Liberals and Health Insurance

Liberals’ proposal for a single-payer (i.e., “Medicare-for-all”) health insurance system is impractical at this juncture. Improving the ACA is more prudent. Resisting the GOP’s disastrous ideas for healthcare is more important.

Democrats are not being smart by embracing the extreme left. I would rather the country err on the progressive side, but embracing Bernie Sanders’ extreme proposal is going to cause problems for Democrats in future elections. (Full disclosure: I don’t belong to any political party. I like good ideas from any side.)

It’s no surprise that health insurance companies despise the idea of a government single-payer health insurance system. A very high-level executive at UnitedHealth Group (UHG) once admonished me for even mentioning single-payer in a discussion we were having about why UHG was exiting the ACA exchanges. I was not even arguing for single-payer, I merely mentioned the word.

One of the main reasons health insurance companies don’t like the single-payer model is because they would no longer be able to sell their insurance plans to employers. Employers knew that they needed to offer health insurance coverage to hire and retain employees. (If there were any doubt before, the ACA made it compulsory for many businesses.) The health insurance companies know this, and they possibly collude with one another, so the plans they offer are overpriced. (Anyone who sees the premiums charged for continuation coverage under COBRA after leaving a job knows this. Your employer usually pays a significant portion of the premiums for you.)

The best way to contain health insurance-related costs and improve the system, in my opinion, would be to separate health insurance from employment. Your health insurance plan should be portable. Health insurance companies should have to compete for business with the individuals who are impacted by the decision to purchase health insurance, not by competing for business with corporations who have no choice in a market where pricing is not regulated.

Single-payer is an idealistic distraction; not a solution. The health insurance industry in the US is an efficient, profitable juggernaut that employs hundreds of thousands of people. No sensible politician would enact laws that damages the health insurance industry into obsolescence. We need the health insurance industry for whatever comes next for health insurance coverage in the US.

Besides, insurance companies nowadays are less insurance companies than they are repositories of intelligence on the health of the nation. Simply put, they know how to make the system more efficient. The government just needs to force them to do it.

The health insurance system would work more efficiently for individuals if the government enforced smarter regulations on how we obtain and pay for health insurance coverage. Improving the ACA and separating health insurance coverage from employment decisions are the two best ways to start.

I do think liberals’ intentions are in the right place in proposing a single-payer system. The most important thing a government can do for its people is adopt healthcare policy that ensures fair and comprehensive access to healthcare for all. How the US makes that happen is the trillion dollar question. The ACA was a good start, but there’s more work to be done. Single-payer, however, is not the solution right now.

Postscript

I am not advocating for sparing the health insurance industry and its employees at the expense of the greater good. I agree that the greater good is more important (sorry erstwhile coal miners—but that’s a different discussion). The point I was trying to make there is that rendering the entire industry obsolete is a waste of resources. The health insurance industry has institutional knowledge that should not be wasted. I don’t believe that a government-run Medicare-for-all system would be more efficient at running a health insurance program than a health insurance company.

Regarding the impact of separating health insurance from employment, I think this is where carefully constructed regulation is necessary. Obviously, the devil is in the details, but I think it would involve regulating the insurance entities to place reasonable caps on plan premiums that solely reflect the economic realities of the risks inherent in the benefits provided, perhaps setting up a clearinghouse for plan offerings that allows insurers the flexibility to offer different kinds of plans while ensuring that the plans are fair and reasonable, and providing premium subsidies for low-income taxpayers.

There are good arguments for a Medicare-for-all system that haven’t been made. I’m not even philosophically opposed to single-payer, I just think it’s too extreme and potentially more wasteful and inefficient than the current system, especially if not implemented properly, which is a significant risk given the politics involved.