be transitioning between insurance policies when you get sick and something gets fouled up (that may not even be your fault—either of your employers may have made the mistake, and you can still be denied tens or hundreds of thousands of dollars of coverage that you paid premiums for in good faith; this from a true story I heard on NPR), or even if you just get confused and miss a payment due to the confusion and stress surrounding your condition (again, I know of one case personally where this has happened).

It is like getting hit twice, battling cancer and your insurance company at the same time. It doesn’t much matter whether it is due to some perfectly legal fine print in your policy or the insurance company using creative argumentation to prove that your current illness was actually a preexisting condition and therefore they don’t have to pay for treatment, or due to the insurance company just outright acting illegally and not paying when they should.

No matter whether the reasoning would stand up in court, I can think of few things more horrifying than the prospect of confronting a debilitating and painful illness and the possibility of my own death and the desire to use my last remaining days in the best way possible, only to find out that I or my family also have to face the possibility of bankruptcy or at minimum huge debt and that I have to use much of what may be my last remaining days fighting a large and faceless corporation over it, while I am sick. Or of the reverse situation, watching a loved one fight an illness and facing the possibility of our last days together, only to have that moment sullied by a fight with a large and faceless corporation and the prospect of huge debt and bankruptcy, two possibilities that are virtually built into the system that was supposedly designed to help you avoid such administrative and monetary problems at these critical moments of your life.

And I can think of few things more frustrating and angering than getting screwed by a huge faceless entity like an insurance company, where no one takes responsibility for (or even acknowledges) doing you wrong.

Maybe it’s just me; I recently got screwed by Carnival Cruise Lines over some luggage of mine they misplaced and then allowed to be stolen, and I still get angry six months later thinking about their attitude and insufficient settlement amount, and not only was it a relatively small sum of money, everything else in my life is pretty much fantastic. I know what it feels like to suddenly become the enemy of a company because they realize they owe you something. Companies, and corporations especially, naturally tend toward sociopathic behavior when they do someone wrong or otherwise have to pay out. I’d hate to have to deal with that when more important issues of illness and mortality are at stake, or to have my loved ones have to deal with it. The prospect of financial ruin if coverage is denied after the fact is such a high stake in this game.

(And this isn’t an anti-capitalism statement—I’m very much for capitalism, and you can’t really blame companies for being sociopathic under these circumstances. Capitalism, much like nature, is red in tooth and claw.)

Some of you may be objecting that a government-run insurance program would merely shift the bureaucracy from a corporation to the government, and that the government could and would act every bit as sociopathic as a corporation would. This is a valid concern. Other systems can also be quite random and frustrating. The NHS in the UK is divided into different trusts throughout the country, and each trust has it’s own budget, so the types of medical care that you can receive may depend merely on where in the country you live, even for some life and death situations, which is just as arbitrary as depending on what your job is. I imagine fights over this would be nightmarish, when you are in critical condition and are being denied a necessary medical procedure, while someone the next county over or even across the street is able to get it easily. I imagine many of the people who have had to fight their trust so as to get the medical services they need would not think such battles were so minor compared to those in the US.

Still, the difference seems to me to be just how complex the fight can become, and possibly how frequently the fights occur (though I have no statistics on this). I imagine in the UK they would like to make a change so that problems such as the above do not occur, but the gaps in coverage in the US are endemic to the system, since the system is built upon a foundation of denying coverage for preexisting conditions. In a free market where every insurance company has to compete with every other insurance company in order to stay in business, there is an inevitable strong incentive to go to any effort to argue that a large insurance claim is a preexisting condition, using whatever esoteric reasoning can be mustered. The sheer complexity of it is what is most daunting, especially for those in the middle of what is surely one of the few great crises of their lives, namely the health problem for which they are trying to get coverage. If this preexisting condition criteria is gone, and again the only way to get rid of it is to mandate universal coverage, then it seems that that would simplify the conflicts a patient and/or doctor might have with the entity who will be paying for the medical care.

Perhaps I am wrong. Perhaps the frequency and complexity of the fights are equal. I suppose everyone can decide for themselves which fight they would rather be confronted with.

Also endemic to a health insurance free market such as the one in the US is the mistakes that can be made when transitioning from one policy to another, or the mistakes in keeping current on premium payments that can be made in the midst of a serious illness. These are headaches that are entirely absent from a universal coverage system, whatever other troubles a universal coverage system might cause you in the midst of a medical situation.

