Not Clear on the Concept

Speaking of risk (as we were not too far down the page): the health insurance system is broken, and getting more broken every day. Here, in an article by Gina Kolata (one of the best writers on health and medicine ever, IMHO), is an example: Several insurers have changed the system so they are covering only a tiny fraction of the cost of more expensive drugs--not elective-type drugs that a person could easily live without or replace with a cheaper alternative, but life-saving drugs for diseases such as cancer and MS--leaving sick people with monthly bills in the thousands of dollars, in some cases, for their meds.

[T]he new system sticks seriously ill people with huge bills, said James Robinson, a health economist at the University of California, Berkeley. “It is very unfortunate social policy,” Dr. Robinson said. “The more the sick person pays, the less the healthy person pays.”

Traditionally, the idea of insurance was to spread the costs of paying for the sick.

“This is an erosion of the traditional concept of insurance,” [Dan Mendelson of Avalere Health] said. “Those beneficiaries who bear the burden of illness are also bearing the burden of cost.”

Exactly. The whole idea for the insured person of having insurance is to be sheltered from ruinous expense in the event of serious illness or injury. 

The idea of insurance is to spread the risk around. Unfortunately, while spreading the risk around is ultimately a good arrangement for everyone in the risk pool (everybody gets sick sometime), it's ultimately a socialist enterprise. (Ooh, I said the bad word!) But insurance companies are capitalist enterprises--they exist to make a profit. And the way to maximize profit is to avoid paying out. So, you make it hard for sick people to get insurance, and you penalize insured people if they get sick. Basically, the money-making model is to get people to pay in, but get rid of them if you have to pay out. Which is the opposite of the concept most of us are looking for in a health insurance plan. It insures not much of anything.

The obvious solution, then, is a single-payer system that operates to spread the risk across the pool, but not to make a profit. 

What won't be a solution is mandating insurance for everyone without regulating exclusions, increases in premiums or copays, decreases in coverage, etc. This can't be fixed one step at a time. The broken system requires a complete overhaul, and anything less will only exacerbate the problem. Let's hope our new Democratic Congress has the vision to see that clearly.