A recent study by the Kaiser Foundation underscores what Americans want in healthcare reform: lower costs. The best way to get there isn’t through insurance companies—and may very well be through government-sponsored programs like Medicare. So why aren’t we talking about that? Because suggesting universal coverage or a single-payer system is a surefire way to be branded a socialist by pitchfork-wielding opponents. But if we continue to treat this topic as taboo, we may never find a better solution to the healthcare crisis than the ill-fitting insurance model we have today.
While the report on what the Kaiser Foundation found in its series of focus groups is worth a read on its own, the quick summary is that typical Americans find the current health insurance landscape complex, unaffordable, and chaotic. Those who dislike Obamacare are just as wary of what might replace it, and are far less focused on party lines than on how rising costs are making it harder to take care of their families.
Our system of health insurance is a surprisingly bad approach to keeping those costs under control. The industry is based on a gamble that insurance companies can find enough people to pay into the system to balance out the people who take money out. That is, they need a steady supply of young, healthy customers whose claims will be less than the cost of their premiums to cover the costs of the sicker, older customers.
But it’s not enough to balance costs. Insurance companies have to pay for their customers’ claims, pay their employees (nearly half a million of them, by some estimates), and still generate enough profit to keep shareholders and other investors happy. The financial statements don’t care whether those profits come from negotiating lower costs with hospitals and drug companies or from shifting costs to customers in the form of co-payments and deductibles. You can guess which is easier to accomplish.
Insurance as a model works really well in cases where the event we’re protecting against is so unlikely that in any given year, the vast majority of customers will never make a claim. Life, disability, and even auto insurance provide peace of mind without breaking the bank. But we get health insurance because we know we’ll need it. From basic, routine care to the high-cost care related to obesity, diabetes, cancer, and other increasingly common health problems, we face a regular onslaught of health costs. And demographic change is making it ever harder to find enough healthy people to offset the many people making substantial claims.
A common belief is that Obamacare resulted in skyrocketing insurance premiums, but the reality is that those costs have been spiraling for years. From 2000 to 2011, I worked for a small company where I was often involved in choosing insurance options for employees. Just about every year we had to switch companies or chip away at benefits just to keep premium increases in the single-digit percentages. Double-digit increases were quite common from one year to the next, as was the trend to shift more and more costs to the consumer. Before Obamacare, these trends were known mostly to people in human resources departments; now, they’re more apparent to a broader audience. The soaring costs are attributable to out-of-control pricing in healthcare and to the endless quest for profits at insurance companies.
What the Kaiser focus groups help highlight is that Americans don’t care about the ins and outs of insurance; they just want lower out-of-pocket costs and access to sufficient medical resources to keep their families healthy. But the insurance industry cannot prioritize that over generating profits. And as individuals, we have no negotiating power to make a difference. If companies and consumers aren’t the answer, that leaves us with some sort of government-subsidized healthcare for everyone.
That, however, is a political third rail. And the stigma around it is preventing us from finding a better solution to healthcare costs. Our current system is dysfunctional and unsustainable, and we must evaluate all potential options if we’re going to achieve manageable healthcare for everybody. To be sure, there are problems with single-payer systems in other countries; that may not ultimately be the right option for us. Some countries guarantee universal coverage while retaining a measure of competition on the payment side. But the U.S. is the only developed country in the world that does not offer some form of government-guaranteed universal health coverage.
If we’re not even free to talk about dismantling the insurance industry because government-based options sound like socialism, then we will assuredly miss out on critical opportunities to find whatever solution is the right one.