And let’s not forget the strange and bitterly ironic catch-22 of having your health insurance tied to your employer: if your illness prevents you from working anymore, you are faced at best with more esoteric administrative headaches and worries of trying to get your coverage continued even after your employment ends, and at worst a loss of coverage right at the moment you need it. You have to figure out how to keep paying whatever premium is demanded while you are not working. Not that I advocate people not paying the premiums for the health insurance they have, but a system that by its very design strikes you hardest with a flurry of superfluous administrative activity and money stresses right at the point when you are psychologically and physically least disposed to be able to deal with them—a system whose purpose is supposedly to alleviate these stresses—seems cruel to me.

I can also say something from my own experience, having lived in Japan for 9 years, where there is universal coverage, and having made friends with many people from around the world who come from countries with universal coverage, that I know many more stories of Americans having to fight with corporate bureaucracy or encountering some administrative headache when they are sick than of people from other countries having to fight their government bureaucracies or having any administrative headaches when they’ve gotten sick.

Almost every single non-American I’ve spoken to about it, possibly 100% of them—and these are people who have experienced themselves or loved ones getting sick in their own countries with government-run insurance, rich people and poor people (and sometimes people who have lived in the U.S. and experienced it firsthand)—have been as horrified as I am at the extent of the potential problems an individual can run into when they get sick in the American system. They generally stare in disbelief when I try to explain to them how the system works or try to tell them stories I personally know of problems people have had with it—”Americans live like that?!” It just doesn’t compute with them that a country that in so many other ways works so comparatively well would have a health insurance system like this. In an overwhelming number of cases, the main stress people from these countries have had to deal with when they or a loved one has gotten sick is the stress of the illness itself.

This is based solely on the sample size of whomever I’ve known in my life, for whatever that’s worth. I don’t want to make any greater claims for my experience than are warranted. But I’ve spent my time abroad being deeply jealous of how little others worry about health care compared to Americans, of how breezy their attitude is toward the prospect of going to a doctor compared to how often Americans have to fret about it (even if they have insurance, because there is always the threat of finding out your visit was not covered after the fact), and of how they are free to go to their home country to be with their families while they get treatment if they have any serious health problems, while Americans are often for practical purposes not free to do so.

Which, I hasten to add, isn’t to say that it’s necessarily fair that they can go back to their country to get treatment even if they haven’t been paying into the system but instead have been paying into the Japanese system. All of their countrymen and women are subsidizing their health care, while I suppose they are subsidizing Japanese people by not using the services they’ve paid their premiums for.

I won’t try to solve that problem here, but there is a bigger problem this situation brings to light, that of overuse of services when people have a breezy attitude toward their health care system. I’m devoting Part 3 to discussing issues such as this one.

I make a similar argument about my personal experience in Japan here in part 3.

3) Unfair To Small Businesses. A third reason why I find it difficult to get behind private, employer-based health insurance is because it can be very hard on a small business if that business employs a disproportionately large number of people with chronic medical problems.

Thank goodness it is illegal to inquire into a person’s medical history when considering them for hire, but the consequence is that some small businesses end up having mostly healthy people and (in theory should get) lower than average health insurance premiums for all of their employees, while others have a higher than average number of chronically sick people and are saddled with higher than average premiums for everyone. This also may result in the insurance company having to renegotiate their policy every time someone comes or goes. In contrast, a large corporation, with its larger sample size of the whole population, is much more likely to be the average, with all employees paying premiums that are average for the population as a whole and a policy that can remain more or less the same no matter who comes and goes.

This is a taxing situation to be in for both the small business, who may find it harder to be competitive, and for employees, who pay higher premiums and may find an incentive to get a different job. Or at least it seems logical that that would be the case, and again I am personally familiar with a situation in which this actually happened in practice, and all of the employees of this business, whether they had a medical condition or not, paid higher than average premiums for poorer than average coverage, and it also ate into the company’s profits as compared to their competitors. But even if it very rarely has these effects in practice, this bit of unfairness seems utterly irrational and arbitrary anyway, and that is the main appeal I want to make on this point.


I want to emphasize once again that these points are more personal, and that their importance is not as great as that of the main argument, How The Free Market Fails At Health Insurance.

This series of articles continues as follows:

Health Insurance Part 3: How Universal Coverage Fails, And Possible Ways To Mitigate That Failure

Published on January 18, 2010 at 3:59 am  Leave a Comment  

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