Health Insurance Roulette: The House Always Wins

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“As Profits Roll In, Aetna To Expand On Obamacare Exchange In 2015” 

“The Obama administration issued rules to allow for a taxpayer-funded insurer bailout.”

According to Forbes Magazine, health insurance companies have recorded substantial profits in the wake of eight million people signing up for coverage during the first “Obamacare” open enrollment period. That’s great news for stockholders, CEOs, CFOs and a handful of other lucky people. But given that the United States spends more on healthcare while ranking at the bottom of the industrialized world in terms of health outcomes, this isn’t such great news for the rest of us.

The enormous resources that many Republicans have poured into attacking Obamacare have, to my eyes, lulled many of us on the left into forgetting that the Affordable Care Act was no more than a political compromise between middle-of-the-road Democrats and right-of-center Republicans. Though it includes a number of good provisions and a certain expansion of healthcare coverage, the ACA was never designed to overhaul the United States healthcare landscape. We still have a chaotic multitude of financing and delivery mechanisms. We still have for-profit and not-for-profit hospitals, though it’s not always clear which is which. We still use emergency rooms as expensive safety nets that by federal law are only required to assess and stabilize patients (and are allowed to charge a whole lot to do so), not to cure them. We still have a smorgasbord of donut holes, coverage gaps and nonsensical limits on rehabilitative services such as physical therapy. We still have no rational system for allocating services. Moreover, as the Forbes articles cheerfully proclaim, the ACA has been a bonanza for the very same insurance companies that have cherry picked “healthy” members, denied care to sick people, wasted healthcare dollars on astronomical administrative costs, and assessed outcomes in terms of the bottom line rather than in terms of health and well-being. The name Affordable Care Act obscures the reality that even with health insurance, healthcare is hardly affordable for most Americans.

Many of us on the left acquiesced to supporting the ACA because of a vague promise that this would be the first step to real reform, to developing a system of universal coverage in which all people have the right to healthcare. For the past six years I’ve been a good foot soldier for President Obama. I’ve donated money and signed petitions each time the Republicans come up with some new attack on Obamacare. But I want to be very clear: The ACA is not the endgame for progressives. It’s high time for us to stop worrying about the Republicans (who won’t pass any legislation in any case) and push forward a true progressive agenda.

Rights versus Responsibilities

Broadly speaking, there are two basic healthcare paradigms: healthcare as a human right and healthcare as a personal responsibility. Healthcare as a right rests on the deeper belief that all human beings are fragile creatures. Our two-footed upright posture makes us susceptible to injuries and accidents, and complicates the business of pregnancy and childbirth. We have long periods of infancy and childhood in which we cannot take care of ourselves. We live to be old enough for our bodies and (sadly) our minds to break-down over periods of many years. Our social instincts bind us in communities in which infections pass from person to person. Our large brains and nimble fingers develop remedies, manipulations and treatments that allow us to facilitate healing from the injuries and infections to which all humans are vulnerable. Recognizing both the universality and the unpredictability of those vulnerabilities, the rights paradigm valorizes and codifies our moral obligation to ensure that simply by virtue of being human we all have the right to appropriate, affordable, accessible and acceptable healthcare.

In the United States, in contrast, we typically understand both health as well as healthcare to be a personal responsibility rather than a human right. Each individual has a moral responsibility to take care of him or herself by exercising, eating nutritious foods, avoiding stress and going for annual exams such as mammograms (even if these “responsibilities” are impossible for many people to fulfill). Each is responsible for acquiring the resources to be able to afford healthcare which in effect frames healthcare as a privilege for those who can pay. Those unfortunates who can’t afford healthcare bear the responsibility for proving “true” neediness and for following through with requirements for certification and re-certification of that need in accordance with fluctuating policies and to the satisfaction of cadres of bureaucrats. Individuals also have the responsibility to take care of their own young children (this obligation does not extend to other family members or friends, though we do say nice things about people who do care for aging parents). Employers in certain types of companies have a responsibility to subsidize the costs of health insurance for their employees. And, under the ACA, individuals, with certain exceptions, have a responsibility (a.k.a. “individual mandate”) to be insured.

Fancy Gambling

Insurance is, of course, a fancy form of gambling. We purchase car, house, health and life insurance because we want to cover our bases in the event of an unlucky spin of the wheel or tumble of the dice: a fender bender, a lightning strike, a heart attack. We gamble that we’ll get back more than we pay out and the insurance company gambles that they’ll pay out less than they take in. Some people enjoy the adrenaline surge of choosing a number at the roulette wheel or waiting to uncover the next blackjack card. I do not.

When I look at the state and federal exchanges meant to serve those Americans who need health insurance, I feel overwhelmed. I have neither the time nor the knowledge to calculate which plan is the most economical for my particular constellation of medical needs or the needs of my family. The exchanges offer me a variety of packages with varying divisions between upfront premiums, co-pays, co-insurance and deductibles. Should I choose a plan with a high premium but lower out-of-pocket costs down the road? That would be a good choice if I knew in advance that I’d have a lot of health issues down the line and if I had the ready cash to pay the upfront premium. Or should I choose a plan with a lower premium but higher deductibles or co-payments? That would make sense if I knew in advance that I’d have a healthy year – but who among us knows that we will? Actuaries calculate these things on the basis of large populations – not for one individual. Indeed, in calculations I have made based on the Massachusetts exchange (Commonwealth Connector) people are just as likely to “choose” a plan that ends up costing them more than a plan that ends up costing them less.

“Choice” is one of the ACA mantras – that Americans should be able to “choose” the plan that is “right for you.” But that choice is phony. We do not choose our diseases. We rarely choose our doctors or hospitals, and when we do that choice is seldom based on any real data. We almost never know enough about modern medicine to be able to choose our treatments. And alternative and complementary medicine that might constitute real choices (vis-à-vis conventional medicine) is not addressed in the ACA.

In healthcare roulette, putting your dollars down on the wrong number can cost you more than you would ever wish to lose. But like in all games of chance, you cannot know which number is right and which is wrong. Not being blessed with the gift of prophecy, most of us cannot predict what medical needs might arise in the future. Insurance companies, however, hire brilliant mathematicians – trained actuaries – who study massive amounts of data which enable them to calculate how much to charge so that the insurance company takes in more money than it pays out. As they say in Vegas, the house always wins. The Forbes reports make that abundantly clear.

Susan Sered is the co-author of Uninsured in America: Life and Death in the Land of Opportunity.

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