One of my favourite Monty Python skits was the Motor Insurance Sketch where the insurance salesman Ron Devious explained to the customer that he had bought the Never Pay Policy.
Vicar: It’s about this letter you sent me regarding my insurance claim.
Devious: Oh, yeah, yeah – well, you see, it’s just that we’re not… as yet … totally satisfied with the
grounds of your claim.
Vicar: But it says something about filling my mouth in with cement.
Devious: Oh well, that’s just insurance jargon, you know.
Vicar: But my car was hit by a lorry while standing in the garage and you refuse to pay my claim.
Devious: (rising and crossing to a filing cabinet) Oh well, Reverend Morrison … in your policy … in
your policy … (he opens the drawer of the filing cabinet and takes out a shabby old sports jacket; he
feels in the pocket and pulls out a crumpled dog-eared piece of paper then puts the coat back and
shuts the filing cabinet) … here we are. It states quite clearly that no claim you make will be paid.
Vicar: Oh dear.
Devious: You see, you unfortunately plumped for our ‘Neverpay’ policy, which, you know, if you
never claim is very worthwhile… but you had to claim, and, well, there it is.
Vicar: Oh dear, oh dear.
Devious: Still, never mind – could be worse. How’s the nude lady?
Vicar: Oh, she’s fine. (begins to sob)
Devious: Look … Rev … I hate to see a man cry, so shove off out the office, there’s a good chap.
And it’s worse if you don’t even get the nude lady. Very good about the shove off out of the office. That has the ring of truth.
This has been a chief device for US Health Insurance companies and in the last 15 years or so become their primary business: turning paid customers into never pay policyholders retroactively. At least Devious had the balls to write it in the contract upfront. Even if that contract was crumpled up inside his pocket.
Increasingly insurers are looking to only insure healthy people, which admittedly does seem to be a more profitable model, if it kinda misses the point of insurance to begin with.
1. The whole point of insurance is spreading the cost of risk.
2. These companies sell confidential information that destroy lives
I expect that the mere act of applying for health insurance requires you to waive confidentiality and give the company permission to access and share any health data with any other insurer/HMO/hospital etc. There is no getting around the fact that far too many people have access to health records but at least if they are government employees and subject to large fines and prison terms for violating confidentiality, there is a substantial disincentive. In the US model there are positive incentives for breaking patient confidentiality.
What these insurance companies are doing is perfectly reasonable in an individual business sense. They are trying to collect large premiums and pay out as little as possible. One way to do this is overcharge and insure only the healthiest people, and at the same time to deny payments as much as possible. In pursuit of this strategy it becomes more profitable to hire Private Investigators to get pictures of someone smoking and cancel their non-smoker coverage than it does to pay a doctor to treat their hypertension.
The system as it exists is a criminal oligopoly because of this data sharing. If Humana refuses to insure anyone with any pre-condition they ought to be precluded from sharing that knowledge with their competitors. This is collusion, an obvious antitrust violation and the sort of practice that distorts markets. In a legitimately free market it would be possible for an honest insurer to emerge. They might charge more in premiums since they would take on riskier patients, but they would gain a competitive advantage from actually fulfilling their end of the contract. If they were smart, they could also slash about 30% of their costs devoted to bureaucracy and fighting/denying claims, and therefore actually be price competitive with their scumbag competitors. If you were an employer and you went with an actual insurance company then you would have a huge competitive advantage in the labour market. If I were GE I would stop advertising “We bring good things to life” and start advertising “GE. Work for us, we provide the health care that actually provides health care.” The fact that this has not occurred is evidence that -as with the financial markets – there is not a free market, but a protected criminal oligopoly wherein the profits are privatized (insurance companies) and losses are socialized (medicare/medicaid/public hospitals).
It actually makes things less efficient, more costly. Less health care for more money.
The stakeholders in the US health care system:
Taxpayers (which is close to 100% overlap with Patients)
Health care providers (doctors, nurses etc)
Health care vendors (Pharmaceuticals, Hospitals etc)
Insurance Companies and HMOs
Of these, Insurance Companies and Employers are fundamentally extraneous to health care. There is no actual need for their involvement. The fact that US employers have to provide health care for employees is a nearly unique competitive disadvantage vs any other first world nation, and further skews the outsourcing problem. It costs way more to locate a job in the US because of employer provided health care. Employers in the US would love to get rid of this, and it is frankly necessary to remain competitive. Ironically, this may be the winning argument leveraging the power of entrenched interests. eg if GM didn’t have to pay a shitload for insurance coverage of retirees they would not be a month away from bankruptcy. They would still be making shitty cars but…
Insurance companies are a different story. They are completely extraneous to the health care issue. The only role they could possibly legitimately play is creating efficiency or in distributing risk. They have done neither, and instead chosen to go another route which in a true free market would eventually lead to their bankruptcy for failing to provide value.
Just take the market away from them and let them go bust as they deserve.
In an economy where something like 15% of people will be out of work for at least part of the year (and lose their health care) and many people will be taking jobs with less coverage – or perhaps be ruled ineligible at their new job due to pre-existing conditions , or even over pretend preconditions we will see a lot more of this
It is shameful. No society that calls itself decent can let this go on, when there is a cheaper better, more economically competitive way to do it right. But it is the price paid for letting the lobbying money of the Insurance Industry plus the false consciousness of the conservative working class riled up to fear rational health care plans as Communist plots to define what is politically permissible to discuss.
It took the Great Depression to implement previously heretical ideas: Social Security, Banking regulations, limits on leverage in financial transactions, infrastructure spending (rural electrification, TVA etc). I am not a cheerleader of the whole agenda. I think Social Security ought to be means tested. Everybody pays, only those who need it get paid. While bringing electricity to the nation was huge in terms of quality of life and economic competitiveness of rural areas, the persistence of subsidies was insane. But the Pros far outweighed the Cons.
Maybe it takes this meltdown to trigger some overdue common sense, less costly but more effective approaches.