What Are We Actually Talking About?

Hey Everyone!! :-)

There's a truism that I think society would benefit from if more people kept it in mind: If you want to find the right answer, first you need to ask the right question. And, right now, in the US, there are few issues I think this applies to more than the healthcare debate. It seems to me, that more than a few people have already made up their minds on this issue without first understanding the answers to some of the most fundamental questions involved in the debate. So, let's take a look at some of those questions and see if we can figure out the answers. Once we've done that, maybe the correct solution to our healthcare problem will become more apparent.

I've noticed that many of the arguments surrounding healthcare in the US seem to stem from some confusion about what "insurance" actually means. So, let's start there. To be clear, insurance is the pooling and sharing of risk. That's it. How does that work? I'm glad you asked. It works by assigning a monetary value to the risk for the entire group, and then dividing up that number among the participants. And that goes for all insurance of any kind. If you participate in any form of insurance, you are participating in the socialization of risk and paying into the common pool based on an average. 

Now, the details regarding how that division is made can vary. Some insurance uses a straight average -- everyone pays exactly the same amount, it's strictly based on total risk divided by number of members -- and other insurance uses a weighted average -- the total is added and then each member is assessed to determine an estimate of their percentage of the risk and that number is multiplied by the total to determine what each member will pay. But, regardless of how the division is calculated, if you are insured against anything, you are participating in a socialist program.

And then we get to the sticky part, how the risk is calculated. For some things, it's relatively straightforward. If you're insuring property, your risk is essentially the cost of having to completely replace that property. Realistically, it's a little more complicated than that because unless you have an extremely small pool, it's unlikely that everyone's property will be completely destroyed and have to be replaced. So, estimating risk also gets into probabilities and trying to determine what's most likely to happen in the future. But, at its core, insuring property is the cost of replacing that property. And property tends to have a reasonably easily estimated dollar-value attached to it.

But assessing the risk for health insurance is quite a bit more complicated. Because it inevitably involves having to answer questions like, "What's the monetary value of a human life?" And the answers to questions like that lead far down the rabbit hole of ethical quandaries like, "Who gets to determine the value of a human life? Or the value of an individual's quality of life? And on what basis can we, as a society, make those determinations and still avoid becoming monsters? Those are questions that involve a lot more thought, conscience-searching, and emotional investment than, "How much does it cost to replace that car and how likely is it that I'll have to pay that cost?"

And then we get to the part that we seem to love to argue about, here in the US, how are we going to administer this socialized risk-pool? There are basically two ways to do this. First, you can have a private corporation do it. Or, second, you can have the government do it.

If you choose the route of a private corporation, you have to add the costs of corporate profit, bloated salaries for upper management and board members, and stock-holder dividends to the total in your risk-pool so that those costs can also be socialized among the members. If you choose the government as the administrator, there will still be administration costs, the act of administering the pool does cost money in and of itself, but there will be no profit margins added on top of those costs. So, the overall administrative cost will be lower.

Then you get to the question of who gets to be in the pool. And that brings us to the fundamental difference in the goal of government versus the goal of private corporations. The goal of government is to protect and assist the governed. The goal of private corporations is to generate profit. Which defines the answer to the question of who gets to be in the pool for each of those entities. 

For corporations, the goal is profit, so their aim is to limit who gets to be in the pool to individuals who have the lowest risk. In other words, young, healthy individuals with no medical issues that will cost them money. That way, they get to collect money but never pay anything out. And that's the ideal situation for a private corporation. Corporations also have the benefit of having one, clearly defined, driving factor: maximize profits at all costs. So they don't need to bother themselves with small details like how many lives will be lost if they deny healthcare coverage to people.

For government, the goal is to protect and assist the governed, which can be most easily achieved if the population in question is generally healthy and stable. In addition, at least in a democracy, government is answerable to the citizenry. And, by and large, most people don't like to think of themselves as vicious sociopaths, and so they do tend to concern themselves with questions about the cost in human life of denying people healthcare. Especially, when the people who face such denials may one day be them or their families. So, when government is the administrator, the answer for who gets to be in the pool tends to be: everyone.

Which brings us to the "compromise" that isn't a compromise that the disingenuous like to propose, "How about a hybrid system?"  A hybrid system is where you have multiple pools of risk, some administered by private corporations and one administered by the government. Why isn't this the compromise it pretends to be? Well, there are several reasons, but they all go back to who is in the pools and how big those pools are. You see, the bigger the pool is, the more people in it, the lower the cost for each individual will be.

If you allow private corporations to create multiple risk pools, they're going to limit the pools they administer to people who have the lowest risk. Again, healthy, young people with no medical issues. They're either going to refuse to administer the risk pools that include people with higher risk, or they'll make the cost of joining those pools so high that almost no one will be able to afford it. Which means all those people with high risk will have to go into the pool administered by the government. And that means either the amount of care the government will be able to insure against for each of the members in its pool will be smaller, or the cost to each individual in the pool will be higher. 

So, either you'll have people who can't get the care they need because the government-administered pool isn't big and varied enough to allow for the proper distribution of risk at a reasonable cost. Or you have people who are left out of the pool altogether because they can't afford to participate, and so going without the medical care they need. This means the inevitable end result of a "compromise" system is people dying who could be saved and people suffering who could be helped.

At this point, unless you're extremely wealthy and/or extremely healthy, the correct answer to the question of what side of the healthcare debate you should be on should be obvious. But what if you are among the lucky ones who either have the money to pay a higher price for healthcare or the health to not need it? Well, then, there are a couple more questions you should be asking yourself. First, do you want to be a vicious sociopath who cares only about yourself and isn't concerned about the well-being of your fellow citizens? If not, again, the answer to what side of the healthcare debate you should be on should be obvious. 

But if you don't care about that, then ask yourself this question, "How confident are you that your luck will hold out?" If you're young and healthy, are you absolutely certain you'll never get sick or become injured and suddenly find yourself in a higher risk pool? Are you sure you'll never get older? Because if you answer yes to the second question, my advice is to share your secret and make yourself a fortune while lowering the healthcare risk for the entire population significantly. 

And if you're wealthy enough to not have to worry about the cost, ask yourself how sure you are that your financial situation will never change. Will you always have that great job with great pay? Will you always be able to work at all? Will your investments tank and take your nest egg with them? 

Because that's what insurance is, a hedge against future calamity socialized among a group to minimize the impact on any, one individual. And "There but for fortune..." can bite anyone in the ass at any time. So, the question everyone should really be asking themselves is, how deep would you like your pool to be before you dive in headfirst? 

Peace!