SCHIP and the Rigged Health Insurance Game

The House last Thursday passed a modified version of the SCHIP bill, with a vote that was seven votes shy of a veto-proof majority. There were 142 members of Congress who voted against extending health care to more poor children. Behind their rhetoric, their intentions are clear: They want to protect the health insurance market and the huge profits that go with it.

But the huge profits are killing health care. We all know that now. Profit-maximizing insurance companies are bad economics. They make money by denying care, which is a terrible way to try to keep us healthy. (The Rockridge Institute's white paper on health care security has details.)

And, profit-maximizing health insurance does more harm than that. It is also killing our sense of community. It pits us one against another to get the limited number of insurance policies, strangling the trust and cooperation we need to thrive. If we can't come together when we need each other most -- when we're sick, injured or dying -- without our vulnerability being used as an opportunity to maximize profits, then the U.S. is a hollow shell. The community that makes our nation a family is dead.

Huge health insurance profits are killing community because they are killing Americans. This is obvious. We know that over 100 million Americans are under- or un-insured. They can't get the insurance necessary to receive adequate medical care. So, millions of Americans remain sick unnecessarily and die prematurely.

But there is a second, more subtle impact of the profit imperative of health insurance that is destroying our communities.

In our current health insurance system, companies can't maximize their profits unless they turn people away. According to Princeton economist Paul Krugman, in any given year about 80 percent of us need very little medical care. Some aspirin and cough syrup, more or less. But 20 percent of us have an accident or illness that requires major medical treatment. That's expensive.

If everyone in the U.S. were covered by the same insurance company or were part of a nationally organized universal health care plan, then this would all balance out. In any given year, the large number of healthy people would pay for the small number of really sick people. And, the years when you are part of the 20 percent with large medical expenses, the others will pay for you. Spread out the risk, share the costs, and we all get good health care. We thrive. This is what every other industrialized country in the world does. Except the United States.

Currently, we don't spread the risk and costs evenly. Instead, we have lots of insurance companies all competing against each other to maximize their profits. Which they have -- to the tune of billions of dollars a year. But they make their billions by not getting "stuck" with the people needing expensive medical treatment -- sort of like avoiding the Old Maid in the children's card game. The more sick people an insurance company ends up with, the lower their profits. "Stuck" with too many people needing medical care at any one time and an insurance company loses some of their profits. So, insurance companies avoid people needing medical care -- the Old Maids -- at all costs. And we know the result: over 100 million Americans who are un- or under-insured, pushed into the health care cracks between insurance companies by the companies themselves.

And those of us with insurance have been dragged into this sick game. Those of us who have health insurance get it in a system that works by excluding some of our neighbors. With the present profit imperative of our competitive health insurance system, we have created a national Sophie's Choice: millions of people must be denied care so that the rest of us -- healthier, wealthier, or fortunate enough to have employer-based insurance -- can get it.