Thursday, November 12, 2009

A (very) short history of the US health insurance industry

In response to Marcia Angell, the medical doctor, Harvard lecturer, and former editor of The New England Journal of Medicine, whose criticism of the House health care reform bill included the statement that the bill is not better than nothing b/c, "it simply throws more money into a dysfunctional and unsustainable system, with only a few improvements at the edges, and it augments the central role of the investor-owned insurance industry," I wanted to share with you an excerpt from a recent NPR program on this topic [see end of this post for a link to the full story].  What follows is a brief history of America's health insurance industry:

Mr. NICHOLS: Well, no and what's fascinating is to think about, in particular, the history of health insurance. Originally, around the time of the turn of the century and a little bit later, most private insurers - well, all private insurers, eschewed health insurance. They were afraid they could never distinguish between the sick and the healthy. And therefore, they were afraid that only the sick would buy. So, they refused to sell it.

The Blue Cross Blue Shield organizations were created out of desperation about the time of The Great Depression...In fact, the first observation that sort of triggered their inspiration, was when school teachers couldn't afford normal delivery - couldn't afford to pay for a baby being born out of their normal accumulated savings. They realized we had to do something about the cost of health care. So, they had the idea of pulling together, across the entire community  (again, a very communitarian original impulse);  have everyone, or at least most people, buy into it and charge them all the same rate; and then they would be covered for their health needs in the hospital.

Initially, physicians opposed that; they had thought it was socialism, as usual. But then they figured out, "wait, hospitals are being paid and we're not." So, the doctors formed their own.  The hospitals made Blue Cross. The doctors made Blue Shield. They put them together. They were always organized as a non-profit, chartered by the individual states.  That's why they were originally 50, and in fact more - a few states have more than one.

And that's what health insurance was until the commercials figured out, "Hey, those Blue Cross guys have figured how to make money. They figured out how to at least break even on this stuff. We can go in there and sell to the healthy and discriminate against the sick, charge the healthy a little bit less than the average priced Blue Cross is charging, and we'll make out like bandits."  And that's really when the insurance market became, I would say, beginning down the road of being dysfunctional.
....
CALLER: Enjoying the show. And I think it was Mr. Nichols who just addressed the main part of my talk about the insurance companies picking people off, basically. I'm in the investment business and, frankly, I like insurance companies as a business. So what I was going to comment on, or point out, is that if the object of a profit-making business - which all these companies are - is to pick off the 50 percent of the population that only spends five percent of the health care dollars and you can make out like a bandit. That's basically why they don't like universal coverage, but the whole idea of insurance is that you form a big pool and then you can sort things out.

If you want to hear more of this NPR story, which I think is one of the more elucidating discussions of this topic out there, here is a link--
http://www.npr.org/templates/story/story.php?storyId=120174337

If you ask me, the Republicans are just plain wrong on this one.  Socialized health care is the only form of health insurance that will be effective for the whole population, in the long term, because of the very nature of the beast, as evidenced by the history cited above.  The reason Republicans are fighting this reform effort is because the health insurance industry produces massive profit for investors.  This money drives our economy.  This money funds politicians' campaigns.  This industry creates jobs.  Not only that, but this industry also generates effortless and reliable income for the investor class, the folks who most obviously rule this country. 

Granted, many people are dying (some of them horribly), as a result of the profit-driven health insurance industry but, hey, this is America.  We are nothing, if not Capitalists.   And if you don't think Capitalism has an ugly side, as ugly as the widespread famines that arose out of Communism, you are fucking kidding yourself.