Our Crazy Health-Insurance System

Thursday's Editorial   —   Posted on September 27, 2007

(by John Stossel, HumanEvents.com) – Almost daily, we’re bombarded with apocalyptic warnings about the 47 million Americans who have no health insurance. Sen. Hillary Clinton wants to require everyone to have it, big companies to pay for it and government to buy it for the poor.

That is a move in the wrong direction.

America’s health-care problem is not that some people lack insurance — it’s that 250 million Americans do have it.

You have to understand something right from the start. We Americans got hooked on health insurance because the government did the insurance companies a favor during World War II. Wartime wage controls prohibited cash raises, so employers started giving noncash benefits, like health insurance, to attract workers. The tax code helped this along by treating employer-based health insurance more favorably than coverage you buy yourself. And state governments have made things worse by mandating coverage many people would never buy for themselves.

Competition also pushed companies to offer ever-more attractive policies, such as first-dollar coverage for routine ailments, like ear infections and colds, and coverage for things that are not even illnesses, like pregnancy. We came to expect insurance to cover everything.

That’s the root of our problem. No one wants to pay for his own medical care. “Let the insurance company pay for it.” But if companies pay, they will demand a say in what treatment is — and is not — permitted. Who can blame them?

And who can blame people for feeling frustrated that they aren’t in control of their medical care? Maybe we need to rethink how we pay for less-than-catastrophic illnesses so people can regain control. The system creates perverse incentives for everyone.  Government mandates are good at doing things like that.

Steering people to buy lots of health insurance is bad policy. Insurance is a necessary evil. We need it to protect us from the big risks — things most of us can’t afford to pay for, like a serious illness, a major car accident or a house fire.

But insurance is a lousy way to pay for things. Your premiums go not just to pay for medical care but also for fraud, paperwork and insurance-company employee salaries. This is bad for you and bad for doctors.

 The average American doctor now spends 14 percent of his income on insurance paperwork. A North Carolina doctor we interviewed had to hire four people just to fill out forms. He wishes he could spend that money on caring for patients.

The paperwork is part of insurance companies’ attempt to protect themselves against fraud. That’s understandable. Many people do cheat. They lie about their history or demand money for unnecessary care or care that never even happened.

So there is a lot of waste in insurance — lost money and time.

Imagine if your car insurance covered oil changes and gasoline. You wouldn’t care how much gas you used, and you wouldn’t care what it cost. Mechanics would sell you $100 oil changes. Prices would skyrocket.

That’s how it works in health care. Patients don’t ask how much a test or treatment will cost. They ask if their insurance covers it. They don’t compare prices from different doctors and hospitals. (Prices do vary.) Why should they? They’re not paying. (Although they do in hidden, indirect ways.)

In the end, we all pay more because no one seems to pay anything. It’s why health insurance is not a good idea for anything but serious illnesses and accidents that could bankrupt you. For the rest, we should pay out of our savings.

Mr. Stossel is co-anchor of ABC News’ “20/20” and the author of “Myth, Lies, and Downright Stupidity: Get Out the Shovel — Why Everything You Know is Wrong”.

Copyright ©2006 HUMAN EVENTS, Sept. 25, 2007. All Rights Reserved.  Reprinted here Sept. 27, 2007 with permission from Human Events.  Visit the website at humanevents.com.

Questions

NOTE:  The issue of how the health care crisis should be solved is very controversial:

  • The three leading Democratic presidential candidates all want to achieve universal or near universal health insurance coverage.  They are willing to put substantial federal money into health care reform.  The Republicans are not.  The Democrats generally want to expand government health insurance programs and give the federal government a greater role in regulating the insurance industry.  The Republicans generally want to shrink federal programs and free the insurance industry from what they consider regulatory shackles.  Instead of universal health insurance, Republicans propose solutions like a $15,000 family tax deduction for purchasing your own health insurance and/or tax credits for health savings accounts.
  • Read a brief explanation of both sides of the health care debate at balancedpolitics.org under the title “Should the Government Provide Free Universal Health Care for All Americans?”

1.  Define the following words as used in the commentary:
–apocalyptic (from paragraph 1)
–catastrophic (from para. 7)
–mandate (from para. 7)

2.  What is the main point of Mr. Stossel’s commentary?

3.  In paragraph 9, Mr. Stossel says: “Insurance is a lousy way to pay for things.”  Why does he think so?  Do you agree or disagree with his statement?  Explain your answer.

4.  Do you think Mr. Stossel make any valid points?  Explain your answer.

5.  Share Mr. Stossel’s commentary with a parent.  Discuss your opinions about the answer to question #4.