In order to make wise decisions as we debate health insurance and healthcare questions, we need to step back and understand the historical context, and we need to redefine the central issues.
Almost three years after the passage of the historic “Affordable Health Care Act,” more popularly known as “Obamacare,” the debate still rages in the US about the proper role for government in “promoting the general welfare” (quoted from the Preamble of the US Constitution), and the character and quality of health insurance. And while the contentious legislation that barely passed the Congress three years ago has given millions more access to insurance, few would argue that it has remained true to its name and made healthcare more affordable. So, the debate not only continues to rage, but heats up from time to time.
It’s impossible to take an informed stand in this crucial debate without understanding the historical and fundamental differences between health “insurance” and healthcare. The purpose of any kind of insurance historically has been to provide cost-effective protection against rare but potentially devastating events (e.g., an early or untimely death, a natural disaster, etc.). Life is naturally full of risks. Certain things occur with such regularity and predictability that it’s incumbent on folks to prepare today for adverse events that might occur in the foreseeable future. But happenstances like your house being hit by a meteor or even catching fire from lightning are statistically very unlikely. And they’re almost impossible to predict. Still, should such an event occur, it could financially wipe out even the most responsible folks, even those particularly frugal, rainy-day savers among us. So, enterprises formed that spread the “risk” of such occurrences over large “pools” or groups of individuals, charging modest “premiums” and providing rare but substantial payouts when calamities actually occurred. For a long time, these companies were notoriously tightly regulated in a manner that demanded them to base their premiums on proven statistical risk prediction methods, permitted them to make only modest profits, and required them to demonstrate sufficient resources to pay benefits to beneficiaries when the need arose.
Health insurance began not much differently than any other kind of insurance. Terrible illnesses, life-threatening accidents, and surgical procedures were historically statistically rare events, especially for younger, healthy folks. And, for the most part, health insurance was purchased to cover the costs of those rare, catastrophic events. Other routine services, such as doctor visits for common ailments, and even well-care, were paid for out of pocket on a fee-for-service basis. For a long time, doctors in the free market competed for business like any other profession, and most non-catastrophic care costs were quite affordable. But the past 40 years or so have seen some very dramatic changes in the business of healthcare, as well as the nature of health insurance:
1. The whole concept of what health insurance is, who should pay for it, and what it should pay for underwent a radical transformation in the US with the advent of big union contracts with industrial employers, especially within the auto industry. As bigger and better benefit packages were negotiated, it became commonplace for employers to pay their employees’ health insurance premiums (which, at the time, were very reasonable). But as medical science advanced and available healthcare services expanded, insurance benefits steadily expanded from covering the rare and extreme or “catastrophic” events, to covering at least a portion of every conceivable medical procedure, even well-care and preventative care. As a result, employer-sponsored coverage morphed from providing employees with “free” insurance against catastrophe, to granting employees a wide range of health care services, all paid for by the company.
2. Regulation over the insurance industry decreased dramatically. The upside of this was more competition between companies and, at least early on, lower rates. But over time, profit-oriented companies found ways to ‘control the gate’ of access to health care services, pay out less in the way of benefits, and produce unprecedented paydays for top executives.
3. Pressures mounted for more and more services to be paid for by third-party payers. And as more sophisticated equipment and procedures became more widely available, and norms changed with respect to the standard of care, overall healthcare costs rose dramatically, insurance premiums spiraled, and pay gaps between specialist providers and lower level medical service deliverers began to enlarge.
4. The whole notion of insurance for only catastrophic health needs gave way to the expectation for third-party payment for all healthcare. In the process, healthcare also came to be seen as more of a ‘right’ than just another in life’s many elective services that the consumer paid for out of pocket.
Most of the industrialized world years ago addressed and resolved many of the still contentious healthcare issues, with healthcare still being bitterly debated in the US. True, even elsewhere there are still disagreements about what constitutes a legitimate healthcare issue. There are also arguments over whether dental health should be considered just as basic a healthcare concern as, for example, liver health. And there are still debates about whether any distinction should be made between mental healthcare and healthcare for illnesses affecting organs other than the brain. But in the US, there’s discord not only over what domains of human health should be considered basic and necessary, but also whether the federal government, in its role of providing for the general welfare of its people, should even be involved in the health insurance business (through programs like Medicare and Medicaid).
It seems the time has come to redefine the central issues. American citizens need to decide whether the inalienable rights to “life, liberty, and the pursuit of happiness” necessarily include the right to health and reasonable access to state-of-the-art healthcare. And we must also decide whether the government’s duty to promote general welfare includes fashioning programs that ensure healthcare for all. That means a major redefinition of the long-running debates, from providing affordable “insurance,” to ensuring universally available health care. We simply have to determine whether it’s in our best interests to tend to (and pay for) each other’s health needs as a way of promoting our productivity and ensuring our mutual prosperity. Of course, this will not be an easy decision. But with a different central question before us, the task should be a lot less complicated. Only after we’ve decided that it’s in our best interest to take care of each other can we move on to the issues of how to ensure cost-effectiveness and pay equity throughout the healthcare system.
I have already redefined and decided the issue for myself. For me, the days of insurance (when it comes to health concerns) are — and should be — over. Our attentions need to turn from providing affordable insurance to ensuring access to sound, cost-effective healthcare. That’s because I believe a nation simply can’t be great or prosperous unless its people are both physically fit and mentally healthy. For a while, we were living under a mass delusion. We thought someone else was paying for our healthcare bills and we could be indiscriminate about our lifestyles. But in fact, we’ve all always paid the price for both. Once we come to terms with that and decide it’s not a matter of whether, but rather how, we can better ensure our mutual health, we’ll be back on the road to prosperity and greatness.