Whether it’s on the smallest kitchen-table scale or something larger, say, the size of Wal-Mart, no one goes into business to lose money, you go into business to make it. And not just make a lot of gross, because the only thing that counts is the net, what you can actually spend on yourself and your family. So, to ward off the red ink, you keep a close eye on the cost and expense side of the ledger. Those are the Pac-man gobblers of gross.
The insurance industry is not at all different. Indeed, the sole task of the insurance underwriter is to guard against what is called “adverse selection,” insuring applicants whose known history will likely lead to a claim.
The philosophy behind insurance is risk pooling. Statistically, insurers know that ‘X’% of houses will burn, that ‘X’% of individuals will be involved in heavy loss auto accidents, that ‘X’% of folks will suffer heavy-loss medical expenses, and so on. They just don’t know the identities of the claimants, prior to a claim being filed. By screening for those whose circumstances or histories — the driver with a couple DUIs, the obese applicant, someone with a serious health condition — point to the probability of a claim enables the companies to offer insurance to the rest of us at rates that are more affordable than if they took on all comers.
It may seem coldly harsh. But would you bet YOUR life savings insuring the person with cancer. Insurance is a business, not a charity. No way. In the cruel world of reality, if it was your own money at risk, you’d say, even to your very best friend, “I’m sorry, but I can’t endanger my family’s future by agreeing to pay, or help pay, your medical expenses.”
It’s easy, but it’s wrong to condemn the insurance companies for decisions any and all of us would also make, were the roles reversed.
This morning’s New York Times article, “With Son in Remission, Family Looks for Coverage” (http://www.nytimes.com/2009/04/21/us/21uninsured.html?th&emc=th), highlighted not only the dilemma for Danna and Russ Walker of Humble, Texas, whose 21-year-old son has been battling testicular cancer for two years, but for all Americans. Mrs. Walker recently lost her 14 year job with DHL, and with it the health insurance that had been paying for her son’s cancer therapies. Per the article, the Walkers are among the 9 million Americans who, since December of 2007, have lost, along with the job, the employer sponsored health insurance.
What is also true of the Walkers — at immediate and dire risk of losing their home to foreclosure and/or facing devastating bankruptcy that is the direct consequence of a serious health problem — is true of the overwhelming majority of working Americans. The majority of personal bankruptcies in the US are the result of serious illness, and the majority of those are among working families who have health insurance!
Rather parenthetically, something that very few are aware of is the fact that health insurance was initially promulgated to protect only one group of Americans: the medical providers — hospitals and physicians — who constantly faced the peril of not being paid for services rendered. The old stories of rural doctors who had to accept proffered chickens or cows from farmers are true, or of urban doctors who had to accept the fact, as a part of their practice, that some patients wouldn’t be able to pay anything at all.
The crisis currently confronting the Walkers is one that potentially confronts all of us, all of America, and it’s not one that private enterprise insurance was ever, ever intended to completely eliminate. Nor should we or the insurance companies themselves expect or hope can be eliminated via the private insurance enterprise business scheme now, or in the future. There just does not exist a profit-making model that will embrace two diametrically conflicting exigencies; 1.) paying the trillion or more of unfunded liabilities posed by those who are suffering the hundreds of thousands to millions of dollars in medical expenses, or who, while healthy today, will in the future fall victim to such an expensive accident or illness; and 2.) keep the premiums for such protection low, affordable to everyone. (Recall that those who are without the means or insurance to pay for care will repair to hospital emergency rooms, and everyone else will still pay the cost of their care, only that it will be more expensive because of the ER setting and because indigents wait until a symptom becomes so serious that a hospital is the only setting capable of treating it.)
It’s not a case of individuals and families being fiscally imprudent. It’s 100% a case of being a human being. And you can’t protect against the vicissitudes of life with an affordable to all private enterprise insurance scheme. To even contemplate that somehow we might is not only foolish myopia; it’s perilous to the very economic and moral viability of the United States of America.
To the economic viability; an ever escalating proportion of gross domestic product that is consumed by medical care, except via instituted drastic rationing of both rudimentary and emergency care, is not one that will be long sustainable.
As to moral viability; we’ve all seen the photographs of Sudanese mothers clutching fly covered, emaciated babies with distended bellies. Some in this country may be able to abide the proposition that such could at some point be the plight of some Americans. There may be some in this country who would unhesitatingly tell Mr. And Mrs. Walker that the providing of medical care to their son Jake is simply too expensive, that offering him the chance to beat the cancer that he’s been battling is of less import than the chance taxes might have to be modestly raised to pay for the care. I could not. Nor do I believe many others could either. At least I hope not.