How about scleroderma? You think you’ll ever get it? If your chances of a heart attack are plausible, do you want cardiac rehabilitation? How many days in a hospital do you want? And what about all those tests: Do you really need a colonoscopy if you have no family history of colon cancer? How few mammograms can you get away with, for peace of mind? How high a deductible can you carry?
Welcome to the burgeoning “consumer-driven” market for health insurance, where you pick from a list “tailored to your needs,” to cite the slogans. Models range from basic to deluxe, with variations in between. Unfettered free markets have given us inexpensive shoes, refrigerators, and computers.
Conservatives want those same market forces to transform insurance. We Americans will shop for it just as we shop for shoes, deciding between Pradas and the cut-rate knock-offs. The poorest (or the healthiest) can choose basic plans; the wealthiest, the deluxe ones. We can push Uncle Sam out of the picture, as insurers solve our health care woes! With a competitive marketplace, we’ll all be insured. How creative! How dangerous!
The purpose of insurance is to spread risk. People pay into a pool, knowing that only a few will ever draw from that pool. A health insurance policy is supposed to cover rare maladies and mishaps. A policy that covers routine outpatient care, leaving out the big-ticket expenses, will trick enrollees into thinking they are well-insured – until that rare malady befalls them. Economists see bankruptcies not just among uninsured people saddled with medical bills, but among insured people whose insurance fell short.
Just as crucially, a market that divides into basic and deluxe will also divide into “healthy” and “sick.” Pools work best when only a sliver of people paying in draw out. Obviously, letting young healthy people buy “Model T” plans will give them “affordable” premiums, but their withdrawal raises costs for the “sick” people. That is why countries with national health insurance consider their populace as one pool. That too is the principal behind Medicare.
If coverage-exclusions are dangerous, so are limitations. From an insurer’s vantage, it is easy to impose caps on hospital days, physician-visits, tests, prescriptions. Consider Texas, which, to its credit, plans to give “basic insurance” to the uninsured parents of children enrolled in Medicaid. The basics include 2 prescriptions a month, 5 doctor-visits a year and 5 hospital days a year. [Austin American-Statesman, Feb. 9] But what if the patient needs more? In an open market, the enrollee must pay. What if the enrollee can’t pay? Either providers — hospitals, physicians, pharmacies –absorb the loss, or the patient foregoes the care.
Finally, Uncle Sam has historically protected consumers from rapaciously greedy and/or fraudulent retailers. States too impose standards on professionals and their products, including insurers. (States’ mandates have made it hard to market the barest of bare bones policies). In an unregulated market, where people shop among a hodgepodge of plans proffered on the internet (much like the subprime mortgages marketed on-line), some buyers will end up with deductibles they cannot pay, bills their insurers will reject, and policies so “bare” that they are fraudulent.
Americans love bargains. In Wal-Mart nation, goods are priced low enough for the poorest Americans to look chic. You can find $20 shoes that look and feel like the $200 version. The not-so-secret secret to Wal-Mart’s success is cheap labor, mostly from China.
But we can’t make healthcare fit the Wal-Mart model. We can’t readily ratchet down the costs of hip replacements, cardiac catheterization or kidney transplants. Our workforce — surgeons, radiologists, technicians, nurses — cannot be “out-sourced” to the developing world.
So the cheaper health insurance policy cannot deliver markedly cheaper health care. It can only deliver less of it, to willing, gullible, and desperate purchasers. Caveat emptor.
Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email retsinas@verizon.net.
From The Progressive Populist, March 15, 2008
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