The other day several friends and I were having a discussion about a number of things, and the issue of health insurance came up. One friend said that one of the problems with the Affordable Care Act was that it made people pay for coverages they didn’t need. And he’s absolutely right… and totally wrong.
The entire point of insurance is to spread the risk among a large number of people and over time. If people were allowed to buy insurance only after they needed it, then there wouldn’t be any insurance, because the insurers would be broke. For better or worse, that was the reason why insurers refused to cover “pre-existing conditions,” or would only do so with a far higher premium, unless the insured had already been covered by the same insurer prior to the discovery of that condition [and some insurers wouldn’t even do that], which often tied people to a given job or resulted in huge problems when they were laid off or had to switch jobs because an employer went out of business. No matter what one thinks about the Affordable Care Act, it is a plan based, if less than optimally, on commercial insurance, and that means that the costs of health care have to be covered by premiums. Those premiums also cover the high salaries and profits of the insurance companies, and the trade-off between the ACA and a single-payer, government-backed system is whether the “efficiencies” [about which I have certain doubts] of the private sector outweigh the costs of a profit-making enterprise enough to make the cost to the insured lower than would be the case in a government-backed single-payer system.
The second problem of understanding is simply that the principal problem underlying the insurance costs is and will continue to be the rising cost of health care in the United States. So long as those costs rise, so will the costs to anyone who is insured, and if there are large numbers of uninsured people who need health care, those costs will be added to the costs of the insured, either through higher premiums and/or greater co-pays because, at present, the vast majority of hospitals are required to treat people who need care, whether or not those individuals can afford it or not.
The third problem is that no country in the world, even the United States, has the resources to provide the ultimate in high-tech health care to every single individual in the country. There isn’t enough funding, enough medical personnel, and enough equipment to do that. So, like it or not, health care is effectively rationed. The “traditional” way of doing that in the United States has been through the market system. If you have enough insurance and money, and enough intelligence to deploy the insurance and money effectively, you can generally get the best health care. If you don’t, you get less, and in some cases, you effectively get nothing. In countries with government-mandated systems, most people get coverage for what the system determines is “equitable” for everyone, although, in some of those countries, if you have great resources, again, you can get better care.
All the political rhetoric about health insurance boils down to how society will pay for the rising health care costs of those who either cannot afford it or choose not to afford it, and how this impacts each person. In our extended family, my wife and I have ended up paying more and more out of pocket every year as the insurance costs, deductibles, and co-pays go up, but we have relatives who work long hours who now have better coverage for less.
But there isn’t a “magic” answer. Health care costs. It’s that simple, and all the political rhetoric in the world won’t change that. That political rhetoric is merely “code” for saying who should pay more.