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The recent Emergency Department conflict at PeaceHealth Sacred Heart Medical Center at RiverBend is a reminder that the United States does not have a healthcare “system.”
Instead, we have two parallel industries responsible for the provision of medical care. One is the medical delivery industry, and the other is the health insurance industry. This would be fine if they had similar missions. They do not, which is why there is no “system.”
Astoundingly, we are the only first-world country that does not provide healthcare to all of its citizens. Instead, we rely on an insurance model — a wholly inappropriate and hopeless strategy.
Why is it inappropriate? Because the insurance model is designed to avoid high risk, to avoid treating the sickest people. This is precisely opposite the goal of the healthcare delivery system, which is to treat sick people.
It is helpful to understand the goal of an insurance company, in contrast to the goal of the medical system. Insurance companies thrive by avoiding excessive risk. Fire insurance is a great example. It is statistically unlikely that your house will burn down. Therefore, an insurance company will protect you from this unlikely event in exchange for the payment of a premium.
The insurance company can do this with confidence because it provides coverage for millions of homes, most of which won’t burn down. Its business plan is to collect more premiums than it pays out to replace burned homes. A simple statistical exercise.
The statistics of healthcare are also well established and predictable. Unfortunately, they are the opposite of the fire insurance example. In healthcare, it is as if everyone’s house burns down. That is, almost everyone will have a sharply increasing need for medical care as they age.
The insurance industry has very accurate projections for the level of medical care needed for all men and women from ages 0 to 110. It varies dramatically but predictably between the sexes at different ages. For example, we know that a 20-something male almost never seeks medical care, except for bones broken while snowboarding. These are easily treatable and have a predictably short duration.
How about the typical 20-something female? Uh-oh. She not only seeks regular medical care much more frequently than males, but she is quite likely to have a baby. This is expensive, and can be enormously expensive if there are complications. Given this simple scenario, which group do you suppose the insurance company is eager to serve? The men, of course. And yet, which group is going to be needing more medical services? The women.
This mismatch illustrates the unworkable state of our healthcare problem. The mismatch is somewhat masked by government intervention. Many regulations are designed to force insurers to cover people they don’t want to cover. For example, with group insurance, the entire group must receive coverage, without individual exceptions.
However, none of these regulations changes the underlying business plan. To stay in business, an insurance company must avoid covering too many high-risk users of medical services. The government can intervene only up to a certain point. Beyond that point, the insurance companies become unprofitable and will cease to offer health insurance.
Consequently, federal and state governments are increasingly involved in providing coverage for the people left out of the private insurance system.
The largest program, started in 1965, is Medicare, which is essentially aimed at the elderly, the indigent and the disabled. There are various other programs: for veterans, the poor, children, and the unemployed. The need for these programs is a direct result of the need of healthcare insurers to exclude these higher-risk groups from coverage.
The ultimate answer to America’s lack of a healthcare system lies in a scheme that provides coverage for everyone. This day is coming, simply because the current situation is untenable. A growing number of Americans are currently uninsured and lack the ability to pay for care. Government programs attempt to bridge the gap, but the gap continues to grow.
Government can’t fix it. The eventual solution will include private insurance companies because they have such a huge financial stake, but the ultimate design will not be recognizable as an insurance product. There will be no exclusion of excessive risks, and we will all receive coverage. It will be expensive. But it is high time we bite the bullet and build a workable, all-inclusive healthcare system.
