Health Care and Profits Don't Mix
by Greg Olear

Recently, the state of Maryland passed a law that, in effect, forced Walmart to pay more towards its employees’ health insurance.  While I admire Maryland’s attempt to redress a glaring problem, the solution they came up with is unfair.  Employers offer benefits like health insurance to retain their employees.  Since Walmart doesn’t give a whit about retaining its unskilled workforce, why should they have to pony up?  That Walmart has so much cash is not, alas, reason enough to force it to absorb the cost.  My point is this: the health care system in the United States is so bollixed up, I actually feel sympathy for Walmart. 

Consider: monthly premiums, co-payments and deductibles are skyrocketing, which is bad for both individuals and their employers, who in some combination pay the bills.  High student loans, even higher malpractice insurance premiums, and the monopolistic “reasonable and customary” rules imposed by insurance companies mean that providers, too, are suffering.  So if the patients are paying more, and the doctors are making less, where is all the money going?  To the insurance companies.  And therein lies the problem.

For-profit health insurers seek to cover only the relatively healthy, to minimize risk; keep “reasonable and customary” costs as low as possible, to maximize profits; and require byzantine rules and regulations, to make collecting money -- whether you’re a patient or provider --frustrating.  You can run a health insurance company to generate as much profit as possible, or you can run a health insurance company to provide the best care possible, for the most people, at the lowest cost.  What you can’t do is both.  Even if you say so on your prospectus.

(This inherent contradiction, incidentally, is unique to health insurance.  Life insurance companies never have more than one claim per person, and the only way to beat the system -- that is, to get the biggest payoff from the least investment -- is to die immediately: not what you or the company want.  Homeowners and automotive insurance are volitive; you can choose not to own a home or drive a car).

     The obvious solution to the health care crisis is to have the government intervene.  But the Republicans don’t want another mammoth federal program, and frankly, I’m not crazy about the idea myself.

Instead, why not establish a non-profit national health insurance company?  Set it up as a quasi-governmental, autonomous agency, sort of like the Fed, and appoint a non-crony to run it.  Offer generous tax incentives for both individuals and employers to make donations.  Cover everyone unconditionally, offer scaled premiums according to financial need, and let the FBI handle the fraud cases.  Keep administrative costs low, and claims processing simple.

In time, the for-profit carriers will either go out of business or streamline their own operations to better serve their customers.  The result: everyone gets affordable health coverage, doctors make more money, patients get better care, and even Walmart is happy.

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