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SCHIP and the Rigged Health Insurance Game

By Eric Haas
Senior Fellow
The Rockridge Institute

The House on Thursday passed a modified version of the SCHIP bill, with a vote that was seven votes shy of a veto-proof majority. There were 142 members of Congress who voted against extending health care to more poor children. Behind their rhetoric, their intentions are clear: They want to protect the health insurance market and the huge profits that go with it.

But the huge profits are killing health care. We all know that now. Profit-maximizing insurance companies are bad economics. They make money by denying care, which is a terrible way to try to keep us healthy. (The Rockridge Institute's white paper on health care security has details.)

And, profit-maximizing health insurance does more harm than that. It is also killing our sense of community. It pits us one against another to get affordable and available insurance policies, strangling the trust and cooperation we need to thrive. If we can't come together when we need each other most—when we're sick, injured or dying—without our vulnerability being used as an opportunity to maximize profits, then the U.S. is a hollow shell. The community that makes our nation a family is dead.

Huge health insurance profits are killing community because they are killing Americans. This is obvious. We know that over 100 million Americans are under- or un-insured. They can't get the insurance necessary to receive adequate medical care. So, millions of Americans remain sick unnecessarily and die prematurely.

But there is a second, more subtle impact of the profit imperative of health insurance that is destroying our communities.

In our current health insurance system, companies can't maximize their profits unless they turn people away. According to Princeton economist Paul Krugman, in any given year about 80% of us need very little medical care. Some aspirin and cough syrup, more or less. But 20% of us have an accident or illness that requires major medical treatment. That's expensive.

If everyone in the U.S. were covered by the same insurance company or were part of a nationally organized universal health care plan, then this would all balance out. In any given year, the large number of healthy people would pay for the small number of really sick people. And, the years when you are part of the 20% with large medical expenses, the others will pay for you. Spread out the risk, share the costs, and we all get good health care. We thrive. This is what every other industrialized country in the world does. Except the United States.

Currently, we don't spread the risk and costs evenly. Instead, we have lots of insurance companies all competing against each other to maximize their profits. Which they have—to the tune of billions of dollars a year. But they make their billions by not getting "stuck" with the people needing expensive medical treatment—sort of like avoiding the Old Maid in the children's card game. The more sick people an insurance company ends up with, the lower their profits. "Stuck" with too many people needing medical care at any one time and an insurance company loses some of their profits. So, insurance companies avoid people needing medical care—the Old Maids—at all costs. And we know the result: over 100 million Americans who are un- or under-insured, pushed into the health care cracks between insurance companies by the companies themselves.

And those of us with insurance have been dragged into this sick game. Those of us who have health insurance get it in a system that works by excluding some of our neighbors. With the present profit imperative of our competitive health insurance system, we have created a national Sophie's Choice: millions of people must be denied care so that the rest of us—healthier, wealthier, or fortunate enough to have employer-based insurance—can get it.

Health insurance companies are playing us in a lose-lose game, where we are the exploited and the exploiter together. They exploit our family responsibilities. I know that I couldn't live with myself, if I didn't provide my wife and daughter the insurance they need to get health care. But, having aided them (and me), I participate in the national Sophie's Choice. How do I face my uninsured neighbors now? Damned if I do, damned if I don't.

Insurance companies have dragged us into this rigged game and millions are losing. We can look the other way and pretend our neighbors and neighborhoods aren't needlessly suffering and dying. We can hope that our luck holds and that we will continue to have insurance. It might be self-denial, but if we're lucky we just might beat the house and survive. But we know some of our neighbors will lose. Whatever happens to us individually, our community is lost.

Health care doesn't have to be this way. It could actually empower community. But first we must stopping playing the insurance company game. As long as health insurance companies control health care, these problems will continue.

We already know that we can have better health care for everyone for less money, if we remove the competition and distrust that insurance company profits have injected into the process. SCHIP is a prime example of just this approach. It demonstrates what we can accomplish when we put lives before profit. Those who voted against expanding SCHIP know that. That's their fear. And, that SCHIP might become a powerful rallying point toward rebuilding a thriving American community through health care for all.

Eric Haas is a Senior Fellow with the Rockridge Institute and has studied framing extensively, teaching the concepts of framing in the context of education issues. Before joining Rockridge, Dr. Haas most recently served as an Assistant Professor in Educational Leadership at the University of Connecticut. He recently began an examination of the framing of No Child Left Behind at Rockridge Nation.

Posted on October 26, 2007

Comments

Quote "We already know that we can have better health care for everyone for less money, if we REMOVE competition".

What rock did you crawl out from? Or should I say What goverment organization pays you.

Removing COMPETITION is the kiss of death.
Post Office vs UPS and FedEx
Schools Public vs Private
Medicare,Rich supplemental any doctor/everyone else HMO

Our government sucks at the healthcare it controls now, VA hospitals, Navive American socialized medicine and County hospitals. Why should goverment get more control? Have you read about the Government Veteran Hospitals? These should be the best hospitals in the world for our bravest Americans. Pick up a paper and see how they are run.
We need Competition not the goverment to solve our problems!

Posted by: Jeff at October 26, 2007 05:12 PM

The SCHIP bill should fail, for the amount of blatant fakery in its design and promotion.

If it is for "the children", then why does it cover adults?

Why does every independent analysis figure the bulk of children coming onto the plan would come out of private insurance coverage?

Why did the funding profile in years 4 and 5 fall to 65% of current funding? I realize socialists had to fake the real cost of the bill, but really, do they think everyone is so stupid not to notice this level of con?

And because Republicans participated in the vote does not make a con job honest.

If the Democratic leadership is so opposed to the Republican "culture of corruption", then one would think honesty and earmark reforms would be in place now.

They aren't.

I am not happy with Mr. Bush either, except that he finally has got up on his hind legs and is using the veto pen. Too little, too late, but I will take what I can get.

Between taxes and healthcare, "progressives" seem to be running the Socialist Bag of Failures and picking the most egregious ones, instead of learning from the past to make a better future.

You chaps are prisoners of your ideology and emotion. Bad combination for public policy.

Posted by: Harry Schell at October 26, 2007 05:27 PM

With this program we have to pay for somone's childeren who makes, what 84K a year, what a joke!
I do not like Bush, but he is 100% correct on this one.

A quick google search "income average US family" showed 48,201 as average income.

84K is way toooo much.

Posted by: Jeff at October 26, 2007 05:41 PM

I keep hearing these morons talk about how Government run systems, just don't work, well, I can tell you I just renewed my drivers card and was in and out, in 20 minutes, and I live in a major city.

People, don't let these scare tactics fool you, Government CAN work, just not by Republicans, why because they are selfish and greedy, beyond belief. I should know, just go to any Country Club, anywhere in the Country and you can hear these blow-hards, telling everyone how great they are. These people no longer have any morals, any sense of community or caring left in them, it's all about them and their selfish needs.

HealthCare is a perfect example of " I got mine " so everything is just fine. For one thing, the way things are set up now, healthcare protects the careless and unhealthy because they are covered by their employer no matter what.

We need to take health care out of the hands of Insurance Companies, their Board of Directors and Wall Street, until we do, these people will rape, and kill everyone in their way. It's never enough either, their money and power. At the very least we can only hope these people will be judged by God for their evil, disregard for human life, I just hope I'm there to see it.

Posted by: jim at November 13, 2007 04:55 PM

